India's Economy Shows Green Shoots as Credit, Deposit Growth Improve

The report from BNP Paribas India said improvements in indicators such as credit and deposit growth, IIP, auto sales, port traffic, GST e-way bills, fuel consumption, and consumer sentiment, though export growth and GST collections have moderated.

"Most indicators of consumption, including auto sales, fuel consumption, PMI, credit card payments, urban wage growth, and consumer sentiments, remain robust. In our view, the government's focus on consumption through expansionary fiscal and monetary policy should support growth," the report said.

Urban consumption indicators looked positive, with vehicle sales (PV, 2W, tractors), fuel consumption, deposit growth, e‑way bills, airline passenger traffic, and hiring demand all recorded upticks.

Rural indicators are mixed as the GST rate cut is positive and monsoon has been good, but low agri-realisation could continue to hurt in the near term, the brokerage said.

After a weak festival season in October, rural indicators are showing signs of recovery, it said, adding that agricultural exports, tractor sales, and reservoir levels have all improved.

The firm estimated that the food inflation has hit its trough and should turn positive this quarter due to the base effect dynamics. Food inflation and the government's renewed emphasis on consumption should provide support for rural wage growth.

Industry and services are showing signs of recovery, with YoY credit growth around 12 per cent, deposit growth at 12.7 per cent, higher airline and port activity, robust PMI readings, and government expenditure.

Industrial production rose after the festive season, and manufacturing output, PV production, new order growth, and cement production remain high, the report said.

On the expenditure side, capital expenditure for the year seems to have been front-loaded and could moderate in the coming months, according to the brokerage.

- IANS