1

2
 Table of Contents

Abstract..................................................................................................................................... 4

Domestic Economic Activity ................................................................................................... 6

FY24 for the Indian economy opens with strong April activity amid seasonal moderation

following a vigorous last quarter of FY 23 .......................................................................... 6

Agriculture sector .................................................................................................................... 9

Bright Kharif Prospects with adequate availability of inputs ............................................. 9

Inflation ................................................................................................................................... 13

Commodity prices are to be lower in 2023, and food inflation is to ease in the upcoming

months ................................................................................................................................. 13

External Sector ....................................................................................................................... 16

Exports to Drive the next wave of Growth ......................................................................... 16

Performance of High-Frequency indicators ........................................................................ 20

3
 Abstract

FY24 for the Indian economy opened on the back of strong activity witnessed in the last quarter
of the previous fiscal. GST collections in April, which marked the commercial activity of the
last month, underwent a level shift pushed up by the widening of the tax base and heightened
economic activity. Index of Industrial Production (IIP) and Eight Core Industries Index (ECI)
averaged steady growth in Q4 of FY23, adding to the capacity utilisation hovering close to 75
per cent two quarters earlier. Air passenger traffic in the last quarter of FY23 finally moved
beyond pre-pandemic levels, among the last of the services sector components to do so. The
first month of the new fiscal has sustained the growth momentum of the previous quarter. PMI-
Manufacturing was at a four-month high in April 2023, while PMI-Services, in the same month,
expanded at the fastest pace in 13 years. Within the services sector, rail freight and port cargo
traffic posted their best growth performances for April in many years.

Buoyed by sustainable growth in activity, increasing capacity utilisation to investment-

triggering 75 per cent, the corporates have started investing in new capacity. The production
of capital goods and construction/infrastructure goods, as estimated in the IIP, grew steadily
in Q4 of FY23, along with imports of capital goods. During the same quarter, the CMIE reports
the completion of projects worth ₹60,000 crore and the announcement of new projects valued
at ₹10.9 lakh crore, the highest ever recorded since the inception of its database.

Like the manufacturing and services sector, the prospects for the agriculture sector also
appear to be bright. The forecast of a normal monsoon, surplus water reservoir levels,
adequate availability of seeds and fertilisers, and robust tractor sales augurs well for a healthy
kharif sowing season starting in June 2023. Despite unseasonal rains, smooth public
procurement of wheat augers well for food security. Rural demand is also gaining momentum,
as evident in sturdy sales of fast-moving consumer goods (FMCG) companies during Q4 of
FY23 and sustained double-digit growth of two-three-wheelers sales in April. Going forward,
healthy prospects for the kharif season, higher minimum support prices (MSP) for crops, and
increased budgetary spending by the government are likely to enhance farmers’ income and
boost the rural economy.

Inflationary pressures across countries are waning. The World Bank’s Commodity Outlook,
April 2023, sees prices of international commodities, barring precious metals, easing in the
current year following weakened prospects for global demand and improving supply chains.
The price level, however, remains above pre-pandemic levels and may continue to do so if the
oil supply gets even more restricted than expected, geo-political tension intensifies, and
weather conditions become unfavourable. Thus far, the softening of international prices has
led to an easing of domestic inflationary pressures in India. WPI inflation, after remaining in

4
double digits for 18 months, has now declined to a 33-month low of -0.9 per cent in April 2023.
CPI inflation has also gradually declined from a peak of 7.8 per cent in April 2022 to an 18-
month low of 4.7 per cent in April 2023. Sticky core inflation has moderated significantly to
almost a three-year low in April, signalling a pass-through of lower input costs by producers.
The central bank must be pleased. Going forward, the expected bumper harvest of food grains
in FY23 and brightened prospects for the kharif season in FY24 are expected to keep food
inflation low in the upcoming months.

Declining commodity prices have eased import costs narrowing the deficit in India’s trade
account. Contributing further to improving the trade balance has been the country’s exports,
in respect of which India’s performance has stood out exceedingly in FY22 and, promisingly,
in FY23. Several measures taken after the Covid-19 outbreak have helped India’s exports
garner a larger global market share which should help it grow at a reasonable rate despite the
slowing of global demand. The Production Linked Incentive (PLI) scheme, for example, has
driven a substantial increase in exports of electronic goods, particularly smartphones, whose
global producers are well on their way to making India a manufacturing hub. Despite facing
stiff competition from other countries in the region, textile and readymade garments exports
from India are also shaping up to increase their global presence with the support of the PLI
incentive. Re-configuration of geo-political alignment has further helped India diversify its
exports of refined crude oil and petroleum products to cater to newer markets.

Services exports, too, rose sharply during the recovery from the pandemic, with the sharpest
growth witnessed in business services exports between FY20 and FY23. The sharp increase is
linked to India's sudden proliferation of Global Capability Centres (GCC). Through GCC,
global businesses outsourced their back-office operations to India after wage costs in their
parent countries spiked up after the inflation spurt. Increased demand for digitisation and
preference for online delivery of services since the outbreak of the pandemic also encouraged
the export of business services. With a growing focus on switching to hybrid business models,
digital delivery of healthcare, educational and recreational services will likely be the future
drivers of India’s services exports.

