The chart shows the huge slowdown in non-oil imports. This metric is supposed to be a proxy for economic growth and, therefore, shows the extent of the slowdown, although gold imports will have to be winnowed out to arrive at a clearer picture. Nevertheless, the magnitude of the deceleration is significant.
Also Read | Chart of the day (PDF)
The question is whether the deceleration continues in October, because the HSBC Purchasing Managers’ Index (PMI), which is seasonally adjusted, shows an uptick for that month. Because it is seasonally adjusted, the effect of pre-Diwali stocking up has probably been filtered out. Also interesting is the fact that the PMI output and input price sub-indices continued to show robust expansion in October, indicating that price pressures are far from having been contained. Note that China’s PMI for October also shows a rebound and commodity prices have rallied from the lows in early October. In sum, while the Reserve Bank of India is considering a halt to further rate increases, the data so far shows that it needs to remain extremely vigilant.
PDF by Yogesh Kumar/Mint