India

India Economic Forecast

India Economic Outlook

After growing 9.7% in the first two quarters of FY 2022 (April 2022–March 2023), the economy should have slowed in Q3 FY 2022. Elevated inflation, rising interest rates and a weakening global economy all likely dragged on momentum. The industrial sector grew just 2.3% in the quarter, while merchandise exports fell 5.5% over October–December. That said, PMI data was more positive, with both the manufacturing and services PMIs in the quarter averaging near their H1 FY 2022 levels. In other news, the government unveiled its FY 2023 budget on 1 February. Spending is to rise 7.5%, with capital outlays increasing especially sharply. Revenue is to rise 12.1%, leading the fiscal deficit to decline to 5.9% from 6.4% this year. The budget was well-received by the market, with populist measures avoided in favor of policies to boost medium-term growth while maintaining fiscal consolidation.

India Inflation

Inflation rose more than expected in January to 6.5% (December: 5.7%) due to an acceleration in food price growth. Inflation should trend downward in the coming quarters on rising interest rates, the cooling of pent-up demand and easing commodity prices. Key factors to watch include currency fluctuations and government export controls and subsidies.

India Economic Data

2017 2018 2019 2020 2021
Population (million) 1.0 1.0 1.0 1.0 1.0
GDP (USD bn) 2 2 2 2 3
GDP per capita (USD) 1 1 2 1 2
GDP (INR bn) 170 188 201 198 234
Economic Growth (Nominal GDP, ann. var. %) 11.0 10.6 6.4 -1.4 18.4
Economic Growth (GDP, ann. var. %) 6.8 6.5 3.9 -5.8 9.1
Private Consumption (ann. var. %) 6.2 7.1 5.2 -5.2 11.2
Government Consumption (ann. var. %) 11.9 6.7 3.9 -0.9 6.6
Fixed Investment (ann. var. %) 7.8 11.2 1.1 -7.3 14.6
Exports (G&S, ann. var. %) 4.6 11.9 -3.4 -9.1 29.3
Imports (G&S, ann. var. %) 17.4 8.8 -0.8 -13.7 21.8
Agriculture (ann. var. %) 6.6 2.1 6.2 4.1 3.5
Industry (ann. var. %) 5.9 5.3 -1.4 -0.9 11.6
Services (ann. var. %) 6.3 7.2 6.4 -8.2 8.8
Industrial Production (ann. var. %) 4.4 3.8 -0.8 -8.5 11.4
Fiscal Balance (% of GDP) -3.6 -3.5 -4.7 -9.6 -6.6
Public Debt (% of GDP) 69.7 70.4 75.1 89.2 84.2
Money (ann. var. of M2 %) 21.7 14.1 11.1 16.1 10.7
Inflation (CPI, ann. var. %, eop) 4.3 2.9 5.8 5.5 7.0
Inflation (CPI, ann. var. %, aop) 3.6 3.4 4.8 6.2 5.5
Inflation (WPI, ann. var. %, eop) 2.7 3.1 0.4 7.9 14.6
Inflation (WPI, ann. var. %, aop) 2.6 4.4 1.4 2.3 13.2
RBI Repurchase Rate (%, eop) 6.00 6.25 4.40 4.00 4.00
10-Year Bond Yield (%, eop) 7.40 7.35 6.14 6.18 6.84
Stock Market (ann. var. of BSE SENSEX %) 11.3 17.3 -23.8 68.0 18.3
Exchange Rate (INR per USD, eop) 65.1 69.2 75.3 73.1 75.9
Exchange Rate (INR per USD, aop) 64.5 69.9 70.9 74.2 74.5
Current Account Balance (USD bn) -49 -57 -25 24 -39
Current Account Balance (% of GDP) -1.8 -2.1 -0.9 0.9 -1.2
Merchandise Trade Balance (USD bn) -161 -184 -161 -100 -191
Merchandise Exports (USD bn) 303 330 313 292 422
Merchandise Imports (USD bn) 465 514 475 392 613
Merchandise Exports (ann. var. %) 10.3 8.8 -5.1 -6.9 44.7
Merchandise Imports (ann. var. %) 20.9 10.6 -7.7 -17.4 56.4
Foreign Direct Investment (USD bn) 30 31 43 44 39
International Reserves (USD bn) 425 413 478 577 607
International Reserves (months of imports) 11.0 9.6 12.1 17.7 11.9
External Debt (USD bn) 529 543 558 574 619
External Debt (% of GDP) 20.0 20.1 19.7 21.4 19.7

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