The Indian economy was on a rollercoaster ride during 2024 as it demonstrated resilience with strong growth, improved GST revenue collection, and strong investment while failing to control inflation as planned by the RBI, slowing down consumption, and revising the GDP growth rate.

While its forex reserve reached a record high, the rupee hit a record low against the US Dollar.

Notwithstanding the expectations of the business and industry, the Reserve Bank of India did not cut the interest rates during the year, though it slashed the Cash Reserve Ratio from 4.50% to 4.25% on December 6.

The CRR is the ratio of the amount a commercial bank should keep in its coffers to the amount it can lend.

Inflation Reaches 14-Month-High

Though the inflation by the Consumer Price Index hovered between 2% and 6% as envisaged by the central bank, it breached the limit in October and reached 6.21%, a 14-month-high. Soaring vegetable prices and disappointment over RBI’s failure to cut the interest rate proved to be the main reasons.

Consumption Comes Down

Consumption came down and FMCG companies like Hindustan Unilever, Godrej Consumption, Marico, Nestle, Parle Products, and Tata Consumptions rolled out a hike in prices due to increased customs duty and input costs. From tea and soap to edible oils and skin care, the prices went up by 5% to 20% in last year, hitting the consumption hard.

GDP Growth Rate Falters

Buoyed by domestic consumption, soaring exports, and government initiatives, the financial year ending March 2024 registered an impressive GDP growth rate of 8.2%. However, it fell considerably in the second quarter of the Financial Year 2024-25 to 5.4%.

The RBI was forced to slash the GDP expectation from 7.2% to 6.6%. Similarly, the GDP forecast for the third quarter of the financial year fell from 7.4% to 6.8% and from 7.3% to 6.9% for the fourth quarter of FY 2024-2025.

Experts believe, tight monetary condition, falling exports and inflationary pressure were some of the reasons for this shortfall.

Massive Investment

Despite these concerns, massive investments were made particularly in infrastructure projects like highways, railways and urban development. Besides, the projects under the National Infrastructure Pipeline made significant development.

Despite inflationary pressure in 2024, household expenditure increased particularly in retail, automobile and tour and travel.

Trade Surplus

Despite concerns, Indian exports for April-November 2024 are estimated to go up by 7.61% to reach $536.25 billion.

On the other hand, its imports are likely to go up by 9.55% and reach $619.20 billion, registering a trade surplus of $82.95 billion. India maintained a surplus with 151 countries, including the US.

Record High Foreign Reserve

Consequently, the foreign reserve of the country hovered around $600 billion for most of the year. According to the RBI, the foreign reserve of India touched a record high of $704.885 billion in the week ending September 27.

Rupee At Record Low Level

Despite trade surplus and record foreign reserve, the Indian currency fell to a high-time low of 85.06 against the US Dollar on December 19, 2024.

Experts believe the historic fall was recorded as the rupee came under tremendous pressure due to the hawkish approach of the US Federal Reserve.

The uptick in the domestic market can be understood by the fact that the monthly GST collection averaged Rs 1.7 lakh crore during 2024. It reflects the robust economic growth as well as the revenue the government received for its development projects and other expenditures.

FDI Jumps

Buoyed by the Production Linked Incentives and other schemes, Foreign Direct Investment reached a record high. It registered an increase of 26% in the first half of the FY 2024-25 when it reached $42.1 billion.

As the year 2025 is approaching, the experts believe, the economy is likely to witness robust growth.