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ECONOMIC SNAPSHOT
Advance
Estimates of National Income for the year 2009-10
(a) Estimates at constant
(2004-05) prices
Gross Domestic Product
(GDP)
GDP at factor cost at constant
(2004-05) prices in the year 2009-10 is estimated
at US$ 961.89 billion (Rs. 44,64,081 crore) showing
a growth rate of 7.4 percent over the Quick Estimates
of GDP for the year 2008-09 of US$ 889.91 billion
(Rs. 41,54,973 crore).The upward revision in the
GDP growth rate is mainly on account of higher
performance in ‘agriculture, forestry and
fishing’, ‘mining and quarrying’
and ‘manufacturing’, than anticipated.
In
the case of ‘mining and quarrying’,
the Index of Industrial Production of Mining (IIPMining)
registered a growth rate of 9.7 per cent during
2009-10, as against the growth rate of 8.3 percent
during April-November, 2009, which was used in
the Advance Estimates. Due to this increase in
the IIP-Mining, the growth rate in GDP is now
estimated at 10.6 percent, as
against the advance estimate growth rate of 8.7
percent.
Similarly,
the IIP of manufacturing registered a growth rate
of 10.9 percent during 2009-10, as against the
growth rate of 7.7 percent during April-November,2009.
Due to this increase in the IIP, the GDP of ‘manufacturing’
sector is now estimated at 10.8 percent,as against
the Advance estimate growth rate of 8.9 percent.
The
sectors which showed growth rates of 5 percent
or more, are ‘mining and quarrying’
(10.6 percent), ‘manufacturing’(10.8
percent), ‘electricity, gas and water supply’(6.5
per cent)'construction’(6.5 percent),'trade,
hotels,transport and communication'(9.3 per cent),'financing,
insurance, real estate and business services'
(9.7 percent), and 'community,
social and personal services' (5.6 percent). The
‘agriculture, forestry and fishing’
sector, however registered a growth rate of 0.2
percent.
Gross National Income
The gross national income
(GNI) at factor cost at 2004-05 prices is now
estimated at US$ 890.29 billion (Rs. 44,39,072
crore) during 2009-10, as against the previous
year’s Quick Estimate of US$ 886.69 billion
(Rs. 41,38,174 crore). In terms of growth rates,
the gross national income is estimated to rise
by 7.3 percent during 2009-10, in comparison to
the growth rate of 6.8 percent in 2008-09.
Per Capita Net National
Income
The per capita net national income in real terms
(at 2004-05 prices) during 2009-10 is estimated to attain a level of US$ 720.23 (Rs.
33,588) as compared to the Quick Estimates for
the year 2008-09 of US$ 682.40 (Rs. 31,821).The
growth rate in per capita income is estimated
at 5.6 percent during 2009-10.
(b) Estimates at current
prices
Gross Domestic Product
GDP at factor cost at current
prices in the year 2009-10 is estimated at US$
1,257.41 billion (Rs. 58,68,331 crore),showing
a growth rate of 12.2 percent over the Quick Estimates
of GDP for the year 2008-09 of US$ 1,120.46 billion
(Rs. 52,28,650 crore).
Gross National Income
The GNI at factor cost at current
prices is now estimated at US$ 1,250.40 billion
(Rs. 58,35,493 crore) during 2009-10, as compared
to US$ 1,115.84 billion (Rs. 52,07,534 crore)
during 2008-09, showing a rise of 12.1 percent.
Per Capita Net National
Income
The
per capita income at current prices during 2009-10
is estimated to attain a level of
US$ 950.87 (Rs. 44,345) as compared to the Quick
Estimates for the year 2008-09 of US$ 860.73 (
Rs. 40,141), showing a rise of 10.5 percent.
Quarterly
Estimates of GDP For Q4 (January-March), 2009-10
(a) Estimates at constant
(2004-05) prices
GDP at factor cost at constant
(2004-05) prices in Q4 of 2009-10 is estimated
at US$ 259.69 billion (Rs. 12,05,119 crore), as
against US$ 238.01 billion (Rs. 11,10,041 crore)
in Q4 of 2008-09, showing a growth rate of 8.6
per cent.
