India's economic momentum is intact despite erratic monsoon, although consumer confidence is low in the current economic situation, the Union Finance Ministry said in its July review.

Here are the highlights of the review, that was released on August 22:

  1. The projection of real GDP growth of 6.5-7.0 percent for FY25, made in the Economic Survey for 2023-24, seems appropriate: FinMin
  2. Retail inflation based on Consumer Price Index-Combined (CPI-C) eased from 5.1 percent in June 2024 to 3.5 percent in July 2024, the lowest since September 2019. This was mainly due to a significant fall in food inflation. It declined to 5.4 percent in July 2024 from 9.4 percent in June 2024
  3. Food inflation may reduce further in the coming months on steady progress in the southwest monsoon that supported kharif sowing. Inflation is moderating, and exports of both goods and services are doing better than they did last year
  4. With moderate core inflation and positive progress in monsoon, the headline inflation outlook is positive. Assuming a normal monsoon, CPI inflation for FY25 is projected at 4.5 percent by the RBI, with Q2 inflation at 4.4 percent.
  5. A steady progress in the southwest monsoon has supported agricultural activity. The cumulative southwest monsoon rainfall was 3 percent higher than the long-period average up to 19 August 2024
  6. Fiscal deficit is estimated to decline further from 5.6 percent of GDP in FY24 (provisional actuals) to 4.9 percent in FY25. The commitment to fiscal discipline will not only help keep bond yields in check but will translate to lower economy-wide borrowing costs.
  7. Gross tax revenue estimated to increase by 10.8 percent in FY25, driven by increases of 12 percent and 14 percent in corporate income tax and taxes on income other than corporate tax. After accounting for transfers to state governments and the NDRF, the net tax revenue of the Union Government is budgeted to increase by 10.9 percent YoY.
  8. The total outstanding liabilities of the Union Government is budgeted to decline from 57.1 percent of GDP in FY24 (Revised Estimates) to 55.7 percent in FY25
  9. The first quarter of FY25 saw healthy revenue generation through direct and indirect taxes. Corporate income tax and personal income tax together grew by 39.9 percent YoY as of the end of June 2024
  10. Total expenditure and capital expenditure are lower by 7.7 percent and 35 percent YoY, respectively, in April – June 2024. However, lower spending is on account of it being a part of the period of the general election. Capital expenditure and total expenditure are expected to pick up in the remainder of the year.
  11. Rising demand for products related to energy transition and artificial intelligence is expected to contribute to trade growth in 2024.
  12. Potential for interest rate cuts in the US later in the year and the consequently weaker US dollar could give global trade a significant boost, providing a ray of optimism for the future of global trade. However, the future of global trade in 2024 is still at risk due to ongoing geopolitical tensions, rising costs of shipping, and the emergence of new industrial policies, as noted by UNCTAD.
  13. Foreign Portfolio Investors (FPIs) turned net buyers in Indian financial markets, with net inflows amounting to USD 10.8 billion in June and July 2024 after witnessing outflows in the first two months of FY25.
  14. The debt segment is expected to garner around $20-40 billion within 18-21 months following the incorporation of Indian Government Bonds into JP Morgan’s Emerging Markets global bond index. There's a positive outlook for investments from FPIs in debt due to India's inclusion in other global indices.
  15. The travel and tourism sector has completely recovered from the pre-pandemic level, with the sector’s contribution to India’s GDP at Rs 19.3 lakh crore in 2023, a nearly 10 percent increase prepandemic level.