indian economy nov ficci

8/3/2019 Indian Economy Nov FICCI

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Current State

OfIndian Economy

February 2009

F e d e r at i o n o f I n d i a n C h a m b e r s o f C o m m e r c e a n d I n d u s t r yN e w D el h i


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Recent Trends in Indian Economy:

While the Indian economy registered an average growth of 8.8% during the 5 yearsending 2007-08, its growth is slacking today this is because the global economic crisis isgetting even deeper than before. Latest IIP numbers for February 2009 shows negative1.2% growth as against plus 9% growth recorded by the industry in the same month ofprevious year.

The six-core infrastructure industry managed to continue with a positive 2.2% growth,this growth was however much less than the growth number of 7% seen in the previousyear. All the constituent sectors except the crude petroleum were seen to post positivegrowth.

The recently adopted measures by the government, including reduction in fuel prices has

brought the WPI based inflation under control. The average inflation for February 2009was 3.45%. However, disaggregated numbers raise concerns over the price rise of theessential commodities like the primary food articles.

With the main economic indicators off the growth track the stock markets seems toappear unattractive for the FIIs. The exit from the markets have has an impact on theoverall economy as the countrys forex reserves got affected. The Sensex shuttledbetween 10K and 8K, which is indicative of the continued weakness in markets.

Money supply in the economy expanded in February 2009 by 16% and was less by apercent than the growth seen in previous year. The credit off take was on the rise,

borrowing by the government and by the commercial sector increased in February 2009.The net foreign exchange assets with the banks turned negative during the month. Growthin the aggregate deposits is maintained compared to the previous year and investments inthe government and approved securities decelerated to 22.2% compared to the increaseby 24.8% seen in the previous year.

The slowdown in tax collection was pronounced since November 2008. In February 2009gross tax collection rose by 7% compared to 26.7% recorded in the previous year. Thelow collection rate was on account the low corporate profits and tax concessions andreductions in the stimulus packages announced over time.

The total revenue loss due to tax reductions will be 0.2 % of GDP in 2008-09 and 0.5%of GDP in 2009-10. In the interim budget for 2009-10 the estimate for 2008-09 fiscaldeficit was revised to 6.0 % of GDP as against the budget estimates of 2.5%.

Overall trade is in declining state due to dry up in international markets cutting throughall sectors. Merchandise exports posted negative growth in straight 5 months startingOctober 2008 during 2008-09 compared to the growth numbers of previous year. While


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several packages for aiding the ailing exports were announced by the government thisyear however the recent numbers for February 2009 do not endorse any improvement.

Foreign direct investment continues to flow and was seen to be slightly impacted due tothe global economic concerns. By end of February 2009 foreign direct investment

received was USD 5 bn in excess of what was receive a year ago. FDI received so far upto February 2009 was USD 31 bn. The overall investments shrank and were close to USD18.5 bn when portfolio investments are included.

Forex reserves reduced sharply to USD 249 bn in February 2009. The reason to the sharperosion in the reserves were large outflows in the foreign investments from the equitymarkets and use of reserves in keeping the Rupee from weakening apart from thevaluation effects. The forex reserves maintained in February 2009 are enough for 10months of import cover. Although it is felt that a further decline may cause concern.

The huge outflow in investments increased the dollar demand and exerted pressure on the

Rupee to weaken to 52 against the USD. The Central bank continues its struggle inkeeping the rate of exchange below 50 and stable. The average exchange rate against theUSD in February 2009 was 49.22.


