India's economy strengthened in February, but external weakness remains a worry, shows Mint tracker
- India's economic performance in February has significantly improved from six months earlier, Mint's monthly macro tracker shows.
The Indian economy's performance showed some improvement in February as compared with the previous month, showed the 16-high frequency indicators tracked by Mint in its monthly macro tracker.
The recovery was led mainly by tractor sales and Purchasing Managers’ Index (PMI). However, the external sector continued to show weakness, with more trouble likely after US President Donald Trump last week unleashed a tariff war with more than 60 countries, including India.
The number of indicators in red on Mint's tracker was five, the same as January. Three indicators were in amber, down from five the previous month.
For each indicator, the value in each month is assigned a colour coding (red, amber and green) to denote where it lies relative to the five-year average (red denotes worse, amber denotes it is in line with the average range, and green denotes better).
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India's external sector continued to remain weak with three of the four indicators—import cover, currency and labour-intensive exports—staying in the red.
Trade balance moved from red to the green zone, showing some signs of improvement in February.
The ease of living segment—comprising retail and core inflation, real rural wages growth and labour force participation rate—maintained its strong performance, with all its constituents in the green since November.
Compared with six months ago, the performance of the Indian economy has significantly improved, with the number of sectors in the red zone decreasing from eight to five, and those in the green zone rising from six to eight.
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Mint's macro tracker, which provides a monthly comprehensive report on the state of the economy, is based on trends in 16 high-frequency indicators. The tracker has been running since October 2018.
Methodology note: While calculating the five-year average, data for some indicators for April-May 2020 and April-May 2021 have been removed to eliminate lockdown-induced skews in the trend. However, the five-year averages may still show high figures due to sustained base effect in several indicators in 2021 and 2022.
Monthly standings will get updated retrospectively as more data comes in.
For inflation, the red/green coding is reversed.
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