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News Excerpt:

The Reserve Bank of India in its recent Monthly Bulletin has said that "India is standing on the brink of a long-anticipated economic surge".

More about the news:

• The data was part of an article, 'State of the Economy' published in the monthly Bulletin of RBI.
• The article is prepared by a team led by Reserve Bank Deputy Governor Michael Debabrata Patra. 
• The RBI has said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.

Key takeaways from the article:

Growth forecast of Indian economy:

• According to the economic activity index (EAI), the economic activity rebounded in April 2024.
• India is likely to grow by 7.5% in the first quarter(May-June) of FY25.
• The growth is driven by rising aggregate demand and non-food spending in the rural economy. 
• The Indian economy has demonstrated marked resilience in the face of geopolitical headwinds impacting the supply chain.
• The Economic Activity Index (EAI) was constructed by extracting the common trend underlying 27 high-frequency indicators of economic activity, using a Dynamic Factor Model. 
• EAI was scaled to 100 in February 2020 and 0 in April 2020, the worst affected month due to mobility restrictions. 
• The Indian economy grew 8.2% in the June quarter, 8.1% in the September quarter and 8.4% in the December quarter of 2023-24. 
• The article noted that high-frequency indicators point towards sustained momentum in domestic demand conditions in April 2024. 
• Toll collections increased by 8.6% (y-o-y) in April 2024.  
• Meanwhile, the government will be releasing the quarterly GDP estimates for January-March, 2024 (Q4 2023-24), and provisional estimates of National Income for the year 2023-24 on May 31. 

Fast Moving Consumer Goods (FMCG):

• For the first time in at least two years, rural demand for fast-moving consumer goods (FMCG) has outpaced urban markets.
• FMCG volume growth of 6.5% was driven by rural growth of 7.6% relative to urban growth of 5.7% on the back of robust demand for home and personal care products.

Automobile:

• Automobile sales increased by 25.4% (y-o-y) in April 2024.
• It is led by strong growth in the two-wheelers and three-wheelers segment, while passenger vehicles recorded the highest-ever monthly sales. 

Inflation:

• Retail inflation fell to an 11-month low of 4.83% year-on-year in April from 4.85% in March.
• It was mainly due to a higher deflation in fuel and light and lower core inflation.
• The prices of vegetables, cereals, pulses, meat, and fish in the food category may keep the headline inflation elevated and closer to 5% in the near term.
• It is in line with projections set out in the April Monetary Policy Committee resolution in spite of deflation in fuel prices and further softening of core inflation to a new historic low.
• Headline inflation is an economy's total inflation. It is measured by the Consumer Price Index (CPI) in India.

Corporate sector:

• For listed private manufacturing companies, retained earnings remained the major source of funds during the second half of 2023-24.
• Listed corporations closed the financial year 2023-24 with the highest growth in quarterly revenues registered in January-March 2024.

Global Economy:

• The outlook for the global economy is turning fragile as the descent of inflation is stalling, re-igniting risks to global financial stability.