Current state of Indian Economy February 2010

Federation of Indian Chambers of Commerce and Industry New Delhi

Indian Economy: Highlights January 2010

Industrial Production The industrial growth numbers for December 2009 shows further improvement in the industrial output, the rise in industrial production was to the tune of 17.6 percent vis--vis the weak growth seen in the previous months of 2009. The growth in the corresponding month of previous year was negative. Output in the three main industries namely mining, manufacturing and electricity was seen to rise by 10.7 percent, 19.3 percent and 5.4 percent respectively in December 2009 compared to the 2.2 percent, -0.6 percent and 1.6 percent growth seen in the previous year. Going by use based classification we saw betterment in the growth recorded by the basic, intermediate and capital goods. The basic goods grew by 7.7 percent (2.0 percent), intermediate by 22.7 percent ( 8.9 percent ) and coal by 13.2 percent ( 6.6 percent) . The growth of 13.2 percent in the consumer goods category was mainly seen coming from the consumer durables segment, the growth in consumer durables was on account of increase in sales during the festive season. Among the seventeen industry segments, growth mainly picked up in ten industry sectors namely cotton textiles that grew by 7.6 per cent, wool , silk and man made fibres by 24.5 percent , textile products by 14.5 percent, wood products by 10.4 percent, paper by 4.4 percent, basic chemicals by 5.8 percent, rubber, plastic , petroleum and coal products by 21.6 percent, metal products by 12.2 percent, machinery equipment by 44.8 percent and transport equipment by 83.4 percent. Only two industry sectors were found trapped in the negative territory during the month. Core Infrastructure The growth numbers in the six core industry sectors reflect the impact of stimulus packages announced by the government through the year. Growth in the overall core infrastructure sector increased from 3.8 percent in October 2009 to 9.4 percent in January 2010, this was compared to the low growth from 0 to 2 percent growth attained during the corresponding months of previous year. In January 2010 acceleration in growth was seen in all the six core industry sectors. Inflation The steady rise in the price index suggests inflation heading double digits. The inflation rate computed in January 2010 was 8.6 percent, this was higher than the inflation rate of 5.0 percent recorded in the same month of 2009. Food inflation was already on the rise and now, the overall inflation is joined by rising prices of non food articles, fuel power and lubricants and some of the articles of manufactured items. The CPI index also shows rise in the price index of CPI-industrial workers, UNME, Agricultural and Rural labourers

2 : Page

Monetary Indicators The broad money supply rose by 12.1 percent during the period April to January of 2009-10. The growth was however marginally low compared to the growth of 12.7 percent growth registered during the same period in 2008-09. Over the period April-January 2009-10 the expansion of aggregate deposits is around 12 percent corresponding to the growth of 14.7 percent during the same period last year. The bank credit disbursal secured a growth of 9.1 percent over the period April-January in 2009-10 marking a marginal decline from 11.7 percent during the corresponding period of last financial year. Stock Market Trends Monthly trends of the indices (Nifty and Sensex) show indications of some stability in the stock market as a result of improvement in the economic fundamentals. The BSE Sensex rose from 17200 points in November 2009 to 17500 points by the end of December 2009, and Nifty increased from 5122 points in end of November 2009 to 5232 points by December end 2009, rising by 2.1 percent. Fiscal Trends With an increase of almost 17% the total expenditure incurred by the government augmented from Rs 671079 crore during the period April-January 2008-09 to Rs 783994 crore in the current fiscal. In case of the revenue receipts of the government the figures are also showing an increase of 5% during the same period. As a result, the fiscal deficit increased moderately at the rate of 33 percent and went up from Rs 262815 crore to Rs 349538 crore during the period April-January 2009-10.

Overall revenue from the tax sources was observed to turn negative in January 2009, mainly on account of weak collections in the indirect tax category during the month. Growth came only from the category of direct taxes where collections from the corporation sources rose by 16.5 percent as against 1.9 percent and collections from the income tax sources recorded 13.3 percent increase in January 2010 in contrast to 5.4 percent in the same month of previous year. Foreign Trade Growth in the Indian merchandise exports turned positive since November 2009. January 2010 recorded a growth of 11.5 percent in exports, calculated in USD terms compared to the negative growth of 16 percent in the corresponding month of 2009. Imports too were seen to post positive growth from December 2009 onwards. Foreign Investments Foreign direct investment accumulated during the April-December period of 2009-10 was USD 26.5 billion this was USD 2 billion higher than what was received previously. Portfolio investments were USD 23.6 billion, compared to negative USD 11 billion in the previous year. The rise in the portfolio investments was particularly on account of rise in the FII investments.

