Despite the global economic slowdown, India has achieved remarkable growth figures.
Recently, the World Bank affirmed India’s position as the fastest-growing among major economies and upgraded India’s growth estimates by 20 basis points to 6.6 percent in June.
The International Monetary Fund (IMF) raised its GDP forecast by 30 basis points to 6.8 per cent. Concurrently, the Reserve Bank of India adjusted its growth projection from 7 percent to 7.2 per cent during its June Monetary Policy Committee meeting.
In a similar vein, the UN’s World Economic Situation and Prospects (WESP) for 2024 also revised India’s growth outlook from 6.2 per cent to 6.9 percent.
Several factors point to this optimistic outlook, including resilient domestic demand, heightened consumer confidence, increased investment activity, and favorable monsoon predictions.
At the current backdrop, here’s how the macroeconomic indicators performed in May of the current fiscal.
Goods and Service Tax
The Goods and Services Tax (GST) collections stand at Rs 1.73 Lakh crores in May 2024, reflecting a 10 per cent year-on-year growth. The growth is driven by a strong increase in domestic transactions (up 15.3 per cent) and slowing of imports (down 4.3 per cent). Among the states, Manipur and Ladakh registered the highest growth and the lowest growth rates at 48 per cent and -41 per cent, respectively.
Inflation
The annual inflation rate based on the all-India Consumer Price Index (CPI) hits a 12 month low and stood at 4.75 per cent in May 2024, slightly down from 4.83 per cent in April. This rate varied between rural (5.28 per cent) and urban (4.15 per cent) areas.
According to the Ministry of Statistics and Programme Implementation, ‘Spices’ has shown a considerable decline at sub-group level in year-on-year inflation as compared to April 2024. Among the groups, inflation corresponding to ‘Clothing & Footwear’, ‘Housing’ and ‘Miscellaneous’ has decreased since last month.
The annual rate of inflation based on all India Wholesale Price Index (WPI) number is 2.61 per cent.
Positive rate of inflation in April, 2024 is primarily due to increase in prices of food articles, electricity, crude petroleum & natural gas, manufacture of food products, other manufacturing etc.
Inflation Rates (Jan-May 2024)
Unemployment
Unemployment rate in India, among persons aged 15 years and above, saw a significant drop in May 2024. It fell to 7 per cent in the month, which was its lowest recorded since September 2022.
In April 2024, the unemployment rate was at a much higher 8.1 per cent. May’s unemployment rate was a notable decline from this level. It was also a substantial moderation from its average of over-8 per cent recorded in the past 12 months.
Unemployment Rates (January-May 2024)
Purchasing Manager’s Index
The seasonally adjusted HSBC India Manufacturing PMI fell to 57.5 in May 2024 from 58.8 in April 2024, indicating a slower but still substantial improvement in the manufacturing sector. The May figure remains nearly four points higher than its long-run average, reflecting continued expansion.
Factory Orders and Production, both expanded, but at softer rates compared to previous months.
Although new orders increased, the pace was the slowest in three months. Growth was driven by strong demand, marketing efforts, and favorable economic conditions, but was hindered by competition and election-related disruptions.
India’s Index for Industrial Production
The Index of Industrial Production (IIP) for April 2024, released in May, indicated a growth rate of 5% year-on-year.
The Quick Estimates of IIP with base 2011-12 stands at 147.7 against 140.7 in April 2023. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of April 2024 stand at 130.8, 144.2 and 212.0 respectively.
Within the manufacturing sector, the growth rate of the top three positive contributors to the growth of IIP for the month of April 2024 are – “Manufacture of basic metals” (8.1 per cent), “Manufacture of coke and refined petroleum products” (4.9 per cent), and “Manufacture of motor vehicles, trailers and semi-trailers” (11.4 per cent)
IIP Growth Rates by Sector for April 2024
Trade Merchandise
India’s merchandise and services exports began FY 2024-25 with a 6.88 per cent growth, amounting to USD 64.56 billion in April 2024. Merchandise exports alone grew by 1.08 per cent to USD 34.99 billion.
Major drivers of merchandise exports growth in May 2024 include Petroleum Products, Engineering Goods, Electronic Goods, Drugs & Pharmaceuticals, RMG of all Textiles and Plastic & Linoleum
Merchandise Export Growth Drivers (May 2024)
FII and DII Statistics
Foreign portfolio investors (FPIs) recorded net outflows of Rs. 12,911 crore in May 2024. Conversely, domestic institutional investors (DIIs) reported net investments of Rs. 45,000 crore. The equity markets ended the month with the NSE Nifty 50 and the BSE Sensex closing at 22,550.40 and 74,018.04, respectively.
UPI Transactions
The Unified Payments Interface (UPI) continued its upward trajectory, with 598 banks participating, compared to 581 in April 2024. The volume of transactions reached 14,035.84 million, and the value hit Rs.20,44,937.05 crore.
UPI Transactions (May 2024)
UPI Transaction Volume and Value in May 2024
Foreign Exchange Reserves
As of May 24, 2024, India’s foreign exchange reserves stood at ₹53,73,798 crore (USD 646,673 million), marking a weekly decline of ₹32,646 crore (USD 2,027 million) and a monthly increase of ₹56,542 crore (USD 8,751 million). Compared to the previous year, the reserves have increased by ₹5,09,242 crore (USD 57,535 million).
Foreign Exchange Reserves Breakdown
