10 Dec

2014

Country Economic Forecast

India
Highlights

Economic growth slowed in Q3 2014, with GDP

expanding by 5.3% year-on-year, compared to 5.7%
in Q2. Services output increased by a reasonably
robust 7.1%, but manufacturing growth slowed to just
0.1%. The expenditure breakdown was also
disappointing, with investment stagnating and
government spending rising by more than 10%. But
the setback to growth in Q3 was in line with our
expectations and we have left our growth forecast for
2014 as a whole unchanged at 5.3%.

However, looking forward, Indias economic

prospects look more upbeat and growth is set to
accelerate. We expect GDP to increase by 5.7% in
2015 and 6.1% in 2016. Inflation has eased
significantly dampened by the fall in global oil prices
and easing food prices. This should help to support
consumer spending and attract more capital inflows.
At the same time, given the high share of oil in total
goods imports, the fall in global oil prices over the last
month has prompted further narrowing in our forecast
of Indias current account gap. We now expect that
the deficit will be around 1.5% of GDP in 2015.

The Reserve Bank of India (RBI) did not cut interest

rates in December, despite the marked fall in inflation
in recent months and pressure from the government
and corporate sector. Inflation expectations are still
high and core inflation has been easing at a slower
pace. The RBI has indicated that it might cut interest
rates early next year, provided that inflation remains
low over the coming months. We expect a rate cut in
Q2 2015, by which time the RBI will have some
evidence to judge whether the trend of lower inflation
has started to become entrenched.

The weak financial health of the government and

corporate sector is likely to constrain growth in the
future. Indias fiscal deficit, at over 4.5% of GDP
currently, is still too high. The government therefore
has no room to increase capital spending to address
supply-side bottlenecks such as poor infrastructure.
The corporate sector is also highly indebted, with the
debt-to-equity ratio, at 83%, the highest among all
emerging markets. As such, we forecast that annual
GDP growth will average 6.3% in 2016-19, well below
the governments target of 8%.

Forecast for India *

(Annual percentage changes unless specified)
Domestic Demand
Private Consumption
Fixed Investment
Stockbuilding & discrep (% of GDP)
Government Consumption
Exports of Goods and Services
Imports of Goods and Services
GDP
Industrial Production
Consumer Prices
Current Balance (% of GDP)
Government Budget (% of GDP)
Current Account ($bn)
Trade Balance ($bn)
Short-Term Interest Rate (%)
Exchange Rate (Rupee per US$)

2013

2014

2015

2016

2017

2018

2.8
4.0
1.0
3.3
4.4
5.3
-1.0
4.7
0.6
10.1
-2.8
-5.9
-49.2
-150.8
9.32
58.6

4.5
6.2
2.0
2.9
6.3
6.3
1.7
5.3
1.9
7.3
-1.0
-4.7
-18.5
-133.1
9.07
60.9

5.3
4.1
4.8
4.1
2.7
6.7
5.2
5.7
3.9
6.0
-1.5
-4.3
-30.7
-146.8
8.57
62.1

5.9
6.7
6.1
3.5
6.7
6.6
5.8
6.1
6.5
6.4
-1.6
-3.9
-35.4
-155.8
8.43
63.6

6.6
6.7
6.8
3.3
6.7
5.8
6.7
6.3
6.1
6.3
-1.5
-3.5
-38.1
-170.9
8.22
65.7

6.7
6.8
6.7
3.3
6.2
5.5
6.6
6.4
5.8
6.0
-1.5
-3.2
-41.3
-189.9
7.95
68.5

* Refers to Calendar year

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India

Forecast Overview
GDP growth slowed in Q3
The Indian economy expanded by 5.3% year-on-year in
Q3 2014, slowing from the 5.7% growth seen in Q2.
Services output rose by a reasonably robust 7.1%, but
manufacturing output grew just 0.1%. The expenditure
breakdown was also a disappointment: while investment
stagnated, government spending rose by more than
10%.
Given that the performance of the economy in Q2 was
buoyed by a number of one-off factors, the slowdown in
Q3 was expected. We still expect GDP to increase by
5.3% in 2014 as a whole modestly stronger than the
sub-5% expansions achieved in 2012 and 2013.

