Private consumption, rural demand revival to drive growth in Apr-Jun: RBI

India’s growth in the April-June quarter is expected to be driven by private consumption, supported by reviving rural demand, and renewed buoyancy in manufacturing, a Reserve Bank article said on Monday.

The global economy is transfixed in the cross-currents of slowing growth and high inflation, and an uneasy calm prevails in the global financial markets as they await clearer signals from policy authorities on banking regulation and supervision, and contours of deposit insurance, it said.

In April and the first half of May 2023, domestic economic conditions have sustained the quickening of momentum seen in the last quarter of 2022-23, said the article on ‘State of the Economy’.

Headline inflation eased below 5 per cent in April 2023, for the first time since November 2021.

It further said corporate earnings are beating consensus expectations, with banking and financial sectors posting strong revenue performance, aided by robust credit growth.

“GDP growth in the first quarter of 2023-24 is expected to be driven by private consumption, supported by revival in rural demand that is underway on the back of the encouraging developments in both the kharif marketing season of 2022-23 and the rabi marketing season of 2023-24, the sustained buoyancy in services, especially contact-intensive sectors, and moderating inflationary pressures,” it said.

The article has been authored by a team led by RBI Deputy Governor Michael Debabrata Patra.

The central bank, however, said the views expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India.