Current state of Indian Economy

August 2010

Federation of Indian Chambers of Commerce and Industry

New Delhi
Highlights – August 2010

July 2010 overall industrial growth numbers continued on the path of buoyancy. The high
growth in the overall industrial output was solely on account of the heavyweight manufacturing
sector. The other two sectors also remained in the positive zone in July and during the period
from April – July 2010. However, the growth in output was lower than the growth seen in the
corresponding period of previous year (FY10). Going by the use-based classification we see a
huge rise in the production of capital goods which rose by 63 percent in July 2010 as compared
to the rise of 1.7 percent in the same month of previous year. The growth in the consumer
goods output swelled only on account the durables segment.

The industry segments that registered a sizable increase in output were food products, cotton
textiles, jute products, paper products , rubber and plastic products, petroleum , coal and tar,
metal products and among the capital goods were the machinery and equipment , transport
equipment and parts.

The growth momentum of the six core infrastructure industries was maintained with the
increase in petroleum products ( crude petroleum and petroleum refinery). Production in coal
and power remained positive, however, the growth numbers were not higher than the previous
year. The two segments that were found in the negative territory were cement and finished
steel.

The moderation in overall inflation could be observed in July 2010, 10 percent in July from 11
percent in the previous month. However, inflation was found to be much higher when
compared with the inflation recorded in July last year and may require more time and steps by
the government to cool down to targeted levels. The prices of items / article groups that fueled
the overall price to rise to such levels were the food and non-food articles (primary goods), fuel
products, beverages, textiles, wood, rubber, chemicals , basic metals , machinery and transport
equipments.

The broad money supply rose by 3.4 percent over the period from April to July 2010-11, this was
lower than the M3 recorded in same period of previous year. The aggregate deposits was also
seen to expand slowly by 3.3 percent during the period from April to July of the current fiscal as
compared to the expansion of 6.2 percent during the same period of 2009-10. The bank credit
rose by 3.5 percent calculated in July over April 2010.

The total revenue of the government stepped up sharply this year with more than twofold
increase, from the Rs 105378 crores up to July 2009-10 to Rs 238524 crores up to the month of

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July of current fiscal . Consequently, the magnitude of fiscal deficit has contracted by almost 43
percent during this period of 2010-11 over the previous year.

According to RBI, government acquired higher than anticipated revenue in July from the auction
of 3G and BWG and revenue from taxes helped the holding back of fiscal deficit within the
targeted level of 5.5 %.

The buoyancy in tax collection in July has been on account of impressive collection in the direct
and indirect taxes. However, in growth terms the indirect tax was observed to be much higher
as compared to the growth in direct taxes.

The indices continue to swing between 16 K to 17K points. In July 2010 it rose to the level of
17.5 K points and currently in September 2010 we saw the Indian stock market rise to the level
of 20 K points again.

The overall merchandise exports slowed to 13 percent in the fourth month ( July) of the present
fiscal as compared to the 30 plus percent growth registered in the previous month of this year. It
is early for any comment on the trend without the trade numbers of August and September.

The total foreign investment swelled to 10.8 billion up to July on the back of inflows in the
portfolio investment category. High investment activity by the FIIs was witnessed during the
month, this high inflows is what has led to increased portfolio investments ( USD 9.1 billion). FDI
received during the month was only USD 1.7 billion .

Further increase in the forex reserves has been witnessed; this has been observed to rise from
USD 275 billion to USD 284 billion and enough to cover 11 months of imports.