There are downside risks to growth and upside risks to inflation, partly channelled through the
external sector and partly originating from weather uncertainties. Yet a strong point going
India’s way is the strength of its domestic demand. Consumption has shown steady and broad-
based growth, while investment in capacity creation and real estate is finding traction. April
is too early to forecast the economic outcomes for the entire year. A good beginning, though,
is a harbinger of positive outcomes.

5
Domestic Economic Activity

FY24 for the Indian economy opens with strong April activity amid seasonal moderation
following a vigorous last quarter of FY 23

1. Economic activity remained buoyant in FY23, and the momentum continued in FY24
amid some seasonal moderation. GST collection jumped to a record high of ₹1.87 lakh crore in
April 2023. The average GST collections have also displayed a level shift upwards over the
years on the back of heightened economic activity and a widening tax base. Seasonal
moderation has, however, set in with e-way bill volume generation, a forerunner of GST
collections, softening from March to 8.4 crore in April 2023. Yet on a year-on-year basis, e-
way bill volume in April has shown growth, suggesting a sustained increase in value addition
in most of the sectors of the economy.

Level Shift Upward in GST Collections and E-Way bill volumes

GST Collections E-Way Bills Generation (Volume)
GST Collections FY20 Avg 10
2 FY21 Avg FY22 Avg 9
1.75 FY23 Avg 8
1.5 7
₹ Lakh crore

1.25 6
Crore

5
1
4
0.75
3
0.5 2
0.25 1
0 0
Apr-19

Apr-20

Apr-21

Apr-22

Apr-23
Dec-20
Dec-19

Dec-21

Dec-22
Aug-21
Aug-19

Aug-20

Aug-22

Apr-22
Aug-21
Apr-19
Aug-19
Dec-19
Apr-20
Aug-20
Dec-20
Apr-21

Dec-21

Aug-22
Dec-22
Apr-23

Source: GSTN, Ministry of Finance

2. PMI manufacturing is yet another indicator that reaffirms a strong April opening of
economic activity in FY24. After remaining well in the expansionary zone throughout Q4 of
FY23, it registered a four-month high of 57.2 in April 2023. Data from the latest report suggests
that robust new business growth and an associated increase in production requirements led to
manufacturers adding to their input inventories as well increasing employment. A similar strong
April opening is expected in respect of the Index of Industrial Production (IIP) and Eight Core
Industries Index (ECI) as well, which have also shown a robust Y-o-Y growth of 4.8 per cent
and 6.5 per cent, respectively, in the last quarter of FY23. Accompanying the growth in
manufacturing output is the rise in capacity utilization towards the 75 per cent benchmark,
which is also a precursor of an increase in the investment rate in the economy. As per RBI’s
survey, capacity utilisation moved up from 74 per cent in Q2 FY23 to 74.3 per cent in Q3 FY23.
A more recent FICCI Manufacturing Survey shows nine out of twelve sectors operating at
above 70 per cent capacity in Q4 of FY23. The outlook for Q1 FY24 in the sector, as assessed

6
by the RBI’s Business Expectations Index (BEI), moderated from the previous quarter on
account of seasonal factors but notably remains above its historical average. Manufacturers
continue to remain optimistic about production, order books, employment, capacity utilisation
and overall business situation in the next two-quarters of FY24 as well.

Robust Manufacturing Sector

Expansion of Capacity Utilisation PMI-Manufacturing indicates favourable
operating conditions
80 65
60
70 55
50
60 45
Per cent

Index
40
50
35
30
40
25

30 20

Apr-23
Oct-20
Apr-20
Jul-20

Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-20

Jan-21

Jan-23
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
FY20 FY21 FY22 FY23

Source: RBI, IHS Markit

3. Mirroring the performance of the manufacturing sector, PMI-Services, after a robust

performance in Q4 FY23, expanded at the fastest pace in 13 years in April 2023 to 62, on the
back of strong demand, particularly in the finance and insurance sub-sector sectors. New export
orders grew for the third successive month in April, indicating improved international demand
as well for India’s service offerings. Receipts from services exports surged in Q4 of FY23 by
an impressive YoY growth of 23 per cent.
Strong Service Sector Performance
PMI-Services expanded at fastest pace in Steady Growth in Rail Freight Traffic
13 years
70 140

61.7 62.0
120
Million Metric Tonnes

60

100
Index

50
80

40
60

30
40
Apr 17
Jul 10
Apr 11

Oct 12

Oct 15
Jul 16

Jan 18
Oct 18
Jan 12

Jul 13
Apr 14
Jan 15

Jul 19
Apr 20

Oct 21
Jan 21

Jul 22
Apr 23

FY20 FY21 FY22 FY23 FY24

April

7
 Domestic Air Passenger Traffic surpasses Record port cargo traffic in April across
pre-pandemic level in Q4 years
8 FY20 FY21 FY22 FY23 70
7
65

