Express View on RBI studies: Carrying hope

Source: The post is based on the article “Express View on RBI studies: Carrying hope” published in “The Indian Express” on 19th August 2023.

Syllabus: GS3- Indian economy

News: The National Statistical Office will soon release GDP growth estimates for the first quarter (April-June). The RBI predicts an 8% growth. Despite global slowdowns and a drop in exports, India’s economy shows positive signs like increased private consumption and investment. However, some sectors, like auto sales, are weak.

What are the major outcomes of the RBI’s State of the Economy report?

RBI’s State of the Economy Report Outcomes:

1. GDP Growth Prediction:

The RBI expects 8% economic growth for April-June.

2. Global Recovery Status:

The global economic recovery is slowing down.

3. Export Situation:

Exports decreased by around 16% in July.

Merchandise exports were at a nine-month low of $32.25 billion.

4. Positive Economic Indicators:

Private consumption and investment activity might balance the decline in exports.

E-way bill volumes showed strong growth.

FMCG sales increased.

Cargo at major ports and railway freight traffic rose in July.

Steel and cement consumption went up.

5. Areas of Economic Concern:

Automobile sales, excluding three-wheelers, are low.

More households/individuals are seeking MGNREGA work than last year.

Non-oil imports decreased, indicating weak domestic demand.

Uncertainty about how much investment will increase.

6. Investment Intention Study:

In 2022-23, plans for 982 projects with Rs 3.5 lakh crore were made.

In 2021-22, it was 791 projects worth Rs 1.96 lakh crore.

60% of these projects, funded by banks and institutions, are in infrastructure.

Major areas: power, roads, bridges, SEZs, biotech, and IT parks.

Uttar Pradesh, Gujarat, Odisha, Maharashtra, and Karnataka have more than half the project cost.

7. Future Investment Cycle:

Strong bank and corporate balance sheets suggest a good future for investment.