Current Affairs - Economy

The Indian government had set a minimum export price (MEP) of USD 550 per tonne for onions to regulate their export. However, to encourage exports and benefit farmers, the government has now removed this threshold, allowing onions to be sold internationally at competitive prices, taking advantage of the global surplus. This move is expected to boost India's onion exports and support farmers in major onion-producing states like Maharashtra.

The International Monetary Fund (IMF) has revised India's GDP growth forecast for FY2024-25 to 7%, an increase from the previous estimate of 6.8%. This upward revision is attributed to stronger private consumption, especially in rural areas. India's economy is expected to remain robust, solidifying its position as one of the fastest-growing major economies globally, with projected growth continuing into FY2025-26.

Moody’s Ratings has raised India's GDP growth forecast to 7.2% for FY 2024, an increase from the earlier estimate of 6.8%. This revision is attributed to resilient private consumption and improved business conditions in the country. The rating agency also adjusted its 2025 growth projection to 6.6%, reflecting positive economic momentum. Additionally, India recorded a strong 7.8% year-over-year growth in Q1 2024, highlighting the robust performance of its industrial and services sectors.

Goldman Sachs revised India's GDP growth forecast down to 6.7% for 2024 and 6.4% for 2025. The downgrade was driven by a significant 35% reduction in central government expenditure and slower real consumption growth. Despite these challenges, the potential easing of monetary policy by the Reserve Bank of India in late 2024 could provide some relief to the growth outlook. This adjustment by Goldman Sachs highlights the impact of fiscal policy on economic projections.

In June 2024, India's Index of Industrial Production (IIP) recorded a growth rate of 4.2%, an increase from 4% in the same month the previous year. This growth reflects an overall positive trend in industrial production. The sector-wise contributions included significant increases in mining (10.3%) and electricity (8.6%), while the manufacturing sector grew by 2.6%. The IIP is an important indicator of industrial performance and economic health, highlighting robust activity across various sectors.