The country now has another monthly economic index, with the State Bank launching Tuesday a tool that will primarily track manufacturing activity to offer a forward-looking economic trends.
The SBI Composite Index rivals the existing data point from British lender HSBC.
The SBI index has been developed on the basis of the bank's internal loan portfolio, which mirrors the credit demand in the country, and other data sets available in public domain.
"The Index will analyse data from both manufacturing and services industries to determine expansion or contraction in the economy," SBI chairperson Arundhati Bhattacharya told reporters in Mumbai, announcing the product.
The bank has created two indices - the SBI Monthly Composite Index and the SBI Yearly Composite Index. Both fulfil complementary purposes such as month-on-month sentiment movement and year-on-year growth forecast, respectively.
The index will also take into account other indicators of economic activities such as consumer spending, mining, interest rates, inflation and exchange rates on a monthly basis. The indices will be released every month post-RBI's credit growth numbers, she said, adding the data collection will not be outsourced as is the case with the HSBC data.
Markers at present depend on HSBC India Purchasing Managers' Index (PMI) and HSBC India Services Business Activity Index to get clues about economic trends.
The Index will help policymakers and market participants to identify turning points in the manufacturing cycles in advance and adjust their investment plans or strategy, Bhattacharya said, adding it will not pre-empt anything.
The SBI Index, to be published on a monthly basis, will track two months in advance the possible trends in official estimates.
"We are trying to do a sort of crystal ball gazing and see where we are going to be in the next two months," Bhattacharya said.
The indices are on a scale of 0 to 100. Index above 50 implies growth over previous respective period and less than
50 will suggest a contraction over respective period.
Sample prediction for SBI Index during October 2006 to March 2013 is at 71% as against PMI at 49%.
Also, the out sample prediction during April 2013 to September 2014 is at 72% as against PMI at 50%. The Index foresees a stronger manufacturing recovery in December 2014.