India begins FY 2014-15 with upward shift in GDP growth

Strengthening in manufacturing and services sectors suggests bottoming out in economic activity

ZyFin Research, a leading financial research and analytics company, today announced its estimate of monthly GDP growth - a barometer of India's economic health. The monthly GDP (mGDP) has registered growth of 3.9% in April 2014 (year-on-year [YoY]), as compared to 3.3% in March 2014. The official first quarter GDP estimate for FY 2014-15 would be made available by Central Statistical Organisation in August 2014.

Economic forces are aligning in favour of the country once again, with multiple real economic data points suggesting a turnaround. Improvement in India's external sector, fuelled by rising exports and a stabilising foreign exchange rate, is one key driver; other positive developments include the expanding manufacturing sector, especially intermediate goods, and growth in IT and financial services on the domestic front. The major bottleneck is a sticky inflation rate, though latest data on retail inflation suggests cooling there as well. Once inflation falls within the central bank's comfort zone and the interest rate regime softens, consumer demand should resurface, thereby strengthening this recovery.

The ZyFin mGDP is India's first and only estimate of India's GDP numbers on a YoY and sequential month-on-month basis, with seasonal adjustments, as is done in most developed economies.

The key highlights of the monthly GDP growth Indicator for April 2014 are:

ZyFin monthly GDP estimates suggest that a bottoming out in economic activity has been underway starting March 2014.

ZyFin estimates YoY growth to have picked up in April 2014 to 3.9% from 3.3% in March 2014.

The seasonally-adjusted data indicates strengthening in services and manufacturing sectors during this period. However, agriculture slowed in April 2014, as compared to March 2014.

Estimates for the GDP Deflator (a measure of retail inflation) did not reflect any adverse impact due to slowing agricultural produce. Inflation was, in fact, lower in April than in March.

Commenting on the April GDP numbers, Debopam Chaudhuri, Chief Economist, ZyFin Research, said, We are optimistic of an economic turnaround as many of our proprietary macro indicators have been suggesting an uptick over the past one or two months. These include the ZyFin Consumer Outlook Index, which reflects a healing consumer sentiment, and the ZyFin Business Cycle Indicator, which suggests a small pick-up in industrial activity. Our data suggest that sectors such as automotive, real estate and consumer durables will improve over the next quarter.

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