Consumer price index-based (CPI) inflation rose to 5.6 per cent in November, but it is expected to ease to 4.6 per cent in the first three quarters of fiscal 2024-25 (FY25). Domestic financial markets have been lifted by the abiding strength of the real economy, it noted.
The broad-based strengthening of underway Indian economic activity will likely be sustained by easing input costs and corporate profitability, the RBI Bulletin said.
High frequency indicators suggest that the build-up in momentum will sustain over the rest of this fiscal.
The main risk to the outlook stems from the evolution of inflation in the months ahead.
In a latest show of strength and poise, India left sceptics gasping and woefully behind the curve as real gross domestic product (GDP) clocked a growth of 7.7 per cent in the first half of FY24, the Bulletin noted.
There is a distinct shift in the momentum of the Indian economy from a contraction in the first quarter to not just positive territory but also to well above trend in the second quarter. High frequency indicators suggest that this build-up in momentum will sustain over the rest of the fiscal, it said.
A silver lining is that hitherto tepid rural demand is on the mend.
The recent release of `10,000 crore to meet enhanced expenditure under the rural job guarantee. A major driver of growth has been the public policy thrust on infrastructure which has propelled gross fixed capital formation into double digit growth. This boost is also likely to be sustained as the quality of public spending improves on an ongoing basis.
The main risk to the outlook stems from the evolution of inflation in the months ahead, the Bulletin added.
Fibre2Fashion News Desk (DS)
