International Demand

Strong demand pushes economy past inflation for now, indicators show

Exports grew at the fastest pace this year, rising 30.7% in April.

India’s economy maintained momentum in April as a wider reopening from the pandemic has prevented rising prices from dampening demand for the time being.

Activity in the services sector as well as in factories rose last month, while three-month weighted averages of monthly changes in indicators ranging from exports to demand for credit suggest continued strength. It helped keep the needle on a dial measuring so-called “animal spirits” at 5 for the 10th month in a row.


While April marked India’s first steps towards life with the virus, including the first full month of commercial international flights after two years, risks hang over the economy as the war in Ukraine stokes the inflation and lockdowns in China are straining supply chains. India’s government and its central bank acted in tandem this month to counter price pressures, with measures such as tax cuts and a surprise increase in borrowing costs.

Reserve Bank of India Governor Shaktikanta Das, who is due to lead a policy panel meeting next month, signaled further tightening to prevent inflation from hurting household purchasing power.

Below are the dashboard details.

Commercial activities

Surveys of purchasing managers showed activity in the services sector in April grew at the strongest pace this year, while manufacturing also showed expansion. That helped the S&P Global India Composite PMI grow at the fastest pace in five months to hit 57.6, well above the 50 threshold that separates growth from contraction.

The activity supported by stronger new orders was accompanied by higher producer prices as producers began to pass on high raw material costs to consumers. This is a risk for headline inflation, which hit its highest level in eight years in April.



Exports grew at the fastest pace this year, rising 30.7% in April from a year ago to $40.2 billion, although in terms of value this was below $42.2 billion from the previous month. Imports also rose 31% to $60.3 billion as high commodity prices pushed up the bill for everything from crude oils to edible oils. That widened the trade deficit to $20.1 billion from $18.5 billion in March.


Consumer activity

The auto sector continued to be weighed down by a global supply crisis, with passenger vehicle sales falling 10% in April from a month ago. The auto industry is seeing rate hikes dampen consumer confidence.

Other indicators of consumer activity were encouraging, however, with bank credit rising 11.1% towards the end of last month, from 9.6% at the end of March. Liquidity conditions remained in excess.


industrial activity

Manufacturing output growth accelerated, rising 1.9% in March from 1.5% the previous month, helped by power and mining. Output growth in eight infrastructure industries slowed to 4.3% from 6% in February as coal and crude oil output fell from a year ago. The two reports are published one month apart.