1

Table of Contents

Abstract ...................................................................................................................................... 3
Strong Domestic Growth Amidst Fragile Global Context ....................................................... 4
Emerging Domestic Growth Drivers ........................................................................................ 4
Industrial activity gains momentum .......................................................................................... 4

Property market revives, backed by strong household investment ............................................... 5

Macroeconomic Balance .......................................................................................................... 7

Central government finances are on track................................................................................. 7

Inflationary pressures ease ....................................................................................................... 8

Kharif sowing progresses despite challenges ........................................................................... 10

Credit growth supports the farm sector and rural demand ....................................................... 11

Employment trends confirm India’s economic resilience ......................................................... 11

Box 1: Women-led development: Tapping the gender dividend for India @ 100.................... 13

External sector developments ................................................................................................. 15

Global trade to recover in H2 of 2023 ......................................................................................................... 15
Steady growth in non-oil exports improves India‟s trade balance in September ......................................... 15
FPI investors remain invested in the Indian economy during H1 of FY24 .................................................. 16

Initiatives in India’s G-20 Presidency Generate Global Hope .............................................. 16

Outlook .................................................................................................................................... 19
Performance of High-Frequency Indicators ......................................................................... 20

2
 Abstract
While keeping the global growth projection for FY24 unchanged at 3 per cent, the IMF has
revised its growth projection for India upwards by 20 basis points to 6.3 per cent in October
2023. This shows the growing confidence of global analysts as well in India’s economic strength,
amidst global uncertainties and fresh geopolitical challenges.
Strong private consumption demand has been a major driver of India’s economic growth in the
recent period. In addition, at least two additional drivers of growth have emerged. The first is the
gradual strengthening of investment demand. Investment has hitherto been propelled mainly by
the capital spending of the Union Government and the crowding-in it induced for private
corporate investment. While this continues unabated, increasing demand for residential
properties, supported by responsive housing loan financing, has given a fillip to construction
activity and the property markets. The second is the firming of industrial activity, substantiated by
recent data and credible perception surveys. Improving corporate balance sheets and their
fledgling investment activity, supported by a strong and emerging banking system and financial
market makes this outlook brighter.
The major macroeconomic concomitants of growth have also generally remained robust.
Inflationary pressures have eased significantly in September, confirming that the spikes in the
previous two months were temporary, caused by seasonal and weather-driven supply constraints
in a few food items. Downside risks, especially emerging out of the vagaries of rainfall and global
headwinds are however non-negligible. Yet, the smooth downward trajectory observed in core
inflation is likely to keep the headline inflation within the target band. The fiscal position of the
Union Government remains solid with steady revenue growth, especially in direct taxes, and
prudent rationalisation of revenue expenditure which has enabled the front-loading of capital
expenditure while keeping the market borrowing programme tied to the budgeted target.
Employment trends are encouraging. While the labour force participation rate is improving
steadily, the unemployment rate is declining. The results for Q1FY24 for the urban segment
signalled the continuation of the salutary trends in FY23. Underlining the improvement in the
overall labour force participation lies the uptick in female participation, a phenomenon
continuously at work in the past six years. The Nari Shakti Vandana Adhiniyam 2023 is a
landmark legislation that can even further catalyse women-led development.
India’s external account remains robust despite a slowdown in global demand. On a YoY basis,
the current account balance and its components, viz, merchandise trade and invisibles have
performed better in Q1FY24. In September 2023, imports moderated much sharper than exports,
improving the overall trade balance significantly on a YoY basis. In H1 FY24, net foreign
portfolio investment inflows remained substantially positive as against net outflows in H1 FY23.
The forex position also remains comfortable.
While domestic macro fundamentals are strong and improving, downside risks arise from global
headwinds and uncertainties in weather conditions. Be that as it may, the RBI’s forward-looking
surveys which show optimism about demand conditions, employment opportunities and industrial
output, have attested to India’s growth prospects for FY24.

3
Strong Domestic Growth Amidst Fragile Global Context
1. International Monetary Fund (IMF), in its World Economic Outlook (WEO), October
2023, revised its growth projection for India for FY24 upwards to 6.3 per cent from 6.1 per
cent projected in July 2023. According to the IMF, this reflected stronger-than-expected
consumption growth during April-June 2023. In July 2023, IMF had already revised its
projection of India‟s growth for FY24 upwards from 5.9 per cent announced in April 2023.
IMF has kept its global growth projection for 2023 unchanged at 3.0 per cent in the WEO
October 2023, as in the WEO Update of July 2023. This reflects increasing global confidence
in India‟s economic strength.

2. Global economic activity was resilient during the first half of 2023, driven by
emerging and developing economies excluding China and some advanced economies, mainly
the United States, growing faster than expected. Global composite PMI has been in the
expansionary zone since February 2023. However, the pace of expansion has slowed from its
peak in April as activity in the services sector lost momentum. Going ahead, risks to the near-
term global outlook remain tilted to the downside. Persistent cost pressures or upward drift in
inflation expectations can compel central banks to keep policy rates higher for longer than
expected, exposing banks to financial vulnerabilities. This, in turn, can trigger an abrupt
reassessment of liquidity and credit risks. The risk of recurrence of adverse supply shocks in
global commodity markets also cannot be ruled out. A continued spike in energy prices can
affect global inflation and hurt growth, especially in commodity-importing economies.

Emerging Domestic Growth Drivers

Industrial activity gains momentum

3. The Index of Industrial Production (IIP) for August 2023 indicated broad-based
acceleration in major industrial sub-sectors. IIP recorded double-digit growth of 10.3 per cent
in August 2023, the highest in the last 14 months. The growth in most of the sub-sectors in
August 2023 was the highest in more than a year, as seen in the following table. Riding
primarily on the strength of public infrastructure spending and booming property market, the
construction goods segments achieved a growth of 13.3 per cent in FY24 so far. This, coupled
with the recent pick-up in the production of capital goods, reflects strengthening investment
activity in the country. The pick-up in the growth of intermediate goods is an indication of
strengthening order book positions. Manufacturing activity during September continues to
remain in the expansionary zone as indicated by the PMI survey, driven by favourable
demand trends and positive market dynamics.

