India Economics – Macro Indicators Chartbook_ Growth Momentum Improves; Support for Macro Stability

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the economic outlook, focusing on inflation, monetary policy, and various economic indicators relevant to the Indian economy [2][3][11]. Core Economic Insights - Inflation Outlook: The uncertain global environment poses challenges, with food inflation being a significant component of the Consumer Price Index (CPI). An improved outlook for summer and winter crops is expected to moderate food inflation over the next 12 months, projecting an average inflation rate of 4.3% for F2026-27, down from 4.9% in F2025 [2]. - Monetary Policy: The Reserve Bank of India (RBI) has cut the Cash Reserve Ratio (CRR) by 50 basis points to 4% to enhance liquidity. A shallow rate cut cycle is anticipated starting from February 2025, with two consecutive cuts of 25 basis points each [3]. Economic Indicators - High-Frequency Indicators: Signs of recovery are noted in credit card spending, air passenger traffic, and vehicle registrations, indicating a potential rebound in consumer activity [5]. - CPI Trends: The CPI has shown a downward trend in core inflation over the past year, although it may face upward pressure due to global commodity price uncertainties [7]. - Trade Balance: The trade balance for oil and gold is being monitored, with concerns about potential double counting in Special Economic Zones (SEZs) [1][6]. Sector-Specific Insights - Consumer Sector: Domestic two-wheeler sales and passenger vehicle sales have shown varying growth rates, with two-wheeler sales experiencing a decline of 7.2% in certain months, while passenger vehicle sales have seen growth rates as high as 34.6% [10]. - Investment Trends: The manufacturing Purchasing Managers' Index (PMI) has remained above 55, indicating expansion in the manufacturing sector. However, investment indicators show a mixed trend, with some sectors experiencing declines [10][28]. Employment and Labor Market - Job Market Trends: The Naukri Job Index has weakened, particularly in the IT and non-IT sectors, reflecting a slowdown in employment demand [46][48]. - Wage Trends: Average rural wages have shown slight increases, but overall employment demand remains below previous fiscal years [25][26]. Additional Observations - Government Spending: The fiscal deficit is expected to decrease gradually, with a focus on capital creation in government spending [3]. - Consumer Sentiment: The CMIE Index of Consumer Sentiment has shown fluctuations, indicating varying levels of consumer confidence [45]. This summary encapsulates the key points discussed in the conference call, highlighting the economic outlook, sector-specific trends, and labor market dynamics.