RBI MPC announcements: GDP for 2023-24 projected at 7%, says Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das in the Monetary Policy Committee meeting announcements on Friday announced that the GDP growth for 2023-24 is projected at 7 per cent, an increase from the previous projection of 6.5 per cent. He added that GDP in Q3 is expected to grow at 6.5 per cent and Q4 at 6 per cent. Real GDP growth for 2024-25 Q1 is projected at 6.7 per cent, Q2 at 6.5 per cent, and Q3 6.4 per cent. “The risks are evenly balanced,”  said Das in the announcements. 

Governor Das said that private consumption should gain support from gradual improvement in rural demand, strengthening of manufacturing activity and continued buoyancy in services. “The healthy twin balance sheets of banks and corporates, high capacity utilisation, continuing business optimism and government’s thrust on infrastructure spending should propel private sector capex. The drag from external demand is also expected to moderate with a turnaround in merchandise and services exports. The protracted geopolitical turmoil, volatility in global financial markets and growing geo-economic fragmentations, however, pose risks to the outlook,” he said in the announcements.

In the previous October MPC announcements, Das had projected GDP growth at 6.5 per cent, with Q2 at 6.5 per cent, Q3 at 6 per cent and Q4 at 5.7 per cent. Real GDP growth for Q1 2024-25 was projected at 6.6 per cent.

However, official data released by the Ministry of Statistics and Programme Implementation announced a higher-than-expected GDP growth of 7.6 per cent in the second quarter of the fiscal, as against RBI’s prediction of 6.5 per cent, which was 110 basis points lower.

“The global economy continues to remain fragile. World trade is decelerating amid a global tide of protectionism. Despite significant restoration of the global supply chain, factors like elevated debt levels, lingering geopolitical hostilities and extreme weather conditions aggravate the risks to global growth and inflation outlook,” said Das, giving a view of the global economy.

However, economic activity in India displayed buoyancy in the second quarter aided by strong domestic demand. GDP growth in the second quarter was driven largely by investment and government consumption, said Das.

Household consumption is supported by durable urban demand, said Das, adding that festival related demand is also spurring households’ discretionary consumption in Q3. “Investment activity continues to be aided by buoyancy in public sector capex. This is also reflected in the strong growth in steel consumption, cement production and imports of capital goods,” said Governor Das.

Also read: RBI MPC 2023 LIVE Updates: Governor Shaktikanta Das to announce monetary policy outcome today; status quo on repo rate likely