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Contents

Title Page

1 Industrial Growth 6

2 Core Infrastructure Industries 8

3 Trends in Inflation 10

4 Monetary Indicators 12

5 Stock Market Trends 16

6 Fiscal Management 18

7 Foreign Trade 20

8 Capital Inflows 21

9 Foreign Exchange Reserves 22

10 Trends in Exchange Rates 23


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LIST OF TABLES

`

Table-1.1 Growth of industry 7

Table-2.1 Growth in six core infrastructure industries-1 8Table-2.2 Growth in six core infrastructure industries-2 9

]Table-3.1 Monthly trends in Wholesale Price Index 10Table-3.2 Monthly trends in consumer prices 11

Table-4.1 Monetary indicators 12-15

Table-5.1 Month trends in major stock market indices 16

Table-6.1 Trends in tax collections of central government 18Table-6.2 Trends in central government finances 19

Table-7.1 Monthly trends in growth of merchandize trade 20

Table-8.1 Monthly trends in foreign investments 21

Table-9.1 Monthly trends in foreign exchange reserves 22

Graph-10.1 Monthly trends in exchange rate of Rupee 23


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1. Industr ial Growth :

The strong growth seen till the year 2007-08, lost steam in 2008-09 with the economy

turning extremely weak since November 2008 on account of the turmoil in the globaleconomy.

The adverse developments in the Indian industry made the industry post negative growthnumbers in February 2009 of 1.2% compared to a significantly high growth of 9.5%recorded in the same month of previous year. It has been seen that the constituents ofoverall index, especially production in mining and manufacturing fell by 1.6% and 1.4 %respectively during the month 2009 compared to 7.9% and 9.6% posted a year ago.Electricity sector was however seen to slow to 0.7% compared to 9.8% previously.

Basic and intermediate sectors lurched below 0% level, posting a negative 0.4% and

5.4% respectively while capital goods was seen to sustain its high growth levels achievedlast year maintaining above 10% growth in February 2009.

Consumer goods segment were also observed to post negative growth of 3% duringFebruary 2009 compared to positive 11.7% in the corresponding month of previous year.The growth in total consumer goods is seen to erode due to fall in the growth ofconsumer non durables category.

The disaggregated growth data on the manufacturing sector that included seventeen broadindustry sectors showed as many as nine industry sectors in February 2009 were in thenegative zone. These sectors were food products, cotton textiles, jute, textile products,

paper products, leather products, metal products and transport equipments. Six moresectors namely beverages & tobacco, wool, silk and manmade textiles basic chemicals,rubber, non metallic mineral products slowed in growth compared to that of the previousyear. Only machinery and equipment and other manufacturing industries exceeded thegrowth posted a year ago.

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

WeightsFebruary2007-08

February2008-09

Industry 100 9.5 -1.2

Mining 10.2 7.9 -1.6Manufacturing 79.4 9.6 -1.4Electricity 10.5 9.8 0.7

Use Based ClassificationBasic 35.6 7.3 -0.4Intermediate 26.5 8.5 -5.4Capital 9.3 10.7 10.4

Consumer Goods 28.7 11.7 -3.0Consumer non Durables 23.3 14.3 -5.5Consumer Durables 5.4 3.1 5.7


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16 industry sectorsFood Products 9.1 18.1 -28.1Beverages, Tobacco and Related Products 2.4 11.8 6.3Cotton Textiles 5.5 5.1 -12.1Wool, Silk and man-made fibre textiles 2.3 10.2 2.1

Jute and other vegetable fibre Textiles (exceptcotton) 0.6 864.1 -7.3Textile Products (including Wearing Apparel) 2.5 -0.4 -2.3Wood and Wood Products; Furniture andFixtures 2.7 -8.2 -16.5Paper & Paper Products and Printing,Publishing & Allied Industries 2.6 5.6 -2.4

Leather and Leather & Fur Products 1.1 15.4 -14.8Basic Chemicals & Chemical Products (exceptproducts of Petroleum & Coal) 14.0 16.1 2.2Rubber, Plastic, Petroleum and Coal Products 5.7 10.9 1.8Non-Metallic Mineral Products 4.4 3.8 2.4

Basic Metal and Alloy Industries 7.5 7.6 0.9

Metal Products and Parts, except Machineryand Equipment 2.8 19.2 -31.3Machinery and Equipment other than TransportEquipment 9.6 3.7 15.6Transport Equipment and Parts 4.0 3.7 -4.4

Other Manufacturing Industries 2.5 12.6 12.6Source: Central Statistical Organization


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2. Core infrastructure industries

Adverse market conditions seem to impact the six core infrastructure industries as it

managed to grow at 2.2% in February 2009 as against the 7.0% growth posted in theprevious year.