4
 Growth in IIP components highest
IIP growth (YoY) in August 2023 (%)
since ... (number of months)
14.9 15.3
12.4 12.6 12.3 Headline IIP 14
10.3
9 9.3 Con. durables 13
6.5

User based Category

5.7
Intermediates 14

Con. non-durables 04

Primary goods 14

Electricity
Headline IIP

Con. non-durables

Mining
Manufacturing
Con. durables

Primary goods

Capital goods

Construction goods
Intermediates

Capital goods 09

Construction goods 15

Manufacturing 14

industrial
category
Broad
Mining 24

User based Category Broad industrial Electricity 14

category
Source: MoSPI

4. The recent survey results published by the Reserve Bank of India (RBI) go in tandem
with the optimistic patterns emerging from IIP data. As per RBI‟s latest Order Books,
Inventories and Capacity Utilisation Survey (OBICUS), seasonally adjusted capacity
utilisation in the manufacturing sector during Q1 of FY24 improved from the previous
quarter and stood at 75.4 per cent. Going ahead, business climate conditions as gauged by
RBI‟s Quarterly Industrial Outlook Survey also appear buoyant with the business
expectations index for Q3FY24 improving from the previous quarter. Manufacturing firms
are more optimistic about Q3FY24 as reflected in their improved assessment of production,
order books and capacity utilization.

Property market revives, backed by strong household investment

5. Private consumption demand remains strong and continues to drive growth. The
magnitude of vehicle loans, an important indicator of growth in private consumption, has
been growing at double-digits since April 2022. Outstanding NBFC retail loans witnessed a
growth of 29.6 per cent in FY23, with 36 per cent of NBFC‟s retail loans being used for the
purchase of vehicles. Lending by NBFCs to the household sector rose from ₹0.2 lakh crore in
FY22 to ₹2.4 lakh crore in FY23, a jump of nearly 11.2 times.

Growth is also being driven by increasing investment rate in the post-pandemic period. The
investment rate increased from 28.9 per cent in FY22 to 29.2 per cent in FY23 and further to 29.3 per
cent in Q1 of FY24. Out of the total gross fixed capital formation (GFCF or fixed investment),
households held the highest share of 40.4 per cent in FY22 acquired majorly through ownership of
residential properties, followed by the private corporate sector at 34.9 per cent, and the public sector
at 24.7 per cent. While the Union Government‟s relentless focus on capital spending has been
propelling aggregate investment since FY22, there are strong indications that households‟ increased
propensity to invest in residential properties will drive investment further.

5
Thanks to the release of pent-up demand, household investment in physical assets grew much faster in
FY22 compared to the pre-pandemic decade (FY12 to FY20). There has been a steady double-digit
growth in housing loans since May 2021 till present. Data from Anarock shows housing volume
growth of 36.5 per cent and value growth of 47.7 per cent during FY23. International media has
acknowledged that the reforms and changes effected during the middle of the last decade have started
yielding rich dividends in the property market1.

Double-digit growth in value and volume of

Growth in Personal Loans to Housing
Housing Sales
Housing (Including priority sector housing) FY22 FY23
Vehicle loans
3.8
35 3.5

2.8
2.3
Per cent

25

Lakh
15

5
Jun-21
Aug-21

Jun-22
Aug-22

Jun-23
Aug-23
Oct-21

Oct-22

Feb-23
Feb-22
Apr-21

Dec-21

Apr-22

Dec-22

Apr-23

Volume of Sales Value of Sales

(₹ Crore)
Source: RBI Source: Anarock

Households are making a smart investment choice of acquiring physical assets, taking advantage of
larger credit availability from banks and after a long period of elevated returns in financial assets.
Given that the real estate sector has a vast network of forward and backward linkages (such as cement
and steel, among others, besides various services), the increase in demand for housing is inducing
broad-based growth and job creation.

Increased demand for housing and vehicle loans reflects the confidence of the households in their
future employment and income prospects signalling strong consumer sentiments. This is further
supported by the Future Expectations Index of the Consumer Confidence Survey of RBI which
reached a four-year high in the latest survey round. The general economic outlook as well as the
prospects for employment, income and spending are expected to improve further over the next year.
Households remain highly optimistic about future earnings even though their sentiment on current
earnings remained around its July 2023 level.

1
https://www.economist.com/finance-and-economics/2023/09/14/indias-property-market-is-ready-for-take-off

6
Macroeconomic Balance

Central government finances are on track

6. Developments in the government‟s finances at the end of August 2023 indicate that
the government is on track to contain the budgeted fiscal deficit to 5.9 per cent of GDP by the
end of FY24. The Government‟s market borrowing plan for the second half of FY24,
published on 26 September 2023, reveals that the market borrowing for the full FY24 is kept
at the budgeted level. Further, revenues generated from direct and indirect taxes have
exhibited steady growth and are indicative of the strength of underlying economic activity
and a broadening tax base. The focus on capital expenditure while rationalising revenue
expenditure has led to an improvement in the quality of expenditure.

Direct tax revenue in April-August 2023 grew by 26.6 per cent on a YoY basis, with revenues from
personal income tax and corporate tax growing by 35.7 per cent and 15.1 per cent, respectively. As per
the information released by the Central Board of Direct Taxes, net direct tax collections in FY24 till
16 September 2023 grew by 23.5 per cent. The largest component of indirect tax revenue, Goods and
services tax (GST), has continued its level shift upward. The average monthly GST collection in
FY24 (until September 2023) is ₹1.65 lakh crore which is 9.9 per cent higher than the average
monthly GST collection for the corresponding period in FY23.

