Reserve Bank of India’s (RBI) Monetary Policy Report- April 2024 has said that the government's continued emphasis on infrastructure creation, coupled with an uptick in private corporate investment and buoyant business optimism, could nurture a sustained revival in the investment cycle, which augurs well for boosting productivity and growth in the economy. It said domestic economic activity, backed by strong fundamentals, remained robust in the first half of 2023-24, weathering challenges from muted global demand.
The report further said that while the fixed investment and the lower drag from net external demand propelled real GDP growth, private consumption received support from steady urban demand. On the supply side, it said, manufacturing activity strengthened further, benefiting from lower input costs and the improvement in global supply chains. Construction activity remained firm on the back of buoyant housing demand and the government's thrust on infrastructure. He noted that going ahead, private consumption will get support from improved prospects for rural demand and rising consumer confidence.
It further said that the impact of a lower fiscal impulse on growth could be offset by higher growth-inducing capital expenditure. The economy's medium and long-term growth potential is rising, propelled by structural drivers like improving physical infrastructure; development of world class digital and payments technology; ease of doing business; enhanced labour force participation; and improved quality of fiscal spending.
