Introduction

Recently, in 2024-25, the following key indicators highlighted improved performances:

• Private consumption stood at 56.3% of the GDP in first quarter of FY25, compared to 55.9% in the same quarter last year. The growth in the private consumption remained muted mainly due to the factors like subdued monsoon and persistent food inflation.
• The agricultural sector maintains robust growth, showing positive advancements in Rabi sowing, where the cultivated area has expanded from 709.09 lakh hectares in 2022-23 to 709.29 lakh hectares in 2023-24 (as on February 1, 2024). To enhance production and bolster farmers' income, elevated Minimum Support Prices (MSPs) have been declared for the upcoming Rabi Marketing Season (RMS 2023-24), ranging from 2.0 to 9.1%. The area sown under the kharif crops also expanded by 8.9% compared to the same period last year, as of May 10, 2024. Crops like rice, Shree anna, coarse cereals, pulses and oilseeds contributed to this increase, which might lead to rise in the production.
• CPI inflation increased to 6.21% in October 2024 from 5.49% in September 2024. 
• Services PMI increased to 56.0 in October 2024 as compared to 54.9 in September 2024. 
• The consumption of petroleum products during FY25 (April-October 2024) stood at 137.649 MMT in volume terms.  
• Quick Estimates for India's Index of Industrial Production (IIP) for September 2024 stood at 146.7 against 145.6 for August 2024. 
• The combined index of eight core industries stood at 161.2 for FY25 (April-September) against 154.7 for FY24 (April-September).  
• Cargo traffic handled at major ports stood at 481.88 million tonnes (MMT) during April-October FY25.  
• Railway freight traffic stood at 126.97 million tonnes in August 2024. 
• During April 2024-September 2024 (2024-25), air freight movement increased by ~15% to 1,862.9180 thousand tonnes compared to 1,619.6245 thousand tonnes in April 2023-September 2023 (2023-24) period. 
• A total of 61.9 crore e-way bills were raised in April-September 2024. 
• India registered a broad-based expansion of 7% in FY23, supported by robust domestic demand and upbeat investment activity. Sectoral analysis reveals that growth was driven by demand from the services sector, and enhanced agriculture export activity was aided by increased infrastructure investment. Private consumption has peaked, marking the highest level during all second quarters in the last 11 years, accounting for 60.6% of the Gross Domestic Product (GDP). The investment rate also rose to be the highest among all the second quarters since 2012-13 at 34.6% of GDP, hinting at the beginnings of an investment cycle.
• In October 2024, gross GST revenue collection reached Rs. 1.87 lakh crore (US$ 22.34 billion), marking a ~8.9% YoY growth; positive trends were observed across components including CGST, SGST, IGST, and Cess collections, with significant inter-governmental settlements contributing to revenue distribution among states/UT.  
• In November 2024, the Indian basket of crude oil reached US$ 72.96 a barrel, compared to US$ 75.12 in October 2024. 
• In October 2024, UPI volume stood at 16,584.97 million transactions worth Rs. 23.49 lakh crore (US$ 280.74 billion). 
• Merchandise exports during FY25 (April-October 2024) stood at US$ 252.28 billion. 
• The average daily net injection under the liquidity adjustment facility (LAF) stood at Rs. 1.94 lakh crore (US$ 23.27 billion) during January 19 to November 20, 2024. 
• In FY25, as of October 25, 2024, foreign exchange reserves in India stood at US$ 684.80 billion.  
• As of November 8, 2024, the currency in circulation (CIC) registered Rs. 35.30 lakh crore (US$ 421.85 billion).  
• Rupee strength reached Rs. 84.45/US$ as of November 21, 2024. 
• The total foreign direct investment (FDI) equity inflow received by India in FY25 (April to June 2024) amounted to US$ 16.17 billion.
• According to RBI:
  • Bank credit stood at Rs. 171.25 lakh crore (~US$ 2.04 trillion) as of September 20, 2024. 
  • Credit to non-food industries stood at Rs. 171.05 lakh crore (~US$ 2.04 trillion) as of September 20, 2024. 

