RBI Bulletin: India’s Economic Growth Poised for Revival as Demand Strengthens

India’s economic growth is set to regain momentum, buoyed by a resurgence in domestic demand, according to the latest RBI Bulletin. The January edition of the Bulletin includes an article on the “State of the Economy,” which outlines the divergent economic outlook for 2025 across global economies. While the US is expected to experience some slowdown, Europe and Japan anticipate weak-to-modest recoveries. Emerging and developing economies are projected to grow at a more moderate pace, with inflation easing more gradually compared to advanced economies.

“In India, high-frequency indicators of economic activity have shown an encouraging uptick in the second half of 2024-25, validating the projected acceleration in real GDP growth outlined in the National Statistical Office’s (NSO) first advance estimates,” the article stated.

Headline inflation in India eased for the second consecutive month in December, though food inflation remains a concern, requiring close monitoring to mitigate potential second-order effects.

Authored by a team led by Michael Patra, who recently stepped down as RBI Deputy Governor, the article highlights that domestic demand is strengthening across the board. “Rural demand, in particular, is gaining momentum, underpinned by resilient consumption and brighter prospects for agriculture,” it noted.

Public capital expenditure on infrastructure is also expected to fuel growth across key sectors, reinforcing the economic recovery. However, the article cautioned that rising input costs in manufacturing, weather-related challenges, and global economic headwinds could pose risks to this optimistic outlook.

The RBI emphasized that the views expressed in the article are those of the authors and do not necessarily represent the official stance of the Reserve Bank of India.