India Macro Data - vrk100 - 21Sep2021

India Macro Data  

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The following are some of the important data points relating to Indian economy. 

1) G-Sec Outstanding: Rupee outstanding loans of Government of India (GOI) as on 20Sep2021 are Rs 77.02 lakh crores (excluding special securities). This figure is also known as G-Sec (Government Securities) outstanding. The data source is Reserve Bank of India. 

 

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Read more:

Bond Basics: All You Want to Know About Bonds  

Stocks, Bonds, Rupee and Inflation - How Are They Inter-connected?  

Government Securities Market in India & Duration Management  

Indian Economy's Strengths and Weaknesses  

Rising Government Debt and Fiscal Deficit  

Cash Management Bills and Government Borrowing  

Basics of Inflation-Indexed Bonds 

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The data from 1999 to 2021: As can be gleaned from table 1 below, the outstanding G-Sec amount has increased by 120 per cent during the Modi Government regime (from Rs 35.14 lakh crore in March 2014 to Rs 71.68 lakh crore in March 2021). During the Manmohan Singh Government (2004 to 2014), the outstanding G-Sec surged by 280 per cent.

The G-Sec amount does not include other public debt and external debt. 

Table 1:

2) Ownership pattern of Govt of India Date Securities: The biggest holders of G-Secs are commercial banks. They hold 37.8 per cent of total outstanding, which is Rs 71.68 lakh crore as on 31Mar2021. The second and third biggest holders are insurance companies (25.3 per cent) and Reserve Bank of India (16.2 per cent). The next in line are provident funds (4.44 per cent), mutual funds (2.94 per cent) and FPIs (foreign portfolio investors 1.87 per cent).

Table 2:

3) Ownership Pattern Over the Years: As per the latest data, as at the end of June 2021, available from Reserve Bank of India (RBI) and Govt of India, the biggest holders of Govt of India Dated Securities are commercial banks (36.0 per cent), insurance companies (25.8 per cent) and Reserve Bank of India (17.1 per cent). The outstanding amount is Rs 78,82,533 crore (end-Jun2021).

In the past five years, the share of commercial banks has decreased to 36 per cent (Jun2021) from 39.9 per cent (Jun2016); the share of insurance firms rose to 25.8 per cent from 22.6 per cent; and the share of RBI rose to 17.1 per cent from 14.9 per cent five years ago.

In the past three years, the RBI has been buying government securities (G-Secs) aggressively which is reflected in its increased ownership pattern. It may be noted this period is coincided with the current RBI governor Shaktikanta Das.

Table 3:

4) Yield and Maturity of Govt of India Dated Securities: Despite persistently high inflation above six per cent for most of the past 20 months, RBI has been able to borrow government securities from the market at or below six per cent yield (see table 4 below). RBI in the past two years, has been resorting to heavy buying of government securities through its Open Market Operations (OMO), which has kept the India 10-year G-Sec yield well below six per cent. 

It may be noted RBI is the money manager for Gov't of India in the sense that RBI borrows money from the market on behalf of Gov't of India.

Table 4:

Weblinks:

RBI public debt statistics

RBI Time Series on public debt

Govt of India public debt management  - quarterly reports

RBI 15Sep2021 Handbook of Statistics on Indian Economy - RBI DBIE (click on 'Handbook of Statistics on Indian Economy' section)page

 

 

 

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Disclosure:  I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets. 

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India's New Normal GDP Growth of 5-6% - VRK100 - 12Sep2012

Rama Krishna Vadlamudi, HYDERABAD   12 September 2012
www.ramakrishnavadlamudi.blogspot.com

India’s GDP growth rate seems to have stabilized at 5.5 per cent or between 5 to 6 per cent. The gross domestic product or national income growth rate is below six per cent for the second time in a row, after reaching lowest multi-year growth rate of 5.3 per cent in the January-March 2012 quarter. The growth rate for April-June 2012 is at 5.5 per cent, according to latest official estimates announced on 31 August 2012. By all indications, it seems 5 to 6 per cent GDP growth rate for India is the ‘New Normal,’ as they say. What are the reasons for the slowdown and what is in store for India’s future growth? Find out.

