Tag Archives: india gdp

India to Remain World’s Fastest-Growing Economy in 2025-26: RBI Bulletin

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India’s economic momentum is expected to strengthen in the second half of 2024-25 and continue into 2025-26, according to the latest RBI monthly bulletin. The country remains poised to maintain its status as the fastest-growing major economy, with GDP growth projections of 6.5% (IMF) and 6.7% (World Bank) for 2025-26.

The Union Budget 2025-26 is seen as a balanced approach toward fiscal consolidation and growth, emphasizing capital expenditure and measures to boost household incomes and consumption. The effective capital expenditure-to-GDP ratio is expected to rise to 4.3% in 2025-26 from 4.1% in 2024-25.

Retail inflation eased to a five-month low of 4.3% in January, largely due to declining vegetable prices. Key economic indicators signal a recovery, with improvements in industrial activity, rising tractor sales, increased fuel consumption, and sustained growth in air passenger traffic.

Rural demand remains strong, driven by higher farm incomes, as FMCG sales in rural areas surged 9.9% in Q3 2024-25, compared to 5.7% in Q2. Urban demand also showed improvement, with Q3 growth nearly doubling to 5% from 2.6% in the previous quarter.

Private sector investment intentions remained stable, with project costs sanctioned by banks/financial institutions nearing ₹1 lakh crore in Q3. External commercial borrowings and IPOs for capital expenditure purposes also saw an uptick.

Global uncertainties, including geopolitical tensions and restrictive trade policies, have influenced domestic equity markets, leading to selling pressure from foreign portfolio investors. The Indian rupee, like other emerging market currencies, has depreciated against a strengthening US dollar. However, India’s strong macroeconomic fundamentals and external sector stability have helped it navigate global economic headwinds, the bulletin noted.

After World Bank, IMF Too Downgrades India Growth Story Post-Demonetization

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after the traumatic brakes on India growth story due to demonetisation, India will see a GDP loss of 1% in the current fiscal year and 0.4% next year, said IMF within days after the World Bank downgraded India growth estimate.

The International Monetary Fund (IMF) estimates India’s growth rate for the current fiscal year to 6.6% from its previous estimate of 7.6% due to what it termed a “temporary negative consumption shock” from demonetization.

“In India, the growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative,” the IMF said in its latest World Economic Outlook (WEO).

But China with 6.7% will be the fastest growing economy surpassing India now with 0.1 percentage point more. The revised estimate for China to 6.5%, 0.3 percentage point above the October forecast was attributed to continued policy support.

In 2018, China’s growth rate is projected to be 6% against India’s 7.7%. The global growth for 2016 is now estimated at 3.1% as per the October 2016 forecast.

Economic activity in both advanced economies and emerging market and developing economies (EMDEs) will accelerate in 2017-18, with global growth projected to be 3.4% and 3.6%, respectively, said IMF keeping its October forecast in tact.

Earlier, even the World Bank decelerated India’s GDP growth for 2016-17 fiscal to 7% from its previous estimate of 7.6% citing the impact of demonetization. But it said India would regain momentum in the following years with a growth of 7.6% and 7.8% due to a reform initiatives.

Maurice Obstfeld, Economic Counsellor and IMF Research Department Director, at a news conference was upbeat on China growth story.

“Our China growth upgrade for 2017 is a key factor underpinning the coming year’s expected faster global recovery. This change reflects an expectation of continuing policy support; but a sharp or disruptive slowdown in the future remains a risk given continuing rapid credit expansion, impaired corporate debts, and persistent government support for inefficient state-owned firms,” he said.

In light of the US economy’s expected momentum coming from new President-elect Donald Trump’s policies may likely shift the next two-year projections for US growth, IMF said.