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

December 2024

Key highlights include:

GDP & National Income Aggregates:

• In Jul-Sep'24, India's real GDP growth moderated to 5.4% YoY, marking its slowest pace in the past seven quarters. This slowdown was primarily driven by sluggish industrial growth and weak private urban consumption.
• Among the three sectors, the services sector expanded by 7.7% YoY, but industrial growth lagged at 3.6% YoY due to a significant slowdown in mining and manufacturing. Agriculture improved, growing by 3.5% YoY, as favorable monsoons helped mitigate the earlier impacts of El Niño, aiding recovery after four weaker quarters.
• Private consumption recorded a 5.9% YoY increase but remained pressured by soaring food inflation, higher borrowing costs, and muted real wage growth. Government spending rebounded with 4.4% YoY growth from a contraction in the previous quarter, although it remained well below the 14% YoY growth recorded in the same period of last year. Meanwhile, gross capital formation growth slowed amid muted private investment activity.

High Frequency Indicators:

• In Nov'24, the high-frequency indicators exhibited mixed trends vs. the previous month. IIP continued its momentum in Oct'24, supported by manufacturing and electricity sectors. Cement production grew, while steel and daily average power consumption declined vs. the previous month levels. The auto sector experienced a decline across most categories in Nov'24 compared to the previous month, reflecting subdued domestic demand following the festive season, although still recorded year-to-date growth.
• On the trade front, the merchandise trade deficit widened to a record high in Nov'24, driven by a sharp rise in gold imports, which surged to $14.8 Bn from $7.1 Bn in Oct'24 as falling global gold prices spurred inventory buildup. Exports declined amid weak global demand and fall in petroleum products prices. Services trade surplus experienced notable growth, led by higher IT export earnings. Forex reserves dropped amid foreign portfolio outflows and RBI interventions to stabilize the rupee. FDI showed a notable improvement in Oct'24 vs. the previous month.
• BFSI indicators showed mixed trends in Oct-Nov'24. UPI transactions softened slightly in Nov'24 after hitting a record high in Oct'24. Both life and non-life insurance premiums declined in Nov'24 compared to the previous month, primarily due to a significant decline in LIC's new business premiums. NSE and BSE transactions continued their downward trend, impacted by global economic headwinds.
• In Nov'24, macroeconomic indicators also presented varying patterns. WPI inflation eased to a three-month low of 1.9% due to declining prices of primary articles, particularly food. CPI inflation moderated to 5.5%, driven by lower vegetable prices and stabilized edible oil costs. Manufacturing PMI dipped to 56.5 as output growth slowed amid rising price pressures, while Services PMI declined slightly to 58.4. Despite marginal declines in new orders and output, strong demand bolstered business sentiment, leading to a hiring surge. GST collections experienced a minor dip compared to the previous month but grew by 10% YoY. Analysts revised FY25 GDP growth forecasts downward to 6.3-6.8% YoY, reflecting economic uncertainties in Nov-Dec'24.

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