Buoyant direct taxes (Apr-Aug) Level shift upwards in GST collections

4.0 FY19 FY20
2 FY21 FY22
3.5 FY23 FY24
3.0
1.5
₹ lakh crore

2.5
₹ lakh crore

2.0
1
1.5
1.0
0.5
0.5
0.0
FY22
FY20
FY21
FY22
FY23
FY24
FY20
FY21

FY23
FY24

0
Oct-20

Aug-21

Jun-22
Nov-22
Apr-18
Sep-18
Feb-19
Jul-19

May-20

Apr-23
Sep-23
Dec-19

Jan-22
Mar-21

Personal Income tax Corporate Tax

Source: CGA Source: GST Council

On the expenditure front, the focus on capital expenditure continued in August 2023. Capital
expenditure in April-August 2023 was 48.1 per cent higher on a YoY basis. Calibrated fiscal
management along with a thrust on capital expenditure has meant that the quality of expenditure, as
measured by the ratio of capital expenditure to revenue expenditure, has improved. The ratio has
increased progressively over the years – for the period April-August 2023, the ratio stands at 0.29, a
massive improvement over 0.13 in the corresponding period of 2019.

7
 Robust growth in capital expenditure Improving quality of expenditure
4.0 Capex (Apr-Aug) 60
Ratio of capital expenditure to revenue
3.5 Capex expenditure (Apr-Aug)
50
Capex growth( RHS) 0.29
3.0
40
0.22
₹ lakh crore

2.5

per cent
30
2.0 0.16
20 0.13
1.5 0.12
10
1.0

0.5 0

0.0 -10
FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24

Source: CGA Source: CGA

Inflationary pressures ease

7. While GDP growth remains on track in FY24, the declining trend in headline inflation
was briefly interrupted in the second quarter due to a spike in the prices of certain food items.
Headline inflation has moved to track on the back of vegetable price correction and the recent
reduction in LPG prices. As per the latest release of the consumer price index, headline
inflation was 5 per cent in September, within the upper tolerance limit of inflation targeting.
This indicates that the increase in inflation during July-August was only temporary, caused by
the seasonal and weather-driven supply constraints in a few food items.

Among the 299 items in the CPI basket, only 11.4 per cent of food items with double-digit inflation in
July caused a spike in headline inflation. However, this declined significantly to 7 per cent in
September. Alongside softening food inflation, the fuel & and light group witnessed a deflation in
September. As a result of the cut in prices of domestic LPG by ₹200 per cylinder, inflation in LPG
declined to (-) 12.7 per cent in September compared to 4.2 per cent in August.

8. Core (non-food, non-fuel) inflation further softened to 4.5 per cent in September from
4.9 per cent in August. This is the lowest core inflation recorded in the last 42 months.
Besides, August was the seventh consecutive month that core inflation has remained within
the RBI‟s upper tolerance band of 6 per cent.

9. To check inflation, the Government has taken various measures from time to time to
augment domestic availability. These steps, inter-alia, include the release of pulses and onion
from the buffer stock, procurement and distribution of tomato and onion, imposition of stock
limits on pulses and wheat, monitoring of stocks declared by entities to prevent hoarding and
changes in import quota and restrictions on exports of specific commodities.

8
 Retail inflation in H1FY24 is lower than Impact of LPG subsidy on inflation in LPG
H1FY23 and H2FY23 and ‘fuel and light’ group
12 25 Fuel & Light
Headline Inflation (%)
Core Inflation (%) 20 LPG
10 Food (CFPI) Inflation (%)

Inflation Rate (%)

15
8 10
Per cent

6.6
6 5
5.5
4.9 0
4 -0.1
-5
2 -10
-12.7
0 -15

Nov-22
Oct-22

Jun-23

Aug-23
Apr-23
Dec-22

Feb-23

May-23

Jul-23

Sep-23
Jan-23

Mar-23
H1FY21

H2FY21

H1FY22

H2FY22

H1FY23

H2FY23

H1FY24
Source: MoSPI Source: MoSPI

Much fewer food items experienced high inflation in September

>10% >25% >50% Inflation Rate (%)
Percentage of items with Inflation

4.3 3.0 7.4 11.5 5.0 6.6

15.1
13.0
11.4 10.4
8.7
7.0

2.7 3.3 3.3 2.3 2.3

2.0 1.7 1.7 1.0 1.0
0.7 0.7

All commodities Food items (CFPI) All commodities Food items (CFPI) All commodities Food items (CFPI)
May-23 Jul-23 Sep-23
Source: MoSPI

10. The recent price trends also vindicate the monetary policy stance of the RBI for the
last one and a half years. Since May 2022, the monetary policy actions broadly included
absorbing excess liquidity in the system by gradually increasing the policy repo rate by 250
basis points and changing the policy stance to the withdrawal of accommodation, to break the
stickiness of core inflation and to keep the headline inflation at check. The monetary
measures of the RBI and the proactive supply-side interventions by the Government to
improve domestic availability of key food items and reduce input costs complemented each
other well. Consequently, headline inflation moderated to 5.5 per cent in H1FY24 as
compared to 7.2 per cent in H1FY23 and 6.2 per cent in H2FY23. Further, inflation
expectations of households have also declined by 90 bps and 40 bps for three months and
one-year ahead periods in the September round of RBI‟s Inflation Expectation survey.
However, the monetary transmission is still incomplete. The RBI in its MPC of October
decided to remain focused on the withdrawal of accommodation to ensure that inflation
progressively aligns with the target while supporting growth, and hence, kept the policy repo
rate unchanged at 6.5 per cent.

9
Kharif sowing progresses despite challenges

11. Healthy sowing of kharif crops is likely to ease inflationary pressure on food items.
Area sown under Kharif crops was 0.2 per cent higher than last year and 3.4 per cent higher
than the last five-year average. The whole country experienced normal monsoon at 94 per
cent rainfall of the Long Period Average (LPA), despite the El Nino risk. About 81 per cent of
the sub-divisions received normal and above-normal rainfall. Essentially, the monsoon core
zone comprising rain-fed agriculture regions received 101 per cent of LPA. There is an
adequate level of moisture content in the soil which bodes well for the upcoming Rabi
season.

