India’s growth outlook is supported by robust domestic engines, in spite of geopolitical tensions, asserted the RBI’s monthly bulletin published on Monday.
Some high-frequency indicators have, however, shown a slackening of momentum in the second quarter of 2024-25, partly attributable to idiosyncratic factors like unusually heavy rains in August and September.
Looking ahead, RBI said private investment is showing some encouraging signs while consumption spending is shaping up for a festival season revival.
“After remaining below target for two consecutive months, inflation surged in September, as an adverse statistical base effect was compounded by a resurgence in food price momentum,” the RBI bulletin read.
In parallel, there are other high-frequency indicators that show steady growth. Consumption spending is shaping up for a festival season revival, especially in small towns and lower-tier cities, RBI said.
“Despite high prices tempering some of the enthusiasm, many buyers are prioritizing discounts. Survey respondents are pointing to higher spending, driven by wardrobe updates, electronics, home decor, and jewellery purchases. Packaged food companies are ramping up supply chains and offerings for the festival seasons in expectations of an uptick in demand in both urban and rural regions,” RBI said.
Although initial e-commerce sales have been underwhelming, retailers are expecting a late-season push. The bulletin said consumer spending is expected to be about 25 percent higher than during Dussehra Diwali last year.
There are also expectations of a surge in hiring of gig workers for the festival season.
Foreign portfolio investments (FPIs) in equities and debt have been buoyant through June to September 2024, drawn by pull factors in the form of India’s growth story, a booming initial public offering (IPO) market, and the increasing weight of India in global indices.
In fact, India has led the global IPO market during 2024 so far, with both small and medium enterprises (SMEs) and the mainboard segment contributing to the surge.
The stage appears set for mega IPOs to shine this Diwali, with several companies lining up to make their shares public.
However, in October, FPIs have been net sellers in India. They have so far sold Rs 3,734 crore worth of equities in India on a cumulative basis. In the past five months, they have been net buyers.
(With ANI Inputs)
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