The forecast of an above-normal monsoon, high-frequency indicators along with a more benign global outlook bode well for the Indian economy to grow by over 7% in 2024-25, according to the National Council of Applied Economic Research’s (NCAER) Monthly Economic Review for April.
A range of high-frequency indicators reveal the resilience of the domestic economy with the Purchasing Managers’ Index (PMI) for manufacturing at a 16-year high and UPI, the leading digital payments system, touching the highest volume since its inception in 2016.
While PMI for manufacturing increased to 59.6 in March, it remained robust for services too, increasing to 61.2, showing signs of expansion of the economy.
Goods and Services Tax (GST) collections reached Rs 1.8 trillion in March 2024, the second best since its rollout in July 2017, while UPI recorded 13.4 billion transactions in March 2024, the highest ever since its introduction with a growth of 55.3% on a year-over-year basis.
“These high-frequency indicators, coupled with a more benign global outlook projected by the International Monetary Fund (IMF) and the World Trade Organisation (WTO) bode well for the Indian economy during the current year,” said NCAER director general Poonam Gupta on Monday.
Indicating a soft landing, the IMF recently upgraded the global growth rate to 3.2% for this year and next year. Simultaneously, the WTO has projected that the world merchandise trade volume will grow 2.6% in 2024, following a 1.2% decline in 2023.
“Projected acceleration in both global growth and trade volumes as well as forecast of an above-normal monsoon indicate that the Indian economy can again attain growth rates higher than 7% during the current fiscal year,” Gupta added.
The Reserve Bank of India has projected the economy to grow by 7% in FY25 while the IMF has projected it to be 6.8%. Indian economy is estimated to have grown by 7.6% in FY24.
Consumer Price Index (CPI) headline inflation was down to 4.9% in March from 5.1% in February while core inflation came down to 3.2% during the same period.
The NCAER report said employment indicators again showed mixed trends with an increase in the number of net new subscribers under the Employees’ Provident Fund Organisation (EPFO) on a year-over-year basis. However, the overall online hiring activities moderated, as per the Naukri JobSpeak Index.