Going by high frequency indicators, India’s economy seems to have got off to an impressive start in 2024-25. On Monday, the services sector purchasing managers’ index (PMI) was reported at 60.8 in April. Though this is a slip from 61.2 in March, total sales and output are among the strongest in 14 years. Earlier, the PMI for manufacturing also showed similar strength at 58.8, the second highest since the beginning of 2021.
- The services sector PMI was reported at 60.8 in April, the manufacturing PMI was bright too and GST collections have started this fiscal year with a new record high. Reason enough for optimism?
Going by high frequency indicators, India's economy seems to have got off to an impressive start in 2024-25. On Monday, the services sector purchasing managers' index (PMI) was reported at 60.8 in April. Though this is a slip from 61.2 in March, total sales and output are among the strongest in 14 years. Earlier, the PMI for manufacturing also showed similar strength at 58.8, the second highest since the beginning of 2021.
Booms on this index can be gauged from the margin by which the reading exceeds the 50 mark that separates expansion from contraction. Further, India's goods and services tax revenue hit a record ₹2.1 trillion in April. All this spells optimism over this year's economic prospects. That this is happening despite the economy not firing on all cylinders, with private investment and consumption still not doing as well as they should, is quite remarkable.
Interest rates aren't low either, with RBI's policy constrained by inflation worries. Its task could've got more complicated had a rate-easing cycle begun in the US. The Federal Reserve's 'higher-for-longer' stance has kept that pressure off, thankfully. Domestic variables can be challenging enough to watch.