Kharif sowing Tractor sales

2022 2023 YoY Growth (RHS) Domestic Tractor Sales YoY Growth (RHS)
120 10% 120 30%
8%
100
100 20%
6%
Million Hectare

80
4% 80
10%
Thousands

60 2%
60
0% 0%
40
-2% 40
20 -10%
-4% 20
0 -6%
-20%
Cereals

Pulses

Cotton
Rice
Total

Foodgrain

Oilseeds

Sugarcane

0
Jun-23

Aug-23
Feb-23

Apr-23
May-23

Jul-23

Sep-23
Jan-23

Mar-23

Source: MoA&FW Source: TMA

Rainfall (% of LPA) Reservoir level

140
Monsoon
101 September 113 120
Core Zone
Billion Cubic Metres

South 100
92
Peninsula 80
August 54
East & 60
82
Northeast
40
Central India 100 July 113 20

Northwest 101 0
12-Jun-23

12-Aug-23

12-Oct-23
12-Feb-23

12-May-23

12-Jul-23
12-Apr-23

12-Sep-23
12-Mar-23
12-Jan-23

June 91
All India 94

Source: IMD Source: CWC

12. As of 12th October, reservoir levels in all regions are higher than the 10-year average
barring the southern region. As we move ahead, the North East Monsoon Season (October-
December) 2023 rainfall over south peninsular India is estimated to be normal (88-112 per

10
cent of LPA). This is likely to improve the reservoir levels of the southern region in the next
three months. Higher tractor sales in September on a sequential basis along with adequate
availability of fertilisers augurs well for upcoming Rabi sowing. Further, an increase in
Minimum Support Prices for Rabi marketing season 2024-25 in the range of 2-7 per cent is
likely to incentivise greater area sowing under rabi crops.

Credit growth supports the farm sector and rural demand

13. Credit has a critical role in the development of the rural economy. Thanks to the
measures taken by the government to foster financial inclusion and continued focus on the
uptake of fintech innovations for improving access to finance, especially in rural areas, rural
credit received a fillip in recent years. As of end of June 2023, rural credit grew by 16.1 per
cent YoY, higher than the growth in total outstanding credit of scheduled commercial banks.
The share of rural credit in the total credit by SCBs was 7.7 per cent at the end of June 2023
and this remained consistently over 7 per cent since June 2017. Credit to agriculture and
allied activities recorded a robust 16.6 per cent growth, YoY, as at the end of August 2023.

Rural credit in India by SCBs

Amount Outstanding (in Rs. billion) No of Accounts (in millions)
Rural credit outstanding (in ₹

11000 76

No. of rural accounts (in

75
10500
74
billion)

73

million)
10000
72
9500 71
70
9000
69
8500 68
Jun-22 Sep-22 Dec-22 Mar-23 Jun-23

Source: Basic Statistical Returns, RBI

Employment trends confirm India’s economic resilience

14. The recently released annual PLFS for 2022-23 (July- June) and quarterly PLFS
(urban) for April- June 2023 point towards strengthening labour markets, reflected in greater
labour force participation and lower unemployment.

The all-India annual unemployment rate (UR) (persons age 15 years and above, as per usual status)
declined from 4.1 per cent in 2021-22 to 3.2 per cent in 2022-23, accompanied also by a rise in labour
force participation rate (LFPR) from 55.2 per cent to 57.9 per cent. The unemployment rate for youth
(15-29 years) continued to decline from 17.3 per cent in 2018-19 to 10.0 per cent in 2022-23.

Even by the relatively strict standards of current weekly status (CWS), the employment situation has
recovered from the pandemic in both urban and rural areas. The unemployment rate has declined from
6.6 per cent in 2021-22 to 5.1 per cent in 2022-23. Notably, this has been accompanied by a rise in the
labour force participation rate from 51.7 per cent in 2021-22 to 54.6 per cent in 2022-23.

11
 Improving annual labour market indicators
Usual Status Current Weekly Status
LFPR UR (RHS) LFPR UR (RHS)
60 8 60 10
57.9 8.7
5.8 8
6
54.6
55 55
per cent

per cent

per cent
per cent
4
50.2 3.2 5.1 4
50 50 48.5
2
2

45 0 45 0

2018-19

2019-20

2020-21

2021-22

2022-23
2018-19

2019-20

2020-21

2021-22

2022-23

Source: PLFS
Note: Figures for ages 15 years and above

The quarterly urban unemployment rate declined from 7.6 per cent in April-June 2022 to 6.6 per cent
in April-June 2023, the lowest since April-June 2018, when the first round of the survey was
conducted. This was accompanied by an increase in urban labour participation rate from 47.5 per cent
in April-June 2022 to 48.8 per cent in April-June 2023. Youth urban unemployment rate declined from
18.9 per cent in April-June 2022 to 17.6 per cent in April-June 2023.

Quarterly labour market indicators for urban areas

LFPR UR (RHS)
50 48.8
24
21
47.5
18
47 15
per cent
per cent

12
44 9
7.6 6
6.6
3
41 0
April-June, 2019

Jan-Mar 2022

Jan-Mar 2023
April-June 2018

Oct-Dec, 2018

Oct-Dec, 2020

Apr-Jun 2021

Apr-Jun 2022

Apr-Jun 2023
Oct-Dec 2021

Oct-Dec 2022
Jul-Sep 2019

Jul-Sep 2021

Jul-Sep 2022
July-Sept, 2018

Jan-March, 2019

Jan-Mar 2021
Jan-Mar 2020

Apr-Jun 2020
Oct-Dec 2019

Jul-Sep 2020

Source: Quarterly PLFS, MoSPI

Note: Figures for Current Weekly Status, 15 years and above

Going ahead, the employment outlook exudes optimism. According to the RBI‟s Industrial Outlook
Survey, the industrial sector‟s intent to hire is higher in the next couple of quarters. As per the
Consumer Confidence Survey, similar sentiments were expressed by households on employment
prospects.

