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Indian economy grows in 24-25 as rural spending increases: RBI
Industry News- Jul 22,24
Rural spending is outpacing urban segments, narrowing the rural-urban divide, as highlighted by the recent monthly per capita consumption expenditure (MPCE) survey of the NSSO.
The Indian economy shows signs of acceleration in the second quarter (July-September) of 2024-25, driven by an improved agricultural outlook and a revival in rural spending, according to the Reserve Bank of India's (RBI) monthly bulletin released.
Rural spending is outpacing urban segments, narrowing the rural-urban divide, as highlighted by the recent monthly per capita consumption expenditure (MPCE) survey of the NSSO. This surge is supported by rising fiscal transfers, increased wages typified by MGNREGS, and higher remittances to rural households due to urban migration, enhancing the effective spending power of rural households, the bulletin states.
The survey reveals that rural consumption patterns show a higher share of conveyance, medical expenses, and consumer services compared to cereals. These developments suggest that rural India is catching up with urban areas, fostering convergence, according to the report.
The rural recovery is positively impacting companies in the fast-moving consumer goods (FMCG) sector, with earnings upgrades boosting stock valuations and reflecting improved sales volumes as inflation moderates. Manufacturing is also gaining momentum, with the purchasing managers’ index (PMI) surpassing its long-run average in June, driven by new orders.
Manufacturing, a key pillar for achieving higher development levels, needs to increase its share to 20-25% of GDP to establish India as a global manufacturing hub. This expansion will boost employment in crucial sectors such as electronics, pharmaceuticals, textiles, and automobiles, giving Indian products a competitive edge internationally, the report adds.
The bulletin also notes that global economic activity is strengthening across advanced and emerging market economies, with global trade in goods and services gathering momentum, which bodes well for India’s exports. With exports nearing $780 billion in 2023-24 and a cumulative growth rate of 10.2 % in the first quarter, India is well-positioned to achieve over $800 billion in exports in 2024-25.
(Source: IANS)
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