New Delhi: The Reserve Bank of India has estimated that India’s gross domestic product (GDP) would grow at 7 percent in the current financial year 2024-25, adding that the outlook for the economy remains bright.
This estimation, appearing as a part of the central bank’s annual report released Thursday, comes at a time when the global economy is projected to maintain a steady growth of 3.2 percent in the 2023-2025 period.
“The outlook for the Indian economy remains bright, underpinned by a sustained strengthening of macroeconomic fundamentals, robust financial and corporate sectors and a resilient external sector,” the RBI said in its report.
Looking ahead, the central bank said that the government’s continued attempts to balance capital expenditure with fiscal consolidation, and optimism among consumers and businesses “augur well for investment and consumption demand”.
These factors are likely to be further supported by a host of positive developments taking place in the agriculture and rural sectors, construction and electronics manufacturing.
The RBI noted that the agriculture sector stands to benefit from the ebbing El Nino and the southwest monsoon, which is expected to be above-normal this year.
“The traction in construction activity is likely to be sustained, supported by both residential and non-residential real estate demand,” the report further said. “Emerging sectors like renewable energy and semiconductors are expected to make rapid advances on the back of recent initiatives.”
It also said that the interim budget 2024-25 allocated Rs 6,903 crore for semiconductors and display fabs, which the RBI said, would “contribute to making India a global hub for chip and electronics manufacturing”.
“Taking into account these factors, real GDP growth for 2024-25 is projected at 7.0 per cent with risks evenly balanced,” the report said.
Regarding inflation, the central bank expects the above-normal southwest monsoon to result in a drop in food inflation. However, it added that the increasing incidence of climate shocks imparts considerable uncertainty to the food inflation and overall inflation outlook.
Overall, the RBI projects retail inflation, as measured by the Consumer Price Index, to average at 4.5 percent in 2024-25, which is still higher than its target of 4 percent.
Moksha M. Munoth is an intern with ThePrint.
(Edited by Mannat Chugh)
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