(23 May 2022) Government Data Roundup: Report on Management of Foreign Exchange Reserves, CPI, WPI are among the data released recently

In the third & latest edition of the ‘Government Data Roundup’, we cover RBI’s report on management of foreign exchange reserves, Third Advance estimates for production of Major crops, latest PLFS quarterly bulletin, CPI & WPI reports, IIP reports, RBI’s monthly bulletin.

The third edition of the fortnightly government data roundup covers report of RBI on foreign exchange reserves, the State of Inequality in India report, the periodic labour force survey Quarterly bulletin, advance estimates of food grain production, Consumer Price Index, Wholesale Price Index, and Index of industrial production.

In addition to the above reports, two releases by the Government during the last fortnight are of prime importance. The first release by the Government is by the Ministry of Youth and Affairs and Sports. It invited comments for the new draft National Youth Policy 2021. For a country with a significant young demographic, this draft National Youth Policy (NYP) assumes importance in unlocking the potential of the youth and ensure their overall development. For more information on the draft NYP, Factly’s review on draft NYP can be read here.

The second important release by the government is the launch of National Data and Analytics Platform (NDAP) by NITI Aayog. The primary objective of the platform is to democratize the access to the public data by making it interoperable, available, interactive, and accessible to common public. All the data sets hosted on this platform are converted to a standard format, making it easier for cross-sectoral analysis and dataset merging. This enables for an easier analysis and visualization of the data.

Brief about the report/data:

This half-yearly review report presents a detailed picture of the country’s overall foreign exchange reserves. It is a go-to document to find all the related information about the movement of foreign exchange reserves. Foreign exchange reserves are categorized into Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDR), and Reserve Tranche Position (RTP) in International Monetary Fund (IMF).

This report also contains the objectives of Reserve Management, the associated legal framework, risk management practices and Transparency and disclosure.

Key Highlights:

• Foreign Exchange Reserves decreased to USD 607.31 billion in March 2022, from its earlier quantum of USD 635.36 billion in September 2021.
• This decline is majorly due to the decline in the foreign currency assets, which reduced from USD 573.6 billion in September 2021 to USD 540.7 billion in March 2022.
• On balance of payments basis (i.e., excluding valuation effects), foreign exchange reserves increased by US$ 63.5 billion during April-December 2021 as compared with US$ 83.9 billion during April-December 2020.
• The primary source of variation to foreign exchange reserves is due to valuation change (appreciation/depreciation of USD against major currencies), which amounted to loss of USD 6.9 billion during April-December 2021 as against gain of USD 24.1 billion during April-December 2020.
• India’s international Investment Position show that the external liabilities are more than external assets, during 2020 & 2021. While the external assets grew by USD 73.8 billion, the external liabilities also grew by USD 86.5 billion between December 2020 to December 2021.
• The foreign exchange reserves cover of imports (on BoP basis), which gives the number of months of imports that could be covered by the reserves, declined to 13.1 months in December-2021 from 14.6 in September-2021.

Brief about the report:

This report aims to comprehensively study the state of inequality in India. The report is divided into two thematic parts each dealing with distinct aspects of inequality. The first part deals with the economic facets and the second part deals with the socio-economic manifestations. Both combinedly look at five key areas that influence inequality – health, education, income distribution, labour market dynamics, and household characteristics.

One important aspect of this report is that it acknowledges the intersectionality of class, gender, and region, in studying the impacts of inequality on the society.

Key Highlights:

• The report underlines the improvement in the education and household conditions, owing to targeted interventions in the form of social protection schemes.
• It expresses concern about the low health coverage, high out-of-pocket expenditures, and malnutrition, and calls for its urgent attention by the states.
• To understand the capital flow through income distribution, the report stresses that wealth concentration as a measure of inequality does not sufficiently reveal the dynamics of purchasing power of the households.
• The report calls for raising the minimum income level and ideation of universal basic income as a measure to overcome the growing income gap, thereby ensuring equity.
• The report acknowledges the need for an urban equivalent of MNREGA to absorb the surplus-labour and ensure their rehabilitation.
• It calls for allocation of more expenditure to social services schemes, equitable access to education, and encourages exercises like the Ease of Living Index, Numeracy Index etc., to study the level of vulnerability among the households and make them more resilient.
• Most importantly, the reportstresses the importance of measuring mobility in and out of poverty. To enable this, it recommends the creation of air-tight income slabs for class-based distinctions. This also ensures that each section of class-based groups get their due share.

