RBI December bulletin says growth indicators showing economic recovery

The global economy continues to exhibit resilience with steady growth and moderating inflation: RBI December bulletin

Easing food prices helped moderate the CPI inflation for November to 5.5%, and with Rabi sowing on track, prospects of agriculture as well as rural consumption are looking up, Reserve Bank of India's latest monthly bulletin released on December 24 said.

The bulletin added that the economy is recovering from a loss in momentum seen in the September quarter. The recovery in growth has been helped by a strong festive activity as well as sustained rural demand, said Reserve Bank of India.

"High frequency indicators (HFIs) for the third quarter of 2024-25 indicate that the Indian economy is recovering from the slowdown in momentum witnessed in Q2, driven by strong festival activity and a sustained upswing in rural demand," the State of the Economy bulletin said.

The GDP growth rate had slowed down to a seven-quarter low of 5.4% during the September quarter of this fiscal. "On the consumption front, FMCG companies attributing the muted demand to urban sluggishness on concerns about food inflation believe that the slowdown has bottomed out and stabilising as it awaits an upward spiral," the State of the Economy report said.

"Positives for consumption are also reflected in reports highlighting a pick-up in new hiring, likely being driven by sectors such as logistics, EVs and EV infrastructure, agriculture and agrochemicals, and e-commerce," the report added.

On government finances, RBI's article said Centre’s revenue collections have been buoyant in H1FY25, but there is a slack in the capital expenditure. It also mentioned that several States have announced sops in their 2024-25 Budgets, which 'may divert resources away' from critical social and economic infrastructure development.