Indian economy is on the upswing: Finance Ministry
The Indian economy demonstrated notable growth across key economic indicators in July 2024, signaling a robust business environment and sustained economic momentum, according to the Finance Ministry’s monthly review released on Thursday.
Key highlights
- Economic activity: July 2024 saw significant milestones, with strong performance across both the manufacturing and services sectors. The review highlights a substantial increase in economic activity, driven by impressive GST collections and a notable rise in e-way bill generation.
- Stock market performance: Stock market indices achieved record highs in July, reflecting investor confidence and robust market performance.
- Manufacturing and services expansion: The Purchasing Managers’ Indices (PMI) indicate continued expansion in both the manufacturing and services sectors, supporting the overall positive economic outlook.
- Tax collections: Gross GST collections for July 2024 reached their second-highest level since May 2023, with a 10.3 percent year-on-year increase. This growth underscores enhanced compliance and the expansion of GST coverage across various economic activities. The total GST revenue for the fiscal year 2025 (April to July) stands at Rs 7.4 lakh crore, with average monthly collections rising from Rs 1.68 lakh crore in FY24 to Rs 1.85 lakh crore in FY25.
- Bank credit and foreign investment: Bank credit has shown healthy growth, and foreign direct investment (FDI) inflows have increased, with gross inflows on the rise.
- Inflation and exports: Inflation is moderating, and exports of goods and services have improved compared to last year.
- Reservoirs and monsoon: Despite some erratic monsoon patterns, reservoirs have been replenished, supporting agricultural and economic stability.
According to the Finance Ministry’s latest review, the year-on-year increase in e-way bills hit a nine-month high of 19.2 percent, with a record 10.5 crore e-way bills issued in the month.
- E-way bills surge: July 2024 saw record issuance of 10.5 crore e-way bills, marking a significant year-on-year increase of 19.2 percent. This surge reflects heightened economic activity and improved logistics efficiency.
- Manufacturing sector performance: The manufacturing sector continued its strong performance in the first four months of FY25, supported by high-frequency indicators. The Purchasing Managers’ Index (PMI) for manufacturing stood at 58.1 in July 2024. This figure is significantly above the long-run average and among the highest recorded in recent years, indicating robust expansion driven by strong demand and increased production volumes.
- Service sector growth: The service sector also showed strong performance, with the PMI Services remaining in the expansionary zone at 60.3 in July 2024. Key drivers include growth in international sales, increased new order uptakes, and a rise in new export orders, contributing to the overall health and expansion of the service sector.
The review underscores a vibrant economic environment with record-setting e-way bill issuance and strong sectoral growth, indicating sustained economic vitality and resilience across both manufacturing and services.
Despite a rise in wages and material costs which pushed up business expenses, overall sentiment in the services sector remains upbeat, driven, among others, by an upswing in the tourism cum hotel industry induced by leisure travel, business travel, and social events, the Finance Ministry said.
Overall, the Finance Ministry’s review reflects a resilient Indian economy with strong growth indicators and a positive outlook for the coming months.
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