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 Contents

Title Page

1 Industrial Growth 6

2 Core Infrastructure Industries 8

3 Trends in Inflation 9

4 Monetary Indicators 10

5 Stock Market Trends 11

6 Fiscal Management 12

7 Foreign Trade 14

8 Capital Inflows 15

9 Foreign Exchange Reserves 16

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List of Tables

Table- 1.1: Growth of Industry: Recent Trends (in percentage) 6

Table -1.2: Growth in 17 Industry sectors 7
Table-1.3: Growth in six-core infrastructure industries (% change) 8
Table-1.4: Growth in six-core infrastructure industries (% change) 8
Table-1.5. Monthly trends in Wholesale price index- monthly average (% change) 9
Table-1.6: Monthly trends in consumer prices (% change) 9
Table-1.7: Monetary sector indicators 10
Table-1.8: Monthly trends in stock market indices 11
Table-1.9: Trends in cumulative tax collections of central government (%) 12
Table-1.10: Service Tax 14
Table-1.11: Trends in central government finances: 14
Table-1.12: Monthly trends in growth of merchandize trade (% change) 15
Table-1.13: Monthly trends in foreign investments ($ million) 16
Table-1.14: Monthly trends in foreign exchange reserves ($ billion) 17

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1. Industrial growth

The IIP growth numbers released in September for July 2010 showed that the overall industry posted
13.8 percent growth, which is higher than the growth of 7.2 percent posted in the corresponding month
of previous year. The three constituents of the overall industry namely the mining, manufacturing and
electricity were seen to grow positively. However, what mainly led to the sizable increase in the overall
growth was high growth of 15 percent in the manufacturing sector in contrast to the increase of 7.2
percent in the previous year.

The use-based classification shows that production of basic goods , capital goods, intermediate goods
grew at 5.1 percent , 63 percent and 9.1 percent in July 2010 as compared to 4.7 percent , 1.7 percent
and 9.1 percent respectively in the same month of previous year. The growth in the consumer goods
decelerated slightly from 9.7 percent previously to 6.7 percent in the current year. The consumer
durables segment clocked the same growth rate as in the previous year.

The industry sectors which among the 17 industry sectors saw an increase were the food products that
increased by 9.1 percent ( -0.1 percent), cotton textiles by 12.1 percent (0.5 percent) , jute products by
19.3 percent (-28.1 percent ), paper products by 7.3 percent ( 1.7 percent), rubber , plastic , petroleum
and coal products by 19.4 percent ( 12.5 percent), metal products rose by 14.8 percent ( 12.6 percent ),
machinery and equipment and transport by 49.4 percent (12.0 percent ) and transport equipment by
24.9 percent (10.9 %) .

( The numbers within braces are for the previous year )

1.1: Growth of Industry: Recent Trends (in percentage)

Weights July July

2009 2010

Industry 100 7.2 13.8

Mining 10.2 8.7 9.7
Manufacturing 79.4 7.4 15.0
Electricity 10.5 4.2 3.7
Use Based Classification
Basic 35.6 4.7 5.1
Intermediate 26.5 9.8 9.1
Capital 9.3 1.7 63.0
Consumer Goods 28.7 9.7 6.7
Consumer non Durables 23.3 5.3 0.5
Consumer Durables 5.4 22.1 22.1

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Table- 1.2: Growth in 17 Industry sectors

17 industry sectors
Food Products 9.1 -0.1 9.1
Beverages, Tobacco and Related Products 2.4 3.7 -2.1
Cotton Textiles 5.5 0.5 12.1
Wool, Silk and man-made fiber textiles 2.3 34.0 1.2
Jute and other vegetable fiber Textiles (except 0.6 -28.1 19.3
cotton)
Textile Products (including Wearing Apparel) 2.5 5.9 -0.7
Wood and Wood Products; Furniture and Fixtures 2.7 1.7 -9.4
Paper & Paper Products and Printing, Publishing & 2.6 1.7 7.3
Allied Industries
Leather and Leather & Fur Products 1.1 14.9 -1.8
Basic Chemicals & Chemical Products (except products of 14.0 6.9 2.5
Petroleum & Coal)
Rubber, Plastic, Petroleum and Coal Products 5.7 12.5 19.4
Non-Metallic Mineral Products 4.4 6.5 0.0
Basic Metal and Alloy Industries 7.5 3.7 4.6
Metal Products and Parts, except Machinery 2.8 12.6 14.8
and Equipment
Machinery and Equipment other than Transport 9.6 12.0 49.4
Equipment
Transport Equipment and Parts 4.0 10.9 24.9
Other Manufacturing Industries 2.5 -0.7 31.1
Source: Central Statistical Organization

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 2. Core sector growth

The core infrastructure industries were seen to maintain growth during the four month period of FY11.
In July growth in the overall core sector was 3.9 percent as against the growth of 3.2 percent attained in
the same month previous year. Four sectors namely the crude petroleum, petroleum refinery, coal and
power were seen to post positive growth of 15.8 percent, 13.7 percent, 4.5 percent and 3.8 percent
during the month as against the negative growth of 0.4 percent , (-) 14.4 percent, 10 .5 percent and 3.8
percent respectively in the previous year. The categories that posted negative growth in July this year
after three months of positive growth were the finished steel and cement industry.