Growth at disaggregated levels show finished steel production inch up by 3.6% comparedto the growth of 2.3% in the previous year. The laggards in the month were cement thatgrew at 8.3% (12.8%), petroleum refinery by 0.5% (5.8%), coal by 6.0% (11.7%) andpower by 0.3%(9.6%). The only sector that posted negative was petroleum.

Table-2.1: Growth in six-core infrastructure industries (% change)

All infrastructureindustries Finished steel Cement Crude petroleum

2007-08 2008-09 2007-08 2008-09 2007-082008-

092007-

082008-

09April 5.9 3.6 2.7 4.0 5.8 6.9 1.4 0.9May 7.8 3.5 8.4 5.2 9.9 3.8 -1.6 3.2June 5.3 3.4 5.6 4.4 6.0 6.5 -0.7 -4.7July 7.2 4.3 10.8 1.9 9.4 8.8 0.9 -3.0August 9.0 2.7 9.6 5.5 16.7 1.9 6.4 -1.0September 5.8 5.1 9.5 5.8 5.4 7.9 -0.7 0.4October 4.5 3.4 5.2 -0.5 7.5 6.2 -0.1 -0.3November 5.3 1.8 4.8 -2.7 5.2 8.7 0.3 0.5December 3.2 1.6 1.8 -3.2 4.4 11.6 -1.5 -0.3

January 3.6 1.4 2.0 1.2 5.6 8.3 -0.2 -8.1February 7.0 2.2 2.3 3.6 12.8 8.3 2.3 -6.2March 9.6 1.2 9.3 -0.3April- February 5.8 3.0 5.6 2.4 7.9 7.2 0.5 -1.7

Source: Ministry of Industry


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Table-2.2: Growth in six-core infrastructure industries (% change)

Petroleum refinery Coal Power

2007-08 2008-09 2007-08 2008-09 2007-08 2008-09April 15.1 4.3 0.6 10.3 8.7 1.4May 14.9 0.1 0.5 8.3 9.3 2.0June 9.8 5.6 0.9 6.2 6.8 2.6July 4.6 11.8 1.1 5.5 7.5 4.5August 8.2 2.5 8.0 5.9 9.2 0.8September 6.9 2.6 6.2 10.7 4.3 4.4October 2.8 5.0 8.9 10.9 4.2 4.4November 5.2 -1.1 7.7 9.6 5.8 2.6December 1.9 3.0 8.4 9.4 3.8 0.7January 5.3 -2.6 7.9 6.3 3.7 1.4February 5.8 0.5 11.7 6.0 9.6 0.3March 0.0 9.3 3.6April- February 7.2 3.0 5.6 8.7 6.6 2.1

Source: Ministry of Industry


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3. Inflation Trends

The wholesale price index based inflation cools further. The average inflation forFebruary 2009 calculated on YoY basis was 3.5% and was lower than the 4.5% recordedin the previous year. The wholesale basket shows softening of fuel prices aiding to thegradual decline in inflation numbers. Some of essential items as the primary food articlesand items in the manufactured category were found to get dearer causing concern.

