Debt Market Update
- India’s retail inflation (CPI) eased to an 18-month low of 4.77% in April 2023 (5.66% in March 2023). CPI remained within the tolerance range of the RBI for the second consecutive month. The consumer food price index (CFPI) eased to 3.84% in April 2023, as against 4.79% in March 2023, playing a pivotal role in taming CPI. Rural inflation in April 2023 stood at 4.68% and urban inflation came at 4.85%.
- Wholesale Price Index inflation (WPI) declined to a 30-month low of -0.92% in April 2023 (1.34% in March 2023) with sustained moderation in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical products, rubber and plastic products and paper products. This is the 11th straight month of decline in WPI-based inflation.
- India GDP over the January-March 2023 quarter of FY23 accelerated to 6.1%. GDP expanded to 7.2% over the entire FY23, doing significantly better than estimates. Fourth quarter GDP numbers took experts by surprise mainly on the production side, with agriculture performing better than expected, with backing from exports, contributed by volume growth and weakening of rupee. Better control of oil import expenses has seen a decline in the balance of payments, giving a leg up to GDP growth. Services growth (trade, hotels and financial services) was another factor. While government expenditure towards capital formation continues to be high (8.9%) and left an impact on GDP growth, waning private consumption expenditure (2.8%) continues to remain a concern.
- India’s industrial output, as measured by the IIP, in March 2023 fell to a 5-month low of 1.1% (5.6% in March 2023) owing to tepid manufacturing and power performance. The previous lowest level of growth was recorded in October 2022 at a contraction of 4.1%. The manufacturing sector’s output grew 0.5% in March 2023 as against 1.4% a year ago. Power generation declined by 1.6% in March 2023 against a growth of 6.1% a year ago. Mining output rose by 6.8% compared to a growth of 3.9% a year ago.
- The production of eight infrastructure (core) sectors registered a growth of 3.5% in April 2023 (3.6% in March 2023), the slowest in six months. The contraction was due to a decline in the output of crude oil, natural gas, refinery products, and electricity.
- India’s Goods and Services Tax (GST) collections surged to an all-time high in April 2023 to Rs 1.87 lakh crore. This is a 12% increase over the previous month and a 21% increase year-on-year. In addition to the obvious factor that is the financial year-end surge, the government has attributed enhanced GST revenues to the growing economy and increasing compliance by taxpayers.