Million Metric Tonnes

6
60
5
Crore

4 55

3 50

2 45
1
40
0 FY20 FY21 FY22 FY23 FY24
Q1 Q2 Q3 Q4 April

Source: IHS Markit, Indian Railways, AAI, Indian Ports Association

4. Transport services has often been monitored to assess the impact of the pandemic. With
the pandemic now behind us the growth of transport services was also impressive in Q4 of
FY23. Air passenger traffic moved past the pre-pandemic levels in Q4 FY23, in line with
India’s burgeoning air passenger traffic market. Similarly, rail freight traffic and port cargo
traffic in Q4 of FY23 remained well above pre-pandemic levels, indicating an upward level
shift in these services. On the back of a strong performance in Q4 of FY23, rail freight traffic
and port cargo traffic in April 2023 were the highest ever across years for the month of April.
The outlook for the services sectors also remains bright, as indicated in the RBI’s Services and
Infrastructure Outlook Survey. The survey respondents were upbeat about the overall business
situation and the turnover during Q1 FY24. They expect favourable employment conditions for
both full-time and part-time employees. The survey expects that demand for services is likely
to grow sequentially till the third quarter of FY24.

5. Buoyed by expectations of growing demand, the private sector has also continued to
invest in building additional capacity. The capital goods and infrastructure/construction goods
sub-indices of IIP have increased at healthy rates of 9.7 per cent and 7.8 per cent, respectively,
in Q4 FY23 on a YoY basis, pointing towards sustained investment activity. Similarly, capital
goods imports rose by 12 per cent YoY over this period.

6. As per the CMIE CapEx database, proposals to set up new investment projects by the
private sector soared to ₹10.9 lakh crore in Q4 FY23, the highest recorded since the inception
of the database. The power sector continued to be a major contributor to new investment
proposals and added ₹1.8 lakh crore worth of new projects in the quarter ending March 2023.
Within the power sector, renewable energy investment proposals accounted for ₹1.5 lakh crore
or 75 per cent of total new proposals. While new investment proposals are on the rise, projects
worth ₹0.6 lakh crore were completed in the quarter ending March 2023, reflecting the steady

8
pace of capacity expansion. A broad categorization of new investment proposals is given in the
table below.

New Investment Proposals (In ₹ lakh crore)

Sector Jun-22 Sep-22 Dec-22 Mar-23
Manufacturing 2.10 2.37 6.47 1.48
Electricity 2.19 0.89 0.28 1.87
Services (other than financial) 0.17 0.19 0.42 7.46
Construction & real estate 0.02 0.07 0.00 0.03
Source: CMIE CapEx database

7. Following the regulatory directive of the government and RBI to payment systems
providers (PSPs) to store their data in domestically located servers, the private sector has
responded. The table above includes 15 projects worth ₹0.6 lakh crore announced in the March
ending quarter of FY23 for the setting up of data centres. The outlay is significantly higher than
in the past.

8. A strong economic activity, including investment activity despite higher interest rates,
underscores the strength of demand in the Indian economy. As inflation further recedes, demand
will become stronger and lay the foundation of a virtuous capex upcycle.

Agriculture sector

Bright Kharif Prospects with adequate availability of inputs

9. The agriculture sector is set to harvest bumper crops as per the 2nd Advance Estimates
for the agriculture year 2022-23. Food grains production is estimated at 32.4 crore tonnes, 2.5
per cent higher than the previous year’s estimate and achieving record production levels for the
seventh consecutive year. The growth in food grains is broad-based across all the principal
crops covering the rabi and kharif seasons. Besides food grain, production of oilseeds and
sugarcane production is also estimated to reach record production levels.

10. Public procurement of wheat (Rabi) during the year 2023-24 is progressing smoothly.
The progress has been propelled by the relaxation provided by the government on the quality
specifications of procured wheat. The relaxation declares fit for procurement of such wheat that
has lost its lustre owing to untimely rains. This has reduced the hardship of farmers who
otherwise resorted to distress sales at low prices in the open market. Higher wheat arrivals at
Mandi in April, compared to the previous two years, signal no major impact of the recent
unfavourable weather conditions on the produce.

9
 Record Foodgrain production Higher wheat arrivals at Mandi in April
35
2020-21 Wheat Arrival Growth (RHS)
30 2021-22
2022-23 (2nd AEs) 120 10%
10%
25
Crore Tonnes

115 8%
20

Lakh Tonnes
110 4% 6%
15
105 4%
10

5 100 2%

0 95 0%
Rice Wheat Pulses Oil Seeds Food 2021 2022 2023
Grains
April

Source: Ministry of Agriculture and Farmers Welfare Source: Agmarknet

11. Against a procurement target of 341.5 Lakh Metric Tons (LMT) of wheat for the central
pool during Rabi Marketing season 1 2023-24, 259 LMT has been procured as of 15th May 2023.
The achievement of the rice procurement target is more advanced. About 512.9 LMT of rice,
which is 99.0 per cent of the target for the central pool, has been procured under the Kharif
Marketing Season2 2022-23. Ongoing procurement operations have benefitted about 1.3 crore
farmers. As of May 2023, total foodgrain stocks with FCI at present are 3.4 times the buffer
norm requirement for the April-June period. This has addressed the food security requirements
of the country in the first quarter of the current year.