Table-3.1. Monthly trends in Wholesale price index- monthly average (% change)

2007-08 2008-09

Jan Feb Jan FebAll Commodities 4.5 5.3 5.3 3.5

I Primary Article 4.8 7.3 10.9 7.0(A) Food Articles 2.1 3.3 11.4 9.7(B) Non-Food Articles 11.1 11.3 6.8 2.8

II Fuel Power Light & Lubricants 3.9 4.8 -1.8 -3.5III Manufactured Products 4.5 4.6 5.7 4.7

(A) Food Products 6.1 7.1 6.0 8.6(B) Beverages, Tobacco & Tobacco Products 9.4 9.4 8.4 10.1(C) Textiles -3.8 -4.0 10.2 9.9(D) Wood & Wood Products 3.1 -0.6 9.9 10.1(E) Paper & Paper Products 1.0 1.3 5.3 4.7(F) Leather & Leather Products 0.7 -0.7 1.3 1.8(G) Rubber & Plastic Products 8.0 8.1 2.3 2.3(H) Chemicals & Chemical Products 7.4 7.3 3.5 2.7(I) Non-Metallic Mineral Products 9.4 8.8 1.9 2.3(J) Basic Metals Alloys & Metals Products 2.8 3.6 9.0 2.3(K) Machinery & Machine Tools 5.1 4.1 4.4 2.7(L) Transport Equipment & Parts 4.9 4.9 3.2 2.7

Source: RBI


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Table-3.2: Monthly trends in consumer prices (% change)

CPI-IW CPI-UNME CPI-AL CPI-RL2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09

April 6.7 7.8 7.7 7.0 9.4 8.9 9.1 8.6

May 6.6 7.8 6.8 6.8 8.2 9.1 7.9 8.8

June 5.7 7.7 6.1 7.3 7.4 8.8 7.5 8.8July 6.5 8.3 6.9 7.4 8.6 9.4 8.0 9.4

August 7.3 9.0 6.4 8.5 8.8 10.3 8.5 10.3

September 6.4 9.8 5.7 9.5 7.9 11.0 7.6 11.0

October 5.5 10.4 5.5 10.4 7.0 11.1 6.7 11.1

November 5.5 10.4 5.1 10.8 6.2 11.1 5.9 11.1

December 5.5 9.7 5.1 9.8 5.9 11.1 5.6 11.1

January 5.5 10.4 5.1 10.4 5.6 11.6 5.9 11.4February 5.5 9.6 6.0 - 6.4 11.8 6.1 10.8

March 7.9 7.9 7.6Source: Ministry of Labor, Center for Monitoring Indian Economy


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4. Monetary Indicators :

In February 2009, money supply swelled by 15.9% as against 17% in the same month ofprevious year. Not only was there a significant rise in the borrowings by the government

by 32.0% (3.5%) up to February 2009, the commercial sector rose by 13% howeverremained lower than the growth of 15.7% in the previous year. Foreign exchange assetsof banks eroded to the extent of 1.2% in February 2009 in contrast to the accretion by34.9% in February 2008.

Non-monetary liabilities have shrunk by 3.8% compared to an increase of 20.6% in thelast year. Aggregate deposits swelled by 16.9% compared to 18% in the previous year.Scale up in investments in government and approved securities were to the tune of 22.2%and this was little below 24.8% recorded in the previous year.

Table-4.1: Monetary sector indicators up to February (February 2008-09 over March 2007-08)

Variation in M3 (Rs crore) Variation in M3 (%)

2007-08 2008-09 2007-08 2008-09

April 549 18342 - 0.5

May 13565 75113 0.4 1.9

June 73824 84387 2.2 2.1

July 141021 140700 4.3 3.5

August 168534 208571 5.1 5.2

September 272933 264364 8.2 6.6

October 301059 331450 9.1 8.3

November 364660 374193 11.1 9.3December 389273 423509 11.7 10.6

January 488833 508078 14.7 12.7

February 564640 635810 17.0 15.9

March 682794 20.6Variation in net bank credit to

government (Rs crore)Variation in net bank credit to

government (%)

