The Reserve Bank of India (RBI), in its monthly statement released on Wednesday, said the landmark GST reforms are poised to deliver a sustained positive impact through improved ease of doing business, lower retail prices, and stronger consumption growth drivers.
With income tax relief for households and employment-enhancing measures, the central bank noted that conditions are set for a steady pick-up in consumption demand in the second half of the fiscal year, potentially creating a virtuous cycle of higher investments and stronger growth, despite global uncertainties.
According to the statement, higher kharif sowing is expected to support sustained agricultural growth while keeping food prices under check. The transmission of front-loaded monetary policy easing has remained robust, it added.
“Healthy corporate balance sheets and the focus on structural reforms by the government are the bright spots of the economy. The landmark GST reforms should progressively result in a sustained positive impact through significant gains in ease of doing business, lower retail prices and strengthening of consumption growth drivers, the officials stated.
High-frequency indicators signalled steady economic activity in August, with rural demand staying strong even as urban demand showed mild weakness. Consumption expenditure and fixed investment activity stayed firm, offsetting the decline in net exports. The RBI projected an optimistic growth outlook for the second half of the year, citing healthy corporate balance sheets and the government’s continued focus on structural reforms as key positives for the economy.