The
sectors which registered significant growth rates
in Q4 of 2009-10 over Q4 of 2008-09 are ‘mining
and quarrying’ at 14.0 per cent, ‘manufacturing’
at 16.3 per cent, ‘electricity, gas and water
supply’ at 7.1 per cent, ‘construction’
at 8.7 per cent, 'trade, hotels, transport and
communication' at 12.4 per cent, and 'financing,
insurance, real estate and business services'
at 7.9 per cent.
(b)
Estimates at current prices
GDP at factor cost at
current prices in Q4 of 2009-10 is estimated at
US$ 349.43 billion ( Rs. 16,21,812 crore), as
against US$ 292.02 billion (Rs. 13,61,871 crore)
in Q4 of 2008-09, showing a rise of 19.1 per cent.
Monthly Economic Report
- Food grains (rice and wheat)
stocks held by FCI and State agencies were 42.84
million tonnes as on
April 1, 2010.
- Overall growth in the Index
of Industrial Production was 17.6 per cent during
April 2010 as compared to 1.1 per cent in April
2009. During 2009-10, IIP growth was 10.4 per
cent compared to 2.8 per cent during 2008-09.
- Core infrastructure-supportive
sectors grew by 5.1 per cent in April 2010 compared
to a growth of 3.7 per cent in April 2009. During
2009-10, these sectors grew at 5.5 per cent
as compared to 3.0 per cent during 2008-09.
- During the financial year
2010-11 (up to May 21, 2010), broad money (M3)
increased by 1.7 per cent, compared to 3.7 per
cent during the corresponding period of the
last year.
- Exports, in US dollar terms
increased by 36.2 per cent and imports increased
by 43.3 per cent, during April 2010.
- Foreign exchange reserves
(excluding gold, SDRs and reserve tranche position
in the IMF) stood at US $ 248.2 billion at end-May
2010, compared to US $ 251.7 billion at end-May
2009.
- Rupee appreciated against
Pound Sterling, and Euro and depreciated against
US dollar and Japanese Yen in the month of May
2010 over April 2010.
- Year-on-year inflation in
terms of Wholesale Price Index was 10.16 per
cent for the month of May 2010 as compared to
1.38 per cent in May 2009.
- Tax revenue (net to Centre)
during April-March, 2009-10 recorded a growth
of 3.6 per cent compared with corresponding
period of 2008-09.
Agriculture
- The
third advance estimates of crop production released
by the Ministry of Agriculture showed an upward
revision as compared to their second advance
estimates in the production of rice (89.31 million
tonnes from 87.56 million tones), wheat (80.98
million tones from 79.06 million tones), cotton
(228.34 from 223.18 lakh bales of 170 kg. each)
and sugarcane (274.66 million tones from 251.27
million tones) during 2009-10. Due to this upward
revision in the production, the growth rate
in ‘agriculture, forestry and fishing’sector
in 2009-10 has shown a growth rate of 0.2 percent,as
against the growth rate of (-) 0.2 percent in
the Advance estimates.
- The Centre increased the
minimum support price of jute by over 14 percent
to US$ 33.77 (Rs 1575) per quintal for 2010-11.
The decision to hike the minimum support price
(MSP) for the TD-5 grade (ex-Assam) variety
of jute was taken at the meeting of the Cabinet
Committee on Economic Affairs (CCEA). "The
increase in the MSP of raw jute is expected
to encourage the farmers to step up investment
in jute cultivation and thereby production and
productivity of Jute in the country," the
official statement said.Jute MSP was at US$
29.48 (Rs 1,375) per quintal last year. The
government also said that the Jute Corporation
of India (JCI) would continue to act as the
Nodal Agency to buy jute at the MSP level. Jute
production is estimated to be 96.98 lakh bales
during 2009-10 season, compared with 96.34 lakh
bales in a year-ago period. One bale is 180
kgs. Major jute producing states in the country
are West Bengal, Bihar, Assam, Orissa, Andhra
Pradesh and Tripura.