2007-08 2008-09 2007-08 2008-09

April 30617 -7763 3.7 -0.9

May 24085 14613 2.9 1.6

June 28117 32597 3.4 3.6

July 80964 69352 9.7 7.6

August 47656 66866 5.7 7.4September 43734 61550 5.2 6.8

October 20115 79275 2.4 8.7

November 32887 144131 3.9 15.9

December 7241 192566 0.9 21.2

January 9547 251500 1.1 27.7

February 28791 289967 3.5 32.0

March 9350 1.1


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Variation in bank credit to commercialsector (Rs crore)

Variation in bank credit tocommercial sector (%)

2007-08 2008-09 2007-08 2008-09

April -40585 -18293 -1.9 -0.7

May -46798 18626 -2.2 0.7

June -30547 42252 -1.4 1.6July -12151 57878 -0.6 2.3

August 37019 106693 1.7 4.2

September 114895 196248 5.4 7.6

October 103108 266620 4.8 10.4

November 150784 285691 7.1 11.1

December 201772 298809 9.5 11.6

January 243520 300584 11.4 11.7

February 334361 331758 15.7 12.9

March 432664 20.3Variation in net foreign exchange assets

of banks (Rs crore)Variation in net foreign

exchange assets of banks (%)

2007-08 2008-09 2007-08 2008-09

April -28024 18732 -3.0 1.5

May -35519 113765 -3.9 9.0

June -17945 103932 2.0 8.0

July 12534 75552 1.4 5.8

August 54117 54821 5.9 4.2

September 100304 77194 11.0 6.0

October 152762 12706 16.7 1.0

November 192930 -46375 21.1 -3.6

December 194508 -82201 21.4 -6.3

January 234167 -50810 25.6 -3.0

February 317796 -15845 34.9 -1.2March 354704 38.8

Variation in non-monetary liabilities ofbanks (Rs crore)

Variation in non-monetaryliabilities of banks (%)

2007-08 2008-09 2007-08 2008-09

April -38474 -25665 -6.7 -3.5

May -71601 71891 -12.9 9.7

June -94033 94555 -16.5 12.2

July -59345 62244 -10.4 8.0

August -29287 19970 -5.1 2.6

September -13480 70928 -2.4 9.2

October -24478 27452 -4.3 3.5

November 12707 9554 2.2 1.2December 14981 -13871 2.6 -1.8

January -809 -6341 -0.1 -0.8

February 117183 -29466 20.6 -3.8

March 114893 20.1

Variation of aggregate deposits of SCB(Rs crore)

Variation in aggregate depositsof SCB (%)


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2007-08 2008-09 2007-08 2008-09

April 5857 51 0.2 -May 31436 56760 1.2 1.8

June 54791 52837 2.1 1.7

July 162203 115943 6.2 3.6

August 164956 194522 6.3 6.1

September 261801 245198 10.0 7.7

October 301563 318500 11.5 10

November 340016 452567 13.0 14.2

December 341729 372413 13.1 11.6

January 412330 433140 15.8 13.5

February 476321 538924 18.1 16.9

March 580208 22.2Variation in investments o f SCB

(Rs crore)Variation in investments of

SCB (%)

2007-08 2008-09 2007-08 2008-09

April 15950 41554 2.0 4.3

May 26938 34147 3.4 3.5

June 49683 36233 6.3 3.7

July 80461 20135 10.2 2.1

August 112277 46723 14.2 4.8

September 117638 15526 14.9 1.6

October 155283 34216 19.6 3.5

November 170128 127431 21.5 13.1

December 128842 118304 16.3 12.2

January 161983 168741 20.5 17.4

February 196908 215975 24.8 22.2

March 181222 22.9

Variation in total credit of SCB(Rs crore) Variation in total credit of SCB(%)

