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India Economic Monitor

BCG’s India Economic Monitor shares insights on the state of Indian Economy from the most recent month, capturing 30+ key macroeconomic indicators and comparing them with trends observed in recent months. These indicators include industrial activity, trade, financial services, economic sentiments and sector-wise trends.

Brief Summary for Latest Report

January, 2024

Key highlights include:

  1. In Dec'23, select high frequency indicators exhibited growth while some indicators saw a decline vs. the previous month. IIP inched down in Nov'23, owing to slower growth in manufacturing and electricity segments. Steel consumption showed improvement, while cement production declined. Power consumption remained at similar levels to the previous month. Auto sector continued to witness a seasonal deceleration across all segments.
  2. Trade and investment indicators showcased mixed trends. Merchandise net exports were driven up by engineering goods, gems and jewelry, and electronics, resulting in a slight contraction in the merchandise trade deficit. Services trade surplus saw a marginal decrease, attributable to a slowdown in exports of IT services. Forex reserves continued their upward trajectory, logging a 21-month peak in Dec’23. However, foreign direct investment (FDI) decelerated due to bottlenecks in global supply chain and monetary policy tightening in developed economies, such as the UK, Eurozone, and USA.
  3. All BFSI indicators showed signs of improvement in Dec'23. UPI volume and value saw a significant uptick as the volume registered a record high of 12 billion transactions, and value reached a peak of INR 18.23 trillion. NSE and BSE transactions recorded strong growth of 40% vs. the previous month, notably fueled by a substantial surge in the number of retail investors. Life insurance premium also grew strongly, driven by an acceleration in new business premium collected by LIC, up by 42% vs. Nov'23.
  4. In terms of macroeconomic indicators, as core inflation slowed down, CPI inflation was lower than expected, rising marginally to 5.69% in Dec’23. WPI inflation rose to 9-month high of 0.73% in Dec'23, attributable to a rise in prices of food items, machinery and equipment and electronics. Manufacturing PMI fell by 2%, recording an 18-month low in Dec'23, driven by slow growth in factory orders and output. However, Services PMI increased by 4% in Dec'23, up from Nov'23's one-year low, on the back of strong business activity. GST collections continued to moderate in Dec'23, following festive spending in Oct-Nov'23. Analyst forecasts indicate GDP growth of 6.5-7.0% YoY for FY24, with all agencies raising their projections.

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