Forum Views - July 2024
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Dr. Vispi Rusi Bhathena, PhD (h.c.)
Chief Executive Officer
Dr. V. Aditya Srinivas
Chief Operating Officer
and Chief Economist
The Indian economy appears to be standing on a solid foundation, with several macroeconomic
indicators showing promising performances across various fronts. One noteworthy aspect is the
consistent and robust GST collection, surpassing Rs. 1.5 lakh crore consistently, indicative of a
significant uptick in grassroots-level economic activity. April 2024 witnessed an unprecedented
milestone with GST collection soaring to Rs. 2 lakh crore, marking an all-time high.
Moreover, the Consumer Price Index (CPI) inflation has remained relatively subdued, hovering
around 4.83%, comfortably below the RBI's target zone of 6%. This provides the Reserve Bank of
India with the leeway to potentially consider rate cuts in the latter part of the year.
T H E
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With the Repo Rate already at 6.5%, nearing its terminal level, the cost of funds assumes paramount
importance, particularly given that a substantial portion of consumption relies on loan capital, such
as housing, automotive, and other capital goods loans.
The recent GDP growth figures for Q4 at 7.8% and the full-year GDP growth for FY23-24 at 8.2%
underscore a very positive trajectory for both the economy and the stock markets. Such robust
growth underscores the resilience of the Indian economy, propelled by a strong demographic
dividend, a thriving domestic consumption theme, and elevated saving rates. These factors
collectively bode well for the long-term prosperity of the economy.
However, amidst this optimism, global attention remains fixated on the policy moves of the US
Federal Reserve, which wield significant influence over global stock markets. The Fed has signaled
its intent to adjust rates only when inflation stabilizes around the 2% mark. With US inflation
currently hovering around 3.5%, above their target zone, the Fed's decisions will undoubtedly
reverberate across international financial markets.
In summary, while challenges and uncertainties persist, the Indian economy's current trajectory,
buoyed by robust fundamentals and resilient dynamics, instills confidence in its long-term
prospects. With prudent policy measures and a conducive global environment, India is poised to
navigate through the evolving economic landscape with resilience and determination.
FORUM VIEWS, JULY 2024 edition
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