In the latest episode of the State of Economy podcast, businessline’s Shishir Sinha discusses with DK Srivastava, Chief Policy Advisor, EY, recent data releases, particularly focusing on GST numbers and the PMI manufacturing index, both showcasing substantial growth. 

Srivastava interprets these indicators as reflections of the Indian economy’s buoyancy in the last quarter of FY24, with manufacturing PMI at 59.1 and GST collections reaching a record high of 1.78 lakh crore in March 2024. These figures suggest that the GDP growth estimates for FY24, set at 7.6%, could potentially be surpassed, hinting at robust economic performance. 

As the conversation transitions to the upcoming election quarter, the anticipation is for increased demand, especially in the MSME sector, driven by election-related expenditures. This is expected to further boost GST numbers and sustain economic buoyancy in the first quarter of FY25. 

However, concerns arise regarding the potential impact of weather forecasts indicating high temperatures and heatwaves. While this may pose challenges for the agricultural sector, which has been relatively subdued in recent quarters, it could also exert pressure on inflation, primarily through food prices. 

Expectations regarding headline inflation remain steady, with projections indicating a range of 5 to 5.4%. Despite a downward trend in core inflation, largely influenced by controlled energy prices, the overall inflation outlook remains stable. 

Regarding monetary policy, Srivastava suggests a cautious approach, with the Monetary Policy Committee likely to maintain current interest rates, given the balanced inflation and growth scenario. Any policy adjustments are expected to be gradual, possibly in the second half of FY25, after assessing the fiscal policy stance following the budget presentation. 

In conclusion, amidst positive growth forecasts for FY25, ranging from 7 to 7.5%, supported by election-driven demand and anticipated infrastructure spending post-monsoon, the Indian economy appears poised for continued expansion.

(Host: Shishir Sinha, Producers: Anjana PV & Amitha Rajkumar)

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