Key Takeaways
- India’s economy is projected to grow at 7% in 2024-25, with a bright outlook for investment activity.
- Geopolitical tensions pose risks to the outlook for India’s economy, but the RBI expresses confidence in the strength of the economy.
- The RBI projects Q1 growth at 7.1%, Q2 at 6.9%, Q3 at 7.0%, and Q4 at 7.0% for India’s economy in 2024-25.
New Delhi: Considering various factors both in the domestic and global markets, the Reserve Bank of India Friday projected the Indian economy to grow at 7 per cent during the current financial year.
The investment cycle is expected to gain further traction, driven by the upturn in private capex, Rs 31.2 lakh crore flow of resources to the commercial sector, and healthy balance sheets of banks and corporates.
Improving global growth and trade prospects, coupled with our rising integration in global supply chains, are expected to propel external demand for goods and services, RBI Governor said announcing the Monetary policy, first in the current fiscal 2024-25.
“Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7.0 per cent with Q1 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7.0 per cent; and Q4 also at 7.0 per cent. The risks are evenly balanced,” he added.
He, however, cautioned about existing geopolitical tensions and increasing disruptions in trade routes saying “these pose risks to the outlook.”
The RBI, however, expressed confidence in the strength of Indian economy and said with rural demand catching up, consumption is expected to support economic growth in 2024-25. Urban consumption stayed buoyant as evident from various indicators.
The resilience in cement production, together with strong growth in steel consumption and production and import of capital goods, augur well for the investment cycle to gain further traction. The total flow of resources to the commercial sector from banks and other sources at Rs 31.2 lakh crore during 2023-24 is significantly higher than that of last year (Rs 26.4 lakh crore).
External demand improved in February with exports registering double digit expansion. Trade deficit, however, widened in February as imports also accelerated.
Going forward, the outlook for agriculture and rural activity appears bright, with good Rabi wheat crop and improved prospects of Kharif crops, due to expected normal Southwest monsoon.