Adequate procurement of wheat ensures food security

50 50%
Procurement Procurement as % of Production (RHS)

40 40%
Million Tonnes

30 30%

20 20%

10 10%

0 0%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Source: FCI
Note: FY23 procurement data till 15th May 2023

12. Prospects for the new Kharif crops season beginning in June 2023 are bolstered by the
India Meteorological Department’s (IMD’s) prediction of a normal southwest monsoon in June-

1
Rabi Marketing Season runs from April to March.
2
Kharif Marketing season runs from October to September

10
September at 96 per cent of the long period average (LPA). With the prediction of a ‘normal’
monsoon, the government has set a record target to raise food grain production by 2.6 per cent
to 332 million tonnes during the 2023-24 crop year, starting July. According to IMD, El Niño
conditions are likely to develop in the second half of the season (August-September). However,
the favourable impact of positive Indian Ocean Dipole (IOD)3 and lower snow cover over the
northern hemisphere may end up offsetting the adverse impact of El Niño.

13. Despite uncertainty about rainfall, the growth of crops is not likely to suffer as water
adequacy for irrigation during the course of the year may not be a challenge. As of 18th May
2023, the storage availability in 146 reservoirs was 99.6 per cent of the corresponding period
of last year and 124 per cent of the average storage of the last ten years. The availability of
water in reservoirs is spread across the Central, Northern, Southern and Western Region, which
contributes to a balanced growth in agricultural productivity across the country.

Surplus Availability of Water in Reservoirs

Percentage deviation from 10 yrs avg of live storage

Southern Region 36%

Western Region 25%

Central Region 22%

Northern Region 23%

All India 24%

Source: Adapted from data available from Central Water Commission as on 18th May, 2023

14. Fertiliser is a critical input to sowing and harvesting and is comfortably available. The
closing stock of fertilisers as on 8th May 2023 is about three times the average expected
requirement in May 2023. Quality seed availability at 179.1 lakh quintals is also more than the
requirement of 165.7 lakh quintals in the country for Kharif 2023. With adequate fertiliser and
seed availability, the double-digit growth of tractor sales in March 2023 portends a healthy
sowing season. Though moderation in tractor sales was witnessed in April 2023 can be
attributed to unseasonal rain and high demand generating festivals coming in March this year
compared to April of last year. Credit support to agriculture also increased in March 2023,
registering 15.4 per cent growth over the corresponding period last year and a sequential
increase of 1.9 per cent.

3
The Indian Ocean Dipole (IOD) is defined by the difference in sea surface temperature between two areas (or
poles, hence a dipole) – a western pole in the Arabian Sea (western Indian Ocean) and an eastern pole in the
eastern Indian Ocean south of Indonesia.

11
 Robust tractor sales Growth of bank credit to agriculture in
double-digit
Domestic Tractor Sales YoY Growth (RHS) 18 Bank Credit Growth (RHS) 16%
140 60% 17 15%
120 50%
16 14%
100 40%

₹ Lakh Crore
15 13%
30%
Thousand

80
20% 14 12%
60
10% 13 11%
40
0% 12 10%
20 -10% 11 9%
0 -20% 10 8%
Apr-22

Jun-22

Aug-22

Oct-22

Dec-22

Apr-23
Feb-23

Nov-21

Nov-22
May-21
Jul-21

Jan-22
Mar-22
May-22
Jul-22

Jan-23
Mar-23
Sep-21

Sep-22
Source: Tractor and Mechanisation Association Source: RBI

15. Healthy prospects for the kharif season, higher Minimum Support Prices (MSP) for
crops and increased budgetary spending by the government will likely enhance the farmers’
income and boost the rural economy. Current indicators of demand for the rural economy are
gaining momentum. For instance, sales of two and three-wheelers experienced healthy growth
in April 2023 and overall FY23. Further, as per Bizom, a retail intelligence platform, sales of
fast-moving consumer goods (FMCG) in rural areas increased rapidly in the fourth quarter of
FY23, driven by softening of inflationary pressures and improvement in wage growth. Going
ahead, rural demand is expected to strengthen further in the first quarter of FY24 as procurement
of a good rabi crop harvest increases rural incomes.

Two-Three Wheeler Sales increases Low demand for MGNREGS work

13.8 3.5

11.7
3.3
Persons (in Crore)

10.1
3.1
Lakh

2.9

2.7

2.5
2021-22 2022-23 2023-24 2021-22 2022-23 2023-24
April April

Source: SIAM Source: Ministry of Rural Development

16. Rural income and, thus, rural demand are also expected to increase from a likely uptick
in construction activity, which will increase remittances from urban centres to families of

12
migrant workers based in rural areas. Improvement in labour market conditions and likely
uptick in construction activity has led to a decline in demand for work under MGNREGS in
April 2023 on a year-on-year basis. Further, to lessen the impact of inflation on rural labourers,
the government has increased the daily wages under MGNREGS on average by 6 per cent,
effective from 1st April 2023. This will likely boost rural demand further among those who
choose to stay back and avail of the MGNREGS.

