RBI Upgrades GDP Growth Rate For FY24 To 7%, Backed By Robust Domestic Demand

At the same time, Das raised concerns regarding geopolitical fluctuations and global economic fragmentation and cited these as potential risk factors to the growth outlook. 

The Reserve Bank of India upgraded its GDP growth rate projection for the current financial year to 7 per cent on Friday. Announcing the decisions taken in the Monetary Policy Committee’s (MPC) bi-monthly review meeting, Governor Shaktikanta Das gave a revised GDP growth estimate for FY24, up from the earlier projection of 6.5 per cent.

The revision was attributed to the robust domestic demand and improved capacity utilisation in the manufacturing sector, reported PTI. At the same time, Das raised concerns regarding geopolitical fluctuations and global economic fragmentation and cited these as potential risk factors to the growth outlook. 

The committee opted to keep the policy rates unchanged at 6.5 per cent and along with the growth projection for FY24, gave an outlook for December and March quarter growth at 6.5 per cent and 6 per cent, respectively. Additionally, the growth outlook for the first three quarters of the upcoming fiscal year stands at 6.7 per cent, 6.5 per cent, and 6.4 per cent respectively. 

Notably, the Indian economy grew by 7.2 per cent in 2022-23 fiscal year. In the current financial year, the economy saw the real GDP grow by 7.8 per cent in the first quarter ended June 2023, and 7.6 per cent in the second quarter ended September 2023, while the last quarter ended March in FY23 recorded a growth of 6.1 per cent. 

The projection from the regulator remained majorly higher than the predictions of global agencies. The IMF, World Bank, ADB, and Fitch provided their projections regarding India’s GDP growth at 6.3 per cent in FY24, while S&P gave a growth outlook of 6.4 per cent for the current fiscal. 

The regulator informed that the total flow of resources to the commercial sector stood at Rs 17.6 lakh crore during the 2023-24 (FY24) fiscal, against Rs 14.5 lakh crore logged in the corresponding period a year earlier. Das noted that despite a muted external demand, exports remained on the positive end in October, and private consumption should be helped by rural demand, manufacturing, and buoyancy in services.