Indian Economy To Recover In Q3 As Rural Demand Continues To Climb, Says State Of The Economy Report

The high-frequency indicators (HFIs) in the report for the Oct-Dec quarter in FY25 indicated that the Indian economy is recovering from the slowdown in momentum clocked in the preceding second quarter

The report further stated that the views expressed belong to the authors and not the central bank itself.

Source : Freepik

India’s gross domestic product (GDP) growth is expected to make a comeback in the third quarter of the current financial year, the latest State of the Economy report by the Reserve Bank of India (RBI) revealed. Notably, the economy clocked a GDP growth rate of 5.4 per cent in the July-September quarter in the 2024-25 fiscal year (FY25).

The high-frequency indicators (HFIs) in the report for the October-December quarter in FY25 indicated that the Indian economy is recovering from the slowdown in momentum clocked in the preceding second quarter. This revival is being backed by robust festive activity and a consistent upswing in rural demand, the report authored by RBI staff including Deputy Governor Michael Patra, noted.

The report further stated that the views expressed belong to the authors and not the central bank itself. India’s growth trajectory is set to climb back in the latter half of FY25, boosted by resilient domestic private consumption demand, reported Business Standard.

“Supported by record-level foodgrain production, rural demand, in particular, is gaining momentum. Sustained government spending on infrastructure is expected to further stimulate economic activity and investment,” the report noted.

Earlier, in its December review of the monetary policy, the central bank slashed its growth projection for FY24 from 7.2 per cent to 6.8 per cent.

The report pointed out that global headwinds pose risks to the changing outlook for growth and inflation. “The time to act is now to excoriate inflation and revive investment strongly, especially as the usual winter easing of food prices is setting in and the prospects of private consumption and exports accelerating are getting brighter,” the report said.

Further, the review said that HFIs indicate that aggregate demand continued to grow in October/November 2024. The E-way bills surged by 16.3 per cent on a year-on-year (YoY) basis in volume terms in November, while toll collections clocked double-digit growth in the month in terms of value and volume.