By Javaria Rana and Ritesh
The Indian economy is in a dynamic state since October 2023, influenced by various internal and external factors. One of the largest and most diverse economies in the world, India’s economic path has been influenced 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. To shed light on the current situation of the Indian economy and the factors affecting its growth and stability, this piece seeks to provide a brief overview of the main economic indicators, policy initiatives and trends that define the country’s economy in October 2023.GST
October 2023 saw the second highest Goods and Services Tax (GST) collection ever, at Rs 1.72 lakh crore, according to the Finance Ministry. Annually, the GST collection from October increased by 13 percent.
In addition, the ministry reported that the average gross monthly GST collection of FY24 was Rs 1.66 lakh crore, 11 percent more than the previous year.
Source: Press Information Bureau (PIB)
Inflation
Headline inflation, as measured by interannual changes in the all-India consumer price index (CPI), moderated to 4.9 percent in October 2023 from 5.0 percent in September.
Inflation came down to 4.9 percent in October from an average of 6.7 percent in 2022-23 and 7.1 percent in July-August 2023, according to the Reserve Bank of India.
Food inflation (yoy) eased to 6.2 percent in October from 6.3 percent in September. By sub-groups, inflation in cereals, meat and fish, milk, vegetables, spices, non-alcoholic beverages and ready meals softened, while it increased in eggs, fruit, legumes and sugar. Edible oils remained in deflation.
The inflation estimates are somewhat in line according to RBI as the global markets see a slowdown due to political 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 to 0.3% for September. This is due to easing inflation in primary food items as well as strong turnaround in national gas and crude oil witnessing a decline.
Unemployment
The unemployment rate among persons aged 15 years and above shot up to 10.1% in October 2023 from 7.1% in September, according to Center for Monitoring Indian Economy (CMIE). This is the first time in 29 months that the unemployment rate has exceeded 10 percent. Generally, the metric rises in October, but the spike this year is exceptionally high.
FII – DII data
In the stock market, the Domestic Institutional Investors invested around Rs. 28,254 crore while Foreign Institutional Investors poured in Rs. 24,548 crore in the month of October according to 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 Services Purchasing Managers’ Index (PMI) ® Business Activity Index showed a significant increase in output in October, reading 58.4.
This was true even though the headline number fell from 61.0 in September to a level that marks the slowest growth since March.
Commercial Goods
India’s total exports in October 2023 estimated at USD 62.26 Billion; an increase of 9.43 percent over USD 56.90 billion in October 2022, according to the data provided by the Ministry of Trade and Industry.
Merchandise exports in October 2023 registered a 6.21 percent increase at $33.57 billion over $31.60 billion in October 2022.
The estimated export of services for April-October 2023 is $192.65 billion compared to $181.37 billion in April-October 2022, projecting a growth of 6.22 percent.
Aggregate Trade Deficit during April-October is reduced by 35.86 percent from 89.86 billion dollars in 2022 to 57.64 billion dollars in 2023; Merchandise trade deficit also improves from $167.14 billion in April-October 2022 to $147.07 billion in April-October 2023.
Non-petroleum and non-Gems and Jewelery exports registered an increase of 11.74 percent from $21.99 billion in October 2022 to $24.57 billion in October 2023.
Major contributors to export growth in October 2023 include Medicines & Pharmaceuticals, Engineering Goods, Electronic Goods, Cotton Yarn/Fabs./made, Handloom Products etc., Iron Ore, Ceramic products and glassware and Meat, dairy and poultry products.
Source: PIB
Industrial production
As the data for October will be released in December, according to 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.
According to 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 nondurables are 125.0 and 142.6 respectively for the month of September 2023.
Source: Ministry of Statistics and Program Implementation
Forex and Gold Reserves
India’s foreign exchange reserves rose by $2.6 billion to $586.5 billion for the week ending October 27, according to data released by the Reserve Bank of India (RBI).
Foreign currency assets (FCA) increased by $2.3 billion to $517.5 billion.
And gold reserves increased by $0.49 billion to $45.9 billion, while SDR decreased by $15 million to $17.91 billion.
System of Payments
Digital payments maintained a strong growth trajectory in volume and value terms across payment modes during October 2023.
The Unified Payments Interface (UPI) saw a record level of transactions at 11408.79 million in volume and Rs 1715768.34 crore (17 Lakh Crore) in value, according to National Payments Corporation of India (NPCI).
The main reason for the digital payment infrastructure and system witnessing 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 steady growth in gross domestic product (GDP) in the third quarter of FY24 for India.