The Reserve Bank of India (RBI) said in its latest bulletin on Tuesday that the country’s economy is recovering from the recession seen in the second quarter. It said the Indian economy is recovering from the slowdown seen in the September quarter, driven by strong festive activity and continued growth in rural demand. An article on the state of the economy in the December bulletin said the global economy continues to display resilience with steady growth and moderate inflation, PTI reported.
ready to rise in the second half
According to the news, High Frequency Indicators (HFIs) for the third quarter of 2024-25 indicate that the Indian economy is recovering from the slowdown seen in the second quarter, driven by strong festive activity and sustained growth in rural demand. The article further said that the growth trajectory is set to pick up in the second half of 2024-25, driven mainly by resilient domestic private consumption demand. The authors said that rural demand, in particular, is accelerating due to record levels of production of food grains.
Investment expected to get further boost
Continued government spending on infrastructure is expected to further boost economic activity and investment. Global headwinds, however, pose risks to the emerging outlook for growth and inflation, the article, written by a team led by RBI Deputy Governor Michael Debabrata Patra, said. India’s GDP growth rate fell to a seven-quarter low of 5.4 per cent during the July-September period of the current financial year.
This estimate is for the third and fourth quarter
The authors further said that another emerging headwind is the slow rate of nominal GDP growth, which may hamper fiscal spending, including capital expenditure, to achieve the budgetary deficit and debt targets. The article also mentioned that according to projections based on in-house Dynamic Stochastic General Equilibrium (DSGC), real GDP growth is likely to reach 6.8 per cent and 6.5 per cent in the third and fourth quarters of 2024-25, respectively.
Growth rate forecast for 2025-26
Growth for 2025-26 is estimated at 6.7 per cent, while headline CPI inflation (retail) is estimated to average 3.8 per cent in 2025-26. In its December monetary policy, the RBI had projected GDP growth for 2024-25 at 6.6 per cent, with Q3 at 6.8 per cent and Q4 at 7.2 per cent. The GDP growth rate for the April quarter of 2025-26 was estimated at 6.9 percent and the second quarter at 7.3 percent. The RBI said the views expressed in the bulletin are those of the authors and do not represent the views of the central bank.
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