An uptick in construction activity

Steady growth in steel consumption and Growth in Cement Freight traffic signal
production increased production in April 2023
Consumption Cement Railway Freight Traffic Growth YoY
Production
Consumption YoY Growth (RHS) 16 60%
12 30

12 40%
20
Million Tonnes
Million tonnes

8
Per cent

10 8 20%

4
0 4 0%

0 -10 0 -20%
Apr-21

Jul-21

Oct-21

Apr-22

Apr-23
Jan-22

Jul-22

Oct-22

Jan-23

Dec-21

Dec-22
Aug-21
Apr-21
Jun-21

Oct-21

Apr-22
Jun-22
Aug-22
Oct-22

Apr-23
Feb-22

Feb-23
Source: Joint Plant Committee, Ministry of Railways
Note: Cement railway freight traffic is used as proxy for cement production data. The correlation between
cement production index in 8-core industries and cement railway freight traffic stand at 0.85.

Inflation

Commodity prices are to be lower in 2023, and food inflation is to ease in the upcoming
months

17. As per the “World Bank Commodity Outlook, April 2023”, international commodity
prices started to decline from the end of the third quarter of 2022 and are estimated to decline
further in 2023 compared to 2022 levels. The food price index is also expected to decline in
2023, driven by the reduction in “oil and meals” and “grains” prices on account of good harvest
in major producing countries. Agriculture inputs such as fertiliser prices are also predicted to
be lower by 37 per cent in 2023 due to a decline in input cost and further easing of supply
restriction. Other commodities like base metals and energy prices have also been projected to
decline in the wake of weakening demand conditions globally.

18. Hence, prices of all commodities, barring precious metals, are likely to moderate in the
current year, though remaining well above pre-pandemic levels. Going forward, several factors,
such as weaker than expected oil supply, higher than anticipated demand from China,
intensification of geo-political tension and unfavourable weather conditions, may pose an

13
upside risk to these forecasts. Prices of commodities sensitive to El Niño effects, such as coffee,
rice, palm oil, and natural rubber, need to be continuously monitored.

Commodity prices to decline in 2023, remain higher than pre-pandemic level

250 2022 2023F Pre-Pandemic Level (2015-19)

200

150
Index

100

50

0
WB Commodity Energy Agriculture Raw Fertilisers Metals & Precious
Price Index Materials Minerals Metals
Source: World Bank

19. The softening of international prices has led to the easing of domestic inflationary
pressures. WPI inflation has been moderating since June 2022, and after remaining in double
digits for 18 months, it has now declined to a 33-month low of -0.9 per cent in April 2023. The
inflation in manufactured products, particularly “base metals”, and “food products”, and “fuel
and power”, are the major contributor to the deflation in April 2023.

20. On the other hand, CPI inflation, which remained sticky, has gradually declined from a
peak of 7.8 per cent in April 2022 to an 18-month low of 4.7 per cent in April 2023. The decline
in CPI inflation was driven by a further reduction in food and core inflation. The table analyses
commodity-wise CPI inflation dynamics over the past three months. It reveals that the decline
in inflation has been more broad-based in March and April 2023. “Cereals and products” and
“Spices” continues to witness double-digit inflation, though it has been moderating. Among
major heads, “food & beverages”, “fuel and light”, “housing”, and “miscellaneous” inflation
has fallen below the upper bound of the inflation target of RBI, while “Clothing & footwear”
inflation continues to remain above 6 per cent level.

Inflation lower than previous month or remains negative

Inflation higher than previous month
Remains at same level compared to previous month

14
 CPI: Commodity-wise inflation dynamics
February March April
Commodities 2023 2023 2023
1.1 Cereals and products 16.7 15.3 13.7
1.2 Meat and fish 3.3 -1.4 -1.2
1.3 Egg 4.3 4.4 3.1
1.4 Milk and products 9.6 9.3 8.9
1.5 Oils and fats -0.5 -7.9 -12.3
1.6 Fruits 6.4 7.6 2.1
1.7 Vegetables -11.5 -8.5 -6.5
1.8 Pulses and products 4.1 4.3 5.3
1.9 Sugar and confectionery 1.3 1.0 1.9
1.10 Spices 20.2 18.2 17.4
1.11 Non-alcoholic beverages 4.4 4.2 4.1
1.12 Prepared meals, snacks, sweets etc. 8.0 7.6 7.0
1 Food & beverages 6.3 5.1 4.2
2 Pan, tobacco & intoxicants 3.2 3.0 3.5
3.1 Clothing 8.7 8.2 7.4
3.2 Footwear 9.8 8.6 7.6
3 Clothing & footwear 8.8 8.2 7.5
4 Housing 4.8 5.0 4.9
5 Fuel and light 9.9 8.9 5.5
6.1 Household goods and services 7.4 7.0 6.5
6.2 Health 6.5 6.6 6.3
6.3 Transport and communication 4.5 4.0 1.2
6.4 Recreation and amusement 4.9 4.3 3.8
6.5 Education 5.6 5.4 5.7
6.6 Personal care and effects 9.4 8.3 9.0
6 Miscellaneous 6.1 5.8 4.9
Source: MoSPI