India: Contributions to GDP

% year
14
12

Domestic
demand

GDP

F'cast

10
8
6
4
2
0
-2
Net exports

-4
-6
1996

1999

2002

2005

2008

2011

2014

2017

Source: Oxford Economics

but there are some positive developments

10
8
6
4
2
0
Wholesale prices (WPI)
-2
2002

2004

2006

2008

2010

2012

2014

Source: Haver Analytics

Net energy imports as % of EM energy use

% of energy use, 2011
60
40
20
0
-20
-40
-60
-80
Philippines

India

China

Brazil

-100
Malaysia

Favourable terms of trade oil and related products

account for around 40% of Indias total goods
imports. The downward revision to our oil price
forecast should therefore result in significantly
cheaper oil imports and help to narrow the current
account deficit further. This improvement, however, is
likely to be tempered somewhat due to the RBI lifting
curbs on gold imports at the end of November (that
were put in place in 2013 when the rupee was under

12

Sth Africa

Easing inflation both the wholesale price (WPI)

and the CPI inflation measures fell to a five-year low
in October as a result of lower prices for food and
fuel. Moreover, since then, global oil prices have
continued to fall and are now expected to stay
relatively low for a prolonged period. This will
maintain the downward pressure on inflation. This is
likely to have a number of positive effects on the
Indian economy, not least by increasing consumers
purchasing power and promoting higher spending. It
will also help to attract more capital inflows due to an
increase in the real return on investment. Having said
that, the impact of lower oil prices is likely to be
partially offset by the governments removal of
subsidies on diesel prices and increases in excise
duty on petrol and diesel. Moreover, given some
unfavourable base effects, this may mean that the
annual CPI inflation rate moves back up to around
6% by mid-2015.

Urban & rural CPI

Russia

India: Prices
% year
14

Indonesia

We expect the economy to gather momentum over the

coming months. GDP growth is likely to average 5.7% in
2015 and 6.1% in 2016. This will be driven by:

Source : World Bank Development Indicators

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India

heavy downward pressure). We now expect the

current account deficit to average around 1.5% of
GDP throughout 2015-18.

Monetary loosening a little way off despite the

sharp fall in inflation in recent months and pressure
from the government and businesses, the RBI did not
cut the policy rate at its meeting on 2 December. The
recent fall in inflation is largely the result of easing
prices of volatile items such as food and fuel (albeit
these comprise 60% of the CPI basket) and
favourable base effects. Meanwhile, inflation
expectations are still high and core inflation measures
have eased at a slower pace. RBI governor,
Raghuram Rajan, indicated that he may ease
monetary policy early next year conditional on
inflation remaining low. As far as we are concerned,
this suggests a rate cut only in Q2 2015, by when the
RBI will have some evidence to judge whether the
trend of lower inflation has become entrenched or not.

India: Repo rate

%
10
9

8
7
6
5
4
3
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Source : Reserve Bank of India

Debt to equity (non-financial corporations)

%
India

albeit constraints to growth persist

Indias growth outlook would be stronger in the absence
of the following features:

Indonesia

High corporate debt Indias corporate sector is

now highly leveraged, with many companies having
borrowed on the assumption that the economy would
keep on growing by around 8% pa. According to the
IMFs Global Financial Stability Report, Indias debtto-equity ratio is elevated at 83%; the highest among
all emerging markets, and only surpassed by Greece
and Italy. At the same time, the levels of bad debt in
the financial system have also risen rapidly. These
factors will limit banks ability to lend and businesses
desire to invest.

Thailand

Fiscal deficit proving difficult to rein in although

Indias fiscal deficit has been reduced, by emergency
spending cuts, to under 5% of GDP currently from an
unsustainably high level of around 6% throughout
2011-13, it is still too high. The government reached
90% of its borrowing target in just the first seven
months of this fiscal year, and is only likely to get
close to its deficit target because of the fall in oil
prices, cuts in subsidies and increased excise duties.
Moreover, progress on selling national assets is
proving to be quite slow. The government, therefore,
has no room to increase capital spending to address
supply-side bottlenecks such as poor infrastructure in
crucial sectors like power and transport.

83

Brazil

77
66

Russia

60

Mexico

59
57

China

50

Turkey

47

Singapore

46

Poland

39

Malaysia

39

South Africa

32

20

40

60

80

100

Source : IMF

India: Government budget balance and debt

% of GDP
2

% of GDP
70

Government
debt (RHS)

60

-2
50
-4
40
-6
Central government
balance (LHS)

-8

30
F'cast

-10

20
1996

1999

2002

2005

2008

2011

2014

2017

Source: Oxford Economics

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India
Risk index (0=no risk, 100=highest risk)

Risk Assessment
Indias economic situation deteriorated significantly
between 2011 and 2013, making the country more
vulnerable to domestic or external shocks. GDP growth
slowed, while the twin deficits have only recently
narrowed from unsustainable levels after drastic action
by the government, including policies to curb gold
imports (recently removed) and sharp cuts to capital
spending. The economy is now much more stable but
there are still downside risks.

