RBI MPC Outcome: Governor Das Slashes India's FY25 GDP Growth Projection To 6.6% On Weak Q2FY25 Data

The Reserve Bank of India (RBI) has revised its GDP growth forecast for the financial year 2025 to 6.6%, down from the earlier estimate of 7.2%. The downward revision follows India's economic performance in the July-September quarter, where GDP growth slumped to a seven-quarter low of 5.4%-the weakest since the third quarter of FY23.

RBI Governor Shaktikanta Das, in his post-policy address, acknowledged the slowdown but struck a cautiously optimistic tone. "The deceleration in growth is narrower than expected, with manufacturing weaknesses limited to select sectors," he said. He emphasized that the domestic economy had likely "bottomed out" in the September quarter and is poised for recovery.

Despite the tempered outlook, Das reassured that the financial sector's health is robust, arguably at its best in recent years. "The Indian economy remains resilient, and industrial activity is expected to normalize," he noted. However, he flagged potential risks, citing the growing wave of global protectionism, which could impact trade and growth.

Quarterly Adjustments

The GDP growth projection for the third quarter of FY25 has been revised to 6.8%, down from 7.4%, reflecting ongoing concerns about the manufacturing sector and external headwinds. Similarly, the fourth-quarter forecast has been adjusted to 7.2% from 7.4%. Projections for the first quarter of FY26 also saw a reduction, revised to 6.9% from the earlier estimate of 7.3%.

The revised outlook reflects both challenges and opportunities for India's economy. While the global economic landscape remains uncertain, marked by protectionist policies and slowing demand, India's economic resilience and strong financial system provide a buffer. Das stressed that the RBI would closely monitor evolving conditions to ensure stability and foster recovery.