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Last updated: 22 Aug, 2023  

India.Growth.9.Thmb.jpg How is the economy faring?

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Bikky Khosla | 22 Aug, 2023

How is the Indian economy performing? According to the CareEdge Ratings Economic Meter, the index of economic activity grew at the pace of 1 percent in July in contrast to 5.7 percent a month ago. This is concerning; it is the slowest growth in 18 months and the report points out that the economy is going to face major challenges in the coming months in the form of high food inflation, uneven monsoon progress and weak external demand.

The report adds that while power consumption, E-way bill issuances and passenger vehicles sales are in a positive line, weak trade data along with feeble rural demand and moderation in corporate bond issuances weigh on the economy. Low two-three wheeler sales (down 8 percent), fall in petroleum consumption (down 2 percent) and 7.95 percent unemployment rate in contrast 6.83 percent in July 2022 are not welcome.

However, a RBI report says a different story - the Indian economy is gathering momentum in the second quarter of 2023-24 although the global recovery is slowing due to weakening industrial production and trade. Moderation is CPI and WPI inflation, encouraging private consumption and fixed investment, increased resilience of agriculture to monsoon shocks and frittering impact of energy price on manufacturing, etc. will help the economy, adds the report.

Meanwhile, retail inflation for July rose to 7.44 percent, with food inflation catapulting to 11.51 percent against 4.87 percent retail inflation 4.55 percent food inflation in June. In another negative development, the rupee last week fell to near a 10-month low at 83.14. Moody's Investors Service, however, maintained its stable outlook on India, while affirming its Baa3 rating. But it pointed out several concerns, including risk of populist measures due to rising domestic political tensions.

I invite your opinions.

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