2013

2014

2017

India
World average

46
29

46
28

43
26

Sovereign risk
Trade credit risk
Political risk
Regulatory risk

45
50
54
33

45
50
51
33

38
51
51
30

Risk warnings

Emerging risks

GDP growth

Growth to gradually
accelerate above 6%

Fall in sentiment and adverse external events there

is a lot of optimism about Indias economic prospects on
the back of positive expectations on reform following the
election. However, there is a possibility that the
government does not deliver on its promises and
businesses and investors begin to lose faith. This will
increase Indias vulnerability to capital outflows,
particularly if there is an adverse external event, such as
disorderly tightening of US monetary policy.

CPI inflation

Inflation has moderated

considerably

Current account balance

Deficit halved as a % of GDP

in 2013

Government balance

Fiscal position is less

precarious now

Government debt

Government debt to fall over

the forecast horizon

External debt

External debt at a
manageable level

Fragile banking sector the RBI has warned that risks

to Indian banks have increased in recent quarters. Public
sector banks, which account for 70% of assets, are
suffering the most, with stressed loans constituting
11.7% of their total loans. As a result, Moodys, the
credit ratings agency, continues to hold a negative
outlook on Indias banking system.

Risk scenarios

Impact of scenarios on risk index

Maximum impact of scenarios on risk index

Key risk scenarios

Risk off another round of outflows of foreign capital
would hit the economy hard by weakening the exchange
rate, pushing inflation up and forcing the central bank to
adopt a much tighter policy. Growth might slow to below
3% in 2015, compared to 5.7% in the baseline.
Investment standstill in China although Indias
exposure to China is relatively limited, the country would
be quite badly affected, since a banking crisis in China
would not only trigger capital outflows from emerging
markets, but also lead to a sharp global slowdown.
Outflows of capital, coupled with trade linkages with
other countries in the Asia Pacific region and beyond
which are heavily exposed to China, would hit Indias
economy significantly. In this scenario, growth might
slow to around 4-5% in 2015.

Risk off

Eurozone slips into recession

Russia isolated

Investment standstill in China

US and Eurozone upside
surprise

-1

Impact of scenarios on GDP growth

% year
10
9
8
7
6
5

Baseline

Investment
standstill in China
Risk off

3
2

US and Eurozone
upside surprise

1
0
2010

2012

2014

2016

2018

Source : Oxford Economics

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India

Long-Term Prospects
Long-term growth limited to about 6%
GDP growth in India is expected to average 6.3% a year
in 2016-19, up from 5.2% a year in 2013-15. This
improvement will be driven by:

India: Actual & potential output

Rupee billion, 2004/2005 prices
24000
Forecast
21000
18000
15000

Favourable demographics Indias working age

population is expected to grow strongly over the next
two decades.

Potential

12000
9000
6000

Rising middle class the middle class is on course

to expand. Indeed, the number of households with an
income greater than US$30,000 is likely to more than
double over the next decade.

Competitiveness India is competitive in

international markets, with unit labour costs among the
lowest of the BRIC economies.

But weak infrastructure key sectors such as power

and transport are suffering from inadequate
infrastructure, which has prevented supply from
increasing in line with growing demand. This will
prevent India from achieving its target growth rate of
8% a year in the long term. Indeed, we now expect
that growth will struggle to attain a sustained period of
growth above 6.3%, even in the medium term.

Actual

3000
0
1996

1999

2002

2005

2008

2011

2014

2017

2020

Source: Oxford Economics

Potential GDP and Its Components

Average Percentage Growth
2004-2013

2014-2023

7.6
1.7
9.2
3.2

5.9
1.8
6.9
2.3

Potential GDP*
Employment at NAIRU
Capital Stock
Total Factor Productivity

*ln(Potential GDP)=0.65*ln(Employment at NAIRU)

+0.35*ln(Capital Stock)+ln(Total Factor Productivity)

Long-Term Forecast for India

(Average annual percentage change unless otherwise stated)

2004-2008

2009-2013

2014-2018

2019-2023

GDP
Consumption
Investment
Government Consumption
Exports of Goods and Services
Imports of Goods and Services
Unemployment (%)

8.7
7.4
15.0
6.4
23.9
21.0
7.5

6.6
6.8
5.7
7.1
7.7
7.1
5.9

6.0
6.1
5.2
5.7
6.2
5.2
5.5

6.2
6.5
6.1
5.5
5.4
6.9
5.5

Consumer Prices
Current Balance (% of GDP)
Exchange Rate (vs US$)
General Government Balance (% of GDP)
Short-term Interest Rates (%)

