Economy exhibiting resilience, GDP to grow at 6.6 pc in FY25: RBI report

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The Indian economy is exhibiting resilience and stability, with the gross domestic product (GDP) projected to grow at 6.6 per cent in 2024-25, a Reserve Bank of India (RBI) report stated on Monday. The growth will be complimented by a revival in rural consumption, a pickup in government consumption and investment, and strong services exports, the report further mentioned.

The Reserve Bank has released the December 2024 issue of the Financial Stability Report (FSR), which reflects the collective assessment of the sub-committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability, news agency PTI reported.

"The soundness of scheduled commercial banks (SCBs) has been bolstered by strong profitability, declining non-performing assets and adequate capital and liquidity buffers. Return on assets (RoA) and return on equity (RoE) are at decadal highs, while the gross non-performing asset (GNPA) ratio has fallen to a multi-year low," the report said, adding that macro stress tests demonstrate that most SCBs have adequate capital buffers relative to the regulatory minimum threshold even under adverse stress scenarios. Stress tests also validate the resilience of mutual funds and clearing corporations, PTI said, quoting the report.

On the economy, FSR stated that during the first half of 2024-25, the real GDP growth (year-on-year) moderated to 6 per cent from 8.2 per cent and 8.1 per cent growth recorded during H1 and H2 of 2023-24, respectively.

"Despite this recent deceleration, structural growth drivers remain intact. Real GDP growth is expected to recover in Q3 and Q4 of 2024-25 supported by pick up in domestic drivers, mainly public consumption and investment, strong service exports and easy financial conditions," the RBI said.

According to PTI, the report also mentions inflation and said that going forward, the disinflationary effect of a bumper kharif harvest and the rabi crop prospects are expected to soften prices of foodgrains.

On the flipside, the rising frequency of extreme weather events continues to pose risks for food inflation dynamics, PTI reported.

Persisting geopolitical conflicts and geo-economic fragmentation can also impose upside pressures on global supply chain and commodity prices.

(With PTI inputs)