Is Modi fudging India's GDP figures? Here's Wall Street Journal:
India registered 7% growth between April and June on Monday,
making it one of the world’s fastest-growing economies, according to official data.
But other key indicators of economic vitality aren’t as positive.
The Wall Street Journal made with Datawrapper
Vehicle sales last quarter didn’t show the kind of growth you would expect from an economy expanding at a rate of more than 7% per year. Car, truck and two-wheeler sales are good indicators of consumers, corporate and farmer sentiment respectively. Overall vehicles sales barely budged last quarter, rising just 1% to 4.89 million vehicles. Passenger vehicle sales were up 6.17%, commercial vehicle sales were up 3.55% and two-wheeler sales were up just 0.64%.
Indian officials had hoped for a pick-up in overseas demand for Indian-made products as Western economies gathered momentum. But the country’s exports have fallen for eight months in a row through July, underscoring continued stress in global economies.
In the year ended March 31, India’s exports totaled $310.5 billion, falling about 9% short of the $340 billion target. In the first four months of the current fiscal year things haven’t improved: goods exports have recorded a 15% decline–compared with the same period last year–to $89.83 billion. China’s move to devalue its currency has given its producers a competitive edge, damping export prospects of other economies, including India. In addition, the sharp drop in global crude oil prices, while good for India’s import bill, has come as a major downer for Indian petroleum product exports, which make up a big chunk of the South Asian economy’s total shipments.
The Indian currency hit a near two-year low against the dollar last week in the midst of the global selloff and was among the worst performing currencies in Asia. Fear among investors that the slowdown in China could cause a global slump was the main drag on the Indian currency. Analysts say the depreciation in the rupee is necessary to keep India’s exports competitive. They expect some more weakness later this year, depending on the U.S. Federal Reserve’s decision on lending rates. Foreign investors became big sellers in the Indian debt market in August, putting pressure on the rupee as they took dollars out of the local market.
The benchmark Sensex index was one of the top-performing indexes last year, but so far this year it has failed to shine. Since mid-2014, investors bought stocks on hopes that the economy would rise faster and boost profits. But that outcome has been elusive and analysts have started cutting their Sensex targets. Ambit Capital now sees the Sensex falling to 28,000 points, down from its earlier target of 32,000. If the Chinese devalue the yuan again, the Indian stock market could fall further.
Profits at big companies have barely budged since Prime Minister Narendra Modi came to power in India last year. The chart above shows the percentage growth of profits of companies in the benchmark Sensex index compared to a year earlier.
According to a Bank of America Merrill Lynch report, the profits of Sensex companies rose by only 1% during the April through June quarter, compared with 24% growth in the same period a year earlier.
Utilities and cement companies have dragged the average earnings growth as big private sector and government projects remained stuck waiting for government approvals. Metal and refining companies suffered due to the decline in oil and commodity prices.
5 Indicators That Contradict India’s GDP Figures - India Real Time - WSJ