Current state of Indian Economy

January 2011

Federation of Indian Chambers of Commerce and Industry

New Delhi
Highlights-January 2011

Quick Estimates of National Income released by CSO shows the real GDP growth at 8.0 percent
during the year 2009-10. The Advance Estimates also expects the Indian economy to grow at 8.6
percent during 2010-11. There is also a high expectation from the agriculture sector.

As per IIP estimates, industrial growth slowed to the level of 2.5 percent in December 2010 from the
growth of 18 percent in the same month of previous year.

The manufacturing sector logged 2 percent growth in IIP during December 2010; the slowest growth
since April 2009.

Volatility continues in the capital goods segment as the sector once again observed major
contraction in output by 9.3 percent in December 2010. However, the cumulative growth in capital
goods from April to December 2010 was more than 16 percent higher than the growth of 11.2
percent during the same period of 2009.

Six core infrastructure industries grew by 6.1 per cent in December 2010 after logging a 21-month
low growth. However, it was slightly low as compared to the numbers recorded in the same month
last year. In December 2010 growth was mainly seen in crude oil sector, petroleum refinery sector
and steel sector.

The WPI based inflation continues to remain on the higher side on account of the rising prices of
food articles. According to the Economic Survey 2010-11, this rise in food prices in December 2010
has been on account of supply side constraints e.g. vegetables, onions, tomatoes, fruits, milk, egg
and fish.

The broad money (M3) growth has been 10.8 percent during the period from March to December
2010-11; slightly down from the growth of 11.0 percent during the same period of previous fiscal.
While growth in the bank credit to the government remained sluggish however, increased to the
commercial sector during the year 2010-11.

The fiscal performance has been better with higher growth in revenue vis-a-vis the percentage
increase in expenditure during the month of December 2010. Subsequently, fiscal deficit narrowed
by 45 percent in the ninth month of 2010 -11 over the same month of previous fiscal.

Merchandise exports were valued USD 22.5 billion in December 2010, growing by 36.4 percent.
However, India’s imports experienced a significant decline by 11.1 per cent in December 2010. As a
result, the deficit saw a considerable reduction to USD 2.6 billion in December 2010 as against USD
11.8 billion in December 2009.
 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

List of Tables and Graphs

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 13
Table-1.11: Trends in central government finances: 13
Table-1.12: Monthly trends in growth of merchandize trade (% change) 14
Table-1.13: Monthly trends in foreign investments ($ million) 15
Table-1.14: Monthly trends in foreign exchange reserves ($ billion) 16
1 Industrial Growth

The industrial growth registered in December 2010 shows a slight increase by 2.5 percent as compared
to the growth of 18 percent in December 2009. The industry constituents , manufacturing sector shows
sluggish 2 percent expansion in manufacturing sector during the month which has been the slowest
growth recorded by this sector since April 2009. The other sectors like mining and electricity saw an
increase by 5.7 percent and 6 percent respectively in December 2010 as against the growth of 11.1
percent and 5.4 percent respectively in December 2009. According to industry experts, this slowdown in
overall IIP growth was mainly due to the base effect, with the index having recorded a steep growth in
December 2009.

In terms of the use-based classification, the pace of IIP growth was dampened considerably by a sharp
contraction in output by 9.3 percent in capital goods sector in December 2010 vis a vis the increase of
42.9 percent during the same month of 2009. Intermediate goods and basic goods posted moderate
growth of 6.6 percent and 6.0 percent respectively in December 2010 compared to the growth of 23.5
percent and 8.4 percent respectively in the previous year. This is a positive indication of continued
demand for finished goods during the month.

Consumer non-durables too displayed de-growth in December 2010 shrinking by 1.1 percent during the
month as compared to the growth of 3 percent in December 2009. Notably, consumer durables
recorded an encouraging expansion of 18.5 percent in December 2010, compared to the 41 percent
growth recorded in December 2009. As a result, a modest growth of 3.7 percent was observed in the
consumer goods industry in December 2010.

