India's Economic Outlook 2013
Last moderated on: Friday, Dec 06, 2013
Political Risk: (Outlook - On Review) With assembly elections in five states this year and a general election, the mega event of the largest democracy in the world, early next year will be a vital development for India economy. We are observing India's fiscal problem very seriously and this will further impede the overall firm outlook on the economy. Until general elections to be held next year, we have identified that the political risk could undermine the economic development and reduction of fiscal deficit up to the budget estimate. Importantly, current term of the government is almost completed without an obstruction to the major functioning of the Indian government.
Economic reforms could trigger the investment inflow into the country. However, we are clueless and believe that the assembly elections and the Lok Sabha elections will be a blockade for the government to act strongly to push reforms in the parliament as long as the current government complete its term.
Currency Risk: (Outlook - Negative) The UNIDOW Research Department downgraded India's currency outlook from "On Review" to "Negative". Upcoming lower house polls and uncertainty related to the next government at the center will push the investment down in the country and eventually raising the demand for the US Dollar. Although, this outlook to be followed till first half of CY2014 and projections will be changed post elections results. There will be a positive outlook for the Indian currency if the BJP led government formed at the center. The UNIDOW Outlook Department projected currency's fiscal end target of 60-61 for a USD.
Economic Risk: (Outlook - Stable) In our recent economic evaluation, The UNIDOW FIS has maintained a stable outlook on the overall economic prospect of the country. The challenge of overspending will be curbed and we're anticipating firm growth and minimal risk of large fiscal deficit to GDP ratio. However, with limited space for rate cut, RBI is unlikely to ease its policy rates in every meet this year due to persistent inflation and volatile industrial output and manufacturing prices threatening the inflation prospect. RBI is giving full attention to the inflation problem, which is undermining the fragile economic growth.
|Real GDP Growth||9.6||6.9||4.4||5.7||5.5|
|Consumer Price Index||10.4||8.4||10||7.7||6.6|
|Wholesale Price Index (WPI)||9.6||8.9||7.6||6.7||6.1|
|Short-term Interest Rate||6||8.1||7.9||6.6||6|
|Long-term Interest Rate||7.9||8.4||8.3||8||7.9|
|Fiscal Deficit (per cent of GDP)||-6.9||-8.2||-8.5||-8.1||-7.5|
|Current Account Deficit (per cent of GDP)||-2.7||-4.2||-3.2||-3.8||-3.6|
All figures are in per cent, unless otherwise mentioned.
1. *Percentage change in GDP Deflator from previous year.
2. **Consumer Price Index (CPI) for Industrial Workers.
3. ***All Commodities.
4. ^Mumbai three months offer rate.
5. ^^10 year government Bond.
Data Source: OECD, World Bank, VMW Analytic Services and IMF.
Ratings and Economic Outlook provided by UNIDOW Financial Intelligence.
Positive - This rating signifies that the outlook is and optimistic and favorable for the domestic as well as foreign investors.
Stable - This outlook tells us that the rating has been used on the basis of current unfavorable domestic and global situation and post-moderation with India's peer economies with mild negative factors.
On Review - Above two ratings are considered as positive. But "On Review" is somewhat a negative outlook. This rating signifies that the UNIDOW FIS is doubtful on the future outlook and consider it as risky/negative for the near-term.
Negative - This is an adverse rating for the country and can be use post critical review.
Risky - This is the last rating measure and the UNIDOW FIS has never used it in its economic outlook report so far. As the name tells, this too is an adverse rating and shows extremely unfavorable and risky outlook.
Sector's Growth of the Indian Economy
Indian GDP Over the past Decade
Indian GDP In Numbers For FY2011
|Agriculture, Forestry & Fishing||1,386,882|
|Mining and Quarrying||191,565|
|Electricity, Gas & Water Supply||103,173|
|Trade, Hotel, Transport & Communication||1,725,485|
|Financing, Insurance, Real Estate & Bus Service||1,232,897|
|Community, Social & Personal Services||1,040,975|
|Total GDP (in INR, Ten Million)||7,306,990|