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January 12, 2022

Real GDP of India increased by 8.4% YoY in Q2 of FY 22, recovering more than 100% of pre-pandemic output in the equivalent quarter of FY 20. India is one of the few countries to have grown for four consecutive quarters in Covid-19 (Q3, Q4 of FY21 and Q1, Q2 of FY22), demonstrating the economy's resiliency. The recovery was fuelled by a resurgence in the services sector, a complete recovery in manufacturing, and continued expansion in the agriculture sector. In addition to successful pandemic management and signalling impact of promised measures, recovery was aided by a quick increase in vaccine coverage from 32% of the adult population at the end of Q1 to 75% at the end of Q2 of FY 22. According to the latest GDP estimates issued by the NSO, the Indian economy increased by 8.4% YoY in Q2 of FY 22, after growing by 20.1% YoY the previous quarter.

In November 2021, the following key frequency indicators highlighted improved performances:

  • As per the ‘Fourth Advance Estimate’ of principal crops, food grain production in India is estimated at 308.65 million tonnes in FY21, an increase of 11.14 million tonnes as compared with FY20.
  • Private consumption increased from 88% in Q1 to 96% in Q2 of FY 22, indicating that it is becoming a macro growth driver.
  • The total rice procurement target for the FY 22 Kharif season has been set at 500 lakh tonnes for the entire country, with 195 lakh tonnes already procured as of November 30th, 2021.
  • In November, CPI inflation rose to 4.9% from 4.5% in October, with retail food inflation decreasing to 1.9% from 5.1% in June 2021.
  • In November 2021, monthly sales of fertilisers stood at 66.2 Lakh LMT, closely equivalent to previous year levels.
  • In December 2021, the Manufacturing Purchasing Managers' Index (PMI) in India stood at 55.5.
  • PMI Services remained in the expansionary zone for the fifth month in a row, at 55.5 in December.
  • Power consumption saw a 4.5% growth in December 2021 compared to the same period last year, indicating growth and improvement in economic activities.
  • In October 2021, the overall IIP (Index of Industrial Production) registered a 3.2% growth YoY. Textiles, food, base metals, non-metallic minerals, and computer electronics all showed signs of recovery within the manufacturing sector.
  • In November 2021, eight sectors output index increased by 3.1% YoY, indicating resumption of economic activities.
  • At key ports, port cargo traffic stood at 529.34 million tonnes between April to December 2021.
  • In November, air cargo traffic increased by 6.15%, YoYindicating that the increase in air freight and traffic activity has maintained.
  • In November 2021, rail freight loading stood at 116.8 MT, registering an increase of 15.6% YoY.
  • In December 2021, the total e-way bills generated stood at 7.16 crore, an increase of 17% from last month. The gross GST collection in December rose to Rs. 1,29,780 crore, up 13% YoY.
  • In December 2021, UPI transactions were valued at Rs. 8.27 lakh crore (US$ 107.51 billion), roughly twice as much as the same month in 2020 in terms of volume and value.
  • In December 2021, the Indian basket of crude oil reached US$ 73.3 a barrel, compared with the average crude oil price of US$ 80.64 a barrel in November 2021.
  • Merchandise exports increased to US$ 299.74 billion in April-December 2021 (at 48.85% YoY growth), driven by strong performance from key sectors such as engineering, petroleum, gems and jewellery, and chemicals.
  • Daily net absorption under the Liquidity Adjustment Facility (LAF) reverse repo corridor framework steadily tempered from 7.75 lakh crore (US$ 104.12 billion) in October to 7.93 lakh crore (US$ 106.54 billion) in November, indicating that liquidity in the banking system remains in considerable surplus.
  • As of December 31, 2021, reserve money stood at 3,802,650 crore, up 5.63% from March 2021 and 14.5% YoY.
  • As of December 31, 2021, currency in circulation (CiC) registered an increase of 7.8% YoY.
  • In December 2021, Foreign Portfolio Investment (FPI) outflows stood at US$ 3.9 billion.
  • Rupee strength reached Rs. 74.37/US$ 1, as of January 6th, 2022.
  • In the second quarter of FY22, net foreign direct investment (FDI) in India stood at US$ 13.5 billion, as compared with US$ 23.4 billion in the second quarter of FY21.
  • As of December 24, 2021, foreign exchange reserves in India stood at US$ 635.66 billion.
  • In the fortnight ending November 19, 2021, the overall bank credit growth increased to 7% YoY in November 2021, as compared 5.8% growth in the same period last year.

Between April 2021 and October 2021, the central government finances registered improved performances. In the review period, the corporation tax recorded 91.6% YoY growth. Between April 2021 and October 2021, custom revenue collection registered 122.3% YoY growth, and the IGST collection to the Centre increased by 40% YoY, primarily due to recovery of economic activities. Until December 16, 2021, the Net Direct Tax collections registered a growth higher than 60% while Advance Tax Collections till third instalment recorded a growth of about 53.5%. In the first two quarters of FY22, the non-tax revenue registered a 78% growth over the same period last year and stood at Rs 2.07 lakh crore (US$ 27.81 billion).

In the pandemic years of 2020 and 2021, India's economy is predicted to grow thanks to a series of second-generation and subtler structural reforms. India's reforms are likely to support yearly growth rates of 7% or higher through the end of the decade. India will be one of the few economies to recover so quickly from the effects of Covid-19 in 2020.

Note: Conversion rate used for January 2021 is Rs. 1 = US$ 0.013

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