India's GDP Growth Momentum Remains Strong At 6.5–7%: Report

India's economic momentum remains strong despite a somewhat erratic monsoon, with the projected real GDP growth of 6.5–7% in the Economic Survey appearing appropriate, according to a report released by the Finance Ministry on Thursday.

The Monthly Economic Review for July indicates that the Indian economy has maintained its momentum in the first four months of fiscal 2025.

Goods and services tax collections during this period experienced a significant increase, driven by an expanded tax base and increased economic activity, the finance ministry's report stated.

"The resilience of domestic activity is also reflected in the strong performance of the manufacturing and services sector purchasing managers' indices. The manufacturing growth has been driven by expansion in demand conditions, a rise in new export orders and growth in output prices," it said.

The report said that the Union Budget for fiscal 2025 has outlined a path for fiscal consolidation. With strong revenue collection, discipline in revenue spending, and robust economic performance, the fiscal deficit is expected to decrease.

At the same time, high levels of capital expenditure are being maintained to support the nascent private investment cycle.

Retail inflation fell to 3.5% in July 2024, the lowest since September 2019, due to a moderation in food inflation. The steady progress of the southwest monsoon has also supported kharif sowing.

Replenished water levels in reservoirs are promising for both the current kharif and the upcoming rabi crop production, which is expected to further help reduce food inflation in the coming months.

"On balance, India's economic momentum remains intact. Despite a somewhat erratic monsoon, reservoirs have been replenished. Manufacturing and services sectors are expanding, according to the Purchasing Managers' indices," it said.

Tax collections, especially indirect taxes, which reflect transactions, are growing healthily, and so is bank credit, it said.

"Inflation is moderating, and exports of both goods and services are doing better than they did last year. Stock markets are holding on to their levels. Foreign direct investment is looking up as gross inflows are rising," it said.

As of now, it said, the projection of real GDP growth of 6.5-7.0% for Fiscal 2025, made in the Economic Survey for 2023-24, seems appropriate.

(With Inputs From PTI)