NEW DELHI: The Reserve Bank of India (RBI) on Thursday said India’s economy is projecting sustained growth supported by robust domestic demand conditions while cautioning about potential headwinds from geopolitical tensions, global economic slowdown, and uneven monsoon.
In its monthly bulletin, the central expects real GDP growth for 2023-24 to reach 6.5%, with the second quarter growth at 6.5%, the third quarter at 6.0%, and the fourth quarter at 5.7%.
The risks to the outlook are deemed to be evenly balanced. Furthermore, real GDP growth for the first quarter of 2024-25 is projected at 6.6%.
“Headwinds from the geopolitical tensions and geoeconomic fragmentation, volatility in the global financial markets, global economic slowdown, and uneven monsoon, however, pose risks to the outlook,” said RBI.
Though near-term inflation may soften due to corrections in vegetable prices such as tomatoes, and the reduction in LPG prices, the trajectory, going forward, will depend on various factors.
As per the report, the area sown under pulses for kharif crops is below last year’s level, and the output of kharif onions needs close monitoring.
Additionally, demand-supply imbalances in spices could keep prices elevated. The inflation outlook will be influenced by El Niño conditions and global food and energy prices.
The apex bank said the risks to inflation are considered to be balanced, with consumer price (CPI) inflation projected at 5.4% for 2023-24, the second quarter at 6.4%, the third quarter at 5.6%, and the fourth quarter at 5.2%.
CPI for the first quarter of 2024-25 is projected at 5.2%.
The RBI highlighted the need for careful monitoring of incoming data and the outlook to differentiate between durable and transitory elements of price shocks.
It stressed upon the importance of timely action to prevent spillovers from food and fuel price shocks to underlying inflation trends and inflation expectations.