Recent high-frequency indicators of economic activity indicate that real GDP growth in India in the first quarter of FY25 is largely maintaining the momentum seen in the previous quarter, according to a bulletin released by the Reserve Bank of India (RBI) on Wednesday.

In the fourth quarter of FY24, GDP grew by 7.8%. As per the RBI’s monetary policy statement for June, growth in the first quarter of FY25 is projected at 7.3%, with the full-year growth for FY25 expected to be 7.2%.

The bulletin indicated that there is growing evidence of a “trend upshift” in the post-pandemic years, which is altering India's growth trajectory from the average of 7% recorded between 2003 and 2019 to an average of 8% or higher between 2021 to 2024, fuelled by “domestic drivers.”

According to the central bank’s paper, entitled ‘State of the Economy’, there has been a “structural break” in the formation of GDP since the Covid crisis, Financial Express reports.

Indeed, since the onset of the pandemic, Q1 GDP has typically shown a tendency to experience some loss of momentum compared to other quarters.

Consequently, the bulletin suggested that there could be some moderation in the pace of growth relative to the 7.8% recorded in the last quarter of FY24 when the National Statistical Office releases its estimate in August.

It noted that the prospects for agriculture are improving with the early onset of the southwest monsoon. “Headline inflation is gradually easing, driven by sustained softening of its core component, although the path of disinflation is interrupted by volatile and elevated food prices,” it said.

Regarding private consumption, the report showed that recent indicators suggest it is resuming its role as the primary driver of demand and is becoming more widespread, also encompassing rural consumers.

In addition, the consumer goods sector is anticipating a robust recovery due to expectations of increased public welfare spending. It noted that while there has been a decline in walk-in customers, this has been offset by e-commerce platforms, particularly during heatwave conditions.

Whereas in terms of investment, the paper said there has been steady growth. There has been some moderation more recently, possibly due to temporary uncertainty affecting investment decisions, but “this too shall pass. A strong revival in private investment has to become the most important factor driving growth in the years to come, especially as public finances consolidate,” it said.