First Quarter GDP

The first quarter for India is from April to June. During 2012-13, the first quarter GDP recorded a growth rate of 5.5 per cent. This is driven by construction sector, which clocked a growth rate of 10.9 per cent over the first quarter of 2011-12. Other sectors that contributed to the 5.5 per cent growth in the first quarter are: finance, insurance, real estate & business services (10.8 per cent); community, social & personal services (7.9 per cent); and electricity, gas & water supply (6.3 per cent).

As can be seen from the following graph, the growth rate in the first quarter of current year has fallen to 5.5 per cent from a high of 9.2 per cent in the fourth quarter of 2010-11, showing a rapid deceleration in the GDP growth rate.

 Note: GDP at factor cost at constant prices (2004-05). Data from CSO.

Investment Activity Hits Rock Bottom

The most worrying factor is the lack of any meaningful growth in investment activity in the country. Due to a virtual halt in government clearances for new projects, lack of environmental approvals, bottlenecks in coal supply linkages and other policy inactions, new projects are not coming up at the desired level in the economy. This is shown in the gross fixed capital formation (GFCF), which is a measure of total investments made in the economy. It is measured by the total value of all fixed assets acquired less disposals, plus certain additions.

At constant (2004-2005) prices, the GFCF is estimated at Rs 4,49,701 crore in the first quarter of 2012-13 as against Rs 4,46,754 crore in the first quarter of 2011-12, showing a dismal growth of less than one per cent. This dismal situation is corroborated by other indicators, like, IIP.

In terms of GDP at market prices, the rates of GFCF at current and constant (2004-2005) prices during Q1 of 2012-13 are estimated at 29.9 per cent and 32.8 per cent, respectively, as against the corresponding rates of 31.2 per cent and 33.9 per cent, respectively in Q1 of 2011-12.

What of the Future?

The future for new investment activity is dicey. The Government of India seems to be in no mood to revive the slowing economy despite hopes of some policy initiatives from the government. India’s prime minister, blames the opposition parties for lack of political support to policy reforms; while the opposition parties are pointing their fingers at the prime minister; while the truth lies in between.

Various estimates put out by different agencies put India’s GDP growth for the current financial year 2012-13 at between 5 and 6.5 per cent. The most pessimistic estimate is from Morgan Stanley at 5.1 per cent. Other estimates are:

Ø      Reserve Bank of India                                6.5%

Ø      Crisil Ltd, Moody’s & CLSA                        5.5%

Ø      Citigroup                                                        5.4%

The reasons attributed by the private agencies for their pessimism are:

Ø      Government’s lack of control on fiscal deficit and growing public debt

Ø      Sticky inflation which remains at elevated levels of 7 per cent or more

Ø      Policy inaction from the Government on various reforms or measures

Ø      The continued dissonance between India’s ruling and opposition parties

Ø      The debt problems in eurozone and the US

My Take on the GDP Estimate

A wise man has once said that the best estimate for the next value is the same as the current value. The latest quarter growth rate is 5.5 per cent and so the best estimate for the next quarter could be 5.5 per cent, which gives an average of 5.5 per cent for the first half-year 2012-13 of 5.5 per cent.

What about the next half-year? Let us see some past data as given below:

        Note: GDP at constant prices (1999-2000) for years from 2006-07 to 2008-09 and at constant

                  prices (2004-05) for years from 2009-10 to 2011-12. Data source: CSO.

The above graph shows in the last two years, only two years (2009-10 and 2010-11) have seen GDP growth rates higher in second half-year than that of first half. So my presumption is that second half growth could be much lesser than that of first half, though absolute GDP in second half is higher than that of first half.

Even if we assume that the Government takes some policy initiatives to revive the economy, it will take another three to four quarters to reflect in the GDP figures. Considering the fact that the economy recorded a growth of 5.7 per cent in the second half of 2011-12, my guesstimate is that the economy may not be able to do any better in the second half of 2012-13.

