Reserve Bank of India Governor Shaktikanta Das emphasizes that they are not complacent in light of rapidly evolving global conditions even as the Indian economy continues to show a picture of stability and strength. According to him, the balance between inflation and growth is well-poised, and India's growth story remains intact.
"Inflation is on a declining trend, though we still have a distance to cover. The external sector reflects the robustness of the economy. Forex reserves are reaching new heights. Fiscal consolidation is underway. The financial sector remains sound and resilient," he said in the latest RBI monthly bulletin.
Das further added that global investor optimism over India's prospects is perhaps at its highest ever.
"We are, however, not complacent, especially amid rapidly evolving global conditions," he said, adding that "we stand unambiguously committed to ensure durable alignment of inflation with the target".
Private final consumption expenditure (PFCE) – the mainstay of aggregate demand – has rebounded strongly, growing at 7.4 percent in Q1 FY25 and contributing 4.2 percentage points to the overall GDP growth, the Central Bank said.
This steadily picks up in rural demand. Even motorcycle sales, though still registering positive growth, stopped growing upbeat during April-August 2024, while tractor sales grew in June-July 2024," RBI noted.
Meanwhile, demand for work under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) contracted by 16.6 per cent in Q2 FY 2024-25, which was seen as a reflection of improvement in farm sector employment.
The good news for rural demand is that spending on fast-moving consumer goods (FMCG) in the rural areas has been showing a resilience after recording a modest growth of 6.7% in April. The positive outline of agriculture, supported by above normal south-west monsoon (SWM) rainfall, higher cumulative kharif sowing and improved reservoir levels augurs well to ensure that the revival in rural demand is sustained, the RBI document emphasized.
Domestic growth has sustained its momentum as private consumption and investment growth have been in tandem, it added.
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