Top Economic News: GST Collection Rises, Post-Festive Slump and More!

India’s economy is currently navigating through a mix of challenges and opportunities, with GDP growth showing signs of slowing down, inflation concerns lingering, and key economic indicators revealing shifting trends. As the festive season winds down and the government gears up for crucial policy decisions, a series of important economic developments have emerged. From a dip in credit growth to NBFCs and rising GST collections to concerns over global plastic pollution regulations, there’s much to digest. In addition, the government's push for higher social security contributions and the anticipated rebound in India's economic growth have sparked discussions among policymakers and economists.

TICE takes a closer look at the top economic stories making headlines today.

Top Economic News

Agencies Downgrade India's FY25 Growth Forecast After Q2 GDP Surprise

India’s GDP growth forecast for FY25 has been downgraded by various agencies following a surprise slowdown in Q2, with GDP growth dipping to a seven-quarter low of 5.4%. While the Reserve Bank of India (RBI) had projected 7.2% growth for FY25, the finance ministry’s estimate is between 6.5-7%. HDFC Bank's economist, Sakshi Gupta, has lowered her forecast to 6.5% from 6.8%, citing further risks to the economy. The RBI’s Monetary Policy Committee is expected to revise its growth projection during its upcoming policy review on December 6.

India's GDP Growth to Rebound to 6.7% in H2, Full-Year Forecast at 6.4%: JP Morgan

JP Morgan has forecasted a rebound in India’s economic growth, projecting a 6.7% growth in the second half of FY25, which would bring the full-year GDP growth to 6.4%. The report suggests that the sluggish third-quarter growth was expected, as the economy had been showing signs of cooling in recent months.

Growth in Bank Credit to NBFCs Declines Sharply to 6.4%: RBI Data

According to the Reserve Bank of India’s (RBI) sectoral credit data, growth in bank credit to Non-Banking Financial Companies (NBFCs) dropped significantly to 6.4% in October from 18.3% a year ago. This slowdown contributed to a decline in overall credit growth in the services sector, which fell to 14.1% year-on-year (Y-o-Y).

Rate Cut Unlikely, but RBI May Signal Readiness to Act

As India grapples with faltering economic growth, the RBI's upcoming Monetary Policy Committee meeting, set for December 4-6, is expected to focus more on the sluggish economy than on containing inflation. While a rate cut seems unlikely, analysts predict the RBI may signal its readiness to act to support growth.

Net GST Collection Rises 11% to Rs 1.63 Trillion in November Amid Drop in Refunds

India’s net GST collections for November grew by 11.1% Y-o-Y to Rs 1.63 trillion, aided by a sharp drop in refunds. However, sequentially, the collections were lower compared to October's Rs 1.68 trillion, which marked a 7.9% increase. The GST Council is expected to discuss rationalising indirect tax rates in its upcoming meeting on December 21.

Post-Festive Slump: UPI Volume Down 7%, Value Drops 8% in November

Unified Payments Interface (UPI) saw a significant decline in transactions in November, with volumes dropping by 7% to 15.48 billion and value declining by 8% to Rs 21.55 trillion. This drop follows a record-high October, driven by festive sales, with October seeing 16.58 billion transactions valued at Rs 23.5 trillion.

Govt Likely to Double EPF Monthly-Wage Cap to Rs 30,000

The government is likely to double the monthly wage ceiling for mandatory Employees' Provident Fund (EPF) contributions to Rs 30,000. Plans are also underway to bring the Employees’ State Insurance Corporation (ESIC) wage ceiling in line with that of the EPF. These discussions were held in a recent meeting of the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO).

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Indian Govt Opposes Regulating Production of Primary Plastic Polymers

India has expressed opposition to regulating the production of primary plastic polymers, arguing that such measures could hinder the developmental rights of countries. This stance was made clear during the fifth meeting of the Intergovernmental Negotiating Committee in South Korea, which was tasked with finalising a treaty to combat plastic pollution.

Wedding Season and Rural Traction Drive Car Sales; PV Wholesales Up 4% in November

Domestic passenger vehicle (PV) wholesales rose by 4% in November 2024, reaching about 350,000 units, driven by the ongoing wedding season and strong demand from rural areas. The figures show a continued momentum post-festive season.

Govt Scraps Registration for Some Items Under Chip Import Monitoring System

The government has discontinued the mandatory registration for certain electronic integrated circuits under the Chip Import Monitoring System, easing regulations for importers of these items.

Cement and Steel Inventory Drawdown Raises Concerns

Data from the Ministry of Statistics and Programme Implementation shows that while consumption of cement and steel has risen, production has not kept pace, leading to concerns about inventory drawdowns.

FMCG Growth Remains Slow in October-November

Growth in the FMCG sector remained sluggish in October-November, largely due to a slowdown in urban demand. Executives from the sector suggest a potential recovery by March-April 2025, but the current market conditions remain challenging.

Magic Price Tags No Longer Cast a Spell on Shoppers

Consumers in India are shifting away from small price-point products (₹5 or ₹10) and opting for larger packs offering better value. This trend is seen across categories like noodles, chocolates, and detergents, reflecting an upgrade in shopping habits.

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India Inc Adopts All-Season Sales Strategies

Indian companies are adapting to weather-related disruptions by promoting off-season sales to drive revenue. For instance, Dabur has successfully marketed its Chyawanprash Ayurvedic product for year-round consumption, leading to a 12% increase in sales during the September quarter.

FSSAI Classifies Packaged Drinking Water as ‘High Risk Food Category’

The Food Safety and Standards Authority of India (FSSAI) has classified packaged drinking and mineral water as a “High Risk Food Category,” subjecting it to mandatory inspections and third-party audits.

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