RBI Financial Coverage: Reserve Financial institution of India (RBI) Governor Shaktikanta Das whereas asserting a establishment on the repo price and coverage stance on Friday, December 6, expects the FY25 GDP Development to be at 6.6%
The RBI Governor after the Financial Coverage Committee (MPC) assembly, whereas pegged GDP progress price to be at 6.6% for FY25, it expects ongoing quarter i.e Q3FY25 (October- December 2024) GDP progress to be at 6.8%
For the Q4FY25 (January- March 2025 quarter) RBI expects the GDP Development to catch tempo to 7.2%, which will probably be greater than RBI expectations for GDP progress in Q3 FY25.
As we transfer into the brand new monetary yr, for the primary quarter of FY26 (Q1FY26 April -June quarter) RBI MPC expects GDP progress to come back 6.9%.
The RBI MPC additionally expects GDP progress in Q2FY26 (July-Setember’2025 quarter) catching additional tempo because it pegs GDP progress through the quarter at 7.3% significantly better and an enchancment over 6.9% in Q1FY26
The MPC proections for GDP progress ought to present some respite, after a shocker was offered by the Q2FY25 GDP progress numbers
GDP had expanded by 5.4% from the earlier yr within the September quarter of 2024, slowing from the 6.7% growth within the earlier interval. Notably iy was additionally effectively beneath market expectations of a 6.5% improve to file the weakest tempo of progress for the reason that December quarter of 2022.
The RBI launch mentioned that “actual gross home product (GDP) registered a decrease than anticipated progress of 5.4 per cent in Q2:2024-25 as non-public consumption and funding decelerated even whereas authorities spending recovered from a contraction within the earlier quarter”. Funding exercise is predicted to select up as per the RBI launch. Additionally Resilient world commerce prospects ought to present help to exterior demand and exports
Nevertheless RBI MPC too into issues has taken into consideratio, the headwinds from geo-political uncertainties, volatility in worldwide commodity costs, and geo-economic fragmentation proceed to pose dangers to the outlook.
However with the weak spot in progress noticed within the second quarter of FY25, the FY25 GDP progress forecast has been lowered from 7.2% pegged earlier.
Professional Views
Sujan Hajra, Chief Economist & Govt Director, Anand Rathi Shares and Inventory Brokers mentioned that “The minimize in GDP forecasts for FY25 by 60 bps was complicated given the expectations of fabric enchancment in financial exercise within the second half. We proceed to carry our full-year projections for FY25 at 7%”.
If we go by RBI’s forecasts for enchancment in financial momentum with greater CPI forecast for the total yr together with a CRR minimize meant to ease liquidity and thus decrease the cash market charges, the necessity for a Feb’25 minimize is decrease and count on RBI to enter the easing cycle from April’25, mentioned Hajra
Disclaimer: The views and proposals above are these of particular person analysts, consultants and broking corporations, not of Mint. We advise traders to test with licensed consultants earlier than making any funding determination.
