Indian economy growth forecast 7% RBI

RBI keeps interest rate at 6.5% as India's economy shows strong growth, aiming for 7% GDP growth in 2024-25.

The Reserve Bank of India has decided to maintain the key interest rate at 6.5%, a move that aligns with expectations from experts. Governor Shaktikanta Das stated that the decision was made due to the stable and robust economic growth the country is experiencing, along with persistent inflation.

This decision marks the seventh consecutive session where the repo rate remains unchanged. The RBI also projected a GDP growth of 7% for the 2024-25 financial year, starting on April 1, with retail inflation expected to be around 4.5%.

Governor Das highlighted the progress made in reducing inflation, noting that two years ago, inflation was a significant concern but has now eased. The central bank remains focused on gradually reducing inflation to reach the medium-term target of 4%.

India's GDP growth for the third quarter of the 2023-24 financial year was recorded at 8.4%, up from 7.6% in the previous quarter. Prime Minister Narendra Modi expressed optimism about the country's economic growth and efforts to improve the lives of its citizens. The government has raised its GDP growth outlook for the fiscal year to 7.6%.

The International Monetary Fund (IMF) executive director praised India's economic growth, calling it the fastest-growing economy in the world. The IMF expects India's economy to expand by 6.7% for the 2024 financial year and by 6.5% for the following year.

Former RBI Governor Raghuram Rajan raised concerns about India's economic growth, emphasizing the need to address structural issues such as education and workforce skills. However, his comments were met with criticism from other economists and officials who highlighted India's progress in these areas.

Overall, the decision to maintain the key interest rate reflects the RBI's commitment to supporting the country's economic growth while managing inflation effectively. India's strong economic performance and ongoing efforts to address structural challenges will be crucial in achieving long-term sustainable growth.

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