Amidst all the global challenges, India’s economy is growing rapidly. As the world continues to grapple with record inflation, geopolitical tensions and supply chain challenges, India’s economy is growing at a faster pace than expected and remains the world’s fastest growing major economy. Global investment banking firm Nomura believes that the Indian economy may get support from rural areas in the coming days.
Demand will increase due to these reasons
According to Nomura, the pace of inflation is slowing down. This may increase demand. Especially rural demand is expected to increase during 2024. Apart from this, the banking firm has also told about the possible reasons for increasing rural demand. Since it is an election year, expenditure incurred before elections can also help the rural economy. Savings in rural areas had dried up during the Covid pandemic, but they are gradually returning to their previous state. All these factors together can support rural demand this year.
The economy will get help
Nomura says that consumption is going to remain strong even after the growth rate slows down in the coming days. The Indian economy may grow by 6.7 percent in the current financial year, which is likely to come down to 5.6 percent in the next financial year. However, even after this, due to reduction in price pressure, consumption is expected to increase on a large scale. This can prove helpful for the Indian economy.
Inflation can be this low
Nomura said that inflation is expected to be 5.6 percent in the current financial year, which may come down to 4.5 percent in the financial year 2024-25. The expenditure incurred before the elections is expected to bring additional cash into the rural economy. The government’s expectation of stability may also support rural consumption. Overall, there are many reasons in favor of boosting rural demand.
Recovery seen last year
According to global banking firms, another big factor in this direction is rural wages, which are consistently higher than rural inflation. That means people in rural areas are earning more than inflation. This factor could also boost consumption in rural areas, which has already seen a sharp improvement during 2023. Even though overall rural demand may have been weak in 2023, figures show that demand in rural areas has been improving throughout the year.
read this also: The pace of Indian economy will remain fast despite challenges, now this agency has increased its estimate
