India’s Economic Growth Set to Rebound Amid Rising Domestic Demand: RBI

GG News Bureau
Mumbai, 17th Jan. The Reserve Bank of India (RBI), in its latest bulletin, has projected a rebound in India’s economic growth, driven by strengthening domestic demand. However, persistent food inflation warrants close monitoring, according to an article on the ‘State of the Economy’ published in the bulletin on Friday.

The bulletin highlights a divergent global economic outlook for 2025, with the United States losing momentum, weak-to-modest recoveries in Europe and Japan, and moderate growth patterns in emerging economies. Inflation in these regions is expected to decline gradually compared to advanced economies.

“In India, there is a conducive quickening of high-frequency indicators of economic activity in the second half of 2024-25, aligning with the implicit pick-up in real GDP growth reflected in the NSO’s first advance estimates,” the article notes.

While headline inflation eased for the second consecutive month in December 2024, the article emphasizes the need for vigilance regarding food inflation and its potential second-order effects.

Authored by a team led by Michael Patra, who recently concluded his tenure as RBI Deputy Governor, the article underscores the resilience of rural demand, which continues to gain momentum, supported by robust agricultural prospects and consumption growth.

The bulletin also points to a revival in public capital expenditure on infrastructure as a key stimulant for growth in pivotal sectors.

However, the report warns of challenges posed by rising input costs in the manufacturing sector, adverse weather conditions, and global economic headwinds.

The central bank clarified that the views expressed in the bulletin are those of the authors and do not necessarily represent the RBI’s official stance.