Amid fast-spreading uncertainty around us, positive news is coming on the domestic economic front. This will bring a sense of cheer and a feeling of comfort. If April is flooded with events of a totally avoidable kind, especially from an Indian perspective, the first month of the new financial year saw a 12.6 per cent jump in GST collection at Rs 236,716 crore, up from Rs 196,141 crore in March 2025. This indicates a pick-up in domestic consumption.
Manufacturing Gains Strength
The HSBC India Manufacturing PMI edged up to 58.2 in April 2025 from 58.1 in March, slightly below the flash estimate of 58.4, marking the strongest sector improvement in ten months. According to S&P Global, output grew at the fastest pace since June 2024, driven by robust domestic and foreign demand. International orders recorded their second-steepest rise since March 2011, boosting sales and supporting solid job creation. While global uncertainties exist, S&P has emphasised the strength of domestic demand, particularly in urban areas. Factors such as easing food inflation and favourable borrowing costs are expected to continue supporting consumer spending. The India Meteorological Department too has forecasted an above normal south-west monsoon.
Monetary Policy Outlook Hinges on Global Events
This augurs well for the economy and could possibly allow the Reserve Bank of India more elbowroom to ponder seriously on further rate reduction. But the RBI move will rest on many external imponderables in the wake of the tariff war triggered by the American president, Donald Trump. How will this play out in the near- and long-term? This could be a guessing game, but the evolving situation seems advantageous to India. The Trump tariff trade is interpreted as more of a trade war with Beijing. Will this result in a supply chain re-jig? It could, perhaps. Proof of this could be found in moves by big names like Apple to reconfigure their supply chain and lean a lot heavily on India. Even as New Delhi is engaged in parleys with Washington, it has clinched a historic Free Trade Agreement (FTA) with the UK. Significantly enough, the deal eliminates tariffs on 99 per cent of Indian exports to the UK, covering nearly 100 per cent of trade value.
This has the potential to open up massive opportunities for labour-intensive and high-growth sectors. This trade pact could have a positive impact on a number of sectors. India is also working on a bilateral trade pact with the European Union. Notwithstanding the escalating uncertainties and tensions around, the evolving scenario on the trade and economic fronts offers India hope to push the envelope and scale a higher growth orbit. But New Delhi cannot afford to ignore the strong headwinds blowing across the globe and at shore.
