RBI Bulletin - Jan 17, 2025

JANUARY 2025 VOLUME LXXIX NUMBER 1Chair Michael Debabrata Patra Editorial Committee Muneesh Kapur Ajit R. Joshi Rekha Misra Praggya Das Sunil Kumar Snehal Herwadkar Pankaj Kumar V. Dhanya Shweta Kumari Anirban Sanyal Sujata Kundu Editor G. V. Nadhanael The Reserve Bank of India Bulletin is issued monthly by the Department of Economic and Policy Research, Reserve Bank of India, under the direction of the Editorial Committee. The Central Board of the Bank is not responsible for interpretation and opinions expressed. In the case of signed articles, the responsibility is that of the author. © Reserve Bank of India 2025 All rights reserved. Reproduction is permitted provided an acknowledgment of the source is made. For subscription to Bulletin, please refer to Section ‘Recent Publications’ The Reserve Bank of India Bulletin can be accessed at https://bulletin.rbi.org.inCONTENTS Articles State of the Economy 1 Measuring Monetary Policy Communication: The Indian Experience 45 Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience 61 A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 75 Geopolitical Risk and Trade and Capital Flows to India 89 Financial Stocks and Flow of Funds of the Indian Economy 2022-23 101 Fiscal-Inflation Nexus: Is there a Feedback Loop? 113 Current Statistics 125 Recent Publications 179 Supplements Report on Trend and Progress of Banking in India 2023-24 Financial Stability Report, December 2024ARTICLES State of the Economy Measuring Monetary Policy Communication: The Indian Experience Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 Geopolitical Risk and Trade and Capital Flows to India Financial Stocks and Flow of Funds of the Indian Economy 2022-23 Fiscal-Inflation Nexus: Is there a Feedback Loop?State of the Economy ARTICLE State of the Economy* also for lenders who are facing the highest levels of write-offs in 14 years. Together with technological advancements, these developments could lift incomes The economic outlook for 2025 is divergent across and boost aggregate demand. The battle against countries with some loss of speed in the US; weak to modest inflation is, however, entering a new phase with fresh recoveries in Europe and Japan; more moderate growth upside threats on the horizon – the weaponisation of profiles in emerging and developing countries alongside uncertainty - and the future path of interest rates is a more gradual disinflation relative to advanced becoming hazy. economies. In India, there is a conducive quickening On the other hand, lack of fiscal space and the of high frequency indicators of economic activity in the enormous debt overhang could clearly keep borrowing second half of 2024-25, bearing out the implicit pick up costs high as developments in the first half of January in real GDP growth for this period in the annual first 2025 revealed. This could dent investment in new advance estimates of the NSO. Headline inflation eased capacities even as supply conditions remain hostage for the second successive month in December, although the to geopolitical disruptions that seem to be unending stickiness in food inflation warrants careful monitoring of (a separate article in this volume of the Bulletin second order effects. examines geopolitical risks and spillovers). Introduction Slowing productivity growth, ageing pressures and grappling with green transition continue to tilt down The world turns a page and looks to the promises the balance of risks over the medium-term for the that 2025 holds, but perhaps through the humbling global economy. A stark carryover from 2024 is going to lens of the experiences of an eventful 2024. It is the be the increasing divergence across countries – some season of forecasting again, and the United Nations loss of speed in the US; weak to modest recoveries in (UN) has been first off the block with a ‘stable but Europe and Japan; more moderate growth profiles in subdued’ outlook for global growth – broadly in emerging and developing countries alongside a more line with the outcome for 2023 and the most recent gradual disinflation relative to advanced economies. estimates for 2024 (please see Section II). Another contending carryover will be the degree Disinflation can be expected to continue of disruption in the global financial architecture. unevenly, opening up some more albeit limited Labour market conditions remain resilient, but youth space for monetary policy easing. This would bring unemployment poses a challenge, especially among welcome relief for households and individuals whose developing countries. On the climate front, record finances and spending power has been severely sea temperatures are scrambling weather patterns stretched as they reel under credit card defaults, and globally. Besides the naturally occurring El Nino and La Nina in the Pacific Ocean, the warming of tropical * This article has been prepared by Michael Debabrata Patra, G. V. Nadhanael, oceans around the world needs to be taken into Arpita Agarwal, Shreya Kansal, Bajrangi Lal Gupta, Yamini Jhamb, Harendra Behera, Indrajit Roy, Sapna Goel, Arjit Shivhare, Radhika Singh, Prashant consideration in climate modelling and forecasting. Kumar, Sakshi Chauhan, Akash Raj, Debapriya Saha, Amar Josh Dungdung, Shreya Bhan, Subhradip Paul, Suganthi D, Pratibha Kedia, Khushi Sinha, Weather patterns in 2025 are expected to be out of Supriyo Mondal, Yuvraj Kashyap, Sonal Yadav, Ashish Khobragade, Amit sync with the anticipated La Nina that should set Pawar, Shreya Gupta, Asish Thomas George, Samir Ranjan Behera, Vineet Kumar Srivastava, and Rekha Misra. Views expressed in this article are in during the early months of the year. Hence, sea those of the authors and do not represent the views of the Reserve Bank of India. surface temperatures could decline below the La Nina RBI Bulletin January 2025 1ARTICLE State of the Economy threshold, given neutral El Nino Southern Oscillation a technical resistance level of 110 for the DXY. As (ENSO) and Indian Ocean Dipole (IOD) conditions. All it rallies to go beyond, more pain lies in store for in all, the global economy is shaping up to be anything other currencies. The Chinese yuan has tumbled but ordinary in 2025.1 to a 14-month low, providing the other end of the tightrope that emerging market currencies have to Global trade is expected to improve, with volume teeter on. The euro’s losses are being accelerated by expansion somewhat higher in 2025 than in the year technical factors, and US dollar-euro parity is looking gone by, although the persistence of geopolitical more plausible than ever before. Perhaps, the only risks and the looming threats of a more protectionist place that can dethrone the US dollar is the US itself environment overcast these expectations with high from self-inflicted wounds. uncertainty. The prospects for financial flows are risk- Global corporate debt sales have soared to a laden, with the outlook for foreign direct investment record US $8 trillion on demand from investors (FDI) still subdued and with portfolio flows displaying to take advantage of the compression in spreads. ‘home bias’ and high volatility. In some developing A steady stream of issuances is expected through countries, domestic drivers are keeping fixed capital 2025, with analysts looking at significant, large scale formation from sagging under the weight of the global mergers and acquisitions financed by debt. In another retrenchment of portfolio flows. development, the phenomenon of private markets The response to the better than anticipated signs dominating financial activity is drawing worldwide of strength in the US labour market in December attention.2 Estimated as growing by close to 20 that was released on January 10 may have brought per cent from a size of US$ 13 trillion in mid-2023, relief to households and businesses, but it has rattled these markets are seen as offering better exposure to financial markets worldwide with persisting effects – innovation. Yet, private markets depend substantially bond markets across the US, Europe and Asia were hit on the ability to free-ride on the transparency of by volatility, with the biggest sell-off in the UK. The information and prices in public markets. The possibility of the shutting out or slowing of further opacity of private markets, illiquid nature of loans monetary policy easing sent bond yields to 12-month and potential maturity mismatches could also lead highs, serving as a reminder that borrowing costs will to a misallocation of resources – in fact, much of punish the most highly indebted governments. Stocks the impetus to these markets stems from stricter traded lower after outperforming through 2024. Ahead regulatory requirements on capital and liquidity for of the US non-farm payrolls global spillovers, the US banks. Hence, it is believed that private funds pose a dollar had halted briefly on the path of its unrelenting potential systemic risk to the broader financial system rise that has been undermining currencies across the because of their interrelationship with the regulated world. The trigger was the possibility of a watering segments. The International Monetary Fund (IMF) down of sweeping tariffs threatened on the campaign has argued that there could be inherent deterioration trail. Following the jobs data, however, the US dollar in pricing and non-pricing standards, erosion in pared losses and regained strength on its march to underwriting standards and weakened covenants – 1 “An extraordinary global economy will require extraordinary agility”, 2 It includes venture capital, private equity, private debt, infrastructure, Financial Times, December 3, 2024. commodities and real estate. 2 RBI Bulletin January 2025State of the Economy ARTICLE the recipe for the next financial crisis.3 This is echoed Headline inflation eased for the second successive by the Organization for Economic Co-operation and month in December, driven by winter easing of prices Development (OECD) which fears that in the event when the earth offers up a rich bounty of fruits and of a severe shock, a rapid loss of confidence could vegetables. Despite the sequential easing, the level of food inflation continues to remain high, with trigger margin calls on derivatives used by private select key products experiencing high double digits credit funds, adding further to liquidity pressures inflation.5 The stickiness in high food inflation, in from redemptions, carrying risks that distressed an environment of firming rural wages and corporate funds default with losses for end-investors. Many salary outgoes, warrants careful monitoring of second liquidity management tools by private credit funds order effects. have yet to be fully tested in severe scenarios. Close monitoring is hence needed, given significant data The time is apposite to rekindle the animal spirits, gaps about the sector and its often limited prudential create mass consumer demand and trigger a boom in investment. There is a conducive quickening of high or conduct oversight. Greater transparency in frequency indicators of economic activity in the second regulatory reporting would close data opacities and half of 2024-25, bearing out the implicit pick up in real enable better assessment of and management of risks GDP growth for this period in the annual first advance by end-investors.4 estimates of the NSO. There are early indications that The first advance estimates for 2024-25 released corporate India may post a much better revenue and by the National Statistics Office (NSO) on January earnings growth in the third quarter vis-à-vis that in 7 confirmed that India continues to be the fastest the first half of 2024-25. According to estimates by growing major economy, although gross domestic various brokerages, the combined net profit of Nifty product (GDP) growth has moderated to 6.4 per cent 50 companies may grow at its fastest rate in three from three consecutive years of above 7 per cent quarters. Banking, finance and insurance companies growth. This slowdown reflects the effect of a host of are again expected to report better earnings. It is also unfavourable factors in H1:2024-25, such as the impact believed that unlisted companies are likely to outpace of localised excess rainfall on non-farm activity. Private their listed counterparts with faster revenue growth. capex is yet to show visible signs of pick-up and with Private final consumption is the brightening spot growth in general government capital expenditure in the economy, driven by e-commerce and q-commerce moderating too, gross fixed investment in GDP and among which it is important to foster competition manufacturing in gross value added (GVA) emerged rather than being restrictive. One way to revive the as the biggest drags on growth. With agriculture and animal spirts may be to provide a consumption boost. allied activities turning in a reasonable performance The demand for household staples has seen a modest on the back of a record kharif harvest, and with higher rise in the October-December quarter. The middle rabi sowing, the fortunes of the rural economy have class is pinning hopes on relief from food inflation improved. and hence higher disposable incomes, especially the urban segment. The rural segment is likely to continue 3 IMF (2024), “The Last Mile: Financial Vulnerabilities and Risks”, Global Financial Stability Report, Chapter 2, International Monetary Fund, https:// www.imf.org/en/Publications/GFSR/Issues/2024/04/16/global-financial- 5 Inflation (y-o-y) in vegetables, and edible oils and fats prices was 26.6 stability-report-april-2024#Chapters. per cent and 14.6 per cent, respectively, which together contributed to 61 4 The rise of private credit markets: A threat to financial stability?, per cent of the CPI food inflation of 7.7 per cent. Ecoscope, OECD, December 16, 2024. RBI Bulletin January 2025 3ARTICLE State of the Economy to record strong volume growth. In the housing space, stability in a greener, cleaner 2025, putting behind us the mid-income segment and premiumisation are 2024, the warmest year in India since record keeping fuelling demand and leading to overall improvement began. It is in our hands. The time to act is now. in market health metrics – another growth gear. Set against this backdrop, the remainder of the An area where animal spirits in India are alive article is structured into four sections. Section II and well is green energy. India’s ambitious green bond covers the rapidly evolving developments in the global programme reflects a commitment to mobilise green economy. An assessment of domestic macroeconomic capital in a larger vision of positioning India as a global conditions is set out in Section III. Section IV climate leader. The renewable energy sector will cross encapsulates financial conditions in India, while the milestones in 2025. Solar power capacity will go past last Section sets out concluding remarks. the 100 gigawatt (GW) mark. Wind power capacity II. Global Setting will exceed 50 GW. India’s nuclear power generation is growing twice as fast as the rest of the world on At the close of 2024 and going into 2025 the global the trajectory of tripling capacity by 2031-32 from the economy is being driven by a strong US economy, current level of 8180 MW. Till December 2024, the offsetting the weak Euro area and China. The easing total renewable energy capacity in India – wind; solar; of global inflation is turning out to be uneven; along hybrid; biomass; small hydro; and nuclear – stood at with trade policy uncertainty and geopolitical risks. 209.4 GW. The ethanol blending target of 20 per cent Considerable uncertainty is being imparted to the blending 10.16 bn/ltr for 2025-26 is within reach, global economic outlook. Our model-based nowcast having averaged 14.6 per cent so far. of global GDP indicates an acceleration in global With all these positives, India can look forward growth momentum in Q4:2024 in spite of formidable to accelerating growth in an environment of price headwinds (Chart II.1). Chart II.1: Global GDP Growth Nowcast (Q-o-Q) Sources: CEIC; OECD; and RBI staff estimates. 4 RBI Bulletin January 2025 tnec reP 2.5 2.0 1.5 0.9 0.8 1.0 0.5 0.5 0.6 0.0 0.4 -0.5 47 Countries OECD+ actual 46 Countries OECD+ actual 72 Countries CEIC nowcast 72 Countries CEIC actual 1202-3Q 1202-4Q 2202-1Q 2202-2Q 2202-3Q 2202-4Q 3202-1Q 3202-2Q 3202-3Q 3202-4Q 4202-1Q 4202-2Q 4202-3Q 4202-4QState of the Economy ARTICLE Global supply chain pressures recorded an among EMEs, they tightened in China and Brazil uptick in December, inching towards historical (Chart II.3c and II.3d). average levels (Chart II.2a). Our geopolitical risk The global composite purchasing managers’ indicator recorded a 29-month high in December, index (PMI) rose to a four-month high in December. driven by escalating tensions in the Middle East An acceleration in services sector activity particularly (Chart II.2b). Shipping costs, which had moderated in financial, business and consumer services offset during August - October 2024, have started rising the weakness in manufacturing on account of the again since November 2024, albeit a slight decline in fall in production of intermediate and investment mid-December 2024 (Chart II.2c). goods (Chart II.4a). Across regions, solid expansions in India and the US contrasted with the contraction Consumer sentiments improved in the US and in the Euro area (Chart II.4b). the UK, but worsened in Japan, the Euro area and in EMEs in December 2024 (Chart II.3a and II.3b). The composite PMI for export orders declined Financial conditions generally eased in AEs but further in December 2024. It has remained in Chart II.2: Trends in Global Supply Chain Pressures and Geopolitical Risks a. Global Supply Chain Pressure Index (GSCPI) Notes: 1. GSCPI reflects data on transportation costs and manufacturing indicators. 2. The WCI assessed weekly by Drewry reports actual spot container freight rates for major east west trade routes. The composite represents a weighted average of the 8 shipping routes by volume and is reported in USD per 40-foot container. Sources: Federal Reserve Bank of New York; BlackRock Investment Institute, December 2024; and Bloomberg. RBI Bulletin January 2025 5 morf snoitaived dradnatS eulav egareva 0.5 0.0 -0.2 -0.5 -1.0 -1.5 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD b. Geopolitical Risk Indicator xednI 0.6 0.5 0.5 0.4 0.3 0.2 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD c. Drewry World Container Index (WCI) reniatnoc teef 04 rep $ SU 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 32-yaM-9 32-nuJ-9 32-luJ-9 32-guA-9 32-peS-9 32-tcO-9 32-voN-9 32-ceD-9 42-naJ-9 42-beF-9 42-raM-9 42-rpA-9 42-yaM-9 42-nuJ-9 42-luJ-9 42-guA-9 42-peS-9 42-tcO-9 42-voN-9 42-ceD-9 52-naJ-9ARTICLE State of the Economy Chart II.3: Consumer Sentiment and Financial Conditions a. Consumer Sentiments (AEs) b. Consumer Sentiments (EMEs) contractionary territory since June 2024, with both a sequential decline (Chart II.5). manufacturing and services export orders recording 6 RBI Bulletin January 2025 xednI xednI xednI c. Financial Conditions Index (AEs) d. Financial Conditions Index (EMEs) xednI xednI 100 0 90 -5 -10 80 -15 70 -20 60 -25 50 -30 -35 40 -40 30 -45 20 -50 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 110 105 100 95 90 85 80 75 70 US Japan Eurozone (RHS) UK (RHS) Brazil China India 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 2 1 0 -1 -2 -3 US UK Euro zone 22-tcO 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 106 104 102 100 98 96 94 China India Brazil 22-tcO 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD Notes: 1. Japan: A score above 50 indicates consumer optimism, below 50 shows lack of consumer confidence and 50 indicates neutrality. 2. Euro zone and UK: -100 indicate extreme lack of confidence, 0 denotes neutrality while 100 indicates extreme confidence. 3. India and US: Higher the index value, higher is the consumer confidence. 4. For financial condition index (pertaining to EMEs constructed by Goldman Sachs), a reading below 100 is accommodative and vice versa. As for the AEs, the index constructed by Bloomberg is a z-score where a positive value indicates accommodative/easy financial conditions and vice versa. Source: Bloomberg. Chart II.4: PMI a. Global PMI b. S&P Global Composite PMI Regional Comparisons Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa. Source: S&P Global. xednI xednI 54 53.8 52.6 52 50 49.6 48 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 60 55 50 45 Composite Manufacturing Services aidnI niapS setatS detinU dlroW dnalerI lizarB anihC aissuR napaJ modgniK detinU ailartsuA ylatI enoz oruE adanaC ynamreG ecnarF Dec-24 Nov-24State of the Economy ARTICLE measured by the Food and Agriculture Organization’s Chart II.5: Global PMI: Export Orders (FAO) food price index declined by 0.5 per cent in December, primarily driven by decline in the prices of sugar (5.1 per cent), dairy products, vegetable oil, and cereals (Chart II.6b). Crude oil prices fell by 0.8 per cent (m-o-m) in December, reflecting weak Chinese demand and rising global supplies offsetting OPEC plus efforts to shore up the market (Chart II.6c). Oil prices increased by 6.1 per cent in January so far (up to 14th), reaching a four-month high following announcement of fresh US sanctions on Russian oil and expectations of stronger economic Note: A level of 50 corresponds to no change in activity and a reading above 50 stimulus by China and higher demand from Europe denotes expansion and vice versa. Source: S&P Global. and the US due to colder weather gained momentum. Global commodity prices softened in December Metal prices softened in December, driven by amidst volatile conditions (Chart II.6a). Food prices sluggish industrial activity in China, the world’s RBI Bulletin January 2025 7 xednI 52 51 50.3 50 49 48.7 48 48.2 47 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Services Composite Manufacturing Chart II.6: Commodity and Food Prices a. Bloomberg Commodity Index b. Food Prices Sources: Bloomberg; World Bank Pink Sheet; and FAO. xednI )001=61-4102( xednI c. Brent Crude Oil d. Metals lbb /$SU )001=2202-dne( xednI 160 140 120 100 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Food price index Meat Dairy Cereals Vegetable oil Sugar 95 90 85 80 75 70 65 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 108 103 98 93 Futures as on Dec 13, 2024 Futures as on Jan 14, 2025 Price Gold Copper Iron 32-luJ-40 32-luJ-42 32-guA-31 32-peS-20 32-peS-22 32-tcO-21 32-voN-10 32-voN-12 32-ceD-11 32-ceD-13 42-naJ-02 42-beF-90 42-beF-92 42-raM-02 42-rpA-90 42-rpA-92 42-yaM-91 42-nuJ-80 42-nuJ-82 42-luJ-81 42-guA-70 42-guA-72 42-peS-61 42-tcO-60 42-tcO-62 42-voN-51 42-ceD-50 42-ceD-52 52-naJ-41 150 140 130 120 110 100 90 80 70 32-luJ-40 32-luJ-42 32-guA-31 32-peS-20 32-peS-22 32-tcO-21 32-voN-10 32-voN-12 32-ceD-11 32-ceD-13 42-naJ-02 42-beF-90 42-beF-92 42-raM-02 42-rpA-90 42-rpA-92 42-yaM-91 42-nuJ-80 42-nuJ-82 42-luJ-81 42-guA-70 42-guA-72 42-peS-61 42-tcO-60 42-tcO-62 42-voN-51 42-ceD-50 42-ceD-52 52-naJ-41ARTICLE State of the Economy largest consumer of base metals although the trend expenditure (PCE) deflator also increased to 2.4 per reversed in January, driven by China’s latest efforts cent in November from 2.3 per cent in October. In to stimulate growth. Gold prices increased in early the Euro area, headline inflation edged up to 2.4 per December, but declined thereafter as rising treasury cent in December6 from 2.2 per cent in November yields and a strengthening US dollar increased the whereas, in the UK, it moderated to 2.5 per cent in opportunity cost of gold holdings. In January so far, December from 2.6 per cent in November. Inflation gold prices have rebounded, supported by a safe- in Japan increased to 2.7 per cent in November haven and inflation hedge demand (Chart II.6d). from 2.3 per cent in October (Chart II.7a). Among Headline inflation declined over much of 2024 EMEs, CPI inflation in China weakened further to reach close to targets in most major economies. to 0.1 per cent in December, its lowest level since The pace of its decline has slowed down in recent March, and in Brazil, it moderated to 4.8 per cent. months, along with uptick in the US to 2.9 per cent Inflation, however, increased in Russia in December (y-o-y) in December from 2.7 per cent in November. and South Africa in November (Chart II.7b). Core Inflation in terms of the personal consumption inflation moderated in the US and UK in December Chart II.7: Inflation - AEs and EMEs a. Headline - AEs 4.4 4.4 4.0 1.5 Sources: Bloomberg; and OECD. 6 According to the flash estimate from Eurostat. 8 RBI Bulletin January 2025 tnec reP d. Services tnec reP 10 9 8 7 6 5 4 3 2.72.5 2.4 2 2.4 1 0 -1 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD US (PCE) UK Euro area Japan c. Core 3.2 3.2 2.7 1.7 tnec reP 7 6 5 4 3 2 1 0 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD b. Headline - EMEs US (PCE) UK Euro area Japan tnec reP 10 9 8.9 8 7 6 5.5 5 4.9 4 3 2.9 2 1 0.1 0 -1 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Brazil China India Russia South Africa 8 7 6 5 4 3 2 1 0 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD US UK Euro Area JapanState of the Economy ARTICLE but remained steady in the Euro area (Chart II.7c). market. Yields on US government securities hardened While services inflation slowed down in the US and in December, with the 10-year and 2-year bond yields UK in December, it recorded a marginal acceleration rising by 40 bps and 9 bps, respectively (Chart II.8b). in the Euro area (Chart II.7d). The increase was driven by the uptick in inflation, as well as strong labour markets in the US. Yields The Morgan Stanley Capital International (MSCI) continued to rise in January, supported by incoming world equity index fell by 2.5 per cent (m-o-m) in data indicating resilience in the US economy. December, mostly on account of declines in equity markets across AEs, particularly the US (Chart II.8a). The US dollar strengthened by 2.6 per cent The decline was primarily driven by the outcome of (m-o-m) in December as a stronger than expected US US Fed’s December FOMC meeting, in which a slower economy and higher than earlier anticipated policy than earlier indicated policy rate easing was signalled. rates by the end of 2025 boosted demand. In January The MSCI Emerging Markets Index also retracted by (up to 14th), it strengthened further by 0.7 per cent. 0.3 per cent in December as fears of potential trade Concomitantly, the MSCI currency index for EMEs tensions weighed on investor sentiment. In January, declined by around 1.2 per cent in December, mainly the MSCI World Index declined by 0.8 per cent (up to due to capital outflows in the equity segment (Chart January 14), primarily driven by decline in the US stock II.8c and II.8d). Chart II.8: Global Financial Markets a. Equity Indices (MSCI) b. US Government Bond Yields Sources: Bloomberg; and IIF. RBI Bulletin January 2025 9 )001=1202-dne enuJ( xednI tnec reP World AEs EMEs 10-year 2-year Spread (10yr-2yr) c. Currency Indices d. Portfolio Flows to EMEs xednI xednI MSCI EME currency index Dollar index (RHS) noillib$SU 130 120 110 100 90 80 70 60 Debt Equity Total 32-luJ-40 32-luJ-42 32-guA-31 32-peS-20 32-peS-22 32-tcO-21 32-voN-10 32-voN-12 32-ceD-11 32-ceD-13 42-naJ-02 42-beF-90 42-beF-92 42-raM-02 42-rpA-90 42-rpA-92 42-yaM-91 42-nuJ-80 42-nuJ-82 42-luJ-81 42-guA-70 42-guA-72 42-peS-61 42-tcO-60 42-tcO-62 42-voN-51 42-ceD-50 42-ceD-52 52-naJ-41 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 32-luJ-40 32-luJ-42 32-guA-31 32-peS-20 32-peS-22 32-tcO-21 32-voN-10 32-voN-12 32-ceD-11 32-ceD-13 42-naJ-02 42-beF-90 42-beF-92 42-raM-02 42-rpA-90 42-rpA-92 42-yaM-91 42-nuJ-80 42-nuJ-82 42-luJ-81 42-guA-70 42-guA-72 42-peS-61 42-tcO-60 42-tcO-62 42-voN-51 42-ceD-50 42-ceD-52 52-naJ-41 110 1,790 1,770 108 1,750 106 1,730 104 1,710 102 1,690 1,670 100 1,650 98 32-luJ-40 32-luJ-42 32-guA-31 32-peS-20 32-peS-22 32-tcO-21 32-voN-10 32-voN-12 32-ceD-11 32-ceD-13 42-naJ-02 42-beF-90 42-beF-92 42-raM-02 42-rpA-90 42-rpA-92 42-yaM-91 42-nuJ-80 42-nuJ-82 42-luJ-81 42-guA-70 42-guA-72 42-peS-61 42-tcO-60 42-tcO-62 42-voN-51 42-ceD-50 42-ceD-52 52-naJ-41 15 10 -6 -11 -16 32-luJ-7 32-luJ-72 32-guA-61 32-peS-5 32-peS-52 32-tcO-51 32-voN-4 32-voN-42 32-ceD-41 42-naJ-3 42-naJ-32 42-beF-21 42-raM-3 42-raM-32 42-rpA-21 42-yaM-2 42-yaM-22 42-nuJ-11 42-luJ-1 42-luJ-12 42-guA-01 42-guA-03 42-peS-91 42-tcO-9 42-tcO-92 42-voN-81 42-ceD-8 42-ceD-82 52-naJ-71 5 -1ARTICLE State of the Economy Chart II.9: Changes in Policy Rates a. AEs b. EMEs 35 0 0 0 -25 -50 -100 -75 -100 -100 -100 -25 -125 -125 -150 -200 -175 -275 -300 Source: Bloomberg. Among AE central banks, Sweden cut its policy Aggregate Demand rate in December by 25 bps whereas Israel, the Czech The first advance estimates (FAE) of national Republic, South Korea and Norway kept their policy income released on January 7, 2025 placed real GDP rates unchanged (Chart II.9a). Among EME central growth for 2024-25 at 6.4 per cent as compared with banks, Peru and Indonesia lowered their policy rates 8.2 per cent a year ago. While private and government by 25 bps each in January 2025 and Colombia, Mexico consumption expenditure hiked up, and net exports and Philippines lowered their benchmark rates by contributed positively, investment growth moderated the same magnitude in December 2024 (Chart II.9b). (Chart III.2). In fact, gross fixed capital formation III. Domestic Developments (GFCF) slowed to 6.4 per cent in 2024-25 from 9.0 per cent growth in 2023-24. A decisive factor in this Recent movements in high-frequency indicators investment slowdown was lower capital expenditure point towards a recovery in H2:2024-25 from the slowdown in H1. Supply chain pressures remained by both the Union8 and State Governments. On the below historical average levels, inspite of a marginal external front, India’s exports grew by 5.9 per cent in uptick in December (Chart III.1a). Based on the 2024-25 primarily on account of a steady growth in economic activity index (EAI)7, seasonally adjusted services exports. Imports contracted by 1.3 per cent, GDP growth nowcast for Q3:2024-25 is placed at 6.2 and enabled net exports to contribute positively to per cent (Chart III.1b and 1c). GDP growth by 1.7 percentage points. 7 The index extracts the dynamic common factor underlying 27 monthly 8 The Union Government has utilised 46.2 per cent of the budgeted indicators representing industry, services, global and miscellaneous capital expenditure during April-November 2024 as compared with 58.5 activities. per cent utilisation during the same period last year. 10 RBI Bulletin January 2025 stniop sisaB ailartsuA adanaC dnalreztiwS cilbupeR hcezC kramneD modgniK detinU learsI napaJ yawroN dnalaeZ weN aibreS nedewS setatS detinU aerA oruE 150 50 0 0 -50 -35 -50 -150 -75 -100 50 -125 -250 -200 -350 -325 -350 -450 Q1:2024 Q2:2024 Q3:2024 Q4:2024 Q1:2025 (till 15 Jan, 2025) stniop sisaB lizarB elihC anihC aibmoloC aisenodnI aidnI ocixeM aisyalaM ureP senippilihP aibarA iduaS acirfA htuoS Q1:2024 Q2:2024 Q3:2024 Q4:2024 Q1:2025(till15Jan,2025)State of the Economy ARTICLE Chart III.1: Economic Activity and GDP Growth Nowcast a. Index of Supply Chain Pressures for India Note: The economic activity index (EAI) is constructed by extracting the common trend underlying twenty-seven high frequency indicators of economic activity using a Dynamic Factor Model. EAI is scaled to 100 in February 2020 and 0 in April 2020, the worst affected month due to mobility restrictions. Sources: National Statistical Office (NSO); and RBI staff estimates. High frequency indicators suggest that aggregate on a y-o-y basis in volume terms in December demand firmed up in Q3:2024-25. E-way bills rose (Chart III.3a), and toll collections recorded strong growth both in volume and value terms (Chart III.3b). While overall automobile sales declined in December 2024, passenger vehicle sales recorded sound growth (Chart III.4a). Domestic tractor sales showed robust growth in December. Among two- wheelers, scooter sales expanded by 3.2 per cent while motorcycle sales contracted (Chart III.4b). Vehicle registrations recorded a contraction in December owing to declines in non-transport and transport vehicles segments (Chart III.4c). Petroleum consumption expanded by 2.1 per cent (y-o-y) in December, as petrol, aviation turbine fuel (ATF) and RBI Bulletin January 2025 11 egareva morf snoitaived dradnatS c. GDP Growth - Actual and Nowcast )tnec rep ni( y-o-Y xednI b. Economic Activity Index 3 2 1 0 -1 -2 -3 01-ceD 11-ceD 21-ceD 31-ceD 41-ceD 51-ceD 61-ceD 71-ceD 81-ceD 91-ceD 02-ceD 12-ceD 22-ceD 32-ceD 42-ceD 140 120 100 80 60 40 20 0 02-beF 02-rpA 02-nuJ 02-guA 02-tcO 02-ceD 12-beF 12-rpA 12-nuJ 12-guA 12-tcO 12-ceD 22-beF 22-rpA 22-nuJ 22-guA 22-tcO 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 30 20 10 6.2 0 -10 -20 -30 GDP Nowcast 81-nuJ 81-peS 81-ceD 91-raM 91-nuJ 91-peS 91-ceD 02-raM 02-nuJ 02-peS 02-ceD 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD Chart III.2: Growth Across Major Components of Real GDP Source: National Statistical Office (NSO). )tnec rep ni( y-o-Y 35 30 25 20 15 9.7 10 7.0 8.2 6.4 5 3.9 0 -5 -10 -5.8 -15 02-9102 12-0202 22-1202 32-2202 42-3202 52-4202 Private final consumption expenditure Imports Gross fixed capital formation Exports Government final consumption expenditure GDP (Y-o-Y growth, per cent)ARTICLE State of the Economy Chart III.3: E-way Bills and Toll Collections a. E-way Bills b. Toll Collections GST E-way bill inter-state E-way bills growth (RHS) GST E-way bill intra-state Sources: GSTN; and RBI. diesel recorded strong growth of 10.8 per cent, 8.7 India’s investments in renewable energy is rising per cent and 6.0 per cent, respectively9 (Chart III.4d). faster than other countries (Chart III.5). According 9 The lower growth in overall petroleum consumption can be attributed to decline in naphtha, superior kerosine oil (SKO) and other fuels. 12 RBI Bulletin January 2025 stinu noilliM y-o-y ,tnec reP )001=9102( xednI y-o-y ,tnec reP 140 35 120 30 100 25 80 20 60 15 40 10 20 5 0 0 Volume Volume growth (RHS) Value Value growth (RHS) 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 1400 50 1200 40 1000 30 800 600 20 400 10 200 0 0 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD Chart III.4: Automobile Sector Indicators a. Automobile Sales b. Rural Demand d. Petroleum Consumption noillim ni rebmuN y-o-y ,tnec reP sennot noilliM y-o-y ,tnec reP Total automobile sales Automobile sales growth (RHS) c. Vehicle Registrations sdnasuohT y-o-y ,tnec reP snoilliM sdnasuohT Motorcycle sales Three wheeler sales (RHS) Scooters Tractor sales (RHS) Source: Society of Indian Automobile Manufacturers (SIAM). Sources: SIAM; and Tractor and Mechanization Association (TMA). 3.5 45 3.0 35 2.5 25 2.0 15 1.5 5 1.0 0.5 -5 0.0 -15 Petrol Growth in average daily petroleum Non-transport vehicles Total registrations growth (RHS) Diesel consumption (RHS) Transport vehicles ATF Source: Ministry of Road Transport and Highways. Source: Petroleum Planning and Analysis Cell. 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 14 12 10 12 8 10 6 8 4 6 2 0 4 -2 2 -4 0 -6 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 2.5 160 140 2.0 120 1.5 100 80 1.0 60 40 0.5 20 0.0 0 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 3000 35 30 2500 25 2000 20 15 1500 10 1000 5 0 500 -5 0 -10 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceDState of the Economy ARTICLE reducing global emissions takes place in this decade. Chart III.5: Investment Growth in Renewable It was also agreed to secure efforts to scale up finance Power during 2019-2024 to developing countries to US$1.3 trillion annually from both public and private sources by 2035. India submitted its 4th Biennial Update Report (BUR-4) to the United Nations Framework Convention on Climate Change on 30th December 2024, emphasising initiatives such as the development of a trading mechanism for carbon credits, increased renewable energy capacity, expansion of forest and tree cover and the consequent creation of natural carbon sinks. Progress so being made towards the Nationally Determined Contributions (NDCs) target of reducing emission intensity of GDP by 45 per cent by 2030 from 2005 levels. Source: International Energy Agency. Employment in the organised manufacturing to the International Energy Agency (IEA), India’s sector expanded to a four-month high in December. annual renewable capacity additions are expected to The rate of job creation in the services sector quadruple from 15 GW in 2023 to 62 GW in 2030. witnessed a marginal moderation from a record high registered in November10 (Chart III.6). In November 2024, several policy decisions have been undertaken at COP29 held in Baku, Azerbaijan The demand for work under the Mahatma to help countries deliver their climate plans more Gandhi National Rural Employment Guarantee Act quickly and cheaply so that faster progress in (MGNREGA) rose in December 2024, in line with the 10 The survey began in 2005. RBI Bulletin January 2025 13 tnemtsevni ni esaercni egatnecreP 350 308 300 244 250 219 200 186 174 152 150 100 79 50 0 Southeast USA European Latin China Africa India Asia Union America Chart III.6: PMI Employment Indices Note: A PMI value above 50 indicates expansion. Source: S&P Global. )egnahc oN = 05( xednI 58 57 56 55.5 55 54 53.4 53 52 51 50 49 48 Manufacturing Services 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceDARTICLE State of the Economy Exports of 6 out of 30 major commodities Chart III.7: Households’ Demand for Work under MGNREGA (accounting for 35.1 per cent of export basket) 5.0 contracted on y-o-y basis in December. Petroleum 4.5 products, gems and jewellery, iron ore, chemicals, and 4.0 oil meals contributed negatively to export growth in 3.5 the month, while electronic goods, engineering goods, 3.0 rice, ready-made garments (RMG) of all textiles, and 2.5 cotton yarn/fabrics contributed positively (Chart III.9). During April-December 2024, India’s merchandise 2.0 exports expanded by 1.6 per cent to US$ 321.7 1.5 billion, primarily led by engineering goods, electronic 1.0 goods, rice, drugs and pharmaceuticals, and RMG 0.5 of all textiles, while petroleum products, gems and 0.0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar jewellery, iron ore, ceramic products and glassware, and other cereals dragged exports down. Source: Ministry of Rural Development. Exports to 9 out of 20 major destinations contracted in December. During April-December 2024, trend observed in previous years, as a significant however, exports to 14 out of 20 major destinations part of rabi sowing was completed (Chart III.7). The expanded, with the US, the UAE and the Netherlands demand for work, however, is expected to fall with being the top three export destinations. the start of rabi harvesting season. Merchandise imports at US$ 59.9 billion increased by 4.9 per cent (y-o-y) in December (Chart III.10). Out India’s merchandise exports at US$ 38.0 billion of 30 major commodities, 20 commodities (accounting contracted by 1.0 per cent (y-o-y) in December 2024 for 69.9 per cent of import basket) registered an (Chart III.8). expansion on a y-o-y basis. 14 RBI Bulletin January 2025 erorC 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Chart III.8: India's Merchandise Exports a. Trend in Exports Note: POL: Petroleum, oil and lubricants. Sources: PIB; DGCI&S; and RBI staff estimates. noillib $SU tnec rep ni htworG Non-POL Y-o-y, growth (RHS) POL M-o-m, growth (RHS) tnec reP b. Decomposition of Sequential Change in Export Growth (y-o-y) 45 40 40 30 35 30 20 25 10 20 15 0 10 -10 5 0 -20 Base effect ∆ in y-o-y growth Momentum 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 25 20 15 10 5 0 -5 -10 -15 -20 -25 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceDState of the Economy ARTICLE Chart III.9: India's Merchandise Exports – Chart III.11: India's Merchandise Imports – Relative Contribution Relative Contribution (December 2024 over December 2023) (December 2024 over December 2023) Petroleum products Gold Gems and jewellery Electronic goods Iron ore Machinery, electrical and non-electrical Organic and Metaliferrous ores and inorganic chemicals other minerals Oil meals Petroleum, crude and products Cotton yarn/ Transport equipment fabrics etc. RMG of all textiles Artificial resins, plastic materials, etc. Rice Iron and steel Engineering goods Pearls, precious and semi-precious stones Electronic goods Coal, coke and briquettes, etc. -6 -4 -2 0 2 4 -4 -2 0 2 4 Percentage point Percentage points Sources: PIB; and RBI staff estimates. Sources: PIB; and RBI staff estimates. Gold, electronic goods, machinery, metalliferous by 5.2 per cent (y-o-y), mainly led by POL, electronic ores and other minerals, and POL contributed goods, gold, machinery, and non-ferrous metals, while positively to import growth, while coal, coke and coal, coke and briquettes, pearls, precious and semi- briquettes, pearl, precious and semi-precious stones, precious stones, chemical material and products, iron iron and steel, artificial resins and plastic materials, and steel, and fertilisers contributed negatively. and transport equipment contributed negatively Imports from 14 out of 20 major source countries (Chart III.11). During April-December 2024, India’s expanded in December, while imports from 13 major merchandise imports at US$ 532.5 billion increased countries expanded during April-December 2024. Chart III.10: India's Merchandise Imports a. Trend in Imports b. Decomposition of Sequential Change in Import Growth (y-o-y) RBI Bulletin January 2025 15 noillib $SU tnec reP Non-POL non-gold Y-o-y, growth (RHS) Gold M-o-m, growth (RHS) POL Base effect Momentum ∆ in y-o-y growth Sources: PIB; DGCI&S; and RBI staff estimates. tnec rep ni htworG 80 60 70 50 60 40 50 30 40 20 30 10 20 0 10 -10 0 -20 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 30 20 10 0 -10 -20 -30 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceDARTICLE State of the Economy Chart III.12: Decomposition of India’s Merchandise Trade Deficit Sources: PIB; and DGCI&S. The merchandise trade deficit widened to US$ During April-December 2024, India’s merchandise 21.9 billion in December 2024 from US$ 18.8 billion in trade deficit widened to US$ 210.8 billion from US$ 189.7 billion a year ago. Petroleum products were the December 2023. Both oil and non-oil deficit widened largest source of the deficit, followed by electronic in December 2024 from the levels recorded a year goods (Chart III.13). ago (Chart III.12). With a larger increase in oil deficit, During November 2024, services exports grew by the share of oil in overall trade deficit increased to 13.9 per cent (y-o-y) to US$ 32.0 billion while services 47.2 per cent in December 2024 from 42.9 per cent a imports expanded by 26.0 per cent (y-o-y) to US$ 17.2 year ago. billion (Chart III.14). As a result, net services export 16 RBI Bulletin January 2025 noillib $SU tnec reP Oil deficit Non-oil deficit Share of oil in trade deficit (RHS) 1.8 7.01 9.6 6.9 7.8 8.01 9.01 4.4 5.9 7.9 8.11 2.01 6.9 3.11 7.8 3.41 3.5 8.22 0.8 7.11 9.31 3.01 2.21 6.91 4.01 6.11 35 80 30 70 60 25 50 20 40 15 30 10 20 5 10 0 0 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Chart III.13: Commodity-wise Merchandise Trade Deficit Note: Coal, coke and briquettes exports in December 2024 are assumed to be at the same level as in November 2024. Sources: PIB; DGCI&S; and RBI staff estimates. noillib $SU Chart III.14: Services Exports and Imports: Growth Rates 250 210.8 200 189.7 34.1 28.5 150 23.9 29.1 46.0 100 45.1 50 89.3 68.1 0 2023-24 (April-December) 2024-25 (April-December) Petroleum products Electronic goods Gold Coal, coke and briquettes Source: RBI. )y-o-y( tnec reP 35 30 25 26.0 20 15 13.9 10 5 0 -5 -10 -15 Exports Imports 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voNState of the Economy ARTICLE Chart III.15: Budgetary Deficit of Central Government during April-November a. Per cent of BE b. Absolute Size Source: CGA. earnings increased by 2.5 per cent (y-o-y) to US$ 14.8 the other hand, moderated during April-November billion during the month. 2024 (Chart III.16a). For the month of November, however, capital expenditure recorded a growth of According to the Controller General of Accounts 21.3 per cent y-o-y (Chart III.16b). Overall, the growth (CGA), the gross fiscal deficit (GFD) and revenue in total expenditure stood at 3.3 per cent during deficit [as per cent of the budget estimates (BE)] of the Central government were higher than during the April-November 2024. corresponding period of the previous year but the Gross tax revenues of the Central Government gross primary deficit remained lower (Chart III.15a grew by 10.7 per cent (y-o-y) in April-November 2024, and b). primarily driven by robust growth in income tax Revenue expenditure (RE) recorded a y-o-y (23.5 per cent), goods and services tax (GST) [9.8 per growth of 7.8 per cent in April-November 2024 in cent], and custom duties (8.7 per cent) [Chart III.17a]. comparison to 3.6 per cent during the corresponding Corporation tax, however, recorded a marginal period of the previous year. Interest payments (IP) decline of 0.5 per cent due to the subdued corporate registered a growth of 8.3 per cent vis-à-vis 11.5 per earnings. Non-tax revenue attained 78.3 per cent cent in the corresponding period of the previous of BE, attributable to the surplus transfer of ₹2.11 year. Driven by food and petroleum subsidies, the lakh crore from the Reserve Bank (Chart III.17b). On expenditure outgo on major subsidies (MS) also the other hand, non-debt capital receipts contracted recorded a growth of 15.0 per cent, in comparison to a by 5.9 per cent due to decline in recovery of loans contraction of 19.4 per cent during the corresponding (9.8 per cent) while disinvestment receipts recorded period of the previous year. Capital expenditure, on a marginal increase of 1.4 per cent. Attributable to RBI Bulletin January 2025 17 EB fo tnec reP 70 60 50 40 30 20 10 0 22-1202 32-2202 42-3202 52-4202 1200 1000 800 600 400 200 0 Gross fiscal deficit Revenue deficit Gross fiscal deficit Revenue deficit Gross primary deficit Gross primary deficit erorc dnasuoht ₹ 22-1202 32-2202 42-3202 52-4202ARTICLE State of the Economy Chart III.16: Capital Expenditure a. Ministry-wise Capital Expenditure b. Month-wise Capital Expenditure Source: CGA. 11 Assignment to States recorded an expansion of 35.0 per cent during April-November 2024 over the corresponding period of 2023-24. 18 RBI Bulletin January 2025 EB fo tnec reP erorc dnasuoht ₹ )tnec rep( htworg y-o-Y 80 70 60 50 40 30 20 10 0 2023-24 2024-25 daoR fo yrtsiniM syawhgiH dna tropsnarT syawliaR fo yrtsiniM ecnaniF fo yrtsiniM ecnefeD fo yrtsiniM fo yrtsiniM snoitacinummoC gnisuoH fo yrtsiniM sriaffA nabrU dna 140 120 100 120 80 100 60 40 80 20 60 0 40 -20 -40 20 -60 0 -80 2023-24 2024-25 Y-o-y growth rate (RHS) lirpA yaM enuJ yluJ tsuguA rebmetpeS rebotcO rebmevoN higher assignments to States by the Centre11, net cumulative GST collection for April-December 2024 tax revenue recorded a marginal increase of 0.5 to ₹16.34 lakh crore (registering a growth of 9.1 per per cent during April-November 2024. Overall, the cent over April-December 2023) [Chart III.18]. total receipts expanded by 8.5 per cent over the As per provisional accounts, States’ GFD stood corresponding period of the previous year. at 47.4 per cent of the BE during April-November 2024, lower than last year’s level (Table III.1). States’ GST collections (Centre plus States) climbed revenue receipts increased by 13.3 per cent, primarily to ₹1.77 lakh crore in December 2024, taking the Chart III.17: Revenue Receipts of the Central Government during April-November a. Tax Revenue(2024-25) b. Non-Tax Revenue Source: CGA. )tnec rep( htworg y-o-Y EB fo tnec reP erorc dnasuoht ₹ EB fo tnec reP 55 70 45 60 50 35 40 25 30 15 20 5 10 -5 0 Growth rate Actuals (RHS) noitaroproC xat emocnI xat TSG smotsuC seitud esicxe noinU seitud 450 100 400 90 350 80 70 300 60 250 50 200 40 150 30 100 20 50 10 0 0 Direct tax Indirect tax 22-1202 32-2202 42-3202 52-4202 Actuals Per cent of BE (RHS)State of the Economy ARTICLE Chart III.18: GST Collection Table III.1: States’ Fiscal Indicators 250 (April-November) (per cent of BE) Deficit Indicators 2022-23 2023-24 2024-25 200 Revenue deficit 21.5 125.9 71.8 Gross fiscal deficit 37.4 55.5 47.4 150 Primary deficit 19.1 56.3 37.3 Note: Data pertains to 23 States. BE: Budget Estimates. Source: Comptroller and Auditor General of India. 100 50 0 Sources: Press Information Bureau (PIB); and GST Portal. driven by higher tax revenues, even as non-tax revenue and grants contracted (Chart III.19a). The growth in tax revenue can be attributed to higher devolution from the Centre, growth in States’ GST and excise collections, and a turnaround in sales tax/value added tax (VAT). On the expenditure side, growth in revenue expenditure picked up RBI Bulletin January 2025 19 erorc dnasuoht ₹ 32 rpA 32 yaM 32 nuJ 32 luJ 32 guA 32 peS 32 tcO 32 voN 32 ceD 42 naJ 42 beF 42 raM 42 rpA 42 yaM 42 nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Chart III.19: Key Fiscal Performance Indicators (April-November) a. Growth in Receipts b. Growth in Expenditure )tnec rep ni( etar htworg y-o-Y )tnec rep ni( etar htworg y-o-Y during April-November 2024, while capital expenditure remained lower than last year’s level (Chart III.19b). Aggregate Supply Aggregate supply, measured by real GVA at basic prices, grew by 6.4 per cent in 2024-25, lower than 7.2 per cent in the preceding year. While agriculture and services remained resilient, industrial sector disappointed (Chart III.20). The growth in agriculture, forestry and fishing increased to 3.8 per cent in 2024-25 from 1.4 per cent a year ago, owing to a higher kharif foodgrains production and rabi sowing. Industrial GVA growth 40 45 40 38.4 30 27.5 22.9 21.4 20.5 35 18.5 20 13.3 30 11.0 10 5.2 5.3 25 20 0 14.1 14.9 15 12.8 12.1 -10 -3.4 9.6 9.1 9.1 10 -20 -13.2 5 0 -30 -29.1 -5 -3.7 -40 -10 Revenue Tax revenues Non-tax Grants Total Revenue Capital receipts revenues expenditure expenditure expenditure 2022-23 2023-24 2024-25 2022-23 2023-24 2024-25 Note: Data pertains to 23 States. Source: Comptroller and Auditor General of India.ARTICLE State of the Economy Chart III.20: Weighted Contribution to GVA Growth Sources: NSO; and RBI staff estimates. 20 RBI Bulletin January 2025 stniop egatnecreP (PADO) remained buoyant, aided by expenditure by the Union and the State Governments as well as 12 resilience in other services activity, such as education 9.4 10 and health. 8 6.7 6.4 The Northeast monsoon (NEM) season (October 6 7.2 3.9 01-December 31, 2024) ended with a total rainfall 4 3 per cent below the long period average (LPA) as 2 compared with 9 per cent below LPA last year. The 0 Southern peninsula region received above normal -2 -4 rainfall (16 per cent above LPA) while all other -4.1 -6 regions received rainfall lower than LPA. Also, the 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 number of sub-divisions receiving deficient/large Agriculture Industry deficient rainfall was higher in 2024 than a year ago GVA (Y-o-Y Growth, per cent) Services (Chart III.21a). subsided to 5.2 per cent, with manufacturing As of January 09, 2025, the all-India reservoir slackening to 5.3 per cent in 2024-25. Increases level (based on 155 major reservoirs) was at 71 per in input cost pressures and weakening of sales cent of total reservoir capacity, which was higher growth weighed on profitability. Growth in mining than in the previous year (57 per cent) as well as the decadal average (59 per cent) [Chart III.21b]. The total and quarrying activity decelerated to 2.9 per cent rabi sown area was 0.1 per cent higher than the level growth due to a contraction in production of crude a year ago as of January 10, 2025.12 Acreage among oil along with a moderation in coal and natural gas all major crop groups, except oilseeds, was higher production. Growth in electricity, gas water supply than the previous year’s levels. The area sown under and other utility services moderated to 6.8 per cent wheat, which accounts for around half of the full growth in 2024-25 as the demand was dampened by season rabi area, was 1.4 per cent higher than in the heavy rainfall and relatively warmer winter along previous year, with more than 100 per cent of sowing with slowdown in industrial activity. Services sector accomplished (Chart III.21c). Measures have been growth remained resilient at 7.4 per cent in 2024- taken by the government to augment wheat supply 25. Construction GVA growth remained upbeat at 8.6 this year.13 per cent but with a moderation over the high base As of January 13, 2025 the cumulative rice of last year. Reflecting the slowdown in domestic procurement for the kharif marketing season cargo traffic and commercial vehicle sales, trade, hotels, transport, and communication services 12 Based on the data released by Ministry of Agriculture and Farmers’ growth moderated to 5.8 per cent from 6.4 per cent Welfare, sowing at 632.3 lakh hectares covered 99.5 per cent of full season normal area as on January 10, 2025. in the preceding year. Financial, real estate and 13 On November 28, 2024, the Government of India announced the professional services softened to 7.3 per cent in 2024- sale of 2.5 million tonnes of wheat through e-auctions under the Open Market Sale Scheme (OMSS) till March. Further, on December 11, 2024, the 25. Public administration, defence and other services Government revised down the stock limit for wheat stocking.State of the Economy ARTICLE a. Cumulative NEM Season Rainfall (October 01- December 31) b. Reservoir Level (As on January 09) Source: India Meteorological Department (IMD). Source: Central Water Commission. c. Weekly Sowing Progress (As on January 10, 2025) 111.3 2.6 102.4 99.6 100.2 99.5 1.4 0.5 0.3 0.1 52.6 -4.9 Source: Ministry of Agriculture and Farmers’ Welfare. RBI Bulletin January 2025 21 snoisivid-buS fo .oN tnec reP level riovreser lluf fo tnec reP tnec reP Chart III.21: Outlook for Season 20 90 81 18 18 78 00 67 74 73 71 16 14 14 60 59 57 14 12 11 50 42 40 10 8 7 8 30 20 6 10 4 0 2 0 0 0 Excess/Large Normal Deficient/Large No rain excess deficient 2023 2024 Last 10 years average 2024 2025 2024-25 (so far) as percentage of full season Normal area Y-o-Y Growth (RHS) nrehtroN nretsaE nretseW lartneC nrehtuoS aidnI llA 120 3 2 100 1 80 0 -1 60 -2 40 -3 -4 20 -5 0 -6 Wheat Rice Pulses Coarse cereals Oilseeds Total crops (KMS) 2024-25 was 1.2 per cent higher than in the corresponding period of the previous year (Chart III.22). The buffer stock of rice at 610 lakh tonnes14 Chart III.22: Procurement and Stocks at the Central Public Distribution System stood at 8.0 times the norm as on January 1, 2025. 