- The Cabinet Committee on
Economic Affairs (CCEA) approved US$ 0.13 billion
(Rs 632 crore) for the National Horticulture
Board to implement its existing schemes and
promote 25,000 integrated commercial horticulture
projects in the 11th plan period ending 2012."It
is expected that with the budgetary support
during the 11th Five Year Plan, additional infrastructure
for post-harvest, cold-chain and primary processing
would be created to handle about 25 lakh tonnes
of horticultural produce," said an official
statement.An investment of US$ 0.11 billion
(Rs 495.61 crore) by the board through back-ended
subsidy for hi-tech commercial horticulture
and cold chain infrastructure is expected to
attract US$ 0.53 billion (Rs 2,500 crore)-US$
0.64 billion (Rs 3,000 crore) investment in
the sector, it said.
- India's cotton production
may increase by over six per cent to a record
25 million bales in 2010-11 season if the country
receives normal monsoon this year, the US Department
of Agriculture has forecast. Cotton output is
pegged at 23.5 million bales (one bale equals
170 kg) in 2009-10 marketing season (August-July)."Assuming
normal 2010 monsoon, cotton production in India's
marketing year 2010-11 is forecast to increase
to a record 25 million bales on expected record
planting and improved yields," the USDA
said in a report.The Department noted that the
area under cotton is forecast to increase marginally
to a record 10.3 million hectares from 10.26
million hectares provided there is "timely
and well distributed monsoon at the time of
planting".
- Agricultural cooperative
major National Agricultural Cooperative Marketing
Federation of India (NAFED) is eyeing the markets
in the Gulf and Europe with food products aimed
primarily at the Indian diaspora."There
have been demands in the last several years
from Indians in the Gulf and Europe to make
our products available for them. We have now
decided to source India-specific products, process
and package them and export them to the Gulf
and Europe. The prices will be competitive,"
NAFED managing director C.V. Ananda Bose said.The
NAFED move will be a boon for the huge Indian
population in the Gulf and European cities like
London. For the Gulf market, NAFED, the largest
farmers' cooperative in the country, will ship
Kerala-specific products because of the large
presence of workers from the state.
- The first of the genetically
modified seed varieties developed in India will
make it to the market soon as the government
has registered two such wheat varieties developed
by Mahyco, an Indian seeds company. This will
create competition in the market dominated by
multinational companies and thereby help lower
seed prices. The Protection of Plant Varieties
and Farmers’ Rights Authority (PPV&FR
Authority) has registered two hybrid wheat varieties.Mahyco
is engaged in the research, production, processing
and marketing of 115 products in 30 crop species
including cereals, oilseeds, fibre and vegetables.
- The Government is contemplating
to enhance milk production to 180 million tonnes
by 2021-22 through the National Dairy Plan which
is a strategic plan prepared by the National
Dairy Development Board (NDDB). The Plan has
three major components, namely, enhancing milk
production through increased productivity, substantially
strengthening and expanding the infrastructure
for procurement, processing, marketing and quality
assurance through existing institutional structures
and by promoting new ones, and human resource
development.According to the Basic Animal Husbandry
Statistics 2008, the average daily milk production
was 2.09 Kgs per indigenous cow and 6.52 Kgs
per crossbred cow in 2007-08.
Capital Market
- According to The Centre
for Monitoring Indian Economy (CMIE), total
floatations stood at US$ 7.74 billion (Rs.36,096.3
crore) in March 2010, the highest collected
since July 2009. While domestic floatations
stood at US$ 7.64 billion ( Rs.35,637.9 crore)
in March 2010, overseas floatations stood at
US$ 0.09 billion (Rs. 458.4 crore). The private
placement of debt and equity was the most sought
after route to raising funds in March 2010.
More than US$ 4.29 billion (Rs. 20,000 crore)
was raised via this route.
- Market regulator SEBI proposed
to reduce the time between public issue closure
and listing to 12 days from the existing (up
to) 22 days. This would be applicable to public
issues opening on or after May 1, 2010.The regulator
also said that the ASBA (Application Supported
by Blocked Amount) process would undergo suitable
modification to make it consistent with the
new timelines. SEBI said the new rule was aimed
at making the existing public issue process
more efficient.Market participants said that
reducing the listing time to 12 days was a good
move.Investors who borrowed funds to invest
in IPOs would stand to gain from a reduction
in interest costs.
