Debt Market Update


Debt Market Update

  • India’s retail inflation eased to 5.02% in September 2023 (6.83% in August 2023), owing to a sharp drop in vegetable prices. Even as headline inflation has crawled back in the central bank's tolerance range of 2-6%, it has now completed four full years in being above the mid-range target of 4%.
  • Wholesale inflation remained in the negative territory for the sixth straight month in September at -0.26% on easing prices of food items, especially vegetables. Inflation in food articles eased to 3.35% in September 2023, after lingering in double digits over the previous two months. It was 10.60% in August 2023.
  • India's industrial output (IIP) expanded by 10.3% in August 2023 (5.7% in July 2023). The latest IIP growth figure is the highest in 14 months. Industrial growth in August 2023 benefited from an improvement in the output of all three sectors - manufacturing, mining and electricity.
  • The gross GST revenue collections for October 2023 is Rs 1.72 lakh crore (Rs 1.63 lakh crore in September 2023). This is the eighth month running that the monthly GST collection has exceeded the Rs 1.5-lakh-crore mark.
  • India's exports declined by 2.6% to USD34.5bn in September 2023 vis-à-vis USD35.4bn in September 2022. Overall imports also slumped by 15% YoY to USD53.8bn in September 2023 against September 2022. With this, trade deficit stood at USD19.4bn in September 2023 vis-à-vis USD24.2bn in August 2023. Since the start of FY24, exports contracted by 8.8% to USD211.4bn.
  • The combined index of eight core Industries cooled off in October 2023 to 8.1% (8.3% in September 2023). This is the lowest level in four months. Performance of the key (core) infrastructure industries is way lower than August's 14-month high of 12.5% (revised). Over April-September 2023, growth in core sector output is 7.8% vis-à-vis 9.8% in the first half of 2022-23. Pickup in rainfall impacted the core sector expansion in September 2023. The drop in core sector growth in September 2023 was owing to sluggish output of the cement industry, its lowest in six months. In fact, all but one of the eight industries (i.e. fertilizer) posted a decline in output growth numbers YoY.
  • India’s fiscal deficit in 1HFY24 stood at ~39.3% of FY24BE as compared to ~36.2% in the similar period last year. Gross tax revenue in 1HFY24 was ~48% of FY2024E (16% higher than 1HFY23) and net tax revenue was 50% of FY2024E (15% Higher), while expenditure in 1HFY24 was at 47% of FY2024E.

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