21. Supply concerns related to specific commodities have been taken care of by proactive
measures taken by the government, like the prohibition of exports, rationalisation of duties,
imposition of stock limits and maintenance of buffer stocks in order to stabilise the price and
control inflation. For instance, with an estimate of a decline in tur and urad production in 2022-
23, the government has taken several measures, such as the continuation of its free import duty
policy until March 2024 and monitoring the stock of tur and urad held by entities such as
importers, millers, stockists, and traders to curb hoarding. A buffer stock of pulses has been
maintained for price stabilisation. Calibrated release of pulses from the buffer stock will
moderate the prices in the market. Open market selling of wheat during February and March
2023 has led to moderation in wheat prices. Also, as milk prices soared due to skin diseases in
livestock, the government vaccinated more than 95 per cent of the livestock in March 2023,
achieving herd immunity levels against Foot and Mouth Disease (FMD) in cattle and buffaloes.
This will result in increased domestic production and curb prices of these products. Going

15
ahead, the bumper harvest of foodgrain in 2022-23 and brightened prospects for the kharif
season are expected to keep food inflation low in the upcoming months.

External Sector

Exports to Drive the next wave of Growth

22. 2021-22 was a remarkable year for India in terms of merchandise export performance.
It registered the highest-ever value in absolute terms and a seven-year high share in GDP. The
export performance was particularly noteworthy as it came after years of muted growth. India’s
merchandise exports increased by 22 per cent in 2021 over the pre-pandemic year of 2019, as
compared to 17.5 per cent in the world’s merchandise exports. Consequently, as per WTO’s
latest World Trade Report, India’s position among the world’s leading exporters in merchandise
trade improved from the 21st in 20204 to the 18th in 20215.

Record Merchandise exports, reach 7-year

Merchandise export volume chained indices
high as share of GDP in FY22

Merchandise Exports Share in GDP (RHS) 50 World India

500 16
40
400 30
12
20
Per cent
USD Billion

300 10
Per cent

8
0
200
-10
4
100 -20
-30
2001

2019
2004

2007

2010

2013

2016

2022
0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY22
Source: DGCIS, M/o Commerce Source: WTO Stats

23. Both India’s and the world’s exports surged in 2021 following the easing of pandemic
restrictions, the release of pent-up demand and the continued disruption of supply chain
networks. As a result of continued frictions in supply chains exerting price pressures, growth
in global exports in value terms was almost thrice the growth in volume terms. India did better
than global exports as its volume growth was thrice that of the world export volume growth,
reflecting a high pace of recovery in domestic production. However, after witnessing strong
growth in FY22, the pace of growth in global merchandise exports moderated in FY23, as
persisting geopolitical tensions and monetary tightening induced recessionary fears have led to

4
https://www.wto.org/english/res_e/statis_e/wts2021_e/wts2021_e.pdf
5
https://www.wto.org/english/res_e/booksp_e/wtsr_2022_e.pdf

16
a decline in discretionary consumer spending across advanced nations. Yet several measures
post the Covid-19 outbreak have been preparing India’s export to garner a larger global market
share which should grow India’s export at a reasonable rate despite the slowing of global
demand and growth.

Sectoral share in Merchandise Exports

FY22 FY23

Readymade garments

Textiles (excluding readymade garments)

Electronic goods

Engineering goods

Chemicals & related products

Crude Oil and Petroleum Products

Source: DGCIS

24. The increase in global market share is evident in respect of refined crude oil and
petroleum products, whose share in India’s export basket rose from 16 per cent in FY22 to 21.6
per cent in FY23. In part, this is attributable to market diversification of India’s exports of crude
products. Accompanied by an increased share, the export basket has also become more
diversified and resilient, with economies with relatively small amounts of historical trade, such
as Netherlands, Israel, Tongo, Brazil and South Africa being in the list of top 10 export
destinations.

25. Driven by the strong push given by Production Linked Incentive (PLI) scheme, along
with the launch of schemes like the Phased Manufacturing Programme for Mobile handsets and
related sub-components manufacturing, among others, electronic exports have emerged as one
of the sectors with the fastest growing exports registering YoY growth of 49.4 per cent in FY23.
Smartphones contribute a substantial part of this export, as evident in the rapid spike in
shipments of smartphones. As per the data from the India Cellular and Electronics Association
(ICEA), the total export value of India’s smartphone shipments during FY23 exceeded USD 10
billion, approximately twice that of the corresponding period last year 6.

26. There has been impressive growth in engineering goods exports as well in recent years,
mainly due to the implementation of the Zero Duty Export Promotion Capital Goods (EPCG)
scheme. However, driven by a sharp fall in the iron and steel component of engineering goods,

6
https://economictimes.indiatimes.com/industry/cons-products/electronics/india-surpasses-rs-85000-cr-worth-
mobile-phone-exports-in-fy23/articleshow/99334570.cms?from=mdr

17
owing to the economic slowdown in key markets, such as the EU and China, the overall share
of engineering goods in the export basket declined in FY23. Initiatives to support and enhance
the competitiveness of the domestic engineering goods manufacturing firms, such as the PLI
scheme for Automobile & Auto Components and the National Programme on Advanced
Chemistry Cell (ACC), FAME INDIA II, among others, are likely to promote exports of this
sub-sector.

