Economy Watch

Economy Watch was launched for public distribution soon after demonetization. Since then more than 90 issues have been published.

It covers various macro-fiscal dimensions of the Indian economy including growth, inflation, government finances, external trade, monetary and financial sectors. It places India in a comparative economic framework using selected developed and developing countries.

Two innovative indices have been developed to capture changes in aggregate demand and macroeconomic imbalances in the Indian economy. The analysis in the Economy Watch is based on monthly, quarterly and annual data sourced from national and international sources.

Every month, a focused theme of contemporary economic importance is identified for a deep and insightful analysis which provides useful inputs and recommendations.

Key highlights for July 2024

• The final FY25 budget has estimated GoI’s fiscal deficit to GDP ratio at 4.9% in FY25 (BE), an improvement as compared to 5.1% as provided for in the interim budget.
• The quality of fiscal deficit is budgeted to improve with the ratio of revenue deficit to fiscal deficit falling to 36% in FY25 (BE) from 46.3% in FY24.
  
• GoI’s total expenditure is budgeted at INR48.2 lakh crore in FY25 (BE), divided into revenue and capital expenditures in the ratio of 77:23.
  
• Both manufacturing and services PMI increased to 58.3 and 60.5 respectively in June 2024, from 57.5 and 60.2 in May 2024.
  
• Led by a higher growth in manufacturing and electricity output, IIP growth increased to 5.9% in May 2024 from 5.0% in April 2024.
  
• CPI inflation at 5.1%, showed an increase for the first time since January 2024. Core CPI inflation remained at a historic low (2012 base series) of 3.1% in June 2024.
  
• WPI inflation remained low at 3.4% in June 2024, although showing an increase for the fourth successive month.
  
• As per the CGA, GoI’s gross tax revenues (GTR) grew by 15.8% during April-May FY25 with growth in direct taxes at 22.7% and that in indirect taxes at 7.5%.
  
• GoI’s total expenditure contracted by (-)0.4% during April-May FY25, with growth in revenue expenditure at 4.7% while capital expenditure contracted by (-)14.4%.
  
• GoI’s fiscal and revenue deficits during April-May FY25 stood at their historic low levels of 3.1% and (-)15.7% of the respective annual BE.
  
• Gross bank credit continued its strong momentum with a growth of 16.1% in May 2024 as compared to 15.3% in April 2024.
  
• Growth in merchandise exports and imports slowed to 2.5% and 5.0% respectively in June 2024 from 9.1% and 7.7% in May 2024.
  
• Merchandise trade deficit narrowed to US$21.0 billion in June 2024 from US$23.8 billion in May 2024, primarily due to moderation in oil imports.
  
• Net FDI inflows eased to US$3.3 billion in May 2024 from US$3.9 billion in April 2024. Net FPI’s witnessed outflows amounting to US$1.5 billion in May 2024.
  
• Average global crude price eased to a four-month low of US$81.2/bbl. in June 2024.
  
• The World Bank has projected global growth at 2.6% in 2024 and 2.7% in 2025, with India’s growth in FY25 and FY26 at 6.6% and 6.7% respectively. The IMF (July 2024) has projected global growth at 3.2% and 3.3% respectively for 2024 and 2025 with India’s growth at 7.0% and 6.5% in the respective fiscal years.