2007-08 2007-08

April 43352 -19427 -2.2 -0.8

May -40435 10455 -2.1 0.4

June -36348 30534 -1.9 1.3

July -16675 44520 -0.9 1.9

August 31120 96420 1.6 4.1

September 106290 180554 5.5 7.6

October 132037 289611 6.8 12.3

November 165818 359819 8.6 15.2

December 218096 283501 11.3 12.0

January 234373 283247 12.1 12.0February 323571 306177 16.7 13.0

March 417304 21.6Variation in food credit of

SCB (Rs crore)Variation in non-food credit of

SCB (Rs crore)2007-08 2008-09 2007-08 2008-09

April 3366 -3375 -46718 -16052

May -3079 3980 -37356 6474

June -2564 5748 -33784 24786


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July -5462 -508 -11213 45029

August -8031 -56 39151 96476

September -9512 776 115802 179777

October -9800 7074 141837 282537

November -7554 5995 173372 353824

December -5509 8724 223605 274777

January -7338 5296 241711 277950

February -2209 4031 325780 302145

March -2121 419426Source: Reserve Bank of India


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5. Stock Market Trends

Markets showed weakness since last year on account of series of upheavals in theeconomy. The Sensex continues to drag around 10K levels. The momentary upwardthrusts seen in the indices are being countered by the still-negatives (indicators) in theeconomy. A quick recovery seems less likely in the near term, however it is also felt thatwith the improvement in the global economic situation stock markets would come backto the levels it has left behind.

Table-5.1: Monthly trends in stock market indices (beginning of month)Date BSE Sensex % Change S&P CNX NIFTY % Change

1.1.05 6679 7.2 2115 7.81.2.05 6552 -1.9 2058 -2.71.3.05 6651 1.5 2084 1.31.4.05 6605 -0.7 2068 -0.81.5.05 6195 -6.2 1917 -7.31.6.05 6730 8.6 2088 8.91.7.05 7210 7.1 2211 5.91.8.05 7669 6.4 2318 4.81.9.05 7876 2.7 2406 3.81.10.05 8492 7.8 2574 6.91.11.05 7944 -6.5 2387 -7.31.12.05 8944 12.5 2699 4.82.01.06 9390 5.0 2835 5.01.02.06 9859 5.0 2971 4.81.03.06 10566 7.7 3123 5.13.04.06 11564 9.4 3473 11.2

1.05.06 12128 4.9 3605 3.81.06.06 10071 -17.0 2962 -17.83.07.06 10695 6.1 3150 6.31.08.06 10751 0.5 3147 -0.11.09.06 11778 9.5 3435 9.13.10.06 12366 5.0 3569 3.91.11.06 13033 5.4 3767 5.51.12.06 13844 6.2 3997 6.12.01.07 13942 0.7 4007 0.31.02.07 14267 2.3 4137 3.21.03.07 13159 -7.7 3811 -7.82.04.07 12455 -5.3 3633 -4.73.05.07 14078 13.0 4150 14.21.06.07 14570 3.5 4297 3.52.07.07 14664 0.6 4313 0.41.08.07 14935 1.8 4345 0.73.09.07 15422 3.2 4474 2.91.10.07 17328 12.3 5068 13.21.11.07 19724 15.7 5866 13.81.12.07 19363 -1.8 5762 -1.81.01.08 20300 4.8 6144 6.6


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1.02.08 18242 -10.1 5317 -13.53.03.08 16677 -8.5 4953 -6.81.04.08 15626 -6.3 4739 -4.32.05.08 17600 12.6 5228 10.32.06.08 16063 -8.7 4739 -9.31.07.08 12961 -19.3 3896 -17.8

1.08.08 14656 13.1 4413 13.31.09.08 14498 -1.1 4447 0.81.10.08 13055 -9.9 3950 -11.13.11.08 10337 -20.8 3043 -23.01.12.08 8839 -14.5 2682 -11.926.12.08 9328 5.5 2857 6.530.01.09 9424 1.0 2874 0.502.03.09 8607 -8.6 2674 -6.9

Source: Reserve Bank of India


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6 Fiscal Management

In the penultimate month of the current fiscal the gross tax collection continues to growat single digit from double digit growth seen in the previous year. The growth incollection up to February 2009 has been only 7% compared to 26.7% in the previous

year. The state of poor tax collection seen in both the direct and indirect taxes was causeddue to low profits by corporate sector and indirect tax relief by the government to aid theailing industry and promote consumer spending. Rate of corporate tax collection has been17.4% in February 2009 compared to 37.1% registered in the previous year and incometax collected was only 7.5% in February this year in contrast to 42.4% previously.

