Disaggregated Indian Industrial Cycles: A Spectral Analysis

Abstract

We study the structure and dating of disaggregated Indian industrial cycles and spectral causality from different policy parameters to these cycles. The scattered pattern of peaks and troughs after 2013, suggests some industries continued to do well during an extended slowdown. Post 2011 industrial cycles have been shallow and short. The exchange rate, currency, credit, nominal and real interest rates all affect industry cycles, but differences in impact by industry type may be due to the structure of the economy. Cash and credit are more important for consumer non-durables, while interest rates affect consumer durables and capital goods. Interest rates do matter but in combination with currency and credit. Co-movement across disaggregated industry points to some common drivers. Stabilization policies need to be used more and fine-tuned based on research. Results on the dating and duration of industry cycles, their cyclicality, phase shifts, amplitude, lead-lag sectors, duration asymmetry and co-movement can help design appropriate policies.