RBI cuts India’s growth estimate but says the GDP slump ‘bottomed out’ in Q2

The move comes after India’s GDP growth for the July-September period, fell to a seven-quarter low of 5.4%. This was the lowest growth since the third quarter of the financial year 2023.

In his post-policy address, RBI Governor Shaktikanta Das attributed the slowdown in GDP to be much lower than expected but the manufacturing weakness is not broad-based but confined to select sectors.

He added that the slowdown in the domestic economy has “bottomed out” in the September quarter.

“I can say with confidence that the health of financial sectors is at one of its best in a long time,” he said.

India’s central bank chief expects the economy to be resilient and industrial activity to recover to normal levels. However, the situation warrants monitoring, he warned, citing rising ‘tendencies of protectionism’ around the world.

After the second-quarter GDP report, brokerages across the board had downgraded their respective GDP estimates for India for the financial year 2025.

Nomura had cut its financial year 2025 GDP growth forecast to 6% from 6.7%, while Goldman Sachs and Emkay had revised their estimates down to 6% from 6.4% and 6.5% respectively earlier.

For the third quarter of the current financial year, the GDP growth estimate has been revised to 6.8% from 7.4% earlier.

For the fourth quarter, the GDP growth forecast is revised to 7.2% from 7.4% earlier, while projections for the first quarter of the next financial year have been revised to 6.9% from 7.3%.