According to industry groups, twelve (12) out of the seventeen (17) industry groups have registered
positive growth in December 2010 as compared to the same month of the previous year. The highest
increase in output is evident in industries like ‘Jute and other vegetable fibre Textiles (except cotton)’
(58.6 percent), followed by ‘Other Manufacturing Industries’ (21.6 percent) and in ‘Metal Products and
Parts (21.0 percent). Interestingly, out of these twelve industries eight industry groups have secured
higher growth in December 2010 as against the growth rates achieved during the same month of 2009.
1.1: Growth of Industry: Recent Trends (in percentage)

Weights Dec Dec

2009 2010

Industry 100 18.0 2.5

Mining 10.2 11.1 5.7
Manufacturing 79.4 19.6 2.0
Electricity 10.5 5.4 6.0
Use Based Classification
Basic 35.6 8.4 6.0
Intermediate 26.5 23.5 6.6
Capital 9.3 42.9 -9.3
Consumer Goods 28.7 10.4 3.7
Consumer non Durables 23.3 3.0 -1.5
Consumer Durables 5.4 41.0 18.8

Table- 1.2: Growth in 17 Industry sectors

17 industry sectors
Food Products 9.1 -4.5 10.1
Beverages, Tobacco and Related Products 2.4 2.0 -8.0
Cotton Textiles 5.5 7.5 10.8
Wool, Silk and man-made fiber textiles 2.3 3.2 -2.2
Jute and other vegetable fiber Textiles (except 0.6
cotton) 39.8 46.5
Textile Products (including Wearing Apparel) 2.5 14.5 -0.8
Wood and Wood Products; Furniture and Fixtures 2.7 10.3 -17.2
Paper & Paper Products and Printing, Publishing & 2.6
Allied Industries 3.8 12.1
Leather and Leather & Fur Products 1.1 1.6 16.3
Basic Chemicals & Chemical Products (except products of 14.0
Petroleum & Coal) 24.7 -3.2
Rubber, Plastic, Petroleum and Coal Products 5.7 21.7 11.1
Non-Metallic Mineral Products 4.4 11.1 2.5
Basic Metal and Alloy Industries 7.5 7.6 9.1
Metal Products and Parts, except Machinery 2.8
and Equipment 0.4 21.4
Machinery and Equipment other than Transport 9.6
Equipment 42.9 -8.1
Transport Equipment and Parts 4.0 89.0 6.4
Other Manufacturing Industries 2.5 -10.4 21.6
Source: Central Statistical Organization
 2 Core Sector growth

The growth in output of six core infrastructure industries recovered sharply to 6.6 per cent in December
2010, after having slumped to a 21-month low of 3 per cent in November 2010. The growth in December
2010 has also been high as compared to 6.2 percent increase during the same month of 2009. This
satisfactory performance is mainly buoyed by the smart jump in the production of crude oil, petroleum
refinery products and steel industry. While the crude oil production increased by 15.8 percent during
the month as against 1.1 percent increase in December 2009. The growth in petroleum refinery sector
shows healthy signs with 8.3 percent growth in Dec 2010 compared to an increase by 0.9 percent in
December 2009. The finished steel production grew at 11.2 per cent in December 2010, the growth was
9.6 per cent in December 2009.

Table-1.3: Growth in six-core infrastructure industries (% change) December 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 3.7 3.3 0.3 7.7 1.9 17.6 1.6 -1.0 -2.6 15.0
September 4.1 4.3 2.5 2.3 0.8 5.8 8.1 6.5 5.2 -0.4 -0.5 12.5
October 2.4 3.9 7.0 -3.8 2.5 12.1 6.2 5.3 16.8 -0.2 -2.1 13.7
November 0.8 5.9 2.3 -6.3 11.7 4.4 8.7 9.0 -11.6 0.5 -1.6 17.0
December 0.7 6.2 6.6 -8.0 9.6 11.2 11.6 11.0 -2.2 -0.3 1.1 15.8
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 3.1 -2.3 5.9 12.9 1.0 0.8 10.2 1.0
September 2.8 3.4 -10.2 11.2 6.5 -2.0 4.4 7.4 1.3
October 5.0 7.2 -4.8 10.6 6.8 0.8 4.4 4.4 8.3
November -1.1 4.8 -3.7 9.7 4.7 0.7 2.6 3.1 3.3
December 3.0 0.9 8.3 11.2 1.2 3.0 1.5 6.6 4.3
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

 3 Inflation trends

The aggregate inflation rose to 8.4 percent in December 2010. This sudden increase in the whole sale
prices is primarily because of rise in the prices of primary food articles (especially vegetables) and fuel
products. While the WPI of food articles rose by 13.5 percent in December 2010 from 10.1 percent in
previous month i.e. November. Inflation in fuel group surged from 10.3 percent in November 2010 to
11.2 percent in December 2010.

