Representative imageMumbai: Real gross domestic product (GDP) growth for the second half of FY25 is likely to be softer than revised Reserve Bank of India (RBI) estimates, economists say, citing the latest series of incoming high-frequency data from the minutes of the assessment of the tariff determination panel.
Economists forecast downside risks of up to 60 basis points to 6.4% to 6.6% in the second half of FY25, compared with central bank projections of 7% for the traditionally busy season in the local economy. Such indicators for October and November, which coincided with the biggest festive season and the start of the wedding season in north India, remained mixed for both the consumption and investment-oriented sectors, said economists analyzing the Monetary Policy Committee (MPC) minutes. ) meeting.
The MPC minutes published on Friday showed that while there was agreement that the balance between growth and inflation would become unfavorable in the short term, differences emerged in the assessment of the underlying risks to growth and the appropriateness of the monetary policy tool to tackle supply-side inflation. “Growth is expected to recover on higher government and agricultural spending, but is likely to be lower than the RBI’s trajectory due to weaker exports and consumer spending, as reflected in vehicle sales in November and December,” said Sameer Narang, head of economic research, ICICI Bank.
Activity in the construction sector remains weak and the Centre’s capital expenditure, which is currently lower than last year, is adding pressure to growth.
New Delhi is likely to fall short of its capital expenditure target by about Rs 1.5 lakh crore, compared to its annual target of Rs. 11.1 lakh crore, according to a recent report by rating agency CareEdge.
Kotak Mahindra Bank forecasts second-half growth to be 6.4%, while QuantEco’s forecasts for the same period are 6.7% to 6.8%.
Among members who voted for status quo on policy rate, then Governor Shaktikanta Das and Rajeev Ranjan were quite optimistic about growth in the second half, thanks to relatively higher government expenditure from the first half and improving agricultural prospects.
