Stage is set for a sustained pick-up in consumption demand in H2 and for a virtuous cycle of higher investments: RBI Bulletin

The growth outlook for H2 is one of optimism, RBI said in its September bulletin as high frequency indicators for August show manufacturing and services activity at a decadal high. Besides, S&P sovereign rating upgrade was an acknowledgement of its strong macro-fundamentals even as imposition of high US import tariff brought in some headwinds to the domestic macro-outlook, the central bank noted. Healthy corporate balance sheets and the focus on structural reforms by the government are the bright spots of the economy. Also, the landmark GST reforms should progressively result in a sustained positive impact through significant gains in ease of doing business, lower retail prices and strengthening of consumption growth drivers, RBI said.

A higher kharif sowing is expected to translate to a sustained growth momentum in the agriculture sector, while also keeping food prices under check. Meanwhile, the transmission of the front-loaded monetary policy easing measures have been robust. Coupled with income tax relief for households and employment augmenting measures, the stage is set for a sustained pick-up in consumption demand in H2 and potentially for a virtuous cycle of higher investments and stronger growth impulses, overcoming persistent global uncertainties, the central Bank noted.

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