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Private consumption is back driven by festive spending, and the medium-term economic outlook remains bullish as the innate strength of the macro-fundamentals reasserts itself, the Reserve Bank Bulletin said on Wednesday.

Global economic activity remained resilient during Q4 FY24 amidst fragile confidence and rising protectionism, read the RBI’s ‘State of the Economy’ report in the November Bulletin.

“In India, the slack in speed observed in the second quarter of 2024-25 is behind us as private consumption is back to being the driver of domestic demand with festival spending lighting up real activity in Q3,” it said.

It added the medium-term outlook remains bullish as the innate strength of the macro-fundamentals reasserts itself.

The article, prepared by a team led by RBI Deputy Governor Michael Debabrata Patra, further said the Indian economy is exhibiting resilience, underpinned by festival-related consumption, and a recovering agriculture sector.

Record production estimates for kharif foodgrains, as well as promising rabi crop prospects, augur well for farm income and rural demand, going forward.

In terms of institutional infrastructure, the adoption of digital crop surveys for accurate production estimation and the introduction of drones are set to bring long-term efficiencies and productivity gains to the sector by enabling the assessment of production conditions on a real-time basis and possibly in proactive supply management, the authors said.

“On the industrial front, manufacturing and construction are expected to sustain dynamism. EV adoption, favourable policies, subsidies, and growing infrastructure are positioning India as a leader in sustainable transportation and fostering job creation in emerging clean energy sectors,” they said.

According to the article, India’s services sector is expected to sustain its growth momentum, robust job creation, and high consumer and business confidence.

It further said that despite pressures in the bond and equity markets from global uncertainty and fluctuating foreign portfolio investments, financial conditions are likely to remain accommodative as reflected in corporate bond issuances and FDI inflows.

The authors also said private investment is lacklustre as reflected in sequentially lower investment in fixed and noncurrent assets during July-September 2024 on account of subdued corporate earnings.

The article said footfalls in malls may be low but ecommerce is burgeoning with a variety of marketing strategies and brand recall initiatives to catch the attention of Generation Z. FMCG and auto companies have been stepping up ad spending to revive demand.

“Rural India is emerging as a gold mine for e-commerce companies in this festival season; this is expected together further momentum with the sharp increase in kharif output and optimism around rabi production emboldening a record foodgrains target for 2024-25,” it said.

On global economic activity, the article said it remained resilient during the October-December period of 2024 amidst fragile confidence and rising protectionism.