Indian economy seeing signs of upward momentum: OECD

In May, OECD had revised downwards the India's growth estimate to 5.3% for 2013 from 5.9%

The Indian economy is seeing signs of upward momentum, helped by gradual reduction of inflationary pressure, though the country’s growth remains “relatively weak”, according to the Paris-based think tank OECD, or the Organisation for Economic Co-operation and Development.

In many developed countries, growth prospects are expected to witness moderate improvements, it said. The conclusions are based on Composite Leading Indicators (CLIs) designed to anticipate turning points in economic activities. “The CLIs for the United Kingdom, Canada and China point to growth close to trend rates and that for India points to a tentative upward change in momentum,” the grouping said in a report on Monday.

India’s growth slowed to a decade-low of five per cent in the last financial year from 6.2 per cent in 2010-11.

The indicators for Russia and Brazil, however, point to slowing momentum, OECD said. India’s CLI marginally rose to 97.6 in May. The reading stood at 97.3 in April, March and February. In January, the reading was higher at 97.7.

In a separate report, OECD, a group of mostly developed nations, said the growth in Association of Southeast Asian Nations (Asean) economies remains resilient compared to the region’s two large economies — India and China. “Growth momentum in the two large economies is weaker than in Asean. India’s growth is still not strong, though some positive signs are observed in accordance with a gradual reduction of inflationary pressure. China also continues to struggle for momentum, partly due to continuing weak performance of manufacturing,” OECD said.

These observations are based on data from April-July 2013. In May, OECD had revised India’s growth estimate downward to 5.3 per cent for 2013 from 5.9 per cent. It had also cautioned that structural bottlenecks could further constrain investment and growth potential.

The Wholesale Price Index(WPI)-based inflation fell to 4.7 per cent in May, driven mainly by decline in prices of manufactured items. It stood at 4.89 percent in April. In May, 2012, it was at 7.55 per cent.

Meanwhile, the grouping said CLIs (in May) for the United States and Japan continue to point to economic growth firming. “In the euro area as a whole, CLI continues to indicate a gain in growth momentum,” it added.