India and Key Economic Indicators – 2013

This week we are going to look into the insights about Top 21 Key Economic Indicators in India. Hope this will give us a better clarity,insights and understanding about the state of our country’s economy.

1. GDP fiscal year YoY %
GDP measures summary value of goods and services generated in a relevant country or region. A region’s gross domestic product, or GDP, is one of the ways for measuring the size of its economy.

Recently GDP record 5 per cent, lowest in a decade, on account of poor performance of manufacturing, agriculture and services sector.

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In 2002-03, the GDP had grown at 4 per cent. Since then the Indian economy has been expanding at over 6 per cent, the highest rate being 9.6 per cent in 2006-07.

2. Quarterly GDP YoY %

GDP (gross domestic product) growth dipped to 5.3 per cent in the second quarter (July-September) of 2012-13 from 6.7 per cent in the same quarter during the previous fiscal, mainly owing to dismal performances by the farm and manufacturing sectors.

The manufacturing sector has been impacting industrial growth severely for the last few months, the pull-down in agriculture during the quarter has led to a much lower GDP growth at 5.4 per cent during the first half (April-September) of 2012-13 as compared to a comparative robust expansion of 7.3 per cent witnessed in the same period a year ago

3.WPI inflation YoY %

WPI inflation rate tracks a set of 435 commodities and their price changes are used for the calculation. The selected commodities are supposed to represent various strata of the economy and are supposed to give a comprehensive WPI value for the economy.

The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction. This helps in analyzing both macroeconomic and microeconomic conditions

Wholesale price index (WPI)-based inflation fell to 6.62 per cent in January, the lowest since December 2009 and currently at three year low.

4.Fed fiscal deficit, INR

The Federal Fiscal Deficit, released by the Controller General of Accounts, is the difference between the amount the government takes in as revenue against its overall spending.

Generally speaking, if the reading is negative, it means the Indian accounts are in a surplus, and that should be positive (or bullish) for the Rupee. On the other hand, a growth in the federal deficit is considered negative (or bearish) for the Rupee.

5.Repo rate

The rate at which the RBI lends money to commercial banks is called repo rate. It is an instrument of monetary policy. Whenever banks have any shortage of funds they can borrow from the RBI.

An increase in reverse repo rate can prompt banks to park more funds with the RBI to earn higher returns on idle cash. It is also a tool which can be used by the RBI to drain excess money out of the banking system.

6.Reverse repo rate
Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. Banks are always happy to lend money to the RBI since their money are in safe hands with a good interest.

A reduction in the repo rate helps banks get money at a cheaper rate and vice versa.

7. Cash reserve ratio

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system.

Scheduled banks are required to maintain with the RBI an average cash balance, the amount of which shall not be less than 4% of the total of the Net Demand and Time Liabilities (NDTL), on a fortnightly basis.

8. Cumulative ind. output YoY %
The Cumulative Industrial Output released by Ministry of Statistics and Programme Implementation measures output of Indian factories, calculated as a weighted aggregate of goods. A high reading is seen as positive (or bullish) for the Rupee, wheras a low reading is seen as negative (or bearish).

Changes in the volume of the physical output of the nation’s factories, mines and utilities are measured by the index of industrial production. The figure is calculated as a weighted aggregate of goods and reported in headlines as a percent change from previous months. It is often adjusted by season or weather conditions and thus volatile. However, it is used as a leading indicator and helps in forecasting GDP changes.

Rising industrial production figures signify increasing economic growth and can positively influence the sentiment towards local currency

9.Infrastructure output YoY %

The Infrastructure Output released by the Ministry of Commerce and Industry is a measure of the production in a range of sector related to infrastructure including coal, electricity generation, crude oil, refinery throughput, finished steel and cement. Generally speaking, a high reading is seen as positive (or bullish) for the Rupee, while a falling trend is seen as negative (or bearish).

Weights as in Industrial Production (Base: 1993-94): Coal (3.2%), Electricity generation (10.2%), Crude oil (4.2%), Refinery throughput (2.0%), Finished steel (5.1%) and Cement (2.0%). The infrastructure sector accounts for 26.68 percent of India’s industrial output.

10.Industrial output YoY %

The Industrial Output released by Ministry of Statistics and Programme Implementation measures outputs of Indian factories. Changes in industrial output are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as positive (or bullish) for the Rupee, whereas a low reading is seen as negative (or bearish).

11.Manufacturing output YoY %

India’s manufacturing output expanded at its slowest pace in three months in January as new orders grew at a weak pace and power outages continued to hurt industrial activity.

Earlier India’s factory activity showed its sharpest rise in six months in December 2012, helped by improved demand and growth in new orders for business

12.Exports – USD

Exports of goods and services consist of transactions in goods and services (sales, barter, gifts or grants) from residents to non-residents(one country to another country).