Table-1.3: Growth in six-core infrastructure industries (% change) July 2010

All Finished steel Cement Crude

infrastructure petroleum
industries
08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 4.6 3.7 5.1 7.5 -1.3 4.7 6.9 11.9 8.7 1.0 -3.1 5.2
May 4.4 3.2 5.0 8.3 2.8 2.5 3.8 11.8 8.6 3.2 -4.3 5.8
June 4.4 6.3 3.4 8.1 3.6 3.5 6.6 12.7 3.6 -4.7 4.0 6.8
July 5.2 3.2 3.9 6.3 4.0 -0.9 5.5 13.8 -0.2 -3.0 -0.4 15.8
August 2.0 6.5 3.3 0.3 1.9 17.6 -1.0 -2.6
September 4.1 4.5 2.3 0.8 8.1 6.5 -0.4 -0.5
October 2.4 3.8 -3.8 2.5 6.2 5.2 -0.2 -2.2
November 0.8 6.0 -6.3 11.7 8.7 9.0 0.5 -1.5
December 0.7 6.4 -8.0 9.6 11.6 11.0 -0.3 1.1
January 2.2 9.4 3.2 16.2 8.3 12.4 -8.1 9.7
February 1.9 4.5 2.4 0.9 8.3 5.8 -6.2 4.0
March 3.3 7.2 -1.8 9.2 10.1 7.8 -2.3 3.5
Source: Ministry of Industry

Table-1.4: Growth in six-core infrastructure industries (% change)

Petroleum Coal Power

refinery
08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 4.3 -4.5 5.3 10.4 13.2 -2.3 1.4 6.7 6.0
May 0.1 -4.3 7.7 8.8 10.4 0.1 2.0 3.0 6.4
June 5.6 -3.8 2.9 6.1 15.2 0.9 2.6 7.7 3.4
July 11.8 -14.4 13.7 5.5 10.5 4.5 4.5 3.8 3.8
August 2.5 31 5.9 12.9 0.8 10.6
September 2.8 3.4 11.2 6.5 4.4 7.9
October 5.0 7.2 10.6 5.0 4.4 4.7
November -1.1 4.9 9.7 4.6 2.6 3.3
December 3.0 0.8 11.2 2.5 1.5 6.7
January -1.3 3.8 6.7 6.0 1.8 5.6
February 0.5 0.8 6.0 6.8 0.6 7.3
March 3.3 -0.4 5.2 7.8 6.3 7.8

Source: Ministry of Industry

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 3. Inflation

Inflation continues to remain one of the top concerns. The WPI based inflation still remains above the
double digit mark. Currently inflation is above 10 percent, way off the targeted 5.5-6.0 percent for the
current fiscal. The inflation is fueled by the prices of primary articles (both food and non- food ), fuel .
Prices were also seen to rise in the case of manufactured articles such as textiles, wood, rubber,
chemicals, basic metals, machinery and transport equipments.

Table-1.5. Monthly trends in Wholesale price index- monthly average (% change)

