The RBI MPC projects India’s Q1 GDP growth at 8 per cent
India’s Q1 GDP growth, the official data for which will be released later in the day on Thursday, is expected to be above 8 per cent year-on-year, higher than the 6.1 per cent recorded in the previous quarter ended March. The RBI MPC has projected India’s Q1 GDP growth at 8 per cent.
State Bank of India (SBI) expects India’s economy to grow 8.3 per cent in April-June 2023, Barclays see the country’s economic growth at 7.8 per cent, and the RBI pegs it at 8 per cent. Rating agency Crisil expects the economy to grow 8.2 per cent, Icra sees it at 8.5 per cent. According to a Reuters poll among economists, India’s Q1 GDP growth is expected in the range of 5.6 per cent and 9.1 per cent.
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In the previous quarter ended March 2023, India’s gross domestic product grew by 6.1 per cent.
SBI and Icra credited capital expenditure by the Centre and states for their expectations of faster economic growth. Icra also said that the lower base — the GDP had contracted by nearly a fourth in the first quarter of FY21 — as a helping factor.
Earlier this month, the RBI kept its FY24 real GDP projection unchanged at 6.5 per cent. RBI Governor Shaktikanta Das said, “Real GDP growth for 2023-24 is projected at 6.5 per cent with Q1 at 8.0 per cent; Q2 at 6.5 per cent; Q3 at 6.0 per cent; and Q4 at 5.7 per cent. Real GDP growth for Q1:2024-25 is projected at 6.6 per cent.”
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The RBI governor said the momentum of overall economic activity in India continues to be positive. On the supply side, crop sowing has picked up with steady progress in the south-west monsoon. The temporal and spatial distribution of monsoon has, however, been uneven.
Inflation
Retail inflation jumped to a 15-month high of 7.44 per cent in July as prices of vegetables and other food items spiked. The Consumer Price Index (CPI) based inflation was at 4.87 in June and 6.71 per cent in July 2022.
Previously, high inflation was recorded at 7.79 per cent in April 2022.
Earlier this month, the RBI revised upwards inflation projection from 5.1 per cent to 5.4 per cent for the current financial year 2023-24.
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“Given the continuing uncertainties, our latest CPI inflation projections for 2023-24, assuming a normal monsoon, is revised to 5.4 per cent, with Q2 at 6.2 per cent, Q3 at 5.7 per cent and Q4 at 5.2 per cent. CPI inflation for Q1:2024-25 is projected at 5.2 per cent,” the RBI governor said.
He said uncertainties, however, remain on domestic food price outlook due to sudden weather events and possible El Niño conditions in August and beyond. “Inflation is expected to surge in July and August due to vegetable prices, MPC remains resolute in aligning inflation to its 4 per cent target.”