Overall, it is safe to predict that India’s real GDP for the financial year 2012-13 is likely to grow by 5.5 per cent. As we have seen repeatedly in the past, the Government and its cheerleaders will try to talk up the growth rate without any concrete measure on the ground level. As a nation we muddle on with our dithering, the country’s poor and lower middle classes will continue to suffer with higher food prices, malnutrition, poor healthcare and skills deficit.

The 2012-13 GDP estimate of 5.5 per cent is the ‘New Normal’ for India.

My assumptions in arriving at the above GDP estimate are:

1). The Government will continue with its ‘dithering’ over policy reforms despite all talks to the contrary as it is bogged down in corruption scandals

2).  India’s ruling party seems to have lost its credibility with the common people and the prime minister has given the impression of being directionless and politically incompetent to take any policy reforms

3). The fiscal room available to revive the economy is limited at this point of time as the fiscal deficit is going to be very high in future

4). The Government will be unable to reduce its subsidy burden from fuel (diesel and LPG especially), food and fertilizers

5). Any downgrade of country rating by Standard & Poor’s will further weaken the sentiment about India in the short term

6). No doubt this is a crude attempt at estimating the GDP figures

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Sorry friends, if I sound very gloomy about the economy,

but this is the reality and let us face it squarely!

CSO – Central Statistics Office of the Government of India

IIP – Index of Industrial Production

Graphs: Author

Data source: CSO

Disclaimer: This should not be construed as a recommendation by the author. The author has a vested interest in the general stock market going up. The views of the author are personal and he changes his views on the market and economy very quickly depending on various factors. Readers or investors must consult their certified financial advisors before taking any decision on their investments and the investment should be in line with their risk profile & risk appetite and their general market perception.

You can access my articles on financial markets at:

www.ramakrishnavadlamudi.blogspot.in

Market Outlook-No Signs of Interest Rates Peaking-VRK100-20Sep2011

	Market Outlook

Rama Krishna Vadlamudi, Hyderabad          20 September 2011

In the last two or three weeks, Indian stock market is stuck in a tight range. The benchmark Sensex is moving between 16,000 and 17,500 and Nifty between 4,800 and 5,200. This is a reflection of various negative global factors impacting the sentiment of positive long term growth prospects in India and reasonable stock valuations. The sovereign debt crisis in the eurozone and the US is yet to unfold completely and nobody is having any clear idea what kind of surprises will be tossed up in the next few quarters. One thing is sure we are going to experience further uncertainty regarding the prospect of Greece defaulting on its government debt or Italy facing more trouble.

No signs of interest rates peaking

The primary ‘dharma’ of RBI is price stability. As part of its resolve to control inflation, RBI has expressed its desire to continue with its dear money policy. However, of late, there is a perception in the markets, that the interest rates in India are peaking or near peak. This view appears to be a bit misplaced when: 1) there is pressure on fiscal deficit, and 2) there is no sign of inflation getting under control in near future. Moreover, the Government has recently increased petrol prices by Rs 3.14 per litre, which will feed in to inflation in the next few months. It is not clear whether international crude prices will come down.

During the previous interest rate up-cycle from October 2005 to October 2008, RBI raised repo rate from 6 per cent to 9 per cent – the previous up-cycle lasted for three years. After a peak of 9 per cent, RBI started reducing interest rates dramatically between October 2008 and April 2009 in view of the Lehman Brothers collapse and the concomitant global financial crisis – the immediate past interest down-cycle lasted for barely 18 months in view of the extraordinary circumstances then.

In financial markets, it is a fashion to look for patterns. Based on the past experience, many market experts are of the view that the interest rates are peaking in India. But, it is not always advisable to look for such past patterns playing out in a similar manner in the future also. The current interest rate up-cycle started from March 2010, with RBI increasing repo rate from 4.75 per cent to 8.25 per cent till now. The previous peak rate is 9 per cent which existed between July 2008 and October 2008. The current situation is different from the previous interest rate down-cycle, when RBI reduced interest rates dramatically from 9 per cent to 4.75 per cent in a matter of just six months.