2009 2010

June July June July

All Commodities -1.0 -0.5 11.1 10.0
I Primary Article 6.5 7.6 18.1 14.9
(A) Food Articles 10.9 14.2 15.6 10.3
(B) Non-Food Articles 0.1 -3.3 18.7 21.0
II Fuel Power Light & Lubricants -12.5 -10.4 14.0 14.3
III Manufactured Products 0.6 0.1 6.9 6.2
(A) Food Products 11.5 9.7 4.0 4.1
(B) Beverages, Tobacco & Tobacco Products 6.0 5.5 7.6 6.5
(C) Textiles 4.5 2.1 15.2 13.8
(D) Wood & Wood Products 0.3 0.3 14.6 14.6
(E) Paper & Paper Products 2.6 2.0 1.0 1.4
(F) Leather & Leather Products -1.0 -1.2 0.5 0.2
(G) Rubber & Plastic Products 3.4 2.5 6.7 7.0
(H) Chemicals & Chemical Products 2.1 3.2 6.3 4.9
(I) Non-Metallic Mineral Products 3.1 5.2 -1.1 -4.8
(J) Basic Metals Alloys & Metals Products -14.1 -15.2 12.0 11.9
(K) Machinery & Machine Tools -2.2 -2.2 5.1 4.2
(L) Transport Equipment & Parts 0.6 0.6 2.6 2.3
Source: Reserve Bank of India

Table-1.6: Monthly trends in consumer prices (% change)

CPI-IW CPI-UNME CPI-AL CPI-RL

08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 7.8 8.7 13.3 7.0 8.8 14.4 8.9 9.1 15.0 8.6 9.1 15.0
May 7.8 8.6 13.9 6.8 9.7 14.1 9.1 10.2 13.7 8.8 10.2 13.7
June 7.7 9.3 13.7 7.3 9.6 14.1 8.8 11.5 13.0 8.8 11.3 13.0
July 8.3 11.9 11.3 7.4 13.0 -- 9.4 12.9 11.0 9.4 12.7 11.2
August 9.0 11.7 8.5 12.9 10.3 12.9 10.3 12.7
September 9.8 11.6 9.5 12.4 11.0 13.2 11.0 13.0
October 10.4 11.5 10.4 12.0 11.1 13.7 11.1 13.5
November 10.4 13.5 10.8 13.9 11.1 15.7 11.1 15.7
December 9.7 15.0 9.8 15.5 11.1 17.2 11.1 17.0
January 10.4 16.2 10.4 16.9 11.4 17.6 11.1 17.4
February 9.6 14.9 9.9 15.8 10.8 16.5 10.8 16.5
March 8.0 14.9 9.3 14.9 9.5 15.8 9.7 15.5
Source: Ministry of Labor, CMIE

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4 Monetary indicators

The broad money supply expanded by 3.4 percent during the period of April to July this year compared
to the growth of 5.3 percent registered during the same period of 2009-10. In absolute terms M3 stood
at Rs 191240 crores as against Rs 253921 crores during the same period of previous fiscal. As on July 30,
2010, the net bank credit flow to Government slowed to 4.3 percent corresponding to the 11.3 percent
growth in 2009-10.

The expansion in money supply is mainly contributed by credit to the commercial sector and increase in
net foreign assets. The net bank credit to the commercial sector was observed to grow at 3.3 percent
during this period compared to modest growth of 0.9 percent in the last fiscal. The net foreign Exchange
assets of banking sector swelled by 4.7 percent vis-à-vis 0.1 percent growth posted during the same
period of 2009-10.

Aggregate deposits in the banking sector increased by 3.3 percent over the period from July to April
2010-11 as against the expansion of 6.2 percent during the same period of previous year. Investments in
government and other approved securities shows moderation in growth to 4.3 percent in 2010-11;
showing a relative decline from the growth of 14.5 percent in the previous financial year. During this
period, total bank credit augmented sharply from 1.1 percent in 2009-10 to 3.5 percent in 2010-11.

The recent hike in key policy rates by RBI on September 16, 2010, made the Indian bankers cautious
about their future move in banking operation. The banking sector is unlikely to respond immediately to
the rate hike by raising their deposit rates and lending rates. Bankers’ opined that, the persistently low
deposit growth could not support the credit growth. There may also be the possibility of increase in
deposit rates followed by lending rates of banks.

