The Reserve Bank of India (RBI) has left the FY25 real GDP and CPI inflation projections unchanged at 7.2 per cent and 4.5 per cent, respectively, even as it slightly revised the Q1FY26 projections for GDP upwards and for CPI inflation downwards.
While keeping the FY25 real GDP projection unchanged, RBI revised quarterly projections: Q2 (July-September) at 7 per cent (from earlier projection of 7.2 per cent); Q3 (October-December) at 7.4 per cent (7.3 per cent); and Q4 (January March) at 7.4 per cent (7.2 per cent).
Real GDP growth for Q1 (April-June) FY26 has been projected at 7.3 per cent (7.2 per cent).
“High frequency indicators available so far suggest that domestic economic activity continues to be steady. The main components from the supply side – agriculture, manufacturing and services – remain resilient. .On the demand side, rural demand is trending upwards while urban demand continues to hold firm. Government consumption is improving. Investment activity remains buoyant, with government capex rebounding from a contraction observed in the first quarter,,” RBI Governor Shaktikanta Das said.
Private investment continues to gain steam on the back of expansion in non-food bank credit, higher capacity utilisation and rising investment intentions, he added. On the external front, services exports is supporting overall growth.
Inflation
While keeping the FY25 CPI inflation projection unchanged, RBI revised quarterly projections: Q2 at 4.1 per cent (4.4 per cent); Q3 at 4.8 per cent (4.7 per cent); and Q4 at 4.2 per cent (4.3 per cent).
CPI inflation for Q1:2025-26 is projected at 4.3 per cent (4.4 per cent).
“The CPI print for the month of September is expected to see a big jump due to unfavourable base effects and pick up in food price momentum, caused by the lingering effects of a shortfall in the production of onion, potato and chana dal (gram) in 2023-24, among other factors.
“The headline inflation trajectory, however, is projected to sequentially moderate in Q4 of this year due to good kharif harvest, ample buffer stocks of cereals and a likely good crop in the ensuing rabi season,” the Governor said.
He cautioned that unexpected weather events and worsening of geopolitical conflicts constitute major upside risks to inflation.