“Domestic economic activity continues to be resilient. On the supply side, steady progress in southwest monsoon, higher cumulative Kharif sowing and improving reservoir levels auger very well for Kharif output. Manufacturing activity continues to gain ground on the back of improving domestic demand,” Das said while announcing MPC’s decision to leave the benchmark rates unchanged at 6.5 per cent yet again.
While forecast for FY25, Q2FY25, Q3FY25 and Q4FY25 was left unchanged, Governor Das said forecast for Q1FY25 has been reduced to 7.1 per cent.
The MPC during its June 2024 meeting had forecast India’s GDP to grow at 7.2 per cent in FY25. Further, the economy’s growth rate was pegged at 7.3 per cent, 7.2 per cent, 7.3 per cent and 7.2 per cent in each of the four quarters of the entire financial year.
The Indian economy grew at 8.2 per cent in FY24.
However, the Economic Survey, released in July 2024 ahead of the full Union Budget announcement forecast a lot more conservative growth rate of 6.5-7 per cent for the ongoing financial year on the back of global uncertainties and various domestic challenges. Prominent global rating agencies like the IMF and ADB have projected the growth at 7 per cent.”…the Survey conservatively projects a real GDP growth of 6.5-7 per cent, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side,” the pre-Budget document said.A normal rainfall forecast by the India Meteorological Department and the satisfactory spread of the southwest monsoon thus far are likely to improve agriculture sector performance and support the revival of rural demand.
The pre-Budget document said also said the outlook for India’s financial sector appears bright, but there is a need to keep a tight vigil on vulnerabilities as India can ill-afford the over-financialisation of the economy at this stage.