The latest ‘EY Economy Watch December 2024’ forecasts real GDP growth for the first two quarters of FY25 at 6.7 per cent and 5.4 per cent respectively, the RBI’s revised growth for 3Q and 4Q FY25. with estimates of 6.8 percent and 72 percent. percent, respectively, “annualized FY25 real GDP growth is estimated at 6.6 percent”.
“However, if the change in GoI’s investment spending remains subdued, the quarterly growth could be 6.5 percent or lower,” the report said. Real GDP growth eased to 5.4% in the July-September quarter (Q2 FY25). 6.7 percent in the previous quarter.
High-frequency data available for October and November points to a mixed picture regarding the pace of growth of the Indian economy. The headline manufacturing PMI saw a moderate expansion to 56.5 in November compared to 57.5 in October. Services PMI, however, remained roughly steady at 58.4 in November 2024, close to the level of 58.5 in October 2024, on the back of strong international demand and improving business confidence.
Retail sales of motor vehicles continued to show double-digit growth of 11.2 percent in November, according to data released by the Federation of Automobile Dealers Association. In particular, the retail sales of two-wheelers and tractors showed a strong growth rate of 15.8 percent and 29.9 percent, respectively, in November 2024, according to the EY report.
“IIP growth was seen at 3.5 percent in October 2024, up from 3.1 percent in September, driven by stronger manufacturing and power generation,” the report said. CPI inflation eased to 5.5 percent in November from 6.2 percent in October as vegetable prices softened, while core CPI inflation remained steady at 3.7 percent for the second consecutive month.
WPI inflation also eased to 1.9 percent in November from 2.4 percent in October. According to DK Srivastava, Chief Policy Advisor, EY India, in the medium term, India’s real GDP growth prospects can be pegged at 6.5 per cent per annum, provided the government keeps up its capital spending for the remainder of the current fiscal year. Accelerate growth. And comes up with a medium-term investment pipeline “with the participation of both the GoI and state governments and their respective public sector entities, and the private corporate sector”.