Reserve Bank of India (RBI) Governor Shaktikanta Das delivers the Monetary Policy statement, Friday, December 6, 2024.
| Photo Credit: PTI
The Reserve Bank of India (RBI) on Friday (December 6, 2024_) has projected India’s real GDP growth for FY25 at 6.6%, with Q3 at 6.8% and Q4 at 7.2%..
The real GDP growth in the first quarter of 2025-26 is projected at 6.9% and the Q2 at 7.3%.
According to RBI Governor Shaktikanta Das, “the risks are evenly balanced”.
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“On the domestic growth situation, growth in real GDP in the second quarter at 5.4% turned out to be much lower than anticipated. This decline in growth was driven mainly by a substantial deceleration in industrial growth from 7.4% in Q1 to 2.1% in Q2 due to subdued performance of manufacturing companies, contraction in mining activity and lower electricity demand,” the RBI Governor said.
The weaknesses in the manufacturing sector, however, was not broadbased but was limited to specific sectors such as petroleum, iron and steel, and cement.
“Going forward, high-frequency indicators that the slowdown in economic activity bottomed out in Q2, and it has since recovered, aided by strong festive demand and pick up in rural activities,” the RBI Governor said.
Agricultural growth is supported by healthy Kharif crop, healthy reservoir levels and better Rabi sowing, Mr. Das said.
Industrial activity is also expected to normalise and recover from the lows of the previous quarter. The end of the monsoon season and the expected pick up in government capital expenditure is also expected to support cement as well as iron and steel sectors.
Mining and electricity are also expected to improve after monsoon-related disruptions. I specifically mention these sectors because they were the ones that were the principal factors in pulling down Q2 GDP growth.
The Services sector continues to grow at a strong pace. On the demand side, rural demand is trending upwards, while urban demand is showing some moderation on a high base.Government consumption is improving and investment activity is also expected to improve. On the external front, merchandise exports grew 17.2% in October, while services exports continue to post upbeat growth at 22.3% in October.
“Taking all these factors into consideration, real GDP growth in 2024-25 is now projected at 6.6%, with Q3 at 6.8% and Q4 at 7.2%, “ Mr. Das said.
Published – December 06, 2024 10:53 am IST