Table-1.7: Monetary sector indicators – up to July (July 2010-11 over March 2009-10)

Variation in M3 (Rs Variation in M3 (%)

crore)
08-09 09-10 10-11 08-09 09-10 10-11
April 22235 124682 42384 0.6 2.6 0.8
May 73398 172709 92656 1.9 3.6 1.7
June 89283 172702 77314 2.2 3.6 1.4
July 169734 253921 191240 4.2 5.3 3.4
August 208571 280313 5.2 5.9
September 264364 331793 6.6 7.0
October 331450 391310 8.3 8.2
November 374193 431266 9.3 9.1
December 423509 521426 10.6 10.9
January 508078 575387 12.7 12.1
February 635810 652944 15.9 13.7
March 740332 806190 18.4 16.9

Source: Reserve Bank of India

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5 Stock market trends

The Indian stock market appears highly promising for the overseas investors as reflected by the inflows
in the past few weeks with the high flow in investments in the country’s stocks. The growing FII
investments made the BSE index not only cross 17 K points but to get closer to the 20 K points in
September 2010.

Table-1.8: Monthly trends in stock market indices (beginning of month figures)

Date BSE Sensex % Change S&P CNX % Change

NIFTY
1.01.08 20300 4.8 6144 6.6
1.02.08 18242 -10.1 5317 -13.5
3.03.08 16677 -8.5 4953 -6.8
1.04.08 15626 -6.3 4739 -4.3
2.05.08 17600 12.6 5228 10.3
2.06.08 16063 -8.7 4739 -9.3
1.07.08 12961 -19.3 3896 -17.8
1.08.08 14656 13.1 4413 13.3
1.09.08 14498 -1.1 4447 0.8
1.10.08 13055 -9.9 3950 -11.1
3.11.08 10337 -20.8 3043 -23.0
1.12.08 8839 -14.5 2682 -11.9
26.12.08 9328 5.5 2857 6.5
30.01.09 9424 1.0 2874 0.5
02.03.09 8607 -8.7 2674 -7.0
31.03.09 9708 12.8 3020 12.9
29.04.09 11403 17.5 3473 15.0
01.06.09 14840 30.1 4529 30.4
01.07.09 14645 -1.31 4340 -4.1
03.08.09 15924 8.7 4711 8.5
01.09.09 15551 -2.3 4625 -1.8
01.10.09 17134 10.2 5083 9.9
03.11.09 15405 -10.1 4564 -10.2
01.12.09 17198 11.6 5122 12.2
04.01.10 17558 2.1 5232 2.1
01.02.10 16356 -6.8 4900 -6.4
02.03.10 16773 2.5 5017 2.4
01.04.10 17693 5.5 5291 5.5
03.05.10 17386 -1.7 5223 -1.3
01.06.10 16572 -4.7 4970 -4.8
01.07.10 17509 5.7 5251 5.7
Source: Reserve Bank of India

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6 Fiscal Management

The total government expenditure amounted to be Rs 332700 crores in July end 2010 calculated over
April 2010; securing almost 25.4 percent increase over the same period of previous year. On the
revenue side, the total receipts increased more than two folds (126.4 % growth in July 2010 over July
2009) from the level of Rs 105378 crores in 2009-10 to Rs 238524 crores during the same period of
current year. The resultant diminution in fiscal deficit is evident from the finance score sheet of the
Government as the level of deficit has come down by 42.7 percent during the period in 2010-11.

RBI in the Mid-Quarter Monetary Policy Review of September 2010 assessed the holistic situation of
government finance in detail. According to the review, higher than expected realizations on 3G and
Broadband Wireless Access (BWA) auction accompanied with buoyant tax revenues, have rationally
suspended the fear of the fiscal deficit exceeding the target of 5.5 per cent announced in Union Budget
2010-11. Thus it would help to stabilize market expectations of liquidity and interest rate movements in
coming months.

The overall tax collection grew by 27.5 percent during the month as against the negative growth of 11.1
percent in July 2009. The persistent collection in both direct and indirect taxes is primarily responsible
for such an increase in tax revenue. In the segment of direct taxes, corporate tax rose by 18.4 percent
vis-a-vis 4.7 percent growth in July 2009 and the collection in income tax accelerated by 15.8 percent
corresponding to the growth of 5.9 percent in same month of last fiscal.