However, Kaushik Basu, Chief Economic Advisor, differs with RBI in respect of interest rate hikes and he argues that there is a need to cut interest rates to give fillip to growth.   

India’s Macro Picture

Last week, Reserve Bank of India raised interest rates by another 25 basis points (0.25 per cent) which is broadly in line with market expectations. GDP growth rate is declining, so is industrial production represented by index of industrial production (IIP). Due to concerns of global slowdown, there are some doubts about exports growth, which are quite robust as of now. Despite RBI raising interest rates by 350 per cent (3.5 per cent) in the last 18 months, the inflation refuses to show any reasonable signs of relenting.

For some time, RBI has been expressing its anxiety about fiscal deficit going out of hand which will put pressure on the growth rate. RBI is of the view that there is a need for fiscal consolidation in view of the deceleration in tax collections and higher expenses on account of fertilizer and oil subsidies. The Indian rupee has weakened to 48.20 against the US dollar from a level of 44.75 on 5 August this year. A weaker rupee increases India’s oil import bill, putting intense pressure on fiscal deficit.

Government raising fuel prices, three times this year, amidst opposition from the people and opposition political parties is a good sign that the central government is serious about curtailing fiscal deficit and bringing some transparency in fuel pricing policy.

To know about the RBI continuous raise of interest rates, just click:

http://ramakrishnavadlamudi.blogspot.com/2011/09/rbi-raises-interest-rates-vrk100.html

Outlook

Overall, the outlook for the stock markets and bond markets in India is not very optimistic considering the pressure on the growth rate – which is impacted negatively by the stubborn inflation and negative global cues. There is no reason to believe at this point of time that the RBI will stop raising interest rates and start decreasing interest rates very soon, unless some serious cooling off happens on the inflation front or some actual debt defaults happening in Greece or some other countries in the eurozone. However, several good quality stocks are available at reasonable prices while the Sensex is hovering is around 17,000 and Nifty at 5,100 for investors who have the patience and risk appetite to hold stocks or equity mutual funds for a period of more than three years.

Disclaimer: The author’s views are personal. He has a vested interest in the stock markets and his views should be taken with a pinch of salt. He may change his views very fast without any notice depending on the market and economic conditions. His views should not be construed as investment recommendation. There is a risk of loss in equity investments. Investors need to consult their certified financial adviser before making any investment decisions.

For author’s articles on financial markets, just click:

www.scribd.com/vrk100

or,

www.ramakrishnavadlamudi.blogspot.com

Market News For Week Ended 09Sep2011-VRK100

Market News For The Week Ended 09Sep2011

International:

--- The US President , Barack Obama, has announced a $447-billion jobs package. It has to be later approved by the US Congress.

--- The total number of jobs created in the US in August was zero. The US businesses are adversely impacted by lack of demand.

--- Swiss central bank has pegged its national currency to Euro. It said it would not allow the Swiss Franc to go below 1.20 against the Euro.

Indian Industry

--- Bharti Airtel has got licenses to operate 2G and 3G mobile services in Rwanda

--- Car sales have fallen in August for the second consecutive month, but, sales of commercial vehicles and two-wheelers have gone up substantially

--- Tata Motors’ CEO Carl-Peter Forster has resigned

--- ICICI Bank will recruit 6,000 people during 2011-12, said its CEO Chanda Kochhar

--- Reserve Bank of India has penalized Credit Agricole and Karnataka Bank to the tune of Rs 10 lakh and Rs 5 lakh respectively for violation of derivatives norms

--- Dr D Subbarao, Governor of Reserve Bank of India, has said that there is a need to bring down Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) in a gradual manner so that banks will have more funds to lend. But he has not given any time frame for their reduction.