700 The wheat stock stood at 184 lakh tonnes, which is 600 marginally higher than the buffer norm. 500 India’s manufacturing PMI experienced a 400 sequential moderation but stayed in expansionary 300 territory in December, supported by external 200 demand (Chart III.23a). The services PMI continued 100 to record robust expansion, driven by strong demand 0 and new business growth (Chart III.23b). Business KMS 2023-24 KMS 2024-25 RMS 2023-24 RMS 2024-25 Rice Wheat expectations for both manufacturing and services Note: *: As on January 13; #: As on January 01. Source: Food Corporation of India. sennot hkaL remained optimistic, as indicated by future output assessments. 610.0 516.5 372.1 376.6 262.0 266.1 184.1 163.5 Procurement* Stock# 14 including unmilled paddy equivalent.ARTICLE State of the Economy Port traffic increased by 3.4 per cent in December 2024, driven by containerised cargo, other miscellaneous cargo, and petroleum, oil and lubricants (POL) [Chart III.24]. In the construction sector, steel consumption growth moderated to 3.3 per cent (y-o-y) in Chart III.24: Port Cargo 100 80 60 40 20 0 -20 -40 Total Raw fertiliser Thermal coal POL Containerised cargo Other miscellaneous cargo Source: Indian Ports Association. 22 RBI Bulletin January 2025 stniop egatnecreP 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Chart III.25: Steel Consumption and Cement Production Steel consumption Cement production growth (RHS) Cement production Steel consumption growth (RHS) Sources: Joint Plant Committee; Office of the Economic Adviser; and Ministry of Commerce and Industry. sennot noilliM y-o-y ,tnec reP 45 25 40 20 35 15 30 25 10 20 5 15 0 10 -5 5 0 -10 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Chart III.23: Purchasing Managers’ Index (PMI) a. Manufacturing b. Services egnahc oN = 05 egnahc oN = 05 70 65 62.5 60 56.4 55 50 45 PMI Future output PMI Future activity Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa. Source: S&P Global. 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 70 65 64.2 59.3 60 55 50 45 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD December. Cement production grew by 13.0 per cent in November (Chart III.25). Available high frequency indicators reflect resilient services sector activity in November/ December, with most indicators showing improvement in y-o-y growth (Table III.2).State of the Economy ARTICLE Table III.2: High Frequency Indicators- Services (y-o-y, per cent) Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Sector Indicator 23 23 24 24 24 24 24 24 24 24 24 24 24 24 Urban demand Passenger Vehicles Sales 4.2 3.2 13.9 9.5 8.9 1.2 4.3 4.9 -2.0 -1.6 -0.4 1.1 4.4 11.4 Two-Wheeler Sales 31.3 16.0 26.2 34.6 15.3 30.8 10.1 21.3 12.5 9.3 15.8 14.2 -1.1 -8.8 Rural demand Three-Wheeler Sales 31.7 30.6 9.5 8.3 4.3 14.5 14.4 12.3 5.1 8.0 6.7 -0.7 -1.3 3.5 Tractor Sales 6.4 -19.8 -15.3 -30.6 -23.1 -3.0 0.0 3.6 1.6 -5.8 3.7 22.4 -1.3 14.0 Commercial Vehicles Sales 3.2 -3.8 3.5 -11.0 Railway Freight Traffic 4.3 6.4 6.4 10.1 8.6 1.4 3.7 10.1 4.5 0.0 Port Cargo Traffic 16.9 0.6 3.2 2.1 2.7 1.3 3.8 6.8 5.9 6.7 5.8 -3.4 -4.9 3.4 Domestic Air Cargo Traffic 9.0 8.7 10.0 11.5 8.7 0.3 10.3 10.3 8.8 0.6 14.0 8.9 0.3 International Air Cargo Traffic 4.9 12.2 19.3 30.2 22.5 16.2 19.2 19.6 24.4 20.7 20.5 18.4 16.1 Domestic Air Passenger Traffic * 8.7 8.1 5.0 5.8 4.7 3.8 5.9 6.9 7.6 6.7 7.4 9.6 13.8 10.9 Trade, hotels, transport, International Air Passenger Traffic * 19.8 18.1 17.0 19.3 15.0 16.8 19.6 11.3 8.8 11.1 11.2 10.3 10.7 8.6 communication GST E-way Bills (Total) 8.5 13.2 16.4 18.9 13.9 14.5 17.0 16.3 19.2 12.9 18.5 16.9 16.3 17.6 GST E-way Bills (Intra State) 22.7 14.2 17.9 21.1 15.8 17.3 18.9 16.4 19.0 13.1 19.0 18.3 5.4 17.9 GST E-way Bills (Inter State) -16.2 11.4 13.8 15.0 10.7 9.6 13.6 16.3 19.6 12.5 17.7 14.4 44.1 17.1 Hotel occupancy -8.6 1.6 2.6 1.8 2.7 -1.4 -2.6 -3.1 3.6 0.7 2.1 -5.3 Average revenue per room 15.9 12.8 11.0 7.8 6.7 4.8 1.8 2.8 7.6 5.2 3.5 4.8 Tourist Arrivals 16.8 7.8 10.4 15.8 8.0 7.7 0.3 9.0 -1.3 -4.2 Steel Consumption 14.6 12.6 11.5 7.0 12.5 9.6 15.9 19.5 14.4 10.0 11.8 8.9 9.5 3.3 Construction Cement Production -4.8 3.8 4.1 7.8 10.6 0.2 -0.6 1.8 5.1 -2.5 7.2 3.1 13.0 PMI Index# Services 56.9 59.0 61.8 60.6 61.2 60.8 60.2 60.5 60.3 60.9 57.7 58.5 58.4 59.3 << Contraction ------------------------------------- Expansion >> Note: #: Data in levels. *: December 2024 data are based on the monthly average of daily figures. The Heat-map is constructed for each indicator for the period July-2021 till date. Sources: SIAM; Ministry of Railways; Tractor and Mechanisation Association; Indian Ports Association; Office of Economic Adviser; GSTN; Airports Authority of India; HVS Anarock; Ministry of Tourism; Joint Plant Committee; and IHS Markit. Inflation month while the CPI fuel group recorded a positive Headline inflation, as measured by y-o-y changes momentum of 60 bps. The CPI core (excluding food in the all-India consumer price index (CPI)15, eased to and fuel) index remained unchanged in December. a four-month low of 5.2 per cent in December 2024 Food inflation decelerated to 7.7 per cent in from 5.5 per cent in November 2024 (Chart III.26). December from 8.2 per cent in November. In terms of The 30 basis points (bps) decline in inflation was sub-groups, a moderation in inflation was observed driven by a negative momentum of around 60 bps, in respect of cereals, milk, vegetables, pulses and which was partially offset by an adverse base effect of around 30 bps. The CPI food recorded a negative sugar, whereas inflation in respect of meat and fish, momentum of around 120 basis points during the eggs, oils and fats, fruits, prepared meals, and non- alcoholic beverages picked up. Deflation in prices of 15 As per the provisional data released by the National Statistical Office (NSO) on January 13, 2025. spices persisted (Chart III.27). RBI Bulletin January 2025 23ARTICLE State of the Economy Chart III.26: Trends and Drivers of CPI Inflation a. CPI Inflation (y-o-y) Sources: National Statistical Office (NSO); and RBI staff estimates. Fuel and light deflation narrowed to (-)1.4 per Core inflation remained steady at 3.7 per cent in cent in December from (-) 1.8 per cent in November December 2024, the same as in November. Among the on account of a lower rate of deflation in kerosene sub-groups, inflation moderated in case of housing, and LPG prices and a higher rate of inflation in transport and communication, and personal care electricity prices. and effects sub-groups; it remained steady in respect 24 RBI Bulletin January 2025 tnec reP b. Contributions Food and beverages CPI excluding food and fuel Fuel and light CPI headline (y-o-y, per cent) stniop egatnecrep ni noitubirtnoC 12 10 8 7.7 6 5.2 4 3.7 2 0 -2 -1.4 -4 -6 Food and beverages CPI excluding food and fuel Fuel and light CPI headline (y-o-y, per cent) 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 8 7 6 5 5.2 4 3 2 1 0 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD Chart III.27: Annual Inflation (y-o-y) and Momentum (m-o-m) across Sub-groups Sources: NSO; and RBI staff estimates.State of the Economy ARTICLE Chart III.28: Annual Inflation across Sub-groups (December 2024 versus November 2024) Sources: NSO; and RBI staff estimates. of clothing and footwear, household goods and In terms of regional distribution, rural inflation services, health, and education. Inflation in respect stood at 5.76 per cent higher than urban inflation of pan, tobacco and intoxicants, and recreation and (4.58 per cent) in December 2024. Majority of the amusement, however, registered an increase in states faced inflation less than 6 per cent (Chart inflation (Chart III.28). III.29). High frequency food price data for January so far Chart III.29 : Spatial Distribution of Inflation December 2024 (up to 14th) show a moderation in rice prices, while (CPI-Combined, y-o-y), (per cent) wheat prices continued to edge up. Edible oil prices continued to witness a broad-based hardening albeit at a slower pace, than a month ago. Pulses prices, on the other hand, continued to moderate. Vegetables prices, especially of potato, onion and tomato witnessed a sharp correction (Chart III.30). Retail selling prices of petrol, diesel and LPG remained unchanged in January thus far (up to 14th) while subsidised kerosene prices decreased (Table III.3). <4 4-6 6-8 8-10 As per the PMIs, input costs across both Note: Map is for illustrative purposes only. Sources: NSO; and RBI Staff estimates. manufacturing and services firms increased at RBI Bulletin January 2025 25ARTICLE State of the Economy Chart III.30: DCA Essential Commodity Prices Sources: Department of Consumer Affairs, GoI; and RBI staff estimates. a slower pace in December after a sharp rise in IV. Financial Conditions November. Selling price pressures also moderated System liquidity turned into deficit since mid- across manufacturing and services firms in December December due to build-up in government cash balances (Chart III.31). driven by the usual quarter-end advance tax outflows Table III.3: Petroleum Products Prices Item Unit Domestic Prices Month-over-month (per cent) Jan-24 Dec-24 Jan-25^ Dec-24 Jan-25^ Petrol ₹/litre 102.92 101.02 101.02 0.0 0.0 Diesel ₹/litre 92.72 90.48 90.48 0.0 0.0 Kerosene (subsidised) ₹/litre 50.50 44.75 43.93 1.8 -1.8 LPG (non-subsidised) ₹/cylinder 913.25 813.25 813.25 0.0 0.0 Notes: 1. ^: For the period January 1-14, 2025. 2. Other than kerosene, prices represent the average Indian Oil Corporation Limited (IOCL) prices in four major metros (Delhi, Kolkata, Mumbai and Chennai). For kerosene, prices denote the average of the subsidised prices in Kolkata, Mumbai and Chennai. Sources: IOCL; Petroleum Planning and Analysis Cell (PPAC); and RBI staff estimates. 26 RBI Bulletin January 2025 margolik rep ₹ a. Cereals b. Pulses margolik rep ₹ c. Vegetables d. Edible Oils (packed) margolik rep ₹ Urad dal Tur/ Arhar dal Moong dal Rice Wheat Masoor dal Gram dal Potato Onion Tomato (RHS) Groundnut oil Mustard oil Sunflower oil margolik rep ₹ margolik rep ₹ 50 45 40 35 30 25 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 190 175 160 145 130 115 100 85 70 55 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 80 160 70 140 60 120 50 100 40 80 30 60 20 40 10 20 0 0 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 200 190 180 170 160 150 140 130 120 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJState of the Economy ARTICLE Chart III.31: PMI: Input and Output Prices a. Manufacturing Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa. Source: S&P. and monthly GST payments. The culmination of the the Reserve Bank cumulatively injected ₹12.55 lakh last tranche of the unconventional monetary policy crore to the banking system via two main and sixteen measures16 announced by the Reserve Bank in 2021 fine-tuning variable rate repo (VRR) operations of 1-7 to address COVID-19 related disruptions resulted in days maturity during December 16, 2024 to January withdrawal of liquidity by about ₹2,530 crore from the 16, 2025. Further, on a review of current and evolving banking system. To address the liquidity tightness, liquidity conditions, it was also decided to conduct RBI Bulletin January 2025 27 )egnahc oN=05( xednI )egnahc oN=05( xednI b. Services 65 65 60 60 55 55 50 50 45 45 Input prices Output prices Input prices Prices charged 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD Chart IV.1: Liquidity Operations Daily SDF Variable rate reverse repo Net LAF MSF Variable rate repo Total absorption Source: RBI. 16 Outstanding liquidity availed by banks under (i) On Tap Targeted Long Term Repo Operation to ease access to healthcare services and infrastructure, and (ii) Special Long-Term Repo Operations (SLTRO) for small finance banks (SFBs) matured on December 26, 2024. erorc hkal ₹ 3.5 2.5 1.5 0.5 -0.5 -1.5 -2.5 -3.5 42-naJ-61 42-naJ-03 42-beF-31 42-beF-72 42-raM-21 42-raM-62 42-rpA-9 42-rpA-32 42-yaM-7 42-yaM-12 42-nuJ-4 42-nuJ-81 42-luJ-2 42-luJ-61 42-luJ-03 42-guA-31 42-guA-72 42-peS-01 42-peS-42 42-tcO-8 42-tcO-22 42-voN-5 42-voN-91 42-ceD-3 42-ceD-71 42-ceD-13 52-naJ-41ARTICLE State of the Economy VRR auctions on all working days in Mumbai with WACR over the policy repo rate averaged 20 bps during reversal taking place on the next working day until December 16 and January 14, 2025, as compared with further notice.17 10 bps during November 16 – December 15, 2024 (Chart IV.2a). Overall, the average daily net injection under the liquidity adjustment facility (LAF) stood at ₹1.55 lakh Across the term money market segment, rates crore during this period in contrast to the average remained elevated, with yields on 3-month treasury net absorption of ₹0.62 lakh crore recorded during bills (T-bills), certificates of deposit (CDs) and 3-month November 16 to December 15, 2024 (Chart IV.1). The commercial papers (CPs) issued by non-banking pick up in government spending alleviated liquidity financial companies (NBFCs) averaging 6.54 per cent, tightness towards the end of December and early 7.34 per cent and 7.67 per cent, respectively, during January. December 16, 2024 - January 14, 2025, up from 6.44 per cent, 7.18 per cent and 7.47 per cent, respectively, Despite tighter liquidity conditions, banks’ during November 16 - December 15, 2024 (Chart placement of funds under the standing deposit IV.2b). The average risk premia in the money market facility (SDF) averaged ₹0.83 lakh crore during (3-month CP minus 91-day T-bill) remained high at December 16, 2024 to January 14, 2025, same as during the previous month. The co-existence of 113 bps during the current period up from 103 bps deficit liquidity conditions and funds deployed during November 16 – December 15, 2024. in the SDF is indicative of skewed distribution of On a y-o-y basis, however, the spread of 3-month liquidity in the banking system. Furthermore, banks CPs (NBFC) over the 91-day T-bill rate stood at 118 appear to be availing liquidity from the RBI but not bps during January 2025 (up to January 14), lower onlending to money markets. Banks’ daily average than 147 bps a year ago. The spread of the 3-month recourse to the MSF at ₹0.10 lakh crore during this CD rate over the 91-day T-bill rate stood at 81 bps period included a nearly three-month high access at (up to January 14) compared to 47 bps a year ago as ₹44,652 crore on a single day (January 8, 2025). system liquidity conditions turned into deficit after The weighted average call rate (WACR) – the five months of surplus (Chart IV.2c). Although the operating target of monetary policy – hovered close spreads tend to rise during periods of deficit liquidity, to the ceiling of the LAF corridor (MSF rate) during they have declined for CPs. the second half of December and early January with The weighted average discount rate (WADR) of occasional breaches. This is partly attributed to CPs stood at 7.53 per cent in January 2025 (up to lower lending volumes in the call money market on January 14), lower than 7.67 per cent during the account of the unwillingness of banks to onlend in corresponding period of the previous year (Chart uncollateralised lending at the quarter end. In early IV.3). Also, the weighted average effective interest January, the WACR reverted closer to the policy repo rate (WAEIR) of CDs softened to 7.60 per cent (up to rate as liquidity conditions eased before firming up January 14) from 7.63 per cent a year ago as the gap again in the second week. Overall, the spread of the between credit and deposit growth narrowed. 17 The auction amount will be decided by the Reserve Bank, based on assessment of the liquidity conditions. The first such auction was conducted on January 16, 2025 for an amount of ₹50,000 crore. 28 RBI Bulletin January 2025State of the Economy ARTICLE Chart IV.2: Policy Corridor and Money Market Rates 7.4 7.2 7.0 6.8 6.6 6.4 6.2 6.0 180 4 160 3 140 2 120 1 100 0 80 -1 60 -2 40 20 -3 0 -4 Source: RBI; CCIL; and Bloomberg. In the primary market, issuances of CDs grew by December 2024, significantly higher than ₹5.61 lakh 47 per cent (y-o-y) to ₹8.22 lakh crore during April– crore in the corresponding period of the previous RBI Bulletin January 2025 29 22-peS 22-tcO 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ erorc hkal ₹ Repo rate WACR MSF SDF tnec reP tnec reP a. Policy Corridor and Call Rate b. Money Market Rates Tri-party repo Market repo 3-month T-bill 3-month CD 3-month CP (NBFC) c. Spread of 3-month CP and CD Rate over 91-day T-bill Rate stniop sisaB Net LAF (RHS) Spread of 3M CD Rate over 91 day T-bill Rate Spread of CP NBFC 3M Rate over 91 day T-bill Rate Spread of CP Non-NBFC 3M Rate over 91 day T-bill Rate 32-rpA-52 32-yaM-52 32-nuJ-42 32-luJ-42 32-guA-32 32-peS-22 32-tcO-22 32-voN-12 32-ceD-12 42-naJ-02 42-beF-91 42-raM-02 42-rpA-91 42-yaM-91 42-nuJ-81 42-luJ-81 42-guA-71 42-peS-61 42-tcO-61 42-voN-51 42-ceD-51 52-naJ-41 8.7 8.4 8.1 7.8 7.5 7.2 6.9 6.6 6.3 6.0 42-rpA-3 42-rpA-52 42-yaM-71 42-nuJ-8 42-nuJ-03 42-luJ-22 42-guA-31 42-peS-4 42-peS-62 42-tcO-81 42-voN-9 42-ceD-1 42-ceD-32 52-naJ-41 Chart IV.3: WADR and WAEIR 800 9 8 600 7 400 6 5 200 4 0 3 2 -200 1 -400 0 Note: *: up to January 14, 2025. Sources: RBI; and CCIL- FTRAC. erorc dnasuoht ₹ 12-beF 12-raM 12-rpA 12-yaM 12-nuJ 12-luJ 12-guA 12-peS 12-tcO 12-voN 12-ceD 22-naJ 22-beF 22-raM 22-rpA 22-yaM 22-nuJ 22-luJ 22-guA 22-peS 22-tcO 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD *52-naJ tnec reP Net LAF CP Issuance (Monthly) CD Issuance (Monthly) WADR (RHS) WAEIR (RHS)ARTICLE State of the Economy Chart IV.4: Certificates of Deposit (CDs) and Commercial Paper (CP) - Fortnightly Issuances Sources: RBI. year (Chart IV.4). Similarly, CP issuances stood at The yield on the 10-year G-sec benchmark ₹11.35 lakh crore during 2024–25 (up to December), increased to 6.86 per cent on January 14, 2025, from up from ₹9.96 lakh crore during the corresponding 6.77 per cent on December 13, 2024. This marginal period of the previous year. uptick was driven by a surge in US treasury yields and increasing crude oil prices (Chart IV.5a). The 30 RBI Bulletin January 2025 erorc dnasuoht₹ erorc dnasuoht₹ 90 200 80 180 160 70 140 60 120 50 100 40 80 30 60 20 40 10 20 0 0 Certificates of deposit Commercial paper (RHS) 12-guA 12-peS 12-tcO 12-voN 12-ceD 22-naJ 22-beF 22-raM 22-rpA 22-yaM 22-nuJ 22-luJ 22-guA 22-peS 22-tcO 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Chart IV.5: Developments in the G-sec Market a. Movement in 10-year G-sec Yield b. G-sec Yield Curve Source: Bloomberg; CCIL; and RBI staff estimates. tnec reP tnec reP India US (RHS) tnec reP stniop sisaB 7.3 5.5 7.2 5.0 7.1 4.5 7.0 4.0 6.9 3.5 6.8 6.7 3.0 6.6 2.5 Tenor (years) 13-12-2024 14-01-2025 Change (Jan 14, 2025 over Dec 13, 2024) (RHS) 42-yaM-7 42-yaM-52 42-nuJ-21 42-nuJ-03 42-luJ-81 42-guA-5 42-guA-32 42-peS-01 42-peS-82 42-tcO-61 42-voN-3 42-voN-12 42-ceD-9 42-ceD-72 52-naJ-41 20 7.9 18 7.7 16 14 7.5 12 7.3 10 7.1 8 6 6.9 4 6.7 2 6.5 0 1 3 5 7 9 11 31 51 71 91State of the Economy ARTICLE yield curve shifted upward across the tenor. Between tenor spectrums during December 16, 2024 - January December 16, 2024, and January 14, 2025, the average 13, 2025 (Table IV.1). term spread (10-year G-sec yield minus 91-day T-bills Reserve money (RM), excluding the first-round yield) narrowed to 27 bps (Chart IV.5b). impact of change in the cash reserve ratio (CRR), The spread of the 10-year Indian G-sec yield over recorded a growth of 7.2 per cent (y-o-y) as on January the 10-year US bond fell to 203 bps as on January 14, 10, 2025 (6.3 per cent a year ago) [Chart IV.7]. Growth 2025 from 324 bps in mid-September and 317 bps a in currency in circulation (CiC), the largest component year ago. Domestic bond yields, which had reached of RM, stood at 5.3 per cent (y-o-y) as on January 10, a three-year low in early December, increased 2025 as compared with 3.9 per cent a year ago. thereafter in line with hardening US bond yields. On the sources side (assets), net foreign assets Foreign portfolio investment (FPI) flows to (NFA) of the Reserve Bank increased by 4.9 per domestic debt instruments recorded outflows in cent (y-o-y) as on January 10, 2025. Gold – a major January 2025 (as on January 14th). The volatility of component of NFA – grew by 49.0 per cent, mainly yields in the Indian bond market remains low relative due to revaluation gains (Chart IV.8). Consequently, to US treasuries though uncertainty regarding the the share of gold in NFA increased from 8.1 per cent incoming US administration’s stance on tariffs, as at end-October 2023 to 11.2 per cent as on January tax cuts and deregulation persists on global bond 10, 2025. markets (Chart IV.6). Money supply (M ) rose by 9.3 per cent (y-o-y) 3 Corporate bonds issuances were higher at ₹6.1 as on December 27, 2024 (11.0 per cent a year lakh crore during 2024-25 (up to November) than ago).18 Aggregate deposits with banks, accounting ₹5.0 lakh crore a year ago. Corporate bond yields and for around 86 per cent of M , increased by 9.7 per 3 associated risk premia increased across ratings and cent (12.0 per cent a year ago). Scheduled commercial Chart IV.6 : Volatility and Spread-Bond Market Note: * 12-month rolling standard deviation. Sources: Bloomberg; and RBI staff calculations. RBI Bulletin January 2025 31 *noitaived dradnatS stniop sisaB 1 550 500 0.8 450 400 0.6 350 300 0.4 250 0.2 200 150 0 100 Volatility-US 10 year bond Volatility- India 10 year bond Spread of 10 year Indian G-sec over US 10 year bond (RHS) 12-rpA-1 12-rpA-82 12-yaM-52 12-nuJ-12 12-luJ-81 12-guA-41 12-peS-01 12-tcO-7 12-voN-3 12-voN-03 12-ceD-72 22-naJ-32 22-beF-91 22-raM-81 22-rpA-41 22-yaM-11 22-nuJ-7 22-luJ-4 22-luJ-13 22-guA-72 22-peS-32 22-tcO-02 22-voN-61 22-ceD-31 32-naJ-9 32-beF-5 32-raM-4 32-raM-13 32-rpA-72 32-yaM-42 32-nuJ-02 32-luJ-71 32-guA-31 32-peS-9 32-tcO-6 32-voN-2 32-voN-92 32-ceD-62 42-naJ-22 42-beF-81 42-raM-61 42-rpA-21 42-yaM-9 42-nuJ-5 42-luJ-2 42-luJ-92 42-guA-52 42-peS-12 42-tcO-81 42-voN-41 42-ceD-11 52-naJ-7 18 Excluding the impact of the merger of a non-bank with a bank (with effect from July 1, 2023).ARTICLE State of the Economy Table IV.1: Financial Markets - Rates and Spread Interest Rates (per cent) Spread (basis points) (Over Corresponding Risk-free Rate) Instrument Nov 16, 2024 – Dec 16, 2024 – Variation Nov 16, 2024 – Dec 16, 2024 – Variation Dec 15, 2024 Jan 13, 2025 Dec 15, 2024 Jan 13, 2025 1 2 3 (4 = 3-2) 5 6 (7 = 6-5) Corporate Bonds (i) AAA (1-year) 7.82 7.89 7 114 115 1 (ii) AAA (3-year) 7.68 7.75 7 88 93 5 (iii) AAA (5-year) 7.60 7.64 4 75 79 4 (iv) AA (3-year) 8.47 8.52 5 167 170 3 (v) BBB- (3-year) 12.12 12.19 7 532 536 4 Note: Yields and spreads are computed as averages for the respective periods. Sources: FIMMDA; and Bloomberg. banks’ (SCBs’) credit growth moderated to 12.4 per per cent and 18 per cent, respectively, 77 per cent of cent as on December 27, 2024 from 15.6 per cent a deposits were available with the banking system for year ago (Chart IV.9). credit expansion as on December 27, 2024. SCBs’ deposit growth (excluding the impact of In response to the 250 basis points (bps) increase the merger) stood at 10.2 per cent as on December in the policy repo rate since May 2022, banks have 27, 2024 (12.6 per cent a year ago) [Chart IV.10]. revised their repo linked external benchmark-based As on December 27, 2024 the system level lending rates (EBLRs) up by a similar magnitude. incremental credit-deposit ratio stood at 94.4 per The 1-year median marginal cost of funds-based cent (Chart IV.11). With the statutory requirements lending rate (MCLR) increased by 175 bps during for CRR and statutory liquidity ratio (SLR) at 4.25 May 2022 to December 2024. Consequently, the Chart IV.7: Growth in Reserve Money and Currency in Circulation Reserve money (CRR adjusted) Currency in circulation N ote: Latest data for reserve money pertain to January 10, 2025. Source: RBI. 32 RBI Bulletin January 2025 y-o-y ,tnec reP 12 10 8 6 4 2 0 22-nuJ-3 22-luJ-7 22-guA-01 22-peS-31 22-tcO-71 22-voN-02 22-ceD-42 32-naJ-72 32-raM-2 32-rpA-5 32-yaM-9 32-nuJ-21 32-luJ-61 32-guA-91 32-peS-22 32-tcO-62 32-voN-92 42-naJ-2 42-beF-5 42-raM-01 42-rpA-31 42-yaM-71 42-nuJ-02 42-luJ-42 42-guA-72 42-peS-03 42-voN-3 42-ceD-7 52-naJ-01 Chart IV.8: RBI's Net Foreign Exchange Assets (NFA) Growth NFA Foreign currency assets Gold (RHS) Source: RBI. y-o-y ,tnec reP y-o-y ,tnec reP 35 60 30 50 25 40 20 30 15 20 10 5 10 0 0 32-rpA-72 32-yaM-12 32-nuJ-41 32-luJ-8 32-guA-1 32-guA-52 32-peS-81 32-tcO-21 32-voN-5 32-voN-92 32-ceD-32 42-naJ-61 42-beF-9 42-raM-4 42-raM-82 42-rpA-12 42-yaM-51 42-nuJ-8 42-luJ-2 42-luJ-62 42-guA-91 42-peS-21 42-tcO-6 42-tcO-03 42-voN-32 42-ceD-71 52-naJ-01State of the Economy ARTICLE Chart IV.9: M Growth and Credit Growth of SCBs – Base Effect and Momentum 3 Source: RBI. weighted average lending rates (WALRs) on fresh and Transmission across bank groups indicates that outstanding rupee loans increased by 189 bps and the increase in the WALR on fresh rupee loans was 117 bps, respectively, during May 2022 to November higher for public sector banks (PSBs) than private 2024 (Table IV.2). On the deposit side, the weighted sector banks (PVBs). In the case of outstanding loans, average domestic term deposit rates (WADTDRs) on however, the transmission for PSBs was lower. For fresh and outstanding deposits increased by 243 bps deposits, transmission to WADTDRs in respect of and 195 bps, respectively, during the same period. both fresh and outstanding deposits was higher for RBI Bulletin January 2025 33 y-o-y ,tnec reP stniop egatnecreP 20 3 18 2 16 1 14 0 12 10 -1 8 -2 6 -3 4 -4 2 0 -5 SCBs' credit growth M growth 3 SCBs' credit momentum effect (RHS) SCBs' credit base effect (RHS) 22-rpA-22 22-yaM-02 22-nuJ-71 22-luJ-51 22-guA-21 22-peS-9 22-tcO-7 22-voN-4 22-ceD-2 22-ceD-03 32-naJ-72 32-beF-42 32-raM-42 32-rpA-12 32-yaM-91 32-nuJ-61 32-luJ-41 32-guA-11 32-peS-8 32-tcO-6 32-voN-3 32-ceD-1 32-ceD-92 42-naJ-62 42-beF-32 42-raM-22 42-rpA-91 42-yaM-71 42-nuJ-41 42-luJ-21 42-guA-9 42-peS-6 42-tcO-4 42-voN-1 42-voN-92 42-ceD-72 SCBs' Deposit momentum effect (RHS) SCBs' deposit base effect (RHS) SCBs' Deposit growth Source: RBI. y-o-y ,tnec reP stniop egatnecreP Chart IV.10: SCBs' Deposit Growth - Base Effect and Momentum 14 4 12 3 2 10 1 8 0 6 -1 4 -2 2 -3 0 -4 22-rpA-8 32-rpA-12 32-yaM-91 32-nuJ-61 32-luJ-41 32-guA-11 32-peS-8 32-tcO-6 32-voN-3 32-ceD-1 32-ceD-92 42-naJ-62 42-beF-32 42-raM-22 42-rpA-91 42-yaM-71 42-nuJ-41 42-luJ-21 42-guA-9 42-peS-6 42-tcO-4 42-voN-1 42-voN-92 42-ceD-72ARTICLE State of the Economy Chart IV.11: Incremental Credit-Deposit Ratio Source: RBI. PSBs than for PVBs during May 2022 and November triggered by changes in the US Fed’s monetary policy 2024 (Chart IV.12). outlook for 2025. Markets faced fresh turmoil on reports of a new virus outbreak in China. Overall, The Government of India has kept the interest the BSE Sensex declined by 6.9 per cent since mid- rates on small savings instruments unchanged for Q4:2024-25.19 With the moderation in average G-sec December 2024 to close at 76,500 on January 14, yields of corresponding maturities, the rates on most 2025 (Chart IV.13). of the instruments, except for public provident fund, For the calendar year 2024 as a whole, the are above the formula-based rates. benchmark index recorded an annual gain of 8.2 per Indian equity markets faced fresh headwinds in cent, making it the ninth consecutive year of positive the second half of December amidst a global selloff returns. The benchmark index was outperformed 34 RBI Bulletin January 2025 )erorc hkal ₹( eulaV )tnec rep( oitaR 30 140 120 25 100 20 80 15 60 10 40 5 20 0 0 Incremental credit-deposit ratio (RHS) Incremental credit Incremental deposit 22-voN-6 22-voN-92 22-ceD-22 32-naJ-41 32-beF-6 32-raM-1 32-raM-42 32-rpA-61 32-yaM-9 32-nuJ-1 32-nuJ-42 32-luJ-71 32-guA-9 32-peS-1 32-peS-42 32-tcO-71 32-voN-9 32-ceD-2 32-ceD-52 42-naJ-71 42-beF-9 42-raM-3 42-raM-62 42-rpA-81 42-yaM-11 42-nuJ-3 42-nuJ-62 42-luJ-91 42-guA-11 42-peS-3 42-peS-62 42-tcO-91 42-voN-11 42-ceD-4 42-ceD-72 Table IV.2: Transmission to Banks’ Deposit and Lending Rates (Variation in basis points) Period Repo Rate Term Deposit Rates Lending Rates WADTDR- WADTDR- EBLR 1-Yr. MCLR WALR - WALR- Fresh Outstanding (Median) Fresh Rupee Outstanding Deposits Deposits Loans Rupee Loans Easing Phase Feb 2019 to Mar 2022 -250 -259 -188 -250 -155 -232 -150 Tightening Period May 2022 to Nov* 2024 +250 243 195 250 175 189 117 Notes: Data on EBLR pertain to 32 domestic banks. *: Data on EBLR and MCLR pertain to December 2024. WALR: Weighted Average Lending Rate; WADTDR: Weighted Average Domestic Term Deposit Rate; MCLR: Marginal Cost of Funds-based Lending Rate; EBLR: External Benchmark-based Lending Rate. Source: RBI. 19 https://dea.gov.in/sites/default/files/RoI_Q4.pdfState of the Economy ARTICLE Chart IV.12: Transmission across Bank-groups (May 2022 to November 2024) a. Lending Rates b. Deposit Rates Source: RBI with a wide margin as the BSE MidCap and BSE Primary markets closed the year strongly, with SmallCap gained 26.1 per cent and 29.3 per cent, 34 firms raising ₹26,973 crore through initial public respectively. Among sectors, healthcare and realty offerings (IPOs) in December 2024.20 India has claimed registered the maximum gains (Chart IV.14). number one position globally in IPO volumes, listing Domestic capital markets deepened further in almost twice as many IPOs as the US and more than 2024, marked by a rise in turnover, size, and investor participation (Table IV.3). two-and-a-half times as many as Europe.21 RBI Bulletin January 2025 35 stniop sisaB stniop sisaB 350 300 315 274 274 261 300 250 212 250 199 200 177 200 182 178 175 185 175 150 133 135 150 99 100 100 50 50 0 WALR WALR 1-Year median 0 (Fresh rupee (Outstanding rupee MCLR WADTDR WADTDR loans) loans) (Fresh deposits) (Outstanding deposits ) PSBs PVBs Foreign banks PSBs PVBs Foreign banks Chart IV.13: BSE Sensex and Institutional Flows Note: FPI and MF flows are represented on 1 5-days rolling sum basis. Source: NSDL: and BSE. xednI 32-yluJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 88000 90 80 85000 70 82000 60 50 79000 40 30 76000 20 73000 10 0 70000 -10 -20 67000 -30 64000 -40 -50 61000 -60 -70 58000 -80 55000 -90 erorc dnasuoht FPI flows (RHS) Mutual fund flows (RHS) Sensex 20 As per data from PrimeDatabase. 21 https://www.ey.com/en_gl/insights/ipo/trendsARTICLE State of the Economy Chart IV.14: Equity Market Performance in 2024 a. Benchmark and Broad Indices b. Sectoral Indices Note: FMCG: Fast moving consumer goods; PSU: Public sector undertakings Source: Bloomberg. Gross inward FDI at US$ 55.6 billion during April- FPI flows turned positive in December 2024 November 2024 were higher than US$ 47.2 billion after two months but remained volatile on account from a year ago. Net FDI, however, declined to US$ of a higher US dollar and treasury/bond yields. Net FPI inflows of US$ 1.8 billion were recorded in 0.5 billion during April-November 2024 from US$ 8.5 December, with inflows in equity and debt segments billion a year ago, reflecting the rise in repatriation taken together (Chart IV.16a). Global uncertainties and net outward FDI (Chart IV.15). Gross FDI inflows and elevated domestic valuations resulted in remained concentrated in manufacturing, financial net outflows of US$ 11.6 billion during Q3:2024- services, electricity and other energy, and retail and 25, offsetting the net inflows of US$ 20.1 billion communication services sectors, which together recorded during H1:2024-25. Similar trends of muted accounted for more than 60 per cent of the flows. FPI performance were observed across most peer Source wise, Singapore, Mauritius, the UAE, the economies during the current financial year (Chart Netherlands, and the US account for more than 75 IV.16b). During January 2025 (up to January 13), FPIs per cent of the flows during the period. recorded a net outflow of US$ 3.4 billion. 36 RBI Bulletin January 2025 4202 ni )tnec rep( snruteR 35.0 Healthcare 43.5 Realty 33.1 Consumer Durable 28.9 30.0 29.3 Industrials 28.4 26.1 Telecom 25.8 Consumer Discretionary 24.0 25.0 Auto 22.3 Capital Goods 21.8 PSU 21.3 20.0 Information Technology 19.9 Power 19.7 Services 17.3 15.0 Oil & Gas 13.2 Utilities 13.0 Financial Services 8.8 10.0 8.2 Energy 8.8 Communication 8.2 Metal 7.0 5.0 Bankex 6.2 FMCG 1.5 0 10 20 30 40 50 0.0 BSE Sensex BSE MidCap BSE SmallCap Returns (per cent) in 2024 Table IV.3: Capital Markets in 2024 (₹ crore, except demat accounts which is in crore and retail direct accounts) 2023 2024 Per cent change Average Monthly SIP Contribution 15,312 22,360 46.0 Number of Demat Accounts (end-period) 13.9 18.5 33.0 Market Capitalisation of BSE (end-period) 3,64,28,846 4,41,95,106 21.3 Asset under Management of Mutual Funds (end-period) 50,77,900 66,93,032 31.8 Equity Derivatives Turnover 7,23,15,81,303 11,56,16,28,457 59.9 Cash Market Turnover 1,75,87,721 3,12,18,920 77.5 Total Accounts opened on RBI’s Retail-Direct platform (end-period) 1,09,212# 1,98,615 81.9 Notes: Data is on calendar year basis; #: As of January 1, 2024. Equity derivatives and cash market turnover pertain to both BSE and NSE combined. Sources: SEBI, NSE, BSE, AMFI and RBI staff calculations.State of the Economy ARTICLE Chart IV.15: Foreign Direct Investment Flows Source: RBI. Net inflows under non-resident deposits (NRD) and Non-Resident Ordinary (NRO) accounts. The rose to US$ 12.6 billion during April-November 2024 flow of deposits in Non-Resident External Rupee from US$ 7.3 billion a year ago. Quarterly data for SCBs Account (NRE) was negative in the third quarter of (excluding RRBs) showed that robust inflows were 2024-25 (Chart IV.17).22 recorded in H1:2024-25 in all three accounts namely, On a cumulative basis, external commercial Foreign Currency Non-Resident (Banks) [FCNR(B)], borrowing (ECB) registrations (US$ 33.8 billion) as Non-Resident (External) Rupee Accounts [NR(E)RA] well as disbursements (US$ 30.9 billion) during April 22 Negative flows were recorded for SCBs excluding Regional Rural Banks. RBI Bulletin January 2025 37 noillib $SU 80 71.4 71.3 60 55.6 47.2 40 28.0 20 10.1 8.5 0 0.5 -20 -29.3 -29.7 -39.6 -44.5 -40 -8.9 -14.0 -15.5 -60 -16.7 -80 32-2202 42-3202 42-3202 )voN-rpA( 52-4202 )voN-rpA( Gross FDI Repatriation/Disinvestment Net outward FDI Net FDI Chart IV.16: Net Portfolio Investments a. India b. Peer Economics (April-December 2024)^ 12 8 4 1.8 0 -4 -3.4 -8 -12 Equity Debt Total Notes: 1. Debt also includes investments under the hybrid instruments. 2. *: Data up to January 13, 2025. 3. ^: Data for India is up to December while data for other countries is up to November 2024. Sources: National Securities Depository Limited (NSDL); and Institute of International Finance. noillib $SU 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD *52-naJ 24 20 16 12 8 4 0 -4 -8 Equity Debt Total noillib $SU anihC yekruT aidnI lizarB aisenodnI acirfA htuoS aisyalaM senippilihP dnaliahT ocixeM Chart IV.17: Quarterly Flows of Components of NRD of SCBs (excl. RRBs) 3000 2000 1000 0 -1000 -2000 -3000 Note: Data for Q3:2024-25 are provisional. Source: Form A return under Section 42(2) of RBI Act, 1934. noillim $SU 32-2202 :3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q NRE NRO FCNR(B)ARTICLE State of the Economy Chart IV.18: External Commercial Borrowings - Registrations and Flows 35 30 25 20 15 10 5 0 -5 -10 -15 -20 Source: Form ECB, RBI. – November 2024 were higher in comparison with expenditure, including on-lending and sub-lending the corresponding period last year. Adjusting for ECB (Chart IV.19). outflows on account of principal repayment of US$ The overall cost of new ECBs raised during 17.4 billion, net ECB inflows (US$ 13.5 billion) during November 2024 declined by 71 bps (m-o-m) to 5.8 per the current financial year was more than double than cent due to decrease in both global benchmark rates a year ago (US$ 5.6 billion) [Chart IV.18]. such as Secured Overnight Financing Rate (SOFR) as Over 40 per cent of the total ECBs registered well as weighted average interest margin (WAIM). during April – November 2024 were related to capital The overall cost of ECBs registered during the current 38 RBI Bulletin January 2025 noillib $SU Registrations Gross Disbursements Principal Repayments Net inflows 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 32 voN-rpA 42voN-rpA Chart IV.19: End-use of the Registered ECBs Apr-Nov 24 2.7 6.0 5.9 5.8 13.3 Apr-Nov 23 10.0 8.2 4.1 4.0 4.6 0 5 10 15 20 25 30 35 US$ Billion Import/ local sourcing of capital goods Modernisation/ new project/infrastructure development On-lending/sub-lending (Capex) Refinancing of ECB/rupee loans Others (including working capital and general corporate purpose) Source: Form ECB, RBI.State of the Economy ARTICLE Chart IV.20: Overall Cost of ECBs 8 6 4 2 0 Sources: Form ECB; and RBI staff estimates. financial year so far (April- November 2024) declined The INR depreciated by 0.9 per cent (m-o-m) by 12 bps to 6.6 per cent y-o-y (Chart IV.20). in terms of the 40-currency real effective exchange rate (REER) in December 2024, majorly on account of The strengthening US dollar exerted depreciating negative relative price differentials (Chart IV.22). pressures on EME currencies in December 2024, leading to a depreciation of 0.7 per cent (m-o-m) in India’s foreign exchange reserves stood at US$ the Indian rupee (INR) during December 2024 (Chart 634.6 billion as on January 3, 2025, providing cover IV.21). Nevertheless, the INR remained one of the for about 11 months of imports or about 90 per least volatile major currencies during the month. cent of external debt outstanding at end-September RBI Bulletin January 2025 39 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 32 voN-rpA 42 voN-rpA Secured overnight financing rate (SOFR) for US dollar Weighted average interest margin )tnec rep ni( nigram dna etar tseretnI Chart IV.21: Movements of the Indian Rupee and Major Currencies against the US Dollar (December 2024 over November 2024) 3 2 0 0 -3 -2 -6 -4 Percentage change (+ appreciation/ - depreciation) Volatility (RHS) Note: US dollar (DXY) measures the movements of the US dollar against a basket of major currencies (Euro, Japanese yen, British pound, Canadian dollar, Swedish krona, Swiss franc). Sources: FBIL; Thomson Reuters; and RBI staff estimates. tnec reP )YXD( ralloD SU xednI ycnerruC EME thab iahT osep enippilihP osep nacixeM ney esenapaJ tiggnir naisyalaM rallod esenawiaT eeeeppuurr nnaaiiddnnII dnuop KU nauy esenihC haipur naisenodnI oruE dnar nacirfA htuoS osep enitnegrA elbur naissuR laer nailizarB tnec rePARTICLE State of the Economy Chart IV.22: Movements in the 40-Currency Real Effective Exchange Rate a. Monthly Changes b. Decomposition of Monthly Changes Change in REER (RHS) REER Source: RBI. 2024 (Chart IV.23a). India remains the fourth largest the effect of a widening merchandise trade deficit foreign exchange reserve holder in the world (Chart on CAD during Q2:2024-25. Net capital inflows IV.23b). exceeded CAD, with strong flows under FPIs, ECBs India’s current account deficit (CAD) declined to and non-resident deposits, leading to net accretion 1.2 per cent of GDP in Q2:2024-25 from 1.3 per cent of foreign exchange reserves (excluding valuation of GDP a year ago (Q2:2023-24). Robust growth in effects) to the tune of US$ 18.6 billion in Q2:2024-25 services exports and remittance receipts cushioned (Chart IV.24). 40 RBI Bulletin January 2025 )001=61-5102( xednI tnec reP 4 2 0 -2 -4 Relative price effect Nominal exchange rate effect Change in REER tnec reP 110 4 108 106 2 104 102 100 0 98 96 -0.9 -2 94 92 90 -4 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD Chart IV.23: Foreign Exchange Reserves a. India b. Top Reserves Holding Economics 750 14 12 650 10 8 550 6 4 450 2 350 0 Foreign exchange reserves Import cover (RHS) Notes: 1. *: Data for January 3. 2. The import cover data for December 2024 and January 2025 is based on annualised merchandise imports for the quarter ending September 2024 as per the balance of payments statistics. 3. ^: Latest reserves for India and Russia is for January 3, 2025, end-November 2024 for Switzerland and Hong Kong, and end-December for other countries. Sources: RBI; respective central bank websites; and RBI staff estimates. noillib $SU shtnoM noillib $SU 3600 3000 2400 1800 1200 600 0 anihC napaJ dnalreztiwS aidnI aissuR nawiaT aibarA iduaS gnoK gnoH aeroK htuoS lizarB 634.6 Reserves at end-December 2023 Latest reserves^ 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42 peS 42 ceD *52 naJState of the Economy ARTICLE Chart IV.24: India’s Balance of Payments 40 3 30 2 20 1 10 0.5 0 0 -10 -1 -1.1 -20 -1.0 -1.1 -1.2 -1.3 -2 -30 -40 -3 Change in reserves on a bop basis (- increase/+ decrease) Capital account balance Current account balance CAB to GDP ratio (RHS) Source: RBI. India’s external debt stood at 19.4 per cent of India’s net international investment position GDP at end-September 2024 as compared with 18.9 (IIP) improved by US$ 19.8 billion during Q2:2024-25 per cent of GDP at end-March 2024. Other external and stood at US$ (-) 348.5 billion. Furthermore, the sustainability indicators recorded an improvement ratio of India’s international assets to international during the same period, emphasising India’s external liabilities improved to 76.2 per cent in September sector resilience (Chart IV.25). 2024 from 74.1 per cent a quarter ago (Chart IV.26). RBI Bulletin January 2025 41 1Q 2Q 3Q 4Q 1Q 2Q 2023-24 2024-25 noillib $SU tnec reP Chart IV.25: India’s External Vulnerability Indicators 60 43.4 42.4 44.9 42.8 40 18.9 19.4 20 6.7 6.7 0 -10.3 -9.6 -20 External Short-term Short-term Debt Net IIP debt to debt (RM) debt (RM) service to GDP GDP ratio to total to reserves ratio ratio debt ratio ratio End-March 2013 End-March 2024 End-June 2024 End-September 2024 Note: RM: Residual Maturity. Sources: RBI; and Government of India. tnec reP Chart IV.26: India's Net IIP and Assets to Liabilities Ratio 1,250 77 1,000 76 750 75 500 250 74 - 73 -250 72 -500 -750 71 -1,000 70 -1,250 69 -1,500 -1,750 68 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Sep 2024 Source: RBI. noillib $SU tnec reP Assets Net IIP Liabilities Assets to Liabilities ratio (RHS)ARTICLE State of the Economy Payment Systems Chart IV.27: Digital Payments to GDP Ratio - Quarterly Digital payments have been steadily rising in the 9.5 past few years, as reflected in the ratio of the value of digital payments to nominal GDP (Chart IV.27). 9.0 In December 2024, digital transactions continued 8.5 to grow across payment modes, driven by end year 8.0 demand (Table IV.4). The growth in transaction values 7.5 of Real Time Gross Settlement (RTGS) and National 7.0 Electronic Funds Transfer (NEFT) nearly doubled 6.5 sequentially. The Unified Payments Interface (UPI) 6.0 showcased its scalability and reliability with a 100 per cent uptime and processing of 54 crore daily average transactions in December 2024 (up from 39 crore in December 2023). The Bharat Bill Payment System (BBPS) witnessed a massive surge in transactions, Source: RBI staff estimates. predominantly driven by credit cards, direct-to-home (DTH) and electricity bill payments. The volume of dispute volumes under FASTags over the past year. credit card bill payments grew nearly 21 times in The net chargeback ratio23 reduced to 0.16 per cent November 2024 y-o-y. In value terms, it increased in November 2024 from 0.22 per cent in November by 25 times. Consequently, the share of credit card 202324, reflecting improved customer satisfaction payments in overall BBPS transactions rose to 62 with the payment method. per cent from 9 per cent in the same period a year ago. The National Electronic Toll Collection (NETC) The growing adoption of digital services is has shown a consistent decline in the proportion of also reflected in a 35 per cent rise in non-financial 42 RBI Bulletin January 2025 oitaR 0202-raM 0202-nuJ 0202-peS 0202-ceD 1202-raM 1202-nuJ 1202-peS 1202-ceD 2202-raM 2202-nuJ 2202-peS 2202-ceD 3202-raM 3202-nuJ 3202-peS 3202-ceD 4202-raM 4202-nuJ 4202-peS Digital Payments to GDP ratio Linear (Digital Payments to GDP ratio) Table IV.4 : Growth in Select Payment Systems (y-o-y in per cent) Transaction Volume Transaction Value Payment System Indicators Nov-23 Nov-24 Dec-23 Dec-24 Nov-23 Nov-24 Dec-23 Dec-24 RTGS 6.2 9.6 7.1 13.8 10.6 9.1 15.7 20.6 NEFT 45.7 21.5 37.5 24.5 17.5 5.4 13.0 13.2 UPI 53.7 37.8 53.5 39.2 46.1 23.9 42.2 27.5 IMPS 1.9 -13.6 2.7 -11.6 17.7 4.4 17.2 5.5 NACH 65.9 -9.3 10.9 28.2 27.2 9.9 4.6 27.6 NETC 12.3 11.9 13.0 9.8 14.1 14.5 18.6 13.3 BBPS 29.5 88.8 25.7 95.4 66.7 266.4 77.4 260.0 Note: RTGS: Real Time Gross Settlement, NEFT: National Electronic Funds Transfer, UPI: Unified Payments Interface, IMPS: Immediate Payment Service, NACH: National Automated Clearing House, NETC: National Electronic Toll Collection, BBPS: Bharat Bill Payment System. Source: RBI. 23 Net chargeback ratio is computed as the ratio of total chargeback initiated on acquirer banks against their total transactions volume for the month. The aggregate ratio is based on data from 12 acquirer banks. 24 https://www.npci.org.in/what-we-do/netc-fastag/netc-dispute-statisticsState of the Economy ARTICLE transactions25, driven primarily by a near doubling of India’s economic growth is poised to rebound Aadhaar-enabled Payment System (AePS) tokenisation as domestic demand regains strength. Rural demand and an increase in BBPS bill requests.26 continues to gain momentum, reflecting a resilience in consumption, supported by brighter agricultural In December 2024, the Reserve Bank decided prospects. A revival in public capex on infrastructure to enable UPI payments from/to full-KYC Prepaid is likely to stimulate growth in key sectors. Rising Payment Instruments (PPIs) through third-party input cost pressures in the manufacturing sector, UPI applications, allowing PPI users to make/receive coupled with weather-related exigencies and global payments through the mobile application of third- headwinds could, however, pose risks to this outlook. party UPI applications.27 The introduction of the beneficiary bank account name look-up facility for 2025 begins and the old order changes, yielding RTGS and NEFT systems is expected to enhance place to new. It will build loftier mansions, as the customer experience. This feature allows customers other departs, bidding adieu. The tumult and the to verify the name of the bank account before clangour dies. The songs of spring are muted now, initiating a transfer, helping to avoid mistakes and receding into the far distance in a morendo. The prevent frauds.28 falcon’s cries get fainter as it turns again and again in V. Conclusion widening circles away from the falconer. The global economic outlook is one of steady But winter has its music too - one last crescendo growth in 2025 supported by lower but stubborn to rage against the dying of the light. This life we inflation which will likely taper expectations of the leave behind is like an arch through which the extent of monetary policy easing. Global financial untraveled terrain of the future gleams to be conditions will remain constrained by public debt followed like a lodestar and discovered. It shall be burdens and the unrelenting strength of the US sought, to the utmost bounds of human thought and dollar. Geopolitical tensions, volatile commodity endeavour. “We may not be that strength that once prices, rising economic uncertainties could have moved earth and heaven, but that which we are, we a bearing on the trajectory of global growth during are; strong in will to strive, to seek, to find, and not 2025. to yield.”29 25 Non-financial transactions include transactions such as balance inquiry, mini statement, pin change using National Financial Switch Transactions over ATM, AEPS over Micro ATM, e-KYC verification, demographic queries, AEPS tokenisation, and BBPS bill fetch requests. 26 Retail Payment Statistics NPCI, November 2024. 27 RBI Notifications, December 27, 2024. 28 RBI Notifications, December 30, 2024. 29 Alfred Tennyson, Ulysses, in Poems, 1842 RBI Bulletin January 2025 43Measuring Monetary Policy Communication: The Indian Experience ARTICLE Measuring Monetary Policy Monetary policy communication performed the role of an anchor in an ocean of fear and vast unknowns Communication: The Indian (Patra, 2024). Experience While the quantity of monetary policy communication has certainly increased, whether by Michael Debabrata Patra, Shweta or not it has been effective in navigating the Kumari and Indranil Bhattacharyya^ surrounding uncertainty and in engaging the public, thereby instilling public understanding, confidence Applying natural language processing (NLP) and trust, remains an unsettled question. It has techniques, this article finds that uncertainty induced been pointed out that 95 per cent of monetary policy by the pandemic and the Russia-Ukraine conflict led communication is not understood by 95 per cent of to longer monetary policy statements by the Governor the people (Haldane, 2017). It is in this context that in which reassurance was provided through confidence evaluating the quality of communication in terms building words. While the overall duration of press of its clarity, ease of understanding and resonance conferences fluctuated, significant improvement in with the shaping of public expectations assumes readability of transcripts was recorded over time. Market importance. volatility on the policy announcement day remained These issues assume relevance in India for a range bound and similar to non-policy days. Intraday similar rationale. Accordingly, natural language volatility appeared to pick up before the start of the processing (NLP) methodologies are being employed Governor’s statement, but it tapered off by the time of in the Reserve Bank of India since 2022 to assess conclusion of the press conference. the efficacy of monetary policy communication Introduction by extracting quantitative information from Since the turn of this century, central banks have unstructured/semi-structured text heavy sources shed their traditional reticence and constructive such as news articles, social media and formal ambiguity to communicate more openly and clearly documents. While NLP or text mining is similar to about monetary policy goals and strategies. The reading, these computer-enabled approaches can objective is to manage the public’s expectations process and summarise far more text than a human consistent with the policy stance as also to enhance reader can. Moreover, these tools can also extract accountability in the public eye. During the global meaning from text that is missed by the human eye, financial crisis of 2008 and thereafter – especially including due to ‘blind spots’ formed by prior beliefs during and after the pandemic – challenges such and expectations (Bholat et al., 2015). as the zero lower bound on interest rates and acute The first such effort in the RBI analysed anxiety about the loss of life and livelihood and the resolutions of the monetary policy committee recent inflation surge resulted in communication (MPC) using NLP methodologies during October being elevated to the status of an instrument. 