fearful symmetry

fearful symmetry
The chart pack January 14

fearful symmetry
Executive summary

fearful symmetry
India: real growth and economy wide prices
12 11 10 9 8 7 6 5 4 3 2
GDP IPD
Sources: Westpac Economics, CEIC.

Sep 2012 Dec 2012 Mar-2013 Jun-2013

Sep-13

Real GDP

10

11

12

fearful symmetry
Indian business confidence & nominal GDP
220 index
Sources: CEIC, Westpac Economics. * Smoothed.

%yr

25

200
180 160 140 120 100

23
21 19 17 15 13 11
D&B business confidence (lhs)
Nominal GDP (lhs)

9 7 5

80 Sep-02

Sep-04

Sep-06

Sep-08

Sep-10

Sep-12

Sep-14
4

fearful symmetry
Indian industrial output
30 25 20 15 10 5 0 -5
Sources: CEIC, Westpac Economics. 3mma.

%yr
Total (lhs) Infrastructure industries (lhs) Capital goods (rhs) Consumer durables (lhs)

%yr

60 50 40 30 20 10 0 -10 -20

-10 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

5

fearful symmetry
Infrastructure related industries: output
30 20 10 %yr
Sources: CEIC, Westpac Economics. 3mma.

%yr

30 20 10

0
-10 Infrastructure index Steel Power

0
-10

-20 Jan-01

-20 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

6

fearful symmetry
Infrastructure related industries: output
60 50 40 30 20 10 0 -10
Sources: CEIC, Westpac Economics. 3mma.

%yr
Infrastructure index Steel Coal Cement Power

%yr

60 50 40 30 20 10 0 -10

-20 Jan-01

-20 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

7

fearful symmetry
Indian industrial output & non-oil imports
%yr 70 60 50 40 30
Sources: CEIC, Westpac Economics. 3mma.

%yr 70 60 50 40 30

20
10 0 -10 -20
Total IP
Capital goods Consumer durables

20
10 0 -10 -20

-30 Jan-01

Non-oil imports

-30 Jan-07 Jan-09 Jan-11 Jan-13

8

Jan-03

Jan-05

fearful symmetry
Autos sales by type
60 50 40 30 20 10 0 -10
Total (lhs) Passenger cars (lhs, 13%) Two wheelers (lhs, 75%) Exports, total (lhs, 13%) Commercial vehicles (rhs, 4%)

%yr
Sources: CEIC, Westpac Economics. Rounded share of unit sales in parentheses. Other (principally 3 wheelers) accounts for 8%. Note exports and other sales segments overlap.

%yr

150 125 100 75 50 25 0 -25

-20
-30 Jan-04

-50
Jan-10 Jan-12 -75 Jan-14
9

Jan-06

Jan-08

fearful symmetry
Urban & rural household consumption shares
60
50 40
37

%
Cereals Fruit & veg Non food 46 Proteins & oils Other food 59

60
50 40 30

45

30

24 21 16 10 19 14 21 16 12 11

20
10 0

20
6
10

10 0

Rural 1994

Rural 2010

Urban 1994

Urban 2010

10

fearful symmetry
Indias manufacturing PMI
75 index ratio 1.5

70
65 60 55 50 45 40 35 Jan-05
Production (lhs) Headline (lhs) Orders to inventories (rhs)
Sources: Markit.