- The SEBI also extended the
ASBA facility to institutional investors in
public issues.This would be applicable for issues
opening on or after 1 May 2010.Currently,only
individuals could apply through ASBA. Last month
SEBI made it compulsory for institutional investors
to pay 100 pe cent money upfront for public
issues as against 10 per cent currently.
- CMIE Overall Share Price
Index (COSPI) rose by 4.2 percent in March 2010
after two consecutive months of decline in January
2010 and February 2010. The rise was seen across
all large, mid-and small- sized companies. While
the index started off on a positive note, it
fell marginally in the first half of March 2010,
before notching up gains in the latter half
of the month. The NSE Nifty also rose by 6.6
per cent in March 2010 and its average daily
trading volumes increased by 11.2 per cent to
US$ 2.92 billion (Rs. 13,631 crore) during the
month.The largest gainer among the major CMIE
sectoral indices in March 2010 was the CMIE
castings & forgings index which rose by
14.6 per cent compared to the previous month.
- As per CMIE,March 2010 Nifty
futures expired (on 25 March 2010) on a positive
note with strong long roll-overs in Nifty April
2010 futures. A similar trend was witnessed
in key stocks like Infosys Technologies, L&T,
HDFC Bank, Bharati Airtel and Reliance Industries.
Rollovers in derivative contracts require the
open interest in the expiring series (near-month)
to be transferred to the next month. The long
roll-overs in future contracts indicate that
the traders are bullish on the underlying index
or stocks.
- Accordig to CMIE,Foreign
Institutional Investor (FII) buying on the bourses
surged during the month of March in 2010. They
brought in US$ 4.03 billion (Rs.18,833.8 crore)
after withdrawing US$ 0.24 billion (Rs.1,136.8
crore) in January 2010 and injecting a mere
US$ 0.45 billion (Rs. 2,113.8 crore) in February
2010. Net investments in equities remained positive
throughout the month.
- In March 2010, market regulator,
the Securities & Exchange Board of India
(SEBI) issued a circular to all mutual funds.
According to the circular:
- The
present maximum limit of the new fund offer
(NFO) period of 30 days in case of open
ended schemes and 45 days of close ended
schemes shall be reduced to 15 days (except
ELSS schemes).
- Mutual funds shall
use the NFO proceeds only on or after the
closure of the NFO period.
- The
mutual fund should allot units, refund money
and dispatch statement of accounts within
five business days from the closure of the
NFO.
- All
the schemes (except ELSS) shall be available
for ongoing repurchase, sale, trading within
five business days of allotment.
- Mutual
funds have to compulsorily provide ASBA
facility to the investors of all NFOs launched
on or after 1 July 2010.
- When
units of an open-ended scheme are sold,
and sale price is higher than the face value
of the unit, part of the sale proceeds that
represents unrealised gains shall be credited
to a separate account (Unit Premium Reserve)
and the same shall not be utilised for the
determination of distributable surplus.
Henceforth, mutual funds will pay dividends
only from realise gains. Mutual funds oppose
this move as they feel it will turn fund
managers into traders. They will be forced
to churn their portfolios regularly in order
to pay dividends to their investors.
- SEBI barred mutual
funds from entering into any revenue sharing
agreements with offshore funds for investments
made on behalf of fund-of-fund schemes,
which invest in other funds as this would
create a conflict of interest. Any commission
or brokerage received from the underlying
fund shall be credited into the concerned
scheme's account.
Money and Banking
- As per CMIE,the rate of
growth in money supply is expected to improve
in 2010-11 due to better economic growth, healthy
deposit growth and higher capital inflows. The
Country's economy is expected to expand by 9.2
per cent in 2010-11 compared to an estimated
7.1 per cent in 2009-10. Foreign exchange reserves
are expected to increase by nearly USD 43 billion
compared to nearly USD 26 billion in 2009-10.
Deposit mobilisation is expected to improve
to 20 per cent from around 18 per cent in 2009-10.
