Next week, crucial economic data releases will set the stage for the new government’s policy framework. Five key high-frequency indicators will be unveiled, and apart from GST collections, all are expected to surpass estimates.
GDP and Fiscal Deficit Data
The Government’s Statistics Office will release the growth data for FY24 and Q4 of FY24 on May 31. This will include the GDP figures and the fiscal deficit for FY24, along with April’s fiscal deficit for FY25. The core sector performance data will also be made public on the same day. Economists predict that the fiscal deficit for FY24 will be lower than the revised estimate of 5.8%, possibly by 10-20 basis points. This is due to better-than-expected tax and non-tax revenue, driven by strong GST collections and dividends from Central Public Sector Undertakings (CPSEs).
Reducing the fiscal deficit is crucial for achieving the target of 4.5% by the end of FY26. The upcoming data will provide insights into the government’s progress towards this goal.
GDP Growth Expectations
Various economists and research agencies have forecasted GDP growth for FY24 to be between 7.5% and 7.8%. India Ratings & Research (Ind-Ra) expects growth to be in the range of 6.9% to 7%. ICRA projects a year-on-year expansion of GDP to moderate to 6.7% in Q4 FY24 from 8.4% in Q3 FY24. This moderation is attributed to a smaller increase in net indirect taxes and a narrower dip in subsidy outgo for the full year. ICRA expects GDP and Gross Value Added (GVA) growth to be at 7.8% and 7%, respectively.
GST Collection Trends
After achieving a record-high GST collection of ₹2.10 lakh crore in April, May’s collection is anticipated to be lower month-on-month but higher year-on-year. The generation of e-Way bills, a key indicator of GST collection, slowed in April to 96.7 million from 103.5 million in the previous month. This suggests a potential moderation in GST collections for May, according to CARE Edge.
Purchasing Managers’ Index (PMI)
On June 3, the Purchasing Managers’ Index (PMI) for May will be released. This data will provide further insights into the manufacturing and services sectors’ performance, influencing the overall economic outlook.
Conclusion
These upcoming data releases will be critical in shaping the economic narrative for the new government. They will offer a clear picture of the current economic conditions and help guide policy decisions moving forward. With GDP growth expected to be strong and fiscal deficit potentially lower than anticipated, the new government will have a solid foundation to build its economic policies. However, the anticipated moderation in GST collections will require careful monitoring. Overall, these indicators will provide essential insights for navigating the economic landscape in the coming months.