The big data release for the week ended February 13, 2016 was the national accounts report, which revealed that the Indian economy
slowed down in the third quarter (Q3) of 2015-16 to 7.1% year on year (yoy)
from 7.5% during the previous quarter. Shrinking in agricultural output and
flat services growth were responsible for the slowing down of gross value added
(GVA) growth, though industrial growth picked up pace. Along with Q3 numbers,
the CSO also released advance estimates for 2015-16, according to which GVA
growth will inch up to 7.3% during the year from 7.1% during the last year.
In contrast with the industry trends
witnessed as per the national accounts report, however, the monthly Index of
Industrial Production (IIP) showed a contraction for the second consecutive
month in December 2015 as manufacturing and capital goods segments slowed down.
Consumer goods, however, showed positive growth. In fact, the core industries
component, showed a small positive growth as well.
Inflation numbers inched up to 5.7%
in January 2016, but still remained below the 6% mark, which was the RBI target
for the month. The achievement of the target indicates that the central bank
has been able to bring inflation under control, though the future trajectory
needs to be carefully watched. While the central bank kept policy rates
unchanged in the bi-monthly policy meeting, the week before, it is likely that
industry voices would encourage it to reduce rates further to ramp up credit
offtake.
There has already been some
pickup in credit growth in the fortnight ended January 22, 2016 to 11.4%,
though, suggesting some return of optimism as well as the fact that the
potential impact of lower interest rates might have started trickling in. Tax
collections also showed healthy growth, with indirect tax collections expected
to exceed budget estimates in 2015-16.
This is an Executive Summary of the Orbis Economics's weekly report - India Macro Weekly. To know about subscription, write to orbis.economics@orbiseconomics.com
This is an Executive Summary of the Orbis Economics's weekly report - India Macro Weekly. To know about subscription, write to orbis.economics@orbiseconomics.com
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