- According to CMIE, Scheduled
commercial bank credit is expected to grow by
16 per cent in 2010-11. Banks are expected to
disburse Rs. 5.2 lakh crore as credit during
the year. This is much higher compared to the
Rs 4.6 lakh crore estimated for 2009-10.
- CMIE expects higher credit
offtake in 2010-11 on the back of a sustained
growth in industrial production and substantial
capacity expansion plans of corporate India.
Industrial production is expected to grow by
more than nine per cent for the second consecutive
year. This will call for higher working capital
credit requirements from companies. To enable
this high production growth, corporate India
will significantly expand capacities in 2010-11.
Compared to estimated Rs 4 lakh crore worth
of investment projects getting completed in
2009-10, we expect projects worth Rs.6.5 lakh
crore to get completed in 2010-11. Credit growth
would be even higher had it not been for the
recent trend of corporates increasingly resorting
to non-banking sources of funds.
- According to M V Nair,
chairman and managing director of Union Bank
of India and chairman of the Indian Banks Association,
the general expectation is that the GDP will
grow by 8.5 per cent and credit and deposit
growth will hover in the range of 20-22 percent.
- Bank of Baroda expects
bank credit to grow by 18-19 per cent in 2010-11.
It recorded a growth of 25 per cent in its retail
portfolio in 2009-10 and it expects the trend
to continue. IDBI grew its home loan portfolio
by 30 per cent in 2009-10. It expects the same
to grow by 25 per cent in 2010-11. State Bank
of India is expecting to grow its loan portfolio
by 20 per cent in 2010-11.
- Indian
Bank is expecting a credit growth of 20 per
cent. ICICI Bank is expecting its advances to
grow by 15 per cent in 2010-11. It expects its
"home loans, car loans and project and
working capital finance businesses" to
together grow by 20-22 per cent.
- According to R Gopalan,
secretary, financial services division of the
ministry of finance, the Government set public
sector banks a target of 20 per cent for credit
and deposit growth for fiscal 2010-11. According
to him, the government was of the view that
the economy would grow at 8.5 per cent next
fiscal and it would require a systemic credit
growth of 20 per cent.
- According to CMIE,growth
in deposits of scheduled commercial banks is
expected to improve from 17 per cent in 2009-10
to at least 20 per cent in 2010-11. This growth
will be primarily driven by higher overseas
inflows. We expect overseas inflows to improve
from an estimated US$ 16.09 billion (Rs. 75,135
crore) in 2009-10 to US$ 39.88 billion (Rs.
1,86,273 crore) in 2010-11 on the back of continuing
strong foreign investment inflows and higher
external commercial borrowings. On a net basis,
foreign exchange reserves of the country are
expected to grow by nearly US$ 43 billion in
2010-11.
- As per CMIE,Improvement
in deposit rates, faster growth in money supply
and much higher overseas inflows together are
expected in an improvement in the rate of growth
in deposits to 20 per cent in 2010-11 from 17
per cent in 2009-10.
- According to CMIE,demand
for funds by corporates grew by about 34 per
cent during 2009-10, funds supply by banks through
non-food credit was higher by only 12 per cent.
Non-bank sources of funds, on the other hand,
rose by a whopping 72 per cent. As a result,
corporates ended up sourcing 47 per cent of
their funds or Rs. 4.1 lakh crore through non-bank
sources in 2009-10 compared to 37 per cent in
the preceding year.
- Resilient Indian banks
have improved their brand value rapidly amidst
global recession. There are 20 Indian banks
in the Brand Finance® Global Banking 500,
an annual international ranking by UK-based
Brand Finance Plc, this year. The State Bank
of India (SBI) became the first Indian bank
to break into the world’s Top 50 list,
according to the Brand Finance study that saw
HSBC retain its top slot for the third year
in a row. The number of Indian banks in the
global list had more than tripled last year
to 19 from six in 2007. Differentiation through
strong brand and customer base value is becoming
a key economic lever for Indian banks. This
is as true in financial services as in consumer
products. The study notes that global banking
sector has begun to show tangible signs of recovery,
with the world’s 500 most valuable banking
groups growing by 62% in terms of market capitalisation
and their brand values cumulatively increasing
by 49%. “This year’s BrandFinance®
Global Banking 500 shows how significant the
recovery of global banking brands has been,”
said David Haigh, CEO of Brand Finance plc.
