“Growth will strengthen in H2 FY25 due to…”: RBI says in its December bulletin

The Reserve Bank of India expects India’s growth trajectory to rebound in the second half of fiscal year 2025, driven by strong demand in rural areas, a historic rise in food grain production, and various other factors. According to the Central Bank’s monthly bulletin, continued government investments in infrastructure are expected to boost economic activity and encourage investments. However, potential global challenges could pose risks to growth and inflation prospects.

“India’s growth trajectory is expected to pick up in the second half of 2024-25, driven mainly by resilient domestic private consumption demand. Supported by record-high foodgrain production, rural demand, in particular, is gaining momentum,” the RBI said.

The December bulletin included an article discussing the current state of the global economy, highlighting its resilience to sustained growth and controlled inflation. As per the High Frequency Indices (HFIs) for Q3 2024-25, the Indian economy is showing signs of recovery after momentum slowed during the second quarter. This recovery is attributed to strong festival activity and continued increase in demand in rural areas.

India’s economic growth rate has slowed significantly, reaching its lowest level in nearly two years, which has had a negative impact on the overall outlook for this year. The country’s GDP grew by 5.4% in the third quarter of the current fiscal year compared to the same period last year.

The RBI noted that India’s continued growth prospects are on a more sustainable footing, fueled by positive climate initiatives such as the promotion of renewable energy, electric vehicles, green hydrogen, and efforts to create a carbon market.