RBI pushes up GDP growth projection to 7 pc for FY24

The RBI on Friday hiked the GDP growth projection for the current fiscal from 6.5 to 7 per cent on buoyant domestic demand and higher capacity utilisation in the manufacturing sector.

Announcing the bi-monthly monetary policy, Reserve Bank of India (RBI) Governor Shaktikanta Das, however, warned that protracted geopolitical turmoil and global economic fragmentation could post risks to the growth outlook.

The central bank kept interest rates unchanged at 6.5 per cent.

The RBI projected real GDP growth for the 2023-24 fiscal at 7 per cent, with the December and March quarter growth estimated at 6.5 per cent and 6 per cent respectively.

The growth in the first, second and third quarters of the next fiscal is estimated at 6.7 per cent, 6.5 per cent and 6.4 per cent respectively.

The Indian economy rose by 7.2 per cent in the 2022-23 fiscal ended in March 2023.

The country's real GDP grew 7.8 per cent and 7.6 per cent year-on-year in the June and September quarters, up from 6.1 per cent in the March quarter.

Other projections

The central bank's projection is significantly higher than forecasts by international agencies.

The IMF, World Bank, ADB and Fitch expect India's GDP to expand 6.3 per cent in the current fiscal while S&P expects growth to be 6.4 per cent in the current fiscal.

The RBI said the buoyancy in public sector capex, above-average capacity utilisation in manufacturing and domestic demand will help boost growth.

The total flow of resources to the commercial sector stood at Rs 17.6 lakh crore during the current fiscal, significantly higher than Rs 14.5 lakh crore last year.

Despite weakness in external demand, exports were positive in October. Private consumption should gain from rural demand, manufacturing and buoyancy in services.

The healthy balance sheet of corporate, business optimism and government infrastructure spending will boost public sector capex, Das said.

(With agency inputs)