India Economic Forecast

India Economic Outlook

November 17, 2020

GDP likely recovered relatively robustly in Q3 (Q2 FY 2020) as large swaths of the economy came back online, leading to a softer contraction in the industrial and services sectors, while agricultural output should have expanded at a stronger pace. Turning to Q4 (Q3 FY 2020), economic activity should be improving: In October, the services sector PMI posted the first expansion since March, while the manufacturing PMI indicated output growth hit a 13-year high. However, shrinking employment in October and lingering targeted containment measures likely continue to weigh on household spending. In November, the government outlined the third installment of stimulus to combat the fallout from Covid-19, focusing largely on credit growth, job creation and infrastructure. Total spending on Covid-19 relief amounts to roughly 2.0% of GDP now—but will likely have a limited impact on the ongoing recovery and its fiscal position.

India Economic Growth

The economy is projected to decline in FY 2020 (April 2020–March 2021) as Covid-19 containment measures hamper domestic activity and external demand. Moreover, the ongoing spread of the virus and potential snap-back of lockdown measures, coupled with fiscal stimulus measures falling well short of the mark, continue to pose a downside risk to the outlook. FocusEconomics panelists project GDP to fall 9.3% in FY 2020, which is down 0.2 percentage points from last month’s forecast, and increase 9.2% in FY 2021.

India Economy Data

2015 2016 2017 2018 2019
Population (million)1,2831,3001,3171,3341,352
GDP per capita (USD)1,6331,7662,0182,0232,113
GDP (USD bn)2,0962,2952,6572,6992,857
Economic Growth (GDP, annual variation in %)8.08.37.06.1-  
Consumption (annual variation in %)7.98.17.07.2-  
Investment (annual variation in %)6.58.57.29.8-  
Industrial Production (annual variation in %)3.34.64.43.8-1.2
Public Debt (% of GDP)68.868.769.469.471.9
Money (annual variation in %)11.56.721.814.310.3
Inflation Rate (CPI, annual variation in %, eop)4.83.94.32.95.9
Inflation Rate (CPI, annual variation in %)4.94.53.63.44.8
Inflation (PPI, annual variation in %)-3.61.82.94.31.7
Policy Interest Rate (%)6.756.256.006.254.40
Stock Market (annual variation in %)-9.416.911.317.3-23.8
Exchange Rate (vs USD)66.2564.8665.1169.1975.34
Exchange Rate (vs USD, aop)65.4267.0464.4669.9170.91
Current Account (% of GDP)-1.1-0.7-1.8-2.1-  
Current Account Balance (USD bn)-22.1-15.2-48.7-57.0-  
Trade Balance (USD billion)-117.3-108.9-158.6-182.3-153.5
Exports (USD billion)262275305331314
Imports (USD billion)379384463513467
Exports (annual variation in %)-15.65.110.68.5-5.1
Imports (annual variation in %)-15.31.320.510.7-8.9
International Reserves (USD)356373421414476
External Debt (% of GDP)23.120.519.920.1-  

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Value Change Date
Bond Yield6.50-0.04 %Jan 01
Exchange Rate71.23-0.09 %Jan 01

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