GDP : 1Q FY21 Real GDP growth contracted by 23.9% yoy, coming in worse than expectations. The contractions was led by a strict lockdown and labor migration, Construction was the worst hit, followed by trade, hotels, transport and communication. Agriculture grew 3.4%. On the production side, public administration contracted 10.3%. However, government consumption on the expenditure side grew meaningfully at 16.4%.
IP :Index for Industrial Production for Jun contracted 16.6% (vs. 34.7% contraction in May). While the (seasonally-adjusted) output of consumer durables doubled between May and June, it was still at just 68% of its pre-pandemic levels. However the non-durable production jumped to 115% of its pre-pandemic levels and registered a healthy 14% YoY growth. In this context, next month’s print will be important to see how much of the growth in non-durables was driven by pent up demand.
CPI : Headline CPI for July came in at 6.9% ahead of the consensus. Bulk of the upside surprise was on account of jump in food inflation which printed at 9.6% (vs. 8.7% in June). Moreover, core inflation continued to accelerate and came at a 17-month high of 5.6% in July (vs. 5.3% in June)
Trade Deficit : India’s trade balance turned to a deficit of ~USD4.8bn in July after a rare surplus of ~USD0.8bn in June, as gold and other imports started to pick-up. Exports in July were down ~10% in July at USD23.6bn while imports were down 28% at USD28.4bn. Imports ex Oil and Gold declined 29%oya (vs. 41% decline in June), the 18th consecutive month of YoY declines. Within imports, consumer goods imports were at 92% of pre-pandemic levels in July while capital goods were at just 62%
Fiscal Deficit: : India’s fiscal deficit stood at Rs8.2trn at the end of July, at ~103% of the budgeted target for the current fiscal year. Sharp fall in tax receipts coupled with resilient government expenditure led to the high deficit in the period.