1.4
1.3 1.2 1.1 1.0 0.9 0.8 0.7 Jan-07 Jan-09 Jan-11 Jan-13

11

fearful symmetry
Indias manufacturing PMI: selected detail
60 index
Sources: Markit.

ratio

1.5

1.4
1.3 1.2

55

50

1.1 1.0

45

Finished goods inventories Order backlog

0.9 0.8 0.7 Jan-11 Jan-13

40 Jan-05

Orders to inventories (rhs)

Jan-07

Jan-09

12

fearful symmetry
India: services sector PMI
65 60 55 50
Business activity

index

index

65 60 55 50 45

45
Sources: CEIC, Markit.

New business

40 Dec-05

40 Jun-07 Dec-08 Jun-10 Dec-11 Jun-13

13

fearful symmetry
Indias formal labour market
59 57 55 53 51 49
Sources: CEIC, Markit. Job indexes from the PMI surveys.

index
Manufacturing Services Composite

index

59 57 55 53 51 49 47

47 Jan-05

Jan-07

Jan-09

Jan-11

Jan-13

14

fearful symmetry
Indian residential property prices
300
250
Kolkata Mumbai

index
All India Delhi Bangalore

index

300
250 200

200

150
100

Sources: CEIC, RBI. Indices based at 2009Q4.

150
100 50

50 Jun-03

Jun-05

Jun-07

Jun-09

Jun-11

Jun-13
15

fearful symmetry
Indian central business district rental rates
500
450
Delhi R per sq foot
Sources: CEIC, Colliers.

R per sq foot

500
450 400

400
Mumbai

350 300 250 200 Mar-07

350 300 250 200

Sep-08

Mar-10

Sep-11

Mar-13
16

fearful symmetry
Various price measures & economic growth
20 16 12 8 4 0
Sources: CEIC, Westpac Economics.

%yr
GDP deflator Real secondary output Real non-farm GDP Industrial workers CPI WPI

%yr

20 16 12 8 4 0 -4

-4 Jun-97

Jun-00

Jun-03

Jun-06

Jun-09

Jun-12
17

fearful symmetry
Indian activity: farm, non-farm & total
12 9 6 3 0 -3 -6 -9 Mar-99 Mar-02 Mar-05
Farm GDP (lhs) Non-farm GDP (rhs) Total GDP (rhs)

% annual avg
Sources: CEIC, Westpac Economics.

% annual avg

14 12 10 8 6 4 2 0

Mar-08

Mar-11

Mar-14

18

fearful symmetry
Indian GDP: real & nominal estimates
25
20 15 10 5 0
Sources: CEIC, Westpac Economics.

%
Deflator %yr Real %yr Nominal %yr

25
20 15 10 5 0

-5 -5 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13

19

fearful symmetry
Indian GDP by industry
20 15 10 5 0
Sources: CEIC, Westpac Economics.

%yr
Construction Trade, transport & communications Manufacturing Finance, property & business services

%yr

20 15 10 5 0 -5

-5 Mar-98

Mar-01

Mar-04

Mar-07

Mar-10

Mar-13
20

fearful symmetry
Contributions to growth: analytical split
12 10 8 6 4 2 0 -2 -4 Jun-97 Jun-00 Jun-03
Other Interest rate sensitive Primary

ppt
Sources: CEIC, Westpac. Contribution to year-ended rate.

ppt

12 10 8 6 4 2 0 -2 -4

Jun-06

Jun-09

Jun-12
21

fearful symmetry
Contributions to growth in value added
12 10 8 6 ppt
Other services Trade, transport & communications Manufacturing Finance, property & business services Construction & utilities Primary

ppt

12 10 8 6

4
2 0 -2 Jun-05
Sources: CEIC, Westpac. Contribution to year-ended rate.

4
2 0 -2 Jun-09 Jun-11 Jun-13
22

Jun-07

fearful symmetry
Indian GDP by expenditure
15 12 9 6 5 3 0 -3 Jun-05 0 -5 -10 Jun-07 Jun-09 Jun-11 Jun-13
23

%yr
Sources: CEIC, Westpac Economics. * Smoothed.

%yr
Private consumption (lhs) Public consumption* (rhs) Fixed investment (rhs) Non-farm GDP (lhs)

25

20
15 10

fearful symmetry
Indian GDP by expenditure
60 50 40 30 20 10 0 -10 -20 Jun-05Jun-06Jun-07Jun-08Jun-09Jun-10Jun-11Jun-12Jun-13 %yr
Sources: CEIC, Westpac Economics.

