The Reserve Bank of India on Friday lowered India’s gross domestic product estimates for the financial year 2024-’25 from 7.2% to 6.6%.
This came after the real gross domestic product growth rate slumped to an 18-month low of 5.4% for the July-September quarter.
The central bank also revised the inflation outlook for the financial year to 4.8%, up from 4.5% that it had projected in October.
This follows retail inflation jumping to a 14-month high of 6.21% in October, which is above the bank’s target of 4% to 6%. This surge was driven by high food prices, with the Consumer Food Price Index shooting up to a 15-month high of 10.87%.
“Both inflation and growth have turned adverse since the last policy,” Reserve Bank Governor Shaktikanta Das told reporters. “Although we expect further alignment of inflation with our medium-term targets, the persistence of inflation impacts purchasing power and consumption.”
Das added that the slowdown in the growth of India’s gross domestic product was confined to certain sectors. “I can say with confidence that the health of financial sectors is at one of its best in a long time,” he said.
After the announcement, financial services company Nomura cut India’s 2025 growth forecast to 6% from 6.7%. Financial firms Goldman Sachs and Emkay had earlier revised their estimates down to 6% from 6.4% and 6.5%, respectively, CNBC TV18 reported.
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