Page 55 - Policy Economic Report - April 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

scheduled commercial banks to obtain overnight liquidity if inter-bank funds completely dry up.
It is an emergency facility that allows banks to borrow at a rate higher than the repo rate.

• These rate adjustments are consistent with the RBI’s objective of achieving the Consumer Price
Index (CPI) inflation target of 4 per cent, within a flexible band of ±2 per cent, while also
supporting economic growth.

Growth Assessment

The Reserve Bank of India has projected real GDP growth at 6.5 per cent for 2025–26, maintaining the
same rate as estimated for 2024–25, following a strong expansion of 9.2 per cent in the preceding year.
The quarterly projections stand at 6.5 per cent in Q1, 6.7 per cent in Q2, 6.6 per cent in Q3, and 6.3 per
cent in Q4. This marks a downward revision of 20 basis points from the February estimate, reflecting
heightened global volatility. Agriculture remains on a positive footing, supported by healthy reservoir
levels and robust crop production, which is expected to sustain rural demand. Manufacturing is showing
early signs of revival amid improved business sentiment, and the services sector continues to demonstrate
resilience.

On the investment side, activity is gaining pace on the back of higher capacity utilisation, continued
government focus on infrastructure, and strong balance sheets of banks and corporates. Easing financial
conditions have also aided this recovery. While services exports are likely to remain steady, merchandise
exports could face headwinds from global uncertainties and trade disruptions. Looking ahead, the RBI has
projected real GDP growth at 6.7 per cent for 2026–27, suggesting continued recovery momentum.

Inflation Outlook

Headline inflation eased during January and February 2025, driven by a sharp decline in food prices. With
uncertainties around the rabi crop largely resolved, and second advance estimates indicating record
wheat output and higher pulse production than last year, food inflation is expected to soften further. This

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