From BJP's 3-0 loss to oil at $86.29, 12 numbers that defined 2018

The high oil price phase increased India's import bill so much that experts say the current account deficit will cross 2.8% of GDP

If you looked back at 2018 and had to give it a name, calling it the Year of Limitations might be the most accurate. The year did truly show that both the political establishment and financial institutions have their limits. Abhishek Waghmare looks at these 12 numbers:

3-0 

The BJP lost more than it gained in 2018. Following a successful 2017 that consisted of a thumping victory in Uttar Pradesh in March and a scrape-through in Gujarat towards end-2017, it lost power to a Congress-led coalition in Karnataka in June 2018, and lost another three states this month. The Congress rode to power in Madhya Pradesh, Rajasthan and Chhattisgarh, albeit by a narrow margin in the first two. Still, it was the biggest political loss for the BJP since 2014. 

$86.29/bbl 

If politics was changing colour at the surface, the economy was sending tremors from the core. The price of Brent crude oil spiked in the April-June period and then in the second half of 2018, reached its peak at $86.29 on October 3. The high price phase increased India’s import bill so much that the current account deficit might cross 2.8 per cent of GDP.  Though oil is now trending near $50/bbl, it did inflict some irreversible damage to rupee’s strength.

Rs 74.39 vs dollar

A week after the oil peak, the rupee touched its record low against the dollar at 74.39 units. This was a result of India’s non-oil, non-gold (NONG) imports also touching new highs in the middle of 2018. The NONG trade deficit, which had contracted in April-June, grew by more than 25 per cent year on year in July-September. 

Rs 843 billion  

Rising oil and NONG rising trade deficit shook the economy and shifted the global investor away from India. Higher interest rates in the west aggravated it and foreign capital flew out of India, particularly in September and October. Over 2018, the outflow of foreign portfolio investment was probably the highest this century at Rs 812 billion (as of December 24). 

38,896 

The oil rally and subsequent capital outflow shook the stock market. After achieving an all-time high of 38896 on August 28, the S&P BSE Sensex plunged 14 per cent in two months to reach 33349 at the end of October. This was the second such plunge of 2018: the first one was following the Union budget when it fell 10 per cent over two months from February 1 to the end of March.  

Rs 10.2 trillion 

While the macro-economic situation was going through rough patches, the business of domestic banks was touching the bottom. For the first time (and perhaps the last), their bad loans (gross non-performing assets or GNPAs) crossed Rs 10 trillion to become 11.6 per cent of the lent amount at the end of March. The higher the bad loans, the bigger the provisioning that eats into the profits. As a result, the commercial losses of banks peaked. In addition, banks were also steered to more tribulations, with the contagion of farm loan waivers spreading across states. 

Rs 2.3 trillion

While the macro-economic situation was going through rough patches, the business of domestic banks was touching the bottom. For the first time (and perhaps the last), their bad loans (gross non-performing assets or GNPAs) crossed Rs 10 trillion to become 11.6 per cent of the lent amount at the end of March. The higher the bad loans, the bigger the provisioning that eats into the profits. As a result, the commercial losses of banks peaked. In addition, banks were also steered to more tribulations, with the contagion of farm loan waivers spreading across states. 

7.9 million 

In a first, the Employees’ Provident Fund Organisation (EPFO) started publishing the monthly net addition to their payroll in April 2018 (with a two-month lag). As many as 7.9 million people effectively subscribed to EPFO in 13 months from September 2017 to September 2018, which the political establishment alluded to job creation. But as more than 90 per cent of these additions were due to a government incentive scheme, it has raised serious questions about whether the data is representative of employment generation.  

Rs 1 trillion  

While job creation is an outcome of a healthy economy, an efficient tax system is one of its foundations. GST, though implemented in 2017, came to full bloom only in 2018. According to calculations, the government - the centre and states - expected at least Rs 1 trillion of GST revenue per month. Barring two months, April and October, all other months fell short. Courtesy, the Rs 1 trillion mark became one of the most discussed numbers of 2018.

Rs 9.24 trillion 

Now with the budget making exercise for 2019-20 underway, the revenue shortfall in GST has put a pressure on the government’s expenditure in an election year. Coinciding with this was the spat between the RBI and the government, when the Finance Ministry sounded the intention to fix the capital framework of the central bank. The value of RBI’s economic capital of Rs 9.24 trillion became the buzz-number during the debate. As of now, North Block continues to maintain that it does not want to touch the RBI’s capital for welfare spending. 

$16 billion

What happened on May 9 was a landmark. Global retail giant Walmart bought a 77 per cent stake in India’s homegrown retailer Flipkart for $16 billion, the biggest acquisition India has ever witnessed. One of the co-founders, Sachin Bansal, exited the company during the deal. The online marketplace’s avatar has remained more or less the same but the startup culture might have got a dash of global corporate governance. As for consumers, discounts continue to rain down on them.

8.5 per cent

The big daddy of all numbers – GDP. While a government-appointed committee elevated the growth rates in the UPA era to above 10 per cent for two years, a second estimate given by the Central Statistics Office downgraded it. For example, the growth rate for 2010-11 was slashed by near to two percentage points from 10.3 per cent in the old series to 8.5 per cent in the new series. This, along with the payroll data, created the biggest data storms of 2018.