Theme: Macro Economy | Is consumer demand on the road to recovery ?

The PMI manufacturing figure stood at 57.8, while GST collections for June amounted to 1.61 lakh rupees. In this episode of the State of the Economy, Shishir Sinha, Associate Editor, businessline and Radhika Rao, Executive Director and Senior Economist at DBS Group Research discuss the recent high frequency economic indicators to assess the state of consumer demand in India. Radhika Rao shed light on the subject, beginning with the GST collection data. She noted that the figure of 1.6 trillion was 12% higher than the corresponding period last year, and the year-to-date monthly average was also 12% higher than fiscal year 2020. Rao attributed this growth to stronger demand, improved due diligence, and price effects reflecting inflation. Regarding PMI manufacturing, Rao highlighted its significance as a confidence survey for manufacturers and service providers. India’s PMI has remained exceptionally strong, consistently above 54 for the past 20 months, signaling confidence and expansion. Furthermore, input prices have started to decrease, reducing the pressure to pass on costs to consumers. However, in the broader region, PMIs have been losing momentum, with five out of seven countries witnessing a decline, reflecting weaker export performance. The conversation also takes a look at the impact of the monsoon on food and fuel prices. Rao emphasized the significance of monsoon onset and its geographic spread. The monsoon has covered ground rapidly, even surpassing previous records for early July. Regarding GDP growth estimates for fiscal year 2024. Rao noted that agencies like S&P and Fitch have revised their projections, highlighting the resilience of the domestic economy. India’s less export-reliant and more consumption-driven economy, coupled with positive growth prospects.