2016 to October 2023 which showed that inflation ^ The authors are from the Reserve Bank of India. The views expressed remained central to the discussions. During the in this article are those of the authors and do not represent the views of pandemic (March 2020 to February 2022); liquidity the Reserve Bank of India. Shweta Kumari expresses her sincere gratitude to Dr. Sandhya Kuruganti and Dr. A R Jayaraman for guidance and and its distribution to pandemic hit entities and acknowledges the technical assistance provided by Lokesh, Navya Singh, Kranti Ingole and Rishabh Salekar. agents received central focus (RBI, 2024). With the RBI Bulletin January 2025 45ARTICLE Measuring Monetary Policy Communication: The Indian Experience geopolitical crisis in 2022, inflation returned as the II. Gleanings from the Literature core topic (March 2022 to October 2023). This was State-of-the-art text-mining methodologies complemented by a study that examined the tone employed on conventional and unconventional of pandemic and post-pandemic monetary policy monetary policies during the COVID-19 crisis communication using a customised dictionary and suggest that central bank communications reflected assessing the impact of communication on overnight considerable uncertainty and heterogeneity during indexed swap rates (Kumari and Kuruganti, 2024). the pandemic, over time and across communication types. Moreover, such communications were more This article extends these initial efforts and reactive than during the global financial crisis (GFC) focuses on the Governor’s monetary policy statement and the dot-com crisis (Benchimol et al., 2021). and the press conference that immediately follows, which provides a quick assessment of the impact of The clarity of central bank communication the statement on the wider public opinion for which conditions the attention of journalists and social the financial market acts as a proxy. It employs media users and, in turn, the wider public. The text modelling to these statements over the period application of language complexity tools as a proxy 2019 to 2024, supplemented by an examination of for communication clarity (or lack of) shows that the impact on financial markets in terms of daily greater complexity is significantly correlated with market volatility as well as intraday volatility on the lower levels of media coverage (Ferrara and Angino, monetary policy day. Intraday market patterns are 2022). Overall, communication clarity is found complemented by the analysis of press conferences to be a significant and robust predictor of media in the context of confirmation, reconsideration or engagement. reinforcement of policy decisions. The hosting of post-policy press conferences has gained legitimacy across major central banks The key findings are that uncertainty induced in which monetary policy decisions are explained by the pandemic and the Russia-Ukraine conflict in detail and journalists are given the opportunity led to longer statements and reassurance was to question top central bank officials. Analysing provided through confidence building words. While how financial markets perceive the explanations the overall period of press conferences fluctuated, provided by central banks on monetary policy significant improvement in readability of transcripts decisions in these press interactions shows that was recorded. Market volatility on the policy the information content is closely linked to the announcement day remained range bound. Intraday nature of the policy decision: the less a decision has volatility appeared to pick up before the start of been anticipated by the market, the stronger is the Governor’s statement, but it tapered down quickly. reaction to the introductory statement, suggesting As for the rest of the article, Section II undertakes that the statement contains relevant explanations a focused survey of the select literature to draw out for the reasons underlying the decision (Ehrmann the underlying motivation of the article and the and Fratzscher, 2009). Press conferences are found to rationale underlying the choice of methodology have a larger effect on financial markets, on average, which is presented in Section III. The results are than the policy decisions. Question and answer set out in Section IV. Some policy perspectives that (Q&A) sessions in press conferences are found to emerge from the analysis are given in Section V play a clarificatory role, in particular, during periods which concludes the article. of large macroeconomic uncertainty. 46 RBI Bulletin January 2025Measuring Monetary Policy Communication: The Indian Experience ARTICLE Intraday trading data reveal that market volatility dictionaries have been developed to capture the is more than three times higher during the press subtle nuances of narrative communication. While conferences of the current Fed Chair than during the uncertainty dictionary is influenced by the widely press conferences of his two immediate predecessors used uncertain wordlist (Loughran-McDonald, 2011), (Narain and Sangani, 2023). Press conferences since the confidence dictionary is constructed from the the beginning of Covid-19 are found to be largely corpus of words found in the Governor’s statements. responsible for the heightened volatility in the recent Words such as uncertain, volatile, unprecedented period. It is also observed during this period that and their variants are identified as words expressing the market tends to move in the opposite direction uncertainty. On the contrary, confidence inspiring during press conferences vis-a-vis its movement words include terms such as watchful, calibrate, following the publication of the FOMC statement. nimble, vigilant, resolute and proactive. In contrast, press conferences during the previous As the size of statements varied over time, two Fed Chairs tended to reinforce the market’s a normalised measure of uncertainty has been initial reaction to the information released in the computed as the proportion of number of sentences FOMC statement. Text analysis of the Q&A portions containing uncertainty terms to total number of of the current Fed Chair’s press conferences suggest sentences during a particular period. The confidence that the choice of language is highly correlated with index has been similarly derived, as specified below: market movements. III. Data and Methodology ... (1) In India, the MPC’s resolutions and minutes are ... (2) structured communication documents deliberating on the goal variables and strategies. By contrast, the where, Governor’s statements are more flexible in terms of is a sentence pertaining to topic “i” in the design and content coverage in the assessment of Governor’s statement of period “t” growth and inflation as well as other aspects such as liquidity and financial market conditions, external is a sentence with uncertainty term, pertaining to sector developments, financial stability as well as topic “i” in period “t” developmental and regulatory measures. During the is a sentence with confidence term, pertaining to period of study (2019 to 2024), 39 statements were topic “i” in period “t” delivered in all, with two statements made outside the MPC meeting cycle – one in April 2020 at the These normalised indices have been used for outbreak of the pandemic and another in May 2021 at comparison across the various statements during the the peak of the second wave. “Footnotes” represent study period. a distinguishing feature of these statements, III.2 Press Conferences highlighting data-driven insights. The press conferences that follow the Governor’s III.1 Governor’s Statements statements provide an avenue to elaborate and In pursuance of the central motivation of this emphasise the considerations behind policy article set out in Section I, specific words related decisions, including ‘surprises’. The Governor’s to uncertainty and confidence in the Governor’s statement is telecast from 10 am (IST). Two hours statements have been identified and customised later – at around 12 pm (IST) – the press conference RBI Bulletin January 2025 47ARTICLE Measuring Monetary Policy Communication: The Indian Experience is telecast live comprising (i) the Governor’s opening vis-à-vis non-monetary policy announcement days remarks; and (ii) a question-and-answer session. of the same month. India VIX of daily frequency is considered as a measure for market volatility. In the A key feature of the press conferences is second stage, intraday patterns in the stock market ease of clarity and understanding, as gauged are analysed in different time windows in terms of from readability scores of transcripts. Readability indicators are typically based on sentence size, word squared returns of the NIFTY 50 index in intervals of size and pronunciation aspects. Alternate indices 5 minutes, as indicated below. viz., Automated Readability Index (ARI), Flesch- ... (6) Kincaid grade level (FK) and Gunning-Fog index (GFI) where indicates NIFTY50 index at minute are used for comparability and robustness checks. “t” on monetary policy day “d”. The indices vary in their computation; however, the interpretation remains similar i.e., lower values of India VIX daily data has been obtained from all these indices imply higher readability. the website of the National Stock Exchange (NSE), while intraday minute-by-minute tick data has been (3) sourced from Bloomberg. This analysis is carried (4) out for monetary policy days only as the aim is to understand how the policy decisions influence (5) market reactions, and how the press conference adds where a complex word is a defined as one with or reduces volatility. 3 or more syllables. IV. Empirical Findings III.3 Financial Markets Volatility The size of the Governor’s statements, measured In the first stage, market volatility on the in terms of number of sentences, varied over the monetary policy announcement day is examined study period (Chart 1). Uncertainty induced by the 48 RBI Bulletin January 2025 secnetneS fo rebmuN Chart 1: Governor’s Statement Size 160 120 80 40 0 Sources: RBI; and Authors’ estimate. beF rpA nuJ guA tcO ceD beF raM rpA yaM guA tcO ceD beF rpA yaM nuJ guA tcO ceD beF rpA yaM nuJ guA peS ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA tcO ceD 2019 2020 2021 2022 2023 2024Measuring Monetary Policy Communication: The Indian Experience ARTICLE pandemic and the Russia-Ukraine conflict were higher share of “Liquidity” and “Financial Markets” marked by longer statements, presumably reflecting as a topic during the pandemic. These results are a efforts to explain in detail the evolving scenario and pointer to the use of communication to complement the measures taken to tide over the unprecedented policy actions. situation. The Russia-Ukraine conflict in 2022 triggered Along with the size, the coverage and relative supply disruptions and inflationary pressures emphasis on various topics also shifted to reflect worldwide. This resulted in an increasing focus on changing circumstances (Chart 2), pointing to “Inflation” as a topic in the statements during that adaptations in communication strategy to address period. A higher share is also evident in the recent emerging challenges. period1, indicating the focus on aligning and keeping inflation within the target band on a durable basis Categorising the study period into different in the face of multiple and overlapping food price phases yields significant results (Chart 3) (frequently shocks, including due to weather events. occurring terms within each topic are presented in word clouds in Annex I). “Monetary Policy” emerged New sections were introduced in the statements. as the most discussed topic at the overall level, One is the “Conclusion” section introduced during though its share has reduced in the recent period and the pandemic which subsequently became the more space is being allotted for discussion on other hallmark of the statement to reassure the public topics. It was followed by “Growth”, which occupied and markets. A distinct “Introduction” section is a considerably larger space than “Inflation” in the recent feature; in the past, it was overlapping with Governor’s statements, especially prior to April 2022, 1 Since October 2023, a sub-section “What do these Inflation and Growth when multiple waves of the pandemic impacted the Conditions mean for Monetary Policy?” has also been part of statements. It has been clubbed with “Inflation” section, as it deliberates primarily on economy. This was also reflected in the substantially inflation related aspects. RBI Bulletin January 2025 49 cipoT fo erahS Chart 2: Topic Prevalence in Governor’s Statements 100% 80% 60% 40% 20% 0% Sources: RBI; and Authors’ estimate. beF rpA nuJ guA tcO ceD beF raM rpA yaM guA tcO ceD beF rpA yaM nuJ guA tcO ceD beF rpA yaM nuJ guA peS ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA tcO ceD 2019 2020 2021 2022 2023 2024 Introduction Liquidity & Financial Markets Monetary Policy External Growth Financial Stability Inflation ConclusionARTICLE Measuring Monetary Policy Communication: The Indian Experience Chart 3: Topic Prevalence in Statement - Period wise a. Pre-Covid Period Financial b. Covid to Pre-war Period Stability 1% External External 2% Introduction 9% Conclusion 4% 10% Liquidity & Financial Monetary Monetary Markets Policy 8% 34% Policy Liquidity & 25% Financial Markets Inflation 25% 20% Growth Growth Inflation 21% 29% 12% c. War Period d. Recent Period Financial Introduction Stability Conclusion Conclusion 8% 1% 7% Introduction 8% External 12% Financial Monetary 10% Stability Policy 10% 11% Monetary External Liquidity & Policy 8% Financial 19% Markets Liquidity & Growth 16% Financial 22% Markets 13% Growth Inflation 17% 18% Inflation 20% Pre-Covid Covid to pre-War War Recent period Feb 2019 to Feb 2020 Mar 2020 to Feb 2022 Apr 2022 to Aug 2023 Oct 2023 to Dec 2024 Sources: RBI; and Authors’ estimate. the “Monetary Policy” section. The “External Sector’ Mentions of uncertainty terms increased started getting mentioned as a separate section from significantly at the start of the pandemic in March April 2022 after the Russia-Ukraine war started, 2020 and again during the second wave in April 2021 (Chart 5). Even when pandemic scars started to heal, reflecting increasing global interlinkages and related uncertainty lingered due to the Omicron variant, policy implications. “Financial stability” has been and again due to financial market volatility, global introduced as a new section in the Governor’s spillovers and persistent supply bottlenecks, as statement since August 2023 and it has had a fairly reflected in higher value of the uncertainty index in good share of the deliberation2. February 2022. It continued to remain elevated after The interplay of uncertainty and confidence the outbreak of the Russia-Ukraine war and further and shifts in communication strategy highlight accentuated in April 2023 due to the banking sector the dynamic relationship between uncertainty, turmoil in some advanced economies. transparency, clarity and reassurance (Chart 4). As a response to uncertainty, reassurance was also provided in terms of confidence building 2 It appeared occasionally in earlier periods, e.g. April 2023 and February 2022. words (Chart 5). Accordingly, the confidence index 50 RBI Bulletin January 2025Measuring Monetary Policy Communication: The Indian Experience ARTICLE Chart 4: Word Clouds a. Uncertainty b. Confidence Sources: RBI; and Authors’ estimate. witnessed a significant increase for the first time covid period witnessed low levels of uncertainty and in March 2020, and again in 2021. It peaked in May confidence, the period from the pandemic onset to 2022, when an off-cycle MPC meeting was conducted pre-war witnessed a mix of lower and higher levels of that commenced the rate tightening cycle. uncertainty but with the confidence index generally The interplay of uncertainty and confidence remaining high3 (Chart 6). The Russia-Ukraine war index indices differs across periods - while the pre- period witnessed lower uncertainty (except in April Chart 5: Uncertainty and Confidence 35 30 25 20 15 10 5 0 Confidence Index Uncertainty Index Sources: RBI; and Authors’ estimate. 3 Low uncertainty and confidence are characterised by values ranging 0-10 while values between 10-20 indicate high uncertainty and confidence. RBI Bulletin January 2025 51 beF rpA nuJ guA tcO ceD beF raM rpA yaM guA tcO ceD beF rpA yaM nuJ guA tcO ceD beF rpA yaM nuJ guA peS ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA tcO ceD 2019 2020 2021 2022 2023 2024 xednIecnedifnoC/ytniatrecnUARTICLE Measuring Monetary Policy Communication: The Indian Experience Chart 6: Interplay of Uncertainty and Confidence 20 15 10 5 0 0 5 10 15 20 Notes: Mid-point of range (0 to 20) of UN and CF index is taken as separator for above quadrants. Sources: RBI; and Authors’ estimate. 2023), but confidence fluctuated intermittently (with period, while uncertainty indices have been lower confidence index being at its peak in May 2022). than before, the confidence indices have been in the middle range (values of around 10). The inference emanating from these results is In the “Introduction” and “Conclusion” sections that as the Governor’s statements are targeted towards of the statements, the level of the confidence the wider public, they have to play a meaningful index is found to be higher than other sections role in informing and managing expectations. In (Chart 7), reflecting strategic efforts to manage public this context, choice of words matters. In the recent expectations. 52 RBI Bulletin January 2025 )FC( xednI ecnedifnoC low UN, high CF high UN, high CF Pre-covid period Covid to Pre-war period War period Recent period low UN, low CF high UN, low CF Uncertainty Index (UN) Chart 7: Topic wise Confidence 35 30 25 20 15 10 5 0 Introduction Monetary Growth Inflation Liquidity & External Financial Conclusion Overall Policy Financial Stability Markets Sources: RBI; and Authors’ estimate. xednI ecnedifnoCMeasuring Monetary Policy Communication: The Indian Experience ARTICLE IV.2 Press Conferences Press conferences were held after all MPC related to monetary policy, inflation, growth and meetings, except during March to October 2020 owing macroeconomic conditions4. to the lockdown and social distancing concerns, and also after the off-cycle meeting of May 2022. From December 2020 to February 2022, there were no opening remarks by the Governor. The overall size of the press conferences (number of sentences in transcripts) fluctuated over time, being lower in 2021 and increasing subsequently after introduction of the Governor’s opening remarks in April 2022. The number of questions asked also followed a similar pattern (Chart 8). There appears to be close co-movement between the number of questions, the size of opening remarks and inflation (Table 1 and Chart 9). Questions mostly Table 1: Correlation (April 2022 to Dec 2024) Opening remarks size Inflation 4 Questions also related to various measures taken by the RBI, such as Number of questions 0.42* 0.61*** CBDC in December 2022, ₹2000 denomination withdrawal in June 2023, Note: * and *** indicates statistical significance at 10 and 1 per cent level incremental CRR in August 2023, risk weights in December 2023, Paytm in respectively. February 2024, gold movements and bond inclusion in June 2024, and Sources: RBI; and Authors’ estimate. deposit mobilisation in August 2024. RBI Bulletin January 2025 53 snoitseuQ / ezis skrameR gninepO ezis ecnerefnoC sserP 125 500 100 400 75 300 50 200 25 100 0 0 Press Conference Size (RHS) Opening Remarks size No. of Questions beF rpA nuJ guA tcO ceD beF ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA peS ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA tcO ceD Chart 8: Press Conference Trends 2019 2020 2021 2022 2023 2024 Sources: RBI; and Authors’ estimate. snoitseuQ / ezis skrameR gnimepO )%( noitalfnI Chart 9: Opening Remarks and Inflation 50 10 40 8 30 6 20 4 10 0 2 Sources: RBI; and Authors’ estimate. 22-rpA 22-nuJ 22-guA 22-peS 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD Opening Remarks size Inflation (RHS) No. of QuestionsARTICLE Measuring Monetary Policy Communication: The Indian Experience Readability indices trended lower with co- exceptionally high, however, on March 27, 2020 movement of all indices, indicating improvement in and May 22, 2020, when the MPC meetings were readability during the study period (Chart 10). held ahead of schedule due to pandemic induced IV.3 Financial Market Patterns uncertainty and sharp rate reductions were announced (75 bps and 40 bps, respectively) (Chart Market volatility (India VIX) on the policy announcement day remained range bound and 11). The VIX reflected a consistent declining pattern similar to non-policy announcement days. It was in 2022 and 2023, reflecting high level of confidence 54 RBI Bulletin January 2025 erocS ytilibadaeR Chart 10: Readability 21 18 15 12 9 6 3 ARI FK GFI Sources: RBI; and Authors’ estimate. beF rpA nuJ guA tcO ceD beF ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA peS ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA tcO ceD 2019 2020 2021 2022 2023 2024 egmahc etar opeR XIV Chart 11: Market Volatility 1.0 80 0.5 60 0.0 40 -0.5 20 -1.0 0 Repo rate change VIX-policy day (RHS) VIX-non-policy days (RHS) Sources: RBI, NSE; and Authors’ estimate. beF rpA nuJ guA tcO ceD beF raM yaM guA tcO ceD beF rpA nuJ guA tcO ceD beF rpA yaM nuJ guA peS ceD beF rpA nuJ guA tcO ceD beF rpA nuJ guA tcO ceD 2019 2020 2021 2022 2023 2024Measuring Monetary Policy Communication: The Indian Experience ARTICLE in markets even during the policy tightening period V. Conclusion of May 2022 to February 2023 (Chart 11). The efficacy of monetary policy is greatly Intraday volatility patterns are examined using enhanced when policy authorities, market NIFTY50 squared returns at 5-minute intervals from participants and the wider public share a common 9:30 am to 1:30 pm to encompass the live coverage set of expectations. In fact, when the intent of policy of the Governor’s statement – 10:00 to 10:30 am and and the desired objectives are clearly understood, the the ensuing press conference – 12:00 to 1:00 pm. It size of policy decisions can be smaller than otherwise. is observed that average volatility was low during the Indeed, the need for policy action may be obviated. study period. Intraday volatility picks up before the This underscores the critical role communication Governor’s statement but tapers down quickly and has come to play in complementing monetary policy becomes almost negligible by the conclusion of the and making it effective. Our findings show that it press conference (Chart 12 and Annex II). is not enough for communication just to be clear, understandable and engaging. It also involves strategy Volatility is more pronounced on days when in adapting communication style to the dynamics of there is a surprise element, viz. either in the direction uncertainty, especially in times of black swan events or quantum of policy rate change, or a surprise and crises when anxiety becomes overwhelming, and event (e.g. MPC meeting outside the pre-announced calendar). Several factors may have contributed to reassurance reinforces the magnitude and duration keeping market volatility low on a daily and intraday of policy changes and stance. Meticulously crafted basis – targeted use of confidence conveying Governor’s statements with thoughtfully selected words; Governor’s opening remarks during press and emphasised words have instilled much-needed conferences; and fine-tuning of communication confidence in India during adverse and uncertain strategy to provide assurance and confidence. periods. RBI Bulletin January 2025 55 nruteR derauqS 05YTFIN Chart 12: Intraday Patterns 0.6 0.5 0.4 0.3 0.2 0.1 0.0 2019 2020 2021 2022 2023 2024 all years Sources: RBI, Bloomberg; and Authors’ estimate. 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31ARTICLE Measuring Monetary Policy Communication: The Indian Experience The press acts as a communication channel for Ferrara, F. M., and Angino, S. (2022). Does Clarity clarification and reinforcement of policy decisions Make Central Banks More Engaging? Lessons from following the release of the Governor’s statement. In ECB Communications. European Journal of Political this context, continuous evaluation of the traction Economy, 74, 102146. achieved by monetary policy communication in Haldane, A. G., (2017). A Little More Conversation influencing expectations assumes importance. This A Little Less Action, Speech given at the Federal is, however, easier said than done as it involves the Reserve Bank of San Francisco, Macroeconomics and inexact science of gauging sentiment as revealed in Monetary Policy Conference, March 31. sound bytes, text and social media posts. Traditionally, Kumari, S. and Kuruganti, S. (2024). Dynamic methodologies fall short when quantification has to Landscape of Monetary Policy Communication in be extracted from unstructured / semi-structured information sets. In this milieu, the application India. RBI Bulletin, November 2024. and refinement of newer technologies such as NLP, Loughran, T. and McDonald, B. (2011). When is a as attempted in this article, become increasingly Liability not a Liability? Textual Analysis, Dictionaries, relevant and exciting. and 10-Ks. Journal of Finance, 66(1), 35-65. References: Narain, N., and Sangani, K. (2023). The Market Bholat, D., Hansen, S., Santos, P., and Schonhardt- Impact of Fed Communications: The Role of the Bailey, C. (2015). Text Mining for Central Banks. Press Conference. Available at SSRN 4354333 Bank of England, Centre for Central Banking Studies Patra, M. D. (2024). Communicating Monetary Handbook No. 33. Policy. Opening Remarks at the “High-Level Policy Benchimol, J., Kazinnik, S., and Saadon, Y. (2021). Conference of Central Banks in the Global South” Federal Reserve Communication and the COVID-19 organised by the Reserve Bank of India as a part of Pandemic. Covid Economics, 79, 218-256. commemoration of its 90th year at Mumbai, India on November 21. Ehrmann, M., and Fratzscher, M. (2009). Explaining Monetary Policy in Press Conferences. International Reserve Bank of India (2024). Annual Report 2023-24: Journal of Central Banking. Monetary Policy Operations, May 30. 56 RBI Bulletin January 2025Measuring Monetary Policy Communication: The Indian Experience ARTICLE Annex I: Topic wise Word Clouds5 Introduction Conclusion Monetary Policy Inflation Growth Liquidity and Financial Markets External Financial Stability Sources: RBI; and Authors’ estimate. 5 Word clouds are based on stemmed words, which present root form of a word. RBI Bulletin January 2025 57ARTICLE Measuring Monetary Policy Communication: The Indian Experience Annex II: Monetary Policy Day wise Intraday Patterns 58 RBI Bulletin January 2025 nruter derauqs 05 YTFIN Chart A: Intraday Patterns - 2019 0.3 0.2 0.1 0.0 7-Feb-19 4-Apr-19 6-Jun-19 7-Aug-19 4-Oct-19 5-Dec-19 nruter derauqs 05 YTFIN 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31 Chart B: Intraday Patterns - 2020 4.0 3.0 2.0 1.0 0.0 Notes: No press conference was held from March to October 2020. 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31 6-Feb-20 27-Mar-20 22-May-20 6-Aug-20 9-Oct-20 4-Dec-20 nruter derauqs 05 YTFIN Chart C: Intraday Patterns - 2021 0.3 0.2 0.1 0.0 05-Feb-21 07-Apr-21 04-Jun-21 06-Aug-21 08-Oct-21 08-Dec-21 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31Measuring Monetary Policy Communication: The Indian Experience ARTICLE RBI Bulletin January 2025 59 nruter derauqs 05 YTFIN Chart D: Intraday Patterns - 2022 0.3 0.2 0.1 0.0 10-Feb-22 08-Apr-22 04-May-22 08-Jun-22 05-Aug-22 30-Sep-22 07-Dec-22 Notes: No press conference was held on 4-May-2022. 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31 Chart E: Intraday Patterns - 2023 nruter derauqs 05 YTFIN 0.3 0.2 0.1 0.0 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31 08-Feb-23 06-Apr-23 08-Jun-23 10-Aug-23 06-Oct-23 08-Dec-23 Chart F: Intraday Patterns - 2024 nruter derauqs 05 YTFIN 0.3 0.2 0.1 0.0 03:9 04:9 05:9 00:01 01:01 02:01 03:01 04:01 05:01 00:11 01:11 02:11 03:11 04:11 05:11 00:21 01:21 02:21 03:21 04:21 05:21 00:31 01:31 02:31 03:31 08-Feb-24 05-Apr-24 07-Jun-24 08-Aug-24 09-Oct-24 06-Dec-24Foreign Exchange Intervention: Efficacy and Trade-offs in the ARTICLE Indian Experience Foreign Exchange Intervention: motives, costs and benefits of reserve accumulation. This paper, by contrast, deals with the motives, costs Efficacy and Trade-offs in the and benefits of holding foreign exchange positions Indian Experience from an EME perspective, scarred by the experience with spillovers, which can be quite different from by Michael Debabrata Patra, Sunil Kumar, what engaged the older strand. Joice John and Amarendra Acharya^ It is important to note the differences. First, this phenomenon is about EMEs, which currently hold This study investigates the effectiveness of roughly three-fifth of international reserves whereas forex interventions undertaken by the Reserve the older literature focused almost exclusively on Bank of India (RBI) and finds that the volatility of advanced economies (AEs). Secondly, AEs have almost portfolio flows, induced by global spillovers, is the stopped intervening in foreign exchange markets; main source of exchange rate volatility in India. EMEs, on the other hand, intervene regularly and have developed institutional formats for it. Thirdly, Foreign exchange interventions, both spot and these interventions tend to impact the path of the forward, effectively counter capital flows volatility, exchange rate more than in AEs because (a) they are with symmetric effects of purchases and sales. not routinely sterilized; (b) the size of interventions The impact of gross spot intervention on exchange are significant relative to the level of market turnover rate volatility indicates the existence of threshold and base money; (c) elaborate reporting requirements effects, explaining the “leaning against the wind” confer on central banks in EMEs an information phenomenon. advantage in inferring the aggregate order flow in the Introduction market; and (d) prudential regulations and operating practices amplify the information advantage and Since the latter half of the 1980s when several the size of the intervention relative to the market emerging market economies (EMEs) dismantled (Canales-Kriljenko, 2003; Filardo et al., 2022; Linde barriers to increasingly engage in international et al., 2024). For EMEs, foreign exchange rate trade and finance, either voluntarily or as a part interventions are umbilically linked to the objective, of structural adjustment programs, a steady either explicit or implicit, of mitigating volatility and accumulation of international reserves has given not the level of the exchange rate or any band around way to a surge since 2004. Global reserve holdings it: in short, not the first moment but the second peaked at US $ 12.9 trillion by 2021, although bouts moment. of high financial market volatility driven by risk- Against the above backdrop, this paper evaluates on-risk-off sentiment shifts since then necessitated the effectiveness of interventions by the Reserve interventions that have slightly modulated this Bank of India (RBI) in the foreign exchange market stock to US $ 12.7 trillion in September 2024. This in India. In the rest of the paper, Section II extracts phenomenon has quite naturally found resonance lessons from the existing literature. Some stylized with an old stream in the literature dating back to facts with respect to intervention in India’s foreign the days of the gold standard that worried about the exchange market are furnished in Section III. ^ The authors are from the Reserve Bank of India. The views expressed in Section IV contains empirical results. Concluding this article are those of the authors and do not represent the views of the Reserve Bank of India. perspectives are set out in Section V. RBI Bulletin January 2025 61ARTICLE Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience II. Guideposts from the Literature By the 2000s, the emerging market model of foreign exchange interventions had arrived! As advanced economies withdrew from The benefits of foreign exchange intervention intervening in foreign exchange markets, the overwhelmed its costs as managing exchange rates empirical literature imbibed the spirit of this and accumulating reserves became preferred policy retreat and largely focused on issues relating to its options, rather than being stigmatized as in the earlier effectiveness – does it work or matter? (Obstfeld, literature. In fact, high liquidity was increasingly 1990; Dominguez and Frenkel, 1993; Dominguez, seen as able to offset weak fundamentals and 1998; Beattie and Fillion, 1999; Sarno and Taylor, ward off contagion (Mulder and Bussier, 1999; Lai, 2002; Ito, 2003; Daude et al., 2016; Menkhoff, 2002). Accordingly, attention turned to the market 2013; Linde et al., 2024 ); if it does, what is optimal microstructure (Dominguez, et al. 1993; Vitale, 2011; and under what conditions? - an older strand had Ormos and Timotity, 2016); instruments (Evans and grudgingly visualized limiting conditions (Boyer, Lyons, 2002; Galan et al., 1997; Hooyman, 1994; 1978; Buiter, 1979; Roper and Turnovsky, 1980; Jones, Hung, 1997; IMF, 1998; Mandeng, 2003; Zapatero et 1984; Blanchard et al., 2015); is it essentially the fear al., 2003); issues in transparency – announcement of floating? (Calvo and Reinhart, 2002); and is there effects; signal to noise ratios – and the management room for it under an inflation targeting framework? of unavoidable operational risk (Fratzscher et al., (Domac and Mendoza, 2002; Adler et al., 2021). 2019); persistence and asymmetric effect of purchase The repetitive visitations of crises through and sales (Blanchard et al., 2015; Adler et al., 2019) the 1990s and 2000s has swung the narrative and policy framework resilience (Linde et al., 2024). completely! Modern generations of currency crises We argue in this paper that perhaps the analytics seem to be triggered by markets that conduct value of foreign exchange intervention in an EME context at risk assessments of the central bank’s balance are better informed by the positive findings of sheet, including off-balance sheet items, and consensus/central tendencies in a young but incisive whenever confidence levels in the central bank’s stream in the literature that focuses on coalescing solvency appear likely to be breached, they strike the experiences of the practitioners i.e., central (Blejer and Schumaker, 1998; Zeuli, 2013; Nocetti, banks themselves, through questionnaire-based 2006). Further, the illiquidity, arising out of short- surveys. It is also informed by progress under the term foreign currency debt becoming larger than IMF’s Integrated Policy Framework (IPF) which has a liquid foreign currency assets, has been a cause case study on India (Linde et al., 2024). of many exchange rate crises (Chang and Velasco, 1999). In these low probability high intensity events, This literature offers an interesting study in fundamentals do not matter and each country stands comparative statics. The starting point of reference alone – the implications of a crisis can be global but becomes the IMF’s 2001 survey on foreign exchange the responsibility for financial stability is national. market organization and the work spawned by it Central banks having strong reserve buffers and (Canales-Kriljenko, et al., 2003; Linde et al., 2024). institutional character generally come out of financial This survey was perhaps the most extensive, with crises with less loss to their credibility (Bordo and 91 respondents that together accounted for 85-90 Siklos, 2015). per cent of developing countries’ GDP, trade and 62 RBI Bulletin January 2025Foreign Exchange Intervention: Efficacy and Trade-offs in the ARTICLE Indian Experience reserves. Moreover, such detailed information on foreign exchange market (Canales-Kriljenko et al., foreign exchange operations in a broad range of 2003). Consequently, operational issues – timing; countries had not been previously available (IMF, frequency; amounts; instruments/currency pairs; 2003). In 2013, the BIS sought the views of central locations; counterparties – are the main decision banks about intervention for its annual meeting of drivers for central banks. Another major consideration Deputy Governors through a survey questionnaire. is that interventions effectively turn into monetary This survey revisited many of the aspects of policy operations when not fully sterilized and intervention identified in the 2004 BIS survey (BIS, necessitate calibration with the monetary policy 2013), especially the role of interventions in reducing stance3. Also, though thinly advocated, interventions provide breathing space for undertaking deeper financial and monetary stability risks, in provision macroeconomic adjustments if there are structural of liquidity support to the foreign exchange market imbalances impacting the exchange market. and in meeting exchange rate objectives. Studies conducted around it, both within the BIS and by The microstructure approach (Lyons, 2001; Evans participating central banks, yield useful insights and Lyons, 2002) shines light on this operational and importantly, provide an update on the 2001 view. The balance between buyer-initiated and seller- IMF survey on operational aspects of intervention initiated orders is a measure of the net exchange that are the centre of interest of this paper1. In this market pressure. Interventions cause changes in spirit, attempts have been to empirically estimate expectations on future exchange rates, triggering equilibrium exchange rates for India (Patra, et al., modifications in open positions, especially by noise 2024) traders chasing trends. The result is a tide of buy/ sell orders well in excess of the central bank’s initial Definitional Issues intervention. Furthermore, market participants may In the emerging market context, the narrow regard these operations as central banks exploiting definition of intervention in the mainstream literature superior or privy information and order flows – central bank foreign exchange operations targeting generated in response to “impound information into the exchange rate2 - gives way to a broader format prices” (Lyons, 2001). The microstructure approach encompassing moderating exchange rate fluctuations also emphasizes the size of intervention relative to and correcting misalignments, addressing disorderly market turnover – the larger the intervention, the market conditions (an objective blessed by the IMF), higher is its impact on the price, thus potentially more accumulating reserves and supplying liquidity to the effective in emerging markets that have relatively low market turnover and are less liquid, including due 1 A freestanding, non-institutional study (Neely, 2001) examined foreign to exchange control and other regulations (Canales- exchange intervention practices of a sample of 22 countries, of which nine were emerging markets, and mainly addressed the effectiveness of Kriljenko et al., 2003). The IMF’s quantitative intervention. An update is found in a subsequent survey (Neely, 2008) which concluded that the surveyed central banks were not pursuaded by most of the common arguments against intervention. 3 It is debatable, however, if fully sterilized interventions are free from 2 That exchange rates violate the parity conditions and deviate substantially this overlap – they may restore base money to initial levels, but open market from fundamentals even in deep and liquid markets, and with reasonable operations could bid up/ down interest rates and alter monetary conditions. capital mobility, seems to have become a settled position in the literature Under the signaling channel, interventions are perceived as indicating a (Rogoff, 1999; Mark, 2001; Sarno and taylor, 2002). Moreover, interventions change in the future stance of monetary policy (Sarno and Taylor, 2002). can occur in response to exchange rate changes but also have an effect on This is strengthened by agents regarding assets/currencies as imperfect exchange rates – the simultaneity problem which is empirically difficult to substitutes, triggering portfolio rebalancing that changes monetary disentangle conditions – the portfolio balance channel. RBI Bulletin January 2025 63ARTICLE Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience integrated policy framework (IPF) shows that even intervention, on the other hand, is typically a though India’s FX market has been mostly deep, it function of the central bank’s ‘scenting’ of the could become shallow in certain periods, including presence of misalignment/disorderly conditions. during the GFC and COVID-19 (Linde et al., 2024). Proximate indicators of market conditions turning disorderly are cited as accelerated changes Operational Priors in the exchange rate potentially driven by one- The intervention strategy involves as a first way bets; widening bid-offer spreads signaling step the setting up of management tolerance heightened uncertainty; the composition of thresholds. turnover – a rising ratio of interbank trades relative to customer-related turnover or ‘hot (a) Defining the metric – which exchange rate potato’ trading; volatility measured in several measure i.e., nominal/real; effective/bilateral; ways, including implied volatility and GARCH, the extent of movement to be tolerated; and over though some tolerance to volatility is warranted what specified period. The overwhelming choice if it co-exists with price discovery. Generally, among surveyed central banks is a currency these indicators are viewed in conjunction pair(s), a tight band in basis points around it that rather than in isolation. The central bank may defines authorities’ tolerance during a trading set benchmarks for these indicators to enhance day (Goldstein, 2002). its capacity to respond. Considerable discretion (b) Amount and timing – clearly an area in which is widely practiced on revealing intervention the optimal intervention literature fails the operations, with tactical ambiguity being the practitioner4. Determining the amount is usually revealed preference among emerging markets highly subjective, shaped by trial and error, (Chiu, 2003). and suffused with central banks’ judgment Technical Aspects honed by unique experiences and country- specific circumstances. Central banks also report Surveys also offer valuable glimpses at various extensive reliance on assessments of market technical issues embedded in implementing intelligence, observable market indicators and the decision to intervene or not. They relate to the level of reserves. In terms of first principles, the choice of markets, onshore or offshore, the the size of the intervention is usually a multiple intervention currency, choice of counterparties, and of the typical market order and technically as administration and governance aspects. A summary large as necessary to achieve the exchange rate of central bank responses is set out below. metric. Size constraints apply less to purchases • Interventions generally take place in the spot than to sales, since the former can be financed market to benefit from liquid conditions and by printing domestic currency and sterilized to obtain direct effects on the spot exchange insulate the inflation objective. The timing of rate; forward markets involve transmission mechanisms that are affected by monetary 4 Opinion, in fact, veers to the other extreme: “The amount of foreign conditions, whereas using derivatives could exchange intervention should not be determined from a policy rule” (Canales-Kriljenko, et al., 2003). This view has been reinforced by the result in leveraged net open positions and observed demise of rule-based intervention more generally, as demonstrated in the case of Canada in the 1990s and Brazil in the 2000s. margin calls can disrupt cash flows. 64 RBI Bulletin January 2025Foreign Exchange Intervention: Efficacy and Trade-offs in the ARTICLE Indian Experience • Onshore markets where the bulk of trading takes implementation of structural reforms starting 1991. place are normally preferred for intervention A brief transitional dual exchange rate arrangement operations so as to directly impact order flows instituted in March 1992 was followed by a market and exploit market intelligence as well; offshore determined exchange rate system in March 1993, interventions are undertaken only where the current account convertibility in August 1994 under local currency trades significantly or beyond Article VIII of the Articles of Agreement of the IMF, working hours offshore. development of the forex market from the second half of the 1990s based on recommendations made • Intervention is generally conducted in the most by Sodhani Committee (1994) and Expert Group on widely traded currency pair to reduce costs and the Foreign Exchange Markets (2005), and a gradual facilitate settlement. The US dollar was reported liberalisation of the capital account based on the as the most favoured intervention currency recommendations of the Committee on Capital (AREAER, IMF, 2022)5. Account Convertibility (1997) and Committee on • Typically, central banks prefer the wholesale Fuller Capital Account Convertibility (2006). As a market to the retail cash market for intervention result, trading volumes have picked up, adding operations to reap economies of scale that work structure, depth and liquidity to the forex market. towards reducing transaction costs. Subsequently, the derivatives segment has been • As regards counterparties, the choice is generally deepened by removing segmentation between of financial institutions and authorized dealers onshore and offshore markets for the INR. Indian which (a) are solvent, (b) provide competitive banks have been allowed to undertake non- two-way quotes and are market makers, and (c) deliverable derivative contracts with each other as provide information on market developments. well as with customers. Non-residents have been given access to the INR Non-Deliverable Foreign • Close coordination between the foreign exchange Exchange Derivative Contract (NDDC) segment, market and money market desks is considered irrespective of purpose. Market makers in India can essential, with a clear decision-making hierarchy. now deal in forex market on a 24x5 basis. In fact, The chain of command (it may involve a small all regulatory barriers based on residence, entity, committee, or a chief dealer being delegated product, venue, and type of exposure have been decisions on amount of intervention subject to removed to enable every economic entity to hedge thresholds, consistent with the management its forex risks flexibily and efficiently. tolerance limits, provided there are no principal- agent problems), with the front office separated The size of the forex market has increased from middle/back offices. substantially over the years (chart 1). The RBI’s intervention in the foreign exchange market III. Some Stylised Facts has been two-sided, driven by the objectives of Exchange rate management in India has smoothing excessive volatility, irrespective of its undergone a major transformation since the source (Table 1&2). It is observed that demand and supply conditions witness abrupt swings because 5 In 2000, the Reserve Bank of India included the euro as an intervention currency but has not used it in that role since. of sudden and excessive movements in foreign RBI Bulletin January 2025 65ARTICLE Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience Chart 1: Average Daily Forex Turnover Table 2: Nature of Monthly Forex Intervention (US$ Million) by RBI (Jan 2006 - Sept 2024) 60,000 Net Intervention Purchase Sale (Purchase +/ 50,000 Sales -) Total Sample Months 225 225 225 40,000 Months of 202 198 180 Intervention 30,000 % Intervention 90 88 80 Months 20,000 Average Monthly 1569 7160 6115 Intervention (US$ mn) 10,000 Max Intervention 18633 36650 38770 (US$ mn) 0 Total Spot Swap/Forward Min Intervention -20101 25 25 (US$ mn) 2001-02 2011-12 2021-22 2023-24 Source: RBI. Source : RBI. portfolio investment (FPI). This is corroborated by a Episodes of heightened volatility have been strong co-movement between FPI flows and the RBI’s observed during the global financial crisis of 2008-09, interventions (Chart 2). the taper tantrums of 2013, the (ILFS) crisis of 2018, Table 1: Indian Rupee-US Dollar Exchange Rate and RBI’s Forex Intervention Period Exchange Rate Appreciation (-) Volatility Net Forex Forex Purchase Forex Sales at the end of the /Depreciation (+) (Standard Intervention (US$ Bn) (US$ Bn) Period in per cent during Deviation) (Purchase +/ Sales -) the period (US$ Bn) Jan 2006 –Aug 2008 43.3 -1.64 2.43 110 132 22 Sep 2008 -Oct 2009 46.9 7.78 1.37 -32 15 47 Jan 2010 -Dec 2010 44.8 -3.57 0.94 1.8 3.3 1.5 Jan 2011 -Dec 2011 53.0 15.49 3.11 -13 0 13 Jan 2012-Dec 2012 54.9 3.37 2.47 -11 7 18 Jan 2013 -Dec 2013 61.9 11.40 4.22 4 51 47 Jan 2014-Dec 2014 63.0 1.78 1.20 32 98 66 Jan 2015-Dec 2015 66.2 4.76 1.72 37 84 48 Jan 2016 -Dec 2016 67.9 2.55 0.76 9 78 69 Jan 2017 -Dec 2017 63.8 -6.41 1.10 28 46 18 Jan 2018-Dec 2018 69.6 8.26 3.11 -16 42 58 Jan 2019-Dec 2019 71.4 2.49 1.05 40 60 19 Jan 2020-Dec 2020 73.0 2.26 1.32 88 127 39 Jan 2021-Dec 2021 74.4 1.86 0.86 33 159 126 Jan 2022-Dec 2022 82.7 10.07 2.85 -46 180 226 Jan 2023-Dec 2023 83.2 0.56 0.57 18 185 167 Jan 2024 -Sep 2024 83.8 0.68 0.33 32 150 118 Source: CEIC and RBI. 66 RBI Bulletin January 2025Foreign Exchange Intervention: Efficacy and Trade-offs in the ARTICLE Indian Experience Chart 2: Net FPI Flows and RBI Intervention (US$ Billion) 25 25 20 20 15 15 10 10 5 5 0 0 -5 -5 -10 -10 -15 -15 -20 -20 -25 -25 Source: RBI and CEIC. then COVID-19 pandemic, the Russia-Ukraine conflict less volatility than other major currencies, despite and more recently, from early 2022 to late 2023 due the unrelenting pressure from a surging US dollar to spillovers from synchronised monetary tightening (Chart 3) and sustained outward flights of FPIs. around the world, the banking crisis of March 2023, IV. Empirical Results the unwinding of yen-carry trade in August 2024 and fears of recession in September 2024. In the Since our objective is to investigate the efficacy second half of 2024, judicious interventions have of RBI’s interventions, we carry out two sets of ensured that the Indian Rupee (INR) has experienced analyses using monthly data from January 2014 till RBI Bulletin January 2025 67 31-naJ 31-yaM 31-peS 41-naJ 41-yaM 41-peS 51-naJ 51-yaM 51-peS 61-naJ 61-yaM 61-peS 71-naJ 71-yaM 71-peS 81-naJ 81-yaM 81-peS 91-naJ 91-yaM 91-peS 02-naJ 02-yaM 02-peS 12-naJ 12-yaM 12-peS 22-naJ 22-yaM 22-peS 32-naJ 32-yaM 32-peS 42-naJ 42-yaM 42-peS Net Intervention [Purchase (+) / Sale (-)] Net FPI (RHS) Chart 3: Rupee-US Dollar Exchange Rate 85.00 75.00 65.00 55.00 45.00 35.00 Source: CEIC. 60-naJ 60-peS 70-yaM 80-naJ 80-peS 90-yaM 01-naJ 01-peS 11-yaM 21-naJ 21-peS 31-yaM 41-naJ 41-peS 51-yaM 61-naJ 61-peS 71-yaM 81-naJ 81-peS 91-yaM 02-naJ 02-peS 12-yaM 22-naJ 22-peS 32-yaM 42-naJ 42-peSARTICLE Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience September 2024. First, we examine the impact of gross forex intervention (purchases plus sales) in a interventions in countering the impact of capital month, which captures the volume affect; and the flows in an auto regressive distributed lag (ARDL) nonlinear effects of gross interventions in the form model that is specified in terms of the changes in of a squared term. the level of the INR/USD: The results indicate that an increase in net FPI ... (1) inflows leads to INR appreciation and vice versa . Both debt and equity portfolio flows are found to where, der is monthly change in the INR/USD be statistically significant in the same direction . exchange rate (in per cent). A positive value of der is synonymous with depreciation of INR/USD and vice Inflation differentials and interest rate differentials versa. Since the exchange rate changes are expected are not statistically significant (Table 3) – neither to exhibit persistence due to hysteresis (Baldwin, PPP nor UIP holds in short-run in Indian conditions. 1988; Campa, 2004), the lagged values of der are The coefficient of the interaction term (net FPI included in (1). X is a vector of explanatory variables x net Intervention)6 is positive and statistically controlling for (i) net FPI flows (debt and equity are significant, opposing the negative and significant also examined separately); (ii) an interaction term impact of net FPI flows term and indicating that – Net FPI x Net interventions (spot and forward forex intervention, both purchases and sales, interventions are considered separately, as also spot effectively weaken the impact of capital flows on purchases and sales); (iii) inflation differentials the exchange rate. These coefficients are also found (CPI headline inflation in India minus CPI headline to be statistically not different from one another7, inflation in the US), assuming purchasing power which suggests no asymmetry in the impact of parity or PPP; and (iv) the difference between the forex purchases and sales on the exchange rate. The weighted average call money rate in India and the coefficient of the interaction term between forward effective US Fed Fund rate to represent uncovered market interventions and net FPI is also positive interest parity (UIP). and statistically significant, indicating that forward market interventions8 also reduce the impact of FPI In the second stage, the impact of forex interventions on exchange rate volatility is flows on exchange rate changes . examined. The mean equation in (1) is augmented The US VIX has a positive and statistically with volatility equations (2) and (3) – a GARCH model significant impact on exchange rate volatility, with different specifications (Dominguez,1993 and indicating that heightened global uncertainty Broto, 2013): accentuates exchange rate volatility in India. The impact of the gross spot intervention, on the ... (2) other hand, is statistically significant and negative, ... (3) 6 The interaction term is supposed to be positive always, as the purchases where, ε denotes the error term of the t (+) happens when net inflows (+) occurs and sales (-) happens when net mean equation (1). ε is split into a white noise outflows (-) occurs. Hence the results can be interpreted in terms of the t absolute size of the intervention. ( ) component and a time-dependent standard 7 Wald test for equality of coefficients of (Net FPI x purchases) and (Net deviation segment ( ). is determined by (a) FPI x sales) in Model 3 (Table 3): chi-square p-value = 0.184. 8 As against spot market intervention for which the effect on INR/USD is lagged squared error terms (ARCH), (b) its own lagged contemporaneous only, forward market intervention is supposed to affect values (GARCH), and (c) a set of explanatory variables the exchange rate contemporaneously and over a period. The outstanding amount represents the cumulative action taken so for, and the elasticity (Y), i.e., US VIX as a measure of global uncertainty; represents the impact of current and previous actions. 