India’s consumption story optimistic, agriculture growth a bright spot: Report

New Delhi (The Uttam Hindu): The Reserve Bank of India’s (RBI) consumer confidence in November turned optimistic for the future while on the rural front, agriculture growth remained a bright spot, clocking a growth of 4 per cent in the second quarter (Q2) this fiscal (FY25), a report showed on Monday.

The private final consumption expenditure (PFCE) growth inched up to 6 per cent in Q2 FY25, against a growth of 2.6 per cent in Q2 FY24, a Bank of Baroda (BoB) report said.

"There are mixed signs of how the consumption story is faring so far as reflected by high-frequency indicators, including uptick in electronic imports. RBI’s consumer confidence in November 2024 turned optimistic for the future,” the report added.

On the rural front, agriculture growth remained a bright spot, clocking a growth of 4 per cent in the July-September period, against 1.7 per cent in the same period last fiscal.

"Rabi sowing so far has been higher compared with last year supported by good soil conditions and better reservoir levels," the report noted.

The area covered under the sowing of the Rabi crop in the ongoing season has gone up to 428.28 hectares (as on December 2), up from 411.8 lakh hectares. The increase in the sown area augurs well as it is expected to result in higher food production and spur growth.

The central bank, in its recent Monetary Policy Committee (MPC) meeting, did resort to a cash reserve ratio (CRR) cut of 50 bps which will add over Rs 1.16 lakh crore of liquidity.

"We see the beginning of the easing cycle (25bps) from February 2025 onwards,” the BoB report said. India’s GDP growth for Q2 FY25 moderated to 5.4 per cent. However, a rebound is expected in the second half of FY25, on the back of an acceleration in government spending.

"Consumption spending is also expected to inch up with support from rural spending and ongoing wedding season," the report noted.