The governor of the Reserve Bank of India (RBI), Shaktikanta Das, addressed the State Bank of India Banking & Economics Conclave on the state of the economy. He majorly touched on private consumption, investment revival, public expenditure, exports, and the role of the financial sector. Some of the points he highlighted further in the article.
He started by showing optimism in the economy’s growth so far and for the future by mentioning that there is potential to grow at a reasonably high pace moving forward. Several parameters are helping in the continued growth. With the status of an emerging market and developing economy, it has favourable demographics, the potential for a greater skill base and strong domestic demand.
The second parameter is the support from the central government through reforms in various sectors and capital expenditure. This support will lead to productive asset creation, promoting job creation and increasing purchasing power and labour productivity.
The third parameter is the broader accommodation of digital and green technology, accelerated by the need during the pandemic. It has also reset the global supply chain, opening more opportunities for the country to tap in. The fourth parameter is export, as it will benefit from the reset in the global supply chain.
The consumption demand increased recently due to the festive season, increasing production capacity and generating employment. Coupling with the cut in excise duty on petrol and diesel and the value-added tax (VAT) by various state governments increases the purchasing power. There is hope that this cycle will repeat and ultimately increase the supply and demand sides, sustaining growth.
However, the contact-intensive services are yet to recover fully. The first quarter of the financial year on the GDP revealed a gap to cover in private consumption and investment.
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