RBI MPC announcements: FY25 GDP growth projected at 7%; here's quarter-wise breakdown

India’s real gross domestic product (GDP) growth is seen at 7% in financial year 2024-25 (FY25), the Reserve Bank of India (RBI) said, following the conclusion of its Monetary Policy Committee (MPC) meeting on April 5. The forecast is the same that the central bank had issued following its previous policy review meeting in February.

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 south-west monsoon, RBI Governor Shaktikanta Das said, while briefing the press following the MPC meeting.

A “boost in private consumption” is also expected, on account of the strengthening of rural demand, improving employment conditions and informal sector activity, moderating inflationary pressures and sustained momentum in manufacturing and services sector, Das said.

“Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7%,” the RBI Governor said, as he also shared the quarter-wise breakdown.

Also Read: RBI MPC meeting outcome: Repo rate retained at 6.5%, FY25 GDP growth forecast stays 7%, inflation seen at 4.5%. Details here

Real GDP growth in FY25: Here’s the quarter-wise breakdown

• Q1 FY25 at 7.1%
• Q2 FY25 at 6.9%
• Q3 FY25 at 7%
• Q4 FY25 at 7%

While the RBI has retained its overall GDP growth forecast for FY25 at 7%, the quarter-wise projections differ marginally as compared to the estimates shared in February. Following its last review meeting, the central bank had said that it saw the economy growing by 7.2% in Q1 FY25, 6.8% in Q2, 7% in Q3 and 6.9% in Q4.

Meanwhile, for the fiscal year ended March 31, 2024 (FY24), the RBI has reiterated its growth estimate of 7.6%. “As per the second advance estimates (SAE), real gross domestic product (GDP) expanded at 7.6% in 2023-24 on the back of buoyant domestic demand.”

“Real GDP increased by 8.4% in Q3, with strong investment activity and a lower drag from net external demand. On the supply side, gross value added recorded a growth of 6.9% in 2023-24, driven by manufacturing and construction activity,” the monetary policy statement added.

Notably, in the MPC meeting held today, it was decided to keep the repo rate unchanged at 6.5% for the seventh time in a row. The panel voted in a ratio of 5:1 to hold the rates, with five members voting in favour of the status quo and one member seeking a revision. The stance of “withdrawal of accommodation” has also been retained.

The RBI also retained its FY25 retail inflation forecast at 4.5%. This is close to the central bank’s medium-term target of 4% inflation. As per the last available data, the inflation grew at 5.1% in February 2024, which is within the RBI’s upper-level tolerance limit of 6% but still significantly higher as compared to its target of 4%.

“Monetary policy must continue to be actively disinflationary to ensure anchoring of inflation expectations and fuller transmission. The MPC will remain resolute in its commitment to aligning inflation to the target. The MPC believes that durable price stability would set strong foundations for a period of high growth,” the RBI said.