Looking at indirect taxes we find all major tax components except the ‘Other taxes’ category confirmed
an impressive growth in July 2010. The customs and excise collection grew by 57.4 percent and 52
percent respectively corresponding to the negative growth observed in same month of last fiscal. The
performance in service tax collection also remained buoyant with a strong growth of 12.5 percent in this
month as against the negative growth of 1.5 percent in July 2009.

Table-1.9: Trends in cumulative tax collections of central government (%)

Gross tax revenue Corporation tax Income tax

08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 52.2 -16.9 27.0 55.0 -8.4 23.4 127.7 20.0 8.3
May 36.1 -11.8 22.0 58.1 10.1 -1.8 76.0 11.7 13.0
June 28.4 -11.4 28.6 43.4 1.8 23.7 50.0 7.1 13.8
July 26.2 -11.1 27.5 41.6 4.7 18.4 42.0 5.9 15.8
August 25.0 -11.5 45.9 2.4 35.7 8.1
September 25.3 -7.6 38.2 7.7 30.7 7.2
October 20.3 -7.5 30.3 6.5 21.9 10.5
November 17.5 -7.8 26.4 6.6 19.0 9.8
December 9.6 -2.5 11.9 16.8 6.8 12.2
January 7.2 -1.2 11.9 16.5 5.4 13.3
February 6.9 -1.6 17.9 10.9 7.5 11.4
March 2.7 10.8 7.1

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 Customs Excise duties Other taxes
08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 25.0 -52..6 106.4 -28.3 -114.2 314.1 9.04 -5.4 -43.2
May 24.1 -38.2 56.6 1.3 -23.3 49.3 26.7 -18.7 -11.7
June 19.9 -37.3 62.2 -0.9 -23.7 52.0 26.0 -9.5 -36.8
July 19.2 -34.7 57.4 4.0 -26.6 52.0 24.7 -3.87 -33.3
August 17.0 -34.0 6.5 -24.5 17.4 -1.97
September 16.8 -32.9 6.6 -22.9 30.7 -20.5
October 14.4 -31.7 6.3 -21.7 16.2 -17.2
November 13.7 -31.2 5.1 -20.0 6.1 -15.0
December 11.1 -29.2 2.1 -18.2 -2.6 -24.2
January 6.4 -25.2 -2.6 -14.5 -6.4 -21.8
February 1.7 -21.8 -7.1 -10.2 -10.0 -19.8
March -4.1 -12.0 -11.5

Table-1.10: Service Tax

Service Tax 08-09 09-10 10-11

April 62.3 -0.04 -6.0
May 40.7 -2.60 1.6
June 34.2 -2.85 9.1
July 29.7 -1.46 12.5
August 28.6 -2.29
September 31.8 -3.7
October 31.8 -5.3
November 30.2 -6.2
December 25.4 -5.9
January 24.6 -6.2
February 22.2 -5.9
March 18.6
Source: Controller General of Accounts

Table-1.11 Trends in central government finances: July 2010

Actual to budget estimates

( in Rs crores)
09-10 10-11
Revenue receipts 105378 238524
Tax revenue 86309 112821
Non tax revenue 19069 125703
Total receipts 106690 241785
Non plan expenditure 194868 222900
On revenue account 181145 194141
On capital account 13723 28759
Plan expenditure 70376 109800
On revenue account 59011 94458
On capital account 11365 15342
Total expenditure 265244 332700
Fiscal deficit 158554 90915
Source: Controller General of Accounts

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 7 Merchandise trade

The total merchandise trade (including the imports and exports) during the first four months of the
2010-11 stood at USD 180 billion as against USD 136 billion. Merchandise exports neared USD 70 billion
in the fourth month of the present fiscal, and imports were seen to rise to the level of USD 112 billion.
The high imports have increased the deficits to USD 43 billion from USD 31 billion in the same period of
previous year.