27. The share of textiles and readymade garments in overall merchandise exports has shown
a declining trend owing to rising input costs, weakening demand in both domestic and foreign
markets and stiffer competition from peer exporters such as Vietnam and Bangladesh. However,
the PLI scheme for man-made fibres (MMF), technical textiles, and the Integrated Textile Parks
scheme are expected to enable the textiles industry to achieve size and scale and enhance its
export share in the coming years. Since FY23 and FY24 are gestation periods under the PLI
scheme for textiles, the surge in textile exports is expected from FY257. As of April 2023, the
government has approved 64 applications with a proposed total investment of ₹19,798 crore
and a projected turnover of ₹1.9 lakh crore under the PLI scheme for textiles.

28. The pandemic and the consequent lockdowns led to limited growth in contact-intensive
services exports (transport and travel). After the pandemic outbreak, the share of services
exports in GDP rose sharply during the recovery phase of FY22, with the sharpest growth
witnessed in business services exports between FY20 and FY23. The sharp increase in business
services exports is linked to the sudden proliferation of Global Capability Centres (GCC) in
India, which can be traced to the twin global shocks. After the advent of the Covid-19 vaccines,
economic activity started recovering in the advanced economies in 2021; however, the outbreak
of the Russia-Ukraine conflict led to a sharp rise in inflation. Rising inflation exerted pressure
on wages, which incentivised global conglomerates to search for low-cost options for setting
up back-office corporate operations. The availability of low-cost, efficient and capable labour
in India led to the setting-up of GCC in India to provide back-office corporate support to the
conglomerates.

29. India has the largest number of GCC in the world (about 1500 GCCs8) and enjoys a
competitive advantage, not only in terms of cost but high web-based capability and
management skills. Through GCC and other business services, India also exports professional
business services composed of Research and Development (R&D), Management Consulting
and Public Relations, and Engineering services, among others. Increased demand for
digitization and preference for online delivery of services post the outbreak of the pandemic
also encouraged the export of business services.

7
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1913958
8 https://community.nasscom.in/communities/gcc/india-gcc-trends-quarterly-analysis-q4cy2022

18
30. India’s robust and thriving ICT sector has competently addressed the rising global
digital demand, supported by Government initiatives such as Bharat Net and UPI, among
others. Schemes such as Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Start-up India,
Digital India and Skill India -have strengthened India’s ICT offering through the building of
India Stack. The commitment to enhance Ease of Doing Business, e-initiatives, and e-
commerce in the recently announced Foreign Trade Policy (2023) is further expected to
strengthen the growth of service sector exports.

Share of sub-components in Services Exports

Transport Travel ICT Services Other business services
100

80

60
Per cent

40

20

FY22

FY23
FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

Source: RBI FY21

Note: Data for FY23 is from Apr-Dec 2022

31. Growth in the services sector can be increased through telecommunication, finance and
other business services, which serve as an intermediate input in switching to hybrid business
models, digital delivery of healthcare, educational and recreational services, and supply chain
management. This is expected to result in an improvement in India’s rank in services exporting
nations (compared to its current rank at 8th position) and increase its market share beyond 4 per
cent in world commercial services exports. Deepening and widening service exports also
warrants investment in human capital, which would further reap the demographic dividend
India is advantaged with over the next two decades.

Outlook
32. There are downside risks to growth and upside risks to inflation, partly channelled
through the external sector and partly originating from weather uncertainties. Yet a strong point
going India’s way is the strength of its domestic demand. Consumption has shown steady and
broad-based growth, while investment in capacity creation and real estate is finding traction.
April is too early to forecast the economic outcomes for the entire year. A good beginning,
though, is a harbinger of positive outcomes.

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

19
 Performance of High-Frequency indicators

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
Agriculture
Fertiliser Sales Mn Tonnes Apr-Mar 59.2 68.1 NA -10.6 15.2 NA
Domestic Tractor Sales Lakhs April 6.3 8.9 7.9 436.2 40.7 -11.1
Rabi Sowing Mn Hectare 3rd Feb 69.8 72.1 NA 1.1 3.3 NA
Kharif Production Mn Tonnes 2nd AE 153.5 153.4 NA 3.8 -0.1 NA
Reservoir Level Bn Cu. Metres 11-May 53.7 58.7 59.8 -16.9 9.3 1.9
Wheat Procurement (RMS) LMT 15-May-23 433.4 187.9 259.0 11.2 -56.6 37.8
Rice Procurement (KMS) LMT 15-May-23 575.9 499.8 512.9 -4.4 -13.2 2.6
Rainfall Millimetres June-Sept 874.6 925 870(F) -8.7 5.8 NA
Industry
8-Core Industries Index Apr-Feb 22.7 25.5 - 36.6 12.3 -
IIP Index Apr-Feb 26.6 29 - 10.2 9.2 -
Domestic Auto sales Lakh Apr-Feb 4.8 5.9 - 19.7 21.7 -
PMI Manufacturing Index Apr-Feb 31.4 34.9 - 11.5 11.1 -
Power consumption Billion kWh Apr-Feb 13.2 14.5 - -6.3 10.4 -
Natural gas production Bn Cu. Metres Apr-Feb 8.7 9.2 - -16.8 6.3 -
Cement production Index Apr-Feb 6.4 6.5 - -23.8 1.6 -
Steel consumption Mn Tonnes Apr 1.4 1.7 1.9 330.4 20.9 11.6

