BCG – India Economic Monitor, November 2023

According to the India Economic Monitor by BCG in November 2023, several high-frequency indicators showed mild to moderate growth compared to the previous month. However, the Index of Industrial Production (IIP) experienced a slight decline in September 2023 due to slower activities in the manufacturing, mining, and electricity sectors. While steel consumption continued to grow, cement production and power consumption saw a small decrease. The auto sector, except for three-wheelers, witnessed robust growth in all segments, with passenger vehicles achieving the highest-ever sales in October 2023, showing a growth rate of 16.5% compared to the previous year. Trade and investment indicators presented mixed trends. The merchandise trade deficit widened in October 2023 due in part to higher oil prices and a significant increase in gold imports during the festive season. However, services trade surplus showed a marginal increase, accompanied by a slight decline in services imports. Additionally, foreign exchange reserves experienced a slight decrease, while foreign direct investment (FDI) rebounded in September 2023 after contracting in August 2023. The issuance of e-way bills reached a new record high in October 2023 due to increased festive season consumption and improved compliance. In the banking, financial services, and insurance (BFSI) sector, most indicators showed moderate growth between September and October 2023. UPI transactions continued to rise in both volume and value, while aggregate deposits and credit also continued their upward trend. However, life insurance premiums slowed down due to a decrease in LIC new business premiums. NSE and BSE transactions declined in October 2023. Macro-economic indicators revealed that Consumer Price Index (CPI) inflation eased to 4.9% in October 2023 due to lower food prices, approaching the central bank's medium-term target of 4%. Wholesale Price Index (WPI) remained in deflationary territory for the seventh consecutive month, contracting by 0.5% in October 2023, with ongoing deflation in manufactured products, fuel, and power categories. Manufacturing Purchasing Managers' Index (PMI) dropped to an eight-month low due to lower demand and rising raw material costs. Services PMI also declined to a seven-month low, driven by subdued demand and inflationary pressures. GST collections surged to the second-highest level ever, driven by stricter anti-evasion measures and increased consumer spending during the festival season. Analysts forecast GDP growth of 6.0%-6.5% YoY for FY24, with most agencies either maintaining or raising their projections.