RBI bulletin pegs India’s GDP growth in Q4 at 7%, corporate investments likely to surge
The Reserve Bank of India’s (RBI) monthly bulletin has projected a 7 per cent GDP growth rate for the fourth quarter of the current financial year. The bulletin also highlights sustained strength in demand conditions, consumer confidence, and enterprise surveys pointing towards strong business optimism. Additionally, it observes disruption in global trade flows and higher transportation costs due to the ongoing Red Sea conflict, but also notes the likelihood of the global economy exhibiting stronger than expected growth in 2024.
The bulletin states that the Indian economy continues to sustain the momentum achieved in the first half of 2023-24, with high frequency indicators pointing towards sustained strength in demand conditions. Consumer confidence has strengthened further, driven especially by optimism about the general economic situation and employment conditions, as per the RBI’s latest survey of households. Various enterprise surveys also point towards strong business optimism.
As per the bulletin, high frequency indicators point towards sustained strength in demand conditions in the economy during January 2024. E-way bills grew by 13.2 per cent in December 2023. Toll collections expanded by 15.5 per cent year-on-year in January 2024, although they sequentially moderated from a record in the previous month. Automobile sales had registered an expansion of 23.3 per cent year-on-year in January with two-wheeler sales recording double-digit growth.
In terms of the agriculture sector, the bulletin states that the rabi crop acreage during 2023-24 stood at 709.3 lakh hectares, a tad higher than the sown area last year and 5.2 per cent higher than the normal acreage. Area under all major crops, except rice and pulses, remained higher on a year-on-year basis.
The bulletin also addresses concerns such as the disruption in global trade flows and higher transportation costs due to the ongoing Red Sea conflict. However, it also states that the likelihood of the global economy exhibiting stronger than expected growth in 2024 has brightened in recent months, with risks broadly balanced.
The bulletin is upbeat on consumer price inflation coming off its November-December spikes in its January 2024 reading, while core inflation is at its lowest since October 2019. It points out that a stable and low inflation at 4 per cent provides the bedrock for sustaining economic growth. CPI inflation was projected at 4.5 per cent for the year 2024-25.
The RBI bulletin states that the Monetary Policy Committee (MPC) decided that monetary policy must remain disinflationary to ensure anchoring of inflation expectations and the progressive alignment of inflation outcomes with the target, while supporting growth.
In conclusion, the RBI’s monthly bulletin showcases a positive outlook for the Indian economy, with expectations of sustained growth in the coming quarters. While there are challenges such as disruptions in global trade and inflationary concerns, the bulletin emphasizes the need for a disinflationary monetary policy to support economic growth.
