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Domestic business confidence points to robust optimism about near-term prospects

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Reserve Bank of India or RBI stated in a monthly update yesterday that real GDP expanded at a six-quarter high rate in October-December 2023, powered by strong momentum, robust indirect taxes and lower subsidies. RBI's nowcast of real GDP growth for January-March 2024 seen in conjunction with high-frequency indicators for the fourth quarter suggests that the NSO's estimate for the full year 2023-24 will be exceeded and a rate closer to 8% may be clocked. Purchasing managers' indices (PMI) reflect buoyant demand conditions, rising investment in technology, efficiency gains and favourable sales growth. The overall level of business confidence points to robust optimism about near-term prospects.

 

RBI noted that aggregate demand in the third quarter of 2023-24 was investment-driven, with some indications of a revival of the private capex cycle. Capacity utilisation in several sectors has reached a point where there has to be new investments. The biggest segment of aggregate demand - private final consumption expenditure - remained low, despite the third quarter coinciding with the festival season. Moreover, government final consumption contracted during the quarter.

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First Published: Mar 20 2024 | 12:13 PM IST

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