New Delhi
Industrial activities in India may see a rise in the second quarter of the current financial year. The reason for this is increase in consumption and increase in exports and reduction in inflation. This information was given in the report released by CRISIL.
Rural economy may improve this year
The report said that till now high inflation rate, increased interest rates have reduced the credit growth rate. Besides this, consumption recovery has also been affected. Apart from this, it was further said in the report that there have been signs of reduction in food inflation. Due to this, consumption is expected to increase and due to good agricultural production this year, the rural economy may see improvement.
Government capital expenditure expected to improve in the second half
According to the report, the urban economy is facing a reduction in support from credit growth due to high interest rates. Lower expenditure by the government is expected to have a moderate impact on GDP growth. Although government capital expenditure is expected to improve in the second half of this financial year, the growth rate is likely to be slower than the previous financial year. A revival in private investment will be important to maintain the investment momentum.
We may see a decline in inflation rate
The report said that global trade is expected to increase this year and this will support export growth. However, there remains a risk of supply chain pressures due to global fluctuations. Exports are likely to be hit by uncertainties arising from the possibility of a US-China tariff war next year. According to CRISIL, higher interest rates and fiscal consolidation are likely to push GDP growth to 6.8 percent in FY25, compared to 8.2 percent in the previous fiscal.
Need to keep an eye on edible oil prices
The report expressed hope that food prices will decline in the coming weeks. In December, when the Kharif crop arrives in the market, the prices of vegetables come down. Last year’s high base will also help in reducing inflation. However, pressure on edible oil prices will have to be monitored.
According to the report, due to decline in food inflation, a decline in inflation rate may be seen in the coming months. We expect the average inflation rate in this financial year to be 4.6 percent.
