India's Economic Activity Slows Marginally; Watchful On Rural Recovery: Nirmal Bang

Nirmal Bang Report

Economic indicators slowed somewhat in the second fortnight of February 2023, which may be partially attributed to lower number of working days. Urban unemployment eased marginally to 8% while rural unemployment moderated to 7.3% from 7.6% in the previous fortnight.

Vehicle registrations slowed from the previous fortnight, but remained above the average run-rate. Retail sales of vehicles increased by 16% YoY in Feb-23, according to the Federation of Automobile Dealers Association. The association said this growth was driven by strong wedding season demand, softening in chip shortages and new launches by automakers ahead of the festive season.

Power generation slowed from the previous fortnight, but was up by 9% YoY in Feb-23. Bank credit growth slowed at the margin to 16.1% YoY, but remained healthy. Air traffic growth moderated from the previous fortnight, but was above the average run-rate.

Rail freight and rail passenger traffic moderated below the average run-rate as was the case with the use of credit cards at point of sales and E-commerce platforms.

Toll collections and UPI payments moderated but remained above the average run-rate. Foreign Portfolio Investors sold Indian equities worth ~$0.6 billion even as India VIX eased.

Domestic Institutional Investors pumped in $1.4 billion into equities. Anecdotal evidence suggests mixed trends in inflation although raw material prices have largely eased. There are also some signs of rural consumption recovering, but we remain watchful about weather trends.

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