Amid trade tensions, Indian economy continues to show growth momentum: EY's Economy Watch

New Delhi [India], April 25 (ANI): India's economy continues to show signs of stability and resilience despite global uncertainties, according to EY's Economy Watch report.
The report highlights encouraging trends in inflation control, fiscal performance, and overall economic activity, even as the global economy faces challenges due to trade tensions and slowing growth.
The report adds, "Available high-frequency data for February and March 2025 point to an evolving scenario where the likelihood of maintaining India's growth momentum appears to be strong. Reflective of a strong performance of both manufacturing and services activity".
One of the most positive developments for India is the sharp decline in inflation. Retail inflation, measured by the Consumer Price Index (CPI), dropped to 3.3 per cent in March 2025 -- its lowest level in 67 months.
This was mainly due to falling vegetable prices and easing food inflation. Core CPI inflation, which excludes food and fuel, also moderated slightly to 4.1 per cent in March.
Wholesale Price Index (WPI) inflation too eased to 2.0 per cent in March, driven by declining food and crude oil prices. These trends suggest that inflationary pressures are under control and are expected to remain below 4 per cent in the coming months.
On the fiscal side, the report noted that the central government's gross tax revenues grew by 10.9 per cent during April-February FY25. However, capital expenditure -- which is essential for long-term growth -- grew by just 0.8 per cent in the same period.
However, a sharp drop of 35.4 per cent in capital spending in February 2025 raised concerns. The report noted that to meet the revised target, capital expenditure would need to grow by over 44 per cent in March. The fiscal deficit stood at 85.8 per cent of the annual target by February.
The report also highlighted strong indicators of economic activity. The manufacturing Purchasing Managers' Index (PMI) rose to an eight-month high of 58.1 in March 2025, indicating healthy growth momentum. Services PMI remained strong at 58.5. Gross GST collections hit Rs 1.96 lakh crore in March, the highest since April 2024.
Looking ahead, the report mentioned that India is expected to grow at 6.5 per cent in FY26 and maintain this pace in the medium term, supported by domestic demand, falling inflation, and lower global crude oil prices.
The report said "Our assessment is that with suitable fiscal and monetary policies, India may be able to sustain a real GDP growth at about 6.5 per cent in FY26 as also in the medium term.... We also expect global crude prices to remain in the range of USD 60-65/bbl in FY26, which may be to India's advantage".
The report stressed that with the right mix of fiscal and monetary policies, India is well-positioned to navigate global headwinds and sustain its growth trajectory. (ANI)