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High-Frequency data for June signals strong economic growth over 7% for fifth consecutive quarter in Q1FY25


High-frequency data indicates that the Indian economy is set to grow over 7 percent for the fifth consecutive quarter in Q1FY25. This positive trend aligns with the Reserve Bank of India’s (RBI) GDP growth projection of 7.3 percent for the first quarter of 2024-25, according to DK Srivastava, Chief Policy Advisor at EY India.

Key economic indicators for June 2024

  • GST collections: Expected to surge by 8 percent to Rs 1.74 lakh crore. Quarterly GST collections reached Rs 5.57 lakh crore, marking a 10.2 percent increase compared to Q1FY24. Saurabh Agarwal, Tax Partner at EY India, highlights that the robust GST collections indicate a booming domestic consumption sector.
  • Manufacturing activity: The HSBC India Manufacturing PMI rose to 58.3 in June from 57.5 in May, driven by strong domestic demand and increased new orders. Employment generation in manufacturing recorded its fastest pace since March 2005, despite overall tepid employment levels in FY24.
  • Auto sales: Mixed trends observed with Maruti recording a 3 percent rise in sales, while Tata experienced an 8 percent decline compared to the previous year.
  • UPI transactions: Exceeded Rs 20 lakh crore for the second consecutive month, with average daily transaction volume and value rising both sequentially and year-over-year.
  • Coal production: Increased by 10.6 percent in the first quarter compared to the previous year.
  • FASTag usage: Slightly lower than the previous month but still 6 percent higher year-over-year.
  • Credit offtake: Continued growth at 19 percent as of the fortnight ending June 14.

Economic outlook and weather impact

  • Weather conditions: The Ministry of Earth Sciences forecasts above-normal rainfall for July 2024, which is expected to boost consumption. June rainfall was 10.9 percent below normal, and reservoir levels were 17 percent below their long-run average.
  • Inflation levels: Falling inflation is anticipated to support consumption, contributing to the overall economic growth.

Revised economic forecasts

Stronger growth in FY24 has led to multiple forecast revisions for the Indian economy. The RBI recently revised its FY25 growth outlook to 7.2 percent from the previous estimate of 7 percent.

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