As per Das, good progress of the southwest monsoon and Kharif sowing would extend the much-needed support to rural consumption.
India’s domestic economic activity is exhibiting signs of broadening with indicators on the demand side pointing towards improvement in urban areas, said Reserve Bank of India (RBI) Governor Shaktikanta Das in a statement which was part of RBI’s bulletin for August.
The RBI chief added that the southwest monsoon rainfall and reservoir levels are above normal this year and the Kharif sowing is progressing well.
“High frequency indicators of the services sector like railway freight traffic, port freight traffic, e-way bills, toll collections and commercial vehicle sales remained robust in June and July. Investment activity is also picking up – the production of capital goods recorded double-digit growth for the second month in a row in May and import of capital goods also witnessed robust growth in June,” said Das.
India’s manufacturing PMI strengthened to an 8-month high of 56.4 in July, clocking a sequential growth from 53.9 in June and 54.6 in May. Das said that capacity utilisation in the manufacturing sector is now above its long-run average thus signalling the need for fresh investment activity for creating additional capacity.
“Bank credit growth has accelerated to 14.0 per cent (y-o-y) as on July 15, 2022 from 5.4 per cent a year ago. Incoming data of corporates for Q1 indicate that sales and demand conditions and profitability of manufacturing sector remained buoyant,” added Das.
As per Das, good progress of the southwest monsoon and Kharif sowing would extend the much-needed support to rural consumption. Urban consumption, on the other hand, is expected to benefit from the demand for contact-intensive services, improved performance of corporates and enhanced optimism of the consumers. Investment activity in the country should also receive the needed support through different avenues such as capacity utilisation, the government’s Capex push and large expansion in bank credit.
“According to our survey, manufacturing firms expect sustained improvement in production volumes and new orders in Q2:2022-23, which is likely to sustain through Q4. At the same time, the domestic economy faces headwinds from global forces – protracted geopolitical tensions; rising global financial market volatility; tightening global financial conditions; and global recession risks,” said Das.
Source: https://www.businesstoday.in/