India’s GDP growth is likely to remain close to 7.5% in the first quarter of the current fiscal year, according to the RBI’s monthly bulletin. The report titled ‘State of the economy,’ says that the Indian economy has demonstrated marked resilience in the face of geopolitical headwinds imparting supply chain pressures. “According to the economic activity index (EAI), activity rebounded in April and early estimates suggest that GDP growth for Q1:2024-25 is likely to remain close to 7.5%,” it says.

The RBI report notes that high-frequency indicators are pointing to a quickening of the momentum of aggregate demand. According to RBI, E-way bills grew by 14.5% in April. Toll collections increased by 8.6% in April 2024. Automobile sales increased by 25.4% in April led by two-wheelers and three-wheelers, whereas passenger vehicles recorded the highest-ever monthly sales. Average daily petroleum consumption increased by 6.1% in April 2024, led by motor spirit (petrol) and aviation turbine fuel.

As per the report, for the first time in atleast two years, rural demand for fast-moving consumer goods (FMCG) has outpaced urban markets—in the quarter gone by. FMCG volume growth of 6.5% was driven by rural growth of 7.6% relative to urban growth of 5.7% on the back of robust demand for home and personal care products.

The report further says that for listed private manufacturing companies, retained earnings remained the major source of funds during the second half of 2023-24. They were mainly used to build up fixed assets and non-current investments, indicating a pick-up in new capacity creation relative to the first half of the year

“There is a growing optimism that India is on the cusp of a long-awaited economic take-off. Recent indicators are pointing to a quickening of the momentum of aggregate demand. Non-food spending is being pushed up by the green shoots of rural spending recovery. A modest easing of headline inflation in the reading for April 2024 confirms the expectation that an uneven and lagged pace of alignment with the target is underway,” it notes.

Notably, the centre will announce the GDP estimates for the January to March quarter of FY24 on May 31.

RBI Governor Shaktikanta Das had earlier said that it is essential in the best interest of the economy, that the CPI inflation continues to moderate and aligns with the target on a durable basis.

Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5% with Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6% and Q4 at 4.5%, says the RBI governor.

RBI Monthly Bulletin

India's GDP likely to grow 7.5% in Q1 FY24: RBI

RBI firm on taming inflation under 4%: Shaktikanta Das