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The Reserve Bank of India’s (RBI) article on 'State of the Economy' published in the November Bulletin has said that private consumption is back driven by festive spending, and the medium-term economic outlook remains bullish as the innate strength of the macro-fundamentals reasserts itself. It said global economic activity remained resilient during Q4:2024 amidst fragile confidence and rising protectionism. It said ‘in India, the slack in speed observed in the second quarter of 2024-25 is behind us as private consumption is back to being the driver of domestic demand with festival spending lighting up real activity in Q3’. It also said the medium-term outlook remains bullish as the innate strength of the macro-fundamentals reasserts itself.

The article, prepared by a team led by RBI Deputy Governor Michael Debabrata Patra, further said the Indian economy is exhibiting resilience, underpinned by festival-related consumption, and a recovering agriculture sector. Record production estimates for kharif foodgrains as well as promising rabi crop prospects augur well for farm income and rural demand, going forward. In terms of institutional infrastructure, the adoption of digital crop surveys for accurate production estimation and the introduction of drones are set to bring long-term efficiencies and productivity gains to the sector by enabling the assessment of production conditions on a real-time basis and possibly in proactive supply management.

On the industrial front, it said manufacturing and construction are expected to sustain dynamism. EV adoption, favourable policies, subsidies, and growing infrastructure are positioning India as a leader in sustainable transportation and fostering job creation in emerging clean energy sectors. According to the article, India’s services sector is expected to sustain its growth momentum, robust job creation, and high consumer and business confidence. It further said that despite pressures in the bond and equity markets from global uncertainty and fluctuating foreign portfolio investments, financial conditions are likely to remain accommodative as reflected in corporate bond issuances and FDI inflows. The authors also said private investment is lacklustre as reflected in sequentially lower investment in fixed and noncurrent assets during July-September 2024 on account of subdued corporate earnings.