Commodity prices to decline in 2023, remain higher than pre-pandemic level: Economic Review

FY24 for the Indian economy opened on the back of strong activity witnessed in the last quarter of the previous fiscal. GST collections in April, which marked the commercial activity of the last month, underwent a level shift pushed up by the widening of the tax base and heightened economic activity. Index of Industrial Production (IIP) and Eight Core Industries Index (ECI) averaged steady growth in Q4 of FY23, adding to the capacity utilisation hovering close to 75 per cent two quarters earlier. Air passenger traffic in the last quarter of FY23 finally moved beyond pre-pandemic levels, among the last of the services sector components to do so. The first month of the new fiscal has sustained the growth momentum of the previous quarter. PMIManufacturing was at a four-month high in April 2023, while PMI-Services, in the same month, expanded at the fastest pace in 13 years. Within the services sector, rail freight and port cargo traffic posted their best growth performances for April in many years.

Buoyed by sustainable growth in activity, increasing capacity utilisation to investment triggering 75 per cent, the corporates have started investing in new capacity. The production of capital goods and construction/infrastructure goods, as estimated in the IIP, grew steadily in Q4 of FY23, along with imports of capital goods. During the same quarter, the CMIE reports the completion of projects worth ₹60,000 crore and the announcement of new projects valued at ₹10.9 lakh crore, the highest ever recorded since the inception of its database.

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