%yr
Public consumption Imports Exports

60 50 40 30 20 10 0 -10 -20

24

fearful symmetry
Contributions to monthly WPI inflation
ppt 2.0 1.5 1.0 0.5
Sources: CEIC, Westpac. 3 month averages.

ppt 2.0 1.5 1.0 0.5

0.0
-0.5 -1.0 -1.5 Jan-05
Other Energy Food- primary Food - manuf Non-food manuf Total

0.0
-0.5 -1.0 -1.5 Jan-09 Jan-11 Jan-13
25

Jan-07

fearful symmetry
Indian wholesale inflation
%yr %yr

25 20
15 10 5 0 -5

Non-food manufactures Primary articles - food Headline Manufactures

25 20
15 10 5 0

Sources: CEIC, Westpac

-5 -10

-10 Apr-05

Apr-07

Apr-09

Apr-11

Apr-13
26

fearful symmetry
Wholesale price inflation: various measures
18
15 12 9 6 3 0 -3
%6mth ann.
ETMs (lhs) Non-food manufacturing (lhs) Protein basket (rhs)

%6mth ann.

45
36 27 18 9 0 -9

-6

Sources: CEIC, Westpac Economics. ETMs are elaborately transformed manufactures.

-18 -27

-9 Apr-05

Apr-07

Apr-09

Apr-11

Apr-13
27

fearful symmetry
Wholesale inflation: non-food manufactures
18 15 12 9 6 3 0 -3
%yr %3mth ann. %6mth ann.
Sources: CEIC, Westpac Economics.

%chg

%chg

18 15 12 9 6 3 0 -3

-6
-9 Apr-05

-6
-9

Apr-07

Apr-09

Apr-11

Apr-13
28

fearful symmetry
Wholesale price inflation: selected measures
18
15 12 9 6 3 0 -3 %chg
ETMs %yr ETMs 6mth ann.

%chg
Non-food manuf. %yr Non-food manuf. 6mth ann.

18
15 12 9 6 3 0 -3

-6
-9 Apr-05

Sources: CEIC, Westpac Economics.

-6
-9

Apr-07

Apr-09

Apr-11

Apr-13
29

fearful symmetry
Demand side inflation: protein & ETMs
50
40 30 20 10 0
Sources: CEIC, Westpac Economics.

%chg
Protein basket %yr (lhs) ETMs %yr (rhs)

%chg
Protein basket %6mth ann. (lhs) ETMs %6mth ann. (rhs)

10
8 6 4 2 0 -2

-10 Apr-05

Apr-07

Apr-09

Apr-11

Apr-13
30

fearful symmetry
Indian inflation: protein rich food basket
50 40 30 20 10 0
Sources: CEIC, Westpac Economics.

%chg
%yr %3mth annualised %6mth annualised

%chg

50 40 30 20 10 0 -10

-10 Apr-05

Apr-07

Apr-09

Apr-11

Apr-13
31

fearful symmetry
Inflation indicators from the business surveys
40 30 20 10 0 -10 -20 Jun-05
Selling prices (RBI, lhs) Capacity utilisation (RBI, lhs) Profit margins (RBI, lhs) Selling prices (Dun & Bradstreet, rhs) Sources: CEIC, Westpac Economics.

Net bal.

Net bal.

60 45 30 15 0 -15 -30

Jun-07

Jun-09

Jun-11

Jun-13
32

fearful symmetry
Indias foreign trade
100 80 60 40 %yr %yr
Sources: CEIC, Westpac. Underlying data in USDs, smoothed.

100 80 60 40

20
0 -20 -40 Jan-04
Exports Oil imports Non-oil imports

20
0 -20 -40 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14

33

fearful symmetry
Indian export growth
120 %yr
Sources: CEIC, Westpac. Underlying data in USDs.

