‘Inflation must fall for 7% GDP growth in FY25’

RBI stresses inflation control as key to achieving 7% GDP growth target in FY25
The Reserve Bank of India.
The Reserve Bank of India. (File photo | PTI)

NEW DELHI: The objective of the government should be to sustain the growth momentum by securing real GDP growth of 7% in FY25 in an environment of macroeconomic stability, the Reserve Bank of India (RBI) said in its December State of the Economy Bulletin on Thursday.

The RBI said to maintain the growth momentum, India needs to align inflation with the target by the second quarter of the year, as projected, and get anchored there.

RBI Governor Shaktikanta Das on Wednesday predicted the FY25 inflation at 4.5%. Speaking at a the World Economic Forum event at Davos, he predicted India’s GDP growth will be 7% in FY25. RBI bulletin further says in order to maintain the growth momentum, the ongoing consolidation of fiscal and external balances needs to continue and balance sheets of financial institutions need to be strengthened and asset quality improved even further.

“The gains of the transformative technological change that is underway must be harnessed for inclusive and participative growth in a sound risk-free environment. The virtuous thrust to investment from government capex must be partnered and even led by the corporate sector, supplemented by foreign direct investment,” says the report.

The report says India must take a leap of faith in 2024, recover the losses of years gone by and prevail over the formidable downside risks that are seen over the horizon. “Weak global outlook can be brightened if geopolitical conflicts end and their repercussions through commodity and financial markets, trade and transportation, and supply networks are contained. Inflation must be vanquished, paving way for financial conditions to ease in support of growth,” says the report.

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