Brief about the study:

The agriculture crop year extends from July to June, where different activities relating to production takes place. The actual estimates of production and yield are available only after the final harvest. However, to take policy decisions regarding import and exports, pricing, marketing, and distribution etc., an advance estimate of production is done, and released at five different time-periods during the crop year.

Key highlights:

• Record production of food grains in the country, at 314.51 million tonnes, is estimated, which is higher than the previous year 2020-21’s production by 3.17 million tonnes.
• The estimated production for 2021-22 is 23.80 million tonnes higher than the average food grain production for last five years, from 2016-17 to 2020-21.
• The third advance estimates indicate a shortfall in the production of wheat, cotton, Jute, and cereals than the target. However, the production of total food grains, total pulses, sugarcane, and oilseeds is estimated to exceed the target.

Significance:

• These estimates provide a broad outlook about the nature and characteristics of the cropping year.
• It provides the governments with adequate time to initiate policy actions depending on the nature of the estimates.
• The difference between the targeted production and the estimates gives an insight about the different aspects that contributed to the shortfall/gain, thereby indicating policy actions for future.

Brief about the Survey:

• The survey underlines the importance of availability of the labour force data at regular intervals of time. This is a quarterly bulletin for the period October-December 2021.
• It measures the employment and unemployment indicators in interval of three months in urban areas in current week status (CWS). Labour force as per CWS means the average number of employed or unemployed people in the seven days leading up to the survey date.
• It provides an estimation of employment and unemployment indicators in both current week status as well as usual status (principal status + subsidiary status) in both urban and rural areas. The usual status indicates the long-term and chronic unemployment scenario in the country.

 Key Highlights:

• The Labour Force Participation Rate (LFPR) in CWS in Urban areas for people of age 15 and above stood at 47.3%, same as for October-December 2020. However, the percentage of females has slightly reduced while it improved for males.
• The worker population ratio (WPR) in CWS in Urban areas for people of age 15 and above stood at 43.2%, which is higher than the 42.4% during the same period in the previous year. This gain is significant as the April-June 2021 WPR fell to 40.9%, during the second wave of COVID-19.
• The unemployment rate (UR) in CWS in Urban areas for people of age 15 and above, fell to 8.7% from 10.3% of the corresponding period of the previous year. As with the WPR, the UR also improved significantly from 12.6% during April-June 2021 to the present 8.7% in October-December 2021.

Brief about the index:

CPI measures the changes in the price level of goods and services that are consumed in a household. It has a fixed basket of goods and services that includes Food and Beverages; Pan, tobacco, and intoxicants; clothing and footwear; housing; fuel and light, and miscellaneous. Each of these categories have weights assigned to them. Along with this, the Consumer Food Price Index (CFPI) is also measured, which is the change in prices of food products consumed by the population. The base year had been changed from 2010 to 2012, from 2015 onwards and the data is collected from 1181 village markets and 1114 urban markets across the country. It is a Laspeyre’s index, which is calculated as, CPI – (Total cost of fixed basket of goods and services in a particular period*100)/ (Total cost of fixed basket of goods & services in base period)

Key Highlights:

• The final CPI combined (Rural+ Urban) general rate stood at 6.95% for March-2022, while April-2022’s provisional combined stood at 7.79%. This marks a huge increase from the April-2021’s combined rate of 4.23%.
• The combined CFPI for March-2022 stood at 7.68%, while the provisional CFPI for April-2022 stood at 8.38%. This shows a significant rise from the March-2021’s figure of 1.96%.

Significance of the report:

• The continuous breaching of the upper tolerance level of inflation targets shows a worrisome picture of the Indian economy. In fact, the previous time inflation stood below 4% was before pandemic in 2019. This upward trend has ripple effects on other aspects of the economy.
• CPI covers fixed basket of goods & services that cover all aspects an average Indian household consumes. Therefore, it gives an indication about the cost of living and the currency’s value. The rising level of CPI indicates a growing burden on pockets of common people.
• Rising CPI indicates the loss of purchasing power of the currency. If this constant rise in CPI is unchecked and becomes uncontrollable, it could become a destructive force in the economy.

Brief about the index:

It is the average change in the prices of wholesale commodities. The index basket comprises of three categories – Primary Articles (117 items, 22.62% of total weight), fuel and power (16 items, 13.15% of total weight) and manufactured products (564 items, 64.23% of total weight). The weights accorded to each category is based on value of production adjusted for net imports. The base year for this index is 2011-12. It is important to note that WPI does not include services. It focuses on the prices of goods that are traded between the organizations and not with the goods bought by consumers. WPI is also known as ‘headline inflation rate’ in India.

