RBI Monetary Policy: Central Bank Retains GDP Growth Forecast At 6.5 Per Cent For FY24

Shaktikanta Das, while announcing the second bi-monthly policy for 2023-24, said the domestic demand condition remains supportive of growth and also the demand in rural areas is on the revival path

According to NSO data, GDP expanded by 6.1 per cent in Q4 of fiscal year 2022-23. For the entire FY23, the growth rate came in at 7.2 per cent.

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The Reserve Bank of India (RBI) on Thursday retained the GDP growth projection for current fiscal year at 6.5 per cent on the back of supportive domestic demand conditions. The central bank in April had marginally revised upwards the 2023-24 GDP growth projection to 6.5 per cent, from its earlier forecast of 6.4 per cent. RBI Governor Shaktikanta Das, while announcing the second bi-monthly policy for 2023-24, said that the domestic demand condition remains supportive of growth and also the demand in rural areas is on the revival path.

In his address, he said India's economy grew 6.1 per cent in the fourth quarter of 2022-23, pushing up the annual growth rate to 7.2 per cent, as against 7 per cent anticipated earlier.

The governor mentioned the higher rabi crop production in 2022-23, the expected normal monsoon, and the sustained buoyancy in services should support private consumption and the overall economic activity in the current year.

Last week, the NSO released India's GDP data. According to official data, GDP expanded by 6.1 per cent in the fourth quarter (Q4) of fiscal year 2022-23. For the entire FY23, the growth rate came in at 7.2 per cent. In Q4FY22, gross domestic product (GDP) growth was 4 per cent.

The growth in real GDP during 2022-23 is estimated at 7.2 per cent as compared to 9.1 per cent in 2021-22, while nominal GDP or GDP at Current Prices in the year 2022-23 is estimated to attain a level of Rs 272.41 lakh crore, as against Rs 234.71 lakh crore in 2021-22, showing a growth rate of 16.1 per cent, according to the release.

The government’s thrust on capital expenditure, moderation in commodity prices and robust credit growth are expected to nurture investment activity, said the Monetary Policy Statement, 2023-24.

Weak external demand, geo-economic fragmentation, and protracted geopolitical tensions, however, pose risks to the outlook, it added. "Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.5 per cent with Q1 at 8 per cent, Q2 at 6.5 per cent, Q3 at 6 per cent, and Q4 at 5.7 per cent, with risks evenly balanced," the governor said, while adding that in the second quarter of 2023, the global economy is sustaining the momentum gained in the preceding quarter in spite of still elevated though moderating inflation, tighter financial conditions, banking sector stress, and lingering geopolitical conflicts.