There has been deterioration in the government finances due to large assistance by thegovernment. The revised consolidated deficit of the centre and the states is above 10% asestimated by EAC to the PM

Table-6.1: Trends in cumulative tax collections of central government (%)

Gross tax revenue Corporation tax Income tax

2007-08 2008-09 2007-08 2008-09 2007-08 2008-09April 5.4 52.2 -36.2 55.0 -4.1 127.7May 35.0 36.1 231.8 58.1 22.1 76.0June 28.1 28.4 48.2 43.4 25.6 50.0July 25.7 26.2 49.3 41.6 32.4 42.0August 24.1 25.0 46.1 45.9 34.4 35.7September 24.5 25.3 38.6 38.2 35.3 30.7October 25.8 20.3 43.0 30.3 34.5 21.9November 25.2 17.5 41.7 26.4 37.8 19.0December 27.0 9.6 37.1 11.9 42.7 6.8January 26.1 7.2 36.6 11.9 42.2 5.4February 26.7 6.9 37.1 17.4 42.4 7.5March 24.8 31.3 40.7

Customs Excise duties Other taxes

2007-08 2008-09 2007-08 2008-09 2007-08 2008-09April 30.1 25.0 29.6 -28.3 29.6 9.04May 23.1 24.1 13.5 1.3 37.1 26.7June 19.8 19.9 11.3 -0.9 43.5 26.0July 19.6 19.2 6.3 4.0 32.1 24.7August 18.6 17.0 4.9 6.5 33.9 17.4September 15.8 16.8 3.4 6.6 40.2 30.7October 18.2 14.4 3.8 6.3 37.4 16.2November 16.6 13.7 4.3 5.1 37.0 6.1

December 16.9 11.1 5.1 2.1 44.3 -2.6January 18.0 6.4 4.8 -2.6 39.9 -6.4February 19.1 1.7 6.0 -7.1 41.0 -10.0March 19.1 4.8 38.9


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Service Tax 2008-09

April 62.3May 40.8June 34.2

July 29.7August 28.7September 31.6October 31.8

November 30.2December 25.5January 24.6February 22.2March

Source: Controller General of Accounts

Table-6.2 Trends in central government finances: February 2009

Actual to budget estimates( in Rs crores)

2007-08 2008-09Revenue receipts 436389 437397

Tax revenue 352356 356390

Non tax revenue 84033 81007

Non debt capital receipts 42342 3794

Recovery of loans 4542 3751

Total receipts 478731 441191

Non plan expenditure 412850 515747

On revenue account 345686 482062

On capital account 67164 33685

Plan expenditure 171283 232577

On revenue account 145669 199848

On capital account 25614 32729

Total expenditure 584133 748324

Fiscal deficit 105402 307133

Revenue deficit 54966 244513

Primary deficit -38938 141334Source: Controller General of Accounts


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7 Foreign Trade

Exports fell flat and hence been experiencing negative growth since October 2008. Thelatest release of commerce ministry on merchandise trade shows exports in February2009 slide by 21.7%. Imports were also seen to shrink by 23% in February 2009

demonstrating limited consumption in the domestic economy.