3 : Page

Foreign Exchange Reserves Countrys reserves is maintained at above USD 280 billion. In December 2009 the forex stood at USD 283.5 billion, rising from USD 251 billion in April 2009. The forex at USD 283 bilion this was slightly lesser than USD 286 billion level attained in the previous month of the 2009.

Exchange Rate From December 2009 to February 2010 Indian Rupee was observed to trade at an average of 46 against the USD. However, Rupee value against Euro became weaker again by 7 percent from December 2009 to February 2010.

4 : Page

List of Tables and Graphs Table- 1.1: Growth of Industry: Recent Trends (in percentage) Table -1.2: Growth in 17 Industry sectors Table-1.3: Growth in six-core infrastructure industries (% change) Table-1.4: Growth in six-core infrastructure industries (% change) Table-1.5. Monthly trends in Wholesale price index- monthly average (% change) Table-1.6: Monthly trends in consumer prices (% change) Table-1.7: Monetary sector indicators up to April (July 2009-10 over March 2008-09) Table-1.8: Monthly trends in stock market indices (beginning of month figures) Table-1.9: Trends in cumulative tax collections of central government (%) Table-1.10: Service Tax Table-1.11: Trends in central government finances: August 2009 Table-1.12: Monthly trends in growth of merchandize trade (% change) up to August 2009 Table-1.13: Monthly trends in foreign investments ($ million) Table-1.14: Monthly trends in foreign exchange reserves ($ billion) Graph 1.1: Exchange rate of Rupee (per unit of other currencies). 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13

5 : Page

Tables
1.1: Growth of Industry: Recent Trends (in percentage) Weights Industry Mining Manufacturing Electricity Use Based Classification Basic Intermediate Capital Consumer Goods Consumer non Durables Consumer Durables 100 10.2 79.4 10.5 35.6 26.5 9.3 28.7 23.3 5.4 Dec 2008 -0.2 2.2 -0.6 1.6 2.0 -8.9 6.6 1.7 3.2 -4.2 Dec 2009 17.6 10.7 19.3 5.4 7.7 22.7 39.1 13.2 5.4 45.9

Table- 1.2: Growth in 17 Industry sectors

17 industry sectors
Food Products 9.1 -2.5 -4.2 Beverages, Tobacco and Related Products 2.4 15.4 1.8 Cotton Textiles 5.5 -2.9 7.6 Wool, Silk and man-made fiber textiles 2.3 7.7 5.7 Jute and other vegetable fiber Textiles (except 0.6 -66.4 24.5 cotton) Textile Products (including Wearing Apparel) 2.5 -0.9 14.5 Wood and Wood Products; Furniture and Fixtures 2.7 -19.1 10.4 Paper & Paper Products and Printing, Publishing & 2.6 -1.7 4.4 Allied Industries Leather and Leather & Fur Products 1.1 -5.3 0.2 Basic Chemicals & Chemical Products (except products of 14.0 -9.0 29.1 Petroleum & Coal) Rubber, Plastic, Petroleum and Coal Products 5.7 -4.8 21.6 Non-Metallic Mineral Products 4.4 7.4 8.0 Basic Metal and Alloy Industries 7.5 4.1 5.8 Metal Products and Parts, except Machinery 2.8 6.4 12.2 and Equipment Machinery and Equipment other than Transport 9.6 2.0 44.8 Equipment Transport Equipment and Parts 4.0 -17.8 83.4 Other Manufacturing Industries 2.5 21.6 -9.6 Source: Central Statistical Organization

