It is hard to miss the cheer in the Reserve Bank governor’s August statement. Festive greetings open the monetary policy review, monsoon rains promise a bumper kharif crop, rural demand looks sturdy, and foreign exchange reserves stand at a comfortable $689 billion. Inflation has fallen to a 77-month low of 2.1% and growth projections are intact at 6.5%. The message is clear: India’s glass, in his telling, is more than half full.That tone rests on several tailwinds. A better-than-average monsoon is replenishing reservoirs and lifting rural sentiment. Government capital expenditure is running more than 50% above last year, providing ballast to investment and construction. Services exports, led by software and business support, continue to grow and now account for 4.3% of global trade. Food prices, long a source of volatility, are in rare deflation thanks to improved harvests and supply-side interventions. Bank balance sheets are healthier, and credit transmission from the 100 basis point easing since February is filtering through, albeit gradually.
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