Soft headline industry numbers hide stronger underlying trend

This is an excerpt from our weekly report - India Macro Weekly. To enquire about subscription of the full report, write in at orbis.economics@orbiseconomics.com 
For the week ended November 14, 2015:
  • India’s economic activity remained wanting, as evident from the headline data point : the Index of Industrial Production (IIP), which showed a growth slow down to 3.6% on a year on year (yoy) basis in September 2015, which is a 4 month low. However, a deeper look does not suggest as much gloom as that suggested by the headline number since the trend figure still quite strong. 
  • Inflation based on the Consumer Price Index (CPI) rose to 5% in October 2015, on a waning of a favourable base effect and promises to remain at these relatively levels for the remainder of the financial year.
  • Other activity indicators like crop under rabi sowing are also showing a disappointing trend so far, with a significant lag in area from the previous year. Foreign tourist arrivals have also grown very little in October compared to last year and foreign exchange earnings have actually fallen.
  • The centre encouraged the lagging investment cycle in the economy by further easing Foreign Direct Investments (FDI) across a spate of sectors including construction development and defence among others.
  • The Prime Minister’s (PM) visit to UK resulted in the signing of US$ 14bn worth of commercial deals in sectors like energy, finance and telecom, which should bring in more investments into India in the coming years. 
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