New Delhi: Despite the irregular monsoon, India's economic momentum is intact and the estimate of GDP (gross domestic product) growth rate of 6.5 to 7.0 percent in the Economic Review seems to be correct. According to the July Monthly Economic of the Finance Ministry, the Indian economy has maintained its momentum in the first four months of the current financial year 2024-25.

The report released by the Finance Ministry on Thursday said that there has been a significant increase in GST collection in the first four months (April-July) of the current financial year 2024-25. This was possible on the back of expansion of tax base and increase in economic activities.

growth in the manufacturing sector

The report said, 'The strong performance of the purchasing managers' index of manufacturing and service sectors also reflects the strength in domestic activity. The growth in the manufacturing sector is due to increased demand, a boom in new export orders and rising production prices. On the fiscal front, the report said that the budget for the financial year 2024-25 has paved the way for fiscal consolidation. The fiscal deficit is expected to come down with the support of strong revenue collection, discipline in revenue expenditure and strong economic performance.

Also, it said that capital expenditure has been maintained at a high level, supporting the new private investment cycle. Good signs are being received for the production of Kharif and upcoming Rabi crops. The report said, retail inflation declined to 3.5 percent in July 2024, the lowest since September 2019. This is a result of softening of food inflation.

Support for Kharif sowing

Steady progress in the southwest monsoon has supported kharif sowing. It said that the rising water levels in reservoirs augur well for the production of the current kharif and upcoming rabi crops. This will help in moderating food inflation in the coming months.

Along with indirect taxes, bank credit is also increasing. The report said, "Overall, India's economic momentum is intact. Water level in reservoirs has been replenished to some extent despite erratic monsoon. Manufacturing and services sector are growing as per the purchasing managers' index." It said that tax collection, especially indirect taxes (which reflect transactions), is growing well, and bank credit is also increasing. According to the report, "Inflation is coming down and exports of both goods and services have been better than last year. Stock markets are remaining at their level. Foreign direct investment is increasing due to increase in gross inflows.