RBI Projects Optimistic GDP Growth Amid Lower Inflation Forecast

The Reserve Bank of India forecasts GDP growth to reach 6.4% in FY25, with economic activity set to improve due to advancements in agriculture and manufacturing. Inflation is expected to moderate to 4.8% in FY25, further aligning with targets in FY26. The RBI has reduced the policy repo rate to stimulate growth.

The Reserve Bank of India (RBI) on Friday forecasted a real GDP growth rate of 6.4% for FY25, citing anticipated enhancements in agriculture and manufacturing sectors. RBI Governor Sanjay Malhotra announced this during the Monetary Policy Committee meeting, projecting a subsequent GDP growth rate of 6.7% for FY26, with moderate quarterly increases.

Inflation is expected to ease, with the Consumer Price Index (CPI) forecasted at 4.8% for FY25 and 4.2% for FY26. The central bank attributes this decline to favorable food price trends and effects of past monetary policy measures. Governor Malhotra emphasized a positive agricultural outlook and the resilience of India's economy amid global challenges.

Rural demand is improving, as indicated by the robust Purchasing Managers' Index for manufacturing, with continued government policy support. Additionally, the RBI plans to leverage Artificial Intelligence to enhance forecasting abilities and maintain macroeconomic stability. Governor Malhotra confirmed the repo rate cut from 6.5% to 6.25%, aiming to bolster economic growth while keeping inflation in check.