In November 2022, the following key frequency indicators highlighted improved performances:

• Private consumption stood at 58.4% of the nominal GDP in Q2 of FY2022-23 indicating a significant step-up from 56.6% in the corresponding quarter of the previous year and the highest among all second quarters during the past 11 years.
• The growth in the agriculture sector continues to remain buoyant, with healthy progress in Rabi sowing, with the area sown being 14.6 % higher than the previous year. To further boost production and support farmers’ income, higher Minimum Support Prices (MSPs) have been announced for the upcoming Rabi Marketing Season (RMS 2023-24) in the range of 2.0 to 9.1%.
• India’s Consumer Price Index (CPI) based retail inflation fell sharply to 5.9% YoY in November 2022 compared to 6.8% in October 2022.
• PMI Services remained comfortably in the expansionary zone at 56.8 during April-November 2022
• Fuel consumption during April-November 2022 stood at 145.2 million tonnes as compared to 130.1 million tonnes during April-November 2021.
• The Index of Industrial (Production IIP) from April-November 2022 stood at 134.3.
• In FY23 (from April-October 2022), the combined index of eight core industries stood at 142.1 thereby recording a growth sequentially in October, barring electricity and cement which were influenced by seasonal factors.
• Cargo traffic handled at major ports stood at 507.1 million tonnes during April-November 2022.
• Railway freight traffic growth stood at 978.7 million tonnes from April-November 2022.
• During April-November 2022, freight movement increased by 1.6% compared to the previous year, indicating that the increase in air freight and traffic activity has been maintained.
• 61.1 crore e-way bills were raised during April-November 2022, as compared to 48.5 crore e-way bills raised during April-November 2021.
• India registered a broad-based expansion of 9.7% during the first half of FY 2022-23, supported by robust domestic demand and upbeat investment activity. Sectoral analysis reveals that growth was driven by demand from the services sector, enhanced agriculture exports, and robust construction activity aided by increased infrastructure investment. Private consumption reached its highest among all second quarters during the past 11 years at 58.4% of GDP. The investment rate also rose to be the highest among all the second quarters since 2012-13 at 34.6% of GDP, hinting at the beginnings of an investment cycle.
• From April-November 2022, the gross Goods and Services Tax (GST) revenue collection crossed the Rs. 1.4 lakh crores (US$ 17.62 billion) benchmark.
• In December 2022, the Indian basket of crude oil reached US$ 78.1 a barrel, compared to US$ 87.55 in November 2022.
• In April-November 2022, UPI transactions were valued at Rs. 87.4 lakh crores (US$ 105 billion).
• Merchandise exports during April-November 2022 stood at US$ 295.3 billion.
• Net Foreign Portfolio Investment (FPI) flows, which were negative in Q1 2022-23, turned positive in the second quarter, and in the third, as of 21st December 2022, stood at USD 4.9 billion.
• Overall system liquidity remained in surplus. During October-November, the average total absorption under the liquidity adjustment facility (LAF) was 1.4 lakh crore, down from the average of 2.2 lakh crore during August-September 2022-23.
• As of December 23, 2022, reserve money stood at Rs. 4,174,957 crores (US$ 504.38 billion).
• As of December 23, 2022, currency in circulation (CIC) registered Rs. 3,242,470 crores (US$ 391.73 billion).
• Rupee strength reached Rs. 81.81/US$, as of November 2022.
• During April-October 2022, India received Net Foreign Direct Investments worth US$ 22.7 billion.
• As of December 9, 2022, India’s foreign exchange reserves stood at US$ 564.1 billion.

• According to RBI:
  • Bank credit stood at Rs. 129.47 trillion (US$ 1.56 trillion) as of November 18, 2022.
  • Credit to non-food industries stood at Rs. 128.95 trillion (US$ 1.56 trillion) as of November 18, 2022.

India’s economy grew faster during the first half of FY2022-23 than other economies, driven by strong demand and investment. Inflationary pressures have been moderating since October, with CPI inflation tempering to an eleven-month low in November. On top of that, it has fallen below the RBI’s upper target band for the first time in 2022, mainly driven by the decline in food inflation. Furthermore, inflation expectations have also moderated in the November round of the RBI’s Households’ Inflation Expectations Survey. This bodes well for augmenting consumption in rural and urban regions in the upcoming months. Improvement in business and consumer sentiment is also likely to bolster discretionary spending. The real investment rate during Q2 of FY2022-23 prevailing at a high level of 34.6% demonstrates the Government’s continued commitment towards asset creation.

An overall rise in Rabi coverage with adequately filled irrigation reservoirs plays a pivotal role in the agricultural output growth in 2022-23. An increase in minimum support prices for both Kharif and Rabi crops in 2022-23 and progress in rice procurement have already been supplementing rural incomes in the country. Higher incomes have further resulted in an increase in sales of passenger vehicles, two and three-wheelers, and tractors by a good year-on-year margin in Oct-Nov. The rise in GST collection, robust e-way bill generation, and increased e-toll collection reaffirm the resilience of economic activity.

In addition, steady growth momentum in service activity continues with expansion in PMI Services during Oct-Nov, attributing to the growth in output and accommodative demand conditions, leading to a 5 sustained upturn in sales. The growth impetus in rail freight and port traffic remains upbeat, with further improvement in the domestic aviation sector. Strong growth in fuel demand, domestic vehicle sales, and high UPI transactions also reflect healthy demand conditions.

Continuous capital spending by the central government during the first seven months expanded by 61.5%, amounting to Rs. 4.1 trillion (US$ 49 billion) which totals up to 54.6% of the available budget. With stable foreign direct investment inflows, resurgent FPI inflows, and adequate foreign exchange reserves providing an import cover of 9 months, the external front remains resilient. This has resulted in the Indian Rupee performing well as compared to other EMEs (Emerging Market Economies). As per the data released by the National Statistical Office (NSO), irrespective of the deterioration in global economic activities, Indian exports have registered a growth sequentially as well as yearly in the 2nd Quarter of the Financial Year 2022-23.

As we head into 2023, global economic developments are expected to complicate the outlook further, and therefore continued vigilance is a critical aspect in maintaining India’s external resilience. Going forward, India needs to focus on medium-term challenges such as securing technology and resources for energy transition and skilling its youth for the 21st century economy, while staying the course on fiscal consolidation at the general government level. With continuous efforts during the last several years, a strong platform has been erected on which the superstructure of a middle-income economy can be constructed

Note: The conversion rate used for January 2023 (as of January 03, 2023) is Rs. 1 = US$ 0.012