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Indian Long Leading Index Up

Relax, there's promise of a better tomorrow

The ECRI Indian Leading Index, a harbinger of Indian economic recessions and recoveries, edged up to 170.5 in August 2002 from 169.6 in the previous month, but its growth rate slipped to 11.8% in August from 12.4%.

However, with the growth rate still fairly healthy, the Indian economy is likely to continue to recover in the coming months. Thus, against the backdrop of robust macroeconomic fundamentals such as soft interest rates, benign inflation and a comfortable external scenario, the outlook continues to look bright.

The growth rate of the ECRI Coincident Index, a gauge of the current pulse of the economy, hovered around the July level of 5.3% in August, up from 2.4% in June.

The external sector also continues to be buoyant with exports growing at 13.5% in the first half (April-September) of the current fiscal, in step with growth in imports at 8.5% during the same period. This is in line with the earlier strength in [ECRI's] Indian Exports Leading Index that comprises leading indexes of India's major trading partners, signalling improvement in the external outlook.

The global outlook hinges on growth prospects in the US, where in the wake of the 2001 recession, GDP has already risen by 3.25% in the past four quarters.

While a new recession cannot yet be ruled out, the latest data suggests that the US economy is veering away from the new-recession track, which may be supportive of a global recovery next year.