Indian Stock Indices

--- Heavy last-minute selling pushed down Sensex on 09 September 2011 with the benchmark index ending at 16,867 for the day

India’s Macro Picture

--- India had shown resilience during the 2007/2008 global financial crisis and as such it is expected that the chances of India proving its mettle once again are better under the current uncertain global environment. India’s strengths include high savings and investment ratios, young population boosting domestic consumption, strong balance sheets of Indian corporates and rising fortunes from export-oriented industries. Good monsoon and NREGS are expected to boost rural incomes. However, the challenges for the Indian economy are stubborn inflation, rising interest rates stunting growth and moderation in exports. Everybody is expecting that interest rate cycle will peak in the next few months. This optimism is reflected partly in the Sensex raising by more than 1,000 points in the past two weeks. However, Sensex performance is not a barometer for the economy.

--- Gross Direct Tax Collections for April-August 2011 are at Rs 1.54 lakh crore, a growth of 25.9 per cent over the corresponding period of last year. However, net direct tax collections are at Rs 0.97 lakh crore, down 3.4 per cent, due to higher refunds.

--- India’s exports grew by 44 per cent to touch $24.3 billion and imports by 42 per cent to touch $38.4 billion in August. For April-August 2011, exports are at $134.5 billion and imports are at $189.4 billion.

--- It is reported in the media that mobile tariffs would go up soon. It is also reported that airfares too will go up as some airline companies are planning for fare hikes during the coming festival season. Car companies too are contemplating price hikes. If manufactures and service providers are increasing the prices/fares, will it not fuel manufacturing inflation?

--- In a first-page story, ET has reported that Indians’ love for gold is stunting India’s growth story

Indian Rupee weakens

--- The Indian rupee (INR) has touched 15-month low on 09Sep2011 quoting at 46.56 against the US dollar (USD) due to heavy demand from oil companies and last-minute fall in Sensex on Friday. Since 05 August 2011 when S&P downgraded US credit rating, INR has lost 4.1 per cent against the US dollar. When the US lost its AAA rating, it was expected that US dollar would weaken and INR would appreciate. The movement of the INR against USD is contrary to expectations. Surprisingly, US dollar index (USDX – an index indicating the strength/weakness of USD against six major currencies, like, Euro, pound sterling, etc.) has gained 3.5 per cent since 05 August 2011, the day when US lost its AAA rating.

Important Data

Indices	Closing		Commodities	Closing
	9-Sep-11			9-Sep-11
Dow Jones	10 992		Nymex Crude ($/barrel)	87
Nasdaq	2 468		Brent Crude ($/barrel)	113
S&P 500	1 154		Gold ($/ounce)	1 859
FTSE 100	5 215		Silver ($/ounce)	41
Dax	5 190
Nikkei 225	8 738		Currencies
Hang Seng	19 867		GBP-USD	1.59
Shanghai composite	2 498		EUR-USD	1.37
Sensex 30	16 867		USD-JPY	77.6
Nifty 50	5 059		USD-RMB	6.39
US dollar index	77.2		USD-INR	46.56

Compiled by: Rama Krishna Vadlamudi, Hyderabad

Read articles on financial markets at: www.ramakrishnavadlamudi.blogspot.com

Market News from 15Aug2011 to 03Sep2011

Market News from 15Aug2011 to 03Sep2011

International:

--- Hewlett-Packard’s share price fell by 20 per cent after it announced that it wanted to buy UK’s Autonomy for $11.7 billion. HP further said it would sell its personal computer and tablet business.

--- Spain has cut property taxes by half to 4 per cent to boost the sagging housing market

--- Bank of America will cut 3,500 jobs during this quarter

--- UBS will cut 3,500 jobs

--- Warren Buffett is buying shares of Bank of America for $ 5 billion

--- Warrant Buffett has asked US lawmakers to raise taxes on the country’s superrich to help cut the budget deficit. He said, “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.” He argues that higher taxes for the rich will not discourage investment.

