After a respite from the disruptions caused due to the Covid-19 pandemic, the global economy is currently stuck in ambiguity owing to certain geopolitical developments over the last few weeks. The Indian economy too is fazed by uncertainties. The RBI Governor Shaktikanta Das has a difficult task at hand to control inflation in a situation where commodity prices are spiked with volatility and patchy economic recovery.
We take a look at a few economic indicators to track the performance of the Indian economy as of March 2022. Overall, the indicators show a mixed trend wherein some activities like PMI services, power generation showed some amount of improvement while PMI manufacturing, exports, and toll collections showed contraction.
After Covid recovery analysts were upbeat on prospects for the Indian economy but following the Russia-Ukraine war, economists have issued downgrades for India, a country that is highly dependent on oil imports.
Recently, ICRA revised its forecast for India’s real GDP growth in FY2023 to 7.2% from 8.0% forecast earlier. “Protracted geopolitical tensions and high commodity prices pose downside risks to the growth outlook, with margin compression set to squeeze value added growth during the period of the conflict,” it said.
India’s March export growth moderated to 14.5% year-on-year from the 25.1% growth witnessed in February. Import growth too moderated to 20.8% in March from 36.1% in February. India’s provisional trade deficit in March moderated to US$18.7 billion from US$20.9 billion in February.
Research firm Nomura in a note to clients wrote that it expects India’s trade deficit to remain elevated, in part owing to India’s higher supply dependence on specific products, such as edible oils, fertilisers and project goods. The broader rise in commodity prices, including fertilisers, natural gas, coal, metals, and edible oils, is also likely to negatively impact imports.
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