Week in Numbers – Tracking India’s Economic Pulse

Nut Graph
India’s GDP growth rose to a five-quarter high of 7.8% in April-June from 7.4% in the preceding quarter. The growth print was well above consensus estimates of 6.7-6.9% and the Reserve Bank of India’s projection of 6.5%. This is the fourth consecutive quarter that GDP growth has increased from the previous quarter.

However, the number was likely flattered by a sharp slowdown in inflation, with nominal GDP growth moderating to 8.8% from 10.8% a quarter ago. The stronger-than-expected print has effectively dashed hopes of an early rate cut by the central bank.

Week in Numbers

Kharif oilseed sowing drags 
Kharif sowing as of August 22 rose 3.4% year-on-year to 107.4 million hectares, led by a 7.6% jump in rice sowing to 42.0 million hectares. Oilseeds acreage fell 2.8% to 18.2 million hectares, raising concerns that edible oil inflation may remain elevated.

Reservoir level nears full capacity
Cumulative southwest monsoon rainfall as of August 29 reached 727.6 millimetres, 6% above the long-period average. Rainfall was relatively evenly distributed, with 91% of the country’s area receiving normal or above-normal rainfall. Reservoir storage level was at 152.3 billion cubic metres as of August 28, or 83% of total capacity. 

Forex reserves fall
India’s foreign exchange reserves fell $4.4 billion from a week earlier to $690.7 billion as of August 22. The reserves included foreign currency assets of $582.3 billion and gold worth $85.0 billion. Overall, reserves have risen $22.3 billion in the current financial year so far.

Domestic Air Passenger Traffic Contracts 
Domestic air passenger traffic contracted 2.6% year-on-year to 12.61 million in July, the first year-on-year decline in nearly three-and-a-half years and lowest monthly level in 22 months.

The Centre’s fiscal deficit jumped 69.1% on year to ₹4.68 trillion in April-July, accounting for 29.9% of the full year target versus 17.2% a year earlier. Lower tax collections and higher capital expenditure and interest payments drove the rise in fiscal deficit.

Tax Collections Slide
Gross tax collections declined for the second consecutive month in July. Total tax collections in April-July were ₹10.93 trillion, only marginally higher than ₹10.84 trillion a year earlier. Income tax and customs duty were the main drags.

Services exports rise
India’s services exports rose 10.2% on year to $33.74 billion in July, while imports increased 8.5% to $17.29 billion. The trade surplus stood at $16.45 billion.

Gross FDI rises, net inflows fall
Gross foreign direct investment increased 10.5% on year to $25.18 billion in April-June on the back of equity inflows. However, net FDI fell 21.0% to $4.92 billion, largely due to higher outward investments.

Industrial Growth Improves 
Industrial production rose 3.5% on year in July, the fastest pace in four months, on the back of stronger manufacturing, though momentum remain modest. 

Bank credit improves
Credit to industries rose 6.0% on year for the fortnight ended July 25, up from 5.5% a month earlier but still well below 10.2% a year ago. Credit to services grew 10.6% versus 9.6% a month earlier.

Lending Rates Rise
The average lending rate on fresh rupee loans by banks rose by 18 basis points to 8.80% in July, ending a four-month decline. In contrast, the average deposits rate on new deposits fell 14 basis points to 5.61%. Since January, lending rates are down 53 basis points and deposit rates 99 basis points, against a 100-basis-point cut in repo rate by the Reserve Bank of India. 

Industry GVA rises 11.9% in 2023-24
Gross value added by industries rose 11.9% at current prices in 2023-24, according to the Annual Survey of Industries. Employment rose 5.9% to 19.59 million, with Gujarat, Maharashtra, and Tamil Nadu accounting for 40% of GVA and 41% of employment.

Government schools dominate enrolment
Government schools accounted for 55.9% of total enrolments in India’s education system. Private aided schools made up for 11.3% and unaided schools 31.9%.

Reserve Money growth slows
Reserve money growth slowed to 6.2% year-on-year as of August 22 from 6.4% a week earlier. Currency with the public rose 8.5%, while banks’ deposits with the RBI declined 2.9%.

Coming up
September 3 – Services & Composite PMI for August.
September 12 – CPI for August.
September 15 – Trade data for August.

Tailpiece
The Centre’s tax revenue slump for a second straight month has raised concerns over fiscal health. The looming goods and services tax rate rationalisation may intensify those worries.