5.6
-1.2
43.9
-4.0
7.5

9.9
-3.5
50.6
-6.1
8.0

6.4
-1.4
64.2
-3.9
8.4

5.0
-1.1
74.3
-2.6
7.5

Working Population
Labour Supply
Participation Ratio
Labour Productivity

2.0
1.8
-0.2
6.4

1.8
1.6
-0.2
4.6

1.5
1.9
0.2
4.0

1.2
1.7
0.6
4.4

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India

Background
Having rarely recorded GDP growth of above 7% prior to 2003, the Indian economy chalked up five consecutive
years above that figure between 2003-07, with 9%+ growth registered in 2005-07. This not only propelled the
country into the economic fast lane alongside China but also meant that it was making an important
contribution to the overall increase in world GDP. However, India still has a very long way to go along the
development path. According to the IMF, Indias GDP per capita using market prices and exchange rates was
just US$1,509 in 2013 while on a PPP basis it was US$5,449; the equivalent figures for China were US$6,958
and US$11,867 respectively.
But structural problems including supply-side bottlenecks in key sectors such as power and transport,
widespread corruption, bureaucratic hurdles and the lack of a transparent and disciplined policy framework
have contributed to a sharp slowdown in Indias economic growth, from above 8% to less than 5% in the last
couple of years. As a result, in the 2014 general elections, the Indian electorate, battered by high inflation and
poor economic conditions, delivered a clear mandate in favour of the opposition Bharatiya Janata Party (BJP).
The BJP won 282 seats of 543 in the lower house of parliament, comfortably above the 272 required for a
simple majority. Meanwhile the Congress party, which had been in power for the past ten years, suffered a
humiliating defeat. They won only 44 seats, not even crossing the 10% threshold required to form the
opposition. This marks an end to coalition politics in India for the first time since 1984. A decisive government
will speed-up decision-making at the centre and reduce political risk, although powerful state governments can
still slow the implementation of changes wrought by the national government.
With two-thirds of the population living in the countryside and more than half the labour force working in the
sector, agriculture is still a key part of the economy. However, in the eleven years to 2009 it only grew by 3.6%
pa in real terms so its share in the overall economy has fallen significantly, from 20.8% in 2002 to 13.8% in
2012. By contrast, the most dynamic sector has been the services sector, recording 9.4% annual growth
between 2002 and 2012, with major expansions in distribution, transport, communication, finance and business
services. Construction has also boomed, growing by more than 9% pa over the same period. Industry has
performed more modestly, with manufacturing recording 8% pa growth.
With the boom in the services sector helping to create a relatively affluent middle class, said to be 300m-strong,
the links between rural incomes and industrial activity have weakened. Rising incomes and increased access to
credit have led to much higher spending on consumer durables such as cars, phones and other electronic
items. However, the higher level of inflation since 2005 has particularly constrained the purchasing power of the
urban and rural poor. And if the economy is to sustain a high level of growth for several decades, it will need to
ensure that an ever-wider number of people are raised above virtual subsistence living, by increasing both
output and productivity growth in agriculture, raising educational standards and making cities more attractive to
migrants.
The 2000s saw a significant integration of the economy with the rest of the world. Exports of services (largely
software and business outsourcing) accounted for 8.5% of GDP in 2013 compared to 4.1% in 2002, while the
equivalent ratio for merchandise exports increased from 10.9% to 18.3%. Allied to this has been a sharp
increase in foreign investment in India, either in the form of FDI (despite the many bureaucratic hurdles) or in
portfolio flows.
The rapid growth in the economy in 2003-07 enabled a sharp fall in the central government budget deficit, from
5.9% of GDP in 2002/03 to 2.7% in 2007/08. However, relatively little was done during this time to widen the tax
base. The cyclical nature of the improvement in the budget over these years was shown by the speed of the
fiscal deterioration in H2 2008 as the economy slowed sharply. Indeed the fiscal deficit widened to 6.7% of GDP
in 2009/10. By 2013/14 it was down to 4.9%, but the pace of fiscal consolidation was much slower than planned
and the fiscal gap was still uncomfortably wide compared to many other emerging economies.

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India

Data & Forecasts

Key Indicators: India
Percentage changes on a year earlier unless otherwise stated
Industrial
production

Oct
Nov
Dec
2014
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct

Bank
Credit

CPI
Industrial
workers

CPI
Combined
rural & urban

PPI

Exports
(US$)

Imports
(US$)

