April-June growth to be driven by private consumption, rural demand: RBI

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India’s growth is expected to be primarily driven by private consumption, with support from a revival in rural demand and a resurgence in manufacturing during the April-June quarter, according to the Reserve Bank of India’s (RBI) monthly bulletin released this week. 

Domestic economic conditions have maintained the positive momentum observed in the previous quarter of 2022-23, during April and the first half of May 2023. Headline inflation in April 2023 dropped below 5% for the first time since November 2021. This aligns with the earlier report from the finance ministry in March, which indicated a rebound in demand. The finance ministry projected that private consumption in India would grow by 7.3% in 2022-23, reflecting the release of pent-up demand for contact-intensive services. In the previous fiscal year, private consumption grew by 11.2%.

Furthermore, corporate earnings are surpassing consensus expectations, with the banking and financial sectors demonstrating strong revenue performance, supported by robust credit growth.

The bulletin concluded by stating that GDP growth in the first quarter of 2023-24 is expected to be driven by private consumption, aided by the ongoing revival in rural demand resulting from positive developments in both the Kharif marketing season of 2022-23 and the Rabi marketing season of 2023-24. Additionally, the sustained growth in services, particularly contact-intensive sectors, and easing inflationary pressures are expected to contribute to economic growth.

Source: Economic Times

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