The total brand value of the Top 500 banks stands
at $716 billion, up 49% over 2009 and 4% higher
than in 2008, prior to the crisis.
- There has been a sharp
increase in the use of IT in banking services.
With the cellular user base expected to touch
600 million by 2010, the volume of pre-paid
card recharging alone could exceed the US$ 4
billion mark. Bharti Airtel launched its mobile
payment services in June 2008 and has already
got one million registered users. “mCommerce
will be one of the top three services offered
over mobile in the future,” said an Airtel
spokesperson. International remittance is another
service that operators are piloting in India.“With
the Reserve Bank of India’s new mobile
payment guidelines, banks and merchants are
fast adopting our open-platform to build a thriving
eco-system and a compelling suite of services
for consumers,” says Mr Sanjay Swamy, CEO
of mChek, a mobile payment service provider.So
far, 19 banks have obtained permission from
the RBI to provide mobile payment facilities
to their customers.
- JP Morgan Chase is set to
enter the corporate banking space in India,
offering a suite of services such as providing
working capital, cash management solutions,
foreign exchange and hedging tools. There will
also be an element of retail operations, though
liability-led, and financial inclusion.“A
key initiative for JPMorgan in 2010 in India
is the launch of global corporate banking as
a part of the global launch of the same in high
growth countries like China and Brazil. This
initiative is driven by the bank's continuing
dialogue with clients around the world who have
expressed a desire for expanded global banking
operations from us,” says Madhav Kalyan,
chief executive officer, JPMorgan Chase Bank,
and head of corporate banking operations in
India.
Infrastructure
The Index of Six core industries
having a combined weight of 26.7 per cent in the
Index of Industrial Production (IIP) with base
1993-94 stood at 266.9 (provisional) in May 2010
and registered a growth of 5.0% (provisional)
compared to 3.2% registered in May 2009. During
April-May 2010-11, six core industries registered
a growth of 5.1% (provisional) as against 3.5%
during the corresponding period of the previous
year.
Crude Oil
Crude Oil production (weight
of 4.17% in the IIP) registered a growth of 5.8%
(provisional) in May 2010 compared to a growth
rate of (-)4.3% in May 2009. The Crude Oil production
registered a growth of 5.5 (provisional) during
April-May 2010-11 compared to (-)3.7% during the
same period of 2009-10.
Petroleum Refinery Products
Petroleum refinery production
(weight of 2.00% in the IIP) registered a growth
of 7.7% (provisional) in May 2010 compared to
growth of (-)4.3% in May 2009. The Petroleum refinery
production registered a growth of 6.5% (provisional)
during April-May 2010-11 compared to (-)4.4% during
the same period of 2009-10.
Coal
Coal production (weight of
3.2% in the IIP) registered a growth of (-)2.3%
(provisional) in April 2010 compared to growth
rate of 14.2% in April 2009. Coal production grew
by 8.2% (provisional) during April-March 2009-10
compared to an increase of 8% during the same
period of 2008-09.
Electricity
Electricity generation (weight
of 10.17% in the IIP) registered a growth of 6.4
% (provisional) in May 2010 compared to a growth
rate of 3.0% in May 2009. Electricity generation
grew by 6.6% (provisional) during April-May 2010-11
compared to 4.8% during the same period of 2009-10.
Cement
Cement production (weight of
1.99% in the IIP) registered a growth of 8.6%
(provisional) in May 2010 compared to 11.8% in
May 2009. Cement Production grew by 8.7% (provisional)
during April-May 2010-11 compared to an increase
of 11.8% during the same period of 2009-10.
Finished (carbon) steel
Finished (carbon) Steel production
(weight of 5.13% in the IIP) registered a growth
of 2.5% (provisional) in May 2010 compared to
2.8% (estimated) in May 2009. Finished (carbon)
Steel production grew by 3.6% (provisional) during
April-May 2010-11 compared to an increase of 0.8%
during the same period of 2009-10.
N.B:
Data are provisional. Revision has been made based
on revised data obtained.
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