Mumbai: Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday that the central bank projects Gross Domestic Product (GDP) growth for the fiscal year 2024-25 at 7 percent. He shared the GDP projection during his monetary policy address.

Specific projections for real GDP growth in individual quarters of the fiscal year were discussed, with a slight adjustment for the first quarter of 2024-25. RBI forecasts a growth rate of 7.1 percent for Q1, down from the previous estimate of 7.2 percent. Earlier estimations had pegged the growth rate for the same quarter at 6.7 percent.

According to the World Economic Outlook Update of the IMF, January 2024, world trade volume is projected to grow from 0.4 per cent in 2023 to 3.3 per cent in 2024.

From the supply side, industrial activity led by manufacturing continued its momentum, with indicators such as the purchasing managers' index (PMI) for manufacturing reaching a 16-year high in March. The services sector also exhibited robust growth, with PMI services remaining above 60 during February-March.

With rural demand on the rise and consumption expected to support economic growth in 2024-25. It has picked up since Q2 2023-24.

There is 30.3 per cent growth in two-wheeler sales during January-February), Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) demand declined by 9.8 per cent y-o-y during February-March 2024 and retail tractor sales increased by 16.1 per cent in January-February. Domestic air passenger traffic rose by 5.8 per cent y-o-y in February 2024 and 4.1 per cent y-o-y in March 2024, while retail passenger vehicle sales posted a growth of 12.4 per cent y-o-y during February 2024. Steel consumption rose by 9.7 per cent, while cement production jumped by 7.9 per cent in January-February 2024. Imports of capital goods expanded by 6.9 per cent during January-February 2024, while capital goods production increased by 4.1 per cent in January 2024.

In 2023-24, Gross Fixed Capital Formation (GFCF) saw a notable surge, growing at a rapid double-digit pace of 10.2 percent. This growth was consistent across the quarters, with expansions of 11.6 percent in Q1, 10.6 percent in Q2, and 10.2 percent in Q3. Meanwhile, GDP expanded by 9.7 percent and 7.0 percent in the preceding two fiscal years. GDP growth for the first three quarters of 2023-24 stood at 8.2 percent, 8.1 percent, and 8.4 percent, respectively.

On the supply side, manufacturing and construction sectors remained robust, contributing to a 6.9% growth in Gross Value Added (GVA) for the fiscal year. Core industries experienced a 6.7 percent growth in February. E-way bills and freight traffic both saw double-digit growth of 18.9 percent and 10.1 percent in February 2024, respectively. Toll collections, GST collections, and international air cargo expanded at robust rates of 10.2 percent, 11.5 percent, and 15.2 percent, respectively, in March.

In the trade sector, India's merchandise exports expanded by 11.9 percent to $41.4 billion, and imports increased by 12.2 percent to $60.1 billion in February. The trade deficit widened to $18.7 billion compared to $16.6 billion last year.

Moreover sectors including food processing, beverages and tobacco, textiles, chemicals and chemical products, cement and cement products, iron and steel, electronics, construction, telecommunications, roads and railways are seeing improvement in investment activities.

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