High Frequency Indicators (HFIs) including vehicle sales and power consumption for October and November 2023 reflect robust economic activity in the third quarter of FY24, which is likely to continue in fourth quarter as well, the Finance Ministry said in a report on Friday.

HFIs in October and November 2023 reflect robust economic activity with PMI Manufacturing and Services remaining in the expansionary zone in October and November.

October imprints of the IIP and Index of eight core industries also highlight sustained growth in manufacturing activity.

Downside risks to growth arise from smouldering inflationary pressures in advanced countries and supply-chain disruptions re-emerging from persistent geopolitical stress, while geopolitics is an independent source of risk in itself, the Half-Yearly Economic Review 2023-24 released by the Finance Ministry said.

However, India's domestic economic momentum and stability, low-to-moderate input cost pressures and anticipated policy continuity are significant buffers against those risks, it said.

The real GDP grew by a healthy 7.7 per cent in the first half of FY'24, following a 7.6 per cent growth in the second quarter ended September 2023.

On the back of strong performance in Q2, the RBI has raised its growth forecast to 7 per cent for the full year, it said, adding, resilient consumption and investment have driven up the growth rate in H1.

The urban component has strengthened consumption, while rural demand is beginning to pick up, it said, adding, the government capex has increased the investment rate while private investment is showing promise.

The strong domestic demand has consequently induced a significant increase in manufacturing and services value-add, it said.

Increases in policy rates have tempered inflation but not enough to lower it to country targets and this may prolong monetary tightening and cause a still lower growth of the global output, it said.

On inflation, the report said, the pressures have moderated in the first half of FY24 mainly due to the stable and declining core inflation.

However, it said, food inflation remained volatile during this period due to weather-driven supply chain disruption.

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