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

2009 2010

Nov Dec Nov Dec

All Commodities 4.5 6.9 8.1 8.4
I Primary Article 14.3 18.0 14.7 16.5
(A) Food Articles 16.7 20.8 10.1 13.5
(B) Non-Food Articles 4.9 10.5 25.5 22.3
II Fuel & Power -1.1 4.6 10.3 11.2
III Manufactured Products 2.3 3.6 4.9 4.5
(A) Food Products 17.9 19.3 1.1 0.4
(B) Beverages, Tobacco & Tobacco Products 6.5 6.5 6.0 5.3
(C) Textiles 2.9 4.8 11.7 10.3
(D) Wood & Wood Products 10.0 10.5 2.2 3.4
(E) Paper & Paper Products 1.4 2.7 5.7 4.5
(F) Leather & Leather Products 5.9 5.9 -1.8 -1.2
(G) Rubber & Plastic Products 0.2 2.0 7.5 5.7
(H) Chemicals & Chemical Products -0.9 1.5 5.2 4.4
(I) Non-Metallic Mineral Products 7.2 5.8 2.1 3.6
(J) Basic Metals Alloys & Metals Products -7.4 -6.0 7.0 7.9
(K) Machinery & Machine Tools -0.3 0.3 2.9 2.8
(L) Transport Equipment & Parts 3.3 3.2 2.7 2.6
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 11.5 9.4 12.9 11.0 9.4 12.7 11.2
August 9.0 11.7 9.9 8.5 12.9 10.3 10.3 12.9 9.7 10.3 12.7 9.7
September 9.8 11.6 9.8 9.5 12.4 10.4 11.0 13.2 9.1 11.0 13.0 9.3
October 10.4 11.5 9.7 10.4 12.0 9.6 11.1 13.7 8.4 11.1 13.5 8.5
November 10.4 13.5 8.3 10.8 13.9 8.4 11.1 15.7 7.1 11.1 15.7 7.0
December 9.7 15.0 9.5 9.8 15.5 9.4 11.1 17.2 8.0 11.1 17.0 8.0
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
4 Monetary Indicators

With the expansion of 10.8 percent the broad money supply stood at Rs 602666 crores in Decxember
2010 as compared to the growth of 11.0 percent in the previous year. The net bank credit to the
government grew slowly at 7.5 percent during in December 2010, this was lower in comparison to the
growth of 19.9 percent observed during the same period of 2009-10. On the contrary the bank credit to
the commercial sector grew by 15.3 percent during the period in 2010-11 which was 8.4 percent during
the same period of 2009-10.

Aggregate deposits in the SCBs went up by 10.7 percent in the last month of 2010 over April, as
compared to the increase of 11.3 percent during the same period of previous fiscal. During this period
in 2010-11, the investments in government and other approved securities registered a growth of 4.6
percent as against the high growth of 21.4 percent during the same period in 2009-10. The only
significant rise was evident in total bank credit that swelled by 16 percent during the period in 2010-11
from the 9 percent growth seen during the same period of 2009-10.

Table-1.7: Monetary sector indicators – up to December (December 2010-11 over April 2010)

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 270884 5.2 5.9 4.1
September 264364 325757 272432 6.6 6.8 4.9
October 331450 388071 468953 8.3 8.1 8.4
November 374193 435782 476052 9.3 9.1 8.5
December 423509 528258 602666 11.0 10.9 10.8
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

5 Stock market trends

The key benchmark indices of Indian stock market showed modest rise in both the markets during the
last month of the calendar year 2010. The index BSE Sensex and the S&P CNX Nifty on 3rd January 2010
closed at 20, 561 k and 6157 k respectively.

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

S&P CNX
Date BSE Sensex % Change % 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
02.08.10 18081 3.3 5431 3.4
01.09.10 18205 0.7 5471 0.7
01.10.10 20445 12.3 6143 12.3
01.11.10 20355 -0.4 6118 -0.4
01.12.10 19850 -2.5 5960 -2.6
03.01.11 20561 3.6 6157 3.3
Source: Reserve Bank of India
6 Fiscal indicators

During the period from April to December 2010-11, the total expenditure of central government
amounted to Rs 786852 crores up from Rs 707540 crores during the same period in 2009-10. On the
revenue side, the total revenue receipt was Rs 584268 crores during the nine month period of 2010-11
as against Rs 389271 crores in 2009-10. While the total expenditure showed an increase of 11.2 percent,
the revenue growth has been much higher at 50.1 percent during the period from April to December of
the current fiscal. As a result the magnitude of fiscal deficit went down by almost 45 percent over the
period in 2010-11.

Sustained growth was seen in tax revenue of the government in the current fiscal and which continued
in the month of December 2010. Both the corporate and income taxes in direct tax category registered
higher increase during the month as compared to the increase in the same month of 2009. According
the Ministry of Finance, this persistent rise in direct tax has been possible due to rationalization of tax
structure, improvement in tax administration and persistent efforts of the employees of income tax
department.

