Economy to Expand Faster In Q3

The Indian economy, buttressed by North Block’s unwavering focus on productivity-boosting structural reforms, investments and ‘ebullient’ domestic consumption, is expected to expand faster in the third quarter than earlier estimated despite lingering growth concerns beyond home, the central bank said in its latest bullet in.

“Investment demand appears to be resilient with the government’s infrastructure spending, an uptick in private capex, automation, digitalization, and indigenization providing a boost,” the Reserve Bank of India (RBI) said.

India’s gross domestic product (GDP) expanded 7.8% in the first quarter of FY2024, through which the RBI expects the economy to increase 6.5%. Several global economic think-tanks expect India to be growth driver through this year and the next although global trade remains rather shaky, posing expansion challenges for several competing high-growth economies.

The RBI bulletin said the global economy is showing signs of slowing in the final quarter of 2023. By contrast, however, the pace of expansion in third-quarter GSP in India should be faster sequentially.

The RBI said that in urban areas, there is strong demand through the season, especially in the mid and premium segments. The entry-level segment demand is, however, relatively subdued as ‘premiumisation’ shows clear signs of developing into a consistent trend.

 “The policy focus on strengthening macroeconomic fundamentals and continued structural reforms have made India distinct in terms of growth outcomes,” the RBI bulletin said.

While growth remains on track, inflation is on a path of moderation, although the consumer price gauge remains above the target, the RBI noted. Headline inflation, remains vulnerable to recurring and overlapping food price shocks.