BCG – India Economic Monitor, Oct 2023

In the October 2023 India Economic Monitor report by BCG, it is stated that most high-frequency indicators showed a mild to moderate growth in September 2023 compared to the previous month. The Index of Industrial Production (IIP) saw an increase in August 2023, following two consecutive months of decline, mainly due to growth in the electricity segment. Additionally, cement production, steel consumption, tractor sales, and two-wheeler sales all demonstrated improvement in September 2023 compared to August 2023, which can be attributed to a favorable monsoon. Regarding trade and investment, there were mixed trends. The trade deficit in merchandise narrowed to a five-month low in August 2023, largely due to a significant decline in merchandise imports, influenced by falling crude and commodity prices. On the other hand, there was a widening trade surplus in services, with an increase in both service exports and imports. Foreign exchange reserves decreased for the second consecutive month in September 2023, as the Reserve Bank of India (RBI) continued to sell dollars through public banks to prevent a decline in the Indian rupee. Foreign direct investment (FDI) also experienced a sharp fall in August 2023. In the banking, financial services, and insurance (BFSI) sector, most indicators saw marginal growth in August and September 2023. Unified Payment Interface (UPI) transactions volume and value increased, with volume exceeding 10 billion transactions. Aggregate deposits remained consistent with July 2023 levels in August 2023, while aggregate credit experienced subdued growth. Life insurance premiums improved in September 2023, as LIC’s new business premiums showed an upward trend after two months of decline. However, transactions on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) slightly decreased. In terms of macroeconomic indicators, there were signs of improvement in September 2023. Consumer Price Index (CPI) inflation declined to 5% in September 2023 compared to 6.8% in August 2023, influenced by a decrease in vegetable prices, while Wholesale Price Index (WPI) inflation rose slightly. The Services Purchasing Managers' Index (PMI) improved, while the Manufacturing PMI reached its lowest value in five months due to slower growth in new orders. Goods and Services Tax (GST) collections increased in September 2023. Analyst forecasts suggest a GDP growth of 5.9%-6.4% year-on-year for FY24, with most agencies maintaining or raising their projections.