RBI projects GDP growth for next fiscal year at 6.7%

RBI cuts policy rate by 25 bps to 6.25% , first reduction in five years

Highlights

* Real GDP growth for the Q2, Q3 and Q4 projected at 7.0 %; 6.5%; and 6.5%, respectively 

* India can achieve over 7% growth rate 

* CPI inflation for FY2025-26 is projected at 4.2%  

* External sector remains resilient 

* Consumption to get a big boost

* RBI committed to provide sufficient system liquidity

* Food inflation pressures likely to see significant softening

* CAD expected to remain well within sustainable level

FPJ News Service mumbai

The Reserve Bank of India on Friday projected the growth rate for the upcoming financial year (FY 2025-26) at 6.7 per cent, up from 6.4 per cent estimated for the current fiscal ending March 31, 2025.

“Real GDP growth for the first quarter of next fiscal year is projected at 6.7 per cent; Q2 at 7.0 per cent; Q3 at 6.5 per cent; and Q4 at 6.5 per cent. The risks are evenly balanced. The real GDP growth for the current year is estimated at 6.4 per cent, a softer expansion after a robust 8.2 per cent growth last year.

Going forward, economic activity is expected to improve in the coming year. Agricultural activity remains upbeat on the back of healthy reservoir levels and bright rabi prospects. Manufacturing activity is expected to recover gradually in the second half of this year and beyond,” RBI Governor Sanjay Malhotra said. 

Early corporate results for Q3 indicate a mild recovery in the manufacturing sector. Mining and electricity are rebounding from monsoon related disruptions in Q2. Business expectations remain upbeat, as evidenced from the PMI manufacturing future output index. Services sector activity continues to be resilient. PMI services, however, declined from its recent peak.

On the demand side, rural demand continues to be on an uptrend, while urban consumption remains subdued with high frequency indicators providing mixed signals. Going forward, improving employment conditions, tax relief in the Union Budget, and moderating inflation, together with healthy agricultural activity bode well for household consumption.  Government consumption expenditure is expected to remain modest.