Key Highlights:

• The provisional inflation for April-2022 stood at 15.08%, marking a huge increase from that of April-2021’s 10.74%.
• The inflation rate based on food price index rose from 8.71% in March 2022 to 8.88% in April 2022.
• Among the categories, index for fuel and Power group increased by 2.79%, followed by Primary Articles (2.70%), and the Manufacturing products (1.69%).
• The upward trend in WPI marks the thirteenth consecutive month when the index is in two-digit figure. This is a record spike, a 17-year high in the WPI inflation rate. 
• The sweeping heatwave across India is said to be the driver behind the increase in the prices of perishable food products.

Significance of the index:

• This index gives an estimation of inflation at a wholesale level, providing an insight about the prevailing macroeconomic conditions in the country.
• Investors tend to rely on WPI for their business and investment decisions. WPI affects the fixed price markets as well as stock markets. It reflects the conditions of demand and supply in the market.

Brief about the report:

This index measures the changes in the level of industrial production in the economy. It indicates the mood of the industrial activity in the country. The base year for this index is 2011-12, and it is assigned a value of 100. While the annual survey of industries gives a complete and detailed picture about the industrial activity, this index gives the short-term analysis regarding the industrial performance. The data for this index is sourced from 14 different agencies like the Indian Bureau of mines, coffee board, tea board, central electricity authority and so on.

For the purpose of this index, industrial production is categorized into three sectors – Mining (14.2%), Manufacturing (75.5%), and Electricity (10.3%). The values in the brackets denote their relative weights. Alternatively, there is also a ‘use-based’ classification of goods – primary goods (34.05%), capital goods (8.22%), intermediate goods (17.22%), infrastructure goods (12.34%), consumer durables (12.84%), and consumer non-durables (15.33%).

Key highlights:

• The IIP for March 2021-22 stands at 148.3, which was 145.6 during March 2020-21. Among the sectors, electricity topped with score of 191.0, followed by manufacturing and mining at 144.6.
• According to the use-based classification, primary goods stood at 153.3, capital goods at 110.0, intermediate goods at 154.8, and infrastructure goods at 170.5. The indices for consumer non-durables stood at 149.3 and that of consumer durables was at 128.8.
• Majority of the goods have shown improvement over the March 2020-21 values, with consumer durables and non-durables registering a decline.

Significance:

• Stronger IIP indicates the growing demand and recovery of the economy.

Brief about the report:

The Reserve Bank of India publishes its Bulletin every month. This bulletin usually consists of the speeches of the RBI Governor and Deputy Governors, along with the Monitory Policy Statement for the fiscal year, articles about issues that impact Indian economy, and the latest statistics regarding the micro and macro-economic indicators of Indian economy.

Key highlights of the bulletin:

• Among the speeches, RBI’s Deputy Governor M. Rajeshwar Rao talks about the resolution of stressed assets and Insolvency and Bankruptcy Code (IBC), 2016. He stressed about expanding the coverage of IBC to include pre-pack resolutions, and the idea of Group resolutions. He further highlights the need to minimize the delays in the admissions of insolvency proceedings and reduce the average time between default and filing of subsequent insolvency resolution, for a more strengthened IBC.
• On the state of Indian economy, the bulletin points out that most of the constituents of Indian economy surpassed their pre-pandemic levels, indicating a consolidated recovery. It also acknowledges the challenges to the Indian economy by the changing geo-political conditions like the Ukraine-Russia war, elevated inflation levels across the nations, and the volatility of financial markets. This section comprehensively captures the Indian economic scenario from multiple perspectives like the exports & imports, aggregate supply & demand, employment & unemployment, cargo traffic, toll collections, E-way bill generations, etc.,
• On the financial stocks and flow of funds in the Indian economy, the report identifies that the households and financial corporations remained net lenders in 2019-20. Households prefer currency and deposits as their investment avenues. While there is a decline in the dependency on foreign resources as compared to the corresponding period of the previous year, the net borrowings of the government rose.
• The report seeks to establish a relationship between external debt and GDP growth and identifies the optimal threshold external debt to GDP ratio, to be between 23-24%. This is above the current 20% and indicates a room for more debt flows of around USD 90 billion.
• The report establishes that the availability and cost of power, coupled with the depth of ground water plays an important role in determining the irrigation efficiency. It stresses particularly on the lower tariffs of electricity to the farm sector in amplifying the existing irrigation imbalances. It calls for a redesign of the irrigation policies, to include technological interventions and minimize the inter-state imbalances in the irrigation efficiencies.