6 : Page

Table-1.3: Growth in six-core infrastructure industries (% change) January 2010 All infrastructure industries 08-09 09-10 4.6 3.7 4.4 3.2 4.4 6.3 5.2 3.3 2.0 6.5 4.1 4.5 2.4 3.8 0.8 6.0 0.7 6.4 2.2 9.4 1.9 3.3 Finished steel Cement Crude petroleum 09-10 11.8 11.8 12.8 14.0 17.6 6.5 5.2 9.0 11.0 12.4 08-09 1.0 3.2 -4.7 -3.0 -1.0 -0.4 -0.2 0.5 -0.3 -8.1 -6.2 -2.3 09-10 -3.1 -4.3 4.0 -0.4 -2.6 -0.5 -2.2 -1.5 1.1 9.7

April May June July August September October November December January February March

08-09 7.5 8.3 8.1 6.3 3.3 2.3 -3.8 -6.3 -8.0 3.2 2.4 -1.8

09-10 -1.3 2.8 3.6 4.0 0.3 0.8 2.5 11.7 9.6 16.2

08-09 6.9 3.8 6.6 5.5 1.9 8.1 6.2 8.7 11.6 8.3 8.3 10.1

Source: Ministry of Industry

Table-1.4: Growth in six-core infrastructure industries (% change) Petroleum refinery 08-09 April 4.3 May 0.1 June 5.6 July 11.8 August 2.5 September 2.8 October 5.0 November -1.1 December 3.0 January -1.3 February 0.5 March 3.3 Coal 09-10 -4.5 -4.3 -3.8 -14.4 3.1 3.4 7.2 4.9 0.8 3.8 08-09 10.4 8.8 6.1 5.5 5.9 11.2 10.6 9.7 11.2 6.7 6.0 5.2 09-10 13.2 10.2 14.7 9.7 12.9 6.5 5.0 4.6 2.5 6.0 Power 08-09 1.4 2.0 2.6 4.5 0.8 4.4 4.4 2.6 1.5 1.8 0.6 6.3 09-10 7.1 3.3 8.0 4.2 10.6 7.9 4.7 3.3 6.7 5.6

Source: Ministry of Industry

7 : Page

Table-1.5. Monthly trends in Wholesale price index- monthly average (% change) 2008-09 All Commodities I Primary Article (A) Food Articles (B) Non-Food Articles II Fuel Power Light & Lubricants III Manufactured Products (A) Food Products (B) Beverages, Tobacco & Tobacco Products (C) Textiles (D) Wood & Wood Products (E) Paper & Paper Products (F) Leather & Leather Products (G) Rubber & Plastic Products (H) Chemicals & Chemical Products (I) Non-Metallic Mineral Products (J) Basic Metals Alloys & Metals Products (K) Machinery & Machine Tools (L) Transport Equipment & Parts Dec 6.1 11.1 10.0 9.3 -0.2 6.6 4.2 8.5 10.5 9.8 6.4 0.6 2.8 6.1 2.9 12.6 3.9 3.0 Jan 5.0 10.7 11.0 6.7 -1.7 2009-10 Dec 7.3 14.9 19.2 7.7 4.3 Jan 8.6 14.5 17.4 10.6 6.9

5.3 5.2 6.6 6.9 26.4 22.6 8.9 5.3 4.3 10.0 5.6 9.0 10.1 0.3 0 5.4 -1.5 -0.6 1.7 -1.2 -2.2 2.3 1.1 1.4 2.4 4.6 8.0 1.9 1.8 -1.7 7.4 -7.3 -2.6 2.7 -0.2 0.9 2.7 0.2 0.2 Source: Reserve Bank of India

Table-1.6: Monthly trends in consumer prices (% change) CPI-IW 08-09 7.8 7.8 7.7 8.3 9.0 9.8 10.4 10.4 9.7 10.4 9.6 8.0 CPI-UNME 08-09 09-10 7.0 8.8 6.8 9.7 7.3 9.6 7.4 13.0 8.5 12.9 9.5 12.4 10.4 12.0 10.8 13.9 9.8 10.4 9.9 9.3 CPI-AL 08-09 8.9 9.1 8.8 9.4 10.3 11.0 11.1 11.1 11.1 11.4 10.8 9.5 CPI-RL 08-09 09-10 8.6 9.1 8.8 10.2 8.8 11.3 9.4 12.7 10.3 12.7 11.0 13.0 11.1 13.5 11.1 15.7 11.1 17.0 11.1 10.8 9.7 Source: Ministry of Labor, CMIE

