Amid growing optimism, India on cusp of long-awaited economic take-off: RBI

Economic Outlook: India is all set to witness a significant economic growth, buoyed by increasing aggregate demand and rising non-food spending in rural areas, as per the Reserve Bank of India's (RBI) May Bulletin released on Tuesday.
On the contrary, the global economic outlook appears fragile as the decline in inflation stalls, raising concerns about global financial stability, as per  an article on the "State of the Economy" in the Bulletin.
The article put together by a team led by RBI Deputy Governor Michael Debabrata Patra, highlighted the volatility in capital flows due to investors' growing risk aversion.

Economic Prospectus 

The RBI commentary has shown optimism about India's economic prospects, citing indicators that suggest a quickening momentum in aggregate demand. The country’s fast-moving consumer goods (FMCG) segment is witnessing an increased rural demand, which has surpassed the demand seen in urban markets seen in the quarter ending March.  This sort of a scenario is being seen for the first time in at least two years. FMCG volume growth reached 6.5 per cent, driven by a 7.6 per cent  increase in rural demand, compared to a 5.7 per cent rise in urban areas, with strong demand for home and personal care products.
Regarding private investment, the article noted that for listed private manufacturing companies, retained earnings were the primary source of funds during the second half of 2023-24. Initial results from listed corporations indicate the highest quarterly revenue growth for January-March 2024, both year-on-year and sequentially.
The RBI authors have indicated that a slight easing of headline inflation in April 2024, suggesting a gradual alignment with the target. However, prices of vegetables, cereals, pulses, meat, and fish may keep headline inflation near 5 per cent in the near term, despite deflation in fuel prices and further softening of core inflation to a new historic low.
The RBI clarified that the views expressed in the Bulletin article are those of the authors and do not represent the central bank's official stance.

(With PTI inputs)