By Javaria Rana and Ritesh
The Indian economy is in a dynamic state as of October 2023, influenced by a variety of internal and external factors. One of the biggest and most varied economies in the world, India’s economic path has been impacted by a number of events. The country has demonstrated resilience and adaptability in the face of persistent global challenges, including the aftermath of the COVID-19 pandemic and geopolitical uncertainties. In order to shed light on the Indian economy’s current situation and the factors influencing its growth and stability, this piece seeks to provide a brief overview of the major economic indicators, policy initiatives, and trends that define the country’s economy in October 2023.GST
October 2023 saw the second-highest collection of Goods and Services Tax (GST) ever, with Rs 1.72 lakh crore, according to the Finance Ministry. On an annual basis, October’s GST collection increased by 13 per cent.
In addition, the ministry reported that FY24’s average gross monthly GST collection was Rs 1.66 lakh crore, 11 per cent more than the previous year.
Source: Press Information Bureau (PIB)
Inflation
Headline inflation, as measured by y-o-y changes in the all-India consumer price index (CPI), moderated to 4.9 per cent in October 2023 from 5.0 per cent in September.
The inflation came down to 4.9 per cent in October from the average of 6.7 per cent in 2022-23 and 7.1 per cent in July-August 2023, as per the Reserve Bank Of India.
Food inflation (y-o-y) dipped to 6.2 per cent in October from 6.3 per cent in September. In terms of sub-groups, inflation in cereals, meat and fish, milk, vegetables, spices, non-alcoholic beverages, and prepared meals softened, while it edged up in eggs, fruits, pulses and sugar. Edible oils remained in deflation.
The inflation estimates are somewhat in-line as per RBI as the global markets see a slowdown due to policy actions and geopolitical conflicts.
Wholesale price index (WPI) has remained in deflation for seven consecutive months. The WPI deflation widened to a three-month low of 0.5% in October compared with 0.3% for September. This is due to lightening inflation in primary food articles as well as a strong turnaround in national gas and crude petroleum witnessing a decline.
Unemployment
The unemployment rate among persons aged 15 years and above shot up to 10.1 per cent in October 2023 from 7.1 per cent in September, according to Centre for Monitoring Indian Economy (CMIE). This is the first time in 29 months that the unemployment rate has gone over 10 per cent. Generally, the metric elevates in October, but the spike this year is exceptionally high.
FII – DII data
In the stock market, the Domestic Institutional Investors invested about Rs. 28,254 crore while Foreign Institutional Investors poured in Rs. 24,548 crore in the month of October as per Ace Equity data reported by the Economic Times. The domestic investors invested more than their foreign counterparts in the market.
PMI
The seasonally adjusted S&P Global India Services Purchasing Managers’s Index (PMI) ® Business Activity Index showed a significant increase in output in October, reading 58.4.
This was true even though the headline number dropped from 61.0 in September to a level that indicates the slowest rate of growth since March.
Trade Merchandise
India’s overall exports in October 2023 estimated at USD 62.26 Billion; an increase of 9.43 per cent over USD 56.90 Billion in October 2022, as per the data given by Ministry of Commerce and Industry.
Merchandise exports in October 2023 registered 6.21 per cent growth at $33.57 bn over $31.60 billion in October 2022.
The estimated services export for April-October 2023 is $192.65 bn as compared to $181.37 bn in April-October 2022, projecting to grow by 6.22 per cent.
Overall Trade Deficit during April-October reduces by 35.86 per cent from $89.86 bn in 2022 to $57.64 bn in 2023; Merchandise Trade deficit also improves from $167.14 bn in April-October 2022 to $147.07 bn in April-October 2023.
Non-petroleum and non-Gems & Jewellery exports registered an increase by 11.74 per cent from $21.99 bn in October 2022 to $24.57 bn in October 2023.
Major contributors to export growth in October 2023 include Drugs & Pharmaceuticals, Engineering Goods, Electronic Goods, Cotton Yarn/Fabs./made-ups, Handloom Products etc., Iron Ore, Ceramic products & glassware and Meat, dairy & poultry products.
Source: PIB
Industrial production
Since the data for October will be released in December, as per the latest data for industrial production for the month of September 2023, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stands at 141.6.
The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of September 2023 stand at 111.5, 140.6 and 205.9 respectively.
As per Use-based classification, the indices stand at 138.8 for Primary Goods, 111.6 for Capital Goods, 153.8 for Intermediate Goods and 168.7 for Infrastructure/ Construction Goods for the month of September 2023.
Further, the indices for Consumer durables and Consumer non-durables stand at 125.0 and 142.6 respectively for the month of September 2023.
Source: Ministry of Statistics and Programme implementation
Forex and Gold Reserves
India’s foreign exchange reserves saw a rise of $2.6 billion to $586.5 billion for the week ending on October 27, as per the data released by Reserve Bank of India (RBI)
Foreign currency assets (FCAs) surged by $2.3 billion to $517.5 billion.
And gold reserves surged by $0.49 billion to $45.9 billion, whereas SDRs decreased by $15 million to $17.91 billion.
Payments System
Digital payments maintained a strong growth trajectory in volume and value terms across payments mode during October 2023.
The Unified Payments Interface (UPI) saw a record level of transactions at 11408.79 million in volume and Rs 1715768.34 crores (17 Lakh Crore) in value, according to National Payments Corporation of India (NPCI).
The main reason for the digital payments infrastructure and system to witness this kind of growth is the strong domestic demand due to the festive season. The demand has driven the economy despite a global slowdown and would help in a steady growth in the gross domestic production (GDP) in the third quarter of FY24 for India.
