MUMBAI:
RBI
, in its State of the Economy report, stated that the positive outlook for
agriculture
and the resurgence of rural spending are contributing to the growth momentum observed in Q2.
The monthly report said that
global economic activity
is strengthening across advanced as well as emerging market economies, and that global trade in goods & services is gathering momentum.
“The second quarter of 2024-25 has begun with signs of quickening momentum in the economy. The improvement in the outlook for agriculture and the revival of rural spending have turned out to be the bright spots in the evolution of demand conditions,” the report said.
Noting that disinflation has been grudging and headline inflation remains closer to 5% than to the 4% target in its latest readings, the report raises concerns over food prices. “The argument that food price shocks are transitory does not seem to be borne out by the actual experience over the past one year — too long a period for a shock to be termed as transitory,” the report said.
However, the authors, which include RBI deputy governor Michael Patra, do not rule out a change in policy stance before the 4% target is achieved. “Based on a careful evaluation of the balance of risks, an enduring movement towards the target should provide signals to forward-looking monetary policy to respond,” the report said.
On the external front, the report notes that rupee has been the most stable among major currencies during the month. NRI deposits recorded net inflows of $2.7 billion in April-May 2024 as compared to $0.6 billion a year ago.
Meanwhile, another report by RBI staff published in the July Bulletin said that as of the end of March 2023, household financial assets accounted for 135% of GDP while their financial liabilities were at 37.8% of GDP. This left their net financial wealth at 97.2% of GDP.
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