The latest monthly economic review from the Ministry of Finance highlights a strengthening private investment cycle in India. In the April-June quarter, overall investment grew by 7.5 percent, reflecting increased private sector participation.
Foreign Direct Investment (FDI) inflows to India surged, with net FDI rising by 52.4 percent during the first four months of FY25. Gross FDI inflows grew by 23.7 percent, increasing from USD 22.4 billion in the same period of FY24 to USD 27.7 billion in FY25. Key sectors attracting FDI include manufacturing, financial services, communication services, computer services, and the energy sector, which together accounted for more than three-quarters of the inflows.
India’s foreign exchange reserves reached a record high of USD 684 billion as of August 30, 2024. Between January and August 2024, the reserves grew by USD 64 billion, marking the largest percentage increase among major reserves-holding nations. These reserves can cover over 11 months of imports and exceed 100 percent of India’s external debt as of March 2024. Rising exports of goods and services, along with stable foreign capital inflows, further strengthen India’s external sector.
Foreign portfolio investors remained net buyers from April to August 2024, contributing to the increase in foreign exchange reserves.
GST collections showed continued growth, with Rs 1.74 lakh crore collected in August, reflecting a 10 percent year-on-year increase. Total GST collections for 2024 reached Rs 9.13 lakh crore, a 10.1 percent rise compared to Rs 8.29 lakh crore during the same period in 2023. The report cited steady GST collections, rising purchasing managers’ indices, and growth in air and port cargo as indicators of robust economic activity.
Labour market conditions showed positive signs, with the Employees’ Provident Fund Organisation (EPFO) adding 10.5 lakh new members in July 2024. Of these new members, 59.4 percent were in the 18-25 age group, suggesting many young individuals, primarily first-time job seekers, are entering the formal workforce.
Looking ahead, the report projects that public expenditure will increase in the remainder of the financial year, boosting growth and investment.
India’s real GDP grew by 6.7 percent in the first quarter of FY25, a decrease from the 8.2 percent growth recorded in the same quarter of the previous year. The report attributed this slowdown to weaker government spending ahead of the Lok Sabha election and the impact of a prolonged heatwave. Despite this, all major non-agricultural sectors recorded growth above 5 percent in the first quarter, indicating widespread economic expansion. The advancing monsoon and increased kharif sowing also brighten the outlook for agricultural production.
For the full financial year 2023-24, India’s GDP grew by 8.2 percent, maintaining its position as the fastest-growing major economy. This follows growth rates of 7.2 percent in 2022-23 and 8.7 percent in 2021-22.
(ani)