shaktikanta das: RBI MPC meeting: Real GDP growth for FY24 projected at 6.5%

shaktikanta das: RBI MPC meeting: Real GDP growth for FY24 projected at 6.5%


At the end of the June 2023 Monetary Policy Committee (MPC) meeting on Thursday, Reserve Bank of India Governor Shaktikanta Das announced that real GDP growth for FY24 has been projected at 6.5% — first quarter at 8% , second quarter at 6.5%, third quarter at 6% and fourth quarter at 5.7%.

Domestic demand conditions remain supportive of growth, the Governor said. Rural demand is growing while urban demand remains resilient, he added.

In the run-up to the MPC’s latest meeting, leading forecasters had projected the numbers in the range of 5.5% to 6.3% — OECD saw FY24 real GDP at 6%, the World Bank at 6.3%, JP Morgan at 5.5% and UBS at 6.2%.

The MPC, at its meeting, unanimously decided to keep the policy rate unchanged at 6.5 per cent, Das announced. It was a status quo at the previous (April) policy meet too.

The committee also decided to focus on withdrawal of accommodative, with a 5-1 vote in favour of this stance, Das informed.

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The MPC in its February meeting had pegged real GDP growth for FY24 at 6.4%. The first advance estimate pegged FY23 GDP growth at 7%.The Indian economy had clocked Q4 GDP print of 6.1% in March quarter (Q4). This stronger-than-expected performance lifted India’s growth to 7.2% in FY23. It exceeded the 7% growth cited in the second advance estimates released in February.In Q4, GDP growth also increased sequentially from the (revised) 4.5% in the comparable quarter last year. The stellar performance helped India retain its status as the fastest-growing major economy in the world.

The economy had grown 9.1% in FY22. That, however, was on a lower base of a Covid-ravaged FY21. The strong growth makes India the fastest-growing major economy again.

In terms of nominal growth, GDP rose 16.1% in FY23 as against with 18.4% expansion in the preceding year.

A look back at key points of Q4’s stellar show
Manufacturing GVA went up 4.5% in Q4 from a year earlier, overturning two quarters of negative growth.

Government’s capex pushed gross fixed capital formation up by 8.9% in Q4, raising its share in GDP to an all-time high of 35.3%. Private consumption, however, remained sluggish with a 2.9% growth.

For full FY23, gross fixed capital formation rose 11.4%, raising its share in GDP to 34%, the highest since FY15.

Overall, GVA grew 6.5% in Q4 compared with 4.7% in the preceding one with construction leading the output surge at 10.4% followed by the trade, hotel, and transport segment at 9.1% and the financial sector at 7.1%.

Farm sector output was 5.5% in the quarter, the highest in three years.



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