Private investment is showing encouraging signs on the back of rising business optimism and a pick up in consumption demand during the ongoing festival season, according to the Reserve Bank's October bulletin released on Monday.

Aggregate demand is poised to shrug off the temporary slowdown in momentum in the second quarter of 2024-25 as festival demand picks up pace and consumer confidence improves, the article on the 'State of the Economy' published in the bulletin said.

Further, rural demand is expected to get a boost from the improved agricultural outlook. "Private investment should pick up steam in response to signs of a pick-up in consumption demand and rising business optimism."

With the financial sector ready to intermediate resources for investment, buffered by healthy balance sheets, and the government's continued thrust on capex, the investment outlook appears bright.

The article authored by a team led by RBI deputy-governor Michael Debabrata Patra said the global economy remained resilient in the first half of 2024, with declining inflation supporting household spending.

Stable growth momentum amidst monetary policy easing is becoming the prevailing theme across most economies.

"In spite of geopolitical tensions, India’s growth outlook is supported by robust domestic engines," it said.

Some high-frequency indicators have, however, shown a slackening of momentum in the second quarter of 2024-25, partly attributable to idiosyncratic factors such as unusually heavy rains in August and September.

"Looking ahead, private investment is showing some encouraging signs in terms of lead indicators while consumption spending is shaping up for a festival season revival," the authors said.