RBI policy: Real GDP growth for FY25 retained at 7.2%

Some NBFCs are aggressively growing without building strong underwriting practices: RBI Governor

The Reserve Bank of India has retained India’s real GDP growth forecast for FY25 at 7.2 percent, governor Shaktikanta Das said on October 9.

The new-look monetary policy committee pegged the second quarter growth at 7 percent, lower from 7.2 percent in the August meeting. For the third and fourth quarter, however, the forecast has been raised to 7.4 percent from 7.3 percent and 7.4 percent from the previous projection of 7.2 percent, respectively.

The MPC expects the GDP first quarter of FY26 to clock a growth of 7.3 percent.  The risks are evenly balanced, the governor said.

India’s real GDP grew at 6.7 percent in Q1, driven by private consumption and investment, he said.

The global economy has remained resilient and is expected to maintain stable momentum over the rest of the year, amidst downside risks from intensifying geopolitical conflicts, the MPC said.

The MPC expects the agriculture sector to perform well on the back of above normal rainfall and robust reservoir levels, as manufacturing and services activities remain steady.

On the demand side, healthy kharif sowing, coupled with sustained momentum in consumer spending in the festival season, augur well for private consumption. Consumer and business confidence have improved.

The MPC left the inflation projection unchanged at 4.5 percent. The Q2 inflation projection is at 4.1 percent, third quarter at 4.8 percent and Q4 at 4.2 percent. For the first quarter of the fiscal, inflation is is seen at 4.3 percent.

"Inflation horse has been brought to the stable within the tolerance band. Have to be careful about opening the gate," said the RBI Governor Das.

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As expected, the monetary policy committee, which got three new external members ahead of the review, left the key repo rate unchanged at 6.5 percent for a tenth time but changed the stance from “withdrawal of accommodation” to "neutral".

A "neutral" stance gives the central bank the flexibility to adjust interest rates based on the direction of inflation. Typically, this position is adopted when the policy priority is equal on both fronts — inflation and growth.