Mumbai: The Reserve Bank of India’s June bulletin, released on Wednesday, highlights a discernible upward trend in India’s economic growth trajectory. From an average of 7% during 2003-19, the growth rate has accelerated to an average of 8% or higher from 2021 to 2024, bolstered by domestic drivers.
Recent indicators suggest a resurgence in private consumption, now increasingly inclusive of rural consumers, emerging as the primary driver of demand. The fast-moving consumer goods sector anticipates robust growth, buoyed by expectations of increased public welfare spending.
While traditional walk-in clientele have decreased, e-commerce platforms, particularly during heatwave conditions, have offset this decline. Investment has maintained steady growth, albeit with recent moderation attributed to transient uncertainty affecting investment decisions, expected to resolve in due course.
The bulletin underscores the pivotal role of revived private investment as a key growth driver in the foreseeable future, alongside the consolidation of public finances. Government consumption spending has moderately increased, underscoring sustained emphasis on capital expenditure, enhancing medium-term economic prospects and investor confidence.
“In a notable development, net exports, particularly in high-end manufacturing, have bolstered GDP contribution. The services sector is undergoing a transformation, with a shift towards high-value activities such as those facilitated by global capability centres (GCCs), evolving from cost-efficient entities to innovation hubs, increasingly spreading to tier-II cities,” the bulletin observes.
The focus is progressively shifting towards services exports and leveraging skilled workforces for sustained growth.
India’s hospitality industry aims to expand tourism horizons, boasting the largest sector in South Asia. A target of adding $1 trillion to GDP by 2047 underscores ambitions to establish India as a premier global tourist destination.
Highlighting the production front, manufacturing has led gross value added (GVA) expansion, complemented by robust growth in construction, both poised for promising near-term prospects.
The commercial real estate landscape in satellite and tier-II cities is undergoing significant transformation, spurred by infrastructure development, strategic urban planning, and competitive cost advantages.
The services sector continues to expand at pre-pandemic rates, driven prominently by finance, insurance, real estate, and business services.
While agricultural activities remained subdued, optimism prevails for improved performance in 2024-25, buoyed by favorable monsoon forecasts. The timely onset of southwest monsoon rains promises favorable conditions for kharif sowing and reservoir replenishment, aligning well with the targeted foodgrains production of 340 million tonnes for the 2024-25 crop year (July-June), as outlined in the bulletin.
