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Nowcasting economic activity in India using payment systems data

Author

Listed:
  • Raju, Sudhakar
  • Balakrishnan, Mahadevan

    (Consultant on Payment Topics, USA)

Abstract

In many economies, the publication of gross domestic product (GDP) figures tends to lag actual economic performance. In India, for example, the time lag is currently almost three months. This paper assesses whether real-time gross settlement (RTGS) data can be used to ‘nowcast’ Indian GDP. As RTGS data are available to the Reserve Bank of India (RBI) on an almost daily basis, such data can be used to construct timely GDP forecasts. This paper reports some initial results on using payments systems data to enhance GDP forecasts. The paper shows that GDP and RTGS are co-integrated, and using an ARIMA-type model demonstrates that RTGS volume data have considerable predictive ability for real GDP.

Suggested Citation

  • Raju, Sudhakar & Balakrishnan, Mahadevan, 2019. "Nowcasting economic activity in India using payment systems data," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 13(1), pages 72-81, March.
    • Handle: RePEc:aza:jpss00:y:2019:v:13:i:1:p:72-81
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    More about this item

    Keywords

    forecasting; nowcasting; GDP; real-time gross settlement (RTGS); payment systems in India;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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