The Indian economy rebounded from the severe contraction imposed by the COVID-19 pandemic and averaged a real GDP growth of above 8 per cent during the last three financial years, according to Shaktikanta Das, Governor, Reserve Bank of India. Das noted in a speech that for the current year (2024-25), the Reserve Bank of India has projected real GDP growth of 7.2 per cent, with risks evenly balanced around this forecast. Improving domestic demand, lower input costs and a supportive policy environment, are spurring manufacturing activity.
The services sector has been displaying strong growth. The growth outlook reflects the underlying strength of India's macro-fundamentals, with domestic drivers - private consumption and investment - playing a major role. The government's thrust on capex and healthy balance sheets of banks and corporates are expected to support private investment. Private consumption, the mainstay of aggregate demand, appears to be on track for a strong improvement due to the favourable agricultural outlook and the pickup in rural demand. Sustained buoyancy in services would also support urban demand.
Das opined that resilient growth has given us the space to focus on inflation so as to ensure its durable descent to the 4 per cent target. The headline inflation trajectory is projected to sequentially moderate from the last quarter of this financial year. Unexpected weather events and worsening of geopolitical conflicts constitute major upside risks to the inflation outlook.
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