What Do the 9 Non-Agricultural Indicators Reveal About Economic Improvement in April-May?
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Synopsis
In a recent report, it was revealed that nine non-agricultural indicators have shown a positive shift in the first two months of the fiscal year, suggesting a robust outlook for summer crop production. This article delves into the details of these indicators and their implications for India's economy.
Key Takeaways
- Nine non-agricultural indicators show improvement.
- Healthy growth forecast for summer crops.
- Strong rural demand expected for two-wheelers and tractors.
- ICRA maintains GDP growth forecast at 6.2 percent.
- CPI inflation projected to decrease to 3.5 percent.
New Delhi, June 25 (NationPress) Economic activities have exhibited a varied trend in the initial two months of this fiscal year. A report released on Wednesday indicates that nine non-agricultural indicators have shown significant progress compared to Q4 FY25, alongside a healthy forecast for summer crop production.
The indicators reflecting positive growth during April-May comprise government capital expenditure, passenger vehicle production, GST e-way bills, the government’s non-interest, non-subsidy revenue expenditure, petrol and diesel consumption, non-oil exports, vehicle registrations, and Coal India Ltd’s (CIL) output.
These developments are promising for both industrial and services GVA growth in the current quarter.
While rainfall has resumed after a break in early June, the spatial and temporal distribution of these rains is critical to ensure favorable kharif sowing and maintain rural demand, as per an ICRA report.
“The outlook for urban consumption is optimistic due to income tax relief, interest rate cuts, and decreased food inflation,” the report stated.
Looking ahead, rural sentiment appears strong, likely boosting demand for two-wheelers and tractors, while urban demand prospects are encouraging, supported by the income tax reductions and lower borrowing costs.
However, global risks remain high due to geopolitical tensions, fluctuations in global financial markets, and ongoing uncertainty surrounding tariff policies.
ICRA has retained India’s GDP growth forecast for FY26 at 6.2 percent.
“With a favorable monsoon forecast and a projected decrease in food inflation, CPI inflation is expected to ease to 3.5 percent in FY2026 from 4.6 percent in FY2025, which is lower than the RBI Monetary Policy Committee's (MPC) estimate of 3.7 percent,” the report noted.
While a pause in rate changes is anticipated in August 2025, ICRA does not exclude the potential for a final 25 bps rate cut in October 2025, “considering our subdued growth-inflation outlook.”
Assuming an average crude oil price of $70 per barrel in FY2026, India's current account deficit (CAD) is projected to stay manageable at 1.1-1.2 percent of GDP for the fiscal year.
Point of View
I emphasize that these indicators suggest a cautiously optimistic outlook for India's economy. The positive trends in non-agricultural sectors, alongside favorable agricultural forecasts, reinforce the importance of comprehensive growth strategies. Our focus remains on providing insights that help navigate through these mixed signals while fostering a robust national economy.
NationPress
25/06/2025
Frequently Asked Questions
What are the key indicators of economic improvement?
The key indicators include government capital expenditure, passenger vehicle production, GST e-way bills, petrol and diesel consumption, non-oil exports, vehicle registrations, and Coal India Ltd's output.
How is summer crop output expected to perform?
Summer crop output is projected to grow at a healthy pace, supported by favorable monsoon forecasts.
What does the report say about rural demand?
The report indicates strong rural sentiments which are likely to boost demand for two-wheelers and tractors.
What is the GDP growth forecast for FY26?
ICRA maintains India's GDP growth forecast for FY26 at 6.2 percent.
What is the expected CPI inflation for FY2026?
CPI inflation is projected to cool to 3.5 percent in FY2026, down from 4.6 percent in FY2025.