--- Steve Jobs steeped down as CEO of Apple Inc and he was replaced by Timothy Cook

--- Moody’s Investors Service has cut Japan’s government debt rating by one notch to Aa3 from Aa2

--- Japan has set aside $ 100 billion to stem the rise of Yen against the US dollar

--- Japan’s public debt is 229% of GDP in 2011 versus 220% in 2010

--- Gold price reached an all-time peak of $ 1,918 on 23 August

--- Google Inc said it would buy Motorola Mobility fro $ 12.5 billion which would give Google access to about 23,000 patents of Motorola

--- Gross public debt as a % of GDP for 2011: Australia 7, Malaysia 55.1, Pakistan 54.1, the Philippines 47, Thailand 43.7, Indonesia 25.4 and China 16.5

US Economy

--- Unemployment is very high at 9.1 per cent

--- Fiscal deficit is very high

--- Housing sector is weakening continuously

--- Some Republican party members are trying to blackmail the President on economic issues

--- US economy is experiencing high exports growth

--- Business investment in equipment and software is expanding

--- Economic growth since the 2007 financial crisis is lesser than expected

Indian Industry

--- Car sales in August month fell for Maruti Suzuki, Hyndai Motor India and Tata Motors recording a decline of 17%, 7% and 33% respectively, compared to the sales in the same month of last year

--- Two-wheeler sales in August month rose for Hero MotoCorp and TVS Motors, showing an increase of 19% and 14% respectively

--- KR Kamath, CMD of Punjab National Bank is opposing savings bank interest rate deregulation

--- Basel III norms are likely to erode banks’ profitability and may affect their return on equity

--- According to a report by Ernst & Young, public sector banks might together face a capital shortfall of Rs 1.07 lakh crore by 2015 as they have to meet Basel III norms from 2013 onwards

--- Enforcement Directorate is enquiring into alleged violation of FEMA norms by Bharti Airtel

--- The stock price of Everonn Education fell 20% after its MD P.Kishore was arrested by CBI on charges of bribing an income tax official to conceal income

--- BP completed the acquisition of 30% stake in 21 oil and gas production sharing contracts operated by Reliance Industries

Stock Indices

--- Heavy selling pushed down Sensex on 26 August 2011 with Sensex ending at 15,849 for the day

--- On 29 August 2011, NSE launched derivatives trading on S&P 500 and Dow Jones Industrial Average

--- Coal India Limited will replace Reliance Capital in the NSE’s Nifty 50 index from 10^th October

--- On 24 August, Coal India had fallen to third rank in market capitalization behind Reliance Industries and ONGC. Coal India dethroned RIL as the India’s most valued firm on 17 August. Coal India could hold the top slot only for a week or so.

Macro Picture

--- India’s current account deficit fell to 2.6% of the GDP in 2010-11 from 2.8% in 2009-10, while the capital account surplus fell to 3.5% in 2010-11 from 3.9% in 2009-10

--- India’s gross public debt to GDP ratio dipped to 66.2% in 2011 from 75.8% in 2007

--- HSBC’s Purchasing Managers’ Index (PMI) for India fell to 52.6 in August from 53.6 in July . Lower exports growth is responsible for the fall in PMI. The PMI reflects acquisition of goods and services based on a survey of over 500 companies.

--- The micro challenges for India are healthcare, malnutrition, hunger, poverty and illiteracy

--- India Inc’s foreign borrowings thro FCCBs and ECBs rose to $12.2 billion in  April-July 2011   against $ 6.5 billion during the same period of last year

--- A Parliamentary panel has asked the Government of India to ensure a minimum assured/guaranteed return to subscribers of the New Pension System (NPS) of the PFRDA

Tablets usage

--- Lawyers for reading charge sheets

--- All MPs in the Indian Parliament will get Tablets

--- Pilots for storing flight manuals

--- Bharti Airtel’s boardroom is paperless with all 16 board members being given tablets

--- Property developers for marketing

--- Restaurants as a replacement for menu cards

--- Sportsmen for their training

Compiled by: Rama Krishna Vadlamudi, Hyderabad

www.ramakrishnavadlamudi.blogspot.com