Governor Shaktikanta Das of the Reserve Bank of India (RBI) stated on Friday that the real GDP growth for 2024–2025 is now anticipated to be 6.6%, with Q3 and Q4 growth rates of 6.8% and 7.2%, respectively. For the current fiscal year, the RBI had previously predicted that the Indian economy would rise by 7.2%. Reading the monetary policy statement, Das stated that GDP growth is expected to be 6.9% in the first quarter of 2025–2026 and 7.3% in the second.
Das explained the second quarter’s lower-than-expected GDP growth of 5.4% by pointing to a significant slowdown in industrial growth, which slowed from 7.4% in the first quarter to 2.1% in the second. This was primarily caused by manufacturing companies’ muted performance, a decline in mining activity, and a decrease in the demand for electricity.
The governor added that the bank rate and the marginal standing facility (MSF) rate both remained at 6.75 percent, while the standing deposit facility (SDF) rate remained at 6.25%. A majority of four members of the RBI MPC voted to maintain the party’s “neutral” stance, confirming the decision. This was done, according to RBI Governor Das, to stimulate growth and make sure inflation stayed below the 4% objective.
RBI’s real GDP projection
The Reserve Bank of India (RBI) reduced its real gross domestic product (GDP) growth prediction for the fiscal year 2024–2025 (FY25) from 7.2 percent to 6.6%.
- Updated to 6.8% in Q3 FY25, down from 7.4%
- Q4 FY25: 7.2% revised from 7.4% originally
- Q1 FY26: Revision to 6.9% and decrease from 7.3%
- FY26 Q2: 7.3 percent
CPI Inflation
The governor noted that a strong increase in food inflation and a rise in core (CPI minus food and fuel) inflation drove headline CPI inflation above the upper tolerance threshold to 6.2% in October from 5.5% in September and sub-4.0% prints in July and August. Das stated that high soil moisture conditions and comfortable reservoir levels bode well for rabi production, and that food inflation is projected to ease in Q4 due to the seasonal easing of vegetable prices and the advent of the kharif harvest.
However, there are upside risks to food inflation from unfavorable weather conditions and rising global agricultural commodity prices. Das stated that although energy prices have recently decreased, it is still necessary to keep an eye on their sustainability. Companies anticipate that input cost pressures will continue to be high and that selling price growth will pick up speed starting in Q4.
