The gross domestic product (GDP) growth during FY25 may turn out to be higher than 7 per cent and even closer to 7.5 per cent, with high-frequency indicators showing resilience and growth dynamism of the Indian economy, the Monthly Economic Review released by the National Council of Applied Economic Research (NCAER) on Wednesday said.
“This outlook is underpinned by the buoyancy in economic activity witnessed in the first quarter; a keen policy focus on investment, growth, and macroeconomic stability; and the expectations of normal monsoon,” said NCAER Director General Poonam Gupta.
The Reserve Bank of India (RBI) raised its projections for India’s real GDP growth for FY25 to 7.2 per cent from 7 per cent. Growth projections have been upgraded by various other agencies as well, with the median projection at 6.9 per cent.
Global growth projections for 2024 have been revised upward by the International Monetary Fund (IMF), the World Bank as well as by other rating agencies. The growth rate is projected to be between 3.2 and 2.6 per cent in 2024.
On the Indian economy, Gupta said that with inflation seemingly having peaked, monetary policy is unlikely to be tightened any further. If anything, she said, it may be eased during the year.
“The global environment seems benign as well in the absence of any known global risks so far,” Gupta added.
While retail inflation eased to a 12-month low of 4.7 per cent in May, taming food inflation continues to remain a challenge, Gupta said.
She said that a broader policy framework may be needed to address this issue, including building climate-resilient food supply along with a gentle shift towards packaged and preserved food supply to bridge the periodical supply and demand gap that has become routine.
Among high-frequency indicators, growth in the Index of Industrial Production (IIP) for core industries accelerated in April 2024, bank credit growth remained above 20 per cent despite some deceleration in personal credit growth, and expectations of an ‘above normal’ monsoon despite deficient rainfall in June held out strongly for the farm sector.
The Purchasing Managers’ Index (PMI) for both manufacturing and services kept the expansionary momentum despite slowing down a bit in May, the NCAER report noted.
First Published: Jun 26 2024 | 5:10 PM IST
