Household consumption is expected to grow faster in the second quarter due to easing inflation and a revival of rural demand, according to the RBI bulletin. Retail inflation has slowed, boosting private consumption and investment activity. However, volatility in food prices remains a risk. The RBI projects real GDP growth at 7.2% for the current fiscal year.
The household consumption is poised to grow faster in the second quarter with easing headline inflation and revival of rural demand, the RBI bulletin stated, on Friday.
The bulletin observed that retail inflation has slowed and remained within the RBI's target for two consecutive months.
This will help boost private consumption , which is already on an upswing, and along with a revival of rural consumption and private investment activity will fuel overall growth.
However, volatility in food prices remains a contingent risk, the bulletin noted.
The Reserve Bank of India (RBI) has projected real GDP growth at 7.2 per cent for the current fiscal.
This growth outlook reflects the underlying strength of India’s macro-fundamentals, with domestic drivers – private consumption and investment – playing a major role.
The IMF has also revised India’s GDP growth upwards to 7.0 per cent, citing improved prospects for private consumption, particularly in rural areas.
The World Bank has also upgraded India’s growth forecast to 7.0 per cent for 2024-25. The growth momentum will be sustained by private capex as strong balance sheets of banks and corporates create favourable conditions.
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The bulletin underlined the divergence in monetary policies that will result from some of the central banks in advanced economies treading the path of rate cuts.
It highlighted the risks from premature loosening of monetary policy and said some of the central banks would want to tread with caution until inflation is durably reined in. "Central Banks in these countries need to remain watchful of their domestic inflation–growth balance and make policy choices.
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