Key indicators suggest economy remains buoyant at end of FY24: NCAER

Indian economy shows resilience with PMI growth, strong GST collections, and bank credit growth

Key markers point to the buoyancy of the Indian economy at the end of FY 2023-24. The Purchasing Manager’s Index (PMI) for manufacturing has increased, while that of services maintained a robust trend, according to the Monthly Economic Review for March released by the National Council of Applied Economic Research (NCAER) on Sunday.

The PMI for manufacturing activity increased to 56.9 in February, reflecting a strong expansionary momentum. Growth in the output of eight key infrastructure sectors rose to a three-month high of 6.7 per cent in February from 4.1 per cent in January 2024.

GST collections too remained buoyant, reaching a value of Rs 1.7 lakh crore in February, registering a year-on-year growth of 12.5 per cent. Collections of GST E-way bills marked an equally impressive year-on-year growth of 18.9 per cent.

 

Bank credit growth remained strong at 20.5 per cent with robust growth for personal loans, services, and agriculture and allied activities.

“These and other markers corroborate the optimistic growth outlook of 7.6 per cent growth rate for FY 2023-24 as per the Second Advance Estimates,” said Poonam Gupta, director general, NCAER.

“As in the past economic growth has been accompanied by indicators pointing toward macroeconomic sustainability,” Gupta said, pointing out that the external sector, in particular, improved with the Current Account Deficit (for Q3 FY2023-24) moderating; remittances flow remaining high at $31.4 billion; services trade surplus increasing; portfolio inflows resuming; and all of this enabling a sharp increase in India’s foreign exchange reserves to nearly $650 billion.

Meanwhile, inflationary pressures remained elevated with Consumer Price Index headline inflation at 5.1 per cent in February 2024, primarily due to high food price inflation and despite core inflation declining.

“Strong growth combined with elevated inflation rates will likely result in a status quo on policy rates when the RBI Monetary Policy Committee meets on April 3-5,” Gupta said.