Upward revision in GDP encouraging: Standard Chartered’s Daruwala

The upward revision in the full year GDP estimate to 7.2% was encouraging, said Zarin Daruwala, CEO, India and South Asia, Standard Chartered Bank in her comment on the monetary policy announcement earlier on Friday.

The upward revision in the full year GDP estimate to 7.2% was encouraging, said Zarin Daruwala, CEO, India and South Asia, Standard Chartered Bank in her comment on the monetary policy announcement earlier on Friday.

“RBI’s optimism on rural consumption boosts the basis for the forecast of an above-normal monsoon, augurs well for the agricultural sector and the overall rural economy. RBI’s ongoing focus on inflation may give it room for rate cuts in the coming months,” she said.  M. V. Rao, Chairman, Indian Banks’ Association (IBA) & MD & CEO, Central Bank of India said, “Considering the resilience exhibited by the high-frequency indicators and assuming the above normal south-west monsoon, RBI has hiked its projection for GDP for FY25 by 20 basis points to 7.2%.” “This hike in RBI projection reposes confidence of the central bank to the growth prospects of the domestic economy. Improvement in growth projections of RBI is quite positive for the markets,” he added. 

Madan Sabnavis, Chief Economist, Bank of Baroda (BoB), said the slight revision in GDP growth forecast to 7.2% was still lower than the BoB’s forecast of 7.3-7.4% for FY25. 

“The RBI is sanguine on the growth trajectory and while inflation is to average 4.5% for the year, there is concern on food inflation especially in the wake of the heatwave which has increased prices of horticulture products. But with growth being secure, it gives the RBI room to not commence on rate cuts at this point of time,” he said. 

“Our view is that October can be the time when a rate cut can be considered but will be fully data driven. A clarification made by the Governor on decisions being based on local conditions is significant because often markets tend to react to Fed statements as they are interpreted as having impact on the RBI decision on repo rate,” he added. According to Domnic Romell, President, CREDAI-MCHI, the apex body of the real estate industry of Mumbai Metropolitan Region (MMR), the stability in interest rates along with the stance of ‘withdrawal of accommodation’, was encouraging for homebuyers and the real estate sector. “Stable borrowing costs enable homeownership aspirations, fostering industry growth. We believe that a 50 basis points reduction by the RBI in the near future would further fuel growth, solidifying India’s position and enabling it to surpass global growth targets,” he added.