RBI restates 7% GDP growth forecast for FY25 contrary to market expectations of a raise

NEW DELHI : The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has kept its growth projection for India’s Gross Domestic Product (GDP) unchanged at 7% for the 2024-25 fiscal year, Governor Shaktikanta Das announced on Friday, April 5

For the first three-quarters of FY25, the GDP growth rates are estimated at 7.1%, 6.9%, and 7%. For the fourth quarter of the fiscal, the growth is projected at 7%

This is the third successive year of 7% or higher growth,” Das said. The governor stressed that the growth and inflation dynamics have played out favourably since the last policy. He said robust growth prospects provide policy space to remain focused on inflation.

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank told, “I think what we need to keep in mind is they seem to be very comfortable from the growth point of view. We were expecting there was some probability that a 7.4%, as indicated in the bulletin could have been revised up as GDP growth. But that too, hasn’t been revised. But we clearly know that there is an indication of an upside that they are seeing on growth front after the bulletin data was out. So I think all-in-all, this is clearly wherein it gives them fair amount of room to wait and watch and let data determine eventually.”

The Governor however highlighted that while inflation is moving closer to target, the last mile of inflation is turning out to be challenging. The RBI MPC has retained its CPI (consumer price index) inflation forecast for FY25 at 4.5%

The RBI also left its repo rate unchanged at 6.5%, in line with market watchers and economists’ expectations. This was the seventh straight instance of the policy rates being left unchanged by India’s central bank.