68 RBI Bulletin January 2025Foreign Exchange Intervention: Efficacy and Trade-offs in the ARTICLE Indian Experience Table 3: Regression Estimates: Dependent Variable is Changes in INR/USD Exogenous Variables (1) (2) (3) (4) (5) (6) Mean Equation Inflation differential (-1) 0.023 0.003 0.015 0.049 (-) 0.024 -0.023 (0.672) (0.965) (0.765) (0.387) (0.734) (0.748) Interest rate differential (-1) 0.001 0.017 0.032 (-) 0.020 0.010 0.013 (0.975) (0.722) (0.448) (0.652) (0.830) (0.771) Net FPI inflows (-) 0.151*** (-) 0.206*** (-) 0.121*** (-) 0.108*** (-) 0.112*** (0.000) (0.000) (0.000) (0.000) (0.000) Net FPI inflows (Equity) (-) 0.119*** (0.002) Net FPI inflows (Debt) (-) 0.209*** (0.002) Net FPI x Net Intervention Spot 0.007** 0.007** (0.023) (0.018) Net FPI x Spot Purchases# 0.005** (0.047) Net FPI x Spot Sales^ 0.008*** (0.001) Net FPI x Outstanding Forwards 0.015*** (0.000) Constant 0.281 0.276 0.194 0.291* 0.433** 0.412** (0.130) (0.144) (0.259) (0.091) (0.014) (0.020) AR (-1) 0.030 0.039 (-) 0.027 0.121 (-) 0.009 (-) 0.032 (0.721) (0.670) (0.764) (0.220) (0.925) (0.740) AR (-2) (-) 0.066 (-) 0.048 (-) 0.091 (-) 0.137 (-) 0.075 (-) 0.099 (0.516) (0.668) (0.359) (0.198) (0.436) (0.290) Volatility Equation ARCH (-1) (-) 0.088* (-) 0.114** (0.054) (0.017) ARCH (-2) 0.036 0.073 (0.826) (0.626) GARCH (-1) 0.239 0.319** (0.388) (0.034) US VIX 0.052** 0.050** (0.042) (0.034) Gross Intervention (-) 0.569*** (-) 4.690*** Spot (0.009) (0.000) Gross Intervention 0.219*** Spot^2 (0.000) Constant 4.142** 23.318*** (0.028) (0.000) Portmanteau test for white noise of 0.243 0.166 0.792 0.517 0.486 0.510 residuals (p-value) Note: p-values in parentheses are based on robust standard errors; *p<0.1, ** p < 0.05, *** p < 0.01; AR: Auto Regressive; ARCH: Auto Regressive Conditional Heteroscedastic; GARCH: Generalized ARCH. #: The interaction term is generated in those months where there are net purchases, otherwise kept zero. ^: The interaction term is generated in those months where there are net sales, otherwise kept zero. Source: Authors’ estimates RBI Bulletin January 2025 69ARTICLE Foreign Exchange Intervention: Efficacy and Trade-offs in the Indian Experience implying that interventions curb exchange rate by risk-on-risk-off sentiments, mainly on account volatility, confirming the results from (1) to (4) in of global spillovers, that is the source of exchange Table 3. The relationship is non-linear as shown by rate volatility rather than differentials in inflation the positive and statistically significant impact of the or interest rates. Foreign exchange interventions, squared term, suggesting the existence of threshold both spot and forward, effectively counter capital effects and explaining the “leaning against the wind” flows volatility, with symmetric effects of purchases phenomenon. and sales. We also detect threshold effects of forex interventions. Throwing sand in the wheels to V. Conclusion dampen the exchange rate volatility is more effective Several emerging market economies (EMEs) than attempts to influence the level of the exchange have opted for market-determined exchange rates through large interventions. This finding has – broadly classified as managed floats in de jure important implications for the conduct of exchange terms – to reap the equilibrating properties of rate policy in countries like India. freer exchange rates movements in the context of References balance of payments disquilibria. The experience with floating exchange rates the world over has, Adler G, N Lisack & R C Mano (2019), Unveiling the however, been quite the converse, marked by effects of foreign exchange intervention: A panel idiosyncratic movements, overshoots hysteresis and approach, Emerging Markets Review, Volume 40. several generations of currency crises, with adverse Adler G., K S Chang & Wang, Zijiao. 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RBI Bulletin January 2025 73A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 A Suite of Approaches for fundamentals. The FEER determines the equilibrium real exchange rate that ensures both internal Estimating Equilibrium (full employment and stable prices) and external Exchange Rates for India 2.0 (sustainable current account balance) equilibrium. A variant of FEER is the DEER, which incorporates by Michael Debabrata Patra, optimal policy such as policymakers’ current account Harendra Behera, Dhirendra Gajbhiye, targets, thereby bringing in a normative perspective. Sujata Kundu and Rajas Saroy^ The CHEER integrates interest rate parity conditions with PPP to evaluate the nominal exchange rate Completing the full suite of equilibrium exchange behaviour in a short to medium run framework. rates for India, this paper highlights the role of price The NATREX approach emphasises medium to long differentials, interest rate differentials, social thrift, run exchange rates by accounting for capital and productivity and the current account balance in debt dynamics and removing speculative factors, determining the Indian rupee’s equilibrium value. thus providing a broader, time-variant framework (Chart 1). Introduction This article is structured as follows. Select Equilibrium exchange rate models provide stylised facts specific to the models estimated in this guiding frameworks for assessing the “fair value” of paper are presented in Section II, followed by the the exchange rate, based on economic fundamentals. description of these alternative approaches in Section In this sequel to the November 2024 effort (Patra III. Methodological details and estimation results are et al., 2024), we expand the suite of equilibrium discussed in Section IV and Section V concludes the exchange rates from the purchasing power parity paper. (PPP), the behavioural equilibrium exchange rate (BEER), the permanent equilibrium exchange rate Chart 1: A Suite of Models for Estimating (PEER) and the fundamental equilibrium exchange Equilibrium Exchange Rates rate (FEER) approaches to cover the capital enhanced Equilibrium equilibrium exchange rate (CHEER), the desired Exchange rate equilibrium exchange rate (DEER) and the natural Behavioural Capital Enhanced Approaches real exchange rate (NATREX) approaches (Annex Purchasing Equilibrium Equilibrium modeling Power Parity Exchange Rate Exchange Rate internal and Table A1). (BEER) (CHEER) external equilibrium To recapitulate, while the PPP model links Permanent Fundamental Natural Equilibrium Equilibrium exchange rates to price level differences across Exchange Rate Exchange Rate Real Exchange Rate (NATREX) (PEER) (FEER) countries, the BEER framework relates exchange rate assessment to current fundamentals. The PEER Desirable Equilibrium refines BEER by focusing on long-term sustainable Exchange rate (DEER) ^The authors are from the Reserve Bank of India. The views expressed in this article are those of the authors and do not represent the views of the Source: Authors’ compilation. Reserve Bank of India. RBI Bulletin January 2025 75ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 II. Stylised Facts where and are home and foreign inflation Uncovered Interest Parity (UIP) and Purchasing rates. Power Parity (PPP) are the starting point for The actual INR-USD spot exchange rate deviated understanding currency valuation and for identifying substantially from its level implied by PPP and UIP misalignments. UIP states that with efficient capital during the global financial crisis (GFC) of 2008-09 and markets, the difference in interest rates between two taper tantrum of 2013-14 (Charts 2a and b). Deviations countries will equal the expected relative change in arose from market stress, risk aversion, and capital their exchange rates over the same period, ensuring outflows from emerging markets, including India. no arbitrage opportunities for investors: This led to widening of interest rate differentials and significant exchange rate volatility. Ahead of the taper tantrum, India’s high current account deficit and inflation widened interest rate differentials and where and are home and foreign nominal interest worsened UIP deviations. In contrast, recent years rates, is the exchange rate at time t, and superscript have seen significantly lower deviations from UIP, ‘e’ denotes expected value (Tanner, 1998). When reflecting improved macroeconomic stability. The relative purchasing power parity holds, exchange current account deficit and inflationary pressures rates adjust to offset differences in inflation between eased. Episodes of capital flows enabled India’s forex two countries. If one country has higher inflation, its reserves to grow. These developments helped to currency should depreciate relative to the other to bring about a closer alignment between interest rate maintain the same purchasing power for goods over differentials and exchange rate expectations. time. Accordingly, the relative PPP exchange rate is given by: III. Model Description The capital enhanced equilibrium exchange rate (CHEER) model (MacDonald, 2000), is one of Chart 2: INR-USD Exchange Rate based on Implied PPP and UIP a. Implied PPP b. UIP 85.0 80.0 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 Sources: CEIC, RBI and Authors’ Calculations. 76 RBI Bulletin January 2025 DSU-RNI 1Q:50-4002 3Q:60-5002 1Q:80-7002 3Q:90-8002 1Q:11-0102 3Q:21-1102 1Q:41-3102 3Q:51-4102 1Q:71-6102 3Q:81-7102 1Q:02-9102 3Q:12-0202 1Q:32-2202 3Q:42-3202 DSU-RNI 85.0 80.0 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 INR/USD_Spot Implied Exchange Rate-PPP Based INR/USD_Spot Implied Exchange Rate-UIP Based 1Q:50-4002 3Q:60-5002 1Q:80-7002 3Q:90-8002 1Q:11-0102 3Q:21-1102 1Q:41-3102 3Q:51-4102 1Q:71-6102 3Q:81-7102 1Q:02-9102 3Q:12-0202 1Q:32-2202 3Q:42-3202A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 the popular approaches to estimate the equilibrium related to the FEER, DEER’s primary advantage is its nominal exchange rate. It bridges the gap between immediate applicability in policy contexts. Unlike the traditional goods market equilibrium (PPP) and neutral stance of the FEER model, DEER incorporates financial market behaviour (UIP) (Juselius, 1990 normative preferences, allowing policymakers to align and 1995; Johansen and Juselius, 1992). This makes currency valuation with strategic macroeconomic CHEER particularly relevant for analysing exchange objectives. Unlike static models, DEER incorporates rate movements driven by interest rate differentials hysteresis, acknowledging that prolonged exchange and capital flows. The underlying rationale for the rate misalignments affect net foreign assets and debt CHEER model is to explain the deviations of nominal servicing costs, necessitating dynamic recalibration. exchange rate from its long run equilibrium indicated This path-dependent approach makes DEER a by the PPP as a result of non-zero interest rate powerful tool for assessing misalignments and their differentials that may be necessary to finance the implications on macroeconomic stability (Artis and capital account of an economy’s balance of payments Taylor, 1995). It considers variables like the real (BoP).1 By jointly analysing UIP and PPP, CHEER offers effective exchange rate (REER), trade elasticities, a comprehensive framework to understand exchange domestic and foreign output levels, and target for rate dynamics in the context of market integration. It current account balances to estimate the degree of involves the estimation of a cointegrating relationship misalignment between observed exchange rates and between relative prices, nominal interest rate policy-driven equilibrium rates. differentials and the nominal exchange rate. The NATREX is a long-run equilibrium concept The desired equilibrium exchange rate (DEER) defined as ‘the rate that would prevail if speculative emerged from identifying the potential shortcomings and cyclical factors could be removed while of the fundamental equilibrium exchange rate (FEER) unemployment is at its natural rate’ (Stein, 1994). approach. The concept of FEER may involve an The NATREX approach considers exchange rate arbitrary definition of medium-term fundamentals, dynamics as consisting of three components – the particularly with regard to the definition of the deviation of the current (short-term) exchange rate target current account, sustainable capital flows from the medium-term value; the deviation of the and optimal fiscal policy. The FEER is inherently medium-term real exchange rate from the long-term normative and is, therefore, tied to some kind of equilibrium value; and the long-term equilibrium a ‘desired’ policy trajectory (Williamson, 1994). exchange rate that is determined solely by economic In the case of DEER, the objective is to obtain an fundamentals, which are defined as productivity equilibrium real exchange rate aligned with specific and time preference (or “social thrift”) at home and policy goals as for instance, the desired path of abroad. It is the real exchange rate which equates the fiscal policy, sustainable external debt levels or current account to ex ante savings and investment targeted current account balances (Égert, 2003). The implied by fundamentals relating to productivity and distinction of DEER lies in being goal-driven, focusing thrift, which are exogenous. It is also consistent with on what exchange rate policymakers desire to achieve portfolio balance, equating domestic and world real rather than optimality considerations. While closely interest rates. The NATREX dynamically evolves with 1 CHEER, therefore, supplements the nominal UIP condition but excludes changes in fundamentals, capturing how structural any risk premia with the assumption that the expected value of the nominal exchange rate can be predicted by using relative prices if PPP holds. shifts like productivity growth or shifts in savings RBI Bulletin January 2025 77ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 patterns influence the real exchange rate trajectory. This makes it a valuable tool for assessing exchange (1) rate misalignments and understanding the factors where the nominal exchange rate is India’s 40-currency driving deviations from the long run equilibrium. trade weighted nominal effective exchange rate Unlike models focused on short-term market forces (NEER) and INR-USD bilateral nominal exchange rate like the PPP, BEER or CHEER, the NATREX integrates as alternate specifications, is the intercept term, structural and dynamic factors into the natural is the domestic price level represented by India’s adjustment of an economy towards its long run consumer price index (CPI)2, is the US CPI, is equilibrium. Additionally, unlike other medium run the interest rate on 10 year Indian treasury bond / models like the FEER and DEER, it does not require 3-month treasury bill rate as alternate specifications, normative assumptions about underlying variables is the market yield on 10-year US treasury and allows for a time-varying equilibrium based on securities / 3-month treasury bill rate as alternate exogenous fundamentals. Thus, it has two main specifications and is the error term. Therefore, components – the long run equilibrium real exchange and indicate the price differential and rate and the medium run dynamics of adjustment the long run / short run interest rate differentials towards this equilibrium. It is estimated by identifying at time period t, respectively. While and are a long run cointegrating relationship between the real expressed in percentage form, , , NEER and INR- exchange rate and the fundamentals, with an error USD exchange rate are transformed into their natural correction term included to capture the trajectory of logarithmic forms to stabilise variances for better the real exchange rate towards the NATREX. model specification. All variables, except interest While CHEER provides the estimated equilibrium rates, are de-seasonalised by using the standard X-13 nominal exchange rate in the short run and the ARIMA procedure. medium run, DEER provides the equilibrium REER Based on equation (1), the equilibrium nominal that should prevail in the medium run, while NATREX exchange rate can be estimated in (2), with the hat estimates the long run equilibrium REER. Compared symbol signifying the fitted series: to models like FEER and NATREX, which emphasise optimal policy paths/targets or long run equilibrium respectively, CHEER and DEER are easier to estimate (2) and operationalise. Accordingly, in conjunction with A suite of vector error correction models the prequel endeavour of November 2024, we now (VECMs) are used on quarterly data from 2004-05:Q1 offer a comprehensive framework for understanding to 2024-25:Q2 (Annex Table A2 provides details of exchange rate dynamics under various alternate the variables/indicators that have been used for models capturing perspectives on different time the empirical analysis) in order to determine the dynamics. equilibrium NEER and the INR-USD bilateral exchange IV. Empirical Methodology and Results rate using the CHEER approach. In order to check the The following equation is used to estimate the equilibrium NEER and the equilibrium INR-USD 2 Data on consumer price index-combined (CPI-C) with base year 2012 are available from January 2011. Prior to that, data corresponding to CPI for nominal exchange rate through the CHEER approach: Industrial Workers (CPI-IW) have been used and re-based to 2012. 78 RBI Bulletin January 2025A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 time series properties of the variables, standard unit differential and the interest rate differential turn root tests are conducted. All the variables in equation out to be statistically significant with the expected (1), i.e., the NEER, the INR-USD exchange rate, price signs (Table 1). The results indicate that in the long differential and interest rate differential are found run, an increase in the price differential between to be integrated of order 1 (Annex Table A3). As per India and the global economy (or the US) leads to a the Johansen-Hendry-Juselius contegration test, both depreciation of the NEER (or the bilateral INR-USD trace and max-eigenvalue tests indicate the presence exchange rate) as higher domestic prices would of a long run cointegrating relationship among the reduce export competitiveness, while an increase variables. in the long term interest rate spread (or the short Therefore, a VECM is considered to be term interest rate spread) between India and the US appropriate for estimating the equilibrium nominal leads to an appreciation of the nominal exchange exchange rate under the CHEER approach. The rate on account of net capital inflows to the domestic regression coefficients corresponding to the price economy. Table 1: Results from the Vector Error Correction Model (VECM) for CHEER Approach3 Long Run Coefficients Explanatory Variables Specification – 1: NEER Specification 2: NEER Specification 3: INR-USD Specification 4: INR-USD (Long term interest rate (Short term interest rate (Long term interest rate (Short term interest rate differential) differential) differential) differential) 4.22*** 4.28*** 4.96*** 4.82*** (0.07) (0.03) (0.07) (0.03) -0.48*** -0.49*** 0.81*** 0.78*** (0.04) (0.03) (0.05) (0.03) 0.02** 0.01** -0.05*** -0.02*** (0.01) (0.004) (0.01) (0.004) -0.08** -0.10** -0.17** -0.22*** (0.03) (0.04) (0.07) (0.07) Post estimation results Adjusted R-squared 0.52 0.54 0.18 0.39 F-Statistic 11.80 11.11 3.16 6.55 VEC Residual Adj. Q-Statistic (lag 2) = Adj. Q-Statistic (lag 2) = Adj. Q-Statistic (lag 3) = 7.40; Adj. Q-Statistic (lag 3) = Portmanteau Tests for 22.88; Prob.= 0.12 19.88; Prob.= 0.23 Prob.= 0.96 25.22; Prob.= 0.07 Autocorrelations4 VEC Residual Serial Rao F- Statistic (Lag 1) = Rao F- Statistic (Lag 1) = 1.48; Rao F- Statistic (Lag 1) = 0.47; Rao F- Statistic (Lag 1) = 1.12; Correlation LM Tests5 2.57***; Rao F-Statistic (Lag 2) = 1.41 Rao F-Statistic (Lag 2) = 0.52; Rao F-Statistic (Lag 2) = 0.65; Rao F-Statistic (Lag 2) = 1.10 Rao F- Statistic (Lag 3) = 0.38; Rao F- Statistic (Lag 3) = 1.92; VEC Residual Prob. = 0.79 Prob. = 0.08 Prob. = 0.00 Prob. = 0.11 Heteroskedasticity Tests (Includes Cross Terms)6 Note: ***;**;*: Significant at less than 1 per cent, 5 per cent and 10 per cent level, respectively. Figures in parentheses represent robust standard errors. Sources: Authors’ estimates. 3 Period dummies to control for the impact of global financial crisis of 2007-09 and taper tantrum episode of 2013-14 were used to improve model specifications. 4 No residual autocorrelations up to lag h. Test is valid only for lags larger than the VAR lag order. 5 Null hypothesis: No serial correlation at lag h. 6 Null Hypothesis: Homoscedasticity. RBI Bulletin January 2025 79ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 The long run coefficients thus obtained can be used to estimate the equilibrium NEER. In the short (3) run, however, own lags of NEER / INR-USD exchange where is the intercept, , and represent rate turn out to be statistically significant. The error the long run coefficients from the ARDL model. The 0 1 2 3 β β β β correction term (ect) is also found to be statistically calculation provides a measure of the DEER, reflecting significant across all model specifications, which the level of REER consistent with sustainable external indicates that the models are stable. The models and internal balances. also broadly satisfy post-estimation diagnostics. The The model incorporates the log of the real fitted values of the NEER / INR-USD estimated by effective exchange rate (lnREER), the log of India’s using the medium run coefficients represent the long real GDP (lnINGDP), the log of real global GDP run equilibrium NEER / INR-USD exchange rate under proxied by GDP of G20 countries (lnWGDP) and two the CHEER approach. dummy variables capturing the GFC and the taper tantrum. All variables have been de-seasonalised Based on the CHEER approach, the actual NEER by using the standard X-13 ARIMA procedure. The and the INR-USD nominal exchange rate have been estimation is conducted by using the ARDL approach, broadly aligned to their medium run equilibrium which captures both short run dynamics and long levels, barring the period of the taper tantrum run relationships over the sample period from 2004- (Chart 3). 05:Q1 to 2024-25:Q2. For the DEER approach, the following econometric To calculate the DEER, long run sustainable model is estimated by relating the current account components of the explanatory variables (REER, balance to GDP ratio (CAB) to key macroeconomic CAB, INGDP, and WGDP) are extracted by using the variables: Hodrick-Prescott (HP) filter, which smooths time- Chart 3: Actual versus Equilibrium NEER and the INR-USD Exchange Rate as Estimated from the CHEER Approach a. Actual NEER versus Equilibrium NEER b. Actual INR-USD versus Equilibrium INR-USD Sources: Authors’ estimates. 80 RBI Bulletin January 2025 001=61-5102 :xednI DSU-RNI 150 140 130 120 110 100 90 80 1Q:50-4002 1Q:60-5002 1Q:70-6002 1Q:80-7002 1Q:90-8002 1Q:01-9002 1Q:11-0102 1Q:21-1102 1Q:31-2102 1Q:41-3102 1Q:51-4102 1Q:61-5102 1Q:71-6102 1Q:81-7102 1Q:91-8102 1Q:02-9102 1Q:12-0202 1Q:22-1202 1Q:32-2202 1Q:42-3202 1Q:52-4202 85 75 65 55 45 35 NEER: Actual Equilibrium NEER: CHEER Approach (Long run interest rate differential) Equilibrium NEER: CHEER Approach (Short run interest rate differential) 1Q:50-4002 1Q:60-5002 1Q:70-6002 1Q:80-7002 1Q:90-8002 1Q:01-9002 1Q:11-0102 1Q:21-1102 1Q:31-2102 1Q:41-3102 1Q:51-4102 1Q:61-5102 1Q:71-6102 1Q:81-7102 1Q:91-8102 1Q:02-9102 1Q:12-0202 1Q:22-1202 1Q:32-2202 1Q:42-3202 1Q:52-4202 INR-USD: Actual Equilibrium INR-USD: CHEER Approach (Long run interest rate differential) Equilibrium INR-USD: CHEER Approach (Short run interest rate differential)A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 series data to isolate trend components. These trend Table 2: Results from the ARDL Model for values are substituted into the estimated long run DEER Approach relationship derived from the ARDL model. The Explanatory variables Long run coefficients equilibrium exchange rate (REER*) is then calculated ln(REER) 0.20*** t (0.04) by solving for lnREER* in equation (3). ln(INGDP) -0.18*** t The ARDL estimates reveal that lnINGDP has a (0.04) ln(WGDP ) 0.12* negative and statistically significant effect on CAB t- (0.03) 1 with a coefficient of -0.18, indicating that higher Constant -0.42 t (0.31) domestic GDP worsens the current account balance Post-estimation results (Table 2). In contrast, lnWGDP exhibits a positive Adjusted R-squared 0.68 coefficient of 0.12, suggesting that higher global D-W Statistic 1.96 economic activity positively impacts the current Breusch-Godfrey Serial Correlation LM (4) 0.25 account balance. While the rise in domestic GDP would ARCH LM (4) 0.88 lead to an appreciation, higher global GDP would Bounds test result F-statistic = 13.96; 1 per cent Lower Bound = 4.7; Upper Bound = 5.0. lead to a depreciation of the equilibrium exchange Note: ***;**;*: Significant at less than 1 per cent, 5 per cent and 10 per rate through productivity changes. The coefficient of cent level; Figures in brackets are robust standard errors. Source: Authors’ estimates. lnREER is 0.20, implying that an increase in the real effective exchange rate has a direct positive effect on degree of exchange rate misalignment (Chart 4). the current account balance, owing to the productivity If the observed REER is higher than the DEER, the channel in the medium run. Indian rupee is overvalued, which may impair The comparison between the calculated DEER competitiveness. Conversely, if the observed REER and the observed REER provides insights into the is lower than the DEER, the rupee is undervalued, REER DEER (Long-term) DEER(CAB=-1%) DEER(CAB=-2.5%) Sources: Authors’ estimates and RBI. RBI Bulletin January 2025 81 001=61-5102 :xednI Chart 4: Actual Equilibrium REER as estimated from the DEER Approach 110 105 100 95 90 85 80 2Q4002 1Q5002 4Q5002 3Q6002 2Q7002 1Q8002 4Q8002 3Q9002 2Q0102 1Q1102 4Q1102 3Q2102 2Q3102 1Q4102 4Q4102 3Q5102 2Q6102 1Q7102 4Q7102 3Q8102 2Q9102 1Q0202 4Q0202 3Q1202 2Q2202 1Q3202 4Q3202 3Q4202ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 potentially boosting export competitiveness. rate R (∂B/ ∂R < as an appreciation leads to a Moreover, we have considered two different targets deterioration of the trade balance) and productivity 0 of CAB as per cent of GDP – (-) 1.0 per cent and (-) of the export sector Z (∂Z ∂R Z includes both b b b 2.5 per cent as alternate desired levels to estimate physical productivity and the terms of trade) to the / > 0; the DEER. Illustratively, with the current account balance of trade. Growth is given by G(R; Z , Z ), where q g balance at (-) 1.0 per cent of GDP, the DEER level ∂G ∂R < (as appreciation of the real exchange rate suggests a depreciation of the real exchange rate to reduces investment as explained earlier), ∂G ∂Z > / 0 reach its equilibrium level. These results highlight and ∂G ∂Z > Z is a vector of exogenous variables g g / 0 the importance of maintaining an exchange rate close that signifies fundamental determinants of growth / 0. to its equilibrium to support external stability and such as improved efficiency, technology transfers sustainable growth. through FDI, liberalisation of the economy, wage The analysis underscores the critical role price flexibility and rule of law. Incorporating these of domestic and global economic conditions in functions, the medium run NATREX is the value determining the equilibrium exchange rate, offering of the real exchange rate that solves the following valuable guidance for exchange rate policy and internal–external equilibrium equation where the external sector management. external debt/GDP ratio F is predetermined, r is the t Underlying the NATREX model are four basic world rate of interest and therefore rF is the ratio of t functions7. The savings function S(F,δ) specifies payments on foreign debt to GDP: savings/GDP (S) as a function of external debt (F; with (4) ∂S F as a rise in current savings is necessary The left-hand side expression of (4) is an to repay higher debt burden in the future) and ⁄∂ > 0 expression for the current account CA (R ; F , Z , r), the social time preference8 (δ; with ∂δ F as a t t t b and the right-hand side expression is the savings- stronger preference for current consumption leads ⁄∂ > 0 investment balance SI (δ, R ; F , Z ). The medium run to lower current savings). The investment function t t t q external debt/GDP equation is given by: is given by I (R Z ), where R is the real exchange rate q (∂I ∂R < as an appreciation of the exchange rate ; decreases the q-ratio9) and Z is a vector of exogenous (5) / 0 q fundamentals that raise the q-ratio such as labour and The long run NATREX is the medium run real capital productivity (∂I ∂Z ). Finally, the trade q exchange rate at which the debt/GDP ratio has balance function B(R; Z ) relates the real exchange ⁄b > 0 stabilised, i.e., dF dt in equation (5) above which t 7 For more details refer to Chapter 4 of Stein (2006). becomes [r – G(F; Z , Z )] F = B (R; Z ). Hence, at this /q =g 0 t b 8 The social time preference is an inverse measure of thrift. It is the rate point the trade balance is sufficiently large to sustain at which the government and private sector emphasise present consumption over future consumption. δ debt repayments adjusted for growth. 9 Tobin’s q is the ratio of expected value of the firm (proxied by the present values of its cash flows) to the cost of investment. An investment is Empirically, the long run NATREX at time t undertaken if q>0, i.e., the proposed capital formation increases the value is estimated by taking time-preference (δ) and of the firm by more than the cost of the investment. In an open economy t that sells output at the world price, an appreciation of the real exchange technological progress [Z = f (Z , Z , Z )] as exogenous rate lowers the export earnings of firms, which lowers the q ratio and makes q b g many investments unviable, hence reducing overall investment. in the reduced-form equation: 82 RBI Bulletin January 2025A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 rate. This leads to a rise in external borrowings, thus Table 3: Results from the ARDL Model for the NATREX Approach appreciating the REER in the medium run. Explanatory Variables Long Run In the case of a rise in domestic productivity (Dependent Variable: Ln(REER) Coefficients t-1 ( ), the marginal cost of producing tradable 15.98*** Constant (3.73) goods decreases, thus improving the current account -0.65** Ln(Domestic Social Consumption/GDP) balance. However, this improvement in productivity t-1 (0.29) -1.29** does not immediately alter domestic savings or Ln(Average Foreign Social Consumption/GDP) t- (0.49) investment decisions. Thus, the REER appreciates, 0.84*** Ln(Domestic GDP Per Capita) t-1 (0.20) reducing the competitiveness of tradables and -1.98*** bringing the current account and capital flows back Ln(Average Foreign GDP Per Capita) t-1 (0.59) to balance. -0.46*** (0.07) Hence, a rise in either time preference or Post Estimation Results Adj. R-squared 0.46 productivity has the same effect on REER in the F-Statistic 5.91 medium run – an appreciation. However, they have D-W Statistic 2.10 different long run effects due to the differential Prob. F(2,61) = Breusch-Godfrey Serial Correlation LM Test10 impact of these movements on the debt burden. 0.64 Prob. F(13,63) Breusch-Pagan-Godfrey Heteroskedasticity Test11 = 0.63 Long Run Effects Bounds Test Result With a rise in time preference, which leads to capital F-statistic = 7.85; 5 per cent Lower Bound at sample size 75 = 2.73; Upper Bound = 3.72. inflows to finance consumption, REER appreciates Note: ***;**;*: Significant at less than 1 per cent, 5 per cent and 10 per in the medium run. This leads to a rise in foreign cent level. Figures in parentheses are standard errors. All variables are seasonally adjusted. debt, thus creating a burden of higher future debt Source: Authors’ estimates. repayments. The associated capital outflows put a depreciating pressure on the REER, thereby improving (6) the current account balance. For the case of India too, Equation 6 is estimated by using an ARDL the empirical results indicate that a rise in social time approach using data from 2004-05:Q4 to 2023-24:Q4 preference leads to a depreciation of the REER in the (Table 3). long run. Medium Run Effects In contrast to the rise in time preference, a rise in productivity has an opposite impact on REER in the Starting from a state of medium run equilibrium long run. It improves the current account balance given by equation (4), wherein current account and helps reduce foreign debt, thereby appreciating balance equals the savings-investment balance, a rise the REER in the long run. This result is empirically in time preference ( ) results in ex ante savings confirmed in the case of India as the coefficient of falling short of investment at the present exchange domestic GDP per capita (a proxy for productivity) is 10 Null hypothesis: No serial correlation up to 2 lags. positive and statistically significant. 11 Null hypothesis: Homoscedasticity. RBI Bulletin January 2025 83ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 Chart 5: Actual versus Equilibrium REER as estimated from NATREX approach REER: Actual NATREX: Long Run Note: Long-run NATREX equation fitted with four quarter moving averages of exogenous series to reduce the short run noise. Source: Authors’ calculations. Misalignment vis-à-vis NATREX suggest an overvaluation of Indian rupee while the NATREX approach shows the equilibrium REER The REER has increased broadly in line with trending upwards in the long run. Overall, across macroeconomic fundamentals under NATREX. models, the medium run equilibrium REER is found Further, in the past financial year, results from the to be higher than the actual REER, indicating a scope NATREX suggest that the actual REER was fairly for the appreciation of the actual REER. aligned to its long run equilibrium (Chart 5). V. Concluding Remarks Overall, the results indicate that in 2023-24, India’s REER was somewhat below the level consistent Equilibrium exchange rates imply consistency with its medium run fundamentals especially during with a given set of fundamentals over the medium to the second half of 2023-24 (Table 4). India’s NEER has long term while acknowledging inherent trade-offs. also been below its medium-run equilibrium level. There is no consensus in the literature on the correct The movements of the equilibrium REER obtained concept of equilibrium exchange rate. Each of the in the medium run (based on the DEER approach) concepts discussed and estimated in this paper and its prequel correspond to a particular policy question. Table 4: Degree of REER Misalignment based on the Various Approaches Our objective is to put together the broadest range FY: BEER: BEER: PEER FEER DEER NATREX of indicators in the form of a toolkit that serves 2023-24 Short Medium CHEER as a point of reference for policy discussions. It is Run Run (NEER) important to note that these estimates are sensitive Q1 -0.9 3.9 3.8 9.2 -0.9 0.6 5.7 Q2 -1.8 2.0 1.1 7.2 -3.8 -1.7 2.4 to key parameters, modelling framework and the Q3 0.7 2.3 1.9 10.5 -3.0 0.1 2.1 choices thereof. The overarching point is, however, Q4 0.01 1.6 0.6 10.3 -4.6 -1.2 1.2 that any assessment of exchange rate misalignment Note: REER Misalignment = Equilibrium REER - Actual REER. Source: Authors’ estimates. must be informed by empirical analysis. 84 RBI Bulletin January 2025 001=61-5102 :xednI 110 105 100 95 90 85 1Q5002 1Q6002 1Q7002 1Q8002 1Q9002 1Q0102 1Q1102 1Q2102 1Q3102 1Q4102 1Q5102 1Q6102 1Q7102 1Q8102 1Q9102 1Q0202 1Q1202 1Q2202 1Q3202 1Q4202A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 References Juselius, K. (1995). Do purchasing power parity and uncovered interest rate parity hold in the long run? Artis, M. J., and Taylor, M. P. (1995). Misalignment, An example of likelihood inference in a multivariate Debt Accumulation and Fundamental Equilibrium time-series model. Journal of Econometrics 69(1), Exchange Rates. National Institute Economic Review, 211-240. 153, 73–83. MacDonald, R. (2000). Concepts to calculate Driver, R. L., and Westaway, P. F. (2004). Concepts of equilibrium exchange rates. In Exchange rates, capital equilibrium exchange rates: an overview. Bundesbank flows and policy (pp. 98-148). Routledge. Series 1 Discussion Paper. Egert, B. (2003). Assessing Equilibrium Exchange Patra et al., (2024). A Suite of Approaches for Rates in CEE Acceding countries: Can we have DEER Estimating Equilibrium Exchange Rates for India, RBI with BEER without FEER? A Critical Survey of the Monthly Bulletin (November). Literature. Oesterreichische Nationalbank, Focus on Stein, J. L. (1994). The Fundamental Determinants of Transition Vol. 2/2003. 38-106. the Real Exchange Rate of the U. S. Dollar Relative to Johansen, S., and Juselius, K. (1992). Testing Other G-7 Currencies. IMF Working Paper WP/95/81. structural hypotheses in a multivariate cointegration Stein, J. L. (2006). Stochastic optimal control, analysis of the PPP and the UIP for UK. Journal of international finance, and debt crises. OUP Oxford. econometrics, 53(1-3), 211-244. Tanner, E. (1998). Deviations from Uncovered Interest Juselius, K. (1990). Long-run Relations in a Well Parity: A Global Guide to Where the Action Is. IMF Defined Statistical Model for the Data Generating Working Paper WP/98/117. Process. Cointegration Analysis of the PPP and the UIP Relations. Discussion Papers 90-11. University of Williamson, J. (1994). Estimating equilibrium Copenhagen. Department of Economics. exchange rates. Peterson Institute. RBI Bulletin January 2025 85ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 Annex Annex Table A1: Summary of Empirical Approaches to Estimating Equilibrium Exchange Rates Sl. Name Theoretical Assumptions Relevant Time Statistical Dependent Estimation No. Horizon Assumptions on Variable Method Dependent Variable 1. Uncovered The expected change in the Short run Stationarity Expected change Direct Interest exchange rate determined by (of change) in real or nominal Parity (UIP) interest differentials terms 2. Purchasing Constant Equilibrium Long run Stationary Real or Test for Power Exchange Rate nominal stationarity Parity (PPP) 3. Capital PPP plus nominal UIP without Short run and Stationary, with Nominal/Bilateral Direct Enhanced risk premia medium run emphasis on Equilibrium (also forecast) speed of Exchange convergence Rate (CHEER) 4. Behavioural Expected future movements in Short run and Non-stationary Real Direct Equilibrium real exchange rates determined medium run Exchange by fundamentals (also forecast) Rate (BEER) 5. Fundamental Real exchange rate compatible Medium run Non- stationary Real Underlying Equilibrium with both Balance Exchange internal and external Rate (FEER) balance 6. Desired As with FEERs, but Medium run Non- stationary Real Underlying Equilibrium the definition of external balance Balance Exchange based on targeted policy path Rate (DEER) 7. Permanent Same as BEER Medium / Non-stationary Real Direct Equilibrium Long run (Extract Exchange permanent Rate (PEER) component) 8. Natural Same as FEERs, but Long run Non- stationary Real Direct Real with the assumptions Exchange of portfolio balance and stable Rates (NATREX) external debt to GDP Source: Driver and Westaway (2004). 86 RBI Bulletin January 2025A Suite of Approaches for Estimating Equilibrium ARTICLE Exchange Rates for India 2.0 Annex Table A2: Variable Description and Data Source Sl. Variable Indicator Description Data Source No. 1. Ln(REER) Real effective exchange rate 40-currency trade-weighted REER RBI t index 2. Ln(INR-USD) Exchange rate between India Spot/nominal rate RBI; Financial Benchmarks India Pvt. t and US Ltd. (FBIL) 3. Ln(P ) Domestic price level India’s consumer price index (CPI) Ministry of Statistics and Programme t,India Implementation (MoSPI) 4. Ln(P* ) Foreign (US) price level US CPI St. Louis FRED t,US 5. I Domestic interest rate Interest rate on 10-year Indian treasury bond RBI t,India / 3-month treasury bill rate in alternate model specifications 6. I* Foreign interest rate Market yield on 10-year US treasury securities St. Louis FRED and Refinitiv t,US / 3-month treasury bill rate in alternate model specifications 7. lnINGDP Real GDP of India Real GDP of India MoSPI 8. lnWGDP Real global GDP Proxied by GDP of G20 countries OECD 9. DGFC Dummy variable for Global Authors’ calculations Financial Crisis period 10. DTAPER Dummy variable for taper Authors’ calculations tantrum period 11. Ln(Domestic time Domestic Social Ratio of social consumption (Public + Private) to Oxford Economics, CEIC and preference) Consumption/GDP GDP for India Authors’ calculations t 12. Ln(Foreign time Average Foreign Social Average of the ratios of social consumption Oxford Economics, CEIC and preference) Consumption/GDP (Public + Private) to GDP for countries included Authors’ calculations in foreign sector. t Foreign sector includes 16 major trade partners included in the 40 currency REER calculation viz., Australia, Brazil, Ghana, Hong Kong, Indonesia, Japan, Malaysia, Nigeria, Russia, Singapore, South Africa, Republic of Korea, Taiwan, Thailand, the US, and the Eurozone. 13. Ln(Domestic Average Foreign GDP Per Average real GDP per capita for countries included Oxford Economics and Authors’ productivity) Capita in foreign sector. Foreign sector is defined the calculations t same as in 12. Source: Authors’ compilation. RBI Bulletin January 2025 87ARTICLE A Suite of Approaches for Estimating Equilibrium Exchange Rates for India 2.0 Annex Table A3: Results of the Unit Root Tests Variables Augmented Dickey Fuller (ADF) Phillips–Perron Unit-Root Test Statistic Test Statistic Z(rho) X ΔX X ΔX Ln(REER) -1.439 -6.548*** -1.968 -7.914*** t Ln(INR-USD) -0.317 -6.948*** -0.172 -6.948*** t (P – P* ) -1.795 -3.269*** -1.584 -6.328*** t t ( I year – I*, year ) -1.982 -12.901*** -2.563 -12.976*** t t ( I 10month – I*,1 0month ) -1.065 -8.097*** -1.354 -8.209*** t t Ln(3GDP) 3 -2.430 -9.838*** -2.412 -10.541*** t Ln(WGDP) -0.923 -8.792*** -1.028 -9.011*** t Ln(Domestic time preference) -1.850 -11.085*** -5.204*** -15.522*** t Ln(Foreign time preference) -1.514 -6.399*** -1.765 -6.399*** t Ln(Domestic productivity) -0.612 -12.330*** -0.707 -17.907*** t Ln(Foreign productivity) -1.058 -8.994*** -1.057 -8.993*** t Note: ***, **, and * indicate significance at 1 per cent, 5 per cent, and 10 per cent levels, respectively. Source: Authors’ estimates. 88 RBI Bulletin January 2025Geopolitical Risk and Trade and Capital Flows to India ARTICLE Geopolitical Risk and Trade propagating and amplifying ripple effects from these exogenous and unpredictable shocks. and Capital Flows to India India has been no exception to the pervasive by Shesadri Banerjee, Harendra Kumar influence of GPR. Indian CEOs rank geopolitical factors Behera, Harshita Keshan and among the most significant threats to business growth over the next three years (KPMG, 2023). The complexity Michael Debabrata Patra^ of policy formulation because of geopolitical factors has also been highlighted (Das, 2023).2 Yet, interest In an era of intensifying global tensions, in India-specific implications of GPR has been sparse, understanding the economic implications of geopolitical with a broad preference for considering India within a risk (GPR) is critical. Our estimates of the impact of broader panel focusing on BRICS economies and Asian GPR on the Indian economy using multivariate time emerging markets economies, often with a specific series models indicate that it is transmitted through emphasis on stock market performance (Balcilar et al., adjustment of terms of trade and the exchange rate, 2018; Kannadhasan and Das, 2020; and Hoque and contracting trade and capital flows by 1.0 and 0.3 Zaidi, 2020).3 percentage points, respectively. Given the relative Our study aims to bridge this gap in the literature predominance of the trade channel over the financial by drawing new evidence on the dynamic effects of channel and consequent pressures on the exchange rate, shocks to the Geopolitical Risk Index (GPRI) on trade strategic responses are warranted to bolster resilience and capital flows in respect of the Indian economy4 against GPR shocks. by using various multivariate time series models. The Introduction estimation results show that the propagation of the shocks to GPRI for India and the world are dissimilar, Geopolitical risks have become the preeminent both qualitatively and quantitatively, depending on threat to global stability, reshaping the world’s whether the shock to GPRI operates through the trade economic landscape and international relations.1 channel or the financial channel. A one standard From the war in Ukraine, the conflict in the Middle deviation shock to the GPRI for India causes a decline East, logistics and shipping disruptions to political in the trade to GDP ratio by 0.9 percentage points and spillovers from at least 64 countries going to the net capital flows by 0.2 percentage points whereas polls lately, these crises have dislocated energy a similar shock to the GPRI for the world contracts markets, shattered supply chains, and imperilled food trade and capital flows by 1.0 percentage points and security, fuelling inflation and accentuating global 0.3 percentage points, respectively, with a marked vulnerabilities. Their pervasive and unpredictable difference in the timing of the peak effects. nature has shrouded the trajectory of global growth and stability with heightened uncertainty. Thus, 2 “Geopolitical conflicts, geo-economic fragmentations, volatile commodity prices, uncertainty in trajectory of monetary policies and their macro- understanding the wider economic implications of financial implications, increasing frequency and ferocity of climate shocks, geopolitical risk (GPR) assumes importance in the all these prevailing together, present a very complicated or should I say, deadly mix of challenges.” context of interconnectedness between economies 3 To the best of our knowledge, Kumar and Rao (2024) is among the very few attempts to offer India-specific analysis addressing the financial sector ^ The authors are from the Reserve Bank of India (RBI). The views implications of GPR. expressed in this article are those of the authors and do not represent the 4 We rely on the GPRI developed by Caldara and Iacoviello (2022), a widely views of the RBI. recognised tool in research and practice, as evidenced by its extensive 1 IMF Global Financial Stability Report, April 2023. citations, cited 2876 times by January 14, 2025. RBI Bulletin January 2025 89ARTICLE Geopolitical Risk and Trade and Capital Flows to India In Section 2, we present stylised facts that cross-border capital flows exemplifying a “flight home” motivate the analysis. Section 3 provides the details effect (Feng et al., 2023) and a shift toward safer assets, of data and sources, model properties and shock or “flight to quality” (Agoraki et al., 2024). identifications. In Section 4, we discuss the results The GPRI captures global risks by analysing of our analysis, Section 5 concludes the article with geopolitical-related content in 10 major newspapers5 some policy perspectives. from automated text-search results of electronic II. Stylised Facts archives. This media-based approach ensures that the GPR index remains exogenous to the model and Geopolitics implies a broad realm in international captures all the major geopolitical events (Caldara and relations, encompassing political instability, tensions Iacoviello, 2022) (Chart 1a). Additionally, the dataset and military conflicts between countries, terrorist includes country-specific indices, representing the threats and/or geographical events that can have percentage of articles meeting the search criteria for regional or global impacts (Caldara and Iacoviello 2022). 43 economies. For this study, we utilise the GPR Index GPR impacts through two channels: the real economy specific to India and the global benchmark GPR index. channel, and the financial channel (Gupta et al., 2019; Soltani et al., 2021; Hou et al., 2024; Dieckelmann et The GPRI registered its first notable surge during al., 2024; and Hodula et al., 2024). The real economy the Iraq invasion of Kuwait and the Gulf War, followed channel includes disruptions to trade, investment, by a sharp rise in early 1993 amidst escalating and consumption, often exacerbated by supply chain tensions between the United States and Iraq (Chart interruptions while the financial channel operates 1a). After a period of decline, it spiked again in the through heightened uncertainty and increasing risk wake of the 9/11 attacks and the 2003 Iraq invasion. aversion, causing shifts in investment portfolios and Subsequent peaks are observed during the 2011 Chart 1: Geopolitical Risk and It's Components a. Geopolitical Risk Indices b. Categories of Geopolitical Risks Source: Caldara and Iacoviello (2022). 5 These newspapers include Chicago Tribune, the Daily Telegraph, Financial Times, The Globe and Mail, The Guardian, the Los Angeles Times, The New York Times, USA Today, The Wall Street Journal, and The Washington Post. The index is calculated using a dictionary-based method by counting the number of articles related to adverse geopolitical events in each newspaper for each month (as a share of the total number of news articles). 90 RBI Bulletin January 2025 selcitra lla fo erahs egatnecreP selcitra lla fo erahs egatnecreP selcitra lla fo erahs egatnecreP 1.2 16 14 1.0 12 0.8 10 0.6 8 6 0.4 4 0.2 2 0 0.0 5891 7891 9891 1991 3991 5991 7991 9991 1002 3002 5002 7002 9002 1102 3102 5102 7102 9102 1202 3202 9/11 Russian 12 invasion of First Gulf war Ukraine 10 Iraq War Libya Intervention Israel- Russian Hamas 8 occupation of war Crimea 6 Paris terrorist attack 4 2 0 GPRI World GPRI India (RHS) 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 9/11 War in Iraq War in Ukraine Paris Madrid and attack London attacks Military Buildup War (Threats, Onsets & Escalation) Terror Threats & ActsGeopolitical Risk and Trade and Capital Flows to India ARTICLE military intervention in Libya, the 2014 annexation GPRI can be attributed primarily to war, with a nearly of Crimea by Russia, the 2015 Paris terrorist attacks, equal contribution from military buildups (Chart 1b). the 2017–2018 North Korean crisis, and the onset of During episodes of heightened geopolitical risk the US-China trade war in 2018. More recently, the (shaded in red in Chart 2), total capital inflows to India, GPR index has soared following Russia’s invasion whether gross or net, decrease relative to the trend, of Ukraine and the intensification of conflict in the pointing to flight home effects (a la Feng et al., 2023).6 Middle East with the Israel-Hamas war. Moreover, shocks to the GPRI may trigger a flight to The India-specific GPRI spiked independently of quality in which investors shift toward safer assets, the global GPRI with notable instances including 1990 including US equities and bonds, during heightened when the insurgency in Kashmir escalated tensions uncertainty (Wang et al., 2023; Agoraki et al., 2024). with Pakistan; in 1999 during the Kargil War between Different types of capital flows to India exhibit India and Pakistan; in 2002 with communal violence varying sensitivities to global GPRI, with foreign in Gujarat; and in 2008 during the devastating portfolio investment (FPI) generally more volatile Mumbai terrorist attacks. Since 2014, however, co- than foreign direct investment (FDI) (Chart 3). This movement between India’s GPR and global GPR has characteristic aligns with flight to safety effects. increased, reflecting India’s deeper integration into global geopolitics and the amplified interplay between To examine the relationship between trade and domestic and international factors. GPR, we plot their trends. This reveals a decline in Analysing various components of the GPRI that India’s trade-to-GDP ratio during periods associated are consolidated into three overarching categories - with GPR spikes (Chart 4a). GPR significantly military buildups; war (encompassing threats, onsets, contributes to rising trade costs (Hou et al., 2024), as and escalations); and terror-related threats and acts evidenced by the sharp increases in all major shipping (Gopinath, 2024) – shows that the recent surge in the cost indicators—the Global Supply Chain Pressure Chart 2: Total Capital Inflows to India vis-à-vis GPR 0.40 10 0.30 8 6 0.20 4 0.10 2 0.00 0 Source: Reserve Bank of India. 