Mumbai, August 10: The Reserve Bank of India (RBI) announced on Thursday that it has maintained its GDP growth projection for the current fiscal year at 6.5 percent, while slightly increasing the inflation projection to 5.4 percent due to a surge in vegetable prices, notably tomatoes.
In the unveiling of the bi-monthly monetary policy, Governor Shaktikanta Das highlighted the continued resilience of domestic economic activity. He noted the positive factors such as the recovery in kharif sowing (summer crop cultivation) and rural incomes, along with strong performance in services and growing consumer optimism, all of which should bolster household consumption.
However, Governor Das also acknowledged risks stemming from factors like weak global demand, volatility in global financial markets, geopolitical tensions, and geoeconomic fragmentation, which could impact the economic outlook.
Considering these dynamics, the real GDP growth for the fiscal year 2023-24 is forecasted to be 6.5 percent, with quarterly growth rates projected as follows: Q1 at 8 percent, Q2 at 6.5 percent, Q3 at 6.0 percent, and Q4 at 5.7 percent. The real GDP growth for Q1 of 2024-25 is estimated to be 6.6 percent.
Regarding inflation, Governor Das mentioned the temporary pressure from rising vegetable prices, particularly tomatoes, which could exert notable upward pressures on near-term headline inflation. However, he anticipated this surge to rectify itself with the arrival of fresh produce in the market. He also noted the substantial improvement in monsoon progress and kharif sowing during July. Nonetheless, he emphasized the need for cautious monitoring of uneven rainfall distribution’s impact.
The projected Consumer Price Index (CPI) based retail inflation for 2023-24 is 5.4 percent. Breakdown for subsequent quarters: 6.2 percent for Q2, 5.7 percent for Q3, and 5.2 percent for Q4, with balanced risks. For the first quarter of 2024-25, retail inflation is predicted at 5.2 percent.
The CPI inflation rate had risen from 4.3 percent in May to 4.8 percent in June, primarily due to food group dynamics, driven by increased prices of vegetables, eggs, meat, fish, cereals, pulses, and spices.