Table-7.1: Monthly trends in growth of merchandize trade (% change) up to February2009

Exports Oil imports Non-oil imports Total imports

2007-08

2008-09

2007-08

2008-09

2007-08

2008-09

2007-08

2008-09

April 23.0 31.5 11.4 46.2 54.2 32.3 40.6 36.6May 18.0 12.9 2.9 50.8 41.5 17.4 26.3 27.1June 14.0 23.5 9.8 53.4 52.2 13.9 36.6 25.9July 18.5 31.2 8.7 69.3 25.8 38.7 20.4 48.1

August 18.9 - 19.5 - 39.5 - 32.6 -September 19.2 10.4 7.9 57.1 0.1 36.2 2.3 43.3October 35.6 -12.1 14.5 22 28.8 5.5 24.2 10.6November 26.8 -9.9 16.7 11.9 35.3 3.4 29.2 6.1December 16.0 -1.1 23.7 30.9 15.3 31.9 18.0 8.8January 20.4 -15.9 60.8 47.5 65.0 0.5 63.5 -18.2February 35.2 -21.7 39.5 -47.5 26.3 -10.2 30.5 -23.3March 26.5 76.6 18.7 35.2April- February - 7.3 - 26.8 - 15.6 - 19.1

Source: Ministry of Commerce


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8. Capital Inflows

Total foreign investments have plunged due to the fact that large number of foreigninstitutional investors chose the exit path mainly to park funds in instruments that aremore secured. However, the country continues to attract foreign direct investments andthis remain little impacted. The total foreign direct investments up to February 2009 wasUSD 31 billion compared to USD 25 billion in the same period of previous year.

Table-8.1: Monthly trends in foreign investments ($ million)

Foreign directinvestments

Portfolioinvestments

Total foreign investments

2007-08 2008-09 2007-08 2008-09 2007-08 2008-09April 1551 3749 1974 -880 3525 2869May 2120 3932 1852 -288 3972 3644

June 1238 2392 3571 -3010 4809 -618July 705 2247 6713 -492 7418 1775August 831 2328 -2747 593 -1916 2921September 713 2562 7081 -1403 7794 1159October 2027 1497 9564 -5243 117591 -3746November 1864 1083 -107 -574 1757 509December 1558 1362 5294 30 6852 1392January 1767 2733 6739 -614 8506 2119February 5670 1466 -8904 -1085 -3234 381March 4438 -1600 2838April-February 25455 31657 30995 -12966 56450 18691



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9. Foreign Exchange Reserves

Our current forex reserves stand at USD 249 billion and are enough to cover for 9-10

months of imports. The FII exit from security holdings is seen the main reason for thedrain in the forex reserves.

Table-9.1: Monthly trends in foreign exchange reserves ($ billion)

2005-06

%Change

2006-07

%Change

2007-08

%Change

2008-09

%Change

April 141.8 0.3 160.6 5.9 204.1 2.5 314.5 1.5May 138.9 -2.9 164.5 2.4 208.3 2.0 312.5 -0.6June 138.4 -0.5 162.9 -0.9 213.4 2.4 312.0 -0.1

July 140.5 2.1 164.0 0.6 229.3 7.4 306.1 -1.8August 143.8 3.3 166.4 1.4 228.8 -0.2 295.3 -3.5September 143.0 -0.6 165.3 -0.6 247.7 8.2 286.3 -3.0October 143.7 0.5 167.1 1.1 262.4 5.9 252.8 -11.7November 142.1 -1.1 175.5 5.0 273.5 4.2 247.6 -2.0December 137.2 -3.4 177.2 1.0 275.9 0.8 255.9 3.3January 139.5 1.7 180.0 1.6 288.3 4.4 248.6 -2.8February 143.1 2.5 194.6 8.1 301.2 4.4 249.2 0.2March 151.6 5.9 199.1 2.3 309.7 2.8



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10. Trends in the Exchange Rates

Pressure on Indian Rupee to weaken further is high due to the fact that FII outflowscontinue and exports are not likely to recover anytime soon. The Rupee showed gradual

weakness against the USD as it progressed from 48 to a $ to 50 to a $ during last tradingsessions of the month.

Graph 10.1: Exchange rate of Rupee (per unit of other currencies).

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indian economy nov ficci

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