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As per the advance estimates of GDP for 2009-10 released by the Central Statistical Organisation (CSO), the economy is expected to grow at 7.2 per cent in 2009-10, with the industrial and the service sectors growing at 8.2 and 8.7 per cent respectively.
India's gross domestic product (GDP) grew by 6 per cent during October to December 2009, over the corresponding quarter of the previous year, as per data released by the CSO.
The economic activities which registered significant growth in the third quarter of 2009-10 over the corresponding period in 2008-09 are 'mining and quarrying' at 9.6 per cent, 'manufacturing' at 14.3 per cent, 'construction' at 8.7 per cent, 'trade, hotels, transport and communication' at 10 per cent and 'financing, insurance, real estate and business services' at 7.8 per cent.
According to the latest estimates available on the Index of Industrial Production (IIP), the index of mining, manufacturing and electricity, registered growth rates of 9.6 per cent, 14.3 per cent and 4 per cent, respectively in Q3 of 2009-10, as compared to the growth rates of 2 per cent, 0.5 per cent and 2.9 per cent in these industries in same period in 2008-09. The key indicators of construction sector, namely, cement and finished steel registered growth rates of 8.5 per cent and 7.7 per cent, respectively in Q3 of 2009-10.
The Economic scenario
Foreign institutional investors (FIIs) were net investors of US$ 4.37 billion in equity and US$ 2.09 billion in debt instruments in the month of March 2010, according to the data released by Securities and Exchange Board of India (SEBI). The number of registered FIIs was 1713 as on March 31, 2010 and the total FII inflow in equity during January to March 2010 was US$ 4.54 billion while it was US$ 4.71 billion in debt.
As on March 26, 2010, India's foreign exchange reserves totaled US$ 277.04 billion, an increase of US$ 24.71 billion over the same period last year, according to the Reserve Bank of India's Weekly Statistical Supplement.
Moreover, India received FDI worth US$ 20.92 billion during April-December 2009, taking the cumulative amount of FDI inflows from August 1991 to December 2009 to US$ 127.46 billion, according to the Department of Industrial Policy and Promotion.
Six core infrastructure industries grew at 4.5 per cent in February 2010 against 1.9 per cent during the corresponding month last year, primarily due to increased output in electricity. The six infrastructure sectors—crude, petroleum refinery products, coal, electricity, cement and finished steel—that constitute 26.68 per cent in IIP, recorded a growth of 5.3 per cent in the period April-February 2009-10, as against 2.9 per cent in the same period last year.
Moreover, according to latest data from RBI, loan disbursement by scheduled commercial banks, including regional rural banks, recorded 16.04 per cent growth at the end of March 12, 2010, on a year-on-year basis. This is above RBI's projection of 16 per cent credit growth in this financial year.
Of the more than 200 companies from over 50 countries that form part of the World Economic Forum's Global Growth Companies (GGC) Community, India today has the second largest representation, with a total of 18 GGCs. Indian GGCs come from every sector, with a strong representation in information technology and electronics, retail, consumer goods and banking.
The GGC Community was formed to engage high-growth companies with the potential to be tomorrow's industry leaders and drive economic and social change.
India ranks 49 among 133 countries in 2009-10 in the global competitiveness index (GCI) prepared by the World Economic Forum (WEF), an improvement of one position from last year. India's position is a result of mixed performance across 12 categories covered by the GCI.
- Exports from India were worth US$ 16.09 billion in February 2010, 34.8 per cent higher than the level in February 2009, according to the Ministry of Commerce and Industry. India's imports during February 2010 were valued at US$ 25.05 billion representing a growth of 66.4 per cent over February 2009.
- India's logistics sector is witnessing increased activity—the country's major ports handled 411.95 MT of cargo during April-December 2009, an increase of 5.14 per cent over previous year traffic, according to data released by the Ministry of Shipping.
- Foreign tourist arrivals in India during the month of February 2010 were 601,000, an increase of 9.9 per cent over February 2009. Foreign exchange earnings during February 2010 were US$ 1.43 billion, an increase of 55.4 per cent over February 2009, according to data released by the Ministry of Tourism.
- The total telephone subscriber base in the country crossed the 600-million mark to touch 600.69 million in February 2010, taking the overall tele-density to 51.05, according to the figures released by the Telecom Regulatory Authority of India (TRAI). Also the wireless subscriber base increased to 563.73 million.
