ndia’s economic momentum remains intact despite a somewhat erratic monsoon, and real GDP growth of 6.5-7 per cent projected in the Economic Survey seems appropriate, a finance ministry report said on Thursday.

According to the Monthly Economic Review for July, the Indian economy has sustained its momentum in the first four months of FY25.

Goods and Services Tax collections in the first four months of FY25 underwent a level shift pushed up by the widening of the tax base and heightened economic activity, the report released by the finance ministry said.

“The resilience of domestic activity is also reflected in the strong performance of the manufacturing and services sector purchasing managers’ indices. The manufacturing growth has been driven by expansion in demand conditions, a rise in new export orders and growth in output prices,” it said.

On the fiscal front, it said, the Union Budget FY25 has laid out a glide path of fiscal consolidation. Supported by strong revenue collection, discipline in revenue expenditure, and robust economic performance, the fiscal deficit is projected to decline.

At the same time, it said, capital expenditure is maintained at high levels, supporting the fledgling private investment cycle.

Retail inflation decreased to 3.5 per cent in July 2024, the lowest since September 2019, driven by moderation in food inflation, it said, adding that steady progress in the southwest monsoon has supported kharif sowing.

Replenishing water levels in the reservoir bodes well for the current kharif and upcoming rabi crop production and this will further aid in reducing food inflation in the coming months, it said.

“On balance, India’s economic momentum remains intact. Despite a somewhat erratic monsoon, reservoirs have been replenished. Manufacturing and services sectors are expanding, according to the Purchasing Managers’ indices,” it said. Tax collections, especially indirect taxes, which reflect transactions, are growing healthily, and so is bank credit, it said.

“Inflation is moderating, and exports of both goods and services are doing better than they did last year. Stock markets are holding on to their levels. Foreign direct investment is looking up as gross inflows are rising,” it said.

As of now, it said, the projection of real GDP growth of 6.5-7.0 per cent for FY25, made in the Economic Survey for 2023-24, seems appropriate.