India's Mixed Consumption Trends Amid Economic Adjustments
India's private consumption growth slightly dipped to 5.9% in Q4 FY25, with government spending also contracting. While import sectors showed improvement, challenges remain in key areas like auto sales. The government met fiscal targets, but tax revenue growth slowed, affecting spending. Agricultural outcomes now hinge on monsoon performance.
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- India
Recent data from Bank of Baroda reveals a slight moderation in India's private consumption growth to 5.9% during the fourth quarter of FY25, down from 6.2% the previous year. The report also highlights a 1.8% contraction in government consumption, a stark contrast to the 6.6% rise seen in the same period last year.
The consumption demand in India presents a mixed scenario, based on high-frequency indicators. Improvements are seen in non-oil-non-gold and electronic imports, suggesting a positive outlook in selected sectors. However, the growth rate in auto sales, steel consumption, and power demand remains sluggish, the report notes.
On the agricultural front, elevated Minimum Support Prices (MSP) for kharif crops have been announced, with the monsoon season's progress now set to play a vital role in rural consumption. The government met its fiscal deficit target of 4.8% of GDP for FY25, aiming to reduce it further to 4.4% in FY26, even as overall spending fell below revised estimates.
(With inputs from agencies.)
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