Key Economic Indicators in IndiaParitosh.pdf

8/14/2019 Key Economic Indicators in IndiaParitosh.pdf

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Key Economic Indicators in India

Submitted By: Paritosh Thakur, P101032

Submitted To: Dr. Vikas Prakash Singh


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Economic Indicators:

An economic indicator is a statistic about the economy. Economic indicators allow analysis of economic

performance and predictions of future performance. One application of economic indicators is that it

makes the study of how the economy will behave in future. Economic indicators are the tools of the

economists to project the future economic condition of country.

There are also three terms that describe an economic indicator's direction relative to the direction of

the general economy:

Pro-cyclic indicators move in the same direction as the general economy: they increase when the

economy is doing well; decrease when it is doing badly. Gross domestic product (GDP) is a pro-cyclic

indicator.

Counter-cyclic indicators move in the opposite direction to the general economy. The unemployment

rate is counter-cyclic: it rises when the economy is deteriorating.

Acyclicindicators are those with little or no correlation to the business cycle: they may rise or fall when

the general economy is doing well, and may rise or fall when it is not doing well

Three Timing Types of Economic Indicators

1. Leading: Leading economic indicators are indicators which change before the economychanges. Stock market returns are a leading indicator, as the stock market usually begins to

decline before the economy declines and they improve before the economy begins to pull out

of a recession. Leading economic indicators are the most important type for investors as they

help predict what the economy will be like in the future.

2. Lagged: A lagged economic indicator is one that does not change direction until a few quartersafter the economy does. The unemployment rate is a lagged economic indicator as

unemployment tends to increase for 2 or 3 quarters after the economy starts to improve.

3. Coincident: A coincident economic indicator is one that simply moves at the same time theeconomy does. The Gross Domestic Product is a coincident indicator.

The Economic Indicators:

Gross domestic product (GDP)measures the total output of goods and services for final use occurring

within the domestic territory of a given country, regardless of the allocation to domestic and foreignclaims. Gross domestic product at purchaser values (market prices) is the sum of gross value added by

all resident and nonresident producers in the economy plus any taxes and minus any subsidies not

included in the value of the products.

Average annual growth in Gross domestic product (GDP) measures the annual growth in GDP of a

particular country from one year to the next. GDP per capita, annual growth measures the annual

growth in GDP per person of a particular country from one year to the next.The Gross Domestic Product


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(GDP) in India expanded 6.9 percent in the third quarter of 2011 over the same quarter, previous year.

Unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a

full year of economic activity, thus avoiding the need to make any type of seasonal adjustment.

Historically, from 2004 until 2011, India's average annual GDP Growth was 8.45 percent reaching an

historical high of 10.10 percent in September of 2006 and a record low of 5.50 percent in December of

2004.

Inflation

The inflation rate in India was last reported at 6.5 percent in December of 2011. From 1969 until 2010,

the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in

September of 1974 and a record low of -11.31 percent in May of 1976. Inflation rate refers to a general

rise in prices measured against a standard level of purchasing power. The most well known measures of

Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in

the whole of the domestic economy.


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INTEREST RATE

The benchmark interest rate (reverse repo) in India was last reported at 7.5 percent. In India, interest

rate decisions are taken by the Reserve Bank of India's Central Board of Directors. The official interest

rate is the benchmark repurchase rate. From 2000 until 2010, India's average interest rate was 5.82

percent reaching an historical high of 14.50 percent in August of 2000 and a record low of 3.25 percent

in April of 2009.