Trade
balance

-1.2
-1.3
0.1

16.6
14.2
14.5

11.1
11.5
9.1

10.2
11.2
9.9

7.2
7.5
6.4

14.3
3.6
3.7

-13.9
-16.5
-14.8

$ bn
-10.6
-9.7
-10.3

1.1
-2.0
-0.5
3.7
5.6
4.3
0.4
0.5
2.5
-

14.7
14.3
14.3
14.3
13.0
13.3
13.3
10.9
11.0
11.2

7.2
6.7
6.7
7.1
7.0
6.5
7.2
6.8
6.3
5.0

8.8
8.0
8.3
8.6
8.3
7.5
8.0
7.7
6.5
5.5

5.1
5.0
6.0
5.5
6.2
5.7
5.4
3.9
2.4
1.8

4.0
-5.7
-0.7
-0.4
10.0
8.9
8.1
0.2
2.7
-5.0

-18.9
-17.9
0.8
-13.8
-10.8
9.0
4.6
1.2
25.5
3.6

-9.5
-8.3
-11.0
-11.4
-11.8
-12.3
-12.2
-11.1
-14.1
-13.4

Financial Indicators: India

Percentage changes on a year earlier unless otherwise stated

Nov
Dec
2014
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov

Repo
rate
%
7.75
7.75

Money
Supply M3
% p.a
14.9
14.8

8.00
8.00
8.00
8.00
8.00
8.00
8.00
8.00
8.00
8.00
8.00

14.5
14.5
13.2
13.7
13.5
12.2
12.7
13.0
12.7
12.7
-

Exchange Exchange Exchange

rate
rate
rate index
Rup/ avg. Rup/$ avg.
Trade
based
84.5
62.6
68.8
84.8
61.9
69.6
84.6
85.0
84.4
83.3
81.5
81.2
81.4
81.1
78.6
77.9
77.0

62.1
62.3
61.0
60.4
59.3
59.7
60.1
60.9
60.9
61.3
61.7

71.1
70.8
72.1
72.7
74.2
73.8
73.3
72.7
73.6
73.7
-

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

Share
price
End per.
20792
21171
20514
21120
22386
22418
24217
25414
25895
26638
26631
27866
28694

Reserves Reserves
cover
$bn
months
263.7
7.8
268.6
7.3
264.6
266.9
276.4
282.0
285.3
288.8
293.8
291.4
287.4
290.4
290.8

7.3
8.0
6.7
7.9
7.3
7.5
7.3
7.8
6.7
7.4
-

10 Dec
2014

India
INDIA

CONSUMERS
EXPENDITURE

TOTAL
FINAL
EXPENDITURE

TOTAL
FIXED
INVESTMENT

REAL
GDP

INDUSTRIAL
PRODUCTION

PRIVATE
SECTOR
BANK
CREDIT
(BPRIV)

GOVERNMENT
BANK
BORROWING

COMPETITIVENESS
(2008=100)

PRODUCER
PRICES

CONSUMER
PRICES

(BGOV)

WHOLE
ECONOMY
PRODUCTIVITY
(GDP/ET)

(C)

(TFE)

(IF)

(GDP)

(IP)

(WCR)

(PPI)

(CPI)

