Monthly GDP accelerates to 5.4% in November 2013-ZyFin Research

Services sector growth drives uptick, supported by declining inflation

The monthly GDP growth at 5.4% in November 2013 (year-on-year [y-o-y]), has moved up from 5.2% in October 2013, showing a steady uptrend in economic growth for the sixth consecutive month, stated ZyFin Research announcing its estimate of monthly GDP (mGDP) growth - a barometer of India's economic health.

This is also the second-highest growth witnessed since January 2012, when growth of 5.7% was recorded. The mGDP growth can be attributed to early signs of improvement in the service sector, coupled with decline in the inflation rate - our estimates suggest inflation for December would be7.3%.

November m-o-m seasonally-adjusted growth was 4.9% (compared to October 2013). The sequential growth in October was 4.8% (compared to September 2013). Inflation, as measured by the GDP Deflator, declined marginally to 7.4%, from 7.5% in the previous month. The GDP deflator is a more comprehensive measure of underlying inflation and is widely used in developed economies. The inflationary situation, while still worrying, has moderated over the past three months. Early estimates suggest inflation estimates for December would be lower, at 7.3%.

Commenting on the November GDP numbers, Dr. Surjit S Bhalla, Senior Advisor, ZyFin Research, said, In addition to growth, the big story for the Indian economy is inflation. In our December report, we had suggested that inflation had peaked in October. Monthly sequential data confirms that Indian inflation may finally be on a downward trend. The next few months will tell whether the six-year era of high inflation is coming to an end.

Adds Debopam Chaudhuri, VP Research, ZyFin Research, "The intensity and sustainability of the likely economic upturn depends largely on a recovery in consumer demand. The ZyFin Consumer Outlook Index, which is a monthly barometer of consumer perceptions on employment, inflation and future spending, has been inching up since November, reflecting healing sentiment. If this strengthens further in the coming months, a demand-pulled economic recovery would follow.

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