'Growth to boost in H2FY25 because of ...': RBI says in its December bulletin

The Reserve Bank of India has forecasted a rebound in India's growth path in the second half of FY25, propelled by strong rural demand, a historic high in foodgrains production, and various other factors. According to the central bank's monthly bulletin, continued government investments in infrastructure are anticipated to boost economic activity and encourage investments. Nevertheless, potential global challenges could pose risks to the developing prospects for growth and inflation. 

The RBI said: "India’s growth trajectory is poised to lift in the second half of 2024-25, driven mainly by resilient domestic private consumption demand. Supported by record level foodgrains production, rural demand, in particular, is gaining momentum." 

The December bulletin featured an article discussing the current state of the global economy, highlighting its resilience with consistent growth and controlled inflation. According to high-frequency indicators (HFIs) for the third quarter of 2024-25, the Indian economy is showing signs of recovery after a slowdown in momentum during Q2. This recovery is attributed to robust festival activity and a continued increase in rural demand. 

India's economic growth rate experienced a significant slowdown, reaching its lowest level in nearly two years, which has had a negative impact on the overall outlook for the year. The country's Gross Domestic Product expanded by 5.4% in the third quarter of the current fiscal year compared to the same period last year.

The RBI indicated that India's continued growth prospects are aligning with a more sustainable foundation, fueled by positive climate initiatives such as the promotion of renewable energy, electric vehicles (EVs), green hydrogen, and efforts to establish a carbon market.