India's economy outpaced other economies during the first half of FY24, propelled by robust demand and increased investment. As of October 2024, the annual retail price inflation in India rose to 6.21%, an increase from the previous month 5.49%, beyond the tolerance band set by the Reserve Bank of India (RBI). The real investment rate during Q2 of FY23, prevailing at a high level of 34.6%, demonstrates the Government's continued commitment towards asset creation.  

An overall rise in Rabi coverage with adequately filled irrigation reservoirs played a pivotal role in the agricultural output growth in 2022-23. An increase in minimum support prices for both Kharif and Rabi crops in 2022-23 and progress in rice procurement have already been supplementing rural incomes in the country. Higher incomes have further resulted in an increase in sales of passenger vehicles, two and three-wheelers, and tractors by a good year-on-year margin in January. The increase in GST collection, the strong generation of e-way bills, and the growth in e-toll collection serve as reaffirmations of the resilience within economic activity.

In addition, steady growth momentum in service activity continues with healthy PMI levels during October to January, attributing to the growth in output and accommodating demand conditions, leading to a sustained upturn in sales. The growth impetus in rail freight and port traffic remains upbeat, with further improvement in the domestic aviation sector. Strong growth in fuel demand, domestic vehicle sales, and high UPI transactions also reflect healthy demand conditions.

Capital expenditure by the Government during April-August FY25 amounted to Rs. 3 lakh crore (US$ 35.97 billion).

The Union Budget 2024–25 focused on employment, skilling, MSMEs, and the middle class. Prime Minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth over a 5-year period with a central outlay of Rs. 2 lakh crore (US$ 23.94 billion). Provision of Rs. 1.48 lakh crore (US$ 17.72 billion) for education, employment and skilling. In pursuit of ‘Viksit Bharat’ and the strategy set out in the interim budget, the Union Budget includes the following 9 priorities for generating ample opportunities for all: (i) Productivity and Resilience in Agriculture, (ii) Employment & Skilling, (iii) Inclusive Human Resource Development and Social Justice, (iv) Manufacturing & Services, (v) Urban Development, (vi) Energy Security, (vii) Infrastructure, (viii) Innovation, Research & Development, (ix) Next-generation Reforms.

Strengthening the banking and financial sector is evident, given the stability in foreign direct investment (FDI) inflows, a resurgence in Foreign Portfolio Investment (FPI) inflows, and ample foreign exchange reserves providing a robust import cover of 9 months. The external front remains resilient, contributing to the commendable performance of the INR compared to other Emerging Market Economies (EMEs).

India's services exports demonstrated robust performance during April-July period of FY25 with an estimated value of services export amounting to US$ 117.35 billion, registering ~9.88% growth compared to the same period of previous fiscal year. This growth is predominantly fuelled by the software and business services sector. With a projected 8% increase in global IT spending for 2024, India's services exports outlook remains favourable. The narrowing merchandise trade deficit and the upward trajectory of net services receipts are anticipated to contribute to an enhancement in India's current account deficit.

As we move ahead in 2024, the global economic landscape is anticipated to introduce further complexities, necessitating sustained vigilance to uphold India's external resilience. It is important for India to address medium-term challenges, including securing technology and resources for energy transition and skill development for the 21st-century economy. Concurrently, maintaining fiscal consolidation at the general government level is crucial.

The Indian economy shows promising signs with the RBI forecasting a 7.2% real GDP growth for FY25, supported by the prospects of robust rabi harvesting, manufacturing profitability, and resilient services. While risks such as geopolitical tensions and supply chain disruptions persist, lower input prices and moderated food inflation are expected to positively impact output growth and export prospects. With efforts to enhance export competitiveness and stable inflation rates, the outlook for India's economic growth remains favourable.

The collective efforts invested over the past several years have laid a robust foundation, providing a sturdy platform upon which the framework of a middle-income economy can be built.