6.55
3.23
4.88
5.61
6.06
6.42
6.45

2.40
1.00
1.97
4.77
6.06
6.82
6.65

4.81
4.70
5.29
5.74
6.14
6.34
6.39

0.72
0.60
1.91
3.93
6.50
6.12
5.77

16.54
14.23
10.69
11.90
12.86
12.89
12.60

15.47
13.18
9.74
10.34
9.41
8.73
8.29

2.96
3.00
3.51
3.89
4.19
4.27
4.33

96.68
93.88
94.01
99.07
99.11
96.51
93.28

7.55
6.32
4.09
3.59
4.24
4.28
4.27

9.70
10.07
7.29
5.99
6.38
6.26
6.03

8.24
5.04
4.74
5.07

9.53
5.47
6.30
4.89

10.23
-4.08
-0.63
4.44

5.77
4.46
4.62
4.38

0.63
-0.28
0.41
2.09

17.08
18.41
15.70
15.15

15.68
16.67
15.34
14.27

3.81
2.54
2.81
2.64

99.20
95.08
95.22
97.21

7.50
7.54
7.87
7.29

8.62
10.18
9.88
10.07

5.15
5.64
2.83
2.75

4.27
3.55
3.92
1.26

3.32
-2.80
3.11
0.18

4.44
4.66
5.16
4.56

2.22
-1.00
1.90
-0.77

14.18
13.56
15.13
14.05

15.36
14.39
9.37
13.90

2.75
3.00
3.44
2.84

98.18
96.61
90.30
90.42

6.74
4.84
6.64
7.05

10.70
9.52
9.67
10.40

8.23
5.64
5.81
5.27

3.78
4.25
4.78
6.71

-0.86
7.03
0.02
2.29

4.61
5.71
5.33
5.53

-0.43
4.54
1.13
2.63

13.86
10.39
7.53
11.17

10.32
5.69
11.84
11.08

2.87
3.94
3.54
3.73

91.65
95.16
94.61
94.61

5.38
5.80
3.87
1.46

8.38
8.10
7.38
5.43

0.90
3.91
5.30
6.26

5.98
5.56
5.45
5.43

4.38
3.10
6.12
5.46

5.86
5.55
5.68
5.84

2.91
1.94
4.85
6.09

8.49
12.15
13.72
13.15

10.16
12.05
9.72
9.54

4.04
3.71
3.82
3.97

97.84
99.12
99.66
99.64

2.88
3.37
3.82
4.26

5.67
5.90
6.09
6.27

6.65
6.80
6.79
6.74

5.73
5.94
6.18
6.39

5.60
5.92
6.22
6.52

6.01
6.11
6.19
6.26

6.43
6.55
6.57
6.47

13.03
13.37
12.61
12.49

9.46
9.53
9.41
9.25

4.11
4.18
4.22
4.26

99.61
99.49
99.05
98.30

4.23
4.21
4.25
4.26

6.36
6.41
6.39
6.37

6.72
6.71
6.72
6.76

6.41
6.43
6.43
6.42

6.76
6.86
6.87
6.82

6.30
6.34
6.36
6.37

6.27
6.17
6.08
5.99

13.05
12.91
12.83
12.79

8.88
8.83
8.67
8.56

4.26
4.27
4.28
4.28

97.34
97.11
96.30
95.27

4.27
4.30
4.29
4.27

6.35
6.29
6.23
6.18

6.78
6.81
6.83
6.85

6.42
6.44
6.45
6.47

6.74
6.69
6.63
6.55

6.38
6.39
6.40
6.41

5.90
5.81
5.73
5.65

12.74
12.67
12.57
12.45

8.32
8.38
8.27
8.18

4.29
4.31
4.34
4.36

94.31
93.81
93.01
91.98

4.25
4.25
4.29
4.31

6.14
6.07
6.00
5.93

REAL
SHORT-TERM
INTEREST
RATE
(Note 1)

EQUILIBRIUM
EXCHANGE
RATE PER
US DOLLAR
(RXEQUIL)

EXCHANGE
RATE PER
US
DOLLAR
(RXD)

YEARS BEGINNING Q1
2012
5.74
2013
4.05
2014
6.23
2015
4.11
2016
6.74
2017
6.73
2018
6.82
2012
I
II
III
IV
2013
I
II
III
IV
2014
I
II
III
IV
2015
I
II
III
IV
2016
I
II
III
IV
2017
I
II
III
IV
2018
I
II
III
IV

TABLE 1 SUMMARY ITEMS

Annual Percentage Changes, Unless Otherwise Specified

COPYRIGHT (C) , OXFORD ECONOMICS

INDIA

TABLE 2 SUMMARY ITEMS

TRADE
BALANCE
($ BN)

CURRENT
ACCOUNT
($ BN)

CURRENT
ACCOUNT
(% OF GDP)

(BVI$)

(BCU$)

(BCUR%)

YEARS BEGINNING Q1
2012
-192.9
2013
-150.8
2014
-133.1
2015
-146.8
2016
-155.8
2017
-170.9
2018
-189.9

-91.5
-49.2
-18.5
-30.7
-35.4
-38.1
-41.3

-5.3
-2.8
-1.0
-1.5
-1.6
-1.5
-1.5

GOVERNMENT
FINANCIAL
BALANCE
(RUPEES BN)
(GB)

-5334.2
-6015.8
-5346.1
-5472.5
-5694.8
-5655.7
-5804.5

2012
I
-46.0
-21.7
-4.8
-1287.2
II
-43.0
-16.9
-4.2
-1904.6
III
-48.8
-21.0
-5.3
-1464.4
IV
-55.0
-31.9
-7.0
-678.0
2013
I
-43.5
-18.1
-3.9
-851.9
II
-47.4
-21.8
-5.1
-2628.2
III
-29.3
-5.2
-1.3
-1492.7
IV
-30.6
-4.2
-0.9
-1043.0
2014
I
-28.8
-1.2
-0.3
82.4
II
-35.6
-7.8
-1.7
-2978.6
III
-37.3
-4.3
-0.9
-1409.7
IV
-31.4
-5.2
-1.0
-1040.3
2015
I
-38.1
-14.3
-2.8
134.2
II
-43.0
-14.8
-3.1
-2992.9
III
-37.1
0.9
0.2
-1473.2
IV
-28.6
-2.6
-0.5
-1140.6
2016
I
-39.9
-15.6
-2.7
216.1
II
-45.6
-15.7
-2.9
-3272.5
III
-39.6
2.0
0.4
-1511.9
IV
-30.7
-6.1
-1.0
-1126.5
2017
I
-43.3
-15.8
-2.5
499.7
II
-49.7
-16.2
-2.8
-3534.9
III
-43.7
3.1
0.5
-1507.1
IV
-34.2
-9.1
-1.4
-1113.4
2018
I
-48.1
-16.4
-2.4
735.5
II
-55.3
-17.7
-2.8
-3846.1
III
-48.5
3.2
0.5
-1555.8
IV
-38.0
-10.3
-1.4
-1138.1
Note 1 : REAL INTEREST RATE = Nominal interest rate (RSH) - % change in CPI

GOVERNMENT
FINANCIAL
BALANCE
(% OF GDP)
(GB*100
/GDP!)

