Private consumption to drive GDP growth in Q1
As per the report, the revival in rural demand is being seen due to record kharif (last year) and rabi harvests.
NEW DELHI: The Reserve Bank of India (RBI) in its monthly State of the Economy report has said that the country’s GDP growth in the first quarter of 2023-24 would be driven by private consumption, supported by revival in rural demand and renewed buoyancy in manufacturing on easing input cost pressures.
RBI predicts sustained buoyancy in services, especially contact-intensive sectors. RBI has predicted the real GDP to grow at 7.8% in the first quarter of 2023-24. As per the report, the revival in rural demand is being seen due to record kharif (last year) and rabi harvests.
“Going by lead indicators such as mandi arrivals and cumulative procurement of wheat so far, the rabi harvest may set a new record, which should provide a boost to the rural economy…mandi arrivals of paddy in kharif marketing season (Oct 2022 to date) have been the highest in eight years,” underlines the report.
The report says the manufacturing sector as a whole is expected to gain from softening input cost pressures, with capacity utilisation in manufacturing straining at trend levels and above it in some industries. It also says that private capital spending will need to get stronger to add additional capacity as demand picks up.
On services sector, the report cites high frequency indicators in the service sector for April 2023 to point out that economic activity is keeping pace. “Automobile sales recorded robust growth with acceleration in both two and three wheelers’ sales. Domestic and international air passenger traffic continued to see double-digit growth,” says the report.
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