~ Ritesh and Shrishti Sharma
In the analysis of India’s economic landscape in November 2023, we confront a resilient nation that has navigated global challenges throughout this decade. From the onset of the global pandemic to the Russia-Ukraine crisis and widespread monetary tightening, India emerged as a steadfast player and ascended from the tenth to the fifth largest economy by 2023, attaining remarkable 7.6 per cent growth in the July-September quarter.
The Reserve Bank of India’s Monetary Policy Committee held the policy rate steady at 6.5 per cent during its December meeting, projecting a promising 7 per cent GDP growth for FY24 and an inflation rate of 5.4 per cent.
As we analyse the nuances of November 2023, our attention converges upon high-frequency indicators, meticulously unravelling the intricate threads of India’s economic pulse.
Goods and Services Tax
The Goods and Services Tax (GST) revenue collection for November 2023 has reached ₹1,67,929 lakh crore, registering a commendable year-on-year growth rate of 15 per cent. The data released by the Ministry of Finance for GST marks the sixth occasion in FY 2023-24 where the gross GST collection has surpassed the ₹1.60 lakh crore threshold.
The GST collection for FY24 up to November 2023 reveals a substantial increase of 11.9 per cent year-on-year. However, this is slightly less than the October’s collection which stood at Rs 1.72 lakh crore.
India’s headline retail inflation rate, as measured by y-o-y changes in the all-India consumer price index (CPI), surged to 5.55 per cent in November, according to data released by the Ministry of Statistics and Programme Implementation. This was mainly due to the rise in prices of key food items.
The Consumer Price Index (CPI) inflation in October was 4.87 per cent. However, at 5.55 per cent, the latest CPI inflation figure is below expectations, with economists predicting the rise to 5.8 per cent y-o-y in November.
The Reserve Bank of India in its Monetary Policy Committee meeting in December left the inflation aim unchanged at 5.4 per cent. The headline inflation remained within the RBI’s tolerance range of 2 to 6 per cent for the third month in a row.
The wholesale price index (WPI) data released by the Ministry of Commerce and Industry showed that the WPI inflation reached to yearly 0.3 per cent in November which is more than the 0.5 per cent deflation in October. This is due to an increase in items of food prices by substantial levels.
November ended with an unemployment rate of 9.2 per cent as per the data recorded from the Centre for Monitoring Indian Economy (CMIE). This is lower than the recent peak of 10.1 per cent pencilled in October 2023.
The opportunities in the form of seasonal employment, both in the rural and urban sector also contribute to the varying unemployment rate on a monthly basis.
According to the annual report by the Periodic Labour Force Survey (PLFS), In rural areas, Unemployment rate decreased from 5.3 per cent in 2017-18 to 2.4 per cent in 2022-23 while for urban areas it decreased from 7.7 per cent to 5.4 per cent. Unemployment rate for males in India decreased from 6.1 per cent in 2017-18 to 3.3 per cent in 2022-23 and corresponding decrease in Unemployment rate for females was from 5.6 per cent to 2.9 per cent.
Businesses maintained a positive outlook for activity in the coming 12 months, although confidence somewhat faded due to rising inflation expectations.
Despite falling from 58.4 in October to a one-year low of 56.9 in November, the seasonally adjusted S&P Global India Services Business Activity Index pointed to a sharp increase in output across the sector. The rate of expansion was also considerably stronger than its long-run average. Survey participants that signalled growth mentioned favourable demand trends and new business gains.
As has been the case on a monthly basis for over two years, service providers in India recorded an increase in sales midway through the third fiscal quarter. The upturn reportedly stemmed from new client wins, demand strength and favourable market conditions. The overall rate of growth softened to the weakest since November 2022, but was sharp and above the series trend.
FII DII Data
For the month of November, the Foreign Portfolio Investors (FPIs) invested about Rs 24,546 in the Indian stock market, as per the data of National Securities Depository Limited (NSDL). The domestic institutional investors bought shares worth net Rs. 12,762.14 as per the provisional data on the NSE.
India’s overall exports in November 2023 is estimated at USD 62.58 Billion, which is a slight increase of 1.23 per cent over USD 61.82 Billion in November 2022. Overall trade deficit during April – November improves by 38.79 per cent from $100.38 bn in 2022 to $61.44 bn in 2023.
The merchandise trade deficit has also improved from $189.21 bn in April – November 2022 to $166.35 bn in April – November 2023, as per the data released by the Ministry of Commerce and Industry.
Major contributors to export growth in November 2023 consist of Iron Ore, Gems & Jewellery, Drugs & Pharmaceuticals, Fruits & Vegetables, Meat, Dairy & Poultry Products, Mica, Coal & Other Ores, Minerals Including Processed Minerals and Cotton Yarn/ Fabs. /Made-Ups, Handloom Products etc.
Since, the data for November will be released in January, as per the latest data for industrial production released by the Ministry of Statistics & Programme Implementation, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stands at 144.7. India’s IIP growth rate has increased to a 16-month high of 11.7 per cent in October 2023.
The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2023 stand at 127.4, 141.8 and 203.8 respectively.
As per Use-based classification, the indices stand at 146.1 for Primary Goods, 106.9 for Capital Goods, 157.8 for Intermediate Goods and 173.9 for Infrastructure/ Construction Goods for the month of October 2023.
Further, the indices for Consumer durables and Consumer non-durables stand at 123.0 and 141.5 respectively for October.
Forex and Gold Reserves
India’s foreign exchange reserves rose to $604.04 bn as of December 1 according to the data from the Reserve Bank of India. The forex reserves have witnessed growth for the third week continuously. And the figure is a four-month high amid the global economies witnessing a slowdown.
In the MPC meeting, the RBI Governor Shaktikanta Das had said, “We remain confident of meeting our external financing requirements comfortably.”
Foreign currency assets (FCAs) stood at $533 bn which was $528 bn in October. The Gold reserves rose to $47 bn whereas SDRs increased to $18.2 bn.
Anticipated to reach 900 million by 2025 as per National Informatics Centre (NIC), the number of mobile wallet users in India underscores the nation’s shift towards digital finance.
In November, with 516 active banks, the Unified Payments Interface (UPI) witnessed 11,235.29 million transactions, totaling Rs. 17,39,740.60 crore per the National Payments Corporation of India (NPCI). This reflects a modest increase compared to transaction values in October.