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The Reserve Bank has scaled down its forecast for India’s GDP growth for 2024-25 to 6.6 per cent from 7.2 per cent earlier, RBI Governor Shaktikanta Das announced on Friday.

He explained that the decision had been made as the growth in real GDP in the second quarter of this year at 5.4 per cent turned out to be much lower than anticipated.

However, Das said that India’s growth story was intact as “going forward, high-frequency indicators available so far suggest that the slowdown in domestic economic activity bottomed out in the second quarter of this year and it has since recovered aided by strong festive demand and pickup in rural activities.”

"The decline in growth was led by a substantial deceleration in industrial growth from 7.4 per cent in the first quarter to 2.1 per cent in the second quarter due to the subdued performance of manufacturing companies, contraction in mining activity and lower electricity demand."

The weaknesses in the manufacturing sector, however, was not broad-based but limited to specific sectors such as petroleum products, iron and steel and cement, Das pointed out.

Industrial activity is expected to normalise and recover from the lows of the previous quarter, Das added.

The RBI’s Q3FY25 GDP growth forecast was reduced to 6.8 per cent from 7.4 per cent, Q4 growth target was lowered to 7.2 per cent from 7.4 per cent, and Q1FY26 was also revised to 6.9 per cent from 7.3 per cent.

The Central bank also revised its estimate for Q3FY25 to 6.8 per cent from 7.4 per cent earlier and Q4FY25 to 7.2 per cent from 7.4 per cent.

For Q1 FY26, the RBI revised its GDP projection to 6.9 per cent from 7.3 per cent earlier.

During its October 2024 monetary policy meeting, the RBI had forecast India's GDP to grow at 7.2 per cent in FY25, higher than 6.5-7 per cent projected in the Finance Ministry's Economic Survey. The quarter-wise growth rates were estimated at 7 per cent for Q2 FY25, 7.4 per cent for Q3, 7.4 per cent for Q4, and 7.3 per cent for Q1 FY26.