SHORT-TERM
INTEREST
RATE
(RSH)

SPREAD
OVER US
SHORT-TERM
RATE
(RSH RSH US)

-5.8
-5.9
-4.7
-4.3
-3.9
-3.5
-3.2

9.5
9.3
9.1
8.6
8.4
8.2
7.9

9.0
9.0
8.8
8.0
6.6
5.3
4.2

-0.2
-0.8
1.8
2.6
2.0
2.0
1.9

50.8
54.6
58.6
62.3
65.4
68.2
70.5

53.5
58.6
60.9
62.1
63.6
65.7
68.5

-5.6
-8.7
-6.6
-2.8

10.3
9.8
9.1
8.7

9.8
9.3
8.7
8.4

1.7
-0.4
-0.8
-1.3

49.6
50.4
51.2
52.1

50.3
54.2
55.2
54.1

-3.4
-10.9
-6.0
-3.8

9.2
8.5
10.3
9.3

8.9
8.2
10.0
9.0

-1.5
-1.0
0.6
-1.1

53.0
54.0
55.1
56.1

54.2
55.9
62.1
62.0

0.3
-11.0
-5.2
-3.3

9.6
9.1
8.9
8.7

9.3
8.9
8.6
8.5

1.2
1.0
1.5
3.3

57.1
58.0
58.9
60.3

61.8
59.8
60.6
61.6

0.4
-10.0
-4.7
-3.3

8.6
8.6
8.5
8.5

8.3
8.2
8.0
7.4

2.9
2.7
2.5
2.2

61.1
61.9
62.7
63.5

61.8
61.9
62.2
62.5

0.6
-9.7
-4.3
-2.8

8.5
8.4
8.4
8.4

7.1
6.8
6.3
6.0

2.1
2.0
2.0
2.0

64.2
65.0
65.8
66.5

62.8
63.3
63.8
64.3

1.2
-9.3
-3.8
-2.5

8.3
8.2
8.2
8.1

5.7
5.4
5.1
4.8

2.0
2.0
2.0
1.9

67.2
67.9
68.5
69.1

64.8
65.3
66.0
66.8

1.6
-9.0
-3.5
-2.3

8.0
8.0
7.9
7.8

4.5
4.2
4.1
4.0

1.9
1.9
1.9
1.9

69.7
70.2
70.8
71.2

67.5
68.2
68.9
69.6

COPYRIGHT (C) , OXFORD ECONOMICS

Economist: Nida Ali | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10 Dec
2014

India

Long-Term Forecast for India

Annual percentage changes unless otherwise specified

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

GDP
Consumption
Investment
Government Consumption
Exports of Goods and Services
Imports of Goods and Services
Unemployment (%)

2004-2013
7.6
7.1
10.3
6.7
15.5
13.8
6.7

9.3
7.5
15.2
7.9
13.8
17.8
6.1

7.7
10.1
11.5
6.2
20.8
18.2
5.8

4.8
5.7
2.4
7.6
8.3
11.6
5.6

4.7
4.0
1.0
4.4
5.3
-1.0
5.6

5.3
6.2
2.0
6.3
6.3
1.7
5.6

5.7
4.1
4.8
2.7
6.7
5.2
5.5

6.1
6.7
6.1
6.7
6.6
5.8
5.5

6.3
6.7
6.8
6.7
5.8
6.7
5.5

6.4
6.8
6.7
6.2
5.5
6.6
5.5

6.4
6.9
6.3
5.8
5.4
6.8
5.5

6.3
6.8
6.1
5.4
5.2
6.9
5.5

6.2
6.6
6.0
5.3
5.0
7.0
5.5

6.1
6.3
6.1
5.4
5.5
7.2
5.5

5.9
6.0
5.9
5.5
6.1
6.6
5.5

6.1
6.3
5.7
5.6
5.8
6.0
5.5

Consumer Prices
Current Balance (% of GDP)
Exchange Rate (per $)
General Government Balance (% of GDP)
Short-term Interest Rates (%)
Working Population
Labour Supply
Participation Ratio (%)
Labour productivity
Employment