20
 YTD Year to Date Year to Date (YoY Growth)
Period/As
Data Title
at the end 2019-20 2021-22 2022-23 2019-20 2021-22 2022-23
of
Inflation
CPI-C Index Apr 157.8 170.1 178.1 4.2 7.8 4.7
WPI Index Apr 132 152.3 150.9 10.7 15.4 -0.9
CFPI Index Apr 156.4 169.4 175.9 2.0 8.3 3.8
CPI-Core Index Apr 157.9 169.1 177.7 5.3 7.1 5.1
Services
Average Daily ETC Collection ₹ Crore Apr 89.5 140.5 171.3 300.7 57.0 21.9
Domestic Air Passenger Traffic Lakhs Apr-Mar 1668.0 2703.4 58.5 62.1
Port Cargo Traffic Million tonnes Apr 61.6 65.0 65.873 29.6 5.6 1.3
Rail Freight Traffic Million tonnes Apr 111.7 122.2 126.5 70.8 9.4 3.5
PMI Services Index Apr 54 57.9 62 900 7.2 7.1
Fuel consumption Million tonnes Apr 16.3 18.5 18.4 74.1 13.1 -0.2
UPI (Value) ₹ Lakh crore Apr 4.9 9.8 14.1 226.6 100.6 43.1
UPI (Volume) Crore Apr 2.6 5.6 8.9 164.2 111.4 59.5
E-way Bill Volume Crore Apr 5.8 7.5 8.4 573.7 29.3 12.0
Fiscal Indicators
Gross tax revenue (Central Govt) ₹ Lakh crore Apr-Feb 22.7 25.5 - 36.6 12.3 -
Revenue Expenditure ₹ Lakh crore Apr-Feb 26.6 29 - 10.2 9.2 -
Capital Expenditure ₹ Lakh crore Apr-Feb 4.8 5.9 - 19.7 21.7 -
Total Expenditure ₹ Lakh crore Apr-Feb 31.4 34.9 - 11.5 11.1 -
Fiscal Deficit ₹ Lakh crore Apr-Feb 13.2 14.5 - -6.3 10.4 -
Revenue Deficit ₹ Lakh crore Apr-Feb 8.7 9.2 - -16.8 6.3 -
Primary Deficit ₹ Lakh crore Apr-Feb 6.4 6.5 - -23.8 1.6 -
GST Collection ₹ Lakh crore Apr 1.4 1.7 1.9 330.4 20.9 11.6

21
 YTD Year to Date Year to Date (YoY Growth)
Data Title Period/As at
the end of 2019-20 2021-22 2022-23 2019-20 2021-22 2022-23

External Sector
Merchandise exports USD Billion Apr 30.7 39.7 34.7 202.3 29.3 -12.6
Non-oil exports USD Billion Apr 27.1 31.8 28.2 203.6 17.3 -11.3
Merchandise imports USD Billion Apr 46.0 58.1 49.9 169.5 26.3 -14.1
Non-oil non-gold imports USD Billion Apr 29.0 36.0 31.5 135.4 24.1 -12.5
Net FDI USD Billion Apr-Feb 35.5 28.3 - -17.7 -20.3 -
Net FPI USD Billion Apr -1.2 -3.0 1.6 - - -
Exchange Rate INR/USD Apr 74.5 76.1 82.0 -2.3 2.1 7.8
Foreign Exchange Reserves USD Billion 5th May 589.5 596.0 596.0 21.5 1.1 0.0
Import Cover Months Apr 16.6 11.5 10.0 - - -
Monetary and Financial
Total Bank Credit ₹ Lakh crore Apr 108.6 119.6 138.6 5.7 10.1 15.9
Non-Food Credit ₹ Lakh crore Apr 108 119.1 138.4 5.7 10.3 16.1
10-Year Bond Yields Per cent Mar 6.07 7.11 7.21 -0.08 1.04 0.1
th
Repo Rate Per cent 12 May 4 4.4 6.5 -0.4 0.4 2.1
Currency in Circulation ₹ Lakh crore Apr 29.1 32.1 34.6 15.2 10.4 7.7
M0 ₹ Lakh crore Apr 35.5 40 44.2 17.5 12.8 10.5
Employment
Net payroll additions under EPFO Lakh Apr-Feb 107.0 131.0 - 62.5 22.4 -
Number of person demanded
Crore Apr 3.8 3.3 3.2 89.1 -13.0 -3.4
employment under MGNREGA
Urban Unemployment Rate Per cent Dec 8.8 7.2 - -1.5 -1.6 -
Subscriber Additions: National
Lakh Apr-Jan 6.3 6.2 - 40 -2.4 -
Pension Scheme (NPS)
Note: F stands for forecast

22