%yr

120

100
80 60 40 20 0 -20

100
80 60 40 20 0

-40 Jan-04

Total goods Software services Engineering goods

-20 Jan-10 Jan-12 -40 Jan-14

Jan-06

Jan-08

34

fearful symmetry
Oil prices in INR terms
100 75 50 25 0 -25
Sources: CEIC, Westpac Economics. 3mma.

%yr
Fateh Brent

%yr

100 75 50 25 0 -25 -50

-50 Jan-01

Jan-03

Jan-05

Jan-07

Jan-09

Jan-11

Jan-13
35

fearful symmetry
The gold price in INR and USD terms
%yr 80 70 USD 60 INR 50 40 30 20 10 0 -10 Sources: CEIC, Westpac Economics. 3mma. -20 -30 Jan-01 Jan-03 Jan-05 Jan-07 %yr 80 70 60 50 40 30 20 10 0 -10 -20 -30

Jan-09

Jan-11

Jan-13
36

fearful symmetry
Indias goods & services trade balance
45 30 15 0 -15 -30 -45 -60 -75 Dec-02
Other invisibles Services Oil Other merchandise Gold

USDbn
Sources: CEIC, Westpac Economics

USDbn

45 30 15 0 -15 -30 -45 -60 -75

Dec-05

Dec-08

Dec-11

37

fearful symmetry
Decomposing changes in the real rupee
20
15 10 5 ppt ppt

20
15 10 5

0
-5 -10 -15 -20 -25 -30 Jan-96
Relative price level Nominal exchange rate Real exchange rate USD/INR

0
-5 -10 -15 -20 -25 -30 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11

Source: BIS, Westpac. Contributions to 12 month changes.

38

fearful symmetry
The rupee against the major currencies
160 150
140 130 120 110 100
Sources: CEIC, Westpac Economics. Indices based at January 1, 2011.

index
USD EUR JPY GBP
Foreign currency strengthens

index

160 150
140 130 120 110 100 90

90 Jan-11

Jul-11

Mar-12

Sep-12

May-13

Nov-13
39

fearful symmetry
The rupee and Mumbai interbank rates
160 150
140 130 120 110 100 90 Jan-11
Sources: CEIC, Westpac Economics. USD/INR index based at January 1, 2011.

index
INR per USD (lhs) Overnight mid (rhs) 3mth mid (rhs)

%pa

12 11
10 9 8 7 6 5

Jul-11

Mar-12

Sep-12

May-13

Nov-13
40

fearful symmetry
USD/INR versus stagflation proxy*
70

INR
USD/INR (lhs)

ratio
PMI based stagflation* (rhs, inverted)

0.6 0.7 0.8 0.9 1.0 1.1

66
62 58 54 50 46 42 38 Apr-06

Sources: Westpac, Bloomberg, Markit

* Manufacturing PMI: Production index over output prices index

1.2
1.3

Jul-07

Oct-08

Jan-10

Apr-11

Jul-12

Oct-13
41

41

fearful symmetry
Gross portfolio liabilities & FX reserves
% of GDP

India Philippines

Debt Equity Total portfolio

21 31 14

Indonesia

FX reserves
Malaysia

41

China 48 58 Thailand
Sources: CEIC, IMF, Westpac.

42

fearful symmetry
Investment share of GDP: then and now
50 45

Investment % GDP
Sources: IMF, Westpac Economics.

1996 2012

40
35 30 25 20 15 10
India Indonesia Korea Taiwan Thailand Malaysia Philippines Singapore Hong Kong China Japan

43

fearful symmetry
Current account balances: then and now
20 15 10 5 0 -5 -10 1996 2012

CA % GDP
Sources: IMF, Westpac Economics.

