Private sector investments to get get a boost on pickup in rural demand: RBI
rural demand driven by improved monsoon prospects along with a rise in urban demand is expected to encourage investments by the private sector that could accelerate overall economic growth.
There are some lead indications already of new capacity creation in a few industries and a pick-up in investment intentions, said an assessment of the state of the economy by the Reserve Bank of India economists published in its latest monthly bulletin.
Aggregate demand conditions are gathering momentum after some slack in the first quarter of 2024-25. The central bank has projected an economic growth of 7.2 percent in 2024-25. " Rural consumption spending on the back of growing incomes is beginning to drive volume growth in fast moving consumer goods (FMCG), reflecting strengthening fundamentals." said a study by RBI deputy governor Michael Patra and his team published in the Bulletin. The views are those of the authors and not of the central bank.
Rural saving is also on the rise as evident in rising number and outstanding amounts of savings bank accounts, the study said The study noted that receding of inflation pressures appear to be the most important metric in rural spending resurgence, driving a catch-up with urban consumption volumes. 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 because of which the central bank did revise the policy repo rate and lft it unchnaged at 6.5 percent .
The average rural consumer is
