India’s Private Sector Growth Accelerates in April Despite Inflation and Global Risks

India’s private sector activity picked up pace in April, signaling a strong start to the new fiscal year as both manufacturing and services rebounded after a brief slowdown in March. According to a survey compiled by S&P Global for HSBC, the flash India Composite Purchasing Managers’ Index (PMI) rose to 58.3 from March’s 57.0, remaining well above the 50-mark that separates growth from contraction for nearly five consecutive years. The expansion was driven largely by manufacturing, which saw its PMI climb to 55.9, while services activity also edged higher, reflecting resilient domestic demand.

The rebound comes even as global uncertainties persist, particularly due to geopolitical tensions linked to the Middle East conflict. The International Monetary Fund has projected India’s economic growth at 6.5% but cautioned that rising inflationary pressures could temper momentum. Export performance showed mixed trends, with manufacturers reporting the strongest growth in overseas orders in nine months, while services firms saw their slowest export expansion in over a year, partly attributed to disruptions caused by the ongoing conflict.

Input cost inflation, though slightly eased from March, remained among the highest levels in nearly three years, driven by increased fuel and raw material prices. Businesses continued to pass on costs to consumers, albeit at a slower pace than input increases. Compounding concerns, supply disruptions linked to the Strait of Hormuz have led to shortages in liquefied petroleum gas, prompting the government to prioritize household supply over industrial use. While business confidence dipped marginally, employment growth strengthened, reaching its fastest pace in ten months, offering a positive signal for the broader economy.

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