Mumbai: The Reserve Bank on Thursday retained the GDP growth projection for the current fiscal year at 6.5 percent, on the back of supportive domestic demand conditions. In April, the central bank had marginally revised upwards the 2023-24 GDP growth projection to 6.5 percent, from its earlier forecast of 6.4 percent.

Domestic demand condition remains supportive of growth

Domestic demand condition remains supportive of growth and also the demand in rural areas is on the revival path, RBI Governor Shaktikanta Das said while announcing the 2nd bi-monthly policy for 2023-24. India's economy grew 6.1 percent in the fourth quarter of 2022-23, pushing up the annual growth rate to 7.2 percent, as against the 7 percent anticipated earlier.

Das said that the higher rabi crop production in 2022-23, the expected normal monsoon, and the sustained buoyancy in services should support private consumption and the overall economic activity in the current year.
The government's thrust on capital expenditure, moderation in commodity prices, and robust credit growth are expected to nurture investment activity, said the Monetary Policy Statement, 2023-24.

Real GDP growth for 2023-24 is projected at 6.5%

Weak external demand, geo-economic fragmentation, and protracted geopolitical tensions, however, pose risks to the outlook, it added. "Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.5 percent with Q1 at 8 percent, Q2 at 6.5 percent, Q3 at 6 percent, and Q4 at 5.7 percent, with risks evenly balanced," the governor said.

Global economy is sustaining momentum gained in preceding quarter

Das said, in the second quarter of 2023, the global economy is sustaining the momentum gained in the preceding quarter in spite of still elevated though moderating inflation, tighter financial conditions, banking sector stress, and lingering geopolitical conflicts.

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