Finance Ministry Reports Decline in Auto Sales, Weak Urban Consumption - Read Here
The Union Finance Ministry has raised concerns about a slowdown in urban consumption, highlighted by a drop in automobile sales during the first five months of the current financial year. According to the ministry’s monthly economic review, this trend suggests signs of weakness in consumer demand in urban areas.
Data from the Society of Indian Automobile Manufacturers (SIAM) shows that passenger vehicle sales declined by 1.8% year-on-year in August, while the Federation of Automobile Dealers Association (FADA) reported a steeper 4.5% contraction for the same period. These figures indicate that consumer spending on vehicles has been lower compared to last year.
Along with domestic consumption concerns, the ministry also flagged issues with India’s exports, which have remained relatively flat due to weak global demand. The value of goods exports during April-August 2024 was $178.68 billion, only slightly higher than the $176.67 billion recorded during the same period last year. Imports, however, rose to $295.32 billion, up from $275.83 billion in the previous year.
The Finance Ministry attributes this muted export growth to challenges in scaling up production, productivity, and competitiveness, along with weak demand from global markets.
On a more positive note, the ministry mentioned that capital expenditure by the government, which had slowed in the April-June quarter due to the Lok Sabha elections, is now picking up. Additionally, there are encouraging signs of an increase in private investments. High-frequency indicators, such as GST collections, purchasing managers’ indices, and growth in air and port cargo, suggest continued economic expansion in the current quarter.
India's GDP growth slowed to 6.7% in the first quarter of the current financial year, compared to 8.2% in 2023-24. The Finance Ministry projects the GDP growth for the full financial year to be between 6.5% and 7%. As public expenditure increases and the rural economy strengthens, the ministry expects overall growth to remain stable in the coming quarters.
