Revised GDP Growth Projections and Inflation Outlook
In the recent monetary policy meeting announcements, Reserve Bank of India Governor Shaktikanta Das revised the estimated GDP growth for 2024-25 downwards to 6.6%. This revision reflects a more cautious outlook compared to previous estimates of 7.2%.
The revised growth projections indicate a 6.8% growth in Q3, 7.2% in Q4, 6.9% in Q1 of next year, and 7.3% in Q2. Das emphasized that the risks to this growth trajectory are evenly balanced.
This downward revision comes after a series of MPC announcements where Das had maintained the GDP growth estimate at 7.2%. However, the actual GDP growth in Q2 turned out to be much lower than expected at 5.4%, primarily due to weaknesses in the manufacturing sector.
Despite the downward revision, Das expressed confidence in the resilience of the Indian economy. He highlighted that the slowdown bottomed out in the second quarter and has since recovered, driven by festive demand and rural consumption. He also emphasized the need for close monitoring of the growth trajectory.
Furthermore, Das acknowledged the challenges posed by global economic events and the reshaping of the global economy. He expressed optimism that India is well-positioned to benefit from emerging trends.
Regarding inflation, Das noted that near-term inflation has become somewhat adverse since the last MPC meeting in October. Consequently, the retail inflation forecast for FY25 has been raised to 4.8% from 4.5% previously.