NEW DELHI: Keeping the key interest rate unchanged at 6.5%, Reserve Bank of India (RBI) on Friday said the real GDP growth forecast for FY 24 remains at 6.5%.
Governor Shaktikanta Das stated that the GDP growth projections for different quarters of FY 24 will be 6.5% for July-September 2023, 6.0% for October-December 2023, and 5.7% for January-March.
In addition, GDP growth for the first quarter of FY25 will be at 6.6%.
According to Das, on the demand front, steady expansion is seen in urban consumption while rural demand is showing signs of revival. Looking ahead, domestic demand conditions are likely to benefit from sustained buoyancy in services, consumer and business optimism, the government’s continued thrust on capex, healthy balance sheets of banks and corporates, and supply chain normalisation.
"Headwinds from geopolitical tensions and geoeconomic fragmentation, volatility in global financial markets, global economic slowdown, and uneven monsoon, however, pose risks to the outlook," he added.
"Risks are evenly balanced...economic activity continues to be resilient and the data points justify that .. current year GDP growth will be at 6.5%," Das said.
Das projected CPI inflation at 5.4% for fy24 with q2 at 6.4%, q3 at 5.6% and q4 at 5.2%. The risks are evenly balanced, he said while further adding that CPI in the first quarter of FY 25 at 5.2%.
The heightened inflation level in July and August at 7.4% and 6.8% respectively was largely driven by food price pressures. Vegetables contributed to one-third of CPI headline inflation in July and one-fourth in August, said Das.
"Sustained inflationary pressures in cereals, pulses, and spices added to the overall food inflation. On the positive side, core inflation softened to 4.9% in July and August. It has eased by 140 basis points from its peak in January," stated Das. The near term is likely to soften because of the reduction in tomato and LPG prices.
For Kharif crops, the area sown under pulses is below the level a year ago. Kharif Onion production needs to be watched closely. Demand-supply mismatch in spices is likely to keep prices elevated. The inflation trajectory will also be affected by El Niño conditions and global food and energy prices, as per Das.