6 Portes et al., (2001) and Giannetti and Laeven (2012) also provide similar insights. RBI Bulletin January 2025 91 tnec reP 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 selcitra lla fo erahs egatnecreP Gross Capital Flows to GDP Net Capital Flows to GDP GPRI World (RHS)ARTICLE Geopolitical Risk and Trade and Capital Flows to India Chart 3: Types of Capital Flows to India vis-à-vis GPR Source: Reserve Bank of India. Index (GSCPI), the Baltic Dry Index, and the Drewry ratio, indicating that higher domestic geopolitical World Container Index—in 2022 (Chart 4b). This risks may discourage foreign capital inflows due to surge aligns with the onset of the Russia-Ukraine war, increased risk aversion. The global GPRI also exhibits as indicated by the shaded red region. a negative correlation with the net capital flow-to- Based on simple correlation analysis for the GDP ratio, suggesting that global geopolitical tensions period 2004Q1 to 2024Q2, several relationships could lead to capital outflows from India as a broader emerge (Table 1). The India-specific GPRI shows a global risk-off sentiment takes hold. A positive and negative correlation with the net capital flow-to-GDP significant relationship between the global GPRI and 92 RBI Bulletin January 2025 snoilliM $SU selcitra llafoerahsegatnecreP 1,60,000 10 1,40,000 1,20,000 8 1,00,000 6 80,000 60,000 4 40,000 2 20,000 0 0 Gross FDI Gross FPI GPRI World (RHS) 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 Chart 4: Interplay of Trade and Geopolitical Risk a. Trade to GDP ratio of India vis-à-vis GPR b. Shipping Cost vis-à-vis GPR Source: CEIC. PDG fo tnec reP *selcitra lla fo erahs egatnecreP xednI 65 10 60 55 8 50 6 45 40 4 35 30 2 25 0 20 GPRI World Trade to GDP ratio (RHS) 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 9500 6.5 5.5 7500 4.5 3.5 5500 2.5 3500 1.5 0.5 1500 -0.5 -1.5 -500 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 GPRI World Global Supply Chain Pressure Index Baltic Dry Index (RHS) Drewry World Container Index (RHS) Sources: CEIC and Bloomberg. Note: * For GSCPI the axis refers to standard deviation from average value and for Drewry index, the axis refers to US$ per 40 feet container. selcitra lla fo erahs egatnecrePGeopolitical Risk and Trade and Capital Flows to India ARTICLE Table1: Key Cross-correlations Variables Trade to GDP Net Capital Flow Exchange Terms of GPRI India GPRI World ratio to GDP ratio rate Trade Trade to GDP ratio 1.00 Net Capital Flow to GDP ratio 0.06 1.00 Exchange rate 0.39*** -0.49*** 1.00 Terms of Trade 0.06 0.05 -0.03 1.00 GPRI India 0.05 -0.22* 0.16 -0.01 1.00 GPRI World -0.15 -0.20* -0.16 0.23** 0.29*** 1.00 Note: The symbols ‘*’, ‘**’, and ‘***’ indicate the statistical significance of correlation coefficients at the level of 10 per cent, 5 per cent and 1 per cent, respectively. Source: Authors’ estimates. terms of trade (TOT) highlights how global supply among multiple variables and their responsiveness to chain disruptions stemming from geopolitical events exogenous shocks from the GPRI. can affect India’s trade dynamics. Additionally, the The data matrix includes six variables: (i) significant correlation between global GPR and India- seasonally adjusted trade volume (i.e. sum of exports specific GPR emphasises the interconnectedness of and imports of goods and services to GDP ratio) (TGR_ geopolitical risks, where international events often D11), (ii) seasonally adjusted net capital flows to GDP reverberate within India. ratio (NCFGR_D11), (iii) year on year (y-o-y) changes The exchange rate shows an intriguing offsetting in the nominal exchange rate (DELTA_NER_YOY), 7 relationship with the trade-to-GDP ratio and the net (iv) y-o-y change in terms of trade (TOT_YOY),8 (v) capital flow-to-GDP ratio. Its positive relationship with standardised series of GPRI for India (GPR_INDIA_SD) the trade-to-GDP ratio suggests that higher imports as and (vi) standardised series of GPRI for the world compared to exports results in a rise in the trade to (GPR_WORLD_SD). First, we consider a positive GDP ratio which leads to currency depreciation while shock to the GPRI for India and its impact on the rest rise in capital inflows could result in appreciation. of the variables i.e., the case of the country-specific Building on the insights gained from this correlation shock. Next, we evaluate the shock to the global GPRI. analysis, we proceed to more robust statistical Impulse response functions (IRFs) — play a central methods to identify how shocks to the GPRI impacts role for analysing the impact of GPR shocks. All the its relationships with key economic variables. model specifications include that three quarter lags III. Methodology best capture temporal variations in the responsiveness of the relevant variables and satisfy the stability As stated in the introductory section, we use a condition.9 The properties of the IRFs are examined in suite of multivariate time series models to identify the alternative models and identification schemes which shocks to GPRI for India and the world - an unrestricted are premised on the methods of generalised impulse Vector Autoregression (VAR) model; a structural VAR (SVAR) model with short-run restrictions; and a responses, short-run identification restrictions and structural VAR model with sign-restrictions (SRVAR). sign-restricted structural identification. Alternative In the system of equations, each variable is considered 7 Nominal Exchange Rate (NER) is defined as the Indian Rupees per US to be driven by its own lagged values, the lagged values dollar. 8 Terms of trade is defined as the ratio of the import price to export price of all other variables in the system, and an error term. of goods and services. All the models capture the dynamic relationships 9 Lag length is selected on the basis of sequential modified LR test criteria. RBI Bulletin January 2025 93ARTICLE Geopolitical Risk and Trade and Capital Flows to India specifications and identification schemes provide Effects of a Rise in GPRI for India: a battery of tests for the IRFs of the shocks of our The qualitative patterns of the IRFs in response to interest. the positive shock to the GPRI indicate the presence The starting point is an unrestricted VAR with of trade and financial channels and their interplay. generalised IRFs which is an ordering-invariant A shock to the GPRI for India causes (i) a rise in the approach (Pesaran and Shin, 1998; Koop et al., index itself and in the global GPRI; (ii) a decline in 1996).10 The SVAR model has short-run restrictions India’s terms of trade; (iii) depreciation of the Indian in the recursive factorisation. In the SRVAR model, rupee (INR) on impact; (iv) a drop in capital flows; and we impose a positive sign restriction on the impulse (v) contraction in trade flows. Intuitively, a rise in the GPRI increases trading costs with a rise in prices of response of the relevant GPRI for one quarter to exports. Trade restrictions such as sanctions or tariffs identify a rise in geopolitical risks. In this method, we can reduce export opportunities for India, force the follow the penalty function approach (Uhlig, 2005).11 exporters to reroute their trade, cause inefficiency in IV. Results resource allocation and increase costs of exporting. In this section, we analyse the results of the The INR also depreciates as foreign investors shift qualitative features of the IRFs and the quantitative their funds from INR-denominated investments to impact of the shocks (Chart 5 and 6). foreign currency-denominated investments (i.e. USD) Chart 5: Effects of a Positive Shock to India GPRI a: Response to Generalised One S.D. Innovations Response of GPR_INDIA_SD to GPR_INDIA_SD Innovation Response of GPR_WORLD_SD to GPR_INDIA_SD Innovation Response of DELTA_NER_YOY to GPR_INDIA_SD Innovation Response of TOT_YOY to GPR_INDIA_SD Innovation Response of NCFGR_D11 to GPR_INDIA_SD Innovation Response of TGR_D11 to GPR_INDIA_SD Innovation Note: Shaded region of the IRFs indicate 68 per cent confidence interval using analytic asymptotic standard errors. Source: Authors’ Estimates. 10 The generalised IRF is used in many studies, such as Boyd et al. (2001), Cheung et al. (2004), and Huang et al. (2008). 11 Applications of sign-restricted VAR methodology are available in Dedola and Neri (2007), Pappa (2009), Mountford and Uhlig (2009), and Cantelmo and Melina (2018). 94 RBI Bulletin January 2025Geopolitical Risk and Trade and Capital Flows to India ARTICLE b: Response to Structural VAR Innovations Response of GPR_INDIA_SD to GPR_INDIA_SD Innovation Response of GPR_WORLD_SD to GPR_INDIA_SD Innovation Response of DELTA_NER_YOY to GPR_INDIA_SD Innovation Response of TOT_YOY to GPR_INDIA_SD Innovation Response of NCFGR_D11 to GPR_INDIA_SD Innovation Response of TGR_D11 to GPR_INDIA_SD Innovation Note: Shaded region of the IRFs indicate 68 per cent confidence interval using analytic asymptotic standard errors. Source: Authors’ Estimates. c: Response to Sign-restricted Structural VAR Innovations Impulse response of GPR_INDIA_SD to GPR_INDIA_SD Innovation Impulse Response of GPR_WORLD_SD to GPR_INDIA_SD Innovation Impulse Response of DELTA_NER_YOY to GPR_INDIA_SD Innovation Impulse Response of TOT_YOY to GPR_INDIA_SD Innovation Impulse Response of NCFGR_D11 to GPR_INDIA_SD Innovation Response of TGR_D11 to GPR_INDIA_SD Innovation Note: Shaded region of the IRFs indicate 68 per cent confidence interval using analytic asymptotic standard errors. Source: Authors’ Estimates. RBI Bulletin January 2025 95ARTICLE Geopolitical Risk and Trade and Capital Flows to India Chart 6: Effects of a Positive Shock to World GPRI a: Response to Generalised One S.D. Innovations Response of GPR_INDIA_SD to GPR_INDIA_SD Innovation Response of GPR_WORLD_SD to GPR_INDIA_SD Innovation Response of DELTA_NER_YOY to GPR_INDIA_SD Innovation Response of TOT_YOY to GPR_INDIA_SD Innovation Response of NCFGR_D11 to GPR_INDIA_SD Innovation Response of TGR_D11 to GPR_INDIA_SD Innovation Note: Shaded region of the IRFs indicate 68 per cent confidence interval using analytic asymptotic standard errors. Source: Authors’ Estimates. b: Response to Structural VAR Innovations Response of GPR_INDIA_SD to GPR_INDIA_SD Innovation Response of GPR_WORLD_SD to GPR_INDIA_SD Innovation Response of DELTA_NER_YOY to GPR_INDIA_SD Innovation Response of TOT_YOY to GPR_INDIA_SD Innovation Response of NCFGR_D11 to GPR_INDIA_SD Innovation Response of TGR_D11 to GPR_INDIA_SD Innovation Note: Shaded region of the IRFs indicate 68 per cent confidence interval using analytic asymptotic standard errors. Source: Authors’ Estimates. 96 RBI Bulletin January 2025Geopolitical Risk and Trade and Capital Flows to India ARTICLE c: Response to Sign-restricted Structural VAR Innovations Impulse response of GPR_INDIA_SD to GPR_INDIA_SD Innovation Impulse Response of GPR_WORLD_SD to GPR_INDIA_SD Innovation Impulse Response of DELTA_NER_YOY to GPR_INDIA_SD Innovation Impulse Response of TOT_YOY to GPR_INDIA_SD Innovation Impulse Response of NCFGR_D11 to GPR_INDIA_SD Innovation Response of TGR_D11 to GPR_INDIA_SD Innovation Note: Shaded region of the IRFs indicate 68 per cent confidence interval using analytic asymptotic standard errors. Source: Authors’ Estimates. to reduce country risk and/or currency risk in their is found that at the peak, a one standard deviation investment portfolio.12 The effects of the financial shock to the GPRI for India causes a decline in channel via the exchange rate, however, is transient trade volume by 0.9 percentage points and capital and may not influence capital flows lastingly.13 flows by 0.2 percentage points. The peak effect of The IRFs obtained from the shock to the GPRI contraction appears on impact for the shock to the for India show that the trade channel is more financial channel, and with a lag of 2 quarters for the predominant relative to the financial channel. Capital trade channel. The timing of contraction is robust flows respond sharply, while trade flows contract irrespective of the models and shock identification gradually and recover over a period of 6-7 quarters. strategies. These qualitative features remain robust across the Effects of a Rise in GPRI for the World alternative identification methods. Considering the mean impulse responses from all three models, it The estimated IRFs obtained from the positive shock to GPRI for the world also indicate the presence 12 According to Wang et al. (2023), the mechanisms contributing to the “flight home” effect includes the erosion of net financial wealth, liquidity of trade and financial channel along with offsetting evaporation, and the increase in risk premia. Using the local projection method of Jordà (2005), he demonstrates that GPR results in exchange rate effects on the exchange rate across modelling depreciation, increases risk premia, and decreases the value of traded stocks strategies. The role of the financial channel turns out as a percentage of GDP. 13 B dowska-Sójka et al. (2022) document a pathway to hedge geopolitical to be prominent in the shocks resulting from the GPRI risk by using different asset classes surrounding the Russian invasion of Ukraęine. of the world. Comparing peak effects, it is observed RBI Bulletin January 2025 97ARTICLE Geopolitical Risk and Trade and Capital Flows to India that the shock to global GPRI has more pronounced restrictions and capital reallocation. Comparing peak effects than its Indian counterpart. effects, it is observed that the shock to global GPRI has more pronounced effects than its Indian counterpart. A positive shock to GPRI at the global level entails (i) spillovers to India; (ii) worsens the terms of trade; Given the relative predominance of the trade (iii) capital outflows and sluggish but prolonged channel over the financial channel and their contraction in trade flows. At the peak, a one standard countervailing pressures on the exchange rate, deviation shock leads to contraction of trade volume policymakers can envisage strategic responses with and capital flows of the magnitudes of 1.0 percentage a suite of targeted interventions to neutralise these points and 0.3 percentage points, respectively. The shocks than relying on broad-brush instruments peak effects of the contraction appear with a 6 to 8 like policy rate adjustments. On the trade front, quarters lag for the trade to GDP ratio, and on impact measures could include diversifying trade sources and for capital flows. participating in larger trade agreements, such as free trade areas (FTAs) and global trade blocs, to bolster V. Conclusion resilience. Investments in infrastructure, particularly Shocks to geopolitical risk are distinct from in enhancing port logistics and connectivity, would ordinary shocks, as they are neither transient position India as an international shipping hub. From nor inherently mean-reverting. Instead, they are the financial channel perspective, building strategic exogenous in nature, marked by strong persistence buffers, forging bilateral swap agreements, and and a pronounced hysteretic effects. Moreover, engaging with multilateral institutions to bring GPR they exert differentiated impacts across nations, mitigation strategies are imperative to resolve GPR- contingent on factors such as geographical proximity induced disruptions. These strategies, combined with to the epicentre of the event, political configurations, a robust safety net, can equip the Indian economy to and economic dependencies. Consequently, each navigate the complexities of persistent geopolitical country must prepare differently, tailoring its policy risks effectively. responses to its specific vulnerabilities rather than relying exclusively on multinational strategies and/or References multilateral agencies. Agoraki, M. E. K., Wu, H., Xu, T., & Yang, M. (2024). 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RBI Bulletin January 2025 99ARTICLE Geopolitical Risk and Trade and Capital Flows to India Koop, G., Pesaran, M. H., & Potter, S. M. (1996). financial assets. European economic review, 45(4-6), Impulse response analysis in nonlinear multivariate 783-796. models. Journal of econometrics, 74(1), 119-147. Soltani, H., Triki, M. B., Ghandri, M., & Abderzag, Mountford, A., & Uhlig, H. (2009). What are the F. T. (2021). Does geopolitical risk and financial effects of fiscal policy shocks?. Journal of applied development matter for economic growth in MENA econometrics, 24(6), 960-992. countries?. Journal of International Studies (2071- Pappa, E. (2009). The effects of fiscal shocks on 8330), 14(1). employment and the real wage. International Uhlig, H. (2005). What are the effects of monetary policy Economic Review, 50(1), 217-244. on output? Results from an agnostic identification Pesaran, H. H., & Shin, Y. (1998). Generalized procedure. 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The The financial resource balance1 of the domestic relevance of financial accounts amplified, particularly, economy remained in deficit at 2.5 per cent of GDP in in the aftermath of the Global Financial Crisis of 2007- 2022-23 as compared to a deficit of 1.9 per cent in 2021- 09, when the need for monitoring financial flows to 22.Net financial wealth2 of domestic sectors moderated to identify systemic risks became apparent. Financial 24.9 per cent of GDP in 2022-23 from 29.0 per cent in accounts compilation, thus, became a crucial part of the previous year but remained above the pre-pandemic the G-20 data gap initiative. level of 24.2 per cent in 2019-20. Financial assets and In this backdrop, the Reserve Bank of India’s liabilities of other depository corporations experienced financial accounts compilation framework known as the highest growth since 2014-15 as credit demand the financial stocks and flow of funds (FSF) which from households and businesses remained buoyant. Non- presents a detailed view of sectoral and financial corporations improved their resource balance instrument-wise stocks and flows of financial amidst moderation in debt-equity ratio of PuNFCs. assets and liabilities. These accounts provide valuable insights into the shifts in domestic Introduction savings and borrowings patterns that hold pivotal The financial accounts offer a comprehensive role in shaping the financial outcomes. framework for analysing financial transactions During 2022-23, the demand for credit, and outstanding positions of financial assets particularly from households and corporations, and liabilities across institutional sectors3 of the remained robust. The government sector stayed on economy. Introduced as the “flow of funds (FoF)” the path of fiscal consolidation in 2022-23 while the in Copeland’s pioneering analysis of money flows current account deficit (CAD) widened to 2.0 percent (Copeland 1949), financial accounts have evolved of GDP, reflecting higher import costs amidst geo- significantly, gaining prominence as a critical tool for economic fragmentation and elevated global food, energy, and commodity prices. As macroeconomic ^ The authors are from the Department of Economic and Policy Research. The authors are thankful to Shri Anand Prakash for his valuable and financial developments interact and impact each suggestions and guidance. The views expressed in this article are those of the authors and do not represent the views of the Reserve Bank of India. other, a comprehensive view of the inter-sectoral 1 Financial resource balance (surplus or deficit) of a sector is measured as financial flows can be gauged best by FSF accounts the net acquisition of financial assets less net incurrence of liabilities. 2 Net financial wealth (NFW) is the difference between stock of total by tracking the changes in resource mobilisation, financial assets and liabilities excluding equity and investment fund shares. the sectoral financial resource balance and their 3 The institutional sectors include: (i) financial corporations (FCs); (ii) non-financial corporations (NFCs); (iii) general government (GG); (iv) households (HH) including non-profit institutions serving households 4 The “from-whom-to-whom” (FWTW) basis provides a detailed mapping (NPISHs). Rest of the world (RoW) is considered as a de facto sector because of financial transactions and stocks, identifying the origin (creditor) and it only shows transactions of the domestic economy vis-à-vis non-residents recipient (debtor) for each financial instrument, thus clarifying inter-sectoral and does not account for all the economic activities taking place abroad. financial linkages and systemic economic dependencies. RBI Bulletin January 2025 101ARTICLE Financial Stocks and Flow of Funds of the Indian Economy 2022-23 respective net financial wealth (NFW). This article While most of the sectors exhibited a deceleration delves into financial trends of the Indian economy in the growth of their liabilities during 2022-23, the during 2022-23, using an FWTW approach. The rest of HH sector recorded an acceleration on account of increased borrowings from the banking and non- the article is structured as follows: Section II provides banking sectors. At the same time, growth in financial the sectoral and instrument-wise financial flows asset creation by the HH sector moderated during the in the economy during the year under review. An year. Public non-financial corporations (PuNFCs), assessment of sectoral financial resource balance is however, registered robust growth in both financial presented in Section III. Section IV illustrates sector- assets and liabilities. specific financial trends in detail. Section V concludes Among financial instruments, currency and the article. deposits, loans and advances, and debt securities II. Financial Flows: Sector and Instrument-wise together accounted for nearly two-thirds of the total financial assets and liabilities as at end-March 2023. In 2022-23, total financial assets of the domestic For FCs including the central bank, debt securities and sectors registered a growth of 9.8 per cent as compared loans and advances constituted almost three-fourths with 9.9 per cent in 2021-22 while liabilities increased of their total financial assets, while currency and by 10.4 per cent as compared with 10.2 per cent in deposits served as their primary sources of liabilities. the previous year. Households (HH) and financial HH liabilities are predominantly in the form of loans corporations (FCs), jointly accounting for over 70 and borrowings, while their financial assets are per cent of the total financial assets, remained the largely in the form of currency and deposits. Equity primary surplus sectors during 2022-23, catering to and investment funds constituted the major financial the financing needs of the general government (GG) assets of RoW, while debt securities continued to and private non-financial corporations (PvNFCs) dominate their liabilities, subscribed mostly by the [Chart 1 and 2]. central bank (Chart 3). Chart 1: Institutional Composition of Financial Assets and Liabilities (as at end-March 2023, in per cent) a. Financial Assets b. Liabilities 5.9 8.3 7.9 26.0 40.3 44.6 18.0 4.5 15.5 26.0 1.1 1.9 FCs PuNFCs PvNFCs FCs PuNFCs PvNFCs GG HH RoW GG HH RoW Source: Authors’ calculations. 102 RBI Bulletin January 2025Financial Stocks and Flow of Funds of the Indian Economy 2022-23 ARTICLE Chart 2: Institution-wise Growth (Y-o-Y in per cent) a. Financial Assets b. Liabilities RoW RoW FCs FCs PvNFCs PvNFCs PuNFCs PuNFCs GG GG HH HH Domestic Economy Domestic Economy -2.0 3.0 8.0 13.0 18.0 0.0 5.0 10.0 15.0 20.0 2021-22 2022-23 2021-22 2022-23 Source: Authors’ calculations. III. Financial Resource Balance Further, NFW of all domestic sectors moderated to 24.9 per cent of GDP as at end-March 2023 from In 2022-23, the financial resource balance of 29.0 per cent in the previous year5. However, the the Indian economy remained in deficit. The deficit increased to 2.5 per cent of GDP from 1.9 per cent in NFW remained above its pre-pandemic level of 24.2 the previous year, driven primarily by the moderation per cent in 2019-20. The moderation in the NFW in the surplus of HH (Chart 4). witnessed across the board in 2022-23 reflects the Chart 3: Institutional Instrument Holdings (as at end-March 2023) a. Financial Assets b. Liabilities 100 80 60 40 20 0 FCs NFCs GG HH RoW Total Others Other account receivable Others Other account receivable Insurance, pension & PF Equity and investment fund Insurance, pension & PF Equity and investment fund Loans and advances Debt securities Loans and advances Debt securities Currency and deposits Monetary gold and SDRs Currency and deposits Monetary gold and SDRs Source: Authors’ calculations. 5 Equity and investment funds and reserves and surplus are excluded from liabilities in the measurement of NFW. RBI Bulletin January 2025 103 latot fo tnec reP latot fo tnec reP 100 80 60 40 20 0 FCs NFCs GG HH RoW TotalARTICLE Financial Stocks and Flow of Funds of the Indian Economy 2022-23 Chart 4: Financial Resource Balance Source: Authors’ calculations. normalization after the pandemic-induced anomaly RBI. Consequently, net flows from ODCs to the RBI in 2020-21 (Table 1). witnessed a reversal during 2022-23. The trend in net flows from HH to GG, OFCs and RBI remained broadly IV. Sectoral Financial Linkages stable. However, HHs received net inflows from the The interlinkages and interdependence among ODCs during 2022-23, driven by rising credit demand, institutional sectors were reflected in the direction in contrast to the marignal net outflows witnessed and magnitude of the net flows (uses minus sources) in the previous year. Additionally, the magnitude of [Chart 5]. A shift in the stance of the monetary flows from ODCs to GG increased, reflecting higher policy from accommodative to withdrawal of public borrowing requirements. With a sharp increase accommodation and the concomitant fall in surplus in loans from ODCs, PuNFCs turned net borrowers of liquidity in the banking system led to a decline funds in 2022-23, as against being net lenders in the in the parking of surplus funds by ODCs with the previous year. In contrast to 2021-22, when the GG Table 1: Sectoral Net Financial Wealth (per cent of GDP at current market prices) Sector 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 1. FCs 28.4 28.3 28.9 28.1 30.2 31.7 31.3 33.5 37.9 34.0 33.8 2. NFCs -20.8 -21.6 -26.7 -26.1 -30.2 -35.1 -37.6 -38.3 -34.8 -34.9 -34.4 2.1 PuNFCs -1.4 -2.0 -2.0 -2.2 -2.3 -2.2 -2.3 -2.7 -3.0 -2.6 -2.0 2.2 PvNFCs -19.4 -19.6 -24.7 -23.9 -27.9 -32.8 -35.4 -35.7 -31.8 -32.3 -32.4 3. GG -49.2 -49.9 -49.5 -52.5 -51.2 -51.1 -50.9 -54.2 -68.1 -63.1 -61.3 4. HH 74.0 74.1 76.4 77.8 79.1 80.6 82.1 83.3 100.5 93.1 86.8 5. Total 32.4 30.9 29.0 27.3 27.9 26.1 24.9 24.2 35.5 29.0 24.9 (1+2+3+4) 6. RoW 24.0 24.3 23.9 23.1 21.4 20.8 21.0 19.6 19.0 17.5 17.2 Source: Authors’ calculations. 104 RBI Bulletin January 2025 PDG fo tnec reP PDG fo tnec reP 20.0 4.0 15.0 3.0 10.0 2.0 1.0 5.0 0.3 1.0 0.0 -0.8 0.0 -1.4 -1.3 0.1 -5.0 -1.5 -1.9 -1.0 -1.9 -2.5 -10.0 -2.0 -3.2 -15.0 -3.0 -20.0 -4.0 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 FCs HH PvNFCs PuNFCs GG Domestic resource balance (RHS)Financial Stocks and Flow of Funds of the Indian Economy 2022-23 ARTICLE Chart 5: Cross Sector Flows a. 2021-22 b. 2022-23 -- ODCs CB Row HH ODCs CB Row HH PvNFCs PuNFCs GG OFCs PvNFCs PuNFCs GG OFCs Note: Chords represent the inter-sectoral flows, and length of an arc represents involvement of the institutional sector in terms of the relative share of flows in the total economy. The extension of the chord from a sector's colour base to another sector indicates net lending. Source: Authors’ calculations. received net inflows of funds from the RBI, a reversal amidst increasing preference for digital payments. was witnessed in 2022-23, reflecting redemption of The deposit liability of the RBI declined by 23.4 per the central government debt securities held with cent in 2022-23 on account of the earlier noted shift RBI. Further details of sectoral flows are discussed in in monetary policy stance. subsequent sections. IV.1.2 Other Depository Corporations IV.1 Financial Corporations Depository corporations other than the central bank are basically engaged in financial intermediation IV.1.1 Central Bank as their principal activity, mostly funded through In 2022-23, growth of financial assets and deposits or market borrowings. In the Indian financial liabilities of RBI decelerated to 2.5 per cent (8.4 per sector, the scheduled commercial banks (including cent in 2021-22) and (-) 1.6 per cent (10.1 per cent regional rural banks) are the largest sub-sector of the in 2021-22), respectively6. On the asset side, foreign ODCs with 85.5 per cent share in the total financial currency assets declined, particularly deposits held assets followed by co-operative banks. The balance with foreign institutions7, to USD 98.0 billion at sheet of ODCs has witnessed accelerated growth end-March 2023 from USD 177.7 billion as at end- since 2020-21, driven by sustained credit demand. March 2022 (RBI, 2022 & 2023). Growth of currency The financial assets and liabilities of ODCs increased liability of the RBI moderated further to 7.8 per cent by 11.7 per cent and 11.8 per cent, respectively, in 2022-23 from 9.9 per cent in the previous year during 2022-23 - their highest growth since 2014-15 (Chart 6 & 7). 6 It may be noted that, in FSF, financial liabilities exclude reserve funds while financial assets exclude fixed assets, thereby leading to a divergence While deposit growth of the ODCs accelerated in growth rates of financial assets and financial liabilities. to 10.4 per cent during 2022-23 from 9.6 per cent 7 Deposits held with foreign institutions comprise deposits with foreign central banks, Bank of International Settlement (BIS), International in the previous year, borrowings of ODCs through Monetary Fund (IMF), foreign commercial banks as well as external asset managers (EAMs). debt securities increased by 25.0 per cent vis-à-vis a RBI Bulletin January 2025 105ARTICLE Financial Stocks and Flow of Funds of the Indian Economy 2022-23 Chart 6: ODCs - Share in Financial Assets Chart 7: ODCs - Growth in Financial Assets (as at end-March 2023, in per cent) and Liabilities 4.3 2.3 7.9 85.5 SCBs Co-operative Banks NBFCs-D HFCs-D Source: Authors’ calculations. Source: Authors’ calculations. decline of 5.9 per cent in the previous year. HH sector IV.1.3 Other Financial Corporations continued to have a major share of fund flows from The distribution of the financial assets and ODCs in the form of loans and advances. While flow of liabilities in the OFC sector is dominated by insurance funds from ODCs to GG, OFCs and PvNFCs increased, corporations followed by mutual funds and pension flows to RoW witnessed a moderation. A net inflow and provident funds (Chart 9). was witnessed by ODCs from other domestic sectors After witnessing two years of double-digit growth primarily on account of the decline in deposits with on the back of pandemic-induced demand, growth of the RBI. (Chart 8). financial assets and liabilities of the insurance sector 106 RBI Bulletin January 2025 )tnec rep ni( htworg Y-o-Y 16 14 11.8 12 11.7 10 8 6 Financial assets Liabilities )tnec rep( stessa latot ni erahS 21-1102 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 PDG fo tnec reP Chart 8: Sector-wise Flow of Financial Assets of ODCs 150 20 100 15 50 10 0 5 -50 0 HH GG ODCs PvNFCs OFCs Other domestic sectors RoW Total financial uses (RHS) Note: ‘Other domestic sectors’ include RBI, PuNFCs and others not elsewhere classified. Source: Authors’ calculations. 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202Financial Stocks and Flow of Funds of the Indian Economy 2022-23 ARTICLE Chart 9: Composition of OFCs (as at end-March 2023, in per cent) a. Financial Assets b. Liabilities 15.8 10.5 14.8 22.6 20.5 16.5 28.3 33.3 - 20.8 16.8 NBFCs- ND Provident & pension funds NBFCs- ND Provident & pension funds Insurance Others Insurance Others Mutual funds Mutual funds Note: Others include All India Financial Institutions (AIFIs), State Finance Corporations (SFCs), State Industrial Development Corporations (SIDCs) and Housing Finance Companies non deposit taking (HFCs-ND). Source: Authors’ calculations. decelerated to 8.6 per cent in 2022-23 (12.4 per cent in in asset prices (Chart 11). As at end-March 2023, the 2021-22) and 7.9 per cent (12.4 per cent), respectively AUM of the mutual fund industry stood at ₹39.4 lakh (Chart 10). crore with 14.57 crore mutual fund accounts/folios (SEBI 2023). The annual increase of assets under management (AUM) of mutual funds (MFs) moderated from ₹9.2 The balance sheet of pension and provident lakh crore during the pandemic year (2020-21) to ₹1.9 funds (14.4 per cent of GDP) registered an increase of lakh crore in 2022-23, primarily due to moderation 16.4 per cent in 2022-23 on top of 18.1 per cent rise RBI Bulletin January 2025 107 )tnec rep ni( htworg Y-o-Y Chart 10: Insurance Sector - Growth in Financial Assets and Liabilities 25 20 15 10 8.6 7.9 5 0 Financial Assets Liabilities Source: Authors’ calculations. 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 erorc hkal (cid:31) Chart 11: Trends in Mutual Funds 10 9.2 8 6.1 6 5.2 3.8 4 2.6 2.4 2 1.2 1.1 1.9 0 -2 -1.5 -4 Asset price change Resource mobilisation Change in assets under management Note: Asset price change is estimated as the difference between the change in AUM and resource mobilisation during the year. Source: Authors’ calculations. 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 1.5ARTICLE Financial Stocks and Flow of Funds of the Indian Economy 2022-23 in the previous year. Despite a growing interest in IV.3 General Government equity investments, government securities remained Fiscal consolidation by the Union Government the dominant asset class, accounting for 50.9 per cent post-pandemic brought the gross fiscal deficit down of the total financial assets of pension and provident to 6.4 per cent of GDP in 2022-23 from 6.7 per cent funds. in the previous year, and 9.2 per cent in 2020-21 (GoI IV.2 Non-Financial Corporations 2024). The state governments combined gross fiscal deficit (GFD) was 2.8 per cent of GDP in 2022-23 as Non-financial corporations (NFCs) [entities compared with 3.4 per cent in the previous year. primarily engaged in producing goods and non- The financial resource gap of general government8 in financial services] include public NFCs (PuNFCs) 2022-23 stood at 6.0 per cent of GDP, as compared [such as central public sector enterprises (CPSEs), with 5.9 per cent in the previous year (Chart 13). power companies, and port trusts] and private NFCs General government debt reduced to 84.3 per cent of (PvNFCs) comprising non-government, non-financial GDP from 86.8 per cent in 2021-22. companies. During 2022-23, NFCs reduced their resource deficit to 4.4 per cent of GDP from 4.5 per Growth of equity investments in statutory cent in the previous year. Further, the NFW of NFCs corporations and joint stock companies, comprising remained negative, although it moderated to (-) 34.4 the bulk of financial assets of central government, per cent of GDP in 2022-23 from (-) 34.9 per cent in accelerated to 15.5 per cent during 2022-23 (13.5 per the previous year. The debt-to-equity (D/E) ratio of cent in 2021-22) with increased capex by the central PuNFCs fell in 2022-23, with rise in capital infusion government. Total loans and advances extended by the particularly in the manufacturing sector. In contrast, central government increased by 9.2 per cent during the D/E ratio of PvNFCs increased, attributable to 2022-23. On the liabilities side, debt securities issued increased demand for credit by PvNFCs (Chart 12). by central government, accounting for 74.0 per cent 8 General government accounts in FSF are on non-consolidated basis, i.e., inter-government transactions are not netted out. 108 RBI Bulletin January 2025 oitaR Chart 12: Debt to Equity Ratio 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 PuNFCs PvNFCs Note: Debt comprises debt securities and loans liabilities; equity refers to the share capital. Source: Authors’ calculations. 21-1102 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202Financial Stocks and Flow of Funds of the Indian Economy 2022-23 ARTICLE of its total liabilities as at end-March 2023, rose by accumulated during the pandemic year (Chart 14). 11.4 per cent over the previous year. While the financial assets flows increased marginally to 11.1 per cent of GDP (from 10.6 per cent in 2021- IV.4 Households (including NPISHs) 22), liabilities of HH increased by 5.9 per cent of During 2022-23, HH net resource balance GDP in 2022-23 (from 3.8 per cent in 2021-22), as HH declined to 5.2 per cent of GDP from 6.7 per cent in borrowed more, both from banks and non-banking 2021-22 and 11.5 per cent in 2020-21, as households financial companies (NBFCs). With a sizeable part of continued to drawdown on their excess savings HH credit being used for real estate, there has been a RBI Bulletin January 2025 109 )tnec rep( pag ecruoser ni erahS PDG fo tnec reP Chart 13: Financial Resource Gap of General Government 140 15 120 10 100 5 80 60 0 40 -5 20 -10 0 -20 -15 ODCs OFCs PuNFCs Resource gap (RHS) HH RoW Other domestic sectors Note: ‘Other domestic sectors’ include RBI, PvNFCs and others not elsewhere classified. Source: Authors’ calculations. )tnec rep( sulpruS laicnaniF ni erahS 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 PDG fo tnec reP Chart 14: Financial Surplus of the Households 140 14.0 120 12.0 100 10.0 80 60 8.0 40 6.0 20 4.0 0 2.0 -20 -40 0.0 Central Bank ODCs OFCs GG PvNFCs Resource gap (RHS) Source: Authors’ calculations. 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202ARTICLE Financial Stocks and Flow of Funds of the Indian Economy 2022-23 compositional shift in total household savings away per cent a year ago. Accordingly, their net financial from financial savings in favour of physical savings wealth reduced to 86.8 per cent of GDP from 93.1 per (NSO, 2024). cent over the same period, although it was above the pre-pandemic position (83.3 per cent of GDP in 2019- Regarding the financial assets of the HH sector, 20) [Table 1]. deposits with banks, non-banks and small saving schemes accounted for the maximum share in total IV.5 Rest of the World assets. The financial assets of the sector grew by India remained a net borrower from the RoW in 9.8 per cent in 2022-23 as compared with 10.5 per 2022-23. With higher merchandise deficit, and higher cent in the previous year. Investment in equities outgo relating to primary income, the current account and mutual funds remained robust, attracted by deficit widened to 2.0 per cent of GDP from 1.2 per buoyant equity market conditions. In contrast to cent in the previous year. On the financing side, net the general trend of HH allocating their surplus to FDI inflows were lower at 0.8 per cent of GDP in 2022- all the sectors, HH turned net borrowers from the 23 (1.2 per cent in the previous year) while portfolio ODCs in 2022-23 on account of robust credit demand. investments witnessed outflows of (-) 0.2 per cent Annual growth of currency holdings of HH, however, of GDP [(-) 0.5 per cent in the previous year] amidst has been moderating with increasing preference for heightened global uncertainties. Forex reserves digital payments. On the liabilities side, while ODCs declined by US$ 28.9 billion to US$ 578.4 billion as at end-March 2023, of which US$ 19.7 billion decline remained the primary source of finance, borrowings was due to valuation loss. Consequently, growth from both ODCs and OFCs surged. Consequently, of liabilities of the RoW decelerated for the third household debt as a percentage of GDP increased to consecutive year in 2022-23 (Chart 15). 39.4 per cent as at end-March 2023 from 38.1 per cent a year ago. The stock of HH financial assets reduced to The share of debt securities, which is the main 126.2 per cent of GDP at end-March 2023 from 131.2 component of RoW’s liabilities, however increased 110 RBI Bulletin January 2025 )tnec rep( seitilibail ni erahS )tnec rep ni ( Y-o-Y Chart 15: Liabilities of RoW 100 25.0 80 20.0 60 15.0 40 10.0 20 5.0 0 0.0 Deposits Debt securities Liabilities Y-o-Y (RHS) Equity and investment fund shares Others Source: Authors’ calculations. 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202Financial Stocks and Flow of Funds of the Indian Economy 2022-23 ARTICLE further during 2022-23, as RBI’s foreign currency saw an increase across all the institutional sectors. deposits with foreign central and commercial banks The HH sector, the sole contributor to the insurance, were substituted with debt securities (RBI 2023). pension and provident funds, witnessed 10.5 per cent increase in the assets invested in this sector (Table 2). IV.6 Sector and Instrument-wise Heat Maps The liabilities of the domestic sectors increased The heat maps of sector-wise contribution to by 10.4 per cent during 2022-23, driven by ODCs, the increase in financial assets and liabilities of the NFCs, and GG. Instrument-wise loans and borrowings domestic sectors are presented in Tables 2 and 3, respectively. Financial assets of the domestic sectors remained dominant, however, deposits by ODCs increased by 9.8 per cent during 2022-23. ODCs, contributed the highest to the change in liabilities, HH and OFCs contributed almost 80 per cent of the followed by debt securities issued by GG. As noted total change, led by ODCs (28.7 per cent). In terms of earlier, deposit liability of the central bank reduced on instruments, loans and advances contributed the most account of decrease in liquidity surplus in the banking to the increase in assets, followed by debt securities system while deposit liability of RoW reduced due to and deposits. Barring central bank and ODCs, an fall in RBI’s foreign currency assets. RoW’s liabilities increase in deposits was seen across all the sectors with in the form of debt securities increased by 20.4 per maximum contribution by HH. Equity investments cent (Table 3). Table 2: Heat Map: Financial Assets 2022-23 Central Domestic Financial Assets ODCs OFCs NFCs GG HH RoW Bank Sectoral Share 15.0 - - - 6.3 - 12.1 5.5 Monetary Gold and SDRs (0.5) (0.1) (0.6) (1.2) .. 19.0 .. .. 8.2 7.9 - Currency .. (0.1) (2.2) (2.3) -40.1 -10.0 12.6 13.5 12.3 9.6 5.6 8.0 Deposits (-5.1) (-2.7) (1.9) (3.5) (2.3) (13.6) (13.6) (10.6) 13.0 10.4 10.1 16.6 -3.3 19.7 10.6 3.7 Debt Securities (5.2) (6.2) (8.8) (1.3) (-0.3) (0.7) (21.9) (4.8) 38.1 16.3 16.8 10.5 9.4 - 15.6 11.2 Loans and Advances (0.8) (23.1) (7.2) (3.0) (0.9) (35.0) (20.6) .. 20.6 9.2 6.6 15.4 8.7 8.8 5.5 Equity and Investment Fund (0.3) (3.6) (3.4) (2.1) (2.3) (11.8) (33.5) - - .. - 10.5 10.5 - Insurance, Pension & PF .. (9.6) (9.6) 32.2 7.9 8.0 10.8 48.8 27.3 11.5 22.3 Other Account Receivable (0.1) (0.3) (0.8) (4.3) (0.8) (0.2) (6.5) (29.3) - 14.0 8.5 -13.3 - -3.6 - Others .. (1.4) (0.2) (-2.8) (-1.2) 2.5 11.7 11.4 7.3 11.3 9.8 9.8 8.3 Domestic Sectoral Share (1.5) (28.7) (22.6) (12.8) (5.9) (28.6) (100) (100) Notes: 1. Green and red colours indicate increase and decrease in assets, respectively. 2. Higher contributions to the changes in value of assets are represented by higher colour concentration. 3. Figures in the parenthesis show instrument-wise contribution to total change in assets of the domestic economy. 4. Figures in the parenthesis of RoW show instrument-wise contribution of total change in assets of RoW. 5. “-” indicates Nil. & “..” indicates Negligible. Source: Authors’ calculations. RBI Bulletin January 2025 111ARTICLE Financial Stocks and Flow of Funds of the Indian Economy 2022-23 Table 3: Heat Map: Liabilities 2022-23 Central Domestic Liabilities ODCs OFCs NFCs GG HH RoW Bank Sectoral Share 5.5 5.5 6.4 Monetary Gold and SDRs - - - - - (0.1) (0.1) (2.5) 7.8 - - - - 7.8 Currency - - (2.2) (2.2) -23.4 10.4 13.5 15.8 13.3 8.6 -36.3 Deposits - (-3.6) (18.3) (0.5) (0.1) (4.3) (19.6) (-133.9) 25.0 14.0 2.0 11.0 10.7 20.4 Debt Securities - - (1.0) (2.1) (0.3) (14.8) (18.3) (152.1) 14.0 19.0 9.8 12.3 18.0 14.0 47.5 Loans and Borrowings - (3.5) (3.1) (8.7) (1.2) (14.5) (31.0) (7.5) 7.3 5.1 4.4 4.9 15.6 Equity and Investment Fund -- - - (0.2) (1.9) (1.4) (3.4) (36.5) 19.7 11.0 3.5 10.5 Insurance, Pension & PF .. - - - (0.1) (9.1) (0.3) (9.5) 132.1 22.5 8.4 8.6 -28.2 24.4 9.6 51.3 Other Account Payable (0.5) (0.8) (0.1) (8.3) (-0.1) (0.3) (9.9) (35.2) 29.6 10.3 12.4 Others - .. .. - - (1.7) (4.3) (6.0) -1.6 11.8 10.8 8.4 11.0 18.1 10.4 6.8 Domestic Sectoral Share (-0.7) (25.5) (16.7) (23.2) (20.5) (14.8) (100.0) (100.0) Notes: 1. Red and green colours indicate increase and decrease in liabilities, respectively. 2. Higher contributions to the changes in value of liabilities are represented by higher colour concentration. 3. Figures in the parenthesis show instrument-wise contribution to total change in liabilities of the domestic economy. 4. Figures in the parenthesis of RoW show instrument-wise contribution of total change in liabilities of RoW. 5. “-” indicates Nil. & “..” indicates Negligible. Source: Authors’ calculations. V. Conclusion References GoI (2024). Union Budget 2024-2025. Ministry of The financial stocks and flows during 2022- Finance, Government of India. 23 highlight the continued role of households and financial corporations as surplus sectors in meeting NSO (2024). National Accounts Statistics 2024. the financing needs of the general government and Ministry of Statistics and Programme Implementation, private non-financial corporations. Financial assets Government of India. of the domestic sectors increased by 9.8 per cent OECD (2017). Understanding Financial Accounts. during 2022-23 while their liabilities increased by Edited by Peter van de Ven, P. and D. Fano 10.4 per cent. The net financial wealth (NFW) of (eds.), OECD Publishing, Paris, https://doi. domestic sector moderated to 24.9 percent of GDP org/10.1787/9789264281288-en. at end-March 2023 from 29.0 percent in the previous RBI (2023). Half Yearly Report on Management of year mainly on account of higher growth of liabilities Foreign Exchange Reserves: October 2022 - March vis-à-vis financial assets, driven by buoyant credit 2023. Reserve Bank of India. demand. However, the NFW at end-March 2023 RBI (2022). Half Yearly Report on Management of remained above the pre-pandemic level of 24.2 Foreign Exchange Reserves: October 2021 - March percent in 2019-20. 2022. Reserve Bank of India. SEBI (2023). Annual Report 2022-23. Securities and Exchange Board of India. 112 RBI Bulletin January 2025Fiscal-Inflation Nexus: Is there a Feedback Loop? ARTICLE Fiscal-Inflation Nexus: Is there As countries modified fiscal targets and activated escape clauses, global public debt surged from 84 a Feedback Loop? per cent of gross domestic product (GDP) in 2019 to near 100 per cent of GDP in 2020. Subsequently, as by Harshita Keshan, Garima Wahi and exceptional fiscal measures came to an end, fiscal Krishna Mohan Kushwaha^ deficits corrected in some cases (but still elevated) and nominal GDP posted robust growth, global debt The article presents an analysis of the fiscal- decreased to around 91 per cent of GDP by end-2022. It inflation nexus, and insights into the evolving dynamics increased thereafter to around 93 per cent in 2024 and of global public debt in the post-pandemic era. The is poised to increase further from burgeoning interest pandemic triggered unprecedented fiscal expansions burdens and the slow pace of fiscal consolidation, and accommodative monetary policies, contributing to casting aspersions on debt sustainability (IMF, 2024a). a surge in global debt levels and multi-decadal high The multi-decadal high inflation during 2022- inflation. Employing a panel vector autoregression 2023 and high nominal GDP growth appear to have (PVAR) framework, the study finds that inflationary contributed to eroding the real value of government surprises can only temporarily reduce real debt burdens debt in the post-pandemic period. This well- while large deficits amplify inflationary pressures. documented debt-reduction mechanism is effective Introduction only when inflation surpasses expectations, as positive inflation surprises boost nominal GDP and The COVID-19 pandemic, a true black swan event, tax revenues (Patel and Peralta-Alva, 2024; Garcia- triggered an unprecedented fiscal and monetary Macia 2023); however, this channel could be transient stimulus across the world to support domestic and unsustainable as repeated inflation surprises demand and preserve financial stability. Even as can destabilise inflation expectations, depress such coordinated policy responses prevented market economic activity, drag down government revenues frenzy and supported quick economic recoveries, and exacerbate fiscal deficits and public debt. At these responses led to inflated central bank balance the same time, prudent fiscal policy also supports sheets and surging public debt levels, contributing to monetary policy in anchoring inflation expectations. multi-decadal high inflation amidst lingering supply Sargent and Wallace (1981) seminal paper illustrates bottlenecks. While the vast quantitative easing (QE) that sustained large government fiscal deficits, even during 2010s after the global financial crisis did not if not financed by central banks, can undermine the provoke inflation, the unparalleled fiscal stimulus effectiveness of monetary policy in curbing inflation. during the pandemic in conjunction with extremely accommodative monetary policies sent inflation These intricate fiscal-financial interactions create soaring globally, raising the question whether a dual and dynamic relationship between inflation inflation is a fiscal phenomenon (The Economist, and debt. While studies which explore inflation and 2021). government debt dynamics focus on one side of the relationship at a time, this article tries to evaluate ^ The authors are from the Monetary Policy Department, Reserve Bank the fiscal-inflation nexus in a comprehensive of India (RBI). Assistance with data processing from Akash Raghatwan is gratefully acknowledged. The views expressed in this article are those of framework of panel vector autoregression (PVAR). the authors and do not represent the views of the RBI. Before delving into the econometric analysis, it is RBI Bulletin January 2025 113ARTICLE Fiscal-Inflation Nexus: Is there a Feedback Loop? essential to first examine the emerging trends in Chart 1a vividly depicts the rising trend of global public debt as outlined in the next section. It global public debt, highlighting its alarming growth provides crucial context, offering insights into the trajectory in dollar value terms for the world as a distributional dynamics of debt and its evolution, whole and some countries which have particularly shaped significantly by the pandemic and subsequent large value of debt. Notably, while worsening debt policy responses. Section III summarises the nature burdens are projected for only one-third of the world’s of work done in this field and the results of these economies, this subset contributes to more than half studies. Section IV provides an in-depth discussion of total global debt and approximately two-thirds of of the model employed, the rationale underpinning global GDP, emphasising the concentrated nature of its selection, and the detailed steps involved in its fiscal vulnerabilities (IMF, 2024b). implementation. Section V presents the results and Further insights into the distribution of debt inferences therefrom with the last section providing burdens are provided in Chart 1b where debt is concluding remarks. examined relative to GDP. The persistently higher II. Stylised Facts mean compared to the median debt-to-GDP signals The pandemic-induced policy response has a positively skewed distribution, indicating that a profoundly influenced global public debt. According few highly indebted economies significantly inflate to the IMF Fiscal Monitor (October 2024), global the average. Over time, the divergence between public debt is anticipated to surpass $100 trillion in median and mean ratios has widened, signifying an 2024 – equivalent to 93 per cent of global GDP – and increasingly skewed debt distribution. An analysis is projected to approach 100 per cent of GDP by 2030. of advanced economies (AEs) and emerging markets This trajectory underscores the significant fiscal and middle-income economies (EMMEs) indicates challenges that lie ahead. that the average debt-to-GDP ratio for AEs is nearly Chart 1: Evolution of Global Debt a. Dollar Value of Debt b. Debt-to-GDP Ratio 140000 Projection 120000 100000 80000 60000 40000 20000 0 Sources: WEO October 2024, IMF; and authors’ calculations. Source: Fiscal Monitor October 2024, IMF. 114 RBI Bulletin January 2025 )snoilliB( $SU 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 5202 6202 7202 8202 9202 Globalmedian Globalaverage UnitedStates China Advanced Economies Emerging Market and Middle-Income Economies PDGfotnec reP 140 120 100 80 60 40 20 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 44220022 55220022 66220022 77220022 88220022 99220022 Projection United States China United Kingdom Euro Area Israel South Africa World Advanced Economies Emerging Market and Developing EconomiesFiscal-Inflation Nexus: Is there a Feedback Loop? ARTICLE Chart 2: Primary Balance vis-à-vis Overall Balance a. Advanced Economies b. Emerging Market and Middle Income Economies 2024 -5.0 -2.7 2024 -5.7 -3.5 2023 -4.7 2023 -5.4 -2.7 -3.3 2022 -7.1 -3.0 -1.2 2022 -4 -5.9 .0 -3.1 2021 -5.7 2021 -8.7 -3.3 2020 -10.2 -8.9 2020 -6.9 2019 -3.0 -1.5 2019 -4.4 -2.6 2018 -2.4 2018 -3.5 -0.9 -1.7 2017 -2.5 -1.0 2017 -3.8 -2.0 2016 -2.6 2016 -4.4 -1.1 -2.7 -2.6 -4.1 2015 2015 -1.1 -2.4 -11 -9 -7 -5 -3 -1 -9 -7 -5 -3 -1 Per cent Per cent Overall Balance Primary Balance Overall Balance Primary Balance Source: Fiscal Monitor October 2024, IMF. 40 percentage points higher than that for EMMEs. and inflationary surprises provided a temporary Despite a modest increase in global debt-to-GDP ratio, reprieve for fiscal balances. Chart 2 illustrates how primary deficits returned to pre-pandemic lows by AEs led by the US are expected to maintain their 2022, especially for AEs — reducing by approximately dominant share of global debt, even as the debt levels eight percentage points for AEs and four percentage of EMMEs steadily rise driven by China. points for EMMEs compared to their 2020 levels. The As pandemic-related restrictions eased and progress, however, remains wobbly on the overall economies began to rebound in 2022, resilient growth deficit front owing to rising interest payments. Overall Chart 3: Revenue to GDP Ratio Projection UnitedStates China Advanced Economies Emerging Market and Middle-Income Economies Oil Producers Source: Fiscal Monitor October 2024, IMF. RBI Bulletin January 2025 115 PDGfotnec reP 40 35 30 25 20 15 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 5202 6202 7202 8202 9202ARTICLE Fiscal-Inflation Nexus: Is there a Feedback Loop? Chart 4: Global Inflation and Debt-to-GDP Ratio Debt-to-GDP ratio Inflation (RHS) Sources: WEO October2024;Fiscal Monitor October2024,IMF. fiscal deficits are expected to increase marginally till highlighting a negative correlation between positive 2024 to 5.2 per cent of GDP, driven by higher interest inflation surprises and debt-to-GDP ratios (Chart expenses and continued public spending, before 4). However, such high inflation-led debt deflation gradually declining during the period 2025–2029. may offer only short-term relief and sustained fiscal Nevertheless, fiscal deficits are expected to remain consolidation efforts are required for effective debt above pre-pandemic levels for most countries over consolidation. The next section summarises the the coming years. nature of work done in this field and the results of these studies. In 2022, when inflation spiked, several countries experienced revenue surprises from increased tax III. Literature Review buoyancy, and concomitantly, surging nominal An increase in inflation affects the fiscal outlook GDP levels drove down deficit and debt ratios. On through various channels (Dynan, 2022). First, higher average, AEs witnessed a jump of around 3 per cent in inflation raises interest cost for the government due government revenues between 2020 and 2022 while to rolling over of debt at higher interest rates. Second, EMMEs revenues increased by around 5 per cent over inflation impacts primary balance both positively and the same time period (Chart 3). However, for EMMEs negatively. It instantly increases the nominal revenue, with significant foreign currency-denominated especially the ones not indexed to inflation, like taxes debt, fiscal dynamics deteriorated due to currency above income thresholds; but also raises the spending depreciation and rising interest rates. due to increased expenditure on inflation-indexed The trajectory of inflation steadily increased benefit programs. Third, inflation also brings about a starting 2020 while debt-to-GDP ratio witnessed a higher nominal GDP growth, helping the government concomitant reduction from its peak, reaching its to bear the burden of higher nominal government trough in tandem with the inflation peak in 2022, debt on the one hand and reducing debt-to-GDP ratio 116 RBI Bulletin January 2025 tnec reP tnec reP 100 95 8.0 90 7.0 85 6.0 80 5.0 75 4.0 70 65 3.0 60 2.0 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 2202 3202 4202 5202Fiscal-Inflation Nexus: Is there a Feedback Loop? ARTICLE through the denominator channel on the other. This restore solvency of public finances. Although some effect is significant and may overshadow the first studies establish that public debt is inflationary and second ones. for countries with large public debt (Kwon, 2009; Romero and Marin, 2017), others find that debt only The impact of inflation surprises on debt and plays a minor role in the determination of price level fiscal balances is also established empirically. Garcia- (Castro et al., 2003; Harmon, 2012). A few studies Macia (2023) finds that as nominal revenues are also explore the prospect of non-linear impact on affected by inflation immediately while primary inflation, wherein the inflation response varies expenditures take time to adjust, inflation shocks with the level of debt. (Cevik and Miryugin, 2024; temporarily improve fiscal balances. Inflationary shocks, and not merely inflation, also improve debt Beirne and Renzhi, 2024). Banerjee et al. (2023) also dynamics by improving the primary balance and the establish that fiscal deficit has a non-linear impact nominal GDP as denominator. Unexpected inflation on inflation – greater impact on upside tail risks has played a significant role in driving the debt-to-GDP than on average inflation – and that these effects ratio during certain periods and in specific countries. are significantly larger for Emerging Market and GDP shocks have also been influential, accounting Developing Economies (EMDEs) as compared to AEs. for an estimated 40 per cent of the yearly variation in They also find that in inflation targeting regimes, the debt-to-GDP ratios for the median advanced economy effect of higher fiscal deficit on inflation weakens (Patel and Peralta-Alva, 2024). However, if inflation is sharply. Martin (2015) infers that higher public debt caused due to a supply shock, for example, higher leads to increased inflation in the longer run unless energy prices, it can also adversely affect the public the country imposes a strict inflation target. On finances by moderating consumption and reducing the expectations front, evidence indicates that debt tax revenues (Bankowski et al., 2023). surprises can raise long-term inflation expectations in Emerging Market Economies (EMEs) persistently, In the US, debt-to-GDP ratio is determined by especially when initial debt and inflation levels are contributions from inflation, growth and nominal high (Brandao-Marques et al., 2024). returns paid on debts of different maturities (Hall and Sargent, 2011). Das and Ghate (2022) find a In AEs, higher deficits under fiscal-led regime higher contribution from inflation and growth have five times larger effect on inflation vis-à-vis towards reduction in debt-to-GDP for India during monetary-led regime, in addition to raising the high inflationary and growth years. Several other likelihood of high inflation (Banerjee et al., 2022). studies use inflation, GDP growth, and interest rates Leeper (1991) demonstrated that active fiscal as drivers of debt to evaluate the evolution of debt- behaviour leads to lump-sum inflation tax, generating to-GDP ratio (Ando et al., 2025). inflation in the next period while Bordo and Levy On the other side, literature also highlights the (2021) find that the association between fiscal potential link between expansionary fiscal policy deficits and inflation holds during periods of fiscal and inflation. The fiscal theory of the price level stress when governments resort to inflation tax. The (Cochrane, 2021) postulates that when real value degree of impact of fiscal deficits on inflation can of government debt is more than the present value also depend on prevailing inflationary conditions of taxes less spending, it can drive up prices to (Lin and Chu, 2013). RBI Bulletin January 2025 117ARTICLE Fiscal-Inflation Nexus: Is there a Feedback Loop? Catao and Terrones (2005), in their study growth, inflation, and policy rates, this study of 107 nations, identify a significant positive employs a Panel Vector Autoregression (PVAR) relationship between fiscal deficits and inflation framework. The PVAR approach effectively accounts in economies experiencing high inflation and in for country-specific heterogeneity while capturing developing countries, however, they also find that the dynamic interdependencies among multiple this relationship does not hold for low-inflation, endogenous variables. Although VAR models are advanced economies. Some studies also attempt to well-suited for estimating such relationships, their assess the bidirectional relationship between fiscal empirical application in macroeconomic studies variables and inflation, but by establishing one often encounter challenges related to limited data causality at a time. In Euro area, inflation affects availability, commonly referred to as the “curse of public finances negatively beyond short run while dimensionality”. fiscal expansion exacerbates inflationary pressures, In this study, relatively short time series further necessitating a stronger monetary policy response limits the feasibility of estimating separate VAR (Bankowski et al., 2023). According to Bon (2015), in models for individual countries. To address this developing countries, public debt seems to increase constraint, the analysis focuses on a concise set of inflation, while inflation reduces public debt. In variables that represent the core dynamics of key another study of nine EU countries, Tiwari et al. macroeconomic indicators and adopts a panel VAR (2015) establish a causality from inflation to budget framework. This pooling of data across countries not deficits for Belgium and France but find no causality only mitigates the limitations of short time series from budget deficits to inflation. but also enhances estimation reliability by leveraging the cross-sectional dimension of the dataset (Adarov, A few studies testing the two-way causality 2021). The specification takes the following reduced between public debt and inflation in a unified form: framework (using either VAR or VECM) have typically focused on a single country like the US (Cherif and y α γ β y ε i,t i i,t i,t Hasanov, 2018) and Germany (Nastansky et al., 2014). –1 wit=h t i+m e +i nd´ex t + = 1,…,T; and country index Overall, the relationship between fiscal deficits and i = 1,…, N, where y is a vector of five variables for inflation has primarily been explored from one i country i: real GDP growth rate, CPI inflation rate perspective, and often in the context of one country (year-on-year), Δ debt-to-GDP ratio, policy rate and or few large economies. This paper builds upon oil price inflation; γ is a vector of country specific these studies to investigate two-way relationship i fixed effects; and ε denotes a vector of reduced between inflation and public debt, across a diverse i,t form errors. set of forty-two countries, including both advanced To account for the substantial cross-sectional and emerging economies. heterogeneity, the model incorporates country fixed IV. Data and Methodology effects (γ) to capture the unobserved, time-invariant i In order to examine the interplay of characteristics unique to each nation. However, since fiscal dynamics (debt-to-GDP ratio) with other fixed effects may correlate with the regressors due macroeconomic indicators, including economic to the lagged dependent variables, we address this 118 RBI Bulletin January 2025Fiscal-Inflation Nexus: Is there a Feedback Loop? ARTICLE potential bias using forward mean-differencing, Table 1: Descriptive Statistics commonly known as the ‘Helmert procedure’, as Variable Variation Mean Std. Dev. Min Max outlined by Love and Zicchino (2006). This approach Δ Debt-to-GDP overall 0.25 5.27 -17.91 12.76 retains the orthogonality between the transformed Ratio between 1.38 -2.97 5.17 within 5.08 -18.96 15.29 variables and lagged regressors, allowing lagged CPI Inflation overall 9.96 18.93 -0.92 96.10 regressors to serve as valid instruments for estimating between 9.17 0.59 35.72 within 16.67 -20.90 92.97 coefficients using the system GMM method. We GDP Growth overall 3.04 3.89 -11.70 9.62 employ robust standard errors to account for between 1.41 -0.11 6.18 within 3.64 -13.56 12.77 potential heteroskedasticity and serial correlation Policy Rate overall 8.27 9.69 -0.17 45.28 within the data. between 6.49 0.80 25.46 within 7.09 -9.04 43.59 Since the model is estimated in its reduced Oil Inflation overall 7.64 27.92 -47.07 66.53 Source: Authors’ estimates. form, additional structure is imposed on the error variance-covariance matrix to identify structural from the World Bank’s Pink Sheet, while policy rate shocks using a standard Cholesky decomposition, data are retrieved from CEIC. Table 1 presents the which orthogonalises the reduced-form errors. In this descriptive statistics for all variables1. framework, variables listed earlier in the ordering are V. Empirical Results treated as more exogenous, influencing subsequent We begin by assessing the stationarity of the variables both contemporaneously and with a lag. The variables used in Section V.1 and determine the chosen ordering for the Cholesky decomposition is: optimal lag length for our model based on the oil inflation→ CPI inflation→ GDP growth → debt- Moment and Model Selection Criteria (MMSC) in to-GDP ratio → policy rate. The primary findings Section V.2. Then we test for Granger causality remain robust to different permutations of ordering. between the primary variables and present the IV.1. Data impulse response functions, analysing the response of the key variables to various shocks, providing This econometric analysis utilises an unbalanced graphical representations alongside detailed panel dataset comprising a global sample of forty-two explanations of the observed effects (Sections V.3 countries, including 15 AEs and 27 EMEs, spanning and V.4). the period 1990–2023 at an annual frequency. The composition of the sample is detailed in Appendix V.1. Test for Stationarity Table A1. The selection of countries is primarily All variables are retained in their original form, driven by the availability of sufficiently long time except for the debt-to-GDP ratio, which is used in series and a substantial number of cross-sectional first differences. Stationarity is verified using the observations (N), ensuring the feasibility of a robust Im-Pesaran-Shin, Fisher Augmented Dickey-Fuller, econometric analysis. The macroeconomic variable and Fisher Phillips-Perron panel unit root tests, with datasets, namely GDP, CPI, and debt-to-GDP ratio, the results presented in Table 2. are sourced from the IMF’s World Economic Outlook 1 The data has been winsorised at 97 per cent, meaning the top and bottom Database (October 2024). Oil price data are obtained 1.5 per cent of values are adjusted. RBI Bulletin January 2025 119ARTICLE Fiscal-Inflation Nexus: Is there a Feedback Loop? Table 2: Results of the Panel Root Test Table 3: Lag Order Selection Im–Pesaran– Fisher Fisher Lag CD MBIC MQIC Shin Augmented Phillips- 1 0.95 -334.26 -124.80 Dickey-Fuller Perron 2 0.92 -264.33 -124.69 Δ Debt-to-GDP Ratio -14.02*** -12.93*** -19.69*** 3 0.93 -137.61 -67.79 CPI Inflation -13.01*** -16.38*** -17.99*** Source: Authors’ estimates. GDP Growth -17.56*** -18.86*** -24.69*** Policy Rate -6.31*** -9.09*** -8.84*** for all lagged variables in the equation, evaluating Oil Inflation -19.07*** -30.61*** -26.92*** whether all lags of all variables can be excluded Note: ***, ** and * denote the level of significance at 1 per cent, 5 per cent and 10 per cent, respectively. from each equation in the panel VAR system. The Source: Authors’ estimates. findings indicate bidirectional causality between the V.2. Model Selection debt-to-GDP ratio and CPI at 1 per cent significance The selection of the appropriate lag order is level. Furthermore, the joint significance chi-square critical for a robust panel VAR analysis. Selecting too statistics in the final row confirm that all lagged few lags can omit critical variables, biasing results, variables collectively Granger cause each variable in while excessive lags risk over-parameterization the system. and reduced degrees of freedom (Boubtane et al., V.4. Impulse Response Functions 2012). We use one lag based on the MMSC (Andrews We now proceed with the analysis of the impulse and Lu, 2001), specifically the Modified Bayesian response functions (IRFs) to assess the responses Information Criterion (MBIC) and the Modified of the debt-to-GDP ratio and CPI to shocks in the Hannan-Quinn Information Criterion (MQIC). corresponding variables within the system. Chart 5 The overall coefficient of determination (CD) also presents IRF plots for debt-to-GDP ratio and CPI. The supports this choice. The combined results reported solid lines in the plots represent the orthogonal IRFs in Table 3 validate the selection of a first order PVAR2 of the respective variables over a ten-year horizon. model, ensuring a balance between explanatory The shaded areas indicate 95 per cent confidence power and parsimony.3 intervals constructed using 1,000 Monte Carlo V.3. Granger Causality simulations based on the fitted reduced form of the Before proceeding further, we examine Granger panel VAR model. causality between key variables, particularly the CPI As shown in Chart 5, a positive shock to the debt- and debt-to-GDP ratio. Table 4 reports the chi-square to-GDP ratio has a positive and significant short-term Wald statistics for testing the null hypothesis that the impact on CPI inflation, which diminishes over time. debt-to-GDP ratio does not Granger cause CPI and vice Specifically, the estimates indicate that a one standard versa, as well as its causal effects on the other three deviation shock to debt-to-GDP ratio (3.7 percentage variables. The last row presents the joint probability points) can lead to a 120 basis points (bps) rise in CPI inflation in the first period, peaking at 181 bps in 2 To ensure the GMM model is overidentified, four lags are used as instruments. Overidentification allows the application of various MMSC the second period. This effect remains significantly criteria, which are not applicable in just-identified models. 3 The selected model passes the stability test. positive up to 5 years. 120 RBI Bulletin January 2025Fiscal-Inflation Nexus: Is there a Feedback Loop? ARTICLE Table 4: Granger Causality Results Δ Debt-to-GDP Ratio CPI Inflation GDP Growth Policy Rate Oil Inflation Δ Debt-to-GDP Ratio - 72.94*** 50.03*** 0.43 84.58*** CPI Inflation 22.49*** - 23.42*** 44.44*** 0.29 GDP Growth 84.07*** 21.69*** - 17.81*** 68.38*** Policy Rate 2.58 5.44** 0.46 - 1.57 Oil Inflation 2.40 18.10*** 26.32*** 4.02** - All 121.99*** 113.03*** 92.24*** 102.95*** 96.02*** Note: The table entries represent chi-square statistics for testing the null hypothesis that the excluded variable does not Granger-cause the dependent variable, against the alternative hypothesis that it does. Levels of statistical significance are denoted as follows: *** for 1 per cent, ** for 5 per cent, and * for 10 per cent. Source: Authors’ estimates. Analysing the other side of the bidirectional 38 bps reduction in debt-to-GDP ratio in first year. relationship, Chart 5 illustrates that higher inflation The impact peaks in the third year and fades by the causes a significant and sharp fall in debt-to-GDP seventh year, supporting the evidence provided by ratio. Specifically, a one standard deviation shock to Garcia-Macia (2023). inflation (4.4 percentage points) can lead to around Chart 5: Impulse Response Functions Step 95% CI Orthogonalized IRF Source: Authors’ estimates. RBI Bulletin January 2025 121ARTICLE Fiscal-Inflation Nexus: Is there a Feedback Loop? Beyond the primary variables of interest, the analysis by the Eurosystem members of the Working interactions among other variables also appear Group on Public Finance. ECB Occasional Paper to be on expected lines (Appendix Chart A1). For No. 332. instance, an increase in the policy rate significantly Beirne, J., & Renzhi, N. (2024). Debt shocks and reduces inflation, demonstrating the effectiveness of the dynamics of output and inflation in emerging monetary policy. economies. Journal of International Money and Finance, 148, 103167. VI. Conclusion Bordo, M. D., & Levy, M. D. (2021). Do enlarged This study analyses the intricate relationship fiscal deficits cause inflation? The historical between inflation and public debt, particularly in the record. Economic Affairs, 41(1), 59-83. context of unprecedented fiscal spending triggered by the COVID-19 pandemic. The findings underscore Bon, N. V. , (2015). The Relationship Between Public the inflationary effects of high public debt, Debt and Inflation in Developing Countries: Empirical emphasising the necessity of fiscal consolidation. Evidence Based on Difference Panel GMM. Asian While high inflation can temporarily deflate away Journal of Empirical Research, 5(9), 128–142. debt burden, this effect is neither permanent nor Boubtane, E., Coulibaly, D., & Rault, C. 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RBI Bulletin January 2025 123ARTICLE Fiscal-Inflation Nexus: Is there a Feedback Loop? Appendix Table A1: Sample of Countries Country name Classification Country name Classification Australia AEs Mongolia EMEs Belarus EMEs Morocco EMEs Brazil EMEs New Zealand AEs Bulgaria EMEs Norway AEs Canada AEs Pakistan EMEs Chile EMEs Peru EMEs Colombia EMEs Philippines EMEs Czech Republic AEs Poland EMEs Denmark AEs Romania EMEs Ecuador EMEs Russia EMEs Euro Area AEs South Africa EMEs Hungary EMEs South Korea AEs India EMEs Sri Lanka EMEs Japan AEs Sweden AEs Jordan EMEs Switzerland AEs Kosovo EMEs Taiwan AEs Laos EMEs Tajikistan EMEs Source: WEO October 2024, IMF. Chart A1: Complete Impulse Response Function Step 95% CI Orthogonalized IRF Source: Authors’ estimates. 124 RBI Bulletin January 2025CURRENT STATISTICS Select Economic Indicators Reserve Bank of India Money and Banking Prices and Production Government Accounts and Treasury Bills Financial Markets External Sector Payment and Settlement Systems Occasional SeriesCURRENT STATISTICS Contents No. Title Page 1 Select Economic Indicators 127 Reserve Bank of India 2 RBI – Liabilities and Assets 128 3 Liquidity Operations by RBI 129 4 Sale/ Purchase of U.S. Dollar by the RBI 130 4A Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US$ Million) 131 5 RBI's Standing Facilities 131 Money and Banking 6 Money Stock Measures 132 7 Sources of Money Stock (M) 133 3 8 Monetary Survey 134 9 Liquidity Aggregates 135 10 Reserve Bank of India Survey 136 11 Reserve Money – Components and Sources 136 12 Commercial Bank Survey 137 13 Scheduled Commercial Banks' Investments 137 14 Business in India – All Scheduled Banks and All Scheduled Commercial Banks 138 15 Deployment of Gross Bank Credit by Major Sectors 139 16 Industry-wise Deployment of Gross Bank Credit 140 17 State Co-operative Banks Maintaining Accounts with the Reserve Bank of India 141 Prices and Production 18 Consumer Price Index (Base: 2012=100) 142 19 Other Consumer Price Indices 142 20 Monthly Average Price of Gold and Silver in Mumbai 142 21 Wholesale Price Index 143 22 Index of Industrial Production (Base: 2011-12=100) 147 Government Accounts and Treasury Bills 23 Union Government Accounts at a Glance 147 24 Treasury Bills – Ownership Pattern 148 25 Auctions of Treasury Bills 148 Financial Markets 26 Daily Call Money Rates 149 27 Certificates of Deposit 150 28 Commercial Paper 150 29 Average Daily Turnover in Select Financial Markets 150 30 New Capital Issues by Non-Government Public Limited Companies 151 RBI Bulletin January 2025 125CURRENT STATISTICS No. Title Page External Sector 31 Foreign Trade 152 32 Foreign Exchange Reserves 152 33 Non-Resident Deposits 152 34 Foreign Investment Inflows 153 35 Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals 153 36 Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 154 37 External Commercial Borrowings (ECBs) – Registrations 155 38 India’s Overall Balance of Payments (US $ Million) 156 39 India's Overall Balance of Payments (` Crore) 157 40 Standard Presentation of BoP in India as per BPM6 (US $ Million) 158 41 Standard Presentation of BoP in India as per BPM6 (` Crore) 159 42 India’s International Investment Position 160 Payment and Settlement Systems 43 Payment System Indicators 161 Occasional Series 44 Small Savings 163 45 Ownership Pattern of Central and State Governments Securities 164 46 Combined Receipts and Disbursements of the Central and State Governments 165 47 Financial Accommodation Availed by State Governments under various Facilities 166 48 Investments by State Governments 167 49 Market Borrowings of State Governments 168 50 (a) Flow of Financial Assets and Liabilities of Households - Instrument-wise 169 50 (b) Stocks of Financial Assets and Liabilities of Households- Select Indicators 172 Notes: .. = Not available. – = Nil/Negligible. P = Preliminary/Provisional. PR = Partially Revised. 126 RBI Bulletin January 2025CURRENT STATISTICS No. 1: Select Economic Indicators 2023-24 2024-25 Item 2023-24 Q1 Q2 Q1 Q2 1 2 3 4 5 1 Real Sector (% Change) 1.1 GVA at Basic Prices 7.2 8.3 7.7 6.8 5.6 1.1.1 Agriculture 1.4 3.7 1.7 2.0 3.5 1.1.2 Industry 9.3 5.0 13.6 7.4 2.1 1.1.3 Services 7.9 10.4 6.9 7.7 7.1 1.1a Final Consumption Expenditure 3.8 4.6 4.1 6.3 5.7 1.1b Gross Fixed Capital Formation 9.0 8.5 11.6 7.5 5.4 2023 2024 2023-24 Oct. Nov. Oct. Nov. 1 2 3 4 5 1.2 Index of Industrial Production 5.9 11.9 2.5 3.7 5.2 2 Money and Banking (% Change) 2.1 Scheduled Commercial Banks 2.1.1 Deposits 12.9 12.5 13.5 11.9 11.1 (13.5) (13.2) (14.2) (11.5) (10.7) 2.1.2 Credit # 16.3 15.8 16.7 13.1 11.8 (20.2) (20.4) (21.1) (11.8) (10.6) 2.1.2.1 Non-food Credit # 16.3 16.0 16.8 13.1 11.8 (20.2) (20.5) (21.3) (11.8) (10.6) 2.1.3 Investment in Govt. Securities 11.1 16.8 15.6 9.2 9.5 (12.8) (18.9) (17.7) (8.1) (8.4) 2.2 Money Stock Measures 2.2.1 Reserve Money (M0) 5.6 5.5 6.7 9.0 7.1 2.2.2 Broad Money (M3) 11.1 10.8 11.2 11.1 11.1 (11.6) (11.4) (11.8) (10.7) (10.8) 3 Ratios (%) 3.1 Cash Reserve Ratio 4.50 4.50 4.50 4.50 4.50 3.2 Statutory Liquidity Ratio 18.00 18.00 18.00 18.00 18.00 3.3 Cash-Deposit Ratio 5.0 5.2 5.2 5.2 5.1 (5.0) (5.1) (5.2) (5.2) (5.1) 3.4 Credit-Deposit Ratio 78.1 76.7 77.2 77.5 77.7 (80.3) (79.2) (79.6) (79.4) (79.5) 3.5 Incremental Credit-Deposit Ratio # 95.8 88.7 92.3 69.2 72.8 (113.4) (119.5) (118.8) (66.2) (69.8) 3.6 Investment-Deposit Ratio 29.5 30.4 29.8 29.7 29.6 (29.8) (30.8) (30.2) (29.9) (29.7) 3.7 Incremental Investment-Deposit Ratio 25.8 36.1 27.8 32.5 29.9 (28.4) (40.2) (31.8) (30.6) (28.1) 4 Interest Rates (%) 4.1 Policy Repo Rate 6.50 6.50 6.50 6.50 6.50 4.2 Fixed Reverse Repo Rate 3.35 3.35 3.35 3.35 3.35 4.3 Standing Deposit Facility (SDF) Rate * 6.25 6.25 6.25 6.25 6.25 4.4 Marginal Standing Facility (MSF) Rate 6.75 6.75 6.75 6.75 6.75 4.5 Bank Rate 6.75 6.75 6.75 6.75 6.75 4.6 Base Rate 9.10/10.25 8.95/10.10 8.95/10.10 9.10/10.40 9.10/10.40 4.7 MCLR (Overnight) 8.00/8.60 7.95/8.45 7.95/8.50 8.15/8.45 8.15/8.45 4.8 Term Deposit Rate >1 Year 6.50/7.25 6.00/7.75 6.00/7.25 6.00/7.25 6.00/7.25 4.9 Savings Deposit Rate 2.70/3.00 2.70/3.00 2.70/3.00 2.70/3.00 2.70/3.00 4.10 Call Money Rate (Weighted Average) 6.85 6.74 6.79 6.63 6.70 4.11 91-Day Treasury Bill (Primary) Yield - 6.93 6.96 6.51 6.49 4.12 182-Day Treasury Bill (Primary) Yield 7.28 7.14 7.16 6.64 6.66 4.13 364-Day Treasury Bill (Primary) Yield 7.31 7.16 7.15 6.60 6.65 4.14 10-Year G-Sec Par Yield (FBIL) 7.31 7.35 7.31 6.81 6.79 5 Reference Rate and Forward Premia 5.1 INR-US$ Spot Rate (Rs. Per Foreign Currency) 83.37 83.25 83.37 84.08 84.50 5.2 INR-Euro Spot Rate (Rs. Per Foreign Currency) 90.22 87.90 90.93 90.96 89.36 5.3 Forward Premia of US$ 1-month (%) 1.00 1.02 0.95 1.49 1.94 3-month (%) 1.11 1.33 1.12 1.69 1.98 6-month (%) 1.31 1.71 1.47 2.01 2.18 6 Inflation (%) 6.1 All India Consumer Price Index 5.4 4.9 5.6 6.2 5.5 6.2 Consumer Price Index for Industrial Workers 5.19 4.5 5.0 4.4 3.9 6.3 Wholesale Price Index -0.7 -0.3 0.4 2.8 1.9 6.3.1 Primary Articles 3.5 2.3 5.2 8.3 5.5 6.3.2 Fuel and Power -4.7 -1.6 -4.1 -4.3 -5.8 6.3.3 Manufactured Products -1.7 -1.1 -0.8 1.8 2.0 7 Foreign Trade (% Change) 7.1 Imports -5.3 10.3 -3.3 -1.2 16.0 7.2 Exports -3.1 5.8 -3.3 16.6 -5.1 Note : Financial Benchmark India Pvt. Ltd. (FBIL) has commenced publication of the G-Sec benchmarks with effect from March 31, 2018 as per RBI circularFMRD.DIRD. 7/14.03.025/2017-18 dated March 31, 2018. FBIL has started dissemination of reference rates w.e.f. July 10, 2018. #: Bank credit growth and related ratios for all fortnights from December 3, 2021 to November 18, 2022 are adjusted for past reporting errors by select scheduled commercial banks (SCBs). Figures in parentheses include the impact of merger of a non-bank with a bank. *: As per Press Release No. 2022-2023/41 dated April 08, 2022. RBI Bulletin January 2025 127CURRENT STATISTICS Reserve Bank of India No. 2: RBI - Liabilities and Assets * (₹ Crore) Item As on the Last Friday/ Friday 2023-24 2023 2024 Dec. Nov. 29 Dec. 06 Dec. 13 Dec. 20 Dec. 27 1 2 3 4 5 6 7 1 Issue Department 1.1 Liabilities 1.1.1 Notes in Circulation 3482333 3330399 3511550 3527096 3536444 3526597 3525519 1.1.2 Notes held in Banking Department 11 12 14 19 17 14 14 1.1/1.2 Total Liabilities (Total Notes Issued) or Assets 3482344 3330410 3511564 3527114 3536461 3526611 3525533 1.2 Assets 1.2.1 Gold 162996 151422 200142 200478 204097 197627 200458 1.2.2 Foreign Securities 3318885 3178712 3311092 3326375 3332168 3328651 3324796 1.2.3 Rupee Coin 463 276 330 262 196 333 278 1.2.4 Government of India Rupee Securities - - - - - - - 2 Banking Department 2.1 Liabilities 2.1.1 Deposits 1782333 1660082 1441830 1391433 1461215 1579442 1531773 2.1.1.1 Central Government 101 100 101 101 101 100 100 2.1.1.2 Market Stabilisation Scheme - - - - - 2.1.1.3 State Governments 42 43 42 42 42 42 42 2.1.1.4 Scheduled Commercial Banks 1008618 939847 1023815 1033128 986172 986556 939428 2.1.1.5 Scheduled State Co-operative Banks 10092 8036 8311 8510 8764 8016 8496 2.1.1.6 Non-Scheduled State Co-operative Banks 6412 4984 5297 5391 5318 4904 4770 2.1.1.7 Other Banks 48725 48415 50545 50362 50201 47635 47566 2.1.1.8 Others 545400 555420 232464 183352 306732 435390 443606 2.1.1.9 Financial Institution Outside India 162944 103239 121255 110547 103885 96799 87765 2.1.2 Other Liabilities 1804747 1803066 1914051 1941476 1929170 1868966 1905453 2.1/2.2 Total Liabilities or Assets 3587080 3463149 3355881 3332909 3390385 3448408 3437226 2.2 Assets 2.2.1 Notes and Coins 11 12 14 19 17 14 14 2.2.2 Balances Held Abroad 1480408 1455394 1532888 1500889 1475458 1440376 1433320 2.2.3 Loans and Advances 2.2.3.1 Central Government - - - 11131 - - - 2.2.3.2 State Governments 2300 2579 16465 34432 28744 19820 21841 2.2.3.3 Scheduled Commercial Banks 266021 271352 21293 9846 108704 232376 244697 2.2.3.4 Scheduled State Co-op.Banks - - - - - - - 2.2.3.5 Industrial Dev. Bank of India - - - - - - - 2.2.3.6 NABARD - - - - - - - 2.2.3.7 EXIM Bank - - - - - - - 2.2.3.8 Others 12398 3167 8428 8209 8209 8459 8459 2.2.3.9 Financial Institution Outside India 162650 105356 120491 110031 103515 96085 87189 2.2.4 Bills Purchased and Discounted 2.2.4.1 Internal - - - - - - - 2.2.4.2 Government Treasury Bills - - - - - - - 2.2.5 Investments 1365425 1359690 1272720 1274243 1274585 1271726 1255979 2.2.6 Other Assets 297868 265598 383580 384111 391154 379553 385727 2.2.6.1 Gold 272028 250726 365807 366421 373036 361210 366385 * Data are provisional. 128 RBI Bulletin January 2025CURRENT STATISTICS No. 3: Liquidity Operations by RBI (₹ Crore) Date Standing OMO (Outright) Net Injection (+)/ Liquidity Absorption (-) Liquidity Adjustment Facility Facilities (1+3+5+7+9-2-4-6 -8) Sale Purchase Variable Variable Reverse Rate Repo Rate MSF SDF Repo Reverse Repo Repo 1 2 3 4 5 6 7 8 9 10 Nov. 1, 2024 - - - - 4215 181247 - - - -177032 Nov. 2, 2024 - - - - 1869 102266 - - - -100397 Nov. 3, 2024 - - - - 1849 98817 - - - -96968 Nov. 4, 2024 - - - 74000 5231 193522 -11 - - -262302 Nov. 5, 2024 - - - 70825 1651 126097 -891 - - -196162 Nov. 6, 2024 - - - 28265 1503 90713 - - - -117475 Nov. 7, 2024 - - - 154585 1685 77243 - - - -230143 Nov. 8, 2024 - - - 50013 12441 61147 635 - - -98084 Nov. 9, 2024 - - - - 8540 57979 - - - -49439 Nov. 10, 2024 - - - - 4147 53323 - - - -49176 Nov. 11, 2024 - - - 61960 6627 129417 - - - -184750 Nov. 12, 2024 - - - 29150 3373 103697 - - - -129474 Nov. 13, 2024 - - - 49732 8077 65540 - - - -107195 Nov. 14, 2024 - - - 8405 1659 185021 - - - -191767 Nov. 15, 2024 - - - - 2124 160722 - - - -158598 Nov. 16, 2024 - - - - 1073 131150 - - - -130077 Nov. 17, 2024 - - - - 125 105669 - - - -105544 Nov. 18, 2024 - - - 74200 3512 100351 0 - - -171039 Nov. 19, 2024 - - - 22565 3166 57757 - - - -77156 Nov. 20, 2024 - - - - 2966 50490 - - - -47524 Nov. 21, 2024 - - - - 11991 47045 302 - - -34752 Nov. 22, 2024 - - 25001 - 4806 51952 924 - - -21221 Nov. 23, 2024 - - - - 1962 45833 - - - -43871 Nov. 24, 2024 - - - - 774 42152 - - - -41378 Nov. 25, 2024 - - 25005 - 10604 56762 - - - -21153 Nov. 26, 2024 - - 25006 - 12413 54115 - - - -16696 Nov. 27, 2024 - - - - 10049 57321 - - - -47272 Nov. 28, 2024 - - 25008 - 2891 71224 - - - -43325 Nov. 29, 2024 - - - 2476 18513 76857 - - - -60820 Nov. 30, 2024 - - - - 1758 63344 - - - -61586 RBI Bulletin January 2025 129CURRENT STATISTICS No. 4: Sale/ Purchase of U.S. Dollar by the RBI i) Operations in onshore / offshore OTC segment Item 2023 2024 2023-24 Nov. Oct. Nov. 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) 41271 -1929 -9275 -20228 1.1 Purchase (+) 194296 34986 27503 30880 1.2 Sale (–) 153025 36915 36778 51108 2 ₹ equivalent at contract rate (₹ Crores) 339528 -15978 -77969 -170630 3 Cumulative (over end-March) (US $ Million) 41271 15448 -728 -20956 (₹ Crore) 339528 125085 -7023 -177653 4 Outstanding Net Forward Sales (-)/ Purchase (+) at the end of month (US -541 -11901 -49180 -58850 $ Million) ii) Operations in currency futures segment Item 2023 2024 2023-24 Nov. Oct. Nov. 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) 0 0 0 0 1.1 Purchase (+) 7930 1496 2531 3926 1.2 Sale (–) 7930 1496 2531 3926 2 Outstanding Net Currency Futures Sales (-)/ Purchase (+) at the end of -1080 -2782 -3229 -2968 month (US $ Million) 130 RBI Bulletin January 2025CURRENT STATISTICS No. 4 A : Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US $ Million) Item As on November 30 , 2024 Long (+) Short (-) Net (1-2) 1 2 3 1. Upto 1 month 0 32400 -32400 2. More than 1 month and upto 3 months 250 26700 -26450 3. More than 3 months and upto 1 year 0 0 0 4. More than 1 year 0 0 0 Total (1+2+3+4) 250 59100 -58850 No. 5: RBI’s Standing Facilities (₹ Crore) Item As on the Last Reporting Friday 2023-24 2023 2024 Dec. 29 Jul. 26 Aug. 23 Sep. 20 Oct. 18 Nov. 29 Dec. 27 1 2 3 4 5 6 7 8 1 MSF 49906 134232 2021 1818 21731 4216 18513 31127 2 Export Credit Refinance for Scheduled Banks 2.1 Limit - - - - - - - - 2.2 Outstanding - - - - - - - - 3 Liquidity Facility for PDs 3.1 Limit 9900 4900 9900 9900 9900 9900 9900 9900 3.2 Outstanding 9810 3167 9062 8541 8547 7223 8428 8459 4 Others 4.1 Limit 76000 76000 76000 76000 76000 76000 76000 76000 4.2 Outstanding - - - - - - - - 5 Total Outstanding (1+2.2+3.2+4.2) 59716 137399 11083 10359 30278 11439 26941 39586 RBI Bulletin January 2025 131CURRENT STATISTICS Money and Banking No. 6: Money Stock Measures (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/ reporting Fridays 2023-24 2023 2024 Nov. 17 Nov. 01 Nov. 15 Nov. 29 1 2 3 4 5 1 Currency with the Public (1.1 + 1.2 + 1.3 – 1.4) 3410276 3254799 3457240 3455882 3444217 1.1 Notes in Circulation 3477795 3323773 3526485 3525876 3510709 1.2 Circulation of Rupee Coin 32689 31196 34437 34437 34676 1.3 Circulation of Small Coins 743 743 743 743 743 1.4 Cash on Hand with Banks 101185 101001 105206 105981 102752 2 Deposit Money of the Public 2681424 2523448 2804840 2755216 2821629 2.1 Demand Deposits with Banks 2586888 2449084 2705139 2657445 2718636 2.2 'Other' Deposits with Reserve Bank 94536 74364 99701 97771 102993 3 M1 (1 + 2) 6091700 5778247 6262080 6211097 6265846 4 Post Office Saving Bank Deposits 195777 213964 200889 200889 200889 5 M2 (3 + 4) 6287477 5992211 6462969 6411986 6466735 6 Time Deposits with Banks 18739918 18028497 20199168 20081105 20182384 (18848160) (18156731) (20270681) (20151338) (20251544) 7 M3 (3 + 6) 24831618 23806744 26461248 26292202 26448230 (24939860) (23934978) (26532761) (26362435) (26517391) 8 Total Post Office Deposits 1313366 1247555 1379283 1379283 1379283 9 M4 (7 + 8) 26144984 25054299 27840531 27671485 27827513 (26253226) (25182533) (27912044) (27741718) (27896674) Figures in parentheses include the impact of merger of a non-bank with a bank. 132 RBI Bulletin January 2025CURRENT STATISTICS No. 7 : Sources of Money Stock (M) 3 (₹ Crore) Sources Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2023-24 2023 2024 Nov. 17 Nov. 01 Nov. 15 Nov. 29 1 2 3 4 5 1 Net Bank Credit to Government 7512016 7368871 8019784 8052979 8035414 1 Net Bank Credit to Government (Including Merger) (7603571) (7475375) (8073626) (8104197) (8086633) 1.1 RBI’s net credit to Government (1.1.1–1.1.2) 1193213 1102323 1211153 1308855 1242346 1.1.1 Claims on Government 1370428 1391088 1342399 1308998 1287452 1.1.1.1 Central Government 1363828 1373750 1311105 1280364 1270987 1.1.1.2 State Governments 6600 17338 31294 28634 16465 1.1.2 Government deposits with RBI 177215 288765 131246 143 45106 1.1.2.1 Central Government 177172 288722 131204 101 45064 1.1.2.2 State Governments 42 42 42 43 42 1.2 Other Banks’ Credit to Government 6318803 6266548 6808631 6744125 6793069 1.2 Other Banks Credit to Government (Including Merger) (6410358) (6373052) (6862473) (6795342) (6844287) 2 Bank Credit to Commercial Sector 16672145 15781445 17728467 17687118 17835267 2 Bank Credit to Commercial Sector (Including Merger) (17202832) (16362044) (18189501) (18145073) (18291281) 2.1 RBI’s credit to commercial sector 14406 5240 9394 9149 10463 2.2 Other banks’ credit to commercial sector 16657739 15776205 17719074 17677970 17824804 2.2 Other banks credit to commercial sector (Including Merger) (17188426) (16356804) (18180108) (18135925) (18280818) 2.2.1 Bank credit by commercial banks 15901477 15040209 16976858 16904863 17052942 2.2.1 Bank credit by commercial banks (Including Merger) (16432164) (15620807) (17437892) (17362818) (17508956) 2.2.2 Bank credit by co-operative banks 738194 718659 723249 754275 753253 2.2.3 Investments by commercial and co-operative banks in other securities 18068 17337 18966 18832 18610 2.2.3 Investments by commercial and co-operative banks in other securities (Including Merger) (18068) (17337) (18966) (18832) (18610) 3 Net Foreign Exchange Assets of Banking Sector (3.1 + 3.2) 5567245 5173904 5949303 5766530 5775605 3.1 RBIs net foreign exchange assets (3.1.1 - 3.1.2) 5240824 4813224 5582596 5399823 5408898 3.1.1 Gross foreign assets 5241083 4813483 5582864 5400090 5409166 3.1.2 Foreign liabilities 259 259 268 268 268 3.2 Other banks’ net foreign exchange assets 326421 360680 366707 366707 366707 4 Government’s Currency Liabilities to the Public 33432 31939 35180 35180 35419 5 Banking Sector’s Net Non-monetary Liabilities 4953219 4549416 5271486 5249605 5233476 5 Banking Sectors Net Non-monetary Liabilities (Including Merger) (5467219) (5108284) (5714849) (5688545) (5671548) 5.1 Net non-monetary liabilities of RBI 1789875 1608680 1904309 1817486 1901186 5.2 Net non-monetary liabilities of other banks (residual) 3163344 2940736 3367177 3432118 3332290 5.2 Net non-monetary liabilities of other banks (residual) (Including Merger) (3677343) (3499604) (3810540) (3871059) (3770362) M₃(1+2+3+4–5) 24831618 23806744 26461248 26292202 26448230 M3 (1+2+3+4-5) (Including Merger) (24939860) (23934978) (26532761) (26362435) (26517391) Figures in parentheses include the impact of merger of a non-bank with bank. RBI Bulletin January 2025 133CURRENT STATISTICS No. 8: Monetary Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2023-24 2023 2024 Nov. 17 Nov. 01 Nov. 15 Nov. 29 1 2 3 4 5 Monetary Aggregates NM₁ (1.1+1.2.1+1.3) 6091700 5778247 6262080 6211097 6265846 NM₂ (NM₁ + 1.2.2.1) 14424855 13807006 15228423 15123411 15223357 NM2 (NM1 + 1.2.2.1) (Including Merger) (14473564) (13864712) (15260604) (15155015) (15254479) NM₃ (NM₂ +1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 25387764 24462451 27050741 26933601 27122450 NM3 (NM2 + 1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 - 2.4 - 2.5) (Including Merger) (25496006) (24590685) (27122254) (27003834) (27191610) 1 Components 1.1 Currency with the Public 3410276 3254799 3457240 3455882 3444217 1.2 Aggregate Deposits of Residents 21105009 20290771 22630346 22462586 22624216 1.2 Aggregate Deposits of Residents (Including Merger) (21213252) (20419005) (22701859) (22532818) (22693377) 1.2.1 Demand Deposits 2586888 2449084 2705139 2657445 2718636 1.2.2 Time Deposits of Residents 18518121 17841687 19925207 19805141 19905580 1.2.2 Time Deposits of Residents (Including Merger) (18626364) (17969922) (19996720) (19875373) (19974741) 1.2.2.1 Short-term Time Deposits 8333155 8028759 8966343 8912313 8957511 1.2.2.1 Short-term Time Deposits (Including Merger) (8381864) (8086465) (8998524) (8943918) (8988633) 1.2.2.1.1 Certificates of Deposits (CDs) 369399 304261 465018 488811 493598 1.2.2.2 Long-term Time Deposits 10184967 9812928 10958864 10892827 10948069 1.2.2.2 Long-term Time Deposits (Including Merger) (10244500) (9883457) (10998196) (10931455) (10986107) 1.3 'Other' Deposits with RBI 94536 74364 99701 97771 102993 1.4 Call/Term Funding from Financial Institutions 777942 842517 863454 917363 951023 2 Sources 2.1 Domestic Credit 25295986 24267472 26937791 26924891 27060933 2.1 Domestic Credit (Including Merger) (25918227) (24954574) (27452667) (27434064) (27568166) 2.1.1 Net Bank Credit to the Government 7512016 7368871 8019784 8052979 8035414 2.1.1 Net Bank Credit to the Government (Including Merger) (7603571) (7475375) (8073626) (8104197) (8086633) 2.1.1.1 Net RBI credit to the Government 1193213 1102323 1211153 1308855 1242346 2.1.1.2 Credit to the Government by the Banking System 6318803 6266548 6808631 6744125 6793069 2.1.1.2 Credit to the Government by the Banking System (Including Merger) (6410358) (6373052) (6862473) (6795342) (6844287) 2.1.2 Bank Credit to the Commercial Sector 17783970 16898601 18918008 18871912 19025519 2.1.2 Bank Credit to the Commercial Sector (Including Merger) (18314656) (17479199) (19379042) (19329867) (19481533) 2.1.2.1 RBI Credit to the Commercial Sector 14406 5240 9394 9149 10463 2.1.2.2 Credit to the Commercial Sector by the Banking System 17769564 16893361 18908614 18862763 19015056 2.1.2.2 Credit to the Commercial Sector by the Banking System (Including Merger) (18300250) (17473959) (19369648) (19320718) (19471070) 2.1.2.2.1 Other Investments ( Non-SLR Securities) 1089184 1100497 1179616 1173789 1177017 2.2 Government's Currency Liabilities to the Public 33432 31939 35180 35180 35419 2.3 Net Foreign Exchange Assets of the Banking Sector 5110820 4757422 5391068 5238838 5289237 2.3.1 Net Foreign Exchange Assets of the RBI 5240824 4813224 5582596 5399823 5408898 2.3.2 Net Foreign Currency Assets of the Banking System -130004 -55802 -191528 -160985 -119661 2.4 Capital Account 3912897 3932436 4352009 4374378 4401596 2.5 Other items (net) 1653576 1220814 1404652 1329869 1299617 Figures in parentheses include the impact of merger of a non-bank with a bank. 134 RBI Bulletin January 2025CURRENT STATISTICS No. 9: Liquidity Aggregates (₹ Crore) Aggregates 2023-24 2023 2024 Nov. Sep. Oct. Nov. 1 2 3 4 5 1 NM₃ 25387764 24462451 26491792 26808015 27122450 (25496006) (24590685) (26567267) (26880587) (27191610) 2 Postal Deposits 729246 702174 728509 732774 732774 3 L₁ ( 1 + 2) 26117010 25164625 27220301 27540789 27855224 (26225252) (25292859) (27295776) (27613361) (27924384) 4 Liabilities of Financial Institutions 85150 67961 68824 68842 66263 4.1 Term Money Borrowings 2375 1214 94 31 26 4.2 Certificates of Deposit 70245 53910 55520 55520 52765 4.3 Term Deposits 12531 12837 13210 13291 13473 5 L₂ (3 + 4) 26202160 25232586 27289125 27609631 27921487 (26310403) (25360820) (27364600) (27682202) (27990647) 6 Public Deposits with Non-Banking Financial Companies 102994 .. 102994 .. .. 7 L₃ (5 + 6) 26305155 .. 27392119 .. .. Note : 1. Figures in the columns might not add up to the total due to rounding off of numbers. 2. Figures in parentheses include the impact of merger of a non-bank with a bank. RBI Bulletin January 2025 135CURRENT STATISTICS No. 10: Reserve Bank of India Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2023-24 2023 2024 Nov. 17 Nov. 1 Nov. 15 Nov. 29 1 2 3 4 5 1 Components 1.1 Currency in Circulation 3511461 3355800 3562446 3561863 3546969 1.2 Bankers’ Deposits with the RBI 1025449 973005 1056267 1072461 1087967 1.2.1 Scheduled Commercial Banks 956011 910823 991970 1008450 1023815 1.3 ‘Other’ Deposits with the RBI 94536 74364 99701 97771 102993 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 4631446 4403169 4718415 4732094 4737929 2 Sources 2.1 RBI’s Domestic Credit 1147066 1166686 1004948 1114578 1194797 2.1.1 Net RBI credit to the Government 1193213 1102323 1211153 1308855 1242346 2.1.1.1 Net RBI credit to the Central Government (2.1.1.1.1 + 2.1.1.1.2 + 2.1.1.1.3 + 2.1.1.1.4 – 2.1.1.1.5) 1186655 1085027 1179902 1280264 1225923 2.1.1.1.1 Loans and Advances to the Central Government - - - 11817 - 2.1.1.1.2 Investments in Treasury Bills - - - - - 2.1.1.1.3 Investments in dated Government Securities 1363369 1373388 1310750 1268291 1270656 2.1.1.1.3.1 Central Government Securities 1363369 1373388 1310750 1268291 1270656 2.1.1.1.4 Rupee Coins 459 361 355 257 330 2.1.1.1.5 Deposits of the Central Government 177172 288722 131204 101 45064 2.1.1.2 Net RBI credit to State Governments 6557 17295 31251 28591 16423 2.1.2 RBI’s Claims on Banks -60553 59123 -215599 -203425 -58011 2.1.2.1 Loans and Advances to Scheduled Commercial Banks -60553 59123 -215599 -203425 -58011 2.1.3 RBI’s Credit to Commercial Sector 14406 5240 9394 9149 10463 2.1.3.1 Loans and Advances to Primary Dealers 9358 3181 7470 7202 8428 2.1.3.2 Loans and Advances to NABARD - - - - - 2.2 Government’s Currency Liabilities to the Public 33432 31939 35180 35180 35419 2.3 Net Foreign Exchange Assets of the RBI 5240824 4813224 5582596 5399823 5408898 2.3.1 Gold 439319 383413 586521 554921 565949 2.3.2 Foreign Currency Assets 4801522 4429828 4996093 4844919 4842966 2.4 Capital Account 1589134 1652217 1864267 1782617 1812747 2.5 Other Items (net) 200741 -43537 40042 34870 88439 No. 11: Reserve Money - Components and Sources (₹ Crore) Item Outstanding as on March 31/last Fridays of the month/Fridays 2023-24 2023 2024 Nov. 24 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 1 2 3 4 5 6 7 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 + 2.4 + 2.5 – 2.6) 4631446 4424556 4718415 4715316 4732094 4724621 4737929 1 Components 1.1 Currency in Circulation 3511461 3355477 3562446 3566826 3561863 3557204 3546969 1.2 Bankers' Deposits with RBI 1025449 994147 1056267 1049477 1072461 1068554 1087967 1.3 ‘Other’ Deposits with RBI 94536 74932 99701 99013 97771 98863 102993 2 Sources 2.1 Net Reserve Bank Credit to Government 1193213 1047703 1211153 1252206 1308855 1160737 1242346 2.2 Reserve Bank Credit to Banks -60553 121081 -215599 -223185 -203425 -27462 -58011 2.3 Reserve Bank Credit to Commercial Sector 14406 5233 9394 9220 9149 10489 10463 2.4 Net Foreign Exchange Assets of RBI 5240824 4839414 5582596 5546606 5399823 5393367 5408898 2.5 Government's Currency Liabilities to the Public 33432 32264 35180 35180 35180 35180 35419 2.6 Net Non- Monetary Liabilities of RBI 1789875 1621139 1904309 1904710 1817486 1847690 1901186 136 RBI Bulletin January 2025CURRENT STATISTICS No. 12: Commercial Bank Survey (₹ Crore) Item Outstanding as on last reporting Fridays of the month/ reporting Fridays of the month 2023-24 2023 2024 Nov. 17 Nov. 1 Nov. 15 Nov. 29 1 2 3 4 5 1 Components 1.1 Aggregate Deposits of Residents 20145188 19336816 21682061 21509693 21671501 (20253430) (19465050) (21753574) (21579925) (21740662) 1.1.1 Demand Deposits 2443853 2307178 2562742 2515558 2576789 1.1.2 Time Deposits of Residents 17701334 17029637 19119320 18994135 19094713 (17809577) (17157872) (19190832) (19064368) (19163873) 1.1.2.1 Short-term Time Deposits 7965600 7663337 8603694 8547361 8592621 1.1.2.1.1 Certificates of Deposits (CDs) 369399 304261 465018 488811 493598 1.1.2.2 Long-term Time Deposits 9735734 9366301 10515626 10446774 10502092 1.2 Call/Term Funding from Financial Institutions 777942 842517 863454 917363 951023 2 Sources 2.1 Domestic Credit 23019606 22112029 24661210 24519716 24722187 (23641847) (22799131) (25176086) (25028889) (25229419) 2.1.1 Credit to the Government 6014054 5962543 6502948 6438179 6487128 (6105610) (6069047) (6556790) (6489397) (6538347) 2.1.2 Credit to the Commercial Sector 17005551 16149486 18158262 18081537 18235059 (17536238) (16730084) (18619296) (18539492) (18691073) 2.1.2.1 Bank Credit 15901477 15040209 16976858 16904863 17052942 (16432164) (15620807) (17437892) (17362818) (17508956) 2.1.2.1.1 Non-food Credit 15878397 14999948 16946803 16859706 17001688 (16409083) (15580546) (17407837) (17317661) (17457702) 2.1.2.2 Net Credit to Primary Dealers 22904 16921 10188 11267 13498 2.1.2.3 Investments in Other Approved Securities 949 820 563 580 565 2.1.2.4 Other Investments (in non-SLR Securities) 1080222 1091535 1170654 1164827 1168055 2.2 Net Foreign Currency Assets of Commercial Banks (2.2.1-2.2.2-2.2.3) -130004 -55802 -191528 -160985 -119661 2.2.1 Foreign Currency Assets 241661 246465 263481 294165 339002 2.2.2 Non-resident Foreign Currency Repatriable Fixed Deposits 221796 186810 273961 275964 276804 2.2.3 Overseas Foreign Currency Borrowings 149868 115457 181048 179186 181858 2.3 Net Bank Reserves (2.3.1+2.3.2-2.3.3) 893350 940579 1300525 1305734 1172693 2.3.1 Balances with the RBI 931483 910823 991970 1008450 1023815 2.3.2 Cash in Hand 89433 88879 92956 93859 90867 2.3.3 Loans and Advances from the RBI 127566 59123 -215599 -203425 -58011 2.4 Capital Account 2299592 2256048 2463572 2567591 2564679 2.5 Other items (net) (2.1+2.2+2.3-2.4-1.1-1.2) 560230 561425 761119 669818 588016 2.5.1 Other Demand and Time Liabilities (net of 2.2.3) 787560 771776 769187 761797 839816 2.5.2 Net Inter-Bank Liabilities (other than to PDs) 197781 158168 128113 121915 135044 Figures in parentheses include the impact of merger of a non-bank with a bank. No. 13: Scheduled Commercial Banks’ Investments (₹ Crore) Item As on 2023 2024 March 22, 2024 Nov. 17 Oct. 18 Nov. 15 Nov. 29 1 2 3 4 5 1 SLR Securities 6106558 6069868 6491008 6489977 6538911 (6015003) (5963364) (6429418) (6438759) (6487693) 2 Other Government Securities (Non-SLR) 177136 179418 158905 157450 157432 3 Commercial Paper 61175 55974 63415 59576 60547 4 Shares issued by 4.1 PSUs 8475 9025 14003 13640 13343 4.2 Private Corporate Sector 77722 83365 96676 96744 96759 4.3 Others 5624 5500 7515 7482 7503 5 Bonds/Debentures issued by 5.1 PSUs 103070 92351 119242 122038 121897 5.2 Private Corporate Sector 287596 291312 232143 231418 231855 5.3 Others 124690 110949 148322 150194 155237 6 Instruments issued by 6.1 Mutual funds 62499 81106 137472 138166 134778 6.2 Financial institutions 172340 182535 185401 188121 188704 RBI Bulletin January 2025 137CURRENT STATISTICS No. 14: Business in India - All Scheduled Banks and All Scheduled Commercial Banks (₹ Crore) Item As on the Last Reporting Friday (in case of March)/ Last Friday All Scheduled Banks All Scheduled Commercial Banks 2023 2024 2023 2024 2023-24 2023-24 Nov. Oct. Nov. Nov. Oct. Nov. 1 2 3 4 5 6 7 8 Number of Reporting Banks 210 210 208 208 137 137 135 135 1 Liabilities to the Banking System 554117 580351 461959 441174 549351 576160 456793 436037 1.1 Demand and Time Deposits from Banks 298452 299509 299445 278500 294471 296162 294684 273722 1.2 Borrowings from Banks 182566 208377 138138 137620 182429 208262 138074 137597 1.3 Other Demand and Time Liabilities 73100 72465 24377 25053 72452 71735 24034 24718 2 Liabilities to Others 22664868 22045232 24168976 24463995 22190597 21597261 23695315 23990163 2.1 Aggregate Deposits 20932067 20223466 22268274 22473475 20475226 19791862 21811286 22017466 (20823825) (20096397) (22196282) (22404315) (20366984) (19664793) (21739295) (21948305) 2.1.1 Demand 2492916 2437425 2576598 2625490 2443853 2391662 2527554 2576789 2.1.2 Time 18439151 17786041 19691676 19847985 18031373 17400201 19283733 19440677 2.2 Borrowings 782260 897811 922304 955899 777942 893404 917220 951023 2.3 Other Demand and Time Liabilities 950541 923954 978397 1034621 937428 911995 966808 1021674 3 Borrowings from Reserve Bank 222716 207355 30948 21293 222716 207355 30948 21293 3.1 Against Usance Bills /Promissory Notes - - - - - - - - 3.2 Others 222716 207355 30948 21293 222716 207355 30948 21293 4 Cash in Hand and Balances with Reserve Bank 1043272 1044258 1156513 1137407 1020916 1022095 1133410 1114682 4.1 Cash in Hand 91886 92836 93424 93455 89433 90354 90430 90867 4.2 Balances with Reserve Bank 951386 951421 1063089 1043952 931483 931741 1042981 1023815 5 Assets with the Banking System 455057 452124 415954 379362 374474 392008 347173 314491 5.1 Balances with Other Banks 246384 264403 267325 247863 198327 222542 214836 195673 5.1.1 In Current Account 12010 26481 11859 12103 8971 23574 8521 9525 5.1.2 In Other Accounts 234373 237922 255466 235760 189357 198969 206314 186147 5.2 Money at Call and Short Notice 39614 40804 31346 27828 12355 25361 18904 19091 5.3 Advances to Banks 51325 51793 47217 39301 48368 51217 46589 38641 5.4 Other Assets 117734 95123 70066 64369 115424 92887 66845 61086 6 Investment 6256962 6121207 6666871 6691500 6106558 5971730 6514977 6538911 (6165407) (6014836) (6613035) (6640281) (6015003) (5865359) (6461140) (6487693) 6.1 Government Securities 6249319 6114549 6657864 6683592 6105610 5970890 6513979 6538347 6.2 Other Approved Securities 7643 6657 9007 7908 949 840 998 565 7 Bank Credit 16866336 16159763 17768822 17959742 16432164 15751806 17315981 17508956 (16335650) (15580023) (17304521) (17503728) (15901477) (15172066) (16851679) (17052942) 7a Food Credit 75472 96147 72843 101871 23081 44182 22204 51254 7.1 Loans, Cash-credits and Overdrafts 16565348 15887441 17451631 17646243 16134303 15482411 17002083 17198615 7.2 Inland Bills-Purchased 60471 47263 69489 69789 60467 47254 67977 68351 7.3 Inland Bills-Discounted 199761 185727 209055 206353 197358 183414 207905 205253 7.4 Foreign Bills-Purchased 16662 16384 15841 15424 16412 16157 15597 15186 7.5 Foreign Bills-Discounted 24094 22947 22807 21934 23624 22569 22419 21550 138 RBI Bulletin January 2025CURRENT STATISTICS No. 15: Deployment of Gross Bank Credit by Major Sectors (₹ Crore) Outstanding as on Growth(%) Mar. 22, Financial Sector 2024 2023 2024 year so far Y-o-Y Nov. 17 Oct. 18 Nov. 29 2024-25 2024 1 2 3 4 % % I. Bank Credit (II + III) 16432164 15825456 17238250 17509171 6.6 10.6 (15901477) (15247263) (16772605) (17053157) (7.2) (11.8) II. Food Credit 23081 41693 18654 51254 122.1 22.9 III. Non-food Credit 16409083 15783763 17219596 17457917 6.4 10.6 (15878397) (15205570) (16753951) (17001903) (7.1) (11.8) 1. Agriculture & Allied Activities 2071251 1927724 2205299 2223467 7.3 15.3 2. Industry (Micro and Small, Medium and Large) 3652804 3529759 3774252 3813094 4.4 8.0 (3635810) (3512271) (3759186) (3798411) (4.5) (8.1) 2.1 Micro and Small 726315 687740 749790 757300 4.3 10.1 2.2 Medium 303998 283701 335822 340525 12.0 20.0 2.3 Large 2622490 2558317 2688640 2715269 3.5 6.1 3. Services 4592227 4297367 4784938 4853884 5.7 13.0 (4490467) (4175901) (4704550) (4775839) (6.4) (14.4) 3.1 Transport Operators 230175 217895 246407 249795 8.5 14.6 3.2 Computer Software 25917 25595 30581 31348 21.0 22.5 3.3 Tourism, Hotels & Restaurants 77513 76146 79732 79088 2.0 3.9 3.4 Shipping 7067 6719 7782 7521 6.4 11.9 3.5 Aviation 43248 39746 46168 46446 7.4 16.9 3.6 Professional Services 167234 154906 186251 184913 10.6 19.4 3.7 Trade 1025752 944579 1079498 1081553 5.4 14.5 3.7.1. Wholesale Trade¹ 538744 490944 571159 568471 5.5 15.8 3.7.2 Retail Trade 487008 453635 508339 513082 5.4 13.1 3.8 Commercial Real Estate 469013 450340 507671 514894 9.8 14.3 (400470) (365537) (452869) (461690) (15.3) (26.3) 3.9 Non-Banking Financial Companies (NBFCs)² of which, 1548027 1461765 1536655 1575306 1.8 7.8 3.9.1 Housing Finance Companies (HFCs) 325626 304460 321110 322240 -1.0 5.8 3.9.2 Public Financial Institutions (PFIs) 226963 190672 198320 196793 -13.3 3.2 3.10 Other Services³ 998281 919676 1064193 1083020 8.5 17.8 (978198) (897036) (1046715) (1066187) (9.0) (18.9) 4. Personal Loans 5331290 5059824 5647476 5734856 7.6 13.3 (4919468) (4618214) (5278594) (5372892) (9.2) (16.3) 4.1 Consumer Durables 23713 23568 23640 24698 4.2 4.8 4.2 Housing 2718715 2591488 2871845 2908672 7.0 12.2 (2331935) (2176908) (2525138) (2568430) (10.1) (18.0) 4.3 Advances against Fixed Deposits 125239 113944 127533 131221 4.8 15.2 4.4 Advances to Individuals against share & bonds 8492 7775 9060 8274 -2.6 6.4 4.5 Credit Card Outstanding 257016 244668 281392 288997 12.4 18.1 4.6 Education 119380 112045 130309 131629 10.3 17.5 4.7 Vehicle Loans 573398 548802 616405 605587 5.6 10.3 4.8 Loan against gold jewellery⁴ 102562 99063 154282 164556 60.4 66.1 4.9 Other Personal Loans 1402775 1318470 1433009 1471222 4.9 11.6 (1377966) (1291942) (1410905) (1449564) (5.2) (12.2) 5. Priority Sector (Memo) (i) Agriculture & Allied Activities⁵ 2081856 1956972 2200460 2210312 6.2 12.9 (ii) Micro & Small Enterprises⁶ 1974191 1872250 2076956 2092196 6.0 11.7 (iii) Medium Enterprises⁷ 490703 460621 557829 556186 13.3 20.7 (iv) Housing 755222 740774 752216 752576 -0.4 1.6 (660572) (641710) (665965) (667694) (1.1) (4.0) (v) Education Loans 62235 60993 62673 62645 0.7 2.7 (vi) Renewable Energy 5991 2081 7122 7458 24.5 258.4 (vii) Social Infrastructure 2613 6512 1120 1095 -58.1 -83.2 (viii) Export Credit 11774 7749 12094 12668 7.6 63.5 (ix) Others 61336 48858 58045 54682 -10.8 11.9 (x) Weaker Sections including net PSLC- SF/MF 1647778 1531851 1742896 1734996 5.3 13.3 Notes: (1) Data are provisional. Bank credit, Food credit and Non-food credit data are based on Section-42 return, which covers all scheduled commercial banks (SCBs), while sectoral non-food credit data are based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 95 per cent of total non-food credit extended by all SCBs, pertaining to the last reporting Friday of the month. Bank credit, Food credit and Non-food credit given for the period November 17, 2023 pertains to December 1, 2023. (2) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger. 1. Wholesale trade includes food procurement credit outside the food credit consortium. 