RBI Annual Report projects India's Real GDP growth to stand at 7% for the fiscal year 2025

The Indian Reserve Bank forecasts a 7% GDP growth for India in fiscal 2025, with risks evenly distributed. This would mark the fourth straight year of expansion with a growth rate of 7% or above.

According to the central bank's annual report, the Indian economy showed strong growth in fiscal 2024, with real GDP increasing from 7% to 7.6% compared to the previous year. The Indian economy continues to show promise due to its solid macroeconomic fundamentals, strong financial and corporate sectors, and a resilient external sector.

It was also stated that labour market indicators in India have gotten better due to strong growth and increased participation in the workforce. India's government is dedicated to slowly lowering the fiscal deficit and also aims to boost capital investment.

The worldwide economic prospects are confronted with various obstacles: ongoing inflation, sizeable public debt, financial stability threats due to prolonged high interest rates, political tensions, economic fragmentation, and climate-related disruptions. The world economy is forecasted to expand by 3.2% in 2024 and 2025, with developed economies increasing by 1.7% and emerging markets and developing economies by 4.2%.

The construction industry is expected to continue moving forward, driven by the demand for both residential and non-residential properties. Newly emerging industries such as renewable energy and semiconductors are predicted to experience fast growth, thanks to recent government efforts. These factors are expected to generate job prospects, boost wages, and enhance local buying power. The forecasted Real GDP growth for FY2025 stands at 7.0%, with equal levels of risk on both sides.

It is estimated that the inflation rate for the fiscal year 2025 will be 4.5% based on the consumer price index, with risks being equally distributed.

The central bank stated it will stay agile and adaptable in its liquidity management using main and fine-tuning operations like repo and reverse repo. An appropriate combination of methods will be used to adjust both temporary and long-term liquidity to maintain orderly changes in money market interest rates and safeguard financial stability.