12
 Optimism among households and businesses on employment outlook
Consumer confidence survey Industrial outlook survey
Consumers' perception on employment Net response on employment
prospects a year ahead 60
40
50
30 40

20 30

Per cent
Per cent

20
10
10
0 0
-10
-10
-20

Q1:2019-20

Q3:2019-20

Q1:2020-21

Q3:2020-21

Q1:2021-22

Q3:2021-22

Q1:2022-23

Q3:2022-23

Q1:2023-24

Q3:2023-24

Q1:2024:25
-20
Nov-21

Nov-22
May-21
Jul-21
Sep-21

May-22
Jul-22
Sep-22

May-23
Jul-23
Sep-23
Jan-22

Jan-23
Mar-22

Mar-23

Source: RBI

15. Underlying the improvement in overall LFPR lies a sharp uptick in female LFPR, a
phenomenon at work for the past six years. The female LFPR (all-India, usual status) rose
from 23.3 per cent in 2017-18 to 37.0 per cent in 2022-23, driven by rural female labour
participation. In utilising the increasing willingness and ability of females to participate in the
labour market lies the promise of women-led development, attested to by the recent women's
reservation Bill in Parliament.

Box 1: Women-led development: Tapping the gender dividend for India @ 100

The recent passage of the women‟s reservation bill - Nari Shakti Vandan Adhiniyam (henceforth
NSVA) - has come at an opportune moment, with India‟s G20 Presidency listing “women-led
development” as one of its six priorities. Further, there is rising global attention towards women‟s
workforce participation and outcomes following the award of the Nobel Prize in Economics to
Prof. Claudia Goldin for her work on key drivers of gender differences in the labour market.

For women-led development to be actualised in its true sense, the prerequisites of equal opportunity
and basic needs must be fulfilled. This has inspired multifarious initiatives by the Government to
improve the quality of lives of women, enabling their economically productive participation in the
workforce.

Financial inclusion: Access to financial services is known to improve women‟s control over
household resources, and is a gateway to accessing credit and insurance. The PM Jan Dhan Yojana
has facilitated the opening of 50 crore bank accounts, out of which 56 per cent of accountholders
are women as of August 2023. This is accompanied by a rise in average deposits by nearly four
times, from ₹1,065 in March 2015 to ₹4,087 in March 2023.

Rural microfinance: The Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-
NRLM), the Government‟s SHG programme, has covered nearly 9 crore women through 83 lakh

13
SHGs. Recently, the Government has targeted the creation of 2 crore „Lakhpati Didis‟ (women with
annual earnings of ₹1 lakh and more) through skilling SHG members with marketable skills such as
plumbing, LED bulb making, and operation of drones and repair, etc.

Skill development and entrepreneurship: Female participation has been quite encouraging in the
wave of human capital formation through Skill India Mission and Start-up and Stand-Up India.
Under the PM Kaushal Vikas Yojana, over 40 lakh women have been certified, which constitutes
more than 40 per cent of the total certified as of FY22. Around 70 per cent of the loans have been
sanctioned to women entrepreneurs under PM Mudra Yojana and 80 per cent of the beneficiaries
under Stand-Up India are women. Realising the vision of Digital India, more than 53 per cent of the
beneficiaries of the Prime Minister‟s Rural Digital Literacy Campaign (PMGDISHA) are women
(as of July 2023).

Access to basic necessities: Construction of over 11 crore toilets under „Swachchh Bharat
Mission‟, clean cooking gas connections to nearly 9.6 crore women below the poverty line under
„Ujjawala Yojana‟ and connecting over 12.6 crores out of 19.5 crores rural household with tap
drinking water connections under „Jal Jeevan Mission‟ have transformed the lives of women by
reducing the drudgery and care burden. These initiatives have a disproportionately positive impact
on women, addressing concerns of safety and dignity, besides freeing up time and energy for
productive work.

Property rights in rural housing: Under PM AWAS Yojana (Gramin), 26.6 per cent of the 2.41
crore completed houses are solely in the name of women and 69 per cent are jointly in the name of
wife and husband. As asset ownership is associated with greater participation of women in
household decision-making, improved health outcomes for young children, and reduced incidence
of domestic violence, PM-AWAS Yojana has proved to be a doubly effective instrument for
equitable prosperity.

Social change as a pathway to economic progress: Women-led development begins with

ensuring the health and education of the girl child. The emphasis on “Beti Bachao, Beti Padhao”
has sensitised collective consciousness towards saving, educating, and saving for the girl child (via
Sukanya Samriddhi Yojana, a flagship small deposits scheme for financial planning for the girl
child. The scheme has more than 3.1 crore accounts to its credit). Concurrently, the gross enrolment
ratio of girls in the schools at the secondary level has increased from 75.5 per cent in (2014-15) to
79.4 per cent in 2021-22. The focus on reaping the gender dividend makes profound economic
sense in terms of utilising the best talent and is crucial for India to become a developed country by
2047.

The abovementioned initiatives have already begun paying dividend, with the female LFPR rising
to 37 per cent in 2022-23 from 23.3 per cent in 2017-18, improvement in the sex ratio at birth from
918 in 2014-15 to 933 in 2022-23, and reduction in maternal mortality rate from 130 per lakh live
births in 2014-16 to 97 per lakh live births in 2018-20. These underline the tectonic shift towards
women-led development in India.

