rural demand: A strong third quarter on the cards for the Indian economy

India’s economy is set for a strong third quarter after a stellar show in the July-September period, showed a series of high-frequency indicators released on Friday.

Manufacturing picked up pace in November, goods and services tax (GST) collections posted another month of robust growth, while auto companies dispatched record-high vehicles to dealers for November. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) showed manufacturing activity regaining momentum in November, rising to 56 from the eight-month low of 55.5 in the previous month. A PMI print above 50 means expansion.

GST surged 15% from a year earlier to ₹1.68 lakh crore in November, as the festival season and strong economic activity contributed to growth, showed data released Friday. “At the moment, most of the other indicators seem to be suggesting that there is resilience in the economy,” said Upasna Bhardwaj, chief economist, Kotak Mahindra Bank.

Data released on Thursday showed core sector output expanded 12.1% in October.

The economy grew a better-than-expected 7.6% in the September quarter, numbers released Thursday showed, prompting some economists to raise their full-year forecasts above RBI’s 6.5% estimate.

“The manufacturing sector seems to be holding up reasonably well, based on hard data both from Q3 GDP and core infra index for October,” said Rahul Bajoria, MD and head of EM Asia (ex-China) economics, Barclays.Carmakers dispatched 335,354 units in November, an increase of 3.9% over 322,600 sent out in the same period last year.

Rural demand
The wholesale volumes were the best for November, though the rate of growth moderated when compared with the previous few months because of the high base of last year.

“India’s manufacturing industry maintained its robust performance in November, with output regaining growth momentum,” said Pollyanna De Lima, economics associate director, S&P Global Market Intelligence. “Firms’ ability to secure new business, both domestically and from abroad, remained central to the success of the sector.”

GST collections crossed the Rs 1.6 lakh crore mark for the sixth time in FY24, with revenue from domestic transactions, including import of services, rising 20% over November 2022.

The demand for aviation turbine fuel (ATF) was up 6.1% year-on-year in November, while petrol sales of state-run oil marketing companies rose 7.5% from the previous year. Record-high vehicle sales and festival-related shopping and spending drove demand in November.

Power consumption rose 8.5% to nearly 120 billion units in November. Coal production at 84.5 million tonnes was 11% higher than a year earlier.

The Unified Payments Interface, the real-time payment mechanism run by the National Payments Corporation of India, crossed 11 billion transactions for the second month in November, even though the volume levelled off from the previous month.

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