5 April 2024 – The Reserve Bank of India’s Monetary Policy Committee (MPC) has issued a cautious note on the global economic landscape, warning of potential risks stemming from high levels of global debt. While maintaining a stable growth forecast for the Indian economy in the upcoming fiscal year, the RBI Governor emphasized the need for vigilance amidst geopolitical tensions and volatile commodity prices.
In its latest assessment, the MPC projected India’s real GDP growth for FY25 to remain steady at 7%, with expectations of robust rural demand and sustained consumption driving economic expansion. However, Governor Shaktikanta Das highlighted concerns regarding the global debt-to-GDP ratio, emphasizing the possibility of adverse spillover effects on emerging economies.
The committee expressed particular concern over recent increases in crude oil prices and ongoing geopolitical tensions, which pose potential upside risks to commodity prices and could impact India’s economic outlook. Despite these challenges, the MPC opted to maintain the benchmark lending rates unchanged at 6.5% for the seventh consecutive time, citing favorable dynamics in growth and inflation.
The RBI’s growth projections have remained consistent, aligning with expectations of steady global growth amidst prevailing uncertainties. While the February 2024 meeting forecasted India’s growth at 7% for FY25, the committee identified key drivers of demand including anticipated improvements in household consumption and prospects of fixed investment.
