The Reserve Bank of India said that “India is standing on the brink of a long-anticipated economic surge”, driven by increasing aggregate demand and heightened non-food spending in rural areas. The outlook for the global economy is turning fragile as the descent of inflation is stalling, re-igniting risks to global financial stability, the RBI said in its article on ‘State of the Economy’ published in the Bulletin.
The article is prepared by a team led by Reserve Bank Deputy Governor Michael Debabrata Patra.
It further said capital flows have become volatile as nervous investors turn risk averse. “There is a growing optimism that India is on the cusp of a long-awaited economic take-off” as recent indicators are pointing to a quickening of the momentum of aggregate demand,” the article stated.
It noted that for the first time in at least two years, rural demand for fast moving consumer goods (FMCG) has outpaced urban markets — in the quarter just gone by.
FMCG volume growth of 6.5 per cent was driven by rural growth of 7.6 per cent relative to urban growth of 5.7 per cent on the back of robust demand for home and personal care products.
Turning to private investment, for listed private manufacturing companies, retained earnings remained the major source of funds during the second half of 2023-24, the central bank said.
Results that have been declared by listed corporate so far indicate that they closed the financial year 2023-24 with the highest growth in quarterly revenues registered in January-March 2024 year-on-year as well as sequentially.
