RBI Raises FY25 GDP Growth Estimate to 7.2%, Repo Rate Same at 6.5%

The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the second bi-monthly monetary policy for the financial year 2024-25 on Friday. This marks the first RBI policy following the 2024 Lok Sabha election results. The six-member Monetary Policy Committee (MPC), led by Governor Das, decided to keep the benchmark repo rate unchanged at 6.5% for the eighth consecutive time, with a 4:2 majority vote.

The committee also chose to maintain its stance of ‘withdrawal of accommodation.’ Additionally, the RBI revised its GDP growth forecast for FY25 to 7.2% from the earlier 7% while retaining the FY25 inflation forecast at 4.5%.

Two members of the MPC, Dr. Ashima Goyal and Prof. Jayanth R. Varma, voted to cut the repo rate by 25 basis points and shift the stance to ‘Neutral.’ The remaining members, Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra, and Governor Das, voted to keep the policy repo rate unchanged at 6.5% and to continue with the current policy stance.

To promote the wider adoption of UPI Lite, the RBI proposed incorporating it under the e-mandate framework, allowing customers to automatically replenish their UPI Lite wallets if the balance falls below a set threshold. This initiative aims to simplify small-value digital payments.

In response to the evolving dynamics of international trade and the progressive liberalization of foreign exchange regulations, the RBI proposed to streamline the existing FEMA guidelines on the export and import of goods and services. This move is intended to enhance the ease of doing business and provide greater operational flexibility to Authorized Dealer banks. Draft guidelines will be issued shortly for stakeholder feedback, Governor Das announced.