Industry Odisha Bureau, Sep 05: India’s economic indicators improved modestly in July this year. Nine of 16 tracked indicators stayed above their one-year average. This marked an improvement from eight indicators in June. Vehicle sales and bank credit provided meaningful support. Yet inflation and weakening monsoon conditions cloud the outlook ahead.
The broader picture, however, remained far from uniform. Seven indicators stayed below their one-year average range still. The gap was visible between goods and services consumption. Domestic production also diverged from external-sector performance during July.
Consumption indicators regained momentum after June’s broader slowdown. Passenger car and van sales grew 34.9% year-on-year. That marked a sharp rise from 15.3% in June. Tractor sales growth accelerated similarly, reaching 20.5% in July. Broadband subscriber growth edged higher too, reaching 11.2%.
Air travel told a different story entirely. Domestic air passenger traffic contracted 4.8% year-on-year in July. That followed a 1% contraction the previous month. May had shown growth of 9.5% by contrast. This divergence highlights consumption’s uneven recovery across sectors.
Production indicators, meanwhile, showed relative strength through July. Rail freight growth accelerated to 9%, up from 4%. Bank credit growth also rose, reaching 19.1% in July. Core-sector growth moderated slightly to 5.4% from June’s 6%. The composite PMI, however, continued losing momentum steadily. It fell to 54.3, down from 57.1 in June. That marked a third straight month of PMI decline.
Inflation added a fresh complication to this picture. Food and beverages inflation is estimated near 5.7% in August. That compares with 5.2% in July, per IDFC First Bank Economics Research. Proteins, edible oils and sugar are driving this increase. Vegetable prices, including tomatoes, have actually eased recently. This suggests inflation pressure extends beyond typical vegetable-price volatility.
Agricultural risks may prove more consequential over coming months. Kharif sowing reached 97% completion by August 28. Total acreage remained 1.7% below last year’s level. Rice and coarse-cereal sowing each declined more sharply. Rice benefits from stronger irrigation coverage, near 65% currently. Pulses and oilseeds, however, carry lower irrigation protection overall.
Rainfall has weakened considerably since July’s brief surplus. August rainfall came in 15% below normal levels. Cumulative monsoon rainfall now shows a 13% deficit. States producing 31% of food grain saw deficient rainfall. Reservoir storage stood at 67.8% of capacity in August. That trails both last year and the 10-year average.
Skymet expects September rainfall to stay 20% below normal. It has revised its full monsoon forecast to a 15% deficit. Icra has cautioned that weaker rainfall could hurt farm incomes. Rural demand may face pressure if this weakness persists. India’s economic resilience, therefore, remains real but far from complete.
