● Economic recovery: India’s economic recovery appears relatively better than developed and major developing economies. However, The IMF sharply lowered India’s economic growth forecast to 6.8% in its latest World Economic Outlook, compared to 7.4% it had estimated earlier in July, citing the impact of external headwinds and weaker than expected Q2 growth.

● Interest rate and Inflation: Rising inflation has been a concern across globe. India’s CPI inflation accelerated to a 5 month high of 7.30% in September due to surging food prices, staying well above the RBI’s upper tolerance band for ninth month. India’s WPI inflation fell to an 18-month low in September to 10.7%. RBI has hiked repo rate by 50bps to 5.9% in recently concluded meeting in order to keep inflation under control. Continued rising inflation may pose risk on demand slowdown, although it is not visible as of now.

● GST collections: Gross collection in the month of October stood at Rs1.52tn. This is second highest monthly collection ever, next only to April 2022. GST collection for 7MFY23 grew in mid-double digits on three year CAGR basis as collection has been robust in recent months and running at a rate higher than the government budgeted. Robust collection does provide room to government to cut down GST rate in case of demand slowdown due to high inflation.

● Monsoon update: Rainfall at PAN India level is higher than normal level. However, uneven distribution of rains means several regions received deficient rainfall while others have seen normal-to-surplus overall showers during the season. Such erratic rainfall/ distribution lead to low crop yield and higher prices.