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A bunch of data was released in the past few days, which showed that the Indian economy continued on the recovery path. Let’s take a look at the key economic indicators that were released.
Gross Domestic Product
Indian economy continued to grow in the July-September quarter as the gross domestic product expanded 8.4% year-on-year, compared with 7.4% contraction in the year-ago period. This is the fourth consecutive quarter that witnessed economic growth. The GDP growth stood at 20.1% in Q1FY22. The growth was attributed to opening of the economy and rapid vaccination initiatives by the government.
Quarterly Gross Value Added [GVA] at basic prices at constant [2011-12] prices in Q2FY22 is estimated at ₹32.89 lakh crore, as against ₹30.32 lakh crore in Q2FY21, showing a growth of 8.5 %, signalling a broad-based recovery across sectors.
Data from the country’s statistics agency NSO showed that the expansion was boosted by double-digit growth in mining and quarrying, public administration, defence and other services.
Agriculture grew at 4.5% during the second quarter, similar to first quarter. Manufacturing registered a 5.5% increase on the back stronger exports. Construction grew 7.5%, while Trade, Hotels, Transport, Communication & Services related to Broadcasting registered an increase of 8.2%.
Exports in Q2FY22 rose 19.62% to Rs 8,32,804 crore from the same period last fiscal. Imports grew 40% year-on-year to Rs 9,69,849 crore in Q2FY22
Private consumption, which is the biggest component of the GDP, grew 8.6% in the second quarter of the fiscal and government consumption expenditure rose 8.73% in the quarter compared to the year-ago period.
The below tabular column shows various components of GDP and its percentage change over the previous year.
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Eight Core Industries Production
The combined Index of Eight Core Industries stood at 136.2 in October 2021, a 7.5 per cent rise from 126.7 in October 2020. The production of coal [14.6%], natural gas [25.8%], refinery products [14.4%], fertilizers [0.04%], steel [0.9%], cement [14.5%] and electricity[2.8%] industries increased in October 2021 over the corresponding period of last year. Crude oil production declined 2.2% in October 2021 on a yearly basis. The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Manufacturing PMI
The Indian manufacturing sector expanded strongly in November, as an accelerated rise in sales supported the fastest upturn in production for nine months.
The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) signalled a healthy improvement as the PMI rose to 57.6 in November from 55.9 in October. The rise in November was higher than the long-run average of 53.6.
Manufacturers stated that rise in demand, improving market conditions and successful marketing boosted sales in November. Factory orders rose for the fifth consecutive month and at a sharp pace that was the fastest since February.
IHS Markit in its report noted that the domestic market was the main source of sales growth, as new export orders rose at a slight pace that was weaker than in October. The report also said that cost inflationary pressures remained intense amid transportation issues and difficulties among suppliers to source raw materials.
Further, companies were concerned that inflationary pressures could dampen demand and restrict output in the year ahead.
Services PMI
Indian service sector continued to strengthen with a substantial upturn in new orders underpinning output growth, according to IHS Markit survey. The seasonally adjusted India Services Business Activity index showed a reading of 58.1 in November, fractionally down from 58.4 in October.
Service providers received new businesses and their sales grew on the back of successful marketing, strengthening demand and favourable market conditions.
Although business confidence improved in November, the overall level of positive sentiment was well below its long-run average.
A few companies expected the higher demand to continue, while several others companies were worried that elevated inflation could dampen the recovery.
Meanwhile, Composite PMI rose to 59.2 in November from 58.7 in October, signalling that private sector activity in India continued to expand. Private sector employment increased only marginally in November. Rates of expansion were equal among both manufacturers and service providers. Manufacturing firms recorded a stronger increase in input cost inflation than their services counterparts.