The decline in retail inflation is expected to speed up the GDP growth in future. This offers the central bank more space to cut interest rates and increase liquidity to promote economic activity and generate more jobs. The report by rating agency Moody’s said that increase in government capital expenditure, softening in monetary policy, income tax cuts in budget will play an important role in increasing India’s growth rate. The report further stated that India’s GDP growth rate can be more than 6.5 percent.
The report said that India’s economic growth is expected to rise after a temporary slowdown in mid -2024. Economist of Bank of Baroda, Deepanavita Majumdar said that according to the current inflation data, we believe that the CPI will be less than the RBI target in the fourth quarter, which will make more scope to relax the policy rates to support the RBI. We hope that in the financial year 2025, the CPI will be at 4.6 percent, while it can be at 3.8 percent in the fourth quarter. This is less than an estimate of RBI for 4.4 percent for the fourth quarter of the current financial year.
The Consumer Price Index (CPI) based inflation has stood at a seven -month low of 3.61 percent in February. This is the lowest level of retail inflation in the country after July 2024.
A Crisil report said that India’s GDP growth is expected to be 6.5 percent in FY 2026. Apart from budgetary support, RBI’s interest rate cut, low crude oil prices and general monsoon are expected to support development.
RBI Governor Sanjay Malhotra had announced to reduce the repo rate by cutting 25 basis points to 6.5 percent to 6.25 percent in the monetary policy review to speed up development amid global uncertainties last month. He said that inflation has decreased and it is expected that it will decrease further and it will gradually be in accordance with the RBI’s 4 percent target.
(This news has not been edited by the Lokjanta team. It has been published directly from the syndicate feed.)
