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The Reserve Bank of India (RBI) released its Annual Report 2024–25, presenting key developments in monetary policy, financial stability, inflation control, GDP growth, and digital financial inclusion—vital for UPSC aspirants to understand India’s macroeconomic outlook.
Key Terms and Concepts
| Key Term | Simple Explanation |
|---|---|
| Inflation | The general rise in prices of goods and services in an economy over a period of time. It reduces the purchasing power of money. |
| Headline Inflation | Total inflation including all items such as food, fuel, and housing. It reflects the overall price rise. |
| Core Inflation | Inflation excluding food and fuel prices, which are volatile. Used to assess underlying long-term inflation trends. |
| RBI (Reserve Bank of India) | India’s central bank that manages the supply of money, regulates banks, and ensures financial stability. |
| Monetary Policy Committee (MPC) | A six-member RBI body that decides the repo rate to control inflation and ensure growth. |
| Repo Rate | The rate at which the RBI lends short-term money to banks. An important tool to control inflation. |
| CRR (Cash Reserve Ratio) | The percentage of a bank’s total deposits that must be kept with the RBI in cash. Used to control liquidity. |
| Gross Fiscal Deficit (GFD) | The gap between the government’s total spending and total non-borrowed income. |
| Capital Expenditure | Government spending on infrastructure and assets that boost long-term growth. |
| Revenue Expenditure | Government’s spending on day-to-day operations, like salaries, subsidies, etc. |
| Non-Performing Assets (NPA) | Loans on which borrowers have stopped making interest or principal repayments for a specified period. |
| Current Account Deficit (CAD) | When a country imports more goods, services, and capital than it exports. |
| GVA (Gross Value Added) | Measure of value of goods and services produced in an economy, sector-wise. |
| CBDC (Central Bank Digital Currency) | A digital form of central bank-issued money. RBI’s e-rupee is a CBDC. |
| Financial Inclusion Index | A composite index that measures access, usage, and quality of financial services. |
| UPI (Unified Payments Interface) | A real-time digital payment system developed by NPCI that allows instant money transfer via mobile. |
| EmTech Repository | RBI’s database of emerging technologies adopted in banking and finance. |
| FinTech Repository | Database to track innovations by financial technology companies in India. |
| bank.in Domain | New secure web domain for regulated banks in India, introduced by RBI to prevent fraud. |
Key Highlights of the RBI Annual Report 2024-25
- Global Economy:
- Global GDP grew at 3.3%
- Services inflation remained high globally
- India’s Performance:
- GDP grew 6.5% (fastest among major economies)
- Headline inflation reduced to 4.6%, core inflation at 3.5%, food inflation at 2.9%
- Fuel inflation witnessed deflation of -2.5%
- RBI Measures:
- Repo rate kept at 6.50% throughout the year
- CRR reduced to 4% (supporting liquidity)
- Surplus transferred to government: ₹2.68 lakh crore
- Sectoral Performance:
- Agriculture GVA: +4.6%
- Industry: +4.3%
- Services: +7.5%
- Banking & Finance:
- Bank frauds rose to ₹36,014 crore
- RBI launched new domain bank.in to reduce cyber frauds
- CBDC pilot: 17 banks, 60 lakh users
- Financial Inclusion Index rose from 60.1 to 64.2
- Digital Economy:
- UPI accounted for 48.5% of global real-time payments
- Digital payments volume rose 34.8%
- External Sector:
- Trade deficit: USD 282.8 billion
- CAD: 1.3% of GDP
- Foreign reserves stable, RBI gold holdings at 879.58 metric tonnes
- Fiscal Side:
- GFD down to 4.7%
- Capital Expenditure: +5.2%
- Revenue Expenditure: +5.8%
- Risks and Challenges:
- High food price volatility
- Global protectionism and supply chain risks
- Fake currency circulation rising in ₹200 and ₹500 denominations
- Climate shocks impacting inflation and agri output
Visual Learning: RBI Annual Report Snapshot
RBI Annual Report 2024–25 Summary
┌────────────┐
│ GDP 6.5% │
└─────┬──────┘
↓
┌─────────────────────────────┐
│ Headline Inflation: 4.6% │
│ Repo Rate: 6.50% │
│ CRR: Reduced to 4% │
└────────────┬────────────────┘
↓
┌────────────────────────────────────┐
│ Financial Inclusion ↑ to 64.2 │
│ UPI = 48.5% of global real-time │
└────────────────────────────────────┘
In a Nutshell (Mnemonic for Easy Recall)
“GOLD-FINCAP”:
G – GDP 6.5%
O – Omnipresent inflation trends (Headline 4.6%, Core 3.5%)
L – Liquidity support (CRR down to 4%)
D – Digital finance boom (UPI +34.8%)
F – Fiscal Deficit falls to 4.7%
I – Inclusion index up to 64.2
N – NPA and fraud vigilance improved
C – CBDC and Tech innovations
A – Assets rise in RBI balance sheet
P – Public sector bank vigilance on frauds
Prelims Practice Questions
- Consider the following statements regarding the RBI’s Annual Report 2024-25:
- Headline inflation in India increased from 2023-24 to 2024-25.
- RBI’s gold holdings crossed 800 metric tonnes.
- Core inflation was lower than headline inflation in 2024-25.
Which of the above statements is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
- Which of the following measures was introduced by the RBI in 2024-25 to enhance banking security?
- Introduction of the ‘bank.in’ domain
- Launch of FinTech and EmTech repositories
- Hike in CRR to curb inflation
Select the correct answer using the code below:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
- Consider the following statements about India’s fiscal performance in 2024-25:
- Capital expenditure grew faster than revenue expenditure.
- Gross Fiscal Deficit was above 6% of GDP.
- States’ fiscal deficit remained within 3.2% of GDP.
Which of the above are correct?
a) 1 and 3 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
Mains Practice Questions
- Discuss the role of the Reserve Bank of India in ensuring monetary stability while fostering inclusive digital financial growth.
- How do inflation trends and capital expenditure levels affect India’s macroeconomic stability? Explain with reference to RBI’s Annual Report 2024-25.
Previous Year Question (UPSC GS-3, 2020)
“What are the main constraints in the transport and marketing of agricultural produce in India?”
(Related to food inflation and supply-chain bottlenecks discussed in the report.)
Answers to Prelims Practice Questions
| Question Number | Answer | Explanation |
|---|---|---|
| 1 | b) 2 and 3 only | Headline inflation decreased (Statement 1 is incorrect), RBI’s gold holdings are 879.58 MT (Statement 2 correct), core inflation was 3.5% (lower than 4.6%) |
| 2 | a) 1 and 2 only | bank.in and repositories were launched. CRR was reduced, not increased. |
| 3 | c) 2 and 3 only | Capital expenditure grew 5.2%, revenue expenditure 5.8%, so statement 1 is incorrect. GFD below 6% (4.7%), states kept within 3.2%. |
