Current Affairs - Economy

The Reserve Bank of India (RBI) has projected a GDP growth rate of 7.2% for the financial year 2024-25. This optimistic projection is attributed to strong domestic demand, low raw material costs, and robust growth in the manufacturing sector. While the first quarter recorded a growth rate of 6.7%, the RBI has forecasted steady increases for the remaining quarters, with GDP growth rates of 7%, 7.4%, and 7.4% for Q2, Q3, and Q4 respectively. The Monetary Policy Committee, in a 5:1 vote, decided to keep interest rates unchanged.

As of September 20, India’s foreign exchange reserves reached a record high of $692.3 billion, driven by market interventions by the Reserve Bank of India (RBI) and inflows into stocks and bonds. This reserve includes $605.7 billion in foreign currency assets, $63.6 billion in gold reserves, and $18.5 billion in Special Drawing Rights (SDRs) with the International Monetary Fund. The rise in reserves helps India maintain financial stability, manage currency volatility, and enhance investor confidence.

The Asian Development Bank (ADB) has retained its forecast for India's GDP growth rate at 7% for FY24, driven by strong performance in agriculture, industry, and services. This growth rate is attributed to the government's fiscal consolidation efforts and resilience amidst global geopolitical challenges. Key growth drivers for FY24 include agricultural improvements, robust performance in the industrial and services sectors, and rural spending. The ADB also forecasts a growth rate of 7.2% for FY25, driven by private investments, urban consumption, and job creation through employment-linked incentives.

S&P Global Ratings has maintained its economic growth forecast for India at 6.8% for the financial year 2024-25. This forecast aligns with their projection of steady growth for the country. Comparatively, other agencies like the Reserve Bank of India (RBI) and Moody's have slightly different forecasts, with the RBI estimating a 7.2% growth for the same period and Moody's predicting a growth rate of 7.2% for 2024 and 6.6% for 2025.

India has seen a significant increase in ammonium nitrate (AN) imports from Russia, leading to concerns within its domestic fertiliser industry. Ammonium nitrate is crucial for both agriculture and industries like mining. Cheaper imports from Russia create competitive pressure on Indian companies, which are investing heavily to expand their production capacity. As India relies on imports to meet a substantial portion of its fertiliser needs, including potash, disruptions or shifts in trade patterns can significantly impact domestic markets.