The central bank in its monthly bulletin noted that external agencies like International Monetary Fund and the World Bank have shown considerable appreciation for the dramatic reduction in poverty seen in recent decades.
The World Bank has estimated that only 12.9 per cent of the Indian population lived on $2.15 per day at the height of the Covid-19 pandemic in 2021. $2.15 is the the global benchmark for extreme poverty.
The IMF in its April 2024 World Economic Outlook noted that it expects robust growth in 2024 and 2025, “reflecting continuing strength in domestic demand and a rising working-age population”.
“Internationally there is a growing optimism that India is on the cusp of a long-awaited economic takeoff,” the central bank said in its State of the Economy article in the bulletin.
India economy outlook
Net profits for India’s listed non-financial companies declined year-on-year for the first time after four consecutive quarters of robust growth.”This suggests that gross value added (GVA) by manufacturing would have been muted in the fourth quarter of 2023-24 relative to preceding quarters, weighing in on overall GVA/GDP growth of the economy,” RBI said.Data indicators sow that economic activity in India rebounded in April. The RBI expects Q1FY25 GDP growth to hover around 7.5 per cent.
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“Recent indicators are pointing to a quickening of the momentum of aggregate demand. In the personal consumption space, Nielsen IQ data indicate that a welcome pivot is underway that will boost this category of spending,” the RBI said in its ‘State of the Economy’ article.
Rural demand for fast moving consumer goods (FMCG) has outpaced urban markets for the first time in at least two years, the bulletin said.
“In the quarter just gone by, FMCG volume growth of 6.5% was driven by rural growth of 7.6 per cent relative to urban growth of 5.7 per cent on the back of robust demand for home and personal care products.”
India inflation
Retail inflation in India measured using Consumer Price Index (CPI) showed a decrease in headline reading, dropping to 4.8 percent in April 2024 from 4.9 percent in March. This decline was attributed to a positive momentum of 48 basis points being counteracted by a favorable base effect of 51 basis points.
In April, year-on-year food inflation slightly quickened to 7.9 percent compared to 7.7 percent in March. Among food categories, inflation rose in cereals, meat, fish, and fruits, while eggs, milk, vegetables, pulses, sugar, spices, non-alcoholic beverages, and prepared meals saw a decrease in inflation. Edible oils continued to experience deflation, albeit at a reduced rate.
“A modest easing of headline inflation in the reading for April 2024 confirms the expectation that an uneven and lagged pace of alignment with the target is underway,” RBI noted.