INDIA BUSINESS CONFIDENCE:

In India, business confidence declined to 125.4 in October of 2011 from 145.2 in July of 2011. In India,

the NCAER (National Council of Applied Economic Research) - MasterCard Worldwide Index of Business

Confidence measures the level of optimism that people who run companies have about the

performance of the economy and how they feel about their organizations prospects. Survey

incorporates four indicators: overall economic conditions six months from now, financial position of

firms six months from now, investment climate and capacity utilization level. Data is collected through

personal interviews and questionnaires sent to a diverse range of businesses across various regions in

India. This page includes: India Business Confidence chart, historical data and news


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India Consumer Confidence

In India, consumer confidence improved to 75.2 in the first half of 2011 from 73 in the second half of

2010. In India, the twice annual MasterCard Index of Consumer Confidence analyzes prevailing

consumer perceptions of economic conditions for the next six-months. Generally consumer confidence

is high when the unemployment rate is low and GDP growth is high. Measures of average consumerconfidence can be useful indicators of how much consumers are likely to spend.

Index of Industrial Production

It is a coincidental economic indicator. In simple words, IIP is an index which gives an industry-wise

detail of any particular economy over a particular period of time. It shows how various components of

the industrial sector have fared, and helps government bodies indentify the areas requiring immediate

attention. Industrial Production in India increased 5.9 percent in November of 2011. Industrialproduction measures changes in output for the industrial sector of the economy which includes

manufacturing, mining, and utilities. Industrial Production is an important indicator for economic

forecasting and is often used to measure inflation pressures as high levels of industrial production can

lead to sudden changes in prices. From 1994 until 2010, India's industrial production averaged 7.49

percent reaching an historical high of 17.70 percent in December of 2009 and a record low of -0.20

percent in December of 2008.


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India Government Debt to GDP

Government debt as a percent of GDP is used by investors to measure India's ability to make future

payments on its debt, thus affecting India's borrowing costs and government bond yields..The

Government Debt in India was last reported at 69.2 percent of the countrys GDP. From 1991 until 2010,

India's average Government Debt to GDP was 72.60 percent reaching an historical high of 81.20 percentin December of 2003 and a record low of 64.10 percent in December of 1996.

Indian Rupee Exchange rate

The Indian Rupee spot exchange rate specifies how much one currency, the USD, is currently worth interms of the other, the INR. While the Indian Rupee spot exchange rate is quoted and exchanged in the

same day, the Indian Rupee forward rate is quoted today but for delivery and payment on a specific

future date. The Indian Rupee exchange rate appreciated 6.75 percent against the US Dollar during the

last month. During the last 12 months, the Indian Rupee exchange rate depreciated 5.83 percent against

the US Dollar. Historically, from 1973 until 2012 the USDINR exchange averaged 30.43 reaching an

historical high of 53.72 in December of 2011 and a record low of 7.19 in March of 1973.


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India Stock Market

The SENSEX, a major stock market index which tracks the performance of large companies based in

India, rallied 1774 points or 2.30 percent during the last month. During the last 12 months, the SENSEX

declined 415 points or 2.30 percent, reaching an high of 19701.73 points in April of 2011 and a low of

15175.08 points in December of 2011. Historically, from 1979 until 2012 the SENSEX market valueaveraged 5099.63 points reaching an historical high of 21004.96 points in November of 2010 and a

record low of 113.28 points in December of 1979.

India Current Account

India reported a current account deficit equivalent to 16.9 Billion USD in the third quarter of 2011. India

is leading exporter of gems and jewelry, textiles, engineering goods, chemicals, leather manufactures

and services. India is poor in oil resources and is currently heavily dependent on coal and foreign oil

imports for its energy needs. Other imported products are: machinery, gems, fertilizers and chemicals.

Main trading partners are European Union, The United States, China and UAE


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India Unemployment Rate

The unemployment rate in India was last reported at 9.4 percent in 2009/10 fiscal year. From 1983 until

2000, India's Unemployment Rate averaged 7.20 percent reaching an historical high of 8.30 percent in

December of 1983 and a record low of 5.99 percent in December of 1994. The labour force is defined as

the number of people employed plus the number unemployed but seeking work. The nonlabour force

includes those who are not looking for work, those who are institutionalized and those serving in the

military.

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Key Economic Indicators in IndiaParitosh.pdf