By Samriddhi Singh Mahar & Siddhi Nawar
The International Monetary Fund (IMF) projects India to become the fourth-largest global economy by 2025, surpassing Japan with a nominal GDP of USD 4,340 billion. The end of the year has been eventful for the Indian economy, as Inflation hit a four-month low, showing easing price pressures for the general public. Meanwhile, the wholesale inflation rose to a six-month high, at 2.37%.
Retail inflation in India eased to 5.22 per cent in December 2024, the lowest in three months, driven by a decline in food inflation to 8.39 per cent, its lowest in four months. The moderation offers relief after October’s breach of the Reserve Bank of India’s target range, signaling some easing of price pressures.
The trade deficit significantly improved, shrinking from – USD 19.84 billion in November to – USD 6.78 billion, narrowing down to a three month low.
Wholesale Price Inflation in India rose to 2.37% in December, marking a six-month high and an increase from November’s 1.89%. The December figure also surpassed October’s inflation rate of 2.36%, which had breached the inflation target set by the Reserve Bank of India (RBI).
India’s industrial growth (IIP) rose to 5.2%, the highest in six months, up from 3.5% in November. However, GST collections were subdued compared to October and November. The PMI slipped marginally to 56.4, its lowest since December 2023, down from November’s 56.5.As the nation anticipates the unveiling of the budget amid rising pressures from the dollar, here is a review of the state of the economy for December, 2024.
GST:
India’s Goods and Services Tax (GST) revenue for December 2024 reached ₹1.76 lakh crore, reflecting a 7.3% increase from Rs 1.64 lakh crore in December 2023. In the previous month, November 2024, GST collections stood even higher at Rs 1.82 lakh crore.
GST: India’s Goods and Services Tax (GST) revenue sustained an annual increase but registered a three-month low in December. The Finance Ministry disclosed that GST collections in December stood at Rs 1.65 lakh crore, marking a 10.28 percent rise from the previous year. However, this figure was lower than both November’s Rs 1.68 lakh crore and October’s Rs 1.72 lakh crore, which was the second-highest collection post the GST implementation.
Domestic gross revenue in November saw an 8.4% growth, amounting to ₹1.32 lakh crore. Key contributors included CGST at Rs 32,836 crore, SGST at Rs 40,499 crore, IGST (including import revenues) at Rs 91,221 crore, and cess at Rs 12,301 crore.After adjusting for refunds, the net GST revenue for December 2024 was ₹1.54 lakh crore, marking a 3.3% rise compared to Rs 1.49 lakh crore in December 2023.
State-wise, Maharashtra led the collection tally with Rs 29,260 crore, registering a 9% year-on-year growth. Karnataka and Tamil Nadu followed with collections of Rs 12,526 crore and Rs 10,956 crore, respectively.
(Source: Ministry of Finance)
UPI Transactions
Unified Payment Interface (UPI) transactions closed the year with an all-time high transaction volume of 16.73 billion in December 2024, surpassing October’s 16.58 billion transactions. Immediate Payment Service (IMPS) transactions rose to 441 million in volume while FASTag, India’s toll collection system, processed 382 million transactions. Aadhaar Enabled Payment System (AePS) transactions also reached 93 million transactions in December.
UPI transactions reached 16,730.01 million in volume and Rs 23,24,699.91 crore in value in December, with the participation of 641 banks driving the ecosystem. In comparison, November saw 15,482.02 million transactions worth Rs 21,55,187.40 crore, facilitated by 637 banks.
(Source: NPCI)
Inflation
In December, the economy experienced mixed inflation trends. Consumer Price Index (CPI) inflation eased to a four-month low of 5.22%, down from November’s 5.48% and October’s 6.21%, which had exceeded the RBI’s target range of 2-6% and marked the highest retail inflation of 2024.
Meanwhile, wholesale price inflation rose to 2.37% in December, a six-month high, up from 1.89% in November and slightly above October’s 2.36%, breaching the RBI’s inflation target.
(Source: Compiled data from Ministry of Statistics and Programme Implementation and Ministry of Commerce and Industry)
Purchasing Managers Index (PMI)
India’s Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global and HSBC, fell to 56.4 in December, its lowest level since December 2023, down slightly from November’s 56.5 and below the earlier estimate of 57.4, which had suggested stronger expansion.
Meanwhile, the Services PMI rose to 59.3 in December from 58.4 in November, driven by reduced inflation and robust business activity, which hit a four-month high. The Finance & Insurance sector led growth in both new orders and business activity among all sub-sectors, signaling strong momentum.
India’s Services PMI in December accelerated to 59.3 from 58.4 in the previous month, revealed data from S&P Global. According to the HSBC Services PMI report, the services sector experienced reduced inflation compared to November, while robust business activity reached a four-month high, signaling strong expansion for businesses.
(Source: S&P Global, HSBC PMI Report)
Index of Industrial Production
The Index of Industrial Production (IIP) rose to 148.4 in December 2024 from 149.9 in November 2024, indicating a growth rate improvement to 5.2% from a 3.5% growth in the previous month, the highest in six months.
For the month of November 2024, the growth rates for the Mining, Manufacturing, and Electricity sectors were 1.9%, 5.8%, and 4.4%, respectively.
In November 2024, the IIP indices stood as follows: Primary Goods at 147.7, Capital Goods at 106.8, Intermediate Goods at 158.8, Infrastructure/Construction Goods at 180.6, Consumer Durables at 120.5, and Consumer Non-durables at 158.1.
The top contributors to IIP growth in November 2024 were infrastructure/construction, consumer durables and primary goods.
(Source: Ministry of Statistics)
FII & DII:
There was a significant inflow from FPIs of Rs 25,938 crore in December 2024. DIIs were net buyers, investing Rs 34,194.73 crore in Indian equities.
Nifty 50 hit a lifetime high in September, and the Sensex soared but corrected multiple times. The Nifty 50 index closed at 23,644.80, and the BSE Sensex closed at 78,139.01.
(Source: BSE & NSE, NSDL)
Trade Merchandise
In December 2024, India recorded total exports of USD 70.67 billion, reflecting a 0.92% growth compared to December 2023 and an increase from November 2024’s USD 67.79 billion.
Total imports stood at USD 77.44 billion, marking a 6.40% rise from the previous year but a significant drop from November 2024’s USD 87.63 billion.
In total the trade deficit shrunk from – USD 19.84 billion in November 2024 to -6.78 in December 2024.
Service exports were estimated at USD 32.66 billion, up from USD 31.63 billion in December 2023 but down from November 2024’s USD 35.67 billion. Service imports slightly decreased to USD 17.50 billion, compared to USD 15.63 billion in December 2023 and USD 17.68 billion in November 2024.
Merchandise exports were valued at USD 38.01 billion in December 2024, down from USD 38.39 billion in December 2023 but higher than November 2024’s USD 32.11 billion. Merchandise imports fell to USD 59.95 billion from November 2024’s USD 69.95 billion, though they exceeded December 2023’s USD 57.15 billion.
(Source: Ministry of Commerce & Industry)
