India Economic Forecast

India Economic Outlook

February 20, 2018

The government unveiled on 1 February its FY 2018 budget, which envisages a fiscal deficit of 3.3% of GDP. The bill mainly benefits low-income earners and rural demographics ahead of a busy election cycle, but also slates higher infrastructure spending and lower corporate tax rates for medium-sized corporations. Meanwhile, the economy continued to make solid progress in the second half of the fiscal year following a lackluster performance in H1, when GDP growth was weighed down by lingering effects of demonetization and the implementation of the Goods and Services Tax. Industrial production growth remained buoyant in December, while both the services and manufacturing PMIs pointed to improving economic conditions in January; auto sales also firmed up in the month.

India Economic Growth

Economic growth is expected to strengthen in FY 2018, with high-frequency indicators showing households are recovering from demonetization and GST-induced distortions. In addition, strong global sentiment, improving business sentiment and robust capital outlays in the FY 2018 budget will lift fixed investment growth next year. The external sector is also expected to drag less on growth on softer import growth and a recovery in export-oriented sectors as GST-related problems fade. Our panel expects growth of 7.3% in FY 2018, which is unchanged from last month’s estimate. In FY 2019, panelists see a GDP expansion of 7.4%.

India Economy Data

20122013201420152016
Population (million)1,2431,2591,2761,2921,309
GDP per capita (USD)1,4651,4771,5971,6111,729
GDP (USD bn)1,8211,8602,0382,0822,264
Economic Growth (GDP, annual variation in %)5.56.57.28.07.1
Consumption (annual variation in %)5.37.46.86.18.7
Investment (annual variation in %)4.81.84.16.62.4
Industrial Production (annual variation in %)1.1-0.12.83.45.0
Public Debt (% of GDP)69.168.568.669.669.5
Money (annual variation in %)7.512.311.711.56.3
Inflation Rate (CPI, annual variation in %, eop)11.58.25.34.83.9
Inflation Rate (CPI, annual variation in %)11.211.05.94.94.5
Inflation (PPI, annual variation in %)7.46.02.0-3.61.8
Policy Interest Rate (%)7.508.007.506.756.25
Stock Market (annual variation in %)8.218.924.9-9.416.9
Exchange Rate (vs USD)54.2860.0262.2966.2564.86
Exchange Rate (vs USD, aop)54.3760.4261.1465.4267.04
Current Account (% of GDP)-4.8-1.8-1.4-1.1-0.7
Current Account Balance (USD bn)-87.4-32.8-27.6-22.1-15.2
Trade Balance (USD billion)-189.5-136.6-137.5-117.8-115.7
Exports (USD billion)300314311262275
Imports (USD billion)490451448380380
Exports (annual variation in %)-1.94.6-1.2-15.74.9
Imports (annual variation in %)0.1-8.0-0.6-15.30.2
International Reserves (USD)293304341356373
External Debt (% of GDP)22.524.023.323.3-  

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India Facts

ValueChangeDate
Bond Yield7.67-0.04 %Feb 20
Exchange Rate64.86-0.09 %Feb 20
Stock Market33,704-0.08 %Feb 20

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