Indian economy is witnessing a positive momentum-OECD's CLIs

The Indian economy is witnessing a positive momentum, OECD's Composite leading indicators (CLIs) stated. The readings are based on CLIs that are designed to anticipate turning points in economic activity. The CLIs point to moderate improvements in growth in most major OECD countries but stabilising or slowing momentum in large emerging economies. It stated that CLIs continue to point to diverging growth patterns across major economies

The latest reading from the Organisation for Economic Cooperation and Development (OECD) comes amid rising concerns about India's growth prospects on account of the falling rupee and relatively sluggish investments.

India's CLI inched up to 97.9 in June, from 97.7 recorded in May. The indicator has been increasing since March when it stood at 97.5.

"The CLI for India continues to show signs of a tentative positive change in momentum. On the other hand, the CLIs for Russia and Brazil continue to point to slowing momentum," stated the report.

The assessment this month is practically unchanged from last month's assessment in all major economies except China where the CLI is now pointing to slowing momentum. In the case of China, the indicator slipped to 99.4 in June from 99.6 seen in May.

In its latest first quarter Monetary Policy Review, Reserve Bank of India (RBI) has scaled down the country's growth forecast for this fiscal to 5.5% from earlier projection of 5.7%.

Apart from inflationary pressure, in recent times, the depreciating rupee has emerged as a major concern. On 07 August, the domestic currency closed at a new low of 61.30 against dollar. This compelled RBI to announced new measures on 08 August to drain cash from the financial system in a bid to address volatility in currency markets. The RBI will auction Rs 22000 crore of government cash management bills every Monday. RBI has announced various measures to curb exchange rate volatility since mid July resulting in liquidity tightening.

Meanwhile, OECD said that indicators for the US, Japan and the UK point to economic growth firming up.

"In the euro area as a whole, the CLI continues to indicate a gain in growth momentum. In Germany, the CLI points to growth returning to trend. The CLI for Italy continues to signal a positive change in momentum while the CLI for France points to relatively stable momentum," it added.

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