The Reserve Bank of India (RBI), in its annual report, projected Indian economy to grow at 7 percent in the current financial year.
“Real GDP growth for 2024-25 is projected at 7 per cent with risks evenly balanced,” RBI said in its annual report released on May 30.
Further, the report said Indian economy expanded at a robust pace in 2023-24, with real GDP growth accelerating to 7.6 per cent from 7 per cent in the previous year – the third successive year of 7 per cent or above growth.
Real GDP growth is robust on the back of solid investment demand, which is supported by healthy balance sheets of banks and corporates, the government’s focus on capital expenditure and prudent monetary, regulatory and fiscal policies, the report added.
RBI retained the GDP growth projection at 7 per cent for 2024-25 fiscal on the back of expectations of a normal monsoon, moderating inflationary pressures, and sustained momentum in the manufacturing and services sectors. In its April monetary policy, RBI said that the real GDP growth for 2024-25 is projected at 7 percent with Q1 at 7.1 percent; Q2 at 6.9 percent; Q3 at 7 percent; and Q4 at 7 percent.
India's GDP in the fourth quarter of the financial year 2023-24 is anticipated to have grown between 6.1 percent and 6.7 percent, a decline from the over 8 percent growth rate observed in the previous three quarters, PTI reported, citing projections by various economists.
The government is set to release the GDP figures for the fourth quarter (January-March 2024) and the provisional estimates for the 2023-24 fiscal year on May 31.
India's GDP grew 8.4 percent in the December quarter, the highest in six quarters. The last time India's economy grew at a faster clip was in the first quarter of 2022-23, when it clocked a growth of 13.1 percent, which was later revised down to 12.8 percent.
Further, the central bank said as headline inflation eases towards the target, it will spur consumption demand especially in rural areas.
“The external sector’s strength and buffers in the form of foreign exchange reserves will insulate domestic economic activity from global spillovers,” report said.
Geopolitical tensions, geoeconomic fragmentation, global financial market volatility, international commodity price movements and erratic weather developments pose downside risks to the growth outlook and upside risks to the inflation outlook, annual report said.
“The Indian economy would also have to navigate the medium-term challenges posed by rapid adoption of AI/ML technologies and recurrent climate shocks,” the report said.
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