INDIAN ECONOMY - SIGNS OF STRONG RECOVERY

 

Indian Economy is showing strong signs of recovery with all major Macro Economic Parameters coming into the positive zone.

GDP back in Black:- The GDP data for the Q3 October to December 2020 has come to 0.4 % which is up from -7.5% earlier quarter data. This means that technically India is out of recession and we may see further positive GDP data in the coming months.

GST collection up for 5 consecutive month:- The GST collection for the month of February 2021 came to Rs. 1.13 lakh crore. This is the fifth consecutive month when the GDP data has come more than Rs. 1 lakh crore. This shows that the economic activities are picking up and things are becoming normal.

IIP index in positive zone:- Index of Industrial Production has come to positive zone with 1.04 % reading which means that manufacturing is also picking up and demand is there for manufacturing activities.

Inflation has come down:- The CPI inflation has come down to 4.03 % from 4.59% earlier reading which means that RBI will have sufficient room to keep the interest rates at constant level. The fall in inflation is good news as the Target Base Inflation policy has done well and the average inflation from 2016 to 2020 is 3.9 %. This means that the interest rates for buying house will be also be less and would help in creating demand and consumption.

Record Inflows from FII:- The Foreign Institutional Investors have been pumping money in 2021 also with Jan and Feb 2021 receiving around Rs. 43000 crore of net investment. This shows that their projection for the V shaped recovery of Indian Economy is quite intact.

Auto Sales rising:- The Auto sales number for the February 2021 has also been very encouraging with average rise in 15 % sales of almost all the major auto companies.

USA announces Stimulus:- US announced $ 1.9 trillion package:- US Fed has again announced $ 1.9 trillion economic package to help the US economy recover from the corona virus pandemic. This liquidity again is likely to come to Indian markets along with other emerging economy stock markets.

Global Lower Interest rates:- Globally the Interest rates at a lower level which means that our RBI will also have more of accommodative stance and keep the interest rates lower for quite some time. Our repo rate is at 4 % which is at 10 years low.

Country    Interest rates

USA              0.25 %

Europe         0.50 %

UK               0.50 %

Japan           Negative