April May June July August September October November December January February March

09-10 8.7 8.6 9.3 11.9 11.7 11.6 11.5 13.5 15.0

09-10 9.1 10.2 11.5 12.9 12.9 13.2 13.7 15.7 17.2

8 : Page

Table-1.7: Monetary sector indicators up to April (January 2009-10 over March 2008-09) Variation in M3 (Rs crore) Variation in M3 (%) 08-09 09-10 08-09 09-10 22235 123424 0.6 2.6 73398 172709 1.9 3.6 89283 172702 2.2 3.6 169734 259720 4.2 5.5 208571 280313 5.2 5.9 264364 331793 6.6 7.0 331450 391310 8.3 8.2 374193 431266 9.3 9.1 423509 521426 10.6 10.9 508078 575387 12.7 12.1 635810 15.9 740332 18.4 Source: Reserve Bank of India

April May June July August September October November December January February March

Table-1.8: Monthly trends in stock market indices (beginning of month figures) Date 1.01.08 1.02.08 3.03.08 1.04.08 2.05.08 2.06.08 1.07.08 1.08.08 1.09.08 1.10.08 3.11.08 1.12.08 26.12.08 30.01.09 02.03.09 31.03.09 29.04.09 01.06.09 01.07.09 03.08.09 01.09.09 01.10.09 03.11.09 01.12.09 04.01.10 BSE Sensex 20300 18242 16677 15626 17600 16063 12961 14656 14498 13055 10337 8839 9328 9424 8607 9708 11403 14840 14645 15924 15551 17134 15405 17198 17558 % Change 4.8 -10.1 -8.5 -6.3 12.6 -8.7 -19.3 13.1 -1.1 -9.9 -20.8 -14.5 5.5 1.0 -8.7 12.8 17.5 30.1 -1.31 8.7 -2.3 10.2 -10.1 11.6 2.1 S&P CNX % NIFTY Change 6144 6.6 5317 -13.5 4953 -6.8 4739 -4.3 5228 10.3 4739 -9.3 3896 -17.8 4413 13.3 4447 0.8 3950 -11.1 3043 -23.0 2682 -11.9 2857 6.5 2874 0.5 2674 -7.0 3020 12.9 3473 15.0 4529 30.4 4340 -4.1 4711 8.5 4625 -1.8 5083 9.9 4564 -10.2 5122 12.2 5232 2.1 Source: Reserve Bank of India

9 : Page

Table-1.9: Trends in cumulative tax collections of central government (%) Gross tax revenue 08-09 09-10 52.2 -16.9 36.1 -11.8 28.4 -11.4 26.2 -11.1 25.0 -11.5 25.3 -7.6 20.3 -7.5 17.5 -7.8 9.6 -2.5 7.2 -1.2 6.9 2.7 Customs 08-09 09-10 25.0 -52..6 24.1 -38.2 19.9 -37.3 19.2 -34.7 17.0 -34.0 16.8 -32.9 14.4 -31.7 13.7 -31.2 11.1 -29.2 6.4 -25.2 1.7 -4.1 Corporation tax 08-09 09-10 55.0 -8.4 58.1 10.1 43.4 1.8 41.6 4.7 45.9 2.4 38.2 7.7 30.3 6.5 26.4 6.6 11.9 16.8 11.9 16.5 17.9 10.8 Excise duties 08-09 09-10 -28.3 --114.2 1.3 -23.3 -0.9 -23.7 4.0 -26.6 6.5 -24.5 6.6 -22.9 6.3 -21.7 5.1 -20.0 2.1 -18.2 -2.6 -14.5 -7.1 -12.0 Income tax 08-09 127.7 76.0 50.0 42.0 35.7 30.7 21.9 19.0 6.8 5.4 7.5 7.1 Other taxes 08-09 9.04 26.7 26.0 24.7 17.4 30.7 16.2 6.1 -2.6 -6.4 -10.0 -11.5

April May June July August September October November December January February March

09-10 20.0 11.7 7.1 5.9 8.1 7.2 10.5 9.8 12.2 13.3

April May June July August September October November December January February March

