The latest report by CareEdge Ratings highlights that while purchasing managers’ indexes (PMIs) remain comfortably in the expansion zone, recent months have witnessed a moderation compared to the beginning of the fiscal year. With external demand under pressure, the report underscores that domestic consumption and investment recovery are pivotal for sustaining industrial activity.

Early estimates for December signal improvement in both manufacturing and services activity. The index of industrial production (IIP) growth, however, stands at 4% for April-October FY25, down from 7% during the same period last year.

The report reveals a 9.8% decline in capital expenditure by 20 major states during the first half of FY25, even as revenue expenditure rose by 9.9%. State tax revenue exhibited a healthy growth of 11.1% in H1 FY25, albeit lower than the budgeted 13.4%. Non-tax revenue collections, however, contracted by 7%, affecting total receipts. Fiscal deficits for the top 20 states reached 2.9% of projected GSDP, slightly up from 2.7% a year ago.

In November, services exports surged by 26.9%, significantly outpacing goods exports, which contracted by 4.8% year-on-year. The decline in goods exports was attributed to a 49.7% drop in petroleum exports amid weakening oil prices, while non-petroleum exports grew by 7.8%.

Also Read: India’s Manufacturing Sector Contribution to GVA Expected to Reach 21% by 2032

Looking ahead, the report projects goods and services exports to rise by 2.5% and 13%, respectively, in FY25. It also forecasts a manageable current account deficit of 0.9% of GDP for the fiscal year.

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