Amid an uncertain global economic outlook, headwinds from supply chain pressures induced by global freight and container costs, and semiconductor shortage, Indian economy remains resilient, stated RBI’s ‘State of the Economy’ report. The Central Board of Directors of the Reserve Bank of India on Tuesday reviewed the global and domestic economic scenario and outlook, including associated challenges.

This review, released in the latest monthly bulletin, comes in the backdrop of persistent geopolitical tensions, rekindled fears of a potential recession in key economies and financial market volatility in response to monetary policy divergence, casting a shadow on global economic prospects even as inflation moderated grudgingly across countries.

Rural consumption

In India, aggregate demand conditions are gathering momentum with revival in rural consumption, riding on the back of growing income, per the RBI staffers.

This stimulus to demand is expected to reinvigorate the hitherto subdued participation of the private sector in total investment, they said. Headline inflation moderated from its spike in June to 3.5 per cent in July, but this was primarily due to the downward statistical pull of base effects.

GDP forecast

“The momentum of global disinflation is slowing, however, warranting caution in easing monetary policy. Financial conditions have been accommodative despite the upward drift in longer-term yields.....Our economic activity index (EAI), based on a range of high frequency indicators, projects GDP growth of 7.2 per cent in Q2:2024-25,” the bulletin said.

The Board, under the Chairmanship of Governor Shaktikanta Das, also reviewed various areas of operations of the Reserve Bank of India including the functioning of Local Boards and activities of select Central Office Departments.

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