Debt Market Update

Debt Market Update

• CPI (retail) inflation decreased slightly to 4.8% in April 2024, an 11-month low, from 4.9% in March 2024. This reduction was primarily due to greater deflation in the fuel and light segment and lower inflation rates for clothing and footwear, and pan, tobacco, and intoxicants. Retail inflation in urban areas was lower than the national average of 4.11% and higher in rural India at 5.43%.
• Wholesale price index-based inflation rose to 1.26% in April 2024 from 0.53% in March 2024, driven by higher prices of food articles, electricity, crude petroleum, natural gas, and manufactured food products. Food article inflation increased to 7.74% from 6.88%, and vegetable inflation surged to 23.60% from 19.52%. Fuel and power inflation also rose to 1.38%.
• Indian GDP grew by a faster-than-anticipated 7.8% in Q4 FY2024, even as it eased to a four-quarter low. Full year GDP expansion clocked a robust 8.2%. FY2024, GDP growth was strong overall, but slowed in Q4FY24. This deceleration was largely due to weaker investment activity, though a rebound is expected in H2FY2025. Private consumption rose modestly by 4.0%, while government spending fluctuated, recovering slightly in Q4. Industrial sector growth slowed, with GVA (Gross Value Added) growth decreasing to 6.3% from 6.8% in Q3FY24, despite robust manufacturing and construction sectors. Services sector growth also dampened. Agricultural GVA growth was revised up for Q3FY24, but remained low at 0.6% YoY in Q4, reflecting the impact of the poor 2023 monsoon.
• Industrial growth (IIP) slowed to 4.9% in March 2024 from 5.7% in February, driven by a decline in mining output, which grew by 1.2% compared to February's 8%. Despite this, manufacturing and electricity sectors saw increases of 5.2% and 8.6% respectively. For FY24, IIP stood at 5.8%, up from 5.2% the previous year. Top contributors in manufacturing included basic metals, pharmaceuticals, and transport equipment. Cumulative growth for mining, manufacturing, and electricity was 7.5%, 5.5%, and 7.1% respectively.
• GST collections for May 2024 were Rs 1.73 lakh crore (Rs 2.1 lakh crore in April 2024), up 10% year-on-year, driven by a 15.3% rise in domestic transactions despite a 4.3% drop in imports. Next month’s GST collections might stagnate due to summer heatwaves and lower auto sales.
• The combined eight core sectors grew by 6.2% in April 2024, (6% in March 2024), driven by strong electricity (9.4%) and steel (7.1%) output. Coal and natural gas production also increased, while fertilisers saw a 0.8% decline. The growth momentum is the fastest since December 2023 and is expected to support overall industrial output.

Source: Bloomberg Internal Research