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

March, 2024

Key highlights include:

GDP & National Income Aggregates

• In Oct-Dec'23, India's real GDP grew by 8.4% YoY, surpassing the forecasts by RBI and other analysts. 
• The robust expansion was led by 10.4% YoY growth in the industrial sector, with the manufacturing sub-sector having a high growth rate of 11.5% YoY. The services sector also registered a growth of 7% YoY driven by public administration, defense, and social and community services, while the agriculture sector registered a degrowth of 0.8% YoY.  Overall, most GDP components showed improvement. 
• Gross capital formation grew at 12.2% YoY, reflecting the government’s focus on capital expenditure. Private consumption increased at a modest pace of 3.5% YoY growth. However, government consumption expenditure declined by 3.2% compared to previous year, driven by curtailed revenue expenditure by both central and state authorities.

High Frequency Indicators

• In Feb'24, most high-frequency indicators exhibited moderate to high growth vs. Jan'24 levels. IIP reached an all-new high in Jan'24, indicating a sustained increase in manufacturing momentum following a revival in Dec'23. Cement production and power consumption recorded growth, while steel consumption inched down. 2W and 3W auto sales logged improvements in Feb'24, however, PV and tractor sales saw a seasonal decline vs. previous month.
• Merchandise trade deficit widened as imports outpaced exports amid the Red Sea conflict. The services trade surplus remained unchanged. Forex reserves grew in Feb'24, driven by a surge in foreign currency assets. FDI rebounded in Jan'24 after a significant drop in Dec'23.
• BFSI indicators showed varied trends in Jan-Feb'24. UPI transactions dipped slightly, after reaching an all-time high in the previous month. Life insurance premiums increased marginally compared to the previous month driven by an increase in LIC new business premium. NSE & BSE transactions decreased in Feb'24, however, posted a robust 146% YoY growth.
• In terms of macroeconomic indicators, CPI inflation held steady at 5.09%, albeit remaining above RBI's medium-term target of 4%. WPI inflation moderated to a four-month low of 0.2% in Feb'24, attributable to lower rates in fuel & power and manufactured products. Manufacturing PMI soared to a 5-month high, spurred by strong sales and export demand, with new export orders seeing significant gains. Services PMI declined due to slow growth in real estate and business services. GST collections took a marginal hit over last month but posted a 12% YoY growth. Analyst forecasts indicate GDP growth of 6.2-7.0% YoY for FY25, with most agencies raising their projections.

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