India

Indonesia

Korea

Taiwan

Thailand

Malaysia Philippines Singapore Hong Kong

China

Japan

44

fearful symmetry
Net foreign portfolio inflows by type: weekly
250 200 150 100 50 0 -50 -100
Net debt Net equity Total
RBI cuts by 50bps ECB OMTs announced FDI law passed QE Taper rumours Actual taper

Rbn
Mukherjee LTRO #2 wins Presidential Election Rise in P. Chidambaram debt new Finance quotas Minister Mukherjees Budget Kelkar Committee Report Big Bang Friday Obama Re-election & Fiscal cliff concerns
Sources: CEIC, Westpac Economics. Rolling weekly totals.

Rbn
P. Chidambarams Budget Rajan new RBI Governor No Taper, then RBI hike(s)

250 200 150 100 50 0 -50 -100 -150

January risk rally QE3 RBI cut announced By 25bps

RBI cut By 25bps

RBI INR stability measures

-150 Jan-12

Jun-12

Dec-12

May-13

Nov-13

45

fearful symmetry
Cumulative net foreign inflows by type
7000 6000 5000 4000 3000 2000 1000 0 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Net debt Net equity

Rbn
Sources: CEIC, Westpac Economics.

Rbn

7000 6000 5000 4000 3000 2000 1000 0

46

fearful symmetry
Non-resident holdings of EM government debt*
100 90 80 70 60 50 40 30 20 10 0
% of total
Sources: IMF, Westpac Economics. *General government debt outstanding.

ARP BRL BULG CLP KRW COL EGY HUF INR

IDR JOR KZK LAT LITH MYR MEX MOR PER POL ROM RUS ZAR THB TKL UKR

47

fearful symmetry
Net foreign portfolio inflows by type
400 300 200 100 Rbn
Net debt Net equity Total

Rbn

400 300 200 100

0
-100 -200 -300 -400
Sources: CEIC, Westpac Economics.

0
-100 -200 -300 -400 Jan-10 Jan-12 -500 Jan-14

-500 Jan-04

Jan-06

Jan-08

48

fearful symmetry
Investment, savings, FDI & the twin deficits
42 CEIC, 40 Sources: Westpac Economics. 38 36 34 32 Investment 30 4 Current Account 2 0 -2 -4 -6 -8 -10 Mar-05 Mar-07 %GDP %GDP 42 40 38 36 34 32 30 4 2 0 -2 -4 -6 -8 -10

Savings

Savings plus net FDI

Capital & financial account inverted

Revenue deficit

Mar-09

Mar-11

Mar-13
49

fearful symmetry
Foreign capital inflow & domestic investment
60 %yr
Other (mainly loans) Portfolio investment Direct investment Capital goods output (lhs) Basic balance
Global boom QE era

%GDP

40

20

0
Sources: CEIC, Westpac Economics. Four quarter sums ex capital goods output.

-20 -3 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 Jun-12 Jun-14

50

fearful symmetry
Foreign bank claims on India
350 300 250 $USbn
US (22%) UK (25%) Japan (6%) Europe (47%)
Change over the year (rhs)

$USbn

120 100 80 60 40 20 0 -20 -40

200
150 100 50

Total outstanding (lhs)

Sources: BIS, Westpac. Shares of total outstanding as of Dec-2010 in parentheses.

0 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12

51

fearful symmetry
Foreign bank claims on India
60 50 40 30 20 10 0 -10 -20 -30
Sources: BIS, Westpac. Shares of total outstanding as of Dec-2010 in parentheses.

$USbn
US (22%) UK (25%) Japan (6%) Europe (47%)

$USbn
Change over 6 months

60 50 40 30 20 10 0 -10 -20 -30 -40

Total

-40 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12

52

fearful symmetry
Foreign bank claims: South & South-east Asia
200 180 160 140 120 100 80 60 40 20
Sources: BIS, Westpac. Total outstanding indexed to Sep-08.

