ON STEADY FOOTING

India is on track to achieve near 6% GDP growth in spite of global headwinds that could impede progress

As the first quarter of this fiscal (Q1 FY24) comes to an end on 30th June, India’s economy seems to have bounced back from the ravages of the Covid-19 pandemic to emerge as one of the bright spots in the global economic landscape.

The country’s economy has now stabilized and seems headed towards a healthy 6% GDP growth this fiscal year, despite some headwinds. Among the larger countries, India’s economy is expected to be a top performer this fiscal year (FY24).

The beginning of this fiscal year has been heartening - India’s services sector has clocked its highest growth in new business and output levels in nearly 13 years (since June ’10), spurred by a strong performance in the finance and insurance segment.

This is according to the seasonally adjusted S&P Global India Services PMI Business Activity Index, which rebounded from a decline to 57.8 in March to 62 in April.

The second positive development is the record-high Goods and Services Tax (GST) collection in April, which is a good indicator of how various levels of the Indian economy are functioning.

The highest-ever collection in April (the first month of the new fiscal) indicates that the economy is now more or less back on track, and this bodes well for the economy this fiscal.

With respect to the services sector, which has emerged as one of India’s top economic growth drivers in recent years, new export orders grew for the third month and at the fastest pace over this period.

Additionally, business confidence, which had sharply slid to an eight-month low in March, revived slightly in April. Another piece of good news was that around 22% of surveyed companies forecast growth over the coming year (12-month period), as opposed to a mere 2% that tilted towards a reduction.