2. NBFCs include HFCs, PFIs, Microfinance Institutions (MFIs), NBFCs engaged in gold loan and others. 3. “Other Services” include Mutual Fund (MFs), Banking and Finance other than NBFCs and MFs, and other services which are not indicated elsewhere under services. 4. Since May 2024, a bank has changed the classification of a category of agricultural loan into “Loans against gold jewellery” under retail segment. 5. “Agriculture and Allied Activities” under the priority sector also include priority sector lending certificates (PSLCs). 6. “Micro and Small Enterprises” under the priority sector include credit to micro and small enterprises in industry and services sectors and also include PSLCs. 7. “Medium Enterprises” under the priority sector include credit to medium enterprises in industry and services sectors. RBI Bulletin January 2025 139CURRENT STATISTICS No. 16: Industry-wise Deployment of Gross Bank Credit (₹ Crore) Outstanding as on Growth(%) Financial 2023 2024 Y-o-Y Mar. 22, year so far Industry 2024 Nov. 17 Oct. 18 Nov. 29 2024-25 2024 1 2 3 4 % % 2 Industries (2.1 to 2.19) 3652804 3529759 3774252 3813094 4.4 8.0 (3635810) (3512271) (3759186) (3798411) (4.5) (8.1) 2.1 Mining & Quarrying (incl. Coal) 54166 53015 50116 53357 -1.5 0.6 2.2 Food Processing 208864 176193 190283 197552 -5.4 12.1 2.2.1 Sugar 26383 13703 17191 16925 -35.8 23.5 2.2.2 Edible Oils & Vanaspati 19700 19557 17331 20296 3.0 3.8 2.2.3 Tea 5692 6102 6429 6509 14.4 6.7 2.2.4 Others 157089 136831 149332 153822 -2.1 12.4 2.3 Beverage & Tobacco 31136 27201 31286 30182 -3.1 11.0 2.4 Textiles 256048 246083 256840 259458 1.3 5.4 2.4.1 Cotton Textiles 99199 95788 92827 95498 -3.7 -0.3 2.4.2 Jute Textiles 4280 3950 4253 4295 0.4 8.7 2.4.3 Man-Made Textiles 45111 43424 47416 47526 5.4 9.4 2.4.4 Other Textiles 107458 102921 112344 112138 4.4 9.0 2.5 Leather & Leather Products 12588 12035 12639 12519 -0.6 4.0 2.6 Wood & Wood Products 23839 22676 25319 25805 8.2 13.8 2.7 Paper & Paper Products 46426 45387 50089 51174 10.2 12.8 2.8 Petroleum, Coal Products & Nuclear Fuels 132356 133857 152974 144756 9.4 8.1 2.9 Chemicals & Chemical Products 249347 236343 259944 263302 5.6 11.4 2.9.1 Fertiliser 37569 32492 31511 31143 -17.1 -4.2 2.9.2 Drugs & Pharmaceuticals 81036 77535 88499 87569 8.1 12.9 2.9.3 Petro Chemicals 23157 20108 25848 30373 31.2 51.0 2.9.4 Others 107584 106207 114086 114217 6.2 7.5 2.10 Rubber, Plastic & their Products 90420 86666 95674 97032 7.3 12.0 2.11 Glass & Glassware 12090 10985 12483 12517 3.5 13.9 2.12 Cement & Cement Products 59757 60997 60805 61614 3.1 1.0 2.13 Basic Metal & Metal Product 384447 369827 422883 428244 11.4 15.8 2.13.1 Iron & Steel 273803 256005 300263 304598 11.2 19.0 2.13.2 Other Metal & Metal Product 110645 113822 122621 123647 11.8 8.6 2.14 All Engineering 196643 189386 219320 223986 13.9 18.3 2.14.1 Electronics 43175 43257 49889 52123 20.7 20.5 2.14.2 Others 153468 146129 169431 171863 12.0 17.6 2.15 Vehicles, Vehicle Parts & Transport Equipment 113185 108818 113603 113753 0.5 4.5 2.16 Gems & Jewellery 84860 89572 92443 87031 2.6 -2.8 2.17 Construction 133520 128308 138635 142057 6.4 10.7 2.18 Infrastructure 1304096 1292278 1298577 1312607 0.7 1.6 2.18.1 Power 644042 630991 646057 651955 1.2 3.3 2.18.2 Telecommunications 138192 142480 121495 122704 -11.2 -13.9 2.18.3 Roads 318072 317170 325803 333166 4.7 5.0 2.18.4 Airports 7280 7987 8117 8407 15.5 5.3 2.18.5 Ports 6681 7111 5823 6116 -8.5 -14.0 2.18.6 Railways 13062 12138 11230 11376 -12.9 -6.3 2.18.7 Other Infrastructure 176767 174401 180051 178884 1.2 2.6 2.19 Other Industries 259016 240132 290339 296148 14.3 23.3 Note: (1) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger. 140 RBI Bulletin January 2025CURRENT STATISTICS No. 17: State Co-operative Banks Maintaining Accounts with the Reserve Bank of India (₹ Crore) Last Reporting Friday (in case of March)/Last Friday/ Item Reporting Friday 2023 2024 2023-24 Oct. 27 Aug. 30 Sep. 06 Sep. 20 Sep. 27 Oct. 04 Oct. 18 Oct. 25 1 2 3 4 5 6 7 8 9 Number of Reporting Banks 33 33 34 34 34 34 34 34 34 1 Aggregate Deposits (2.1.1.2+2.2.1.2) 138788.9 136454.8 133771.9 133484.9 131009.0 133236.7 131961.9 131965.1 132037.8 2 Demand and Time Liabilities 2.1 Demand Liabilities 30226.7 27401.2 27177.9 28015.9 27871.3 27646.4 26781.0 25419.0 25724.0 2.1.1 Deposits 2.1.1.1 Inter-Bank 9101.3 6210.8 7554.0 8324.4 8039.9 7743.1 7544.4 7243.0 7210.1 2.1.1.2 Others 15000.4 14768.0 13721.9 13695.0 13761.7 13473.1 13625.5 13121.6 13179.2 2.1.2 Borrowings from Banks 130.0 1254.6 179.9 190.0 639.7 2.1.3 Other Demand Liabilities 5995.0 5167.8 5902.0 5996.5 6069.7 6250.3 5611.1 4864.4 4695.0 2.2 Time Liabilities 198141.8 173252.2 181698.8 181365.2 180677.8 181476.5 176057.8 177986.9 177577.6 2.2.1 Deposits 2.2.1.1 Inter-Bank 72308.4 49258.2 59084.4 59157.2 59278.4 59406.1 55990.1 56392.3 56169.6 2.2.1.2 Others 123788.5 121686.8 120050.0 119789.9 117247.3 119763.6 118336.4 118843.5 118858.6 2.2.2 Borrowings from Banks 673.6 889.7 1235.0 1123.9 2852.3 1143.3 683.0 1712.2 1460.2 2.2.3 Other Time Liabilities 1371.3 1417.5 1329.4 1294.2 1299.8 1163.5 1048.5 1038.9 1089.2 3 Borrowing from Reserve Bank 0.0 0.0 0.0 0.0 4 Borrowings from a notified bank / Government 95914.5 74228.2 84199.0 84699.7 87192.9 87696.9 87889.0 89225.0 88927.0 4.1 Demand 27317.7 19329.5 23957.2 23942.2 23761.2 23412.8 25815.3 25217.3 24980.3 4.2 Time 68596.8 54898.7 60241.8 60757.5 63431.7 64284.1 62074.0 64007.2 64224.1 5 Cash in Hand and Balances with Reserve Bank 16263.7 11176.0 11195.1 11754.2 12126.7 12368.8 12171.0 12371.3 11411.6 5.1 Cash in Hand 960.0 992.9 699.1 683.4 822.3 780.9 781.6 838.2 818.0 5.2 Balance with Reserve Bank 15303.7 10183.1 10496.0 11070.8 11304.4 11587.9 11389.5 11533.2 10593.6 6 Balances with Other Banks in Current Account 2088.1 1685.7 1607.4 1697.0 1841.0 1658.2 1178.6 1229.3 1135.9 7 Investments in Government Securities 77700.5 73744.2 75232.9 75681.3 73803.6 73488.7 74364.4 73111.6 73805.6 8 Money at Call and Short Notice 34355.3 16653.1 14673.7 14683.1 14879.4 15615.3 17561.1 17854.6 16692.6 9 Bank Credit (10.1+11) 135141.9 123771.7 136830.6 138748.4 138876.6 138973.3 135277.0 135003.0 136490.2 10 Advances 10.1 Loans, Cash-Credits and Overdrafts 134936.8 123727.6 136641.1 138544.2 138702.8 138795.8 135082.7 134807.4 136282.1 10.2 Due from Banks 142185.2 122092.6 137902.0 139259.2 141899.6 143516.4 139711.1 141859.4 142706.5 11 Bills Purchased and Discounted 205.1 44.1 189.5 204.2 173.8 177.5 194.2 195.6 208.1 RBI Bulletin January 2025 141CURRENT STATISTICS Prices and Production No. 18: Consumer Price Index (Base: 2012=100) Group/Sub group 2023-24 Rural Urban Combined Rural Urban Combined Dec.23 Nov.24 Dec.24 (P) Dec.23 Nov.24 Dec.24 (P) Dec.23 Nov.24 Dec.24 (P) 1 2 3 4 5 6 7 8 9 10 11 12 1 Food and beverages 185.9 192.7 188.4 188.8 206.2 203.9 195.3 212.3 209.4 191.2 208.4 205.9 1.1 Cereals and products 181.4 181.7 181.5 186.2 198.1 198.9 185.6 195.5 196.5 186.0 197.3 198.1 1.2 Meat and fish 213.0 221.3 215.9 208.0 220.9 219.2 217.5 229.8 228.7 211.3 224.0 222.5 1.3 Egg 185.4 189.5 187.0 197.1 199.3 209.8 200.8 204.8 215.7 198.5 201.4 212.1 1.4 Milk and products 181.4 181.5 181.4 182.4 187.1 187.3 182.5 187.8 187.9 182.4 187.4 187.5 1.5 Oils and fats 165.3 158.7 162.9 162.4 186.8 189.0 156.7 172.8 174.5 160.3 181.7 183.7 1.6 Fruits 172.1 179.9 175.7 172.6 190.7 188.8 178.9 193.7 192.3 175.5 192.1 190.4 1.7 Vegetables 183.9 229.9 199.5 188.4 260.0 242.4 234.6 315.4 289.4 204.1 278.8 258.3 1.8 Pulses and products 192.2 196.5 193.7 204.2 214.5 212.4 210.1 219.4 217.4 206.2 216.2 214.1 1.9 Sugar and confectionery 126.2 128.1 126.9 130.2 131.1 130.1 131.4 133.2 132.7 130.6 131.8 131.0 1.10 Spices 238.0 228.4 234.8 249.1 229.9 229.1 238.7 224.4 224.1 245.6 228.1 227.4 1.11 Non-alcoholic beverages 180.7 168.2 175.5 182.0 186.0 186.8 169.2 174.7 175.5 176.7 181.3 182.1 1.12 Prepared meals, snacks, sweets 193.3 200.9 196.8 194.3 200.5 201.1 202.4 210.8 211.7 198.1 205.3 206.0 2 Pan, tobacco and intoxicants 202.0 207.1 203.3 203.1 208.1 208.6 208.4 212.1 212.2 204.5 209.2 209.6 3 Clothing and footwear 192.9 181.5 188.4 194.1 199.0 199.4 182.7 187.4 187.8 189.6 194.4 194.8 3.1 Clothing 193.5 183.5 189.6 194.8 199.9 200.3 184.8 189.6 190.0 190.9 195.8 196.2 3.2 Footwear 189.4 170.2 181.4 190.3 193.4 193.6 171.2 175.5 175.6 182.4 186.0 186.1 4 Housing -- 176.7 176.7 -- -- -- 176.9 183.0 181.7 176.9 183.0 181.7 5 Fuel and light 183.0 178.9 181.4 183.1 180.8 182.2 175.5 169.6 170.4 180.2 176.6 177.7 6 Miscellaneous 181.7 173.7 177.8 183.0 190.4 190.8 174.8 181.8 182.0 179.0 186.2 186.5 6.1 Household goods and services 181.5 171.8 176.9 182.5 186.4 186.9 172.7 178.0 178.3 177.9 182.4 182.8 6.2 Health 190.8 185.2 188.7 192.5 199.3 200.2 186.8 194.0 194.5 190.3 197.3 198.0 6.3 Transport and communication 171.1 161.4 166.0 171.8 176.6 176.7 161.9 165.7 165.8 166.6 170.9 171.0 6.4 Recreation and amusement 175.8 171.1 173.2 177.0 181.0 181.5 171.9 176.4 176.7 174.1 178.4 178.8 6.5 Education 184.0 179.1 181.1 185.3 192.0 192.2 180.5 187.8 187.8 182.5 189.5 189.6 6.6 Personal care and effects 186.3 187.4 186.8 188.1 206.0 206.2 189.4 207.7 208.0 188.6 206.7 206.9 General Index (All Groups) 185.6 182.4 184.1 187.6 199.4 198.4 183.6 193.2 192.0 185.7 196.5 195.4 Source: National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India. P: Provisional No. 19: Other Consumer Price Indices Item Base Year Linking 2023-24 2023 2024 Factor Nov. Oct. Nov. 1 2 3 4 5 6 1 Consumer Price Index for Industrial Workers 2016 2.88 137.9 139.1 144.5 144.5 2 Consumer Price Index for Agricultural Labourers 1986-87 5.89 1229 1253 1315 1320 3 Consumer Price Index for Rural Labourers 1986-87 - 1240 1262 1326 1331 Source: Labour Bureau, Ministry of Labour and Employment, Government of India. No. 20: Monthly Average Price of Gold and Silver in Mumbai Item 2023-24 2023 2024 Nov. Oct. Nov. 1 2 3 4 1 Standard Gold (₹ per 10 grams) 60624 60786 76713 76221 2 Silver (₹ per kilogram) 72243 72222 93352 90230 Source: India Bullion & Jewellers Association Ltd., Mumbai for Gold and Silver prices in Mumbai. 142 RBI Bulletin January 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Base: 2011-12 = 100) Commodities Weight 2023-24 2023 2024 Dec. Oct. Nov.(P) Dec.(P) 1 2 3 4 5 6 1 ALL COMMODITIES 100.000 151.4 151.8 156.7 156.0 155.4 1.1 PRIMARY ARTICLES 22.618 183.0 182.8 200.6 197.9 193.8 1.1.1 FOOD ARTICLES 15.256 191.3 191.2 217.9 214.0 207.4 1.1.1.1 Food Grains (Cereals+Pulses) 3.462 193.8 200.8 213.4 214.8 213.8 1.1.1.2 Fruits & Vegetables 3.475 210.2 201.1 291.6 273.2 244.7 1.1.1.3 Milk 4.440 180.3 181.7 185.6 185.3 185.8 1.1.1.4 Eggs, Meat & Fish 2.402 172.1 165.7 171.0 173.1 174.7 1.1.1.5 Condiments & Spices 0.529 235.4 248.1 243.5 244.5 240.2 1.1.1.6 Other Food Articles 0.948 189.5 196.6 219.3 215.4 213.7 1.1.2 NON-FOOD ARTICLES 4.119 162.4 162.3 161.9 162.2 166.3 1.1.2.1 Fibres 0.839 168.0 161.9 160.9 159.0 159.5 1.1.2.2 Oil Seeds 1.115 185.0 185.3 185.4 185.9 182.8 1.1.2.3 Other non-food Articles 1.960 134.9 134.1 140.1 138.9 140.8 1.1.2.4 Floriculture 0.204 279.7 310.0 247.3 270.0 349.3 1.1.3 MINERALS 0.833 217.7 217.7 229.6 228.5 229.6 1.1.3.1 Metallic Minerals 0.648 204.2 208.3 219.4 220.1 219.9 1.1.3.2 Other Minerals 0.185 265.0 250.7 265.3 258.1 263.5 1.1.4 CRUDE PETROLEUM & NATURAL GAS 2.410 153.6 152.2 147.3 146.1 141.9 1.2 FUEL & POWER 13.152 152.0 155.8 148.8 147.1 149.9 1.2.1 COAL 2.138 136.4 136.7 135.5 135.5 135.6 1.2.1.1 Coking Coal 0.647 143.4 143.4 143.4 143.4 143.4 1.2.1.2 Non-Coking Coal 1.401 124.8 125.8 125.8 125.8 125.8 1.2.1.3 Lignite 0.090 267.6 258.1 229.5 229.5 231.2 1.2.2 MINERAL OILS 7.950 159.0 160.0 153.0 154.0 153.9 1.2.3 ELECTRICITY 3.064 145.0 158.4 147.4 137.3 149.4 1.3 MANUFACTURED PRODUCTS 64.231 140.2 140.0 142.9 143.0 143.0 1.3.1 MANUFACTURE OF FOOD PRODUCTS 9.122 160.5 161.1 175.9 177.3 176.7 1.3.1.1 Processing and Preserving of meat 0.134 145.3 144.9 154.5 153.2 155.4 1.3.1.2 Processing and Preserving of fish, Crustaceans, Molluscs and products thereof 0.204 142.9 145.5 149.2 148.9 143.9 1.3.1.3 Processing and Preserving of fruit and Vegetables 0.138 130.4 130.4 132.9 132.7 133.3 1.3.1.4 Vegetable and Animal oils and Fats 2.643 145.0 140.8 178.2 182.0 183.7 1.3.1.5 Dairy products 1.165 179.1 179.7 181.6 182.0 182.0 1.3.1.6 Grain mill products 2.010 175.6 180.2 188.0 190.2 190.2 1.3.1.7 Starches and Starch products 0.110 157.1 163.0 172.4 169.5 165.8 1.3.1.8 Bakery products 0.215 165.4 166.5 170.0 172.8 173.5 1.3.1.9 Sugar, Molasses & honey 1.163 134.6 138.1 139.0 138.4 136.1 1.3.1.10 Cocoa, Chocolate and Sugar confectionery 0.175 139.8 141.4 160.5 160.7 166.6 1.3.1.11 Macaroni, Noodles, Couscous and Similar farinaceous products 0.026 149.9 150.9 155.7 158.1 166.4 1.3.1.12 Tea & Coffee products 0.371 176.2 173.9 197.7 193.8 180.1 1.3.1.13 Processed condiments & salt 0.163 192.1 199.1 191.5 190.8 192.7 1.3.1.14 Processed ready to eat food 0.024 146.3 147.5 152.8 152.6 153.4 1.3.1.15 Health supplements 0.225 179.1 178.8 189.4 191.5 189.0 1.3.1.16 Prepared animal feeds 0.356 208.3 210.2 210.2 206.3 202.3 1.3.2 MANUFACTURE OF BEVERAGES 0.909 131.5 132.0 134.5 134.9 134.6 1.3.2.1 Wines & spirits 0.408 133.3 134.4 136.5 137.0 137.0 1.3.2.2 Malt liquors and Malt 0.225 135.6 136.8 138.7 139.2 139.1 1.3.2.3 Soft drinks; Production of mineral waters and Other bottled waters 0.275 125.5 124.5 128.1 128.5 127.3 1.3.3 MANUFACTURE OF TOBACCO PRODUCTS 0.514 173.5 172.7 176.0 177.4 177.0 1.3.3.1 Tobacco products 0.514 173.5 172.7 176.0 177.4 177.0 RBI Bulletin January 2025 143CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2023-24 2023 2024 Dec. Oct. Nov.(P) Dec.(P) 1 2 3 4 5 6 1.3.4 MANUFACTURE OF TEXTILES 4.881 134.6 133.7 135.9 135.9 136.9 1.3.4.1 Preparation and Spinning of textile fibres 2.582 120.1 118.7 121.2 120.6 120.7 1.3.4.2 Weaving & Finishing of textiles 1.509 157.5 156.7 157.5 158.4 161.4 1.3.4.3 Knitted and Crocheted fabrics 0.193 120.0 119.7 125.5 123.6 123.5 1.3.4.4 Made-up textile articles, Except apparel 0.299 156.6 157.1 160.4 159.9 161.5 1.3.4.5 Cordage, Rope, Twine and Netting 0.098 139.2 136.8 142.2 143.2 144.4 1.3.4.6 Other textiles 0.201 129.6 130.4 134.6 135.4 134.0 1.3.5 MANUFACTURE OF WEARING APPAREL 0.814 150.8 151.9 153.9 153.8 154.4 1.3.5.1 Manufacture of Wearing Apparel (woven), Except fur Apparel 0.593 148.7 149.0 151.0 151.0 151.6 1.3.5.2 Knitted and Crocheted apparel 0.221 156.6 159.8 161.8 161.5 161.8 1.3.6 MANUFACTURE OF LEATHER AND RELATED PRODUCTS 0.535 124.1 124.1 125.7 125.7 125.6 1.3.6.1 Tanning and Dressing of leather; Dressing and Dyeing of fur 0.142 107.3 106.6 106.5 106.0 108.2 1.3.6.2 Luggage, HandbAgs, Saddlery and Harness 0.075 140.9 140.8 144.1 143.8 142.4 1.3.6.3 Footwear 0.318 127.7 127.9 129.9 130.1 129.4 1.3.7 MANUFACTURE OF WOOD AND PRODUCTS OF WOOD AND CORK 0.772 146.6 147.6 148.7 148.4 149.0 1.3.7.1 Saw milling and Planing of wood 0.124 137.8 135.1 142.0 141.9 142.3 1.3.7.2 Veneer sheets; Manufacture of plywood, Laminboard, Particle board and Other panels and Boards 0.493 146.1 148.4 147.6 147.3 148.1 1.3.7.3 Builder's carpentry and Joinery 0.036 206.4 207.3 216.2 214.2 214.6 1.3.7.4 Wooden containers 0.119 139.8 139.8 140.3 139.8 140.0 1.3.8 MANUFACTURE OF PAPER AND PAPER PRODUCTS 1.113 140.3 138.4 139.8 139.0 138.9 1.3.8.1 Pulp, Paper and Paperboard 0.493 147.6 145.6 144.5 143.7 143.1 1.3.8.2 Corrugated paper and Paperboard and Containers of paper and Paperboard 0.314 140.9 140.5 149.3 148.6 148.9 1.3.8.3 Other articles of paper and Paperboard 0.306 128.0 124.7 122.4 121.3 122.0 1.3.9 PRINTING AND REPRODUCTION OF RECORDED MEDIA 0.676 182.3 185.4 186.0 186.7 188.2 1.3.9.1 Printing 0.676 182.3 185.4 186.0 186.7 188.2 1.3.10 MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS 6.465 136.9 135.7 136.3 136.1 136.4 1.3.10.1 Basic chemicals 1.433 139.9 138.2 137.6 138.2 139.3 1.3.10.2 Fertilizers and Nitrogen compounds 1.485 142.8 142.5 142.9 143.2 143.0 1.3.10.3 Plastic and Synthetic rubber in primary form 1.001 132.3 129.0 133.9 133.1 132.8 1.3.10.4 Pesticides and Other agrochemical products 0.454 132.8 132.3 129.3 129.5 128.8 1.3.10.5 Paints, Varnishes and Similar coatings, Printing ink and Mastics 0.491 143.7 144.9 139.8 137.8 139.0 1.3.10.6 Soap and Detergents, Cleaning and Polishing preparations, Perfumes and Toilet preparations 0.612 139.7 138.9 139.5 139.7 140.4 1.3.10.7 Other chemical products 0.692 134.4 133.1 136.1 135.3 134.9 1.3.10.8 Man-made fibres 0.296 103.6 102.3 102.8 102.9 103.9 1.3.11 MANUFACTURE OF PHARMACEUTICALS, MEDICINAL CHEMICAL AND BOTANICAL PRODUCTS 1.993 142.9 143.3 143.5 144.1 144.1 1.3.11.1 Pharmaceuticals, Medicinal chemical and Botanical products 1.993 142.9 143.3 143.5 144.1 144.1 1.3.12 MANUFACTURE OF RUBBER AND PLASTICS PRODUCTS 2.299 127.5 127.5 129.6 128.6 129.1 1.3.12.1 Rubber Tyres and Tubes; Retreading and Rebuilding of Rubber Tyres 0.609 113.7 114.1 116.5 116.8 117.1 1.3.12.2 Other Rubber Products 0.272 107.3 107.3 113.4 112.2 111.9 1.3.12.3 Plastics products 1.418 137.3 137.2 138.2 136.8 137.5 1.3.13 MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS 3.202 134.7 135.4 130.4 130.6 131.3 1.3.13.1 Glass and Glass products 0.295 163.8 164.6 162.5 162.2 163.4 1.3.13.2 Refractory products 0.223 119.7 119.0 118.7 123.6 125.3 1.3.13.3 Clay Building Materials 0.121 123.9 116.4 126.0 127.5 123.3 1.3.13.4 Other Porcelain and Ceramic Products 0.222 122.3 122.7 124.1 124.6 124.6 1.3.13.5 Cement, Lime and Plaster 1.645 137.3 138.9 128.8 128.6 129.5 144 RBI Bulletin January 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2023-24 2023 2024 Dec. Oct. Nov.(P) Dec.(P) 1 2 3 4 5 6 1.3.13.6 Articles of Concrete, Cement and Plaster 0.292 137.7 138.0 138.7 138.9 139.7 1.3.13.7 Cutting, Shaping and Finishing of Stone 0.234 130.3 132.5 135.6 135.5 135.9 1.3.13.8 Other Non-Metallic Mineral Products 0.169 102.4 101.8 94.8 93.8 94.2 1.3.14 MANUFACTURE OF BASIC METALS 9.646 141.0 139.6 139.3 138.6 137.6 1.3.14.1 Inputs into steel making 1.411 140.3 137.0 134.0 132.2 130.2 1.3.14.2 Metallic Iron 0.653 153.6 151.1 142.6 139.9 133.4 1.3.14.3 Mild Steel - Semi Finished Steel 1.274 119.9 117.8 118.0 117.7 116.9 1.3.14.4 Mild Steel -Long Products 1.081 141.3 139.7 140.0 139.6 139.5 1.3.14.5 Mild Steel - Flat products 1.144 143.4 142.0 132.5 132.1 129.6 1.3.14.6 Alloy steel other than Stainless Steel- Shapes 0.067 137.6 135.3 134.6 133.7 132.3 1.3.14.7 Stainless Steel - Semi Finished 0.924 136.4 132.0 128.3 126.6 129.0 1.3.14.8 Pipes & tubes 0.205 169.7 170.8 162.8 163.4 162.7 1.3.14.9 Non-ferrous metals incl. precious metals 1.693 144.8 144.4 157.6 157.9 156.6 1.3.14.10 Castings 0.925 141.0 144.7 144.8 144.5 146.2 1.3.14.11 Forgings of steel 0.271 173.3 172.2 172.7 172.8 172.1 1.3.15 MANUFACTURE OF FABRICATED METAL PRODUCTS, EXCEPT MACHINERY AND EQUIPMENT 3.155 138.6 137.9 135.0 135.3 136.1 1.3.15.1 Structural Metal Products 1.031 132.3 131.5 129.8 129.6 130.9 1.3.15.2 Tanks, Reservoirs and Containers of Metal 0.660 157.6 153.6 147.1 147.0 147.6 1.3.15.3 Steam generators, Except Central Heating Hot Water Boilers 0.145 106.3 105.8 112.5 112.0 112.5 1.3.15.4 Forging, Pressing, Stamping and Roll-Forming of Metal; Powder Metallurgy 0.383 141.4 144.5 138.3 140.3 140.6 1.3.15.5 Cutlery, Hand Tools and General Hardware 0.208 108.4 109.1 102.0 102.4 102.4 1.3.15.6 Other Fabricated Metal Products 0.728 143.8 143.8 143.7 144.3 145.1 1.3.16 MANUFACTURE OF COMPUTER, ELECTRONIC AND OPTICAL PRODUCTS 2.009 119.3 119.9 121.5 121.2 121.2 1.3.16.1 Electronic Components 0.402 115.0 114.7 117.1 117.1 118.4 1.3.16.2 Computers and Peripheral Equipment 0.336 135.3 135.1 135.3 133.6 132.6 1.3.16.3 Communication Equipment 0.310 136.1 139.4 145.7 145.9 146.2 1.3.16.4 Consumer Electronics 0.641 103.6 103.9 100.5 100.5 100.0 1.3.16.5 Measuring, Testing, Navigating and Control equipment 0.181 113.8 113.8 120.9 120.9 121.1 1.3.16.6 Watches and Clocks 0.076 157.2 159.2 167.7 167.7 167.7 1.3.16.7 Irradiation, Electromedical and Electrotherapeutic equipment 0.055 108.3 109.6 116.6 115.2 116.5 1.3.16.8 Optical instruments and Photographic equipment 0.008 103.8 102.2 106.8 108.7 108.7 1.3.17 MANUFACTURE OF ELECTRICAL EQUIPMENT 2.930 131.4 131.6 133.8 133.8 134.1 1.3.17.1 Electric motors, Generators, Transformers and Electricity distribution and Control apparatus 1.298 130.1 130.6 131.9 132.8 133.4 1.3.17.2 Batteries and Accumulators 0.236 137.8 139.1 141.1 141.7 141.3 1.3.17.3 Fibre optic cables for data transmission or live transmission of images 0.133 123.4 126.0 120.6 116.5 118.0 1.3.17.4 Other electronic and Electric wires and Cables 0.428 146.1 145.6 155.6 153.8 154.1 1.3.17.5 Wiring devices, Electric lighting & display equipment 0.263 116.8 117.1 118.9 118.7 117.6 1.3.17.6 Domestic appliances 0.366 133.8 132.6 131.7 130.7 131.8 1.3.17.7 Other electrical equipment 0.206 120.9 119.8 123.8 124.9 125.1 1.3.18 MANUFACTURE OF MACHINERY AND EQUIPMENT 4.789 129.0 129.4 130.8 130.8 130.6 1.3.18.1 Engines and Turbines, Except aircraft, Vehicle and Two wheeler engines 0.638 128.9 130.9 133.9 133.6 132.5 1.3.18.2 Fluid power equipment 0.162 131.9 132.4 134.1 134.6 134.7 1.3.18.3 Other pumps, Compressors, Taps and Valves 0.552 117.4 117.8 118.4 118.6 118.8 1.3.18.4 Bearings, Gears, Gearing and Driving elements 0.340 127.7 128.8 127.0 127.2 129.0 1.3.18.5 Ovens, Furnaces and Furnace burners 0.008 83.7 85.0 86.3 87.0 86.9 1.3.18.6 Lifting and Handling equipment 0.285 128.6 129.5 129.6 130.0 129.9 RBI Bulletin January 2025 145CURRENT STATISTICS No. 21: Wholesale Price Index (Concld.) (Base: 2011-12 = 100) Commodities Weight 2023-24 2023 2024 Dec. Oct. Nov.(P) Dec.(P) 1 2 3 4 5 6 1.3.18.7 Office machinery and Equipment 0.006 130.2 130.2 130.2 130.2 130.2 1.3.18.8 Other general-purpose machinery 0.437 145.2 142.4 146.8 147.1 142.7 1.3.18.9 Agricultural and Forestry machinery 0.833 142.5 143.9 145.3 145.6 145.8 1.3.18.10 Metal-forming machinery and Machine tools 0.224 122.5 123.1 123.1 123.1 123.1 1.3.18.11 Machinery for mining, Quarrying and Construction 0.371 88.6 88.6 89.2 89.5 90.0 1.3.18.12 Machinery for food, Beverage and Tobacco processing 0.228 124.4 123.4 126.1 126.0 126.2 1.3.18.13 Machinery for textile, Apparel and Leather production 0.192 137.2 135.2 141.0 138.2 141.3 1.3.18.14 Other special-purpose machinery 0.468 144.7 144.9 144.3 144.6 144.1 1.3.18.15 Renewable electricity generating equipment 0.046 70.8 70.2 68.6 68.6 68.8 1.3.19 MANUFACTURE OF MOTOR VEHICLES, TRAILERS AND SEMI-TRAILERS 4.969 128.4 128.4 129.5 129.4 129.8 1.3.19.1 Motor vehicles 2.600 128.5 128.7 129.9 129.6 130.5 1.3.19.2 Parts and Accessories for motor vehicles 2.368 128.2 128.0 129.2 129.2 129.1 1.3.20 MANUFACTURE OF OTHER TRANSPORT EQUIPMENT 1.648 143.1 143.7 145.1 145.5 145.8 1.3.20.1 Building of ships and Floating structures 0.117 163.7 163.6 177.9 177.9 177.9 1.3.20.2 Railway locomotives and Rolling stock 0.110 107.4 108.9 108.1 107.8 108.4 1.3.20.3 Motor cycles 1.302 144.7 145.3 146.3 146.9 147.0 1.3.20.4 Bicycles and Invalid carriages 0.117 137.9 137.8 133.3 133.3 135.1 1.3.20.5 Other transport equipment 0.002 159.2 163.1 164.5 162.9 163.7 1.3.21 MANUFACTURE OF FURNITURE 0.727 159.6 159.3 160.9 162.6 161.3 1.3.21.1 Furniture 0.727 159.6 159.3 160.9 162.6 161.3 1.3.22 OTHER MANUFACTURING 1.064 158.2 161.1 184.1 183.8 183.1 1.3.22.1 Jewellery and Related articles 0.996 157.9 161.1 185.6 185.3 184.6 1.3.22.2 Musical instruments 0.001 187.0 179.2 199.7 205.2 200.6 1.3.22.3 Sports goods 0.012 155.2 155.8 168.0 167.8 167.9 1.3.22.4 Games and Toys 0.005 159.6 159.7 162.8 162.4 163.5 1.3.22.5 Medical and Dental instruments and Supplies 0.049 163.1 162.2 158.6 158.6 158.6 2 FOOD INDEX 24.378 179.8 179.9 202.2 200.3 195.9 Source: Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India. 146 RBI Bulletin January 2025CURRENT STATISTICS No. 22: Index of Industrial Production (Base:2011-12=100) Industry Weight 2022-23 2023-24 April-November November 2023-24 2024-25 2023 2024 1 2 3 4 5 6 7 General Index 100.00 138.5 146.7 143.4 149.3 141.1 148.4 1 Sectoral Classification 1.1 Mining 14.37 119.9 128.9 120.9 124.9 131.3 133.8 1.2 Manufacturing 77.63 137.1 144.7 141.6 147.4 139.3 147.4 1.3 Electricity 7.99 185.2 198.3 201.2 211.9 176.3 184.1 2 Use-Based Classification 2.1 Primary Goods 34.05 139.2 147.7 144.3 150.0 143.8 147.7 2.2 Capital Goods 8.22 100.3 106.6 103.6 108.2 98.0 106.8 2.3 Intermediate Goods 17.22 149.4 157.3 154.7 161.2 151.3 158.8 2.4 Infrastructure/ Construction Goods 12.34 160.7 176.3 171.7 182.5 164.2 180.6 2.5 Consumer Durables 12.84 114.5 118.6 116.9 127.1 106.5 120.5 2.6 Consumer Non-Durables 15.33 147.7 153.7 149.4 148.6 157.2 158.1 Source : Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India. Government Accounts and Treasury Bills No. 23: Union Government Accounts at a Glance (₹ Crore) Financial Year April – November 2024-25 Percentage to Budget Item (Budget 2024-25 2023-24 Estimates (Actuals) (Actuals) Estimates) 2024-25 2023-24 1 2 3 4 5 1 Revenue Receipts 3129200 1870455 1720120 59.8 65.3 1.1 Tax Revenue (Net) 2583499 1443435 1435755 55.9 61.6 1.2 Non-Tax Revenue 545701 427020 284365 78.3 94.3 2 Non Debt Capital Receipt 78000 23953 25463 30.7 30.3 2.1 Recovery of Loans 28000 14972 16604 53.5 72.2 2.2 Other Receipts 50000 8981 8859 18.0 14.5 3 Total Receipts (excluding borrowings) (1+2) 3207200 1894408 1745583 59.1 64.3 4 Revenue Expenditure 3709401 2227502 2066522 60.1 59.0 of which : 4.1 Interest Payments 1162940 658494 607963 56.6 56.3 5 Capital Expenditure 1111111 513500 585645 46.2 58.5 6 Total Expenditure (4+5) 4820512 2741002 2652167 56.9 58.9 7 Revenue Deficit (4-1) 580201 357047 346402 61.5 39.8 8 Fiscal Deficit (6-3) 1613312 846594 906584 52.5 50.7 9 Gross Primary Deficit (8-4.1) 450372 188100 298621 41.8 42.2 Source: Controller General of Accounts (CGA), Ministry of Finance, Government of India and Union Budget 2024-25. RBI Bulletin January 2025 147CURRENT STATISTICS No. 24: Treasury Bills – Ownership Pattern (₹ Crore) 2023-24 2023 2024 Item Dec. 1 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 1 2 3 4 5 6 7 8 1 91-day 1.1 Banks 18054 6954 4445 3961 2949 2891 3054 3848 1.2 Primary Dealers 22676 26459 7867 12580 7081 8257 9025 9398 1.3 State Governments 5701 18301 94683 94833 88433 84060 79060 82560 1.4 Others 88670 82087 84488 79259 83470 81552 81021 78354 2 182-day 2.1 Banks 84913 72670 39780 39229 38534 38535 40000 42525 2.2 Primary Dealers 87779 78845 30680 31156 28255 29947 32689 30551 2.3 State Governments 4070 12099 13595 12339 11916 12265 12265 11265 2.4 Others 102311 81685 81040 80115 82711 81018 78212 80824 3 364-day 3.1 Banks 91819 94768 82642 76754 74108 77807 78510 75027 3.2 Primary Dealers 159085 184085 115669 116452 110781 110223 108012 106748 3.3 State Governments 41487 43204 34600 35195 35587 35837 35829 35933 3.4 Others 165095 158147 169689 171795 177111 170970 169478 171225 4 14-day Intermediate 4.1 Banks 4.2 Primary Dealers 4.3 State Governments 318736 118579 162948 120316 101407 153906 190890 188494 4.4 Others 442 716 547 173 1746 952 1357 551 Total Treasury Bills (Excluding 14 day 871662 859305 759178 753667 740936 733362 727154 728257 Intermediate T Bills) # # 14D intermediate T-Bills are non-marketable unlike 91D, 182D and 364D T-Bills. These bills are ‘intermediate’ by nature as these are liquidated to replenish shortfall in the daily minimum cash balances of State Governments. Note: Primary Dealers (PDs) include banks undertaking PD business. No. 25: Auctions of Treasury Bills (Amount in ₹ Crore) Date of Notified Bids Received Bids Accepted Total Cut- Implicit Yield Auction Amount Total Face Value Total Face Value Issue off at Cut-off Price Number Number (6+7) Price (per cent) Competitive Non- Competitive Non- ( ₹ ) Competitive Competitive 1 2 3 4 5 6 7 8 9 10 91-day Treasury Bills 2024-25 Oct. 30 7000 82 16356 878 51 6972 878 7850 98.40 6.5116 Nov. 6 7000 105 30332 1373 10 6927 1373 8300 98.42 6.4437 Nov. 13 7000 114 30298 1911 37 6962 1911 8874 98.42 6.4395 Nov. 21 7000 108 27212 5436 36 6964 5436 12400 98.42 6.4581 Nov. 27 7000 93 19172 10028 49 6972 10028 17000 98.41 6.4929 182-day Treasury Bills 2024-25 Oct. 30 6000 71 10555 258 54 5986 258 6244 96.80 6.6404 Nov. 6 6000 80 15932 1022 45 5978 1022 7000 96.80 6.6280 Nov. 13 6000 115 19592 1520 46 5980 1520 7500 96.81 6.6188 Nov. 21 6000 72 10920 1422 52 5978 1422 7400 96.80 6.6501 Nov. 27 6000 96 20278 1015 38 5985 1015 7000 96.79 6.6599 364-day Treasury Bills 2024-25 Oct. 30 6000 73 21019 694 29 5986 694 6680 93.83 6.5991 Nov. 6 6000 83 25666 676 25 5970 676 6646 93.83 6.5991 Nov. 13 6000 76 14515 288 43 5979 288 6267 93.81 6.6145 Nov. 21 6000 76 16105 113 41 5986 113 6100 93.81 6.6200 Nov. 27 6000 72 14513 119 41 5994 119 6114 93.78 6.6545 148 RBI Bulletin January 2025CURRENT STATISTICS Financial Markets No. 26: Daily Call Money Rates (Per cent per annum) Range of Rates Weighted Average Rates As on Borrowings/ Lendings Borrowings/ Lendings 1 2 November 04 ,2024 5.10-6.50 6.41 November 05 ,2024 5.10-6.40 6.31 November 06 ,2024 5.10-6.40 6.34 November 07 ,2024 5.10-6.50 6.41 November 08 ,2024 5.10-6.55 6.44 November 11 ,2024 5.10-6.55 6.45 November 12 ,2024 5.10-6.55 6.45 November 13 ,2024 5.10-6.72 6.39 November 14 ,2024 5.10-6.51 6.41 November 16 ,2024 5.50-6.50 6.16 November 18 ,2024 5.10-6.65 6.43 November 19 ,2024 5.10-6.60 6.49 November 21 ,2024 5.10-6.90 6.62 November 22 ,2024 5.10-6.90 6.73 November 25 ,2024 5.50-6.90 6.71 November 26 ,2024 5.10-6.85 6.69 November 27 ,2024 5.10-6.85 6.70 November 28 ,2024 5.10-6.85 6.71 November 29 ,2024 5.50-6.90 6.70 November 30 ,2024 5.50-6.85 6.22 December 02 ,2024 5.10-6.65 6.51 December 03 ,2024 5.10-6.50 6.44 December 04 ,2024 5.10-6.60 6.42 December 05 ,2024 5.10-6.75 6.54 December 06 ,2024 5.50-6.75 6.52 December 07 ,2024 5.50-6.70 6.15 December 09 ,2024 5.50-6.75 6.56 December 10 ,2024 5.50-6.85 6.67 December 11 ,2024 5.50-6.90 6.70 December 12 ,2024 5.50-6.80 6.62 December 13 ,2024 5.50-6.85 6.68 Note: Includes Notice Money. RBI Bulletin January 2025 149CURRENT STATISTICS No. 27: Certificates of Deposit 2023 2024 Item Nov. 17 Oct. 18 Nov. 1 Nov. 15 Nov. 29 1 2 3 4 5 1 Amount Outstanding (₹ Crore) 314547.67 484133.94 465475.31 489838.50 491658.72 1.1 Issued during the fortnight (₹ Crore) 17713.85 33814.44 9730.19 46552.33 40434.94 2 Rate of Interest (per cent) 7.09-7.65 6.93-7.65 7.02-7.83 6.98-7.85 6.98-7.60 No. 28: Commercial Paper Item 2023 2024 Nov. 30 Oct. 15 Oct. 31 Nov. 15 Nov. 30 1 2 3 4 5 1 Amount Outstanding (₹ Crore) 394967.95 438134.20 445104.90 448862.80 445122.05 1.1 Reported during the fortnight (₹ Crore) 59808.25 48517.65 66159.85 50771.85 64504.65 2 Rate of Interest (per cent) 6.99-14.34 6.95-12.60 6.99-12.53 6.99-13.77 7.00-12.61 No. 29: Average Daily Turnover in Select Financial Markets (₹ Crore) Item 2023-24 2023 2024 Dec. 1 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 1 2 3 4 5 6 7 8 1 Call Money 17761 17469 16926 16124 19243 13985 14474 14605 2 Notice Money 2550 8956 252 1374 439 3706 331 4241 3 Term Money 871 1768 723 685 1268 780 895 1743 4 Triparty Repo 601363 740971 682726 781433 768911 837328 707471 939435 5 Market Repo 574534 620918 497243 567993 587924 601587 493723 585745 6 Repo in Corporate Bond 1817 675 4146 3420 5481 5371 4588 5114 7 Forex (US $ million) 95115 106187 110857 98958 100719 101881 108061 123525 8 Govt. of India Dated Securities 90992 62592 116577 91164 72479 84826 76147 83490 9 State Govt. Securities 6102 3580 7471 4998 3756 7151 5307 4154 10 Treasury Bills 10.1 91-Day 5378 1293 3130 3709 2108 2983 3669 1988 10.2 182-Day 6079 4495 4174 6064 3824 3184 3533 3800 10.3 364-Day 4307 3954 3138 3736 4066 4281 3550 3800 10.4 Cash Management Bills 0 0 0 0 0 0 11 Total Govt. Securities (8+9+10) 112858 75915 134490 109670 86232 102424 92206 97232 11.1 RBI 492 986 7 111 79 1374 15 213 150 RBI Bulletin January 2025CURRENT STATISTICS No. 30: New Capital Issues by Non-Government Public Limited Companies (Amount in ₹ Crore) 2023-24 2023-24 (Apr.-Nov.) 2024-25 (Apr.-Nov.) * Nov. 2023 Nov. 2024 * Security & Type of Issue No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount Issues Issues Issues Issues Issues 1 2 3 4 5 6 7 8 9 10 1 Equity Shares 339 80942 210 47839 320 157899 29 11393 18 36266 1A Premium 328 76319 201 45193 304 134426 29 11073 17 34016 1.1 Public 272 65832 164 41339 227 145106 25 11281 12 35849 1.1.1 Premium 272 62791 164 39905 227 123369 25 10982 12 33699 1.2 Rights 67 15110 46 6500 93 12793 4 112 6 417 1.2.1 Premium 56 13527 37 5289 77 11057 4 91 5 316 2 Preference Shares - - - - - - - - - - 2.1 Public - - - - - - - - - - 2.2 Rights - - - - - - - - - - 3 Bonds & Debentures 44 16342 26 10918 27 5743 1 264 2 218 3.1 Convertible - - - - - - - - - - 3.1.1 Public - - - - - - - - - - 3.1.2 Rights - - - - - - - - - - 3.2 Non-Convertible 44 16342 26 10918 27 5743 1 264 2 218 3.2.1 Public 44 16342 26 10918 27 5743 1 264 2 218 3.2.2 Rights - - - - - - - - - - 4 Total (1+2+3) 383 97284 236 58757 347 163642 30 11657 20 36483 4.1 Public 316 82174 190 52257 254 150849 26 11545 14 36066 4.2 Rights 67 15110 46 6500 93 12793 4 112 6 417 Note : 1. Since April 2020, monthly data on equity issues is compiled on the basis of their listing date. 2. Figures in the columns might not add up to the total due to rounding off numbers. Source : Securities and Exchange Board of India. * : Data is Provisional RBI Bulletin January 2025 151CURRENT STATISTICS External Sector No. 31: Foreign Trade 2023 2024 2023-24 Item Unit Nov. Jul. Aug. Sep. Oct. Nov. 1 2 3 4 5 6 7 1 Exports ₹ Crore 3618952 281096 282606 289305 287578 327712 270298 US $ Million 437072 33746 33807 34484 34314 39000 32039 1.1 Oil ₹ Crore 696850 61557 43221 47817 37764 37175 30891 US $ Million 84157 7390 5170 5700 4506 4424 3662 1.2 Non-oil ₹ Crore 2922102 219539 239384 241488 249814 290537 239406 US $ Million 352915 26356 28636 28784 29808 34576 28378 2 Imports ₹ Crore 5616042 458656 475136 524948 452606 530437 538792 US $ Million 678215 55062 56838 62571 54005 63125 63865 2.1 Oil ₹ Crore 1480232 124404 115925 92396 104574 153628 134229 US $ Million 178733 14935 13868 11013 12478 18283 15911 2.2 Non-oil ₹ Crore 4135810 334253 359211 432552 348032 376809 404562 US $ Million 499482 40127 42971 51558 41527 44842 47954 3 Trade Balance ₹ Crore -1997090 -177560 -192530 -235643 -165028 -202725 -268494 US $ Million -241143 -21316 -23031 -28087 -19691 -24125 -31825 3.1 Oil ₹ Crore -783382 -62846 -72704 -44579 -66811 -116453 -103338 US $ Million -94576 -7545 -8697 -5314 -7972 -13859 -12249 3.2 Non-oil ₹ Crore -1213708 -114714 -119827 -191064 -98217 -86272 -165156 US $ Million -146567 -13771 -14334 -22774 -11719 -10267 -19577 Note: Data in the table are provisional. Source: Directorate General of Commercial Intelligence and Statistics. No. 32: Foreign Exchange Reserves 2024 Item Unit Jan. 05 Nov. 22 Nov. 29 Dec. 06 Dec. 13 Dec. 20 Dec. 27 1 2 3 4 5 6 7 1 Total Reserves ₹ Crore 5133694 5545695 5560661 5546163 5536494 5478951 5476869 US $ Million 617303 656582 658091 654857 652869 644391 640279 1.1 Foreign Currency Assets ₹ Crore 4546115 4787282 4806616 4790434 4770775 4732163 4721047 US $ Million 546650 566791 568852 565623 562576 556562 551921 1.2 Gold ₹ Crore 394932 570744 565949 566898 577133 558837 566843 US $ Million 47489 67573 66979 66936 68056 65726 66268 Volume (Metric Tonnes) 804.68 876.18 876.18 876.18 876.18 876.18 876.18 1.3 SDRs SDRs Million 13688 13705 13705 13705 13705 13705 13705 ₹ Crore 152173 151906 152152 152713 152617 152069 152881 US $ Million 18298 17985 18007 18031 17997 17885 17873 1.4 Reserve Tranche Position in IMF ₹ Crore 40474 35763 35945 36118 35969 35882 36097 US $ Million 4866 4232 4254 4266 4240 4217 4217 * Difference, if any, is due to rounding off. Note: Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign currency assets in US dollar take into account appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at rupee-US dollar RBI holding rates. No. 33: Non-Resident Deposits (US $ Million) Scheme Outstanding Flows 2023 2024 2023-24 2024-25 2023-24 Nov. Oct. Nov. (P) Apr.-Nov. Apr.-Nov.(P) 1 2 3 4 5 6 1 NRI Deposits 151879 144489 162693 162697 7290 12552 1.1 FCNR(B) 25733 21860 31871 32040 2496 6307 1.2 NR(E)RA 98624 96795 100873 100666 2313 3384 1.3 NRO 27522 25834 29949 29992 2480 2860 P: Provisional. 152 RBI Bulletin January 2025CURRENT STATISTICS No. 34: Foreign Investment Inflows (US $ Million) 2023-24 2024-25 (P) 2023 2024 (P) Item 2023-24 Apr.-Nov. Apr.-Nov. Nov. Oct. Nov. 1 2 3 4 5 6 1.1 Net Foreign Direct Investment (1.1.1-1.1.2) 10129 8502 479 803 -1333 -2629 1.1.1 Direct Investment to India (1.1.1.1-1.1.1.2) 26807 17448 16026 1774 422 -97 1.1.1.1 Gross Inflows/Gross Investments 71279 47193 55645 5090 6778 5373 1.1.1.1.1 Equity 45817 30560 36926 2958 4307 2370 1.1.1.1.1.1 Government (SIA/FIPB) 585 224 600 31 149 72 1.1.1.1.1.2 RBI 31826 19788 25825 1854 3524 1676 1.1.1.1.1.3 Acquisition of shares 12013 9651 9874 952 550 537 1.1.1.1.1.4 Equity capital of unincorporated bodies 1394 897 628 121 85 85 1.1.1.1.2 Reinvested earnings 19768 12717 14877 1718 1996 1996 1.1.1.1.3 Other capital 5694 3917 3842 414 474 1007 1.1.1.2 Repatriation/Disinvestment 44472 29745 39619 3316 6356 5470 1.1.1.2.1 Equity 41334 27476 38012 2924 6234 5088 1.1.1.2.2 Other capital 3137 2269 1608 392 122 382 1.1.2 Foreign Direct Investment by India 16678 8946 15547 971 1755 2532 (1.1.2.1+1.1.2.2+1.1.2.3-1.1.2.4) 1.1.2.1 Equity capital 9111 5001 8689 497 841 1020 1.1.2.2 Reinvested Earnings 5786 3857 3992 482 482 482 1.1.2.3 Other Capital 5406 2818 4943 181 614 1230 1.1.2.4 Repatriation/Disinvestment 3624 2730 2077 189 181 200 1.2 Net Portfolio Investment (1.2.1+1.2.2+1.2.3-1.2.4) 44081 23134 7540 4198 -10876 -2379 1.2.1 GDRs/ADRs - - - - - - 1.2.2 FIIs 44626 23605 7341 4084 -10975 -2396 1.2.3 Offshore funds and others - - - - - - 1.2.4 Portfolio investment by India 544 471 -199 -114 -99 -17 1 Foreign Investment Inflows 54210 31636 8019 5001 -12209 -5007 P: Provisional No. 35: Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals (US $ Million) 2023 2024 Item 2023-24 Nov. Sep. Oct. Nov. 1 2 3 4 5 1 Outward Remittances under the LRS 31735.74 1878.67 2758.25 2408.01 1946.43 1.1 Deposit 916.45 25.19 43.00 39.06 40.21 1.2 Purchase of immovable property 242.51 10.31 25.47 24.96 23.53 1.3 Investment in equity/debt 1510.89 41.30 135.08 149.34 85.79 1.4 Gift 3580.27 181.55 221.67 216.30 216.51 1.5 Donations 11.31 0.54 0.87 0.66 0.62 1.6 Travel 17006.27 1180.42 1713.06 1454.66 1113.78 1.7 Maintenance of close relatives 4611.53 206.63 281.24 283.75 276.78 1.8 Medical Treatment 79.62 8.02 7.89 8.49 7.49 1.9 Studies Abroad 3478.65 207.55 320.10 221.18 172.40 1.10 Others 298.23 17.15 9.88 9.62 9.32 RBI Bulletin January 2025 153CURRENT STATISTICS No. 36: Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 2023 2024 2022-23 2023-24 Dec Nov Dec Item 1 2 3 4 5 40-Currency Basket (Base: 2015-16=100) 1 Trade-Weighted 1.1 NEER 91.20 90.73 90.22 91.80 91.76 1.2 REER 102.78 103.70 103.50 108.13 107.20 2 Export-Weighted 2.1 NEER 93.01 93.11 92.74 94.24 94.09 2.2 REER 101.10 101.21 101.11 104.99 104.00 6-Currency Basket (Trade-weighted) 1 Base : 2015-16 =100 1.1 NEER 85.93 83.62 82.88 82.79 82.78 1.2 REER 101.80 101.66 101.62 105.48 104.76 2 Base : 2022-23 =100 2.1 NEER 100.00 97.31 96.45 96.35 96.33 2.2 REER 100.00 99.86 99.82 103.61 102.91 Note: Data for 2023-24 and 2024-25 so far is provisional. 154 RBI Bulletin January 2025CURRENT STATISTICS No. 37: External Commercial Borrowings (ECBs) – Registrations (Amount in US $ Million) Item 2023-24 2023 2024 Nov. Oct. Nov. 1 2 3 4 1 Automatic Route 1.1 Number 1188 64 135 82 1.2 Amount 29461 1146 5029 1398 2 Approval Route 2.1 Number 33 0 1 4 2.2 Amount 19748 0 470 1435 3 Total (1+2) 3.1 Number 1221 64 136 86 3.2 Amount 49209 1146 5499 2833 4 Weighted Average Maturity (in years) 5.60 4.50 6.70 5.80 5 Interest Rate (per cent) 5.1 Weighted Average Margin over alternative reference rate (ARR) for Floating Rate Loans@ 1.66 1.61 1.58 1.18 5.2 Interest rate range for Fixed Rate Loans 0.00-27.00 0.00-11.80 0.00-11.00 0.00-11.00 Borrower Category I. Corporate Manufacturing 15836 502 926 1419 II. Corporate-Infrastructure 15916 163 2941 372 a.) Transport 1505 120 200 0 b.) Energy 3513 0 1449 60 c.) Water and Sanitation 33 0 1 0 d.) Communication 6309 0 0 0 e.) Social and Commercial Infrastructure 115 30 63 0 f.) Exploration,Mining and Refinery 2480 5 850 312 g.) Other Sub-Sectors 1961 8 378 0 III. Corporate Service-Sector 1526 87 86 256 IV. Other Entities 1728 0 0 0 a.) units in SEZ 1 0 0 0 b.) SIDBI 0 0 0 0 c.) Exim Bank 1727 0 0 0 V. Banks 0 0 0 0 VI. Financial Institution (Other than NBFC ) 20 0 0 0 VII. NBFCs 13361 379 1436 743 a). NBFC- IFC/AFC 7734 103 285 75 b). NBFC-MFI 531 0 120 0 c). NBFC-Others 5096 276 1031 668 VIII. Non-Government Organization (NGO) 0 0 0 0 IX. Micro Finance Institution (MFI) 0 0 0 0 X. Others 822 15 110 43 Note: Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period. @ With effect from July 01, 2023, the benchmark rate is changed to Alternative Reference Rate (ARR) RBI Bulletin January 2025 155CURRENT STATISTICS No. 38: India’s Overall Balance of Payments (US$ Million) Jul-Sep 2023 Jul-Sep 2024 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 438441 435922 2519 553557 534943 18614 1 Current Account (1.1+ 1.2) 231670 242956 -11286 245671 256854 -11182 1.1 Merchandise 108254 172799 -64544 103967 179285 -75319 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 123416 70158 53258 141705 77568 64137 1.2.1 Services 83352 43411 39940 93493 48943 44550 1.2.1.1 Travel 7482 8662 -1180 7635 9367 -1732 1.2.1.2 Transportation 7054 7277 -223 8792 9188 -396 1.2.1.3 Insurance 828 821 7 902 786 116 1.2.1.4 G.n.i.e. 140 244 -104 147 316 -169 1.2.1.5 Miscellaneous 67848 26408 41440 76017 29287 46730 1.2.1.5.1 Software Services 39570 4333 35237 44164 4539 39624 1.2.1.5.2 Business Services 21472 13673 7799 25176 15548 9628 1.2.1.5.3 Financial Services 2069 1183 887 2190 1265 926 1.2.1.5.4 Communication Services 887 365 522 519 497 21 1.2.2 Transfers 28147 3221 24926 31938 2829 29109 1.2.2.1 Official 23 267 -244 28 265 -237 1.2.2.2 Private 28124 2954 25170 31910 2564 29346 1.2.3 Income 11917 23526 -11608 16274 25796 -9522 1.2.3.1 Investment Income 10158 22609 -12451 14279 24774 -10494 1.2.3.2 Compensation of Employees 1760 917 843 1995 1023 972 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 205807 192966 12841 307885 277368 30518 2.1 Foreign Investment (2.1.1+2.1.2) 128572 124460 4112 203323 185710 17612 2.1.1 Foreign Direct Investment 16586 17420 -834 21214 23452 -2238 2.1.1.1 In India 15722 12686 3036 20666 15622 5044 2.1.1.1.1 Equity 9877 12278 -2401 13847 15016 -1169 2.1.1.1.2 Reinvested Earnings 4740 4740 5559 5559 2.1.1.1.3 Other Capital 1105 409 697 1261 606 655 2.1.1.2 Abroad 864 4734 -3870 548 7830 -7282 2.1.1.2.1 Equity 864 1683 -820 548 4313 -3765 2.1.1.2.2 Reinvested Earnings 0 1446 -1446 0 1514 -1514 2.1.1.2.3 Other Capital 0 1604 -1604 0 2003 -2003 2.1.2 Portfolio Investment 111986 107040 4947 182108 162258 19850 2.1.2.1 In India 111127 105841 5286 181433 161618 19815 2.1.2.1.1 FIIs 111127 105841 5286 181433 161618 19815 2.1.2.1.1.1 Equity 101529 97937 3593 160273 149590 10683 2.1.2.1.1.2 Debt 9598 7905 1693 21160 12028 9132 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 859 1198 -339 675 640 35 2.2 Loans (2.2.1+2.2.2+2.2.3) 29728 26453 3274 38662 31126 7536 2.2.1 External Assistance 2601 1800 802 3727 1581 2146 2.2.1.1 By India 9 49 -40 8 30 -22 2.2.1.2 To India 2592 1751 842 3720 1551 2168 2.2.2 Commercial Borrowings 7464 10422 -2958 17443 15416 2027 2.2.2.1 By India 2853 3926 -1073 5059 8028 -2969 2.2.2.2 To India 4612 6496 -1884 12384 7388 4996 2.2.3 Short Term to India 19662 14232 5430 17492 14129 3363 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 17632 14232 3400 14817 14129 688 2.2.3.2 Suppliers' Credit up to 180 days 2030 0 2030 2675 0 2675 2.3 Banking Capital (2.3.1+2.3.2) 34020 29686 4333 52432 46345 6087 2.3.1 Commercial Banks 34020 29614 4405 52112 46345 5767 2.3.1.1 Assets 8673 11210 -2538 17627 18853 -1226 2.3.1.2 Liabilities 25347 18404 6943 34485 27492 6993 2.3.1.2.1 Non-Resident Deposits 21257 18048 3209 28921 22753 6167 2.3.2 Others 0 72 -72 319 0 319 2.4 Rupee Debt Service 0 1 -1 0 2 -2 2.5 Other Capital 13488 12365 1123 13469 14184 -716 3 Errors & Omissions 963 0 963 0 722 -722 4 Monetary Movements (4.1+ 4.2) 0 2519 -2519 0 18614 -18614 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 0 2519 -2519 0 18614 -18614 Note: P: Preliminary. 156 RBI Bulletin January 2025CURRENT STATISTICS No. 39: India’s Overall Balance of Payments (₹ Crore) Jul-Sep 2023 Jul-Sep 2024 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 3624220 3603401 20819 4636946 4481027 155919 1 Current Account (1.1+ 1.2) 1915021 2008316 -93295 2057901 2151571 -93670 1.1 Merchandise 894849 1428380 -533531 870890 1501809 -630919 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 1020172 579936 440236 1187011 649762 537249 1.2.1 Services 688997 358846 330151 783157 409979 373178 1.2.1.1 Travel 61845 71601 -9756 63958 78464 -14506 1.2.1.2 Transportation 58311 60151 -1840 73649 76965 -3316 1.2.1.3 Insurance 6842 6785 57 7553 6581 972 1.2.1.4 G.n.i.e. 1154 2018 -863 1228 2643 -1415 1.2.1.5 Miscellaneous 560846 218292 342554 636769 245326 391443 1.2.1.5.1 Software Services 327091 35818 291272 369945 38026 331920 1.2.1.5.2 Business Services 177488 113019 64469 210894 130244 80650 1.2.1.5.3 Financial Services 17106 9777 7329 18349 10595 7754 1.2.1.5.4 Communication Services 7334 3015 4319 4345 4167 177 1.2.2 Transfers 232665 26623 206042 267531 23696 243835 1.2.2.1 Official 189 2206 -2018 232 2218 -1985 1.2.2.2 Private 232476 24416 208060 267298 21478 245821 1.2.3 Income 98510 194468 -95957 136323 216087 -79763 1.2.3.1 Investment Income 83966 186888 -102922 119611 207519 -87908 1.2.3.2 Compensation of Employees 14544 7579 6965 16712 8568 8145 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 1701234 1595084 106150 2579045 2323409 255635 2.1 Foreign Investment (2.1.1+2.1.2) 1062795 1028803 33993 1703161 1555629 147532 2.1.1 Foreign Direct Investment 137100 143996 -6896 177706 196451 -18745 2.1.1.1 In India 129962 104866 25096 173115 130862 42253 2.1.1.1.1 Equity 81644 101488 -19844 115988 125784 -9796 2.1.1.1.2 Reinvested Earnings 39181 0 39181 46563 0 46563 2.1.1.1.3 Other Capital 9137 3378 5759 10564 5078 5486 2.1.1.2 Abroad 7138 39130 -31992 4591 65589 -60998 2.1.1.2.1 Equity 7138 13916 -6778 4591 36128 -31537 2.1.1.2.2 Reinvested Earnings 0 11956 -11956 0 12680 -12680 2.1.1.2.3 Other Capital 0 13258 -13258 0 16780 -16780 2.1.2 Portfolio Investment 925695 884807 40889 1525455 1359178 166277 2.1.2.1 In India 918597 874902 43695 1519799 1353816 165984 2.1.2.1.1 FIIs 918597 874902 43695 1519799 1353816 165984 2.1.2.1.1.1 Equity 839257 809559 29698 1342550 1253064 89486 2.1.2.1.1.2 Debt 79340 65343 13997 177250 100752 76498 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 7099 9905 -2806 5656 5363 293 2.2 Loans (2.2.1+2.2.2+2.2.3) 245733 218667 27066 323859 260732 63127 2.2.1 External Assistance 21502 14877 6626 31222 13242 17979 2.2.1.1 By India 72 404 -331 64 247 -184 2.2.1.2 To India 21430 14473 6957 31158 12995 18163 2.2.2 Commercial Borrowings 61702 86150 -24448 146114 129136 16979 2.2.2.1 By India 23582 32453 -8871 42379 67249 -24870 2.2.2.2 To India 38120 53697 -15577 103735 61887 41849 2.2.3 Short Term to India 162529 117640 44888 146523 118354 28169 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 145745 117640 28105 124117 118354 5763 2.2.3.2 Suppliers' Credit up to 180 days 16783 0 16783 22406 0 22406 2.3 Banking Capital (2.3.1+2.3.2) 281213 245392 35820 439202 388217 50985 2.3.1 Commercial Banks 281213 244798 36415 436527 388217 48311 2.3.1.1 Assets 71689 92667 -20978 147657 157925 -10268 2.3.1.2 Liabilities 209524 152131 57393 288870 230292 58579 2.3.1.2.1 Non-Resident Deposits 175715 149187 26528 242259 190597 51662 2.3.2 Others 0 594 -594 2675 0 2675 2.4 Rupee Debt Service 0 12 -12 0 15 -15 2.5 Other Capital 111493 102211 9282 112822 118816 -5994 3 Errors & Omissions 7964 0 7964 0 6046 -6046 4 Monetary Movements (4.1+ 4.2) 0 20819 -20819 0 155919 -155919 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 0 20819 -20819 0 155919 -155919 Note: P: Preliminary. RBI Bulletin January 2025 157CURRENT STATISTICS No. 40: Standard Presentation of BoP in India as per BPM6 (US$ Million) Item Jul-Sep 2023 Jul-Sep 2024 (P) Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 231670 242934 -11264 245671 256828 -11157 1.A Goods and Services (1.A.a+1.A.b) 191606 216210 -24604 197459 228229 -30769 1.A.a Goods (1.A.a.1 to 1.A.a.3) 108254 172799 -64544 103967 179285 -75319 1.A.a.1 General merchandise on a BOP basis 107367 160246 -52879 103981 161701 -57720 1.A.a.2 Net exports of goods under merchanting 888 0 888 -14 0 -14 1.A.a.3 Nonmonetary gold 12553 -12553 17585 -17585 1.A.b Services (1.A.b.1 to 1.A.b.13) 83352 43411 39940 93493 48943 44550 1.A.b.1 Manufacturing services on physical inputs owned by others 283 39 244 276 20 256 1.A.b.2 Maintenance and repair services n.i.e. 56 308 -251 90 263 -172 1.A.b.3 Transport 7054 7277 -223 8792 9188 -396 1.A.b.4 Travel 7482 8662 -1180 7635 9367 -1732 1.A.b.5 Construction 954 677 277 1263 951 312 1.A.b.6 Insurance and pension services 828 821 7 902 786 116 1.A.b.7 Financial services 2069 1183 887 2190 1265 926 1.A.b.8 Charges for the use of intellectual property n.i.e. 422 3341 -2919 448 3877 -3428 1.A.b.9 Telecommunications, computer, and information services 40546 4968 35578 44772 5333 39439 1.A.b.10 Other business services 21472 13673 7799 25176 15548 9628 1.A.b.11 Personal, cultural, and recreational services 1211 2080 -869 1107 1794 -688 1.A.b.12 Government goods and services n.i.e. 140 244 -104 147 316 -169 1.A.b.13 Others n.i.e. 835 140 695 694 237 458 1.B Primary Income (1.B.1 to 1.B.3) 11917 23526 -11608 16274 25796 -9522 1.B.1 Compensation of employees 1760 917 843 1995 1023 972 1.B.2 Investment income 8939 22196 -13257 12849 24336 -11486 1.B.2.1 Direct investment 2322 12281 -9959 2725 13008 -10283 1.B.2.2 Portfolio investment 84 3657 -3573 78 4152 -4074 1.B.2.3 Other investment 520 6040 -5520 1168 6953 -5785 1.B.2.4 Reserve assets 6013 217 5796 8878 223 8655 1.B.3 Other primary income 1219 413 806 1430 438 992 1.C Secondary Income (1.C.1+1.C.2) 28146 3198 24948 31937 2803 29134 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 28124 2954 25170 31910 2564 29346 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 27335 2040 25296 31084 1803 29282 1.C.1.2 Other current transfers 788 914 -126 826 761 64 1.C.2 General government 22 245 -222 27 239 -212 2 Capital Account (2.1+2.2) 151 202 -51 186 192 -6 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 9 91 -82 7 68 -61 2.2 Capital transfers 142 110 31 179 124 55 3 Financial Account (3.1 to 3.5) 205657 195305 10352 307700 295815 11885 3.1 Direct Investment (3.1A+3.1B) 16586 17420 -834 21214 23452 -2238 3.1.A Direct Investment in India 15722 12686 3036 20666 15622 5044 3.1.A.1 Equity and investment fund shares 14617 12278 2339 19405 15016 4389 3.1.A.1.1 Equity other than reinvestment of earnings 9877 12278 -2401 13847 15016 -1169 3.1.A.1.2 Reinvestment of earnings 4740 4740 5559 5559 3.1.A.2 Debt instruments 1105 409 697 1261 606 655 3.1.A.2.1 Direct investor in direct investment enterprises 1105 409 697 1261 606 655 3.1.B Direct Investment by India 864 4734 -3870 548 7830 -7282 3.1.B.1 Equity and investment fund shares 864 3130 -2266 548 5827 -5279 3.1.B.1.1 Equity other than reinvestment of earnings 864 1683 -820 548 4313 -3765 3.1.B.1.2 Reinvestment of earnings 1446 -1446 1514 -1514 3.1.B.2 Debt instruments 0 1604 -1604 0 2003 -2003 3.1.B.2.1 Direct investor in direct investment enterprises 1604 -1604 2003 -2003 3.2 Portfolio Investment 111986 107040 4947 182108 162258 19850 3.2.A Portfolio Investment in India 111127 105841 5286 181433 161618 19815 3.2.1 Equity and investment fund shares 101529 97937 3593 160273 149590 10683 3.2.2 Debt securities 9598 7905 1693 21160 12028 9132 3.2.B Portfolio Investment by India 859 1198 -339 675 640 35 3.3 Financial derivatives (other than reserves) and employee stock options 5476 7362 -1887 6359 11892 -5533 3.4 Other investment 71609 60964 10645 98018 79598 18419 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 21257 18120 3137 29240 22753 6487 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 0 72 -72 319 0 319 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 21257 18048 3209 28921 22753 6167 3.4.2.3 General government 0 0 3.4.2.4 Other sectors 0 0 3.4.3 Loans (External Assistance, ECBs and Banking Capital) 22828 23788 -960 44362 40589 3773 3.4.3.A Loans to India 19967 19813 153 39295 32531 6764 3.4.3.B Loans by India 2862 3975 -1113 5067 8058 -2991 3.4.4 Insurance, pension, and standardized guarantee schemes 144 10 134 47 3 44 3.4.5 Trade credit and advances 19662 14232 5430 17492 14129 3363 3.4.6 Other accounts receivable/payable - other 7718 4814 2903 6877 2124 4753 3.4.7 Special drawing rights 0 0 0 0 3.5 Reserve assets 0 2519 -2519 0 18614 -18614 3.5.1 Monetary gold 0 0 3.5.2 Special drawing rights n.a. 0 0 0 0 3.5.3 Reserve position in the IMF n.a. 0 0 3.5.4 Other reserve assets (Foreign Currency Assets) 0 2519 -2519 0 18614 -18614 4 Total assets/liabilities 205657 195305 10352 307700 295815 11885 4.1 Equity and investment fund shares 123488 121915 1574 187308 182969 4339 4.2 Debt instruments 74451 66057 8394 113515 92108 21407 4.3 Other financial assets and liabilities 7718 7333 385 6877 20738 -13861 5 Net errors and omissions 963 0 963 0 722 -722 Note: P: Preliminary. 