index
Malaysia Philippines Indonesia Thailand India

index

200 180 160 140 120 100 80 60 40 20 0

0 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12

53

fearful symmetry
Foreign direct investment inflows by sector
Other, 16.3

Primary industry, 3.3

Construction and infrastructure, 15.8

Real estate, 4.4

IT manuf, 3.5 Pharma manuf, 7.0

Other non-financial services, 14.0

Communication services, 9.4 Financial services, 4.2

Other manuf, 22.0

Sources: CEIC, Westpac Economics. Sum of inflows from 2010 and 2011

54

fearful symmetry
RBI credit to the banking system
450
400 350 300 250 200 150 100 55
R bn
Sources: CEIC, Westpac Economics.

ratio
Loans and advances from the RBI (lhs) Credit-deposit ratio (rhs)

65

60

50
0 50 Mar-99 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13
55

fearful symmetry
RBI credit to banks: volume and price
450
400 350 300 250 200 150 100
R bn
Loans and advances from the RBI (lhs) Marginal standby facility rate (rhs)

%pa

11
10 9 8 7

50

Sources: CEIC, Westpac Economics.

0 5 Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13

56

fearful symmetry
Indian monetary policy, activity and inflation
64 60 56 52 48 44 Mar-04
Rate corridor (rhs) Manufacturing PMI (lhs) WPI (rhs) Core inflation (rhs)

index
Sources: CEIC, Westpac Economics.

%pa/yr

12

10
8 6 4 2 0 Mar-10 Mar-12 -2 Mar-14
57

Mar-06

Mar-08

fearful symmetry
Commercial credit and nominal activity
40

%yr
Non-food commercial credit (lhs)

%yr
Sources: CEIC, Westpac Economics.

30

30

Nominal GDP (rhs)

20

20

10

10 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12

58

fearful symmetry
Bank liquidity and credit supply
40 30 20 10 0
Sources: CEIC, Westpac Economics.

%yr

%yr
Loan to deposit growth differential Resident deposits Private credit

40 30 20 10 0

-10 Mar-04

Mar-06

Mar-08

Mar-10

Mar-12

-10 Mar-14
59

fearful symmetry
Indian money and credit aggregates
35 30 25 20 %yr %yr
Sources: CEIC, Westpac. * Deposits less CRR & SLR.

35 30 25 20

15
10 5 0 Jan-04 M1 Credit Jan-06 M3 DXRR* Jan-08 Jan-10 Jan-12

15
10 5 0 Jan-14

60

fearful symmetry
Indian bank liquidity and commercial credit
35 30 25 20 15 10 5 Jan-02 DXRR* (lhs) Commercial credit (lhs) Loan to deposit ratio^ (rhs) Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 %yr %
Sources: CEIC, Westpac. * Resident deposits less the CRR and SLR. ^ Stock of commercial credit to stock of DXRR.

125 120 115 110 105 100

95 Jan-14

61

fearful symmetry
Indian bank loans by sector & purpose
150 %yr Construction Infrastructure Consumer durables Housing %yr
Sources: CEIC, Westpac.

150

125
100 75 50 25 0 -25 -50 Jan-04 Jan-06

125
100 75 50 25 0 -25 -50

Jan-08

Jan-10

Jan-12

Jan-14

62

fearful symmetry
Indian bank loans to infrastructure
150 120 90 60 30 0
Sources: CEIC, Westpac.

%yr Total Road Power Other Telco

%yr

150 120 90 60 30 0

-30 Mar-04

Mar-06

Mar-08

Mar-10

Mar-12

-30 Mar-14

63

fearful symmetry
Central government revenues & outlays
40 30 20 10 0 -10 -20
%yr %yr

Tax revenues
Sources: CEIC, Westpac Economics. Rolling twelve months for historical data, budget estimate at outset of the year in question.

40 30 20 10 0 -10 -20
40 30 20 10 0 -10

40 Actual 30 Budgeted 20 10 0 -10 Jan-00 Jan-03

Expenditure

Jan-06

Jan-09

Jan-12

64

fearful symmetry
Central government expenditure growth
40 30 20 10 0
Sources: CEIC, Westpac Economics. Rolling twelve months.

