An article published in the latest monthly bulletin of the Reserve Bank of India said that amid a weak global outlook, the Indian economy is strengthening, led by domestic drivers – private consumption and fixed investment, and strong public sector capital expenditure. The supply response is improving and headline inflation has fallen from last month’s peak, the report added.
“In the second quarter, existing indicators point to increased sequential momentum, driven by domestic demand. Clothing and lifestyle retailers as well as shopping malls have seen a sharp recovery in sales across all price points over the past few weeks. This triggered a sharp recovery in sales across all price points. boosting hopes of a pickup in demand for the remainder of the festive season starting with Raksha Bandhan and Onam and cheering for discretionary retail spending,” the article said.
On the investment front, capital expenditure by large central public sector enterprises (CPSEs) was strong, reaching over 42% of the annual target of Rs 100 crore.
On the other hand, capital expenditure11 in the private corporate sector reportedly continued to slow down, although there were also reports of sectoral improvement on the basis of projects approved by banks/financial institutions.
Supply response is also improving. Although August was the driest and warmest since 1901, linseed sowing activity remained consistent with last year. The India Meteorological Department (IMD) said September precipitation is expected to be normal at 91 to 109 per cent of the long-term average (LPA), which should restore reservoir levels and soil moisture content.
“An important development in the implementation of monetary policy is the stabilization of core inflation, which also reflects the general easing of price pressures on its components, including goods and services. Both rural and urban CPI inflation have slowed, each tracking the extent of the moderation in headline inflation. ,” the article stated.
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