LEAD PROFILE OF MONETARY INDICATORS FOR INDIAN GROWTH CYCLES

Abstract

The present paper is an attempt towards recognizing the leading indicators from monetary sector
for Indian economy. The growth cycles have been observed by Bry-Boschan (BB) Procedure,
utilizing information on Index of Industrial Production (IIP). The respective Composite Leading
Index (CLI) has been constructed using Narrow Money (M1) and Time Deposits- Scheduled
Commercial Deposits (TDSCB). For the construction of CLI, Auto Regressive Distributed Lag
Model (ARDL) is applied. It was found that India has experienced four growth cycles for the
time span from June, 1997 to December, 2016. CLI recorded lead with average duration of 2.5
months for IIP peak and 3 months for IIP trough.