- According to the latest statistics from the Association of Mutual Funds in India (AMFI), the assets under management (AUM) of mutual funds were worth US$ 174.96 billion in February 2010, an increase of 36 per cent over February 2009.
- According to NASSCOM's India IT-BPO sector performance estimates for FY 09-10, export revenues for the Indian IT-BPO industry are expected to record a growth of 5.5 per cent to reach US$ 49.7 billion in FY09-10.
- According to data released by Society of Indian Automobile Manufacturers, the cumulative production data for April-February 2010 shows production growth of 24.34 per cent over same period last year. Passenger vehicles production crossed 2 million and two wheelers production touched almost 9.5 million.
- According to the Gem and Jewellery Export Promotion Council, the exports of gems and jewellery from India including rough diamonds, rose by 10.48 per cent during April-February 2010 to touch US$ 28.84 billion.
- The recovery of the Indian economy, as was broadly expected, worked well for the advance tax figures for the third installment that was payable by December 15, 2009. The all India direct tax collection between April and December 2009, which includes corporate and personal taxes, increased 8.1 per cent to US$ 48.39 billion, according to figures that are currently with the income-tax (I-T) department.
- The Indian drug retail market grew by a 29.24 per cent in value terms in October 2009 over the year ago period, more than double the average monthly revenue growth rate of 13-14 per cent in the recent past, as per market research firm ORG IMS.
- India has joined an elite group of six countries which have successfully decoded the human genome indigenously. The discovery, which was announced by the Council of Scientific and Industrial Research (CSIR), will bring pharmaceutical companies a step closer to designing drugs accounting for the specific characteristics of the Indian physiology.
- Merger and acquisition (M&A) activity involving Indian small and medium enterprises (SMEs) are on the rise. During the first two months of 2010 M&A transactions worth US$ 155 million have been concluded in the SME sector, up by 66 per cent over the US$ 93 million in transactions in the corresponding period of 2009, according to Venture Intelligence, a Chennai-based research firm focusing on M&A and PE transactions.
Agriculture
Agriculture is one of the strongholds of the Indian economy and accounted for 15.7 per cent of the country's gross domestic product (GDP) in 2008-09.
In Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee has made the following announcements for the agriculture sector.
- US$ 88.02 million is provided to increase the Green Revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern up, West Bengal and Orissa.
- US$ 66.02 million has been provided to organise 60,000 pulses and oil-seed villages in rain-fed areas in 2010-11 and provide an integrated intervention for water harvesting, watershed management and soil health to improve productivitiy of the dry land farming areas.
- Banks have been consistently meeting the targets set for agricultural credit flow in the past few years. For the year 2010-11, the target has been set at US$ 82.53 billion.
- In addition to the 10 mega food park projects already being set up, the government has decided to set up five more.
- External commercial borrowings are available for cold storage for preservation or storage of agricultural and allied products.
Growth potential story
- Ernst and Young has forecast the passenger car market in India to grow by 12 per cent annually over the next five years from the present figure of 1.89 million units to reach 3.75 million units by 2014.
- Small and medium enterprises (SMEs) are expected to contribute 22 per cent to India's Gross Domestic Product (GDP) by 2012, up from about 17 per cent at present, according to a survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
- The healthcare industry in the country, which comprises hospital and allied sectors, is projected to grow 23 per cent per annum to touch US$ 77-billion mark by 2012 from the current estimated size of US$ 35 billion, according to a Yes Bank and ASSOCHAM report.
- India's domestic business processing outsourcing (BPO) market, that has close to 500 players, will grow at a compound annual growth rate (CAGR) of 33.3 per cent, to reach revenues of US$ 6.82 billion by 2013, up from US$ 1.62 billion in 2008, according to a report by information technology research firm IDC India.
- According to a report published by domestic broking major Edelweiss Capital in March 2010, India's GDP is set to quadruple over the next ten years and the country is likely to be a US$ 4 trillion economy by 2020.
- India will overtake China to become the world's fastest growing economy by 2018, according to the Economist Intelligence Unit (EIU), the research arm of London-based Economist magazine.
- Majority of India Inc's top CEOs feel that the Indian economy is likely to grow at 8-8.5 per cent in the next fiscal, according to a survey conducted by industry body CII in March this year. As per the survey which took responses from 100 CEOs and industrialists, 60 per cent of the respondents said they expect GDP to grow 8-8.5 per cent for the year ending March'11, while another 20 per cent expect growth to range between 7.5-8 per cent.
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