Table-1.12: Monthly trends in growth of merchandize trade (% change) up to July 2010

Exports Oil imports Non-oil imports Total imports

08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 31.5 -33.2 36.2 46.2 -58.5 70.5 32.3 -24.6 34.3 36.6 -36.6 43.3
May 12.9 -29.2 35.1 50.8 -60.6 66.7 17.4 -25.4 28.2 27.1 -39.2 38.5
June 23.5 -27.7 30.4 53.4 -50.6 26.5 13.9 -16.5 21.5 25.9 -29.3 23.0
July 31.2 -28.4 13.2 69.3 -55.5 4.4 38.7 -24.5 49.6 48.1 -37.1 34.3
August 26.9 -19.4 76.7 -45.5 39.6 -25.5 51.2 -32.4
September 10.4 -13.8 57.1 -33.5 36.2 -30.4 43.3 -31.3
October -12.1 -6.6 22 -9.3 5.5 -17.2 10.6 -15.0
November -9.9 18.2 11.9 7.3 3.4 -5.9 6.1 -2.6
December -1.1 9.3 -30.9 42.8 31.9 22.4 8.8 27.2
January -15.9 11.5 -47.5 56.0 -0.5 28.8 -18.2 35.5
February -21.7 34.8 -47.5 97.4 -10.2 55.6 -23.3 66.4
March -33.3 54.1 -58.1 85.2 -18.9 61.0 -34.0 67.1

Source: Ministry of Commerce

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8 Foreign investment

The foreign direct investment received up to July 2010 was USD 7.5 billion and was much lower than the
investment of USD 10.3 billion received in the previous year.

However, the total FDI which includes the portfolio investments (which is mainly the FII investments)
lifted the total foreign investment for the four-month period (April – July ) to USD 21.3 billion almost at
the same level as recorded in the previous year .

Table-1.13: Monthly trends in foreign investments ($ millions)

Foreign direct Portfolio investments Total foreign

investments investments
08-09 09-10 10-11 08-09 09-10 10-11 08-09 09-10 10-11
April 3749 2339 2179 -880 2278 3315 2869 4617 5494
May 3932 2095 2213 -288 5639 41 3644 7734 2254
June 2392 2582 1380 -3010 353 1232 -618 2935 2612
July 2247 3476 1785 -492 2077 9114 1775 6508 10899
August 2328 3268 593 926 2921 4194
September 2562 1512 -1403 4999 1159 6511
October 1497 2332 -5243 2922 -3746 5254
November 1083 1722 -574 1274 509 2996
December 1362 1542 30 1533 1392 3075
January 2733 2042 -614 3139 2119 5181
February 1466 1717 -1085 230 381 1947
March 1956 1209 -889 5306 1067 6515
Source: Reserve Bank of India

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9 Foreign exchange reserves

In July 2010 forex reserves rose to USD 282 billion from USD 275 billion in the previous month, the rise
in the forex reserves can be attributed to large inflows coming through the portfolio investment route
and partly as a result of revaluation of non-dollar assets.

Indian Rupee against the USD gained by a Rupee over the three-month period .Indian Rupee traded at
Rs 46.5 approx in July and Rs 45.5 in September 2010. Whereas, Euro was seen to get weaker against
the Indian Rupee, trading between RS 56-58 during July and Rs 60-61 in September.

Table-1.14: Monthly trends in foreign exchange reserves ($ billion)

07-08 % Change 08-09 % Change 09-10 % Change 10-11 % Change

April 204.1 2.5 314.5 1.5 251.7 0.0 279.6 0.2

May 208.3 2.0 312.5 -0.6 262.3 4.2 273.5 -2.2
June 213.4 2.4 312.0 -0.1 265.1 1.0 275.7 0.8
July 229.3 7.4 306.1 -1.8 271.6 2.4 284.2 3.1
August 228.8 -0.2 295.3 -3.5 276.4 1.8
September 247.7 8.2 286.3 -3.0 281.2 1.7
October 262.4 5.9 252.8 -11.7 284.3 1.1
November 273.5 4.2 247.6 -2.0 288.1 1.3
December 275.9 0.8 255.9 3.3 283.4 -1.6
January 288.3 4.4 248.6 -2.8 280.9 -0.9
February 301.2 4.4 249.2 0.2 278.4 -0.9
March 309.7 2.8 251.7 1.0 279.1 0.3
Source: Reserve Bank of India

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