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 27.3 45.9 2.4 18.3 35.7 8.1 13.9
September 25.3 -7.6 25.3 38.2 7.7 17.9 30.7 7.2 13.6
October 20.3 -7.5 26.4 30.3 6.5 21.0 21.9 10.5 10.7
November 17.5 -7.8 26.8 26.4 6.6 19.9 19.0 9.8 11.8
December 9.6 -2.5 26.8 11.9 16.8 20.4 6.8 12.2 13.1
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

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 59.8 6.5 -24.5 43.3 17.4 -1.97 -28.9
September 16.8 -32.9 61.8 6.6 -22.9 41.1 30.7 -20.5 -30.7
October 14.4 -31.7 63.7 6.3 -21.7 38.9 16.2 -17.2 -28.7
November 13.7 -31.2 64.2 5.1 -20.0 37.3 6.1 -15.0 -24.2
December 11.1 -29.2 65.8 2.1 -18.2 36.5 -2.6 -24.2 -20.0
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 13.8
September 31.8 -3.7 15.9
October 31.8 -5.3 17.3
November 30.2 -6.2 16.0
December 25.4 -5.9 19.7
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: December 2010

Actual to budget estimates

( in Rs crores)
09-10 10-11
Revenue receipts 389271 584268
Tax revenue 307591 391148
Non tax revenue 81680 193120
Total receipts 397560 615603
Non plan expenditure 497381 536898
On revenue account 460970 487692
On capital account 36411 49206
Plan expenditure 210159 249954
On revenue account 179555 212885
On capital account 30604 37069
Total expenditure 707540 786852
Fiscal deficit 309980 171249
Source: Controller General of Accounts
7 Foreign Trade

India’s merchandise exports maintained the growth momentum during December 2010. It registered
higher growth of 36.5 percent as against 9.3 percent growth in December 2009. The growth in
December also remained higher compared to the 26.5 percent growth observed in the previous month
(November).

Imports during December 2010 were valued at USD 25 billion representing a negative growth of 11.1 per
cent over the imports of USD 28.3 billion in December 2009. The resultant trade deficit was USD 2.6
billion in December 2010 as compared to USD 11.8 billion in December in the previous year.

Table-1.12: Monthly trends in growth of merchandize trade (% change) up to December 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 22.5 76.7 -45.5 12.4 39.6 -25.5 41.1 51.2 -32.4 32.2
September 10.4 -13.8 23.2 57.1 -33.5 14.4 36.2 -30.4 31.2 43.3 -31.3 26.1
October -12.1 -6.6 21.3 22 -9.3 0.3 5.5 -17.2 9.9 10.6 -15.0 6.8
November -9.9 18.2 26.5 11.9 7.3 2.3 3.4 -5.9 15.1 6.1 -2.6 11.2
December -1.1 9.3 36.4 -30.9 42.8 -16.0 31.9 22.4 -9.0 8.8 27.2 -11.1
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

8 Capital flows

The foreign institutional investment is badly shaped. High volatility is seen in foreign institutional flows
(FIIs) to India which has been negative. What is more serious and cause of worry is the FDI, which are
long term overseas investments as the trend seen in the FDI inflows in the past few months has not
been encouraging.

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 1297 -618 2935 2677
July 2247 3476 1785 -492 2077 9114 1775 6508 10899
August 2328 3268 1330 593 926 -440 2921 4194 890
September 2562 1512 2118 -1403 4999 10577 1159 6511 12695
October 1497 2332 1392 -5243 2922 28704 -3746 5254 30096
November 1083 1722 1628 -574 1274 -19811 509 2996 -18183
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
9 Foreign Exchange Reserves

India’s forex registered an increase by USD 4.9 billion during the month of December 2010. India’s
foreign exchange reserves were valued at USD 297.3 billion, an increase by 2.3 percent in December
2010 as against the 1.9 percent decline in November. The upsurge in foreign currency assets from USD
263.2 billion in November 2010 to USD 267.8 billion in December 2010 attributed to the increase in
forex kitty during the month.

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 1.8 283.1 -0.3
September 247.7 8.2 286.3 -3.0 281.2 1.7 292.9 3.5
October 262.4 5.9 252.8 -11.7 284.3 1.1 298.0 1.7
November 273.5 4.2 247.6 -2.0 288.1 1.3 292.4 -1.9
December 275.9 0.8 255.9 3.3 283.4 -1.6 297.3 2.3
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