Economic Activity in India Improved to an 8-Month High of 10.1% in October October 2024 also registered a robust 9.9 per cent month-on-month (MoM) growth, surpassing the 6.5 per cent MoM increase observed in October 2023.
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The ICRA Business Activity Monitor showcased a year-on-year (YoY) growth of 10.1 per cent in October 2024, marking its highest performance in eight months. This acceleration in economic activity occurred despite the challenging base effects of a strong prior year and was driven by a combination of post-monsoon recovery, robust festive demand, and a surge in India's exports. The report shows YoY growth rose to 10.1 per cent in October 2024, compared to 6.6 per cent in September 2024.
This improvement reflects a recovery in electricity generation and mining activity as monsoon disruptions dissipated. Seasonal demand during the early festive period and robust growth in India's merchandise exports further propelled this increase. While growth in October 2023 stood at a higher 13.6 per cent, the continued expansion highlights the resilience of economic activity.
October 2024 also registered a robust 9.9 per cent month-on-month (MoM) growth, surpassing the 6.5 per cent MoM increase observed in October 2023. This marks the highest sequential growth since March 2023 (10.5 per cent). The early festive season amplified consumer spending, benefiting sectors like transportation, retail, and energy.
Festive season boost
The early onset of the festive season in 2024 provided a significant boost to economic activity. Vehicle registrations, a key proxy for consumer demand, surged by 32.4 per cent YoY in October 2024, reversing an 8.7 per cent contraction from the previous month. Similarly, domestic air passenger traffic rose by 9.6 per cent, showcasing strong mobility trends.
Consumption of petrol jumped to 8.7 per cent YoY growth in October 2024, up from 3.0 per cent in September, while diesel consumption reversed its decline, growing by 0.1 per cent compared to a 1.9 per cent contraction the previous month. These indicators underscore the resurgence of consumer activity and logistics operations, driven by seasonal and export-related demand.
India's merchandise exports witnessed a uptick, with non-oil exports growing by 25.6 per cent YoY in October 2024 compared to 6.8 per cent in September. Key sectors such as electronic goods, engineering products, chemicals, and readymade garments were major contributors, highlighting the global competitiveness of Indian manufacturers.
Core industrial activities also rebounded. Coal India Limited (CIL) reported a 2.3 per cent YoY growth in output in October 2024, a turnaround from a 1.0 per cent contraction in September. Similarly, electricity generation recovered to 0.2 per cent YoY growth after declining by 1.6 per cent in the previous month.
Contrasting trends
The festive season demand fueled a rise in two-wheeler (2W) production, which grew by 13.4 per cent YoY in October 2024, slightly up from 12.9 per cent in September. However, passenger vehicle (PV) output contracted by 4.0 per cent YoY, primarily due to excessive inventory levels at dealerships, which constrained new production.
Infrastructure-linked indicators displayed varying performances. Rail freight registered a 1.5 per cent YoY growth in October 2024, recovering from a 0.7 per cent decline in September. Finished steel consumption, a proxy for construction activity, grew by 9.0 per cent YoY, albeit at a slower pace compared to 10.5 per cent in September.
Early data for November suggests continued momentum
Preliminary data for November 2024 points to sustained economic activity. Daily vehicle registrations averaged 108,400 units between November 1-18, surpassing the monthly averages for October 2024 and November 2023. Electricity demand also rose by 3.2 per cent during November 1-17, up from 1.1 per cent in October, partly due to a favourable base.
The festive season's conclusion is expected to temper growth in certain high-frequency indicators by the end of November 2024. However, the resilience in core sectors like exports, mining, and electricity generation provides a stable foundation for sustained economic momentum.
