Confirming the strength of India’s economic growth, the Reserve Bank of India’s October bulletin projected real GDP growth at 7.2 percent for FY 2024-25. In the bulletin, the RBI highlighted that consumption and investment demand continue to grow at a rapid pace, with growth estimated at 7 percent in the second quarter and 7.4 percent in the 3rd and 4th quarters.
The RBI Bulletin is authored by its Editorial Committee, chaired by Deputy Governor Michael Debabrata Patra. The Central Board of the Bank is not responsible for the interpretation and opinions expressed in the articles, which are the responsibility of the author.
“India’s growth story remains intact as its fundamental drivers – consumption and investment demand – are gaining momentum,” the bulletin told. It added that private consumption, driven by improved rural demand and a strong agricultural outlook, will play a key role.
Urban demand is also expected to remain resilient, supported by the services sector. The bulletin further pointed out that the government’s emphasis on capital expenditure and healthy corporate and bank balance sheets are positive factors boosting investment activity.
In the first quarter of FY2024-25, real GDP grew by 6.7 per cent, led by a recovery in private consumption and investment, reaching its highest share in GDP since 2012-13. On the supply side, gross value added (GVA) grew by 6.8 per cent, outpacing GDP growth, with strong contributions from the industrial and services sectors.
Looking ahead, the bulletin said agriculture is likely to see sustained growth due to favourable weather conditions and better kharif sowing, while manufacturing is expected to benefit from lower input costs and supportive policies. High frequency indicators such as the PMIs for manufacturing (56.5 in September) and services (57.7) reflect robust expansion across sectors. The central bank bulletin also noted upward trends in both rural and urban demand, with investment activity benefiting from a surge in government capital expenditure and private sector optimism.
On the inflation front, the RBI bulletin noted a sharp decline in headline inflation to 3.6 per cent in July and 3.7 per cent in August, but cautioned that September could see a rise due to unfavourable base effects and higher food prices. However, the bulletin projected CPI inflation at 4.5 per cent for 2024-25, with expectations that food inflation will ease by the end of the fiscal year.
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