india aggregate demand And with the increase in expenditure on non-food items in the villages, the much-awaited economic takeoff is on the verge of taking off. This has been said in the May Bulletin released on Tuesday by the Reserve Bank of India (RBI). An article on ‘State of the Economy’ published in the Bulletin said that the outlook for the global economy is becoming fragile. The reason for this is that on one hand the decline in inflation is now slowing down, while on the other hand the risks to global financial stability are increasing again. It said capital flows have become unstable as nervous investors have become risk averse. This article has been written by the team led by Reserve Bank of India Deputy Governor Michael Debabrata Patra.
Demand in villages overtakes cities
The article says, “There is growing hope that India is on the threshold of the much-awaited economic takeoff. This is due to recent signals pointing towards an uptick in the pace of aggregate demand.” It said that for the first time in at least two years, rural demand for fast-moving consumer goods (FMCG) was up in the last quarter. Has gone ahead of urban markets. Volume growth of FMCG goods stood at 6.5 per cent driven by strong demand for household and personal care products. This growth was driven by rural growth of 7.6 percent. Whereas in urban areas the increase was 5.7 percent.
Companies presented good results
Regarding private investment, it is written in the article that some part of the earnings retained by listed private manufacturing companies remains the major source of funds in the second half of 2023-24. The financial results of the listed companies announced so far show that the growth in revenue achieved by them on annual and quarterly basis in the January-March quarter of the financial year 2023-24 was the highest. It is written in the article that there was a slight decline in headline (gross) inflation in April this year. This is in line with our expectations.
No relief from inflation yet
Despite softening of fuel prices and core inflation coming down to historically low levels, prices of vegetables, cereals, pulses, meat and fish in the food category are likely to keep retail inflation high and near five per cent in the near term. . This is in line with the Monetary Policy Committee (MPC)’s estimate in April. The central bank clearly stated that the things written in the bulletin are the views of the authors and do not represent the views of the Reserve Bank of India.
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