158 RBI Bulletin January 2025CURRENT STATISTICS No. 41: Standard Presentation of BoP in India as per BPM6 (₹ Crore) Jul-Sep 2023 Jul-Sep 2024 (P) Item Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 1915018 2008132 -93114 2057899 2151355 -93457 1.A Goods and Services (1.A.a+1.A.b) 1583846 1787226 -203380 1654047 1911789 -257742 1.A.a Goods (1.A.a.1 to 1.A.a.3) 894849 1428380 -533531 870890 1501809 -630919 1.A.a.1 General merchandise on a BOP basis 887510 1324618 -437107 871011 1354507 -483496 1.A.a.2 Net exports of goods under merchanting 7339 0 7339 -121 0 -121 1.A.a.3 Nonmonetary gold 0 103763 -103763 0 147303 -147303 1.A.b Services (1.A.b.1 to 1.A.b.13) 688997 358846 330151 783157 409979 373178 1.A.b.1 Manufacturing services on physical inputs owned by others 2339 320 2019 2316 169 2147 1.A.b.2 Maintenance and repair services n.i.e. 465 2544 -2078 755 2199 -1444 1.A.b.3 Transport 58311 60151 -1840 73649 76965 -3316 1.A.b.4 Travel 61845 71601 -9756 63958 78464 -14506 1.A.b.5 Construction 7887 5598 2289 10580 7963 2616 1.A.b.6 Insurance and pension services 6842 6785 57 7553 6581 972 1.A.b.7 Financial services 17106 9777 7329 18349 10595 7754 1.A.b.8 Charges for the use of intellectual property n.i.e. 3485 27618 -24133 3754 32473 -28719 1.A.b.9 Telecommunications, computer, and information services 335161 41064 294097 375037 44672 330366 1.A.b.10 Other business services 177488 113019 64469 210894 130244 80650 1.A.b.11 Personal, cultural, and recreational services 10012 17193 -7180 9269 15029 -5760 1.A.b.12 Government goods and services n.i.e. 1154 2018 -863 1228 2643 -1415 1.A.b.13 Others n.i.e. 6902 1160 5742 5815 1982 3834 1.B Primary Income (1.B.1 to 1.B.3) 98510 194468 -95957 136323 216087 -79763 1.B.1 Compensation of employees 14544 7579 6965 16712 8568 8145 1.B.2 Investment income 73890 183473 -109583 107633 203850 -96217 1.B.2.1 Direct investment 19194 101520 -82327 22828 108966 -86138 1.B.2.2 Portfolio investment 692 30227 -29535 653 34776 -34123 1.B.2.3 Other investment 4298 49928 -45630 9783 58239 -48455 1.B.2.4 Reserve assets 49705 1797 47908 74369 1870 72499 1.B.3 Other primary income 10076 3415 6661 11978 3669 8309 1.C Secondary Income (1.C.1+1.C.2) 232662 26438 206224 267528 23480 244048 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 232476 24416 208060 267298 21478 245821 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 225958 16860 209099 260383 15102 245281 1.C.1.2 Other current transfers 6518 7557 -1039 6915 6376 539 1.C.2 General government 186 2022 -1836 230 2002 -1772 2 Capital Account (2.1+2.2) 1245 1668 -423 1558 1611 -53 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 74 755 -680 57 570 -513 2.2 Capital transfers 1170 913 257 1501 1041 460 3 Financial Account (3.1 to 3.5) 1699992 1614420 85572 2577489 2477933 99556 3.1 Direct Investment (3.1A+3.1B) 137100 143996 -6896 177706 196451 -18745 3.1.A Direct Investment in India 129962 104866 25096 173115 130862 42253 3.1.A.1 Equity and investment fund shares 120825 101488 19336 162551 125784 36767 3.1.A.1.1 Equity other than reinvestment of earnings 81644 101488 -19844 115988 125784 -9796 3.1.A.1.2 Reinvestment of earnings 39181 0 39181 46563 0 46563 3.1.A.2 Debt instruments 9137 3378 5759 10564 5078 5486 3.1.A.2.1 Direct investor in direct investment enterprises 9137 3378 5759 10564 5078 5486 3.1.B Direct Investment by India 7138 39130 -31992 4591 65589 -60998 3.1.B.1 Equity and investment fund shares 7138 25872 -18734 4591 48809 -44218 3.1.B.1.1 Equity other than reinvestment of earnings 7138 13916 -6778 4591 36128 -31537 3.1.B.1.2 Reinvestment of earnings 0 11956 -11956 0 12680 -12680 3.1.B.2 Debt instruments 0 13258 -13258 0 16780 -16780 3.1.B.2.1 Direct investor in direct investment enterprises 0 13258 -13258 0 16780 -16780 3.2 Portfolio Investment 925695 884807 40889 1525455 1359178 166277 3.2.A Portfolio Investment in India 918597 874902 43695 1519799 1353816 165984 3.2.1 Equity and investment fund shares 839257 809559 29698 1342550 1253064 89486 3.2.2 Debt securities 79340 65343 13997 177250 100752 76498 3.2.B Portfolio Investment by India 7099 9905 -2806 5656 5363 293 3.3 Financial derivatives (other than reserves) and employee stock options 45263 60858 -15595 53269 99618 -46349 3.4 Other investment 591934 503940 87993 821059 666767 154291 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 175715 149782 25933 244933 190597 54337 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 0 594 -594 2675 0 2675 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 175715 149187 26528 242259 190597 51662 3.4.2.3 General government 0 0 0 0 0 0 3.4.2.4 Other sectors 0 0 0 0 0 0 3.4.3 Loans (External Assistance, ECBs and Banking Capital) 188702 196637 -7935 371605 339998 31607 3.4.3.A Loans to India 165048 163780 1267 329162 272501 56660 3.4.3.B Loans by India 23654 32857 -9202 42443 67497 -25054 3.4.4 Insurance, pension, and standardized guarantee schemes 1194 85 1109 393 25 368 3.4.5 Trade credit and advances 162529 117640 44888 146523 118354 28169 3.4.6 Other accounts receivable/payable - other 63794 39797 23998 57605 17794 39811 3.4.7 Special drawing rights 0 0 0 0 0 0 3.5 Reserve assets 0 20819 -20819 0 155919 -155919 3.5.1 Monetary gold 0 0 0 0 0 0 3.5.2 Special drawing rights n.a. 0 0 0 0 0 0 3.5.3 Reserve position in the IMF n.a. 0 0 0 0 0 0 3.5.4 Other reserve assets (Foreign Currency Assets) 0 20819 -20819 0 155919 -155919 4 Total assets/liabilities 1699992 1614420 85572 2577489 2477933 99556 4.1 Equity and investment fund shares 1020775 1007766 13008 1569010 1532662 36348 4.2 Debt instruments 615423 546038 69385 950874 771559 179316 4.3 Other financial assets and liabilities 63794 60616 3179 57605 173712 -116108 5 Net errors and omissions 7964 0 7964 0 6046 -6046 Note: P: Preliminary. RBI Bulletin January 2025 159CURRENT STATISTICS No. 42: India’s International Investment Position (US$ Million) Item As on Financial Year/Quarter End 2023-24 2023 2024 Sep. Jun. Sep. Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities 1 2 3 4 5 6 7 8 1. Direct investment Abroad/in India 242271 542931 232097 528679 246248 552865 253530 555484 1.1 Equity Capital* 153343 511142 146159 497612 156225 520706 161504 523010 1.2 Other Capital 88927 31789 85938 31067 90023 32160 92026 32474 2. Portfolio investment 12162 277038 12096 259358 12103 277140 12306 293649 2.1 Equity 10644 162061 8974 154634 10367 160898 10983 170934 2.2 Debt 1517 114977 3122 104723 1736 116242 1323 122715 3. Other investment 132654 575068 120311 546182 140952 589624 146190 617176 3.1 Trade credit 33450 123662 30854 124733 32865 126576 32428 129931 3.2 Loan 17547 221738 11962 208669 20803 224823 22147 240166 3.3 Currency and Deposits 53519 154787 45711 146166 57747 160628 56105 164076 3.4 Other Assets/Liabilities 28138 74880 31784 66615 29537 77597 35510 83002 4. Reserves 646419 587714 651997 705782 5. Total Assets/ Liabilities 1033505 1395036 952218 1334219 1051300 1419629 1117808 1466309 6. Net IIP (Assets - Liabilities) -361531 -382001 -368329 -348501 Note: * Equity capital includes share of investment funds and reinvested earnings. 160 RBI Bulletin January 2025CURRENT STATISTICS Payment and Settlement Systems No.43: Payment System Indicators PART I - Payment System Indicators - Payment & Settlement System Statistics System Volume (Lakh) Value (₹ Crore) FY 2023-24 2023 2024 FY 2023-24 2023 2024 Nov. Oct. Nov. Nov. Oct. Nov. 1 -2 -1 0 5 2 3 4 A. Settlement Systems Financial Market Infrastructures (FMIs) 1 CCIL Operated Systems (1.1 to 1.3) 43.04 3.08 3.59 2.61 259206893 21011085 25730864 20592498 1.1 Govt. Securities Clearing (1.1.1 to 1.1.3) 16.80 1.24 1.69 1.10 170464587 13568124 16664120 13954925 1.1.1 Outright 9.51 0.64 1.04 0.54 13463848 939382 1626397 847485 1.1.2 Repo 4.94 0.41 0.41 0.35 76718788 5919154 6573748 5366007 1.1.3 Tri-party Repo 2.35 0.19 0.23 0.20 80281951 6709589 8463975 7741434 1.2 Forex Clearing 24.92 1.74 1.74 1.40 80984671 6922315 8046345 5972544 1.3 Rupee Derivatives @ 1.31 0.10 0.16 0.11 7757636 520645 1020399 665029 B. Payment Systems I Financial Market Infrastructures (FMIs) - - - - - - - - 1 Credit Transfers - RTGS (1.1 to 1.2) 2700.16 219.20 267.92 240.29 170886670 13591443 17070975 14826882 1.1 Customer Transactions 2686.04 218.05 266.69 239.16 152406168 12078797 15418778 13504833 1.2 Interbank Transactions 14.12 1.15 1.23 1.12 18480503 1512645 1652197 1322050 II Retail 2 Credit Transfers - Retail (2.1 to 2.6) 1486106.89 128072.73 185187.17 170358.50 67542859 5673303 7358283 6274182 2.1 AePS (Fund Transfers) @ 3.92 0.30 0.31 0.30 261 19 17 14 2.2 APBS $ 25888.17 3221.01 4021.91 2250.97 390743 47635 69157 32384 2.3 IMPS 60053.35 4723.84 4668.23 4079.18 6495652 535002 629382 558328 2.4 NACH Cr $ 16227.27 1380.65 1463.68 1438.33 1525104 142415 157479 147385 2.5 NEFT 72639.50 6394.01 9183.38 7769.51 39136014 3208491 4152428 3380884 2.6 UPI @ 1311294.68 112352.92 165849.66 154820.21 19995086 1739741 2349821 2155187 2.6.1 of which USSD @ 26.19 2.69 1.64 1.56 352 37 18 16 3 Debit Transfers and Direct Debits (3.1 to 3.3) 18249.53 1527.84 1871.73 1894.74 1687658 142456 189818 185643 3.1 BHIM Aadhaar Pay @ 193.59 18.82 24.54 19.29 6112 590 773 629 3.2 NACH Dr $ 16426.49 1376.66 1710.21 1732.94 1678769 141646 188844 184814 3.3 NETC (linked to bank account) @ 1629.45 132.36 136.98 142.51 2777 220 202 200 4 Card Payments (4.1 to 4.2) 58469.79 4742.56 5762.99 5171.02 2423563 210038 248709 208387 4.1 Credit Cards (4.1.1 to 4.1.2) 35610.15 2970.90 4332.14 3936.04 1831134 160644 201789 169298 4.1.1 PoS based $ 18614.08 1583.66 2196.73 2036.02 651911 59015 79293 68233 4.1.2 Others $ 16996.08 1387.24 2135.41 1900.02 1179223 101629 122496 101065 4.2 Debit Cards (4.2.1 to 4.2.1 ) 22859.64 1771.66 1430.85 1234.98 592429 49394 46920 39089 4.2.1 PoS based $ 16477.95 1301.95 1063.85 919.33 393589 34379 32182 26756 4.2.2 Others $ 6381.69 469.71 367.00 315.65 198840 15015 14738 12333 5 Prepaid Payment Instruments (5.1 to 5.2) 78775.40 6510.09 5977.88 5847.81 283048 24248 20419 19214 5.1 Wallets 63256.69 5308.63 4425.20 4462.09 234353 19853 13074 13130 5.2 Cards (5.2.1 to 5.2.2) 15518.71 1201.46 1552.68 1385.72 48695 4394 7345 6083 5.2.1 PoS based $ 8429.87 662.14 718.88 663.27 11247 891 981 915 5.2.2 Others $ 7088.84 539.32 833.81 722.45 37447 3504 6365 5168 6 Paper-based Instruments (6.1 to 6.2) 6632.10 525.55 546.98 472.48 7212333 558866 624057 537849 6.1 CTS (NPCI Managed) 6632.10 525.55 546.98 472.48 7212333 558866 624057 537849 6.2 Others 0.00 – – – – – – – Total - Retail Payments (2+3+4+5+6) 1648233.71 141378.76 199346.75 183744.55 79149461 6608910 8441287 7225275 Total Payments (1+2+3+4+5+6) 1650933.88 141597.96 199614.67 183984.84 250036131 20200353 25512262 22052158 Total Digital Payments (1+2+3+4+5) 1644301.78 141072.41 199067.69 183512.36 242823799 19641487 24888205 21514309 RBI Bulletin January 2025 161CURRENT STATISTICS PART II - Payment Modes and Channels System Volume (Lakh) Value (₹ Crore) FY 2023-24 2023 2024 FY 2023-24 2023 2024 Nov. Oct. Nov. Nov. Oct. Nov. 1 2 3 4 5 6 7 8 A. Other Payment Channels 1 Mobile Payments (mobile app based) (1.1 to 1.2) 1252599.21 108646.12 154874.97 144939.48 30687088 2646783 3532207 3215469 1.1 Intra-bank $ 83000.56 6927.98 9126.57 8518.56 5676805 478326 657333 598558 1.2 Inter-bank $ 1169598.65 101718.14 145748.39 136420.92 25010283 2168458 2874874 2616911 2 Internet Payments (Netbanking / Internet Browser Based) @ (2.1 to 2.2) 45034.98 3622.58 4232.23 3624.01 102117736 8033440 10303412 9002230 2.1 Intra-bank @ 12033.28 988.62 1151.19 1024.09 53247042 4130936 5085518 4483631 2.2 Inter-bank @ 33001.71 2633.96 3081.04 2599.92 48870694 3902504 5217894 4518598 B. ATMs 3 Cash Withdrawal at ATMs $ (3.1 to 3.3) 66440.72 5542.64 5545.04 4760.71 3259388 276530 285506 241717 3.1 Using Credit Cards $ 95.80 7.89 8.32 7.75 4648 391 444 410 3.2 Using Debit Cards $ 66001.01 5505.75 5515.23 4734.61 3241538 275032 284076 240471 3.3 Using Pre-paid Cards $ 343.90 28.99 21.49 18.35 13202 1107 985 837 4 Cash Withdrawal at PoS $ (4.1 to 4.2) 15.18 0.75 0.29 0.28 148 7 3 3 4.1 Using Debit Cards $ 15.06 0.75 0.28 0.27 147 7 3 3 4.2 Using Pre-paid Cards $ 0.12 0.01 0.01 0.02 1 0 0 0 5 Cash Withrawal at Micro ATMs @ 11754.95 1079.59 1227.30 898.33 314003 28972 31480 22981 5.1 AePS @ 11754.95 1079.59 1227.30 898.33 314003 28972 31480 22981 PART III - Payment Infrastructures (Lakh) System As on March 2023 2024 2024 Nov. Oct. Nov. 1 2 3 4 Payment System Infrastructures 1 Number of Cards (1.1 to 1.2) 10667.22 10725.71 11017.88 11008.78 1.1 Credit Cards 1018.03 960.01 1068.90 1072.40 1.2 Debit Cards 9649.19 9765.69 9948.98 9936.38 2 Number of PPIs @ (2.1 to 2.2) 16743.63 16944.31 15503.27 15624.08 2.1 Wallets @ 13381.80 13758.21 11439.31 11460.53 2.2 Cards @ 3361.82 3186.10 4063.95 4163.55 3 Number of ATMs (3.1 to 3.2) 2.58 2.58 2.56 2.55 3.1 Bank owned ATMs $ 2.23 2.24 2.21 2.20 3.2 White Label ATMs $ 0.35 0.34 0.35 0.35 4 Number of Micro ATMs @ 17.55 15.87 14.43 14.43 5 Number of PoS Terminals 89.03 84.32 95.09 96.91 6 Bharat QR @ 62.50 58.74 64.31 63.60 7 UPI QR * 3434.93 3087.39 6167.67 6260.92 @: New inclusion w.e.f. November 2019 #: Data reported by Co-operative Banks, LABs and RRBs included with effect from December 2021. $ : Inclusion separately initiated from November 2019 - would have been part of other items hitherto. *: New inclusion w.e.f. September 2020; Includes only static UPI QR Code Note : 1. Data is provisional. 2. ECS (Debit and Credit) has been merged with NACH with effect from January 31, 2020. 3. The data from November 2019 onwards for card payments (Debit/Credit cards) and Prepaid Payment Instruments (PPIs) may not be comparable with earlier months/ periods, as more granular data is being published along with revision in data definitions. 4. Only domestic financial transactions are considered. The new format captures e-commerce transactions; transactions using FASTags, digital bill payments and card-to-card transfer through ATMs, etc. Also, failed transactions, chargebacks, reversals, expired cards/ wallets, are excluded. Part I-A. Settlement systems 1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018. Part I-B. Payments systems 4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc. 4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc. 5. Available from December 2010. 5.1: includes purchase of goods and services and fund transfer through wallets. 5.2.2: includes usage of PPI Cards for online transactions and other transactions. 6.1: Pertain to three grids – Mumbai, New Delhi and Chennai. 6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks. Part II-A. Other payment channels 1: Mobile Payments – o Include transactions done through mobile apps of banks and UPI apps. o The data from July 2017 includes only individual payments and corporate payments initiated, processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and authorised using mobile device are excluded. 2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank. Part II-B. ATMs ` 3.3 and 4.2: only relates to transactions using bank issued PPIs. Part III. Payment systems infrastructure 3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards. 162 RBI Bulletin January 2025CURRENT STATISTICS OOOccccccaaasssiiiooonnnaaalll SSSeeerrriiieeesss No. 44: Small Savings (₹ Crore) Scheme 2023-24 2023 2024 Oct. Aug. Sep. Oct. 1 2 3 4 5 1 Small Savings Receipts 232460 12669 12130 11569 10981 Outstanding 1865029 1759706 1940611 1951745 1962367 1.1 Total Deposits Receipts 161344 8731 9998 9281 8792 Outstanding 1298795 1225055 1361210 1370491 1379283 1.1.1 Post Office Saving Bank Deposits Receipts 17229 -160 -205 810 1062 Outstanding 191692 211136 199017 199827 200889 1.1.2 Sukanya Samriddhi Yojna Receipts 35174 1594 2005 1878 1787 Outstanding 157611 101021 169154 171032 172819 1.1.3 National Saving Scheme, 1987 Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.4 National Saving Scheme, 1992 Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.5 Monthly Income Scheme Receipts 26696 1614 1710 1222 1033 Outstanding 269007 259995 278161 279383 280416 1.1.6 Senior Citizen Scheme 2004 Receipts 38167 2382 2436 1942 1699 Outstanding 175472 164570 187824 189766 191465 1.1.7 Post Office Time Deposits Receipts 25341 1762 3052 2436 2121 Outstanding 305776 293588 322122 324558 326679 1.1.7.1 1 year Time Deposits Outstanding 140423 132337 152099 153904 155580 1.1.7.2 2 year Time Deposits Outstanding 11967 10842 13491 13737 13910 1.1.7.3 3 year Time Deposits Outstanding 8932 8317 9773 9907 10033 1.1.7.4 5 year Time Deposits Outstanding 144454 142092 146759 147010 147156 1.1.8 Post Office Recurring Deposits Receipts 18713 1561 1005 1020 1238 Outstanding 197134 192875 202963 203983 205221 1.1.9 Post Office Cumulative Time Deposits Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.10 Other Deposits Receipts 8 -23 -6 -28 -149 Outstanding 1754 1530 1617 1589 1440 1.1.11 PM Care for children Receipts 16 1 1 1 1 Outstanding 349 340 352 353 354 1.2 Saving Certificates Receipts 56069 3756 1788 2152 2080 Outstanding 418021 400056 431065 432781 434502 1.2.1 National Savings Certificate VIII issue Receipts 16853 1074 1180 768 637 Outstanding 183905 174881 190261 191030 191667 1.2.2 Indira Vikas Patras Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.3 Kisan Vikas Patras Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.4 Kisan Vikas Patras - 2014 Receipts 20939 1419 -174 695 783 Outstanding 220560 213406 225184 225879 226662 1.2.5 National Saving Certificate VI issue Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.6 National Saving Certificate VII issue Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.7 M.S. Certificates Receipts 18277 1263 782 689 660 Outstanding 18277 12717 22543 23232 23891 1.2.8 Other Certificates Outstanding -4721 -948 -6923 -7360 -7718 1.3 Public Provident Fund Receipts 15047 182 344 136 109 Outstanding 148213 134595 148336 148473 148582 Note : Data on receipts from April 2017 are net receipts, i.e., gross receipt minus gross payment. Source: Accountant General, Post and Telegraphs. RBI Bulletin January 2025 163CURRENT STATISTICS No. 45 : Ownership Pattern of Central and State Governments Securities (Per cent) Central Government Dated Securities 2023 2024 Category Sep. Dec. Mar. Jun. Sep. 1 2 3 4 5 (A) Total (in ₹. Crore) 10383607 10538792 10740389 10946860 11271589 1 Commercial Banks 37.96 37.55 37.66 37.52 37.55 2 Co-operative Banks 1.52 1.49 1.47 1.42 1.35 3 Non-Bank PDs 0.66 0.67 0.66 0.70 0.77 4 Insurance Companies 26.05 26.16 25.98 26.11 25.95 5 Mutual Funds 3.02 3.03 2.90 2.87 3.14 6 Provident Funds 4.42 4.57 4.47 4.41 4.25 7 Pension Funds 4.32 4.44 4.52 4.74 4.86 8 Financial Institutions 0.54 0.55 0.55 0.57 0.63 9 Corporates 1.21 1.33 1.35 1.44 1.60 10 Foreign Portfolio Investors 1.61 1.92 2.34 2.34 2.80 11 RBI 13.06 12.54 12.31 11.92 11.16 12 Others 5.64 5.74 5.79 5.97 5.92 12.1 State Governments 2.04 2.07 2.04 2.13 2.19 State Governments Securities 2023 2024 Category Sep. Dec. Mar. Jun. Sep. 1 2 3 4 5 (B) Total (in ₹. Crore) 5161642 5338587 5646219 5727482 5909490 1 Commercial Banks 33.87 33.90 34.14 33.85 34.39 2 Co-operative Banks 3.60 3.53 3.39 3.38 3.29 3 Non-Bank PDs 0.61 0.63 0.60 0.59 0.60 4 Insurance Companies 26.97 26.64 26.14 25.85 25.56 5 Mutual Funds 1.86 2.00 2.09 2.08 1.93 6 Provident Funds 21.70 22.00 22.35 22.94 23.02 7 Pension Funds 4.82 4.56 4.76 4.87 4.87 8 Financial Institutions 1.65 1.63 1.59 1.58 1.57 9 Corporates 1.87 2.03 2.02 2.03 1.95 10 Foreign Portfolio Investors 0.02 0.03 0.07 0.05 0.04 11 RBI 0.69 0.66 0.63 0.62 0.60 12 Others 2.34 2.37 2.20 2.17 2.18 12.1 State Governments 0.27 0.27 0.25 0.26 0.26 Treasury Bills 2023 2024 Category Sep. Dec. Mar. Jun. Sep. 1 2 3 4 5 (C) Total (in ₹. Crore) 925317 849151 871662 858193 747242 1 Commercial Banks 56.35 57.18 58.53 47.79 44.74 2 Co-operative Banks 1.20 1.28 1.67 1.49 1.58 3 Non-Bank PDs 0.54 1.70 1.66 2.69 2.28 4 Insurance Companies 5.26 5.50 5.06 5.78 5.26 5 Mutual Funds 12.74 11.21 11.89 14.50 15.06 6 Provident Funds 1.52 0.08 0.15 0.60 0.26 7 Pension Funds 0.01 0.00 0.01 0.00 0.00 8 Financial Institutions 4.10 5.34 7.16 6.56 6.36 9 Corporates 4.00 4.58 4.50 4.79 4.66 10 Foreign Portfolio Investors 0.10 0.07 0.01 0.20 0.15 11 RBI 0.00 0.00 0.00 0.00 0.00 12 Others 14.17 13.06 9.36 15.59 19.65 12.1 State Governments 11.36 9.26 5.88 11.55 14.95 Note: The table format is revised since monthly Bulletin for the month of June 2023. Central Government Dated Securities include special securities and Sovereign Gold Bonds. State Government Securities include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). Bank PDs are clubbed under Commercial Banks. The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/ Individuals etc. Data since September 2023 includes the impact of the merger of a non-bank with a bank. 164 RBI Bulletin January 2025CURRENT STATISTICS No. 46: Combined Receipts and Disbursements of the Central and State Governments (₹ Crore) Item 2019-20 2020-21 2021-22 2022-23 2023-24 RE 2024-25 BE 1 2 3 4 5 6 1 Total Disbursements 5410887 6353359 7098451 7880522 9110725 9800798 1.1 Developmental 3074492 3823423 4189146 4701611 5514584 5862996 1.1.1 Revenue 2446605 3150221 3255207 3574503 3965270 4195108 1.1.2 Capital 588233 550358 861777 1042159 1453849 1526993 1.1.3 Loans 39654 122844 72163 84949 95464 140895 1.2 Non-Developmental 2253027 2442941 2810388 3069896 3467270 3800321 1.2.1 Revenue 2109629 2271637 2602750 2895864 3266628 3537378 1.2.1.1 Interest Payments 955801 1060602 1226672 1377807 1562660 1711972 1.2.2 Capital 141457 169155 175519 171131 196073 259346 1.2.3 Loans 1941 2148 32119 2902 4569 3597 1.3 Others 83368 86995 98916 109015 128871 137481 2 Total Receipts 5734166 6397162 7156342 7855370 9054999 9650488 2.1 Revenue Receipts 3851563 3688030 4823821 5447913 6379349 7209647 2.1.1 Tax Receipts 3231582 3193390 4160414 4809044 5456913 6142276 2.1.1.1 Taxes on commodities and services 2012578 2076013 2626553 2865550 3248450 3631569 2.1.1.2 Taxes on Income and Property 1216203 1114805 1530636 1939550 2204462 2506181 2.1.1.3 Taxes of Union Territories (Without Legislature) 2800 2572 3225 3943 4001 4526 2.1.2 Non-Tax Receipts 619981 494640 663407 638870 922436 1067371 2.1.2.1 Interest Receipts 31137 33448 35250 42975 49552 57273 2.2 Non-debt Capital Receipts 110094 64994 44077 62716 86733 118239 2.2.1 Recovery of Loans & Advances 59515 16951 27665 15970 55895 45125 2.2.2 Disinvestment proceeds 50578 48044 16412 46746 30839 73114 3 Gross Fiscal Deficit [ 1 - ( 2.1 + 2.2 ) ] 1449230 2600335 2230553 2369892 2644642 2472912 3A Sources of Financing: Institution-wise 3A.1 Domestic Financing 1440548 2530155 2194406 2332768 2619811 2456959 3A.1.1 Net Bank Credit to Government 571872 890012 627255 687904 346483 ... 3A.1.1.1 Net RBI Credit to Government 190241 107493 350911 529 -257913 ... 3A.1.2 Non-Bank Credit to Government 868676 1640143 1567151 1644864 2273328 ... 3A.2 External Financing 8682 70180 36147 37124 24832 15952 3B Sources of Financing: Instrument-wise 3B.1 Domestic Financing 1440548 2530155 2194406 2332768 2619811 2456959 3B.1.1 Market Borrowings (net) 971378 1696012 1213169 1651076 1962969 1983757 3B.1.2 Small Savings (net) 209232 458801 526693 358764 434151 447511 3B.1.3 State Provident Funds (net) 38280 41273 28100 13880 21386 19857 3B.1.4 Reserve Funds 10411 4545 42153 68803 52385 -33653 3B.1.5 Deposits and Advances -14227 25682 42203 51989 35819 -10138 3B.1.6 Cash Balances -323279 -43802 -57891 25152 55726 150310 3B.1.7 Others 548753 347643 399980 163104 57374 -100684 3B.2 External Financing 8682 70180 36147 37124 24832 15952 4 Total Disbursements as per cent of GDP 26.9 32.0 30.1 29.2 30.8 30.0 5 Total Receipts as per cent of GDP 28.5 32.2 30.3 29.1 30.7 29.6 6 Revenue Receipts as per cent of GDP 19.2 18.6 20.4 20.2 21.6 22.1 7 Tax Receipts as per cent of GDP 16.1 16.1 17.6 17.8 18.5 18.8 8 Gross Fiscal Deficit as per cent of GDP 7.2 13.1 9.5 8.8 9.0 7.6 … : Not available; RE: Revised Estimates; BE: Budget Estimates Source : Budget Documents of Central and State Governments. Note: GDP data is based on 2011-12 base. GDP for 2024-25 is from Union Budget 2024-25. Data pertains to all States and Union Territories. 1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments. 1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions. 2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments. 3A.1.1: Data as per RBI records. 3B.1.1: Borrowings through dated securities. 3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF). This data may vary from previous publications due to adjustments across components with availability of new data. 3B.1.6: Include Ways and Means Advances by the Centre to the State Governments. 3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account. RBI Bulletin January 2025 165CURRENT STATISTICS No. 47: Financial Accommodation Availed by State Governments under various Facilities (₹ Crore) During November-2024 Sr. State/Union Territory Special Drawing Ways and Means Overdraft (OD) No Facility (SDF) Advances (WMA) Average Number Average Number Average Number amount of days amount of days amount of days availed availed availed availed availed availed 1 2 3 4 5 6 7 1 Andhra Pradesh 6257.57 30 1743.94 27 1950.80 2 2 Arunachal Pradesh - - - - - - 3 Assam - - - - - - 4 Bihar - - - - - - 5 Chhattisgarh - - - - - - 6 Goa - - - - - - 7 Gujarat - - - - - - 8 Haryana 861.51 17 2407.00 3 - - 9 Himachal Pradesh - - 398.67 28 457.83 6 10 Jammu & Kashmir UT - - 626.34 14 - - 11 Jharkhand - - - - - - 12 Karnataka - - - - - - 13 Kerala 1554.65 30 1675.80 30 812.17 12 14 Madhya Pradesh - - - - - - 15 Maharashtra - - - - - - 16 Manipur 104.86 30 212.24 30 300.15 10 17 Meghalaya 196.23 28 - - - - 18 Mizoram - - - - - - 19 Nagaland 34.41 6 - - - - 20 Odisha - - - - - - 21 Puducherry - - - - - - 22 Punjab 4288.73 30 451.42 17 - - 23 Rajasthan 3603.83 26 458.89 14 - - 24 Tamil Nadu - - - - - - 25 Telangana 4649.23 30 1900.03 23 633.37 11 26 Tripura - - - - - - 27 Uttar Pradesh - - - - - - 28 Uttarakhand 1171.54 28 - - - - 29 West Bengal - - - - - - Notes: 1. SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government securities. 2. WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches. 3. OD is advanced to State Governments beyond their WMA limits. 4. Average Availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for which accommodation was extended during the month. 5. -Nil. Source: Reserve Bank of India. 166 RBI Bulletin January 2025CURRENT STATISTICS No. 48: Investments by State Governments (₹ Crore) As on end of November 2024 Consolidated Guarantee Sr. State/Union Government Auction Treasury Sinking Fund Redemption Fund No Territory Securities Bills (ATBs) (CSF) (GRF) 1 2 3 4 5 1 Andhra Pradesh 11385 1123 0 0 2 Arunachal Pradesh 2708 7 0 5000 3 Assam 8480 89 0 0 4 Bihar 12290 - 0 22000 5 Chhattisgarh 7684 479 0 8387 6 Goa 1033 450 0 0 7 Gujarat 15021 656 0 2000 8 Haryana 2288 1677 0 0 9 Himachal Pradesh - - 0 0 10 Jammu & Kashmir UT 19 18 0 0 11 Jharkhand 2368 - 0 1530 12 Karnataka 19982 743 0 61370 13 Kerala 3065 - 0 0 14 Madhya Pradesh - 1259 0 0 15 Maharashtra 70629 1717 0 0 16 Manipur 68 138 0 0 17 Meghalaya 1251 107 0 0 18 Mizoram 452 62 0 0 19 Nagaland 1855 45 0 0 20 Odisha 17848 2013 115 10433 21 Puducherry 572 - 0 1700 22 Punjab 9026 0 0 0 23 Rajasthan 1291 - 0 8700 24 Tamil Nadu 3378 - 0 3612 25 Telangana 7767 1703 0 0 26 Tripura 1203 26 0 25 27 Uttarakhand 4941 208 0 0 28 Uttar Pradesh 10556 - 0 5000 29 West Bengal 13418 1017 0 0 Total 230578 13538 115 129757 Notes: 1. CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. 2. ATBs include Treasury bills of 91 days, 182 days and 364 days invested by State Governments in the primary market. 3. - : Not Applicable (not a member of the scheme). RBI Bulletin January 2025 167CURRENT STATISTICS No. 49: Market Borrowings of State Governments (₹ Crore) 2024-25 Total amount 2022-23 2023-24 raised, so far in September October November 2024-25 Sr. No. State Gross Net Gross Net Gross Net Gross Net Gross Net Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Gross Net Raised Raised Raised Raised Raised Raised Raised Raised Raised Raised 1 2 3 4 5 6 7 8 9 10 11 12 13 1 Andhra Pradesh 57478 45814 68400 55330 4000 -1000 6000 4000 4000 2000 54000 36918 2 Arunachal Pradesh 559 389 902 672 - - - - 400 400 400 254 3 Assam 17100 16105 18500 16000 1750 1750 1500 1000 - -500 9250 7300 4 Bihar 36800 27467 47612 29910 6000 3922 8000 3000 6000 3000 26000 15922 5 Chhattisgarh 2000 -2287 32000 26213 2000 2000 3000 2300 - - 6500 3000 6 Goa 1350 500 2550 1560 300 300 200 100 200 100 1050 250 7 Gujarat 43000 28300 30500 11947 - -1000 1500 -500 3000 1000 9000 1000 8 Haryana 45158 28638 47500 28364 3000 1700 1500 750 4000 3500 25000 18720 9 Himachal Pradesh 14000 11941 8072 5856 700 700 600 200 500 300 5700 3850 10 Jammu & Kashmir UT 8473 5969 16337 13904 - - 400 -40 400 400 10150 8810 11 Jharkhand 4000 -155 1000 -2505 - - - - - - - - 12 Karnataka 36000 26000 81000 63003 3000 1000 20000 18000 4000 1500 27000 16000 13 Kerala 30839 15620 42438 26638 3753 2253 2745 1245 2249 1249 29247 17347 14 Madhya Pradesh 40158 26849 38500 26264 5000 3950 5000 4000 5000 4250 25000 18650 15 Maharashtra 72000 42815 110000 79738 24000 17000 3000 600 - -2700 67000 44800 16 Manipur 1422 1147 1426 1076 - - 200 - - - 800 540 17 Meghalaya 1753 1356 1364 912 150 -258 197 197 - - 1247 759 18 Mizoram 1315 1129 901 641 90 40 50 50 80 60 671 541 19 Nagaland 1854 1199 2551 2016 - - - - - -150 300 -50 20 Odisha 0 -7500 0 -4658 - - - -500 1000 1000 1000 -500 21 Puducherry 1200 698 1100 475 - -200 300 300 - -100 550 150 22 Punjab 45500 33660 42386 29517 2000 1888 3150 3150 387 387 30430 25976 23 Rajasthan 46057 30110 73624 49718 6000 3500 7000 5230 4265 3015 47765 32683 24 Sikkim 1414 1320 1916 1701 - - 1000 1000 - - 1000 870 25 Tamil Nadu 87000 65722 113001 75970 9000 7875 8000 3150 9025 5400 67025 43175 26 Telangana 40150 30922 49618 39385 4500 2500 4500 3700 1000 200 37000 29482 27 Tripura 0 -645 0 -550 - - - - - - - - 28 Uttar Pradesh 55612 41797 97650 85335 - - 3000 24 6000 3500 9000 -709 29 Uttarakhand 3200 1450 6300 3800 - - 500 500 500 500 2400 2400 30 West Bengal 63000 42500 69910 48910 7000 5000 3500 2000 3000 1000 31000 17900 Grand Total 758392 518829 1007058 717140 82243 52920 84842 53457 55006 29311 525485 346039 - : Nil. Note: The State of J&K has ceased to exist constitutionally from October 31, 2019 and the liabilities of the State continue to remain as liabilities of the new UT of Jammu and Kashmir. Source: Reserve Bank of India. 168 RBI Bulletin January 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Amount in ` Crore) 2021-22 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 3,42,813 3,30,490 4,85,203 5,54,816 17,13,322 Per cent of GDP 6.6 5.9 7.7 8.5 7.3 I. Financial Assets 3,63,395 5,25,419 8,16,484 9,07,366 26,12,664 Per cent of GDP 7.0 9.3 13.0 13.9 11.1 of which: 1.Total Deposits (a)+(b) (81,064) 2,04,486 4,28,035 2,83,634 8,35,091 (a) Bank Deposits (1,06,429) 1,97,105 4,22,393 2,70,025 7,83,094 i. Commercial Banks (1,07,941) 1,95,442 4,18,267 2,62,326 7,68,094 ii. Co-operative Banks 1,512 1,663 4,126 7,699 15,000 (b) Non-Bank Deposits 25,365 7,380 5,642 13,610 51,997 of which: Other Financial Institutions (i+ii) 17,555 (435) (2,178) 5,770 20,712 i. Non-Banking Financial Companies 5,578 (1,371) 73 4,021 8,302 ii. Housing Finance Companies 11,977 936 (2,252) 1,748 12,410 2. Life Insurance Funds 1,15,539 1,28,277 1,04,076 1,38,998 4,86,889 3. Provident and Pension Funds (including PPF) 1,24,971 1,12,810 95,493 2,18,719 5,51,993 4. Currency 1,28,660 (68,631) 62,793 1,46,845 2,69,667 5. Investments 24,884 82,260 69,715 50,926 2,27,785 of which: (a) Mutual Funds 14,573 63,151 37,912 44,964 1,60,600 (b) Equity 4,502 13,218 27,808 3,084 48,613 6. Small Savings (excluding PPF) 50,405 66,218 56,372 68,243 2,41,238 II. Financial Liabilities 20,583 1,94,929 3,31,281 3,52,550 8,99,343 Per cent of GDP 0.4 3.5 5.3 5.4 3.8 Loans (Borrowings) from 1. Financial Corporations (a+b) 20,479 1,94,825 3,31,178 3,52,446 8,98,928 (a) Banking Sector 21,428 1,38,720 2,67,955 2,74,181 7,02,284 of which: i. Commercial Banks 26,979 1,40,269 2,65,271 3,37,010 7,69,529 (b) Other Financial Institutions (949) 56,105 63,223 78,266 1,96,644 i. Non-Banking Financial Companies (8,708) 30,151 32,177 40,003 93,623 ii. Housing Finance Companies 7,132 24,404 29,495 37,436 98,467 iii. Insurance Corporations 627 1,550 1,551 827 4,554 2. Non-Financial Corporations (Private 34 34 34 34 135 Corporate Business) 3. General Government 70 70 70 70 279 RBI Bulletin January 2025 169CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Contd.) (Amount in ` Crore) 2022-23 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 2,89,980 2,99,395 2,96,132 4,54,240 13,39,748 Per cent of GDP 4.5 4.6 4.3 6.4 5.0 I. Financial Assets 5,79,958 6,34,471 7,50,245 9,71,526 29,36,200 Per cent of GDP 8.9 9.8 10.9 13.6 10.9 of which: 1.Total Deposits (a)+(b) 1,85,429 3,17,361 2,80,233 3,25,853 11,08,876 (a) Bank Deposits 1,63,172 2,99,533 2,56,400 3,07,867 10,26,971 i. Commercial Banks 1,58,613 3,00,565 2,48,460 2,84,968 9,92,606 ii. Co-operative Banks 4,559 (1,032) 7,940 22,899 34,365 (b) Non-Bank Deposits 22,257 17,829 23,833 17,986 81,905 of which: Other Financial Institutions (i+ii) 6,505 2,077 8,082 2,234 18,897 i. Non-Banking Financial Companies 4,231 3,267 3,247 3,946 14,690 ii. Housing Finance Companies 2,274 (1,191) 4,835 (1,712) 4,207 2. Life Insurance Funds 73,298 1,51,677 1,67,522 1,56,613 5,49,109 3. Provident and Pension Funds (including PPF) 1,48,915 1,20,367 1,38,584 2,18,709 6,26,575 4. Currency 66,439 (54,579) 76,760 1,48,990 2,37,610 5. Investments 51,503 48,530 49,779 64,151 2,13,962 of which: (a) Mutual Funds 35,443 44,484 40,206 58,955 1,79,088 (b) Equity 13,561 1,378 6,434 1,665 23,038 6. Small Savings (excluding PPF) 54,375 51,115 37,368 57,211 2,00,068 II. Financial Liabilities 2,89,978 3,35,076 4,54,113 5,17,285 15,96,452 Per cent of GDP 4.5 5.2 6.6 7.3 5.9 Loans (Borrowings) from 1. Financial Corporations (a+b) 2,89,781 3,34,880 4,53,917 5,17,089 15,95,667 (a) Banking Sector 2,34,235 2,63,450 3,70,783 3,83,845 12,52,313 of which: i. Commercial Banks 2,30,284 2,61,265 3,68,305 3,31,293 11,91,146 (b) Other Financial Institutions 55,546 71,429 83,134 1,33,244 3,43,354 i. Non-Banking Financial Companies 30,532 36,650 55,792 94,565 2,17,539 ii. Housing Finance Companies 22,337 33,031 24,903 36,746 1,17,017 iii. Insurance Corporations 2,678 1,748 2,439 1,933 8,798 2. Non-Financial Corporations (Private 34 34 34 34 135 Corporate Business) 3. General Government 163 163 163 163 650 170 RBI Bulletin January 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Concld.) (Amount in ` Crore) 2023-24 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 3,53,093 2,89,675 2,98,111 6,11,366 15,52,245 Per cent of GDP 5.0 4.1 3.9 7.8 5.3 I. Financial Assets 6,74,763 8,15,842 8,08,779 11,32,130 34,31,514 Per cent of GDP 9.6 11.5 10.7 14.5 11.6 of which: 1.Total Deposits (a)+(b) 2,68,925 4,12,388 2,99,372 4,10,559 13,91,244 (a) Bank Deposits 2,55,249 5,06,208 2,79,872 3,94,573 14,35,902 i. Commercial Banks 2,46,079 5,06,700 2,82,537 3,87,313 14,22,629 ii. Co-operative Banks 9,170 (492) (2,665) 7,260 13,273 (b) Non-Bank Deposits 13,676 (93,820) 19,499 15,986 (44,658) of which: Other Financial Institutions (i+ii) (485) (1,07,982) 5,338 1,825 (1,01,305) i. Non-Banking Financial Companies 6,119 4,782 4,896 1,943 17,740 ii. Housing Finance Companies (6,605) (1,12,764) 442 (118) (1,19,045) 2. Life Insurance Funds 1,58,358 1,41,413 1,61,192 1,30,036 5,90,999 3. Provident and Pension Funds (including PPF) 1,63,508 1,48,178 1,53,255 2,53,719 7,18,661 4. Currency (48,636) (36,701) 56,719 1,46,644 1,18,026 5. Investments 41,409 73,060 79,633 1,08,732 3,02,834 of which: (a) Mutual Funds 32,086 55,769 60,135 90,973 2,38,962 (b) Equity 3,757 7,146 9,941 8,236 29,080 6. Small Savings (excluding PPF) 91,198 77,504 58,607 82,441 3,09,751 II. Financial Liabilities 3,21,670 5,26,167 5,10,667 5,20,764 18,79,269 Per cent of GDP 4.6 7.4 6.7 6.7 6.4 Loans (Borrowings) from 1. Financial Corporations (a+b) 3,21,520 5,26,016 5,10,516 5,20,613 18,78,666 (a) Banking Sector 2,13,606 8,68,874 4,02,647 3,92,330 18,77,458 of which: i. Commercial Banks 2,08,027 8,75,654 3,89,898 3,82,558 18,56,136 (b) Other Financial Institutions 1,07,914 (3,42,858) 1,07,869 1,28,283 1,208 i. Non-Banking Financial Companies 81,449 59,684 85,032 1,00,836 3,27,001 ii. Housing Finance Companies 23,784 (4,04,294) 21,233 25,853 (3,33,424) iii. Insurance Corporations 2,681 1,753 1,604 1,594 7,631 2. Non-Financial Corporations (Private 34 35 35 35 138 Corporate Business) 3. General Government 116 116 116 116 465 Notes : 1. Net Financial Savings of households refer to the net financial assets, which are measured as difference of financial asset and liabilities flows. 2. Preliminary estimates for 2023-24 and revised estimates for 2021-22 and 2022-23. 3. The preliminary estimates for 2023-24 will undergo revision with the release of first revised estimates of national income, consumption expenditure, savings, and capital formation, 2023-24 by the National Statistical Office (NSO). 4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc. 5. Figures in the columns may not add up to the total due to rounding off. RBI Bulletin January 2025 171CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Amount in ` Crore) Item Jun-2021 Sep-2021 Dec-2021 Mar-2022 Financial Assets (a+b+c+d+e+f+g+h) 2,33,27,377 2,39,99,280 2,47,08,474 2,54,40,650 Per cent of GDP 110.4 108.9 108.2 107.8 (a) Bank Deposits (i+ii) 1,07,90,832 1,09,87,937 1,14,10,330 1,16,80,355 i. Commercial Banks 99,53,044 1,01,48,486 1,05,66,753 1,08,29,079 ii. Co-operative Banks 8,37,788 8,39,451 8,43,577 8,51,276 (b) Non-Bank Deposits of which: Other Financial Institutions 2,06,509 2,06,074 2,03,896 2,09,665 i. Non-Banking Financial Companies 67,840 66,469 66,542 70,564 ii. Housing Finance Companies 1,38,669 1,39,605 1,37,353 1,39,102 (c) Life Insurance Funds 49,29,725 51,42,279 52,13,527 53,57,350 (d) Currency 27,42,897 26,74,266 27,37,059 28,83,904 (e) Mutual funds 18,55,000 20,64,364 21,26,112 21,52,141 (f) Public Provident Fund (PPF) 7,57,398 7,62,264 7,67,287 8,34,148 (g) Pension Funds 6,16,517 6,67,379 6,99,173 7,36,592 (h) Small Savings (excluding PPF) 14,28,499 14,94,717 15,51,089 15,86,496 Financial Liabilities (a+b) 77,43,630 79,38,456 82,69,633 86,22,079 Per cent of GDP 36.6 36.0 36.2 36.5 Loans/Borrowings (a) Banking Sector 61,80,377 63,19,097 65,87,052 68,61,233 of which: i. Commercial Banks 56,47,239 57,87,508 60,52,779 63,89,789 ii. Co-operative Banks 5,31,728 5,30,164 5,32,833 4,69,989 (b) Other Financial Institutions 15,63,253 16,19,358 16,82,581 17,60,847 of which: i. Non-Banking Financial Companies 7,36,312 7,66,463 7,98,641 8,38,643 ii. Housing Finance Companies 7,21,510 7,45,914 7,75,408 8,1 2,845 iii. Insurance Corporations 1,05,431 1,06,981 1,08,532 1,09,359 172 RBI Bulletin January 2025CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators(Contd.) (Amount in ` Crore) Item Jun-2022 Sep-2022 Dec-2022 Mar-2023 Financial Assets (a+b+c+d+e+f+g+h) 2,56,21,348 2,64,23,992 2,71,87,716 2,78,44,981 Per cent of GDP 102.8 102.6 103.2 103.3 (a) Bank Deposits (i+ii) 1,18,43,527 1,21,43,060 1,23,99,459 1,27,07,326 i. Commercial Banks 1,09,87,692 1,12,88,257 1,15,36,717 1,18,21,685 ii. Co-operative Banks 8,55,835 8,54,803 8,62,742 8,85,641 (b) Non-Bank Deposits of which: Other Financial Institutions 2,16,170 2,18,247 2,26,328 2,28,562 i. Non-Banking Financial Companies 74,794 78,061 81,308 85,254 ii. Housing Finance Companies 1,41,376 1,40,185 1,45,020 1,43,308 (c) Life Insurance Funds 53,25,967 55,59,682 57,86,593 57,95,431 (d) Currency 29,50,343 28,95,764 29,72,524 31,21,514 (e) Mutual funds 20,48,097 22,60,210 23,55,316 23,67,793 (f) Public Provident Fund (PPF) 8,51,913 8,58,591 8,64,731 9,39,449 (g) Pension Funds 7,44,459 7,96,454 8,53,412 8,98,343 (h) Small Savings (excluding PPF) 16,40,871 16,91,985 17,29,353 17,86,563 Financial Liabilities (a+b) 89,11,861 92,46,741 97,00,657 1,02,17,746 Per cent of GDP 35.8 35.9 36.8 37.9 Loans/Borrowings (a) Banking Sector 70,95,468 73,58,918 77,29,701 81,13,546 of which: i. Commercial Banks 66,20,073 68,81,338 72,49,643 75,80,936 ii. Co-operative Banks 4,73,897 4,76,025 4,78,487 5,30,915 (b) Other Financial Institutions 18,16,393 18,87,823 19,70,956 21,04,201 of which: i. Non-Banking Financial Companies 8,69,175 9,05,825 9,61,617 10,56,182 ii. Housing Finance Companies 8,35,181 8,68,213 8,93,116 9,29,862 iii. Insurance Corporations 1,12,037 1,13,785 1,16,223 1,18,157 RBI Bulletin January 2025 173CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Concld.) (Amount in ` Crore) Item Jun-2023 Sep-2023 Dec-2023 Mar-2024 Financial Assets (a+b+c+d+e+f+g+h) 2,87,56,851 2,96,44,299 3,07,47,010 3,19,86,847 Per cent of GDP 104.6 105.4 106.6 108.3 (a) Bank Deposits (i+ii) 1,29,62,575 1,34,68,783 1,37,48,656 1,41,43,228 i. Commercial Banks 1,20,67,764 1,25,74,464 1,28,57,001 1,32,44,314 ii. Co-operative Banks 8,94,811 8,94,319 8,91,655 8,98,914 (b) Non-Bank Deposits of which: Other Financial Institutions 2,28,077 1,20,095 1,25,432 1,27,257 i. Non-Banking Financial Companies 91,373 96,156 1,01,051 1,02,994 ii. Housing Finance Companies 1,36,703 23,939 24,381 24,263 (c) Life Insurance Funds 60,64,437 62,55,801 65,53,726 67,69,272 (d) Currency 30,72,878 30,36,177 30,92,896 32,39,540 (e) Mutual funds 26,26,046 28,29,859 31,56,299 33,87,208 (f) Public Provident Fund (PPF) 9,55,061 9,60,344 9,64,852 10,51,376 (g) Pension Funds 9,70,016 10,17,975 10,91,276 11,72,651 (h) Small Savings (excluding PPF) 18,77,761 19,55,265 20,13,873 20,96,314 Financial Liabilities (a+b) 1,05,39,266 1,10,65,282 1,15,75,799 1,20,96,412 Per cent of GDP 38.3 39.3 40.2 41.0 Loans/Borrowings (a) Banking Sector 83,27,152 91,96,026 95,98,673 99,91,003 of which: i. Commercial Banks 77,88,962 86,64,616 90,54,514 94,37,072 ii. Co-operative Banks 5,36,409 5,29,528 5,42,241 5,51,852 (b) Other Financial Institutions 22,12,114 18,69,256 19,77,126 21,05,409 of which: i. Non-Banking Financial Companies 11,37,631 11,97,315 12,82,347 13,83,183 ii. Housing Finance Companies 9,53,646 5,49,352 5,70,585 5,96,438 iii. Insurance Corporations 1,20,837 1,22,590 1,24,194 1,25,788 Note : 1. Data as ratios to GDP have been calculated based on the Provisional Estimates of National Income 2023-24, released by NSO on May 31, 2024. 2. Pension funds comprises funds with the National Pension Scheme. 3. Outstanding deposits with Small Savings are sourced from the Controller General of Accounts, Government of India. 4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc. Data for outstanding deposits are available only for other financial institutions. 5. Figures in the columns may not add up to the total due to rounding off. 174 RBI Bulletin January 2025CURRENT STATISTICS Explanatory Notes to the Current Statistics Table No. 1 1.2& 6: Annual data are average of months. 3.5 & 3.7: Relate to ratios of increments over financial year so far. 4.1 to 4.4, 4.8,4.9 &5: Relate to the last friday of the month/financial year. 4.5, 4.6 & 4.7: Relate to five major banks on the last Friday of the month/financial year. 4.10 to 4.12: Relate to the last auction day of the month/financial year. 4.13: Relate to last day of the month/ financial year 7.1&7.2: Relate to Foreign trade in US Dollar. Table No. 2 2.1.2: Include paid-up capital, reserve fund and Long-Term Operations Funds. 2.2.2: Include cash, fixed deposits and short-term securities/bonds, e.g., issued by IIFC (UK). Table No. 4 Maturity-wise position of outstanding forward contracts is available at http://nsdp.rbi.org.in under ‘‘Reserves Template’’. Table No. 5 Special refinance facility to Others, i.e. to the EXIM Bank, is closed since March 31, 2013. Table No. 6 For scheduled banks, March-end data pertain to the last reporting Friday. 2.2: Exclude balances held in IMF Account No.1, RBI employees’ provident fund, pension fund, gratuity and superannuation fund. Table Nos. 7 & 11 3.1 in Table 7 and 2.4 in Table 11: Include foreign currency denominated bonds issued by IIFC (UK). Table No. 8 NM and NM do not include FCNR (B) deposits. 2 3 2.4: Consist of paid-up capital and reserves. 2.5: includes other demand and time liabilities of the banking system. Table No. 9 Financial institutions comprise EXIM Bank, SIDBI, NABARD and NHB. L and L are compiled monthly and L quarterly. 1 2 3 Wherever data are not available, the last available data have been repeated. Table No. 13 Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional. RBI Bulletin January 2025 175CURRENT STATISTICS Table No. 14 Data in column Nos. (4) & (8) are Provisional. Table No. 17 2.1.1: Exclude reserve fund maintained by co-operative societies with State Co-operative Banks 2.1.2: Exclude borrowings from RBI, SBI, IDBI, NABARD, notified banks and State Governments. 4: Include borrowings from IDBI and NABARD. Table No. 24 Primary Dealers (PDs) include banks undertaking PD business. Table No. 30 Exclude private placement and offer for sale. 1: Exclude bonus shares. 2: Include cumulative convertible preference shares and equi-preference shares. Table No. 32 Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign currency assets in US dollar take into account appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at rupee-US dollar RBI holding rates. Table No. 34 1.1.1.1.2 & 1.1.1.1.1.4: Estimates. 1.1.1.2: Estimates for latest months. ‘Other capital’ pertains to debt transactions between parent and subsidiaries/branches of FDI enterprises. Data may not tally with the BoP data due to lag in reporting. Table No. 35 1.10: Include items such as subscription to journals, maintenance of investment abroad, student loan repayments and credit card payments. Table No. 36 Increase in indices indicates appreciation of rupee and vice versa. For 6-Currency index, base year 2021-22 is a moving one, which gets updated every year. REER figures are based on Consumer Price Index (combined). The details on methodology used for compilation of NEER/REER indices are available in December 2005, April 2014 and January 2021 issues of the RBI Bulletin. Table No. 37 Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period. 176 RBI Bulletin January 2025CURRENT STATISTICS Table Nos. 38, 39, 40 & 41 Explanatory notes on these tables are available in December issue of RBI Bulletin, 2012. Table No. 43 Part I-A. Settlement systems 1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018. Part I-B. Payments systems 4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc. 4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc. 5: Available from December 2010. 5.1: includes purchase of goods and services and fund transfer through wallets. 5.2.2: includes usage of PPI Cards for online transactions and other transactions. 6.1: Pertain to three grids – Mumbai, New Delhi and Chennai. 6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks. Part II-A. Other payment channels 1: Mobile Payments – Include transactions done through mobile apps of banks and UPI apps. o The data from July 2017 includes only individual payments and corporate payments initiated, o processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and authorised using mobile device are excluded. 2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank. Part II-B. ATMs 3.3 and 4.2: only relates to transactions using bank issued PPIs. Part III. Payment systems infrastructure 3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards. Table No. 45 (-) represents nil or negligible The table format is revised since monthly Bulletin for the month of June 2023. Central Government Dated Securities include special securities and Sovereign Gold Bonds. State Government Securities include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). Bank PDs are clubbed under Commercial Banks. The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/ Individuals etc. Data since September 2023 includes the impact of the merger of a non-bank with a bank. RBI Bulletin January 2025 177CURRENT STATISTICS Table No. 46 GDP data is based on 2011-12 base. GDP for 2023-24 is from Union Budget 2023-24. Data pertains to all States and Union Territories. 1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments. 1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions. 2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments. 3A.1.1: Data as per RBI records. 3B.1.1: Borrowings through dated securities. 3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF). This data may vary from previous publications due to adjustments across components with availability of new data. 3B.1.6: Include Ways and Means Advances by the Centre to the State Governments. 3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account. Table No. 47 SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government securities. WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches. OD is advanced to State Governments beyond their WMA limits. Average amount Availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for which accommodation was extended during the month. - : Nil. Table No. 48 CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. ATBs include Treasury bills of 91 days, 182 days and 364 days invested by State Governments in the primary market. --: Not Applicable (not a member of the scheme). The concepts and methodologies for Current Statistics are available in Comprehensive Guide for Current Statistics of the RBI Monthly Bulletin (https://rbi.org.in/Scripts/PublicationsView.aspx?id=17618) Time series data of ‘Current Statistics’ is available at https://data.rbi.org.in. Detailed explanatory notes are available in the relevant press releases issued by RBI and other publications/releases of the Bank such as Handbook of Statistics on the Indian Economy. 178 RBI Bulletin January 2025RREECCEENNTT PPUUBBLLIICCAATTIIOONNSS Recent Publications of the Reserve Bank of India Name of Publication Price India Abroad 1. Reserve Bank of India Bulletin2024 `350 per copy US$ 15 per copy `250 per copy (concessional rate*) US$ 150 (one-year subscription) `4,000 (one year subscription) (inclusive of air mail courier charges) `3,000 (one year concessional rate*) 2. Handbook of Statistics on theIndian `550 (Normal) US$ 24 States 2023-24 `600 (inclusive of postage) (inclusive of air mail courier charges) 3. Handbook of Statistics on theIndian `600 (Normal) US$ 50 Economy 2023-24 `650 (inclusive of postage) (inclusive of air mail courier charges) `450 (concessional) `500 (concessional with postage) 4. State Finances - `600 per copy (over the counter) US$ 24 per copy A Study of Budgets of 2024-25 `650 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 5. Report on Currency and Finance `575 per copy (over the counter) US$ 22 per copy 2023-24 `625 per copy (inclusive of postal charges) (inclusive of air mail courier charges) 6. 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Banking Glossary (English-Hindi) `100 per copy (over the counter) `150 per copy (inclusive of postal charges) Notes 1. Many of the above publications are available at the RBI website (www.rbi.org.in). 2. Time Series data are available at the Database on Indian Economy (https://data.rbi.org.in). 3. The Reserve Bank of India History 1935-2008 (5 Volumes) are available at leading book stores in India. * Concession is available for students, teachers/lecturers, academic/education institutions, public libraries and Booksellers in India provided the proof of eligibility is submitted. RBI Bulletin January 2025 179RREECCEENNTT PPUUBBLLIICCAATTIIOONNSS General Instructions 1. All communications should be addressed to: Director, Division of Reports and Knowledge Dissemination, Department of Economic and Policy Research (DRKD, DEPR), Reserve Bank of India, Amar Building, Ground Floor, Sir P. M. Road, Fort, P. B. No.1036, Mumbai - 400 001. Telephone: 022- 2260 3000 Extn: 4002, Email: spsdepr@rbi.org.in. 2. Publications are available for sale between 10:30 am to 3:00 pm (Monday to Friday). 3. Publications will not be supplied on a cash-on-delivery basis. 4. Publications once sold will not be taken back. 5. Back issues of the publication are generally not available. 6. Wherever concessional price is not indicated, a discount of 25 per cent is available for students, faculty, academic/education institutions, public libraries, and book sellers in India provided the proof of eligibility is submitted. 7. Subscription should be made preferably by NEFT and transaction details including payer’s name, subscription number (if any), account number, date and amount should be emailed to spsdepr@rbi.org.in, or sent by post. a. Details required for NEFT transfer are as follows: Beneficiary Name Department of Economic and Policy Research, RBI Name of the Bank Reserve Bank of India Branch and address Fort, Mumbai IFSC of Bank Branch RBIS0MBPA04 Type of Account Current Account Account Number 41-8024129-19 b. In case of subscription through non-digital modes, please send the demand draft/cheque payable at Mumbai in favour of Reserve Bank of India, Mumbai. 8. Complaints regarding ‘non-receipt of publication’ may be sent within a period of two months. 180 RBI Bulletin January 2025