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External sector developments
Global trade to recover in H2 of 2023
16. There is continuing weakness in global demand flowing from higher inflation levels
in major economies affecting real incomes, and continuing contraction of the manufacturing
PMI headline index for 12 months till August 2023 (though slightly up in August 2023). The
latest estimate by the World Trade Organisation (WTO) for world merchandise trade volume
growth for 2023 is 0.8 per cent, which is almost half of its estimate made in April 2023, i.e.,
1.7 per cent. However, the WTO is optimistic about a revival in global trade growth in 2024.
The WTO Outlook notes that the signs of recovery could begin in the second half of 2023
itself in comparison to the first half when merchandise trade volume was down by 0.5 per
cent (YoY).
Steady growth in non-oil exports improves India‟s trade balance in September

17. The pressures outlined above are bound to have implications for India‟s external
sector performance. According to the recent RBI estimates, the Current Account Deficit
(CAD) of India was higher in Q1FY24 as compared to Q4FY23, however, it was lower than
that in Q1FY23. The CAD increased to 1.1 per cent of GDP in Q1FY24 from 0.2 per cent in
Q4FY23, but was lower than the 2.1 per cent recorded in Q1FY23. The Q-o-Q rise in CAD
from US$ 1.4 billion in Q4FY23 to US$ 9.2 billion in Q1FY24 was mainly on account of the
increasing trade deficit and lower surplus on the invisibles account. Weaker global demand
and tighter monetary policies have, inter alia, led to moderating export demand.

On a YoY basis, the CAD and its components viz., merchandise trade, and invisibles, performed better
in Q1FY24. CAD declined by half from US$ 18.0 billion to US$ 9.2 billion in Q1FY24. Major factors
driving this were a decline in merchandise trade deficit by 10.2 per cent and an increase in service
exports surplus by 13.1 per cent in Q1FY24. The narrowing of CAD in Q1FY 24 (YoY) resulted in
accretion of foreign exchange reserves worth US$ 24.4 billion in Q1FY24, supported by strong net
FPI inflows during the period.

Snapshot of Current Account Deficit

Net Merchandise Trade Balance Net Services Net Transfers
Net Income Current account balance
100

50
US$ billion

-50

-100
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 P
2021-22 2022-23 2023-24

Source: RBI
Note: P stands for Provisional

15
Monthly trade data shows that, in September 2023, exports (merchandise and services) moderated
slightly by 1.2 per cent while imports declined 13.7 per cent improving India‟s overall trade balance
by 67.3 per cent, on a YoY basis. Merchandise non-petroleum non-gems and jewellery exports
expanded by 1.8 per cent.

Services exports expanded by 0.5 per cent in September 2023. Remarkable improvements have been
witnessed in growth in net exports of business services and financial services. In software services
exports, which accounted for 47.4 per cent of total service exports in Q1FY24, the surplus grew by
10.5 per cent (YoY). Recently published Survey on Computer Software and Information Technology
Enabled Services Exports: 2022-23 by the RBI informs that the US, Canada, followed by the EU
imported 86.8 per cent of India‟s total software services exports, with a YoY growth of 18-20 per cent
in exports to these countries in FY23.

18. There are imminent fears of rising crude oil prices in H2 FY24, given that the average
price during Q2FY24 (US$ 86.8/bbl.) was higher than Q1FY24 (US$ 77.9/bbl.) and ongoing
speculation and wait-and-watch situation emerging from the recent geopolitical situation in
the middle-East. However, these averages are way lower than the average prices during
Q1FY23 (US$ 109.5/bbl.) and Q2FY23 (US$ 97.9/bbl.).

FPI investors remain invested in the Indian economy during H1 of FY24

19. In H1 FY24, net foreign portfolio investment inflows were US$ 16.5 billion as against
net outflows of US$ 7.8 billion in H1 FY23. This along with consistent surpluses on account
of remittances (though moderating by 8 per cent Q-o-Q in Q1FY24) and services exports
provide resilience to India‟s external sector. Further, India‟s foreign exchange reserves have
been consistently cushioning the external financing needs and were at US$ 584.7 billion as of
6th October 2023.

20. Despite continuing global headwinds, India‟s external sector is poised for better
growth prospects following improving trade prospects in 2024. India‟s lower vulnerability in
external debt indicators, compared with its emerging market economy peers lends further
strength to a robust external sector.2

Initiatives in India’s G-20 Presidency Generate Global Hope

21. Amidst global uncertainty, India‟s G20 presidency has led to many new initiatives and
achievements which can be utilised for tackling global economic challenges, including those
related to food and energy insecurity.

22. The increasing demand for development financing, coupled with hardening global
challenges has highlighted the need for Multilateral Development Banks (MDBs) to

2
https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=56501#F5

16
strengthen and evolve. Against this background, the Indian G20 Presidency established the
G20 Independent Expert Group (IEG) on strengthening MDBs. During this Presidency year,
efforts were also made to provide momentum to the MDBs‟ implementation of the
recommendations of the Capital Adequacy Frameworks (CAF) panel which can enable
MDBs to stretch their balance sheets and use their existing resources more efficiently.

23. One major highlight of the Indian presidency was widening the scope of the policy
framework to consider the macro-financial implications of crypto assets. This was
necessitated to address the full range of risks posed by crypto assets, including risks specific
to Emerging Markets and Developing Economies. Consequently, the IMF and the Financial
Stability Board have developed a Synthesis Paper to support a coordinated policy approach to
crypto-assets, detailing macroeconomic and regulatory perspectives and the full range of risks
posed by crypto assets. Thus, the Indian Presidency has been able to push towards clearer
policies on crypto assets by bringing consensus around the need to broaden the scope of
ongoing work on crypto assets.

24. Digital Public Infrastructure (DPI) has been seamlessly integrated into the G20
discussions as a key priority under the Indian Presidency. Taking lessons from India‟s success
story of leveraging DPI to advance financial inclusion, the G20 Policy Recommendations for
Advancing Financial Inclusion and Productivity Gains through DPI were formulated and
unanimously endorsed by the G20. The Financial Inclusion Action Plan has also
acknowledged the significant role of DPI in advancing financial inclusion in G20 and
beyond.

25. India‟s G20 Presidency has also emphasised the need to address the global challenges
posed by debt vulnerabilities, both in low-income and middle-income countries. The Indian
Presidency has been diligently advocating the interests of the Global South on debt. G20
members are actively engaged in discussions aimed at strengthening multilateral coordination
to effectively address the deteriorating debt situation and facilitate coordinated debt treatment
for debt-distressed countries. To accelerate debt restructuring, the Global Sovereign Debt
Roundtable, a joint initiative of the IMF, World Bank and the Presidency was launched to
strengthen communication and foster a common understanding among key stakeholders.

