The Reserve Bank of India today released the September 2017 issue of its monthly Bulletin. The Bulletin includes Speeches by the Top Management, two Articles and Current Statistics. The two Articles are: I. Monthly Seasonal Factors of Selected Economic Time Series, 2016-17; and II. Private Corporate Investment: Growth in 2016-17 and Prospects for 2017-18.

I. Monthly Seasonal Factors of Selected Economic Time Series, 2016-17

Seasonal adjustment of macroeconomic variables helps in estimating underlying sequential changes and understanding inter-relationships. This annual article, which is 38th in the series, presents monthly seasonal factors of 76 major macroeconomic variables covering five categories, i.e., monetary and banking indicators (14 series), price indices (30 series), industrial production (23 series), services sector indicators (6 series) and merchandise trade (3 series).

The seasonal factors have been estimated using X-13-ARIMA software package developed by the US Census Bureau, after suitably configuring it to suit the Indian conditions (e.g., trading day effect, Diwali festival effect). The monetary and banking aggregates witnessed major shift due to demonetisation of high value currency notes during November-December 2016 and subsequent rapid remonetisation. The estimation of seasonal factors in presence of such shift included appropriate treatment of outliers.

Main Findings:

• Indicators of industrial production, monetary/banking and services sector indicators recorded a seasonal peak in March while the majority of price indicators recorded a seasonal trough in March-May.

• CPI for vegetables showed very high seasonal variation. The seasonality of pulses and products increased significantly in recent times.

• Within the IIP series, capital goods and intermediate goods recorded the highest and the lowest seasonality. Production of coal, cement and steel also exhibited strong seasonality.

• Gradual dampening of seasonal variations was observed in 42 macroeconomic variables whereas 20 series experienced amplification of seasonal fluctuations.

• Most of the monetary and banking indicators have witnessed considerable moderation in seasonality over the last decade. The seasonality of merchandise trade indicators has been rising during recent years.

II. Private Corporate Investments: Growth in 2016-17 and Prospects for 2017-18

Based on the data collected from major financiers of private corporate sector investment, an annual study undertaken by the Reserve Bank of India indicated that the total cost of projects assisted by the select banks / financial institutions (FIs) went up significantly in 2016-17; however, the actual capital expenditure, during 2016-17 by the private corporate sector declined for the sixth successive year.

Main Findings:

• Loans sanctioned by select banks/FIs almost doubled from 954 billion in 2015-16 to 1,828 billion in 2016-17.

• Power sector continued to have a dominant share (45.1 per cent) in the total cost of projects, though its share came down from 57.2 per cent in the previous year.

• The states in which major investments were planned in 2016-17 include Gujarat, Maharashtra, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana and Tamil Nadu, accounting for nearly 64 per cent of the total cost of the projects planned.

• As per the study it is envisaged that capex by the private and joint business sectors would be lower by 11 per cent in 2016-17.

• The planned capex in 2017-18 indicates slight improvement over the position prevailing in the previous year.

Jose J. Kattoor
Chief General Manager

Press Release: 2017-2018/691