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Economy Watch
Economy Watch provides an in-depth review of salient developments in India’s macroeconomy and economic policy in a global context.
It has established itself as a thought leadership publication, providing valuable inputs for policymakers in the central and state governments, academicians, industry and businesses and other stakeholders.
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 December 2024
- Real GDP and GVA growth eased to a seven-quarter low of 5.4% and 5.6% respectively in 2QFY25.
- Manufacturing PMI expanded at a slower pace of 56.5 while that of services remained nearly stable at 58.4 in November 2024 as compared to their levels of 57.5 and 58.5, respectively, in October 2024.
- IIP growth increased to 3.5% in October 2024, exceeding its September 2024 level of 3.1%, due to improved growth in manufacturing and electricity output.
- The RBI retained the repo rate at 6.5% in its December 2024 monetary policy review. It however, announced a 50 basis points (bps) reduction in Cash Reserve Ratio (CRR) in two tranches of 25 bps each to 4.0%, effective 14 and 28 December 2024 respectively, aimed at infusing liquidity amounting to INR 1.16 lakh crore into the banking system.
- CPI inflation eased to 5.5% in November 2024 from 6.2% in October 2024 as vegetable prices eased, whereas core CPI inflation remained steady at 3.7% for the second successive month.
- WPI inflation moderated to 1.9% in November 2024 from 2.4% in October 2024, primarily due to a sharp fall in vegetable inflation.
- As per the CGA, GoI’s GTR showed a growth of 10.8% during April-October FY25 with growth in direct taxes at 11.1% and that in indirect taxes at 9.0%.
- GoI’s total expenditure showed a low growth of 3.3% during April-October FY25, with revenue expenditure growing by 8.7% and capital expenditure contracting by (-)14.7%.
- GoI’s fiscal and revenue deficits during April-October FY25 stood at low levels of 46.5% and 52.2% of their respective annual BEs.
- Growth in gross bank credit moderated to a 29-month low of 12.8% in October 2024 from 14.4% in September 2024.
- Growth in merchandise exports turned negative at (-)4.8% in November 2024 partly attributable to easing global economic activity. Growth in merchandise imports surged to a 27-month high of 27.0% in December 2024 primarily due to a sharp increase in gold imports.
- Merchandise trade deficit surged to a historic high of US$37.8 billion in December 2024.
- Net FPI inflows surged to US$9.7 billion in September 2024, its highest level since November 2020. Net FDI witnessed outflows amounting to US$3.1 billion in September 2024.
- Average global crude price fell to US$72.3/bbl. in November 2024, its lowest level since August 2021, falling from US$74/bbl. in October 2024.
- The OECD has projected global growth at 3.2% in 2024, with India’s FY25 growth forecasted at 6.8%.
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