26. G20 also reaffirmed its commitment to strengthening multilateral efforts for swift
implementation of a two-pillar international tax package to address the tax challenges arising
from the digitisation of the economy. A package of deliverables on the two-pillar international
tax package has been developed by the members of the OECD/G20 Inclusive Framework on
Base Erosion and Profit Sharing. During the G20 Presidency, India also launched the pilot
programme of the South Asia Academy in India for tax and financial crime investigation in
collaboration with the OECD. Efforts have also been made to identify approaches toward

17
streamlining the wider use of treaty-exchanged information between interested jurisdictions
on a bilateral and voluntary basis. These efforts are vital in influencing the future tax
transparency agenda at the global level.

27. Recommendations on the mechanisms to support the timely and adequate

mobilisation of resources for climate finance have also been prepared. Focus has been placed
on public finance, mechanisms and risk-sharing facilities, to address both adaptation and
mitigation efforts in a balanced manner to reach the ambitious Nationally Determined
Contributions (NDCs), carbon neutrality and net-zero considering different national
circumstances. The Presidency also focused on financial solutions, policies, and incentives to
encourage greater private flows for rapid development, demonstration, and deployment of
green and low-carbon technologies.

28. G20 also took note of the report prepared by OECD on „Towards orderly green
transition-Investment requirements and managing risks to capital flows‟ based on an analysis
of data on investment funds from selected Advanced Economies (AEs) and Emerging
Markets (EMs), including India. The report points to the structural issues in global capital
markets acting as barriers to higher flows to EMs, including in green sectors and highlights
the importance of foundational capital market reforms and sound macroeconomic policies to
support green investment.

29. A report on Macroeconomic Risks Stemming from Climate Change and Transition
Pathways was also prepared based on the policy experiences of G20 members in dealing with
the macroeconomic impacts of climate change and transition pathways. The report identifies
that the macroeconomic impacts of the transition to a low-carbon economy will depend on
the composition of a country‟s transition policies, but can be manageable if the appropriate
policy mix is implemented. Policymakers have a range of tools at their disposal to address
climate change risks. The optimal choice of these instruments and their applicability for
specific sectors is dependent on country circumstances. The report also emphasises the
importance of international dialogue and cooperation, including in the areas of finance and
technology.

30. Towards achieving the Sustainable Development Goals (SDGs), and promoting
orderly, just, and affordable transitions, the Finance Ministers and Central Bank Governors
have committed to take action to enable financing for SDGs, including and beyond climate,
in line with the G20 Sustainable Finance Roadmap. The Sustainable Finance Working Group
developed an analytical framework for SDG-aligned finance for scaling up the adoption of
social impact investment instruments and improving nature-related data and reporting. In this
regard, the G20 Sustainable Finance Technical Assistance Action Plan (TAAP), a multi-year
document, has been prepared, highlighting the recommendations for creating an enabling

18
environment for enhancing capacity-building services and tailoring them according to local
needs. TAAP aims to scale up capacity building and technical assistance in sustainable
finance, especially for EMDEs and Small and Medium Enterprises (SMEs).

31. G20 also took note of the recent food and energy crisis faced by many economies
because of supply chain disruptions. While global food and energy prices have fallen from
their peak levels, the potential for high levels of volatility in food and energy markets
remains, given the uncertainties in the global economy. In this context, the G20 report on the
macroeconomic impacts of food and energy insecurity and their implications for the global
economy provides a comprehensive overview of policy experiences shared by members in
dealing with this issue and is supported by analysis from international organisations.

Outlook
32. Global uncertainties have been compounded by recent developments in the Persian
Gulf. Depending on how the situation develops, crude oil prices may push higher. Further, the
relentless supply of US Treasuries and continued restrictive monetary policy in the US (with
further monetary policy tightening not ruled out) could cause financial conditions to be
restrictive. At current levels, US stock markets have greater downside risk than upside. If the
downside materialises, it will have spillover effects on other markets. Fraught geopolitical
conditions can cause a general increase in global risk aversion. If these risks worsen and are
sustained, they can affect economic activity in other countries, including India.

33. However, India‟s macroeconomic outlook for FY24 is bright and is solidly
underpinned by strong domestic fundamentals. Alongside private consumption, investment
demand is also firming up. There are additional growth levers in broad-based industrial
growth and buoyant residential property markets. Industrial capacity utilisation has improved.
An increase in household demand for residential properties combines with strong public
sector capex to reinforce investment. Kharif sowing has progressed well despite challenges.
Improved reservoir levels augur well for the upcoming Rabi season. Core inflation is
declining steadily, while food inflation has eased. Yet, there are significant headwinds.
Global inflation in 2023 was estimated to decline steadily due to the tight monetary policies
of central banks. But fresh challenges have cropped up in adverse geo-political turns and
volatile crude prices. Sluggish global demand is affecting India‟s trade, but this is projected to
recover from H2FY24. Nonetheless, with a lower trade deficit and a comfortable forex
reserve position, India‟s external account looks robust. Echoing all this, RBI‟s forwarding-
looking surveys on manufacturing, consumer confidence, employment and inflation
expectations have optimistic findings. In sum, as IMF projections also confirm, India will
remain the fastest-growing major economy in the world in FY24.
***

For feedback and queries, one may write to: - [email protected]

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 Performance of High-Frequency Indicators

YTD Year to Date Year to Date (YoY Growth)

Data Title Unit Period/As at
the end of 2021-22 2022-23 2023-24 2021-22 2022-23 2023-24

