In recent times, many leading agencies have reaffirmed high growth for the Indian Economy. Which of the following statement/statements can be the best reason/reasons for India's projected high growth?

I. Strong Private Final Consumption Expenditure (PFCE)

II. Government's shift of focus from large capital expenditure towards private investment

III. Increase in domestic air passenger traffic along with a reduction in the volume of Fast-Moving Consumer Goods (FMCG)

IV. Fading of the El Nino oscillation and better Rabi crop prospects

Select the correct answer using the codes given below:

The correct answer is 1) I and IV.

Key Points

• Strong Private Final Consumption Expenditure (PFCE): PFCE is a key driver of economic growth, reflecting the total value of all goods and services consumed by households. High PFCE indicates robust consumer demand, which is crucial for economic growth.
• Fading of the El Nino oscillation and better Rabi crop prospects: El Nino can cause severe weather disruptions, affecting agriculture. With its fading, agricultural productivity improves, positively impacting the economy.
• Government expenditure and private investments are also important factors, but in this context, the focus is on the direct consumption and agricultural output.
• Domestic air passenger traffic and FMCG volume are indicators of economic activity but are not primary drivers like PFCE and agricultural output.

Additional Information

• Private Final Consumption Expenditure (PFCE):
  • PFCE measures the total value of all goods and services consumed by households in an economy.
  • It includes expenditures on durable goods (e.g., cars, appliances), non-durable goods (e.g., food, clothing), and services (e.g., healthcare, education).
  • High PFCE indicates strong consumer demand, which drives economic growth and production.
• El Nino Oscillation:
  • El Nino refers to the periodic warming of sea surface temperatures in the central and eastern equatorial Pacific Ocean.
  • This phenomenon can disrupt normal weather patterns, leading to extreme weather events such as droughts and floods.
  • Its fading can stabilize weather patterns, leading to better agricultural output.
• Rabi Crops:
  • Rabi crops are sown in winter and harvested in spring. Examples include wheat, barley, and mustard.
  • Good Rabi crop prospects indicate favorable weather conditions and agricultural productivity, contributing to the economy.
• Fast-Moving Consumer Goods (FMCG):
  • FMCG are products that are sold quickly and at relatively low cost. Examples include packaged food, beverages, toiletries, and over-the-counter drugs.
  • While important for the economy, a reduction in FMCG volume may indicate a temporary slowdown in consumer spending.