7.7
-2.3
47.2
-5.1
7.8
1.9
1.7
53.6
5.5
2.0

10.3
-3.6
45.7
-4.0
6.3
1.8
1.6
53.4
7.2
2.0

9.6
-3.6
46.7
-7.2
9.5
1.8
1.6
53.3
5.6
1.9

9.7
-5.4
53.5
-5.8
9.5
1.7
1.6
53.2
3.0
1.8

10.1
-2.8
58.6
-5.9
9.3
1.7
1.6
53.1
3.0
1.6

7.3
-1.0
60.9
-4.7
9.1
1.6
1.7
53.1
3.5
1.7

6.0
-1.5
62.1
-4.3
8.6
1.5
1.8
53.1
3.9
1.8

6.4
-1.6
63.6
-3.9
8.4
1.5
1.9
53.2
4.2
1.9

6.3
-1.5
65.7
-3.5
8.2
1.4
2.0
53.4
4.3
2.0

6.0
-1.5
68.5
-3.2
7.9
1.4
2.0
53.7
4.3
2.0

5.7
-1.1
70.9
-2.8
7.7
1.3
1.9
54.1
4.4
1.9

5.3
-1.1
72.4
-2.5
7.5
1.2
1.8
54.4
4.4
1.8

5.0
-1.1
74.0
-2.5
7.4
1.2
1.7
54.7
4.4
1.7

4.6
-1.2
75.9
-2.6
7.4
1.1
1.6
55.0
4.4
1.7

4.2
-1.2
78.2
-2.7
7.3
1.1
1.5
55.3
4.3
1.6

5.7
-1.3
69.2
-3.3
8.0
1.3
1.8
54.0
4.2
1.8

0.1

1.0

1.4

0.0

-1.6

-2.4

-2.6

-2.7

-2.7

-2.5

-2.2

-1.9

-1.4

-1.0

-0.6

-2.0

Output gap (% of potential GDP)

Economist: Nida Ali, Economist | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

2023 2014-2023

10 Dec
2014

India

Key Facts
Politics
Chief of state: President Pranab MUKHERJEE
Head of government: Prime Minister Narendra MODI
Political system: Federal republic
Date of next presidential election: July 2017
Date of next legislative election: 2019
Currency: Indian rupee (INR)

Long-term economic & social development

1980 1990
GDP per capita (US$)
271
376
Inflation (%)
11.4
9.0
Population (mn)
699
869
Urban population (% of total)
23.1
25.6
Life expectancy (years)
55.4
58.5
Source : Oxford Economics & World Bank

Structure of GDP by output

Agriculture
Industry
Services
Source : World Bank

2000
457
4.0
1044
27.7
62.2

2013*
1499
10.1
1254
32.0
66.2

* 2013 or latest
available year

2013
18.2%
24.8%
57.0%

Source : CIA Factbook

Location : Southern Asia, bordering the Arabian Sea and the Bay
of Bengal, between Burma and Pakistan (CIA Factbook)

Long-term sovereign credit ratings & outlook

Fitch
Moody's
S&P

Foreign currency
BBB- (Stable)
Baa3 (Stable)
BBB- (Stable)

Corruption perceptions index 2013

Local currency
BBB- (Stable)
Baa3 (Stable)
BBB- (Stable)

Developed economies (average)

Emerging economies (average)
India
Emerging Asia

Score
74.5
37.3
36.0
34.7

Source: Transparency International

Scoring system 100 = highly clean, 0 = highly corrupt

Structural economic indicators

Current account (US$ billion)
Trade balance (US$ billion)
FDI (US$ billion)

1990
-7.4
-5.6
0.2

1995
-5.9
-4.1
2.0

2000
-4.9
-9.2
3.1

2013*
-49.2
-150.8
26.4

Debt service (US$ billion)

Debt service (% of exports)
External debt (% of GDP)

8.1
34.9
26.2

13.6
34.4
26.0

11.0
17.5
21.2

39.4
8.5
23.5

Oil production (000 bpd)

Oil consumption (000 bpd)

660
1168

703
1575

646
2127

772
3622

Source : Oxford Economics / World Bank / EIA

Composition of goods & services exports,

2013
Fuels and
mining
products
17.3%

Manufactures
40.3%

Other goods
exports
0.1%

Agricultural
products
10.2%

Transportation
3.7%

Destination of goods' exports (2013)

European Union (28)
United States
United Arab Emirates
China
Singapore
Source : WTO

16.7%
12.5%
10.1%
4.9%
4.2%

Other
commercial
services
24.6%

Travel
4.0%

Source : WTO

Economist: Nida Ali, Economist | Tel: +44 207 803 1423 | e-mail: nali@oxfordeconomics.com

10