New Delhi [India]NEW DELHI, Aug. 16 (Xinhua) — India's rural economy has emerged as a major driver of economic growth, outperforming urban areas, largely due to increased government spending in recent quarters, highlighted in a report by financial services firm Anand Rathi.

“Rural India continues to grow faster than urban areas, mainly due to an increase in government spending in rural areas in the last quarter,” the report said.

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The report said that the trend of rural economic growth is expected to continue in the coming months, although there is a possibility of a slowdown in growth. The report also added that favourable seasonal conditions and better planting dates are expected to support increased demand in rural areas and provide a buffer against potential economic uncertainty.

“We expect this growth to slow after the election, and favourable monsoon conditions and improved planting dates should support the upward trend in rural demand.”

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The report also highlights that the government's ambitious Rp11.1 trillion investment plan is expected to boost infrastructure development and further improve the prospects of the rural economy.

The rural economy plays an important role in the development of the country as the majority of the population still lives in rural areas. According to the Economic Survey 2022-2023, around 65 percent of India's population lived in rural areas in 2021.

The report also notes that India stands out among developing countries due to its strong GDP growth.

Last year, India recorded growth of more than 8%, and the Reserve Bank of India estimates that growth will reach 7.2% in fiscal 2025. The fiscal outlook is positive, and efforts are being made to reduce the fiscal deficit to 4.5%.

The report also noted that India's credit rating could improve due to high tax revenues and large distributions from the Reserve Bank of India, leading to a smaller than expected fiscal deficit.

“The fiscal outlook looks promising with the focus remaining on reducing the fiscal deficit towards the 4.5 per cent target. Strong tax revenues and a generous dividend from the RBI could push the fiscal deficit below estimates, which could lead to an upgrade in the sovereign rating,” the report said. (ANI)

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