Macro-Economic Vulnerability index, RIRI and other notes
The Macro-Economic Vulnerability index was introduced in Economic Survey 2014-15. It adds a country’s fiscal deficit, current account deficit, and inflation. This index showed that in 2012 India was the most vulnerable of the major emerging market countries. Since 2013, India’s index has improved by 5.3 percentage points compared with 0.7 percentage point for China, 0.4 percentage point for all countries in India’s investment grade.
Rational Investor Ratings Index (RIRI)
RIRI was introduced in Economic Survey 2014-15. RIRI combined two elements: (i) growth, which crucially determines rewards and returns; and (ii) macroeconomic stability (which proxies for risks)
Startups and Dynamism
One part of the economy that is witnessing unusual dynamism is the start-up sector, focused on e-commerce and financial services. As of January 2016, there were 19,400 technology-enabled start-ups in India, of which 5,000 had been started in 2015 alone.1 No less than 2000 of the start-ups have been backed by venture capital/angel investors since 2010, of which 1005 were created in 2015 alone. Indian start-ups raised $3.5 billion in funding in the first half of 2015, and the number of active investors in India increased from 220 in 2014 to 490 in 2015.
El Niño, La Niña and Forecast for FY 2017 Agriculture
From time to time, agricultural production is affected by El Niño, an abnormal warming of the Pacific waters near Ecuador and Peru, which disturbs weather patterns around the world. The 2015 El Niño has been the strongest since 1997, depressing production over the past year. But if it is followed by a strong La Niña, there could be a much better harvest in 2016-17.
The monsoon could also be good due to other favourable factors such as a “positive Indian Ocean Dipole”, the phenomenon where the western tropical Indian Ocean waters near Africa become warmer relative to those around Indonesia.
