‘Economy on recovery path in Q3 driven by strong festive activity, rural demand’

“High frequency indicators (HFIs) for the third quarter of 2024-25 indicate that the Indian economy is recovering from the slowdown in momentum witnessed in Q2 (FY2025), driven by strong festival activity and a sustained upswing in rural demand,” the ‘State of the Economy’ article published in the RBI’s December bulletin said.

E-way bills increased by 16.3 per cent (y-o-y) in volume terms in November (Chart III.4a). Toll collections recorded double digit growth in November 2024, both in value and volume terms. Vehicle registrations continued to grow in double digits (y-o-y) in November 2024 with a month-on-month (m-o-m) pick up in registration of non-transport vehicles. The country’s fuel consumption surged in November 2024, driven by farm harvesting, increasing rural activity and robust air travel, it said.

The article has been prepared by the RBI’s Deputy Governor Michael Patra and other central bank officials. The RBI said the views published in the article are of the authors and not of the institution.

India’s growth trajectory is poised to lift in the second half of 2024-25, driven mainly by resilient domestic private consumption demand. Supported by record level foodgrains production, rural demand, in particular, is gaining momentum, the article said.

“Sustained government spending on infrastructure is expected to further stimulate economic activity and investment,” it said.

Global headwinds, however, pose risks to the evolving outlook for growth and inflation.

The article further said that expectations around India’s resilient growth trajectory going forward are also coalescing with a more sustainable underpinnings in view of positive climate action, with increased policy focus on renewable energy, electric vehicles (EVs), green hydrogen, and steps towards institutionalising the carbon market.

These concerted efforts indicate a promising path toward achieving net-zero emissions. Leveraging global frameworks for carbon trading and scaling climate finance, including green bonds, will further reinforce decoupling of growth and emissions.

Alongside, India is riding the wave of digitalisation to boost growth, improve productivity and enhance the reach of products and services, spurred by shifts in more discerning consumer behaviour and the deepening reach of online shopping, particularly in smaller towns.

“This surge also underscores a growing investor confidence and the momentum of innovative energies driving India’s FinTech ascendency,” the article said.