Agriculture
Fertiliser Sales Mn Tonnes Apr-Aug 29.3 28 28 6.4 -4.4 0
Domestic Tractor Sales Lakhs Apr-Sept 4.4 4.9 4.7 9.8 10.5 -3.7
Kharif Sowing Mn Hectare 29th Sep 111.2 110.5 110.7 -0.3 -0.7 0.2
Kharif Production Mn Tonnes Final 155.4 155.7 - 3.2 0.2 -
Reservoir Level Bn Cu.Metres 12-Oct 142.2 159.3 132 -4.4 12.0 -17.1
Wheat Procurement (RMS) LMT NA 433.4 187.9 262 11.2 -56.6 39.4
Rice Procurement (KMS) LMT 30-Sep-23 575.9 569.5 - -4.4 -1.1 -
Rainfall Millimetres June-Sep 874.5 925 820 -9 5.8 -11.4
Credit to Agri & allied activities ₹ Lakh crore Aug 13.6 15.4 18.0 13.0 13.4 16.6
Industry
8-Core Industries Index Apr-Aug 130.7 143.8 154.8 19.4 10 7.7
IIP Index Apr-Aug 125.6 135.3 143.5 28.9 7.7 6.1
Domestic Auto sales Lakh Apr-Sep 78.5 102.2 108.0 14.5 30.2 5.7
PMI Manufacturing Index Apr-Sep 52.6 55.2 57.9 21.3 4.8 5
Power consumption Billion kWh Apr-Aug 707.2 790.2 846.5 12.7 117.7 7.1
Natural gas production Bn Cu.Metres Apr-Aug 11.1 11.4 11.7 19.9 3.4 2.2
Cement production Index Apr-Aug 148.3 164.2 185.1 44.4 10.7 12.7
Steel consumption Mn Tonnes Apr-Sep 497.1 552.8 633.4 36.1 11.2 14.6

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 YTD Year to Date Year to Date (YoY Growth)
Data Title Unit Period/As at
the end of 2021-22 2022-23 2023-24 2021-22 2022-23 2023-24
Inflation
CPI-C Index Apr-Sept 161.4 172.9 182.5 5.3 7.2 5.5
WPI Index Apr-Sept 134.5 153.6 150.9 11.8 14.2 -1.8
CFPI Index Apr-Sept 160.9 173.5 184.9 3.3 7.8 6.6
CPI-Core Index Apr-Sept 160.7 170.6 179 5.9 6.1 4.9
Services
Average Daily ETC Collection ₹ Crore Apr-Sep 90.6 140.9 169.1 92.6 55.6 20
Domestic Air Passenger Traffic Lakh Apr-Aug 437.5 1038 1259 208.9 137.3 21.3
Port Cargo Traffic Million tonnes Apr-Sep 346.4 384.8 393.7 15.9 11.1 2.3
Rail Freight Traffic Million tonnes Apr-Sep 668.8 736.7 758.2 25.3 10.1 2.9
PMI Services Index Apr-Sep 49.8 57.2 60.9 68.4 14.8 6.4
Fuel Consumption Million tonnes Apr-Sep 93.7 107.4 113.7 9.1 14.6 5.9
UPI (Value) ₹ Lakh crore Apr-Sep 34.3 62.9 90.6 121.5 83.3 44
UPI (Volume) Crore Apr-Sep 1844.6 3705 5875.5 117.3 100.9 58.6
E-Way Bill Volume Crore Apr-Sep 35.1 46.1 54.2 51 31.2 17.6
Fiscal Indicators
Gross tax revenue (Central Govt) ₹ Lakh crore Apr-Aug 8.6 10.2 11.9 70.5 18.7 16.5
Revenue Expenditure ₹ Lakh crore Apr-Aug 11.1 11.4 13 -0.8 3 14.1
Capital Expenditure ₹ Lakh crore Apr-Aug 1.7 2.5 3.7 27.8 46.8 48.1
Fiscal Deficit ₹ Lakh crore Apr-Aug 4.7 5.4 6.4 -46.3 15.7 18.8
GST Collection ₹ Lakh crore Apr-Aug 6.8 8.9 9.9 50.1 30.9 11.1

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 YTD Period/As Year to Date Year to Date (YoY Growth)
Data Title Unit
at the end of 2021-22 2022-23 2023-24 2021-22 2022-23 2023-24
External Sector
Merchandise exports USD Billion Apr-Sep 198.3 231.5 211.4 58.1 16.7 -8.7
Non-oil exports USD Billion Apr-Sep 169.7 180.7 169.5 49.8 6.5 -6.2
Merchandise imports USD Billion Apr-Sep 274.6 372.6 327 81.0 35.7 -12.2
Non-oil non-gold imports USD Billion Apr-Sep 180.4 241.5 221.9 60.8 33.9 -8.1
Net FDI USD Billion Apr-Jul 13.1 17.3 5.7 322.6 32.1 -67.1
Net FPI USD Billion Apr-Sep 5.4 -7.4 20.8 -28.0 -237.0 381.1
Exchange Rate INR/USD Apr-Sep 73.9 78.5 82.4 -1.6 6.2 5
Foreign Exchange Reserves USD Billion 06th -Oct 639.5 532.9 584.7 16 -16.7 9.7
Import Cover Months Sep 15 9 10 - - -
Monetary and Financial
Non-Food Credit ₹ Lakh crore 22nd Sep 108.9 126.1 151.3 5.1 15.8 20.0
10-Year Bond Yields Per cent Apr-Sep 6.1 7.3 7.1 -0.8 1.2 -0.2
Repo Rate Per cent 13th Oct 4 5.9 6.5 0 1.9 0.6
Currency in Circulation ₹ Lakh crore 6th Oct 29.4 31.9 32.9 8.9 8.5 3.1
M0 ₹ Lakh crore 6th Oct 36.8 41.0 43.9 14.3 11.3 7.2
Employment
Net payroll additions under EPFO Lakh Apr-Jul 30.3 48.2 60.3 5379.1 59.1 25.1
Number of persons demanded
Crore Apr-Sep 22.9 18.4 19.3 -6.1 -19.5 4.6
employment under MGNREGA
Urban Unemployment Rate Per cent Jun 12.6 7.6 6.6 -39.4 -39.7 -13.2
Subscriber Additions: NPS Lakh Apr-Jul 2.35 2.5 2.56 36.1 6.4 2.4

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