NEW DELHI : India’s economy is performing well, with risks evenly balanced, to achieve 7% growth in FY25, but geopolitical tensions and geo-economic fragmentation pose risks to the country’s growth, the finance ministry said in its latest monthly economic review. In its economic review for January, the ministry said risks to global trade, including a spike in commodity prices due to the Houthi militant group’s attacks on important trade routes in the Red Sea region, have resulted in supply chain disruptions.
Also, persistent underlying inflation in developed countries could extend tight monetary conditions, the ministry said in the review, released on Tuesday. During the Reserve Bank of India’s latest bi-monthly monetary policy committee meeting, the regulator projected a real GDP growth of 7% for FY25, up from its previous forecast of 6.6%, while maintaining its benchmark lending rate at 6.5% for the sixth consecutive time.
RBI’s growth projections for FY25 include a growth rate of 7.2% in Q1, 6.8% in Q2, 7% in Q3, and 6.9% in Q4. “Prospects of healthy rabi (winter crop) harvesting, sustained manufacturing profitability and underlying service resilience are expected to support economic activity in FY25," the ministry said.
“On the demand side, household consumption is expected to improve, while prospects for capital formation are bright owing to an upturn in the private capex cycle, improved business sentiments, healthy balance sheets of banks and corporates, and the government’s continued thrust on capital expenditure," it added. India remains the fastest-growing major global economy, ahead of the US, China and other major advanced nations.
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