%yr
Total Plan Non-plan

%yr

40 30 20 10 0 -10

-10 Jan-00

Jan-03

Jan-06

Jan-09

Jan-12
65

fearful symmetry
Non-Plan outlays: actual & budget
40 30 20 10 0
Sources: CEIC, Westpac Economics. Rolling twelve months for historical data, budget estimate at outset of the year in question.

%yr
Actual Non-Plan spending Budgeted Non-Plan spending

%yr

40 30 20 10 0 -10

-10 Jan-00

Jan-03

Jan-06

Jan-09

Jan-12
66

fearful symmetry
Plan outlays: actual & budget
40 30 20 10 0
Sources: CEIC, Westpac Economics. Rolling twelve months for historical data, budget estimate at outset of the year in question.

%yr
Actual Plan spending
Budgeted Plan spending

%yr

40 30 20 10 0 -10

-10 Jan-00

Jan-03

Jan-06

Jan-09

Jan-12
67

fearful symmetry
The subsidy bill and the oil price
105 %yr
Fateh oil price, INR terms Budgeted Subsidy spending

%yr

105

90
75 60 45 30 15 0 -15 -30 -45 Jan-00

90
75 60 45 30 15 0 -15

Sources: CEIC, Westpac Economics.

-30 -45 Jan-12

68

Jan-03

Jan-06

Jan-09

fearful symmetry
Real net fixed capital stock growth by decade
12
CAGR %
1981-91 1991-01 2001-11

9
Sources: Westpac, CEIC.

0 Total Public Private firms Households

69

fearful symmetry
Capital efficiency in India and China
2 3 4 5 6 7
China India

ICOR*

ICOR*

2 3 4 5 6 7 8

Sources: CEIC, Westpac. * Incremental capital to output ratio: GCF/GDP / GDP growth rate. A falling ratio indicates greater efficiency, a rising ratio lesser efficiency. In this chart, as the series is inverted, a rising curve is an improvement in efficiency, and vice versa.

8 Mar-05

Mar-07

Mar-09

Mar-11

Mar-13

70

fearful symmetry
India: investment and its efficiency
12 ICOR
Sources: Westpac Economics, CEIC.

More investment, less efficient, in CY2013 GFC downswing & rebound

10 8 6 4 2 32 34 36 38
Gross investment share
2012/13: Annus horribilis: Less investment & less efficient

Rising share, stable high efficiency: Golden years

Recovery & stimulus overhang

40

42
71

fearful symmetry
Is there a threshold inflation effect on growth?
12 GDP IPD
Sources: Westpac Economics, CEIC. * Quarterly sample, Jun-97 to Mar-12

11
10 9 8 7 6 5

Black triangles are actuals for the period Sep-09 to Sep-12

Dec-12 Mar-13 Sep-13 Jun-13
Khaki circles are actuals for the period Mar-04 to Dec-07

4
3 2

Empirically estimated Growth-Inflation Curve*

Real GDP

10

11
72

fearful symmetry
The 4 Cs: crime, courts, corruption, contracts
60 50 40 30 20 10 0
China India Indonesia

%
Corruption* Courts* Contracts^ Crime*

% 56
Source: World Bank. * Share of managers nominating as a constraint on business. Courts refers to confidence in courts upholding property rights. ^ Number of procedures to enforce a contract.

60 50 40 30

42 34 25 25 12

41

27

31 18 20

22 20 10 0

73

fearful symmetry
Income level per capita & its distribution
70 60 50 40
Gini index South Africa Colombia China Thai Brazil Chile Mexico Russia US
Sources: Westpac Economics, WDI

Indon.

30
India Malaysia

Poland
Wealthy OECD

PPP GDP per head

20 0 10 20 30 40 50 60

74

fearful symmetry
The key points reiterated

75

fearful symmetry
Disclaimer
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