The Indian economy continues to display resilience and stability, but Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the need for caution, especially in the face of fast-changing global dynamics. He highlighted that while the balance between inflation and growth is on track, India’s growth remains robust.

“Inflation is on a downward trajectory, although we still have progress to make. The external sector reflects the strength of the economy, with foreign exchange reserves reaching new heights. Fiscal consolidation is in progress, and the financial sector remains strong and resilient,” Das said in the RBI’s latest monthly bulletin.

He further noted that global investor confidence in India’s prospects is at an all-time high. However, he reiterated, “We are not complacent, particularly given the rapidly evolving global conditions. We are fully committed to ensuring inflation aligns with our target in a sustainable manner.”

The Central Bank reported that private final consumption expenditure (PFCE), a key component of aggregate demand, showed a robust recovery, growing by 7.4% in the first quarter of FY25 and contributing 4.2 percentage points to overall GDP growth.

“Rural demand is gradually picking up. Motorcycle sales continued their strong growth from April to August 2024, and tractor sales also rose during June and July,” according to the RBI.

Additionally, the demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) fell by 16.6% in the second quarter of FY25, signaling better employment in the agricultural sector.

“Spending on fast-moving consumer goods (FMCG) in rural areas is a positive indicator for rural demand. Favorable agricultural conditions, supported by above-normal monsoon rainfall, higher kharif crop sowing, and improved reservoir levels, are expected to sustain this recovery,” the report highlighted.

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