The Reserve Bank of India has predicted 72 per cent real GDP growth for for 2024-25 on above-normal monsoon, growing rural and urban consumption, uptick in services and the government’s thrust on capex.
It projected the Q1 growth at 7.3 per cent; Q2 at 7.2 per cent; Q3 at 7.3 per cent; and Q4 at 7.2 per cent with risks evenly balanced.
“Looking ahead, the forecast of above normal south-west monsoon by the India Meteorological Department (IMD)19 is expected to boost kharif production and replenish the reservoir levels.20 Strengthening agricultural sector activity is expected to boost rural consumption. On the other hand, sustained buoyancy in services activity should continue to support urban consumption. The healthy balance sheets of banks and corporates; the government’s continued thrust on capex; high capacity utilisation; and business optimism augur well for investment activity. External demand should get a fillip from improving prospects of global trade,” RBI Governor Shaktikanta Das said in the Monetary Policy statement.
He said global growth is sustaining its momentum in 2024 and is likely to remain resilient, supported by rebound in global trade.
The triggers
The provisional estimates released by the National Statistical Office (NSO) placed India’s real gross domestic product (GDP) growth at 8.2 per cent in 2023-24.During 2024-25 so far, domestic economic activity has maintained resilience. Manufacturing activity continues to gain ground on the back of strengthening domestic demand. The eight core industries posted healthy growth in April 2024. Purchasing managers’ index (PMI) in manufacturing continued to exhibit strength in May 2024 and is the highest globally.
Services sector maintained buoyancy as evident from available high frequency indicators.12 PMI services stood strong at 60.2 in May 2024 indicating continued and robust expansion in activity.
Private consumption, the mainstay of aggregate demand, is recovering, with steady discretionary spending in urban areas. Revival in rural demand is getting a fillip from improving farm sector activity.14 Investment activity continues to gain traction, on the back of ongoing expansion in non-food bank credit.
Merchandise exports expanded in April with improving global demand. Non-oil non-gold imports entered positive territory.17 Services exports and imports rebounded and posted a strong growth in April 2024.
