The Reserve Bank of India ( driven ) The October Bulletin has reaffirmed India’s economic resilience, projecting a true GDP growth rate of 7.2 percent for fiscal year 2024-25. The bulletin, which emphasizes robust consumption and investment demand, forecasts growth rates of 7 percent in the second quarter and 7.4 percent for both the third and fourth quarters. The report, prepared by a committee headed by Lieutenant Governor Michael Debabrata Patra, highlights that private consumption is being boosted by improved rural demand and a positive agricultural outlook. Urban demand is expected to remain strong, particularly in the services sector. The RBI Bulletin attributes India’s growth momentum to several factors, including the government’s focus on capital spending and the health of the corporate and banking sectors, which are expected to further spur investment activities. In the first quarter of fiscal year 2024-25, the economy expanded by 6.7 percent, mainly due to a resurgence in private consumption and a notable increase in investment, reaching its highest share of GDP since 2012-13. Gross Value Added (GVA) increased by 6.8 percent, with significant contributions from the industrial and service sectors. Looking ahead, the RBI anticipates sustained agricultural growth due to favorable weather and improved Kharif sowing. The manufacturing sector is also expected to prosper, helped by lower input costs and supportive government policies. High-frequency indicators such as the Purchasing Managers’ Index (PMI) for manufacturing and services show solid expansion, indicating strong momentum in both rural and urban demand. Regarding inflation, the bulletin reported a decrease in headline inflation to 3.6 percent in July and 3.7 percent in August. However, it warned of a possible rebound in September due to base effects and rising food prices. The RBI projects that Consumer Price Index (CPI) inflation for 2024-25 will be 4.5 per cent, with food inflation expected to stabilize by the end of the fiscal year. For fiscal year 2025-26, the RBI forecasts GDP growth of 7.1 per cent, with a projected first quarter of 7.3 per cent, assuming favorable weather conditions and stability of external factors. The bulletin notes that risks to both growth and inflation appear balanced, suggesting a cautiously optimistic outlook for the Indian economy.
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