After contracting for eight straight months, India’s exports grew by a meagre 0.82 per cent in January to USD 25.58 billion

13.Imports – USD
Imports of goods and services consist of transactions in goods and services (purchases, barter, gifts or grants) from non-residents to residents(home country).

Imports rose by 6.12 per cent to USD 45.5 billion in the month under review, widening the trade deficit to USD 20 billion.Oil imports in January grew by 6.91 per cent to USD 15.89 billion from USD 14.87 billion in the corresponding period last year.Non-oil imports, too, increased by 5.71 per cent during the month under review to USD 29.68 billion.

14. Trade deficit govt – USD
India’s exports increased marginally by 0.82% in January to USD 25.58 billion compared to USD 25.37 billion in the same month last year after contracting for eight straight months. At the same time, Imports jumped by 6.12% to USD 45.5 billion in the month. Trade deficit jumped to record high of USD 20 billion which is becoming the biggest concern for the Indian economy

15. Trade deficit-RBI
The Trade Deficit released by the Ministry of Commerce and Industry measures the amount of imports compared to exports of total goods and services.

A positive value shows a trade deficit, while a negative value shows trade surplus. If a steady demand in exchange for Indian exports is seen, that would turn into a negative growth in the trade deficit, and that should be positive (or bullish) for the Rupee.

16. Balance of payments
Balance of payments is a set of accounts recording all economic transactions between the residents of the country and the rest of the world in a given period of time, usually one year. Payments into the country are called credits, payments out of the country are called debits.

There are three main components of a balance of payments:
– current account
– capital account
– financial account

Either a surplus or a deficit can be shown in any of these components.

Balance of payments shows strengths and weaknesses in a country’s economy and therefore helps to achieve balanced economic growth. The release of a balance of payments can have a significant effect on the exchange rate of a national currency against other currencies. It is also important to investors of domestic companies that depend on exports. Positive current account balance is when inflows from its components into the country exceed outflows of the capital leaving the country.

17. Current account balance
Current account records the values of the following: – trade balance – exports and imports of goods and services – income payments and expenditure – interest, dividends, salaries – unilateral transfers – aid, taxes, one-way gifts It shows how a country deals with the global economy on a non-investment basis.

Current account surplus may strengthen the demand for local currency. Persistent deficit may lead to a depreciation of a currency

18. External debt

As per the standard practice, India’s external debt data are disseminated on a quarterly basis with a lag of one quarter. Statistics for the first two quarters of the calendar year (ending March and June) are compiled and released by the Reserve Bank of India, while the data for the last two quarters (ending September and December) are compiled and released by the Ministry of Finance, Government of India.

In addition, Government of India brings out an Annual Status Report on External Debt that contains detailed analysis of external debt position of the country.

19. Bank loan growth YoY %
Loan growth in the sector has been strong with over 4% qoq growth (16% yoy until Dec. 14, 2012) which is ahead of its expectation.

M3 Money supply YoY %
Monetary aggregates, known also as “money supply”, is the quantity of currency available within the economy to purchase goods and services. Depending on the degree of liquidity chosen to define an asset as money, various monetary aggregates are distinguished: M0, M1, M2, M3, M4, etc. Not all of them are used by every country. Note that methodology of calculating money supply varies between countries.

M3 is a broad monetary aggregate that includes all physical currency circulating in the economy (banknotes and coins), operational deposits in central bank, money in current accounts, saving accounts, money market deposits, certificates of deposit, all other deposits and repurchase agreements. Excess money supply growth potentially can cause inflation and generate fears that the government may tighten money growth by allowing the interest rates to rise which in turn, lowers future prices

India’s M3 money supply rose an annualised 12.7 percent in the two weeks to Jan. 25, compared with 14.8 percent growth a year earlier, the Reserve Bank of India said on Wednesday.

Money supply was 81 trillion rupees ($1.52 trillion) as of Jan. 25, compared with 81.12 trillion rupees on Jan. 11, the
central bank said.

FX reserves, USD
International reserves are used to settle balance of payments deficits between countries. International reserves are made up of foreign currency assets, gold, holdings of SDRs and reserve position in the IMF.

Total of a country’s gold holdings and convertible foreign currencies held in its central bank. Usually includes foreign currencies themselves, other assets denominated in foreign currencies, and particular amount of special drawing rights (SDRs). A foreign exchange reserve is a useful precaution for countries exposed to financial crises. It can be used for the purpose of intervening in the exchange market to influence or peg the exchange rate

Summary of Latest Updates on Top 20 Economic Indicators of India

Updated Economic Indicators as on 8th August