The finance ministry, in the monthly economic report for July, has maintained a positive stance on the economy, keeping the growth forecast at 6.5-7 per cent for the current financial year ahead of the release of gross domestic product (GDP) figures for the first quarter, even as the Reserve Bank of India’s (RBI) consumer confidence and industrial outlook surveys remained cautious.
The report released on Thursday said, “As of now, the projection of real GDP growth of 6.5-7.0 per cent for FY25, made in the Economic Survey for 2023-24, seems appropriate.”
The ministry added that both the consumer and industrial outlook surveys, which showed a declining trend, need to be monitored for future trends.
The report noted that lower optimism on the general economic situation, employment, and prices led to a moderation in the future expectations index of the Consumer Confidence Survey in July 2024. The industrial outlook survey of the manufacturing sector, also conducted by the central bank, showed a decline in both the current assessment and expectation indices of business sentiment in August.
The finance ministry expects capital expenditure and total expenditure to pick up in the remainder of the year after lower spending in the first quarter of this financial year due to the general election. Total expenditure and capital expenditure were lower by 7.7 per cent and 35 per cent year-on-year (Y-o-Y), respectively, in April–June 2024, the report said. “Capital expenditure is maintained at high levels, supporting the fledgling private investment cycle,” the report said.
On the fiscal front, it said the Union Budget FY25 has laid out a glide path for fiscal consolidation. Supported by strong revenue collection, discipline in revenue expenditure, and robust economic performance, the fiscal deficit is projected to decline.
The economic report said that the Indian economy experienced a notable upswing across various economic indicators in July 2024, signalling strong and resilient business activity.
“The month saw impressive milestones being reached, substantial growth in GST collections, and a significant rise in e-way bill generation, which point to an overall increase in economic activity. The stock market indices also reached record highs in July,” the report said.
On balance, the report said that India’s economic momentum remains intact and that despite a somewhat erratic monsoon, reservoirs have been replenished.
The ministry’s report also noted that inflation is moderating, and exports of both goods and services are performing better than they did last year.
Retail inflation decreased to 3.5 per cent in July 2024, the lowest since September 2019, driven by moderation in food inflation, the monthly economic report said, adding that steady progress in the southwest monsoon has supported kharif sowing.
First Published: Aug 22 2024 | 6:01 PM IS