09-10 -5.4 -18.7 -9.5 -3.87 -1.97 -20.5 -17.2 -15.0 -24.2 -21.8

Table-1.10: Service Tax Service Tax April May June July August September October November December January February March 08-09 09-10 62.3 -0.04 40.7 -2.60 34.2 -2.85 29.7 -1.46 28.6 -2.29 31.8 -3.7 31.8 -5.3 30.2 -6.2 25.4 -5.9 24.6 -6.2 22.2 18.6 Source: Controller General of Accounts

10 : Page

Table-1.11 Trends in central government finances: January 2010 Actual to budget estimates ( in Rs crores) 08-09 09-10 Revenue receipts Tax revenue Non tax revenue Total receipts Non plan expenditure On revenue account On capital account Plan expenditure On revenue account On capital account Total expenditure Fiscal deficit 404815 425021 329271 333336 75544 91685 408264 434456 471998 557018 445388 517920 26610 39098 199081 226976 168677 191392 30404 35584 671079 783994 262815 349538 Source: Controller General of Accounts

Table-1.12: Monthly trends in growth of merchandize trade (% change) up to January 2010 Exports 08-09 31.5 12.9 23.5 31.2 10.4 -12.1 -9.9 -1.1 -15.9 -21.7 -33.3 Oil imports 08-09 09-10 46.2 -58.5 50.8 -60.6 53.4 -50.6 69.3 -55.5 -45.5 57.1 -33.5 22 -9.3 11.9 7.3 30.9 42.8 47.5 56.0 47.5 58.1 Non-oil imports Total imports 08-09 09-10 08-09 09-10 32.3 -24.6 36.6 -36.6 17.4 -25.4 27.1 -39.2 13.9 -16.5 25.9 -29.3 38.7 -24.5 48.1 -37.1 -25.5 -32.4 36.2 -30.4 43.3 -31.3 5.5 -17.2 10.6 -15.0 3.4 -5.9 6.1 -2.6 31.9 22.4 8.8 27.2 0.5 28.8 -18.2 35.5 10.2 -23.3 18.9 -34.0 Source: Ministry of Commerce

April May June July August September October November December January February March

09-10 -33.2 -29.2 -27.7 -28.4 -19.4 -13.8 -6.6 18.2 9.3 11.5

11 : Page

Table-1.13: Monthly trends in foreign investments ($ million) Foreign direct investments 08-09 09-10 3749 2339 3932 2095 2392 2582 2247 3476 2328 3268 2562 1512 1497 2332 1083 1722 1362 1542 2733 1466 1956 24693 26506 Portfolio Total foreign investments investments 08-09 09-10 08-09 09-10 -880 2278 2869 4617 -288 5639 3644 7734 -3010 353 -618 2935 -492 2077 1775 6508 593 926 2921 4194 -1403 4999 1159 6511 -5243 2922 -3746 5254 -574 1274 509 2996 30 1503 1392 3045 -614 2119 -1085 381 -889 1067 -11267 23670 13426 50176 Source: Reserve Bank of India

April May June July August September October November December January February March Apr-Dec

Table-1.14: Monthly trends in foreign exchange reserves ($ billion) 07-08 April May June July August September October November December January February March 204.1 208.3 213.4 229.3 228.8 247.7 262.4 273.5 275.9 288.3 301.2 309.7 % Change 2.5 2.0 2.4 7.4 -0.2 8.2 5.9 4.2 0.8 4.4 4.4 2.8 08-09 314.5 312.5 312.0 306.1 295.3 286.3 252.8 247.6 255.9 248.6 249.2 251.7 % Change 09-10 % Change

1.5 251.7 0.0 -0.6 262.3 4.2 -0.1 265.1 1.0 -1.8 271.6 2.4 -3.5 276.4 1.8 -3.0 281.2 1.7 -11.7 284.3 1.1 -2.0 288.1 1.3 3.3 283.4 -1.6 -2.8 0.2 1.0 Source: Reserve Bank of India

12 : Page

Re/ USD
10 20 30 40 50 60 0

Graph 1.1: Exchange rate of Rupee (per unit of other currencies).

13 : Page

Re/Euro

USD Euro
0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar April May June July Aug Sept Oct Nov Dec Jan Feb 10 20 30 40 50 60 70 80