Mumbai, May 30,2024:  The outlook for the Indian economy remains bright with the GDP growth likely to be at a robust 7 per cent in 2024-25, the Reserve Bank of India (RBI) said in its annual report released on Thursday.

Against the backdrop of subdued global economic activity and multiple headwinds, the Indian economy expanded at a robust pace in 2023-24, with real GDP growth accelerating to 7.6 per cent from 7.0 per cent in the previous year – the third successive year of 7 per cent or above growth, the report pointed out.

The sustained strengthening of macroeconomic fundamentals, robust financial and corporate sectors and a resilient external sector are expected to drive growth in 2024-25, the report stated.

The government’s continued thrust on capex while pursuing fiscal consolidation, and consumer and business optimism augur well for investment and consumption demand, it added.

According to the report, the prospects for agriculture and rural activity appear favourable due to the ebbing El Nino and the expected above-normal southwest monsoon.

The extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme for a period of five more years with effect from January 1, 2024 will strengthen national food security.

The government’s focus on AatmaNirbhar Oilseeds Abhiyan, the expansion of environmentally sustainable nano diammonium phosphate (DAP) in all agro-climatic zones and the promotion of bioeconomy through a new bio-manufacturing and bio-foundry scheme in the interim Union Budget 2024-25 would also support the agriculture sector.

The Union government’s impetus to growth-inducing capital spending is likely to be sustained in 2024-25 with more than half of borrowings directed towards financing of capital outlay.

The central government extended the financial assistance scheme for states’ capital expenditure to 2024-25 with an outlay of Rs 1.3 lakh crore. The budgeted reduction in gross market borrowings from 5.3 per cent of GDP in 2023-24 (RE) to 4.3 per cent of GDP in 2024-25 (BE) will enhance the flow of funds to the private sector and support private investment.

The fiscal outlook for states remains favourable, with adequate fiscal room to pursue increased capital expenditure. The digitalisation of the tax system has enhanced tax collections, with the Centre’s direct tax revenues budgeted to reach 6.7 per cent of GDP in 2024-25, the highest in three decades, it adds.