Theme: Macroeconomy | Can India maintain inflation stability despite agricultural hurdles?

In the latest episode of State of Economy hosted by Shishir Sinha, Devendra Kumar Pant, Chief Economist, India Ratings and Research (Ind-RA) provides insights into India's current economic situation.  The podcast discusses various high-frequency economic indicators that reveal a mixed picture for the Indian economy. The podcast begins with a discussion on the recent Goods and Services Tax (GST) collections, which reached ₹1.72 lakh crore, the second highest since the inception of GST. Pant cautions against jumping to conclusions based on a single month's data and highlights the factors contributing to this growth. The conversation then delves into the implications of this GST growth on India's fiscal deficit. The budget had estimated a deficit of 5.9%, and the discussion explores the possibility of achieving this target in light of the economic trends. Next, the podcast examines the core sector numbers, focusing on the auto sector's dispatch and the PMI manufacturing index. Despite some fluctuations, Pant emphasises that India remains in an expansionary mode, which is crucial for sustaining economic growth. The podcast also looks at concerns about inflation due to lower agricultural output caused by a below-normal monsoon. The discussion highlights the impact of agricultural growth on India's economy and the potential consequences for inflation, monetary policy, and overall growth.  Pant concludes by projecting that India's inflation is likely to stabilise at around 5 per cent, emphasising the importance of the 4 per cent inflation target set by the Reserve Bank of India. (Host: Shishir Sinha; Producer: Siddharth MC)