Reserve Bank of India governor Shaktikanta Das believes that the growth recorded in the private final consumption for the first quarter of the current fiscal suggests that rural demand is picking up.
Private final consumption contributes 57 percent of India’s gross domestic product (GDP).
"Indian economy is now at a critical juncture. Massive changes are taking place in various economic sectors and market and the country is geared with orbital shifts," the governor said during FIBAC 2024 in Mumbai on September 5.
In the June quarter of FY25, the private consumption rose 7.5 percent, leaving behind a disappointing 4 percent recorded in FY24. However, the data has also puzzled experts as auto sales has declined in August, cement sales volumes moderated and the share of affordable housing has bee low even at a time when the gap between the rural and urban consumption is narrowing.
Das pointed out that, according to data, fundamental growth drivers of the economy are gaining momentum. "This gives us confidence to say that Indian growth story remains intact."
Amid concerns over food inflation, the governor said that the monsoon progressing well and healthy kharif sowing raising prospects of better harvest. "There is greater optimism that food inflation outlook could become more favourable during the course of the year. However, we need to remain watchful of forces impacting inflation playout. The balance be between growth and inflation is well poised."
Further, Das said that to achieve the goal of becoming an advanced economy by 2047, Indian economy needs a multi prompt and multi sectoral approach. "Our focus should be on employing all engines of growth from both supply and demand side. The supply side focus must encompass the agriculture industry and services," he said.
Providing a boost these targets, expenditure of states and Center is likely to pick up pace in line with budget estimates in the remaining quarters of current year, Das predicted.
Indicating a robust India Inc, the governor highlighted that the net corporate profits have grown by 14.2 percent in Q1FY25, reveled in RBI's survey of 2,934 private non-financial corporates.
Moreover, Das said that the central bank will set up a cloud facility for storage of financial sector data of all the firms, helping smaller entities.
"This will be of particular benefit to the smaller entities in the financial sector, whether they are small NBFCs, medium-sized NBFCs or small private banks or urban co-operative banks. We are working on cloud facility," he said.
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