Economic growth to sustain till FY25, says RBI survey

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Forward-looking surveys by the Reserve Bank of India indicate sustainable economic growth through to FY25, with real gross fixed capital formation (GFCF) expected to rise to 7.4 per cent in FY25 from 6.8 per cent in FY24, according to forecasts by 39 experts. economically.

Consumer confidence in the domestic economy has been improving since the pandemic even as household inflation expectations normalize over the course of the current fiscal year.

However, merchandise exports are expected to decline by 2.9 percent and imports by 4.0 percent, in US dollars, during FY24.

In contrast, exports are likely to grow by 8.3 percent and imports by 7.8 percent in FY25, according to the results of the 82nd survey of professional forecasters on macroeconomic indicators.

Accordingly, experts project the current account deficit (CAD) at 1.5 percent of GDP in FY24, and 1.6 percent in FY25.

The forecast for real GDP (gross domestic product) growth for FY24 was unchanged at 6.0 percent, and it is expected to grow by 6.4 percent in FY25. The forecast for GDP growth for FY24 was in the range of 5.3-6.8 in cent and fiscal year 25 between 6.0 and 7.6 percent.

The Reserve Bank of India pegged FY24 GDP growth at 6.5 percent, with first quarter growth at 8.0 percent, second quarter at 6.5 percent, third quarter at 6.0 percent and fourth quarter at 5.7 percent.

Morale improvement

The Consumer Confidence Survey showed that both the Future Expectations Index (FEI) and the Present Situation Index (CSI) improved from the previous round on the back of improved ratings for all survey criteria, except for core spending.

“With a significant improvement in May 2023, household sentiment on current income approached neutral territory and remains somewhat optimistic about future business conditions and earnings over the next year,” it said.

Consumer price index inflation

Headline inflation based on the Consumer Price Index (CPI) is forecast at 5.0 percent for FY24, seen at 4.7 percent in Q1 FY24, and expected to remain in the range of 4.9-5.3 percent for the three quarters following after that. . For fiscal year ’25, CPI inflation is expected to be 4.9 percent.

“CPI inflation, excluding food and beverages, tobacco and liquor, and fuel and light, is expected to be 5.3 percent in both Q1 and Q2 of FY24, and to decline thereafter to 5.2 percent and 5.1 percent. consecutively in the following two quarters, the survey said.

The RBI has projected CPI inflation at 5.1 percent for FY24, with inflation seen at 4.6 percent in the first quarter and then in the range of 5.2-5.4 percent for the next three quarters. The survey of household inflation expectations showed that the average inflation perception eased by 10 basis points to 8.8 per cent in the latest round.