MUMBAI: The country is poised for an
economic rebound
, driven by a resurgence in
domestic demand
and strong agricultural prospects, and the time is ripe to take steps to rekindle demand and investment, RBI’s latest ‘state of the economy’ report said. The report has been released less than a fortnight before the Budget amid growing calls for the finance minister to revive consumption.
RBI’s monetary policy will follow the Budget.
“The time is apposite to rekindle the animal spirits, create mass consumer demand and trigger a boom in investment. There is a conducive quickening of high-frequency indicators of economic activity in the second half of 2024-25, bearing out the implicit pick up in real GDP growth for this period in the annual first advance estimates of the NSO,” the report said.
The State of the Economy report, which has been co-authored by RBI deputy governor Michael Patra, who retired this week, has an oblique farewell reference drawing from Alfred Lord Tennyson’s poem, “Ulysses”, which has themes of passing time and change, as well as the enduring power of human will. “We may not be that strength that once moved earth and heaven, but that which we are, we are; strong in will to strive, to seek, to find, and not to yield,” the report says quoting Tennyson.
On inflation, there is a continued caution on the ever-volatile food prices. “Headline inflation eased for the second successive month in Dec, although the stickiness in food inflation warrants careful monitoring of second-order effects,” the report states. This cautious optimism is echoed in the growth outlook, with RBI anticipating a revival in
public capital expenditure
on infrastructure to stimulate key sectors.
The report identifies green energy as a sector where “animal spirits in India are alive and well.” With solar and wind power capacities projected to exceed 100GW and 50GW, respectively, in 2025, India is on track for “accelerated growth in an environment of price stability in a greener, cleaner 2025”.
