The manufacturing sector’s purchasing managers’ index has gone further into expansion zone, even as other indicators point to an economic pick-up. Let’s hope factors beyond Indian control don’t get in way.
Summary
- The manufacturing sector's purchasing managers' index has gone further into expansion zone, even as other indicators point to an economic pick-up. Let's hope factors beyond Indian control don't get in way.
As the world braces for the impact of US tariffs, it's a relief that India's economy appears to be doing well. Survey findings released on Wednesday show the manufacturing purchasing manager's index having scaled a nine-month high of 58.1 in March. This reading was 56.3 in February.
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Meanwhile, India's goods and services tax revenue climbed to an 11-month high of ₹1.96 trillion last month. Overall, these mark an encouraging close to 2024-25.
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Despite a rebound to 6.2% in India's output growth in the third quarter of that fiscal year from 5.6% in the preceding three months, the pace of expansion is underwhelming for an economy aspiring to join the developed world. It'll be some time before the impact of America's policy resets become clear.
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Broadly, however, the external environment could prove to be a drag. Wars in Europe and West Asia mean that geopolitical outcomes are unclear, even as the world's economic outlook is full of uncertainty. While India isn't as exposed to global turbulence as many other nations, policymakers will need to stay alert to ripple effects. The effect of the budget's consumption stimulus must not get outweighed by factors beyond Indian control.