The Reserve Bank of India raised its GDP growth projection for the current fiscal year to 7.2% from 7%, citing increased private consumption and a resurgence of demand in rural areas.
During the unveiling of the bi-monthly monetary policy, RBI Governor Shaktikanta Das highlighted the National Statistical Office's estimates, which placed India's real GDP growth at 8.2% in 2023-24.
"Domestic economic activity has shown resilience thus far in 2024-25," Das said, noting a strengthening manufacturing sector and buoyancy in the services sector, as indicated by high-frequency indicators.
Das pointed out that urban areas are witnessing steady discretionary spending, contributing to the recovery of private consumption. Meanwhile, rural demand is on the rise due to improvements in the farm sector.
The projection for above-normal southwest monsoon by the India Meteorological Department is expected to further boost agricultural production, Das added.
"With these factors in mind, real GDP growth for 2024-25 is projected at 7.2%," Das said, detailing quarterly projections.
Das also underscored the healthy balance sheets of banks and corporates, alongside the government's focus on capital expenditure, as positive indicators for investment activity. He noted the potential boost in external demand from improving global trade prospects.
On the global economic front, Das mentioned sustained momentum and resilience in growth, supported by a rebound in global trade, while acknowledging easing global inflation.
In addressing market expectations regarding monetary policy, Das clarified that while the RBI monitors global economic conditions, its actions are primarily guided by domestic growth-inflation dynamics.
"We play the game according to the local weather and pitch conditions," Das emphasized, asserting the central bank's autonomy in decision-making.
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