RBI projects GDP growth at 7 pc for 2024-25, retail inflation seen at 4.5 pc

India’s GDP growth for 2024-25 is projected at 7 per cent while the forecast for inflation for the year has been retained at 4.5 per cent, RBI Governor Shaktikanta Das said on Friday.

“Growth has continued to sustain its momentum, surpassing all projections.

“India presents a different picture on account of its fiscal consolidation and faster GDP growth. Domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and an improving global environment. The second advance estimates placed the real GDP growth at 7.6 per cent for 2023-24, the third successive year of 7 per cent or higher growth,” Das said while unveiling the first monetary policy review for the current financial year in which the key policy rates were left unchanged to keep inflation in check.

The RBI Governor said, “Headline inflation has eased to 5.1 per cent during both January and February, and this has come down to 5.1 per cent in these two months from the earlier peak of 5.7 per cent in December. Looking ahead, robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4 per cent,”

The central bank now sees inflation for Q1, Q2, Q3 and Q4 of this fiscal year at 4.9 per cent, 3.8 per cent, 4.6 per cent and 4.5 per cent, respectively. In the February policy, the monetary authority had pegged the inflation readings at 5 per cent, 4 per cent, 4.6 per cent and 4.7 per cent respectively, assuming a normal monsoon.

Das pointed out that two years ago, around this time, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation. The elephant has now gone out for a walk, and appears to be returning to the forest.

“The RBI will now have to ensure the ‘elephant’ remains in the forest,” Das quipped.