Aman Singh

- 206

Economic Survey
of India 2015
Comparison & Analysis

Macroeconomic Review - 1
WPI CPI Data : March 2014 Feb 2015 (%)

10
8

6
4

2
0

-2
41699

41791

41883
WPI

41974

42036

The WPI has gone down however CPI

stays up
Oil prices major contributor to the
slide
Manufacturing
inflation
hovering
around 1%
External & not internal factors control
the Inflation

CPI

CAD (in USD bn)

0

-2
-4

-6
-8
-10
-12
Q3 2013-14 Q4 2013-14 Q1 2014-15 Q2 2014-15
CAD (in USD bn)

The increase in CAD is due to slowing

of exports and increase in imports
Slowdown in manufacturing sector
seen as a reason

Macroeconomic Review - 2

FIIs have pumped in $33bn (Apr-Dec) in the Capital Markets against an outflow of $539mn
a year ago,

Growth in BSE Sensex by about 30%,

About $11bn of inflow in 2 months of 2015, (not in survey)

After almost 12 quarters of economic growth deceleration, the economic growth has seen a
rise to 7.2%

MVI or the Macroeconomic Vulnerability Index, pitched India as the riskiest economy in
2013-14 has now put Brazil as the riskiest economy in a set of fragile five

New GDP estimation has moved base year from 2004-05 to 2011-12. Saw GDP growth for
FY14 revised from 5.1% to 6.9%

Method not completely reliable as forecast for 2013-14 not expected.

Macroeconomic Review - 3

RIRI Rational Investors Rating Index is used as a supplement to analyze the macro-economic
stability of a region.

Rational investors look not only at macroeconomic stability but also growth prospective.

India outshines the peer of its rating (BBB) and those of the rating above its (A). It outshines
BRICS, Turkey and other notable emerging economies.

RIRI Data 2010 to 2105 for select economies

Macroeconomic Outlook

The growth prospects for Indian economy is expected to hold in the short run
because,

The decline in Oil prices,

The monetary easing coupled with control on inflation,

Increase in household spending in interest-sensitive sectors,

Favorable monsoon expected in 2015 as compared to 2014.

If we take these figures in consideration, growth for FY16 has been pegged at about
8.5%

Tax cuts and more aggressive, corporate-friendly reforms expected

GST has the potential to be a game changer, however implementation stays an

issue

Issues such as Coal block, 2G-3G Spectrum allocation, vital to cover CAD.

Macroeconomic Outlook - 2

Abnormally low interest rates in the U.S. and fear of rollback of stimulus is prompting
the Oil extraction to continue.

Oil, inflation, monetary easing will play a major role in FY2016.

Agriculture is another important sector for GDP in FY2016.

Rural wage growth has declined to about 3.6%, the production has taken a hit in
FY2015 due to poor monsoon and now due to a sudden storm, prices expected to rise

Govt. of India missed its divestment target of Rs.64,000 Cr by about Rs.50,000 Cr due
to no progress in divestment of ONGC and NHPC.

For FY16, GoI has again set a divestment target of about Rs.60,000 Cr.

Graphs & Charts

MVI 2010-15 for Fragile five

CPI-WPI data 2013-15

Oil prices data Dec 201314

200
180
160
140
120
100
80
60
40
20
0

Price / barrel

Current price