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The Reserve Bank of India (RBI) has bumped up its real GDP growth projection for FY24 to 7 per cent from 6.5 per cent even as the CPI inflation projection has been retained at 5.4 per cent.
“The Indian economy presents a picture of resilience and momentum. The real gross domestic product (GDP) growth for Q2 of the current financial year has exceeded all forecasts,” Governor Shaktikanta Das said in his 32nd monetary policy statement.
Das emphasised that the fundamentals of the Indian economy remain strong with banks and corporates showing healthier balance sheets; fiscal consolidation on course; external balance remaining eminently manageable; and forex reserves providing cushion against external shocks.
These factors, combined with consumer and business optimism, create congenial conditions for sustained growth of the Indian economy, he added.
“Looking ahead, it is our endeavour to further build on these fundamentals which are the best buffer against global shocks in today’s uncertain world,” Das said.
Real GDP growth for Q3 has been revised to 6.5 per cent (6.0 per cent); and Q4 to 6.0 per cent (5.7 per cent).
Real GDP growth projection for Q1:2024- 25 has been nudged up to 6.7 per cent (6.6 per cent). The real GDP growth projection for Q2 and Q3 are at 6.5 per cent and 6.4 per cent, respectively, with risks evenly balanced.
CPI inflation
RBI retained CPI inflation projection at 5.4 per cent for 2023-24, with Q3 at 5.6 per cent and Q4 at 5.2 per cent.
“Since the last policy, CPI headline inflation moderated to 4.9 per cent in October from 7.4 per cent in July….There has been broadbased easing in core inflation, which is indicative of successful disinflation through monetary policy actions,” Das said.
The near-term outlook, however, is masked by risks to food inflation, which might lead to an inflation uptick in November and possibly in December, he cautioned, adding this needs to be watched for second round effects, if any.
CPI inflation for Q1:2024-25 is projected at 5.2 per cent; Q2 at 4.0 per cent; and Q3 at 4.7 per cent. The risks are evenly balanced.
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