Team Blitz India
NOTING that domestic FMCG sector may moderate over the next six months while demand outlook for premium consumer business is robust, the Reserve Bank of India in its March bulletin said that significant per capita income shifts are underway in India.
“The biggest segment of aggregate demand – private final consumption expenditure – remained low, despite the third quarter coinciding with the festival season,” the RBI said in the State of the Economy article. The government’s final consumption too contracted during the quarter.
Across many sectors, the capacity utilisation levels have reached a point where there have to be new investments, RBI said. “The high visibility of structural demand and healthier corporate and bank balance sheets will likely be galvanising forces,” it added.
On the growth front, the central bank said that the global economy is losing steam, with growth slowing in some of the most resilient economies and high frequency indicators pointing to further levelling in the period ahead. Given the continued nature of geopolitical tension, unsettled financial conditions and ‘stubborn’ inflation in major economies, the RBI expects a decline in global growth momentum.
“Geopolitical risks index also rose to a 19-month high in February, mainly due to risks emerging from the increased scope, scale and sophistication of cyber attacks, tensions in the middle east driven by the ongoing war in Gaza, and the potential for escalation of US-China tensions over Taiwan,” RBI said.
However, despite the worries abroad, RBI says that the Indian economy is experiencing “a conducive macroeconomic configuration that can be its launching pad for a step-up in its growth trajectory,” RBI said.
It also notes that the Indian economy’s GDP growth rate has averaged over 8 per cent over the period 2021- 24. “The underlying fundamentals indicate that this can be sustained and even built upon,” RBI said.
