Macro-economic update

Feb 27, 2013

CCIL Economic Research CCIL Economic Research

Macro-Economic Updates
Feb 27, 2013 Economic Survey 2012-13: Highlights
o GDP growth is estimated at 5.0% in 2011-12 against 6.2% in the previous year. However, the growth is expected to be bottoming out in 2011-12 and may post an improved growth in the range of 6.1% to 6.7% in 2013-14. Domestic savings as a proportion to GDP is estimated to decline to 30.8% in the current fiscal year compared to 34% in the previous year. Industrial output estimated to post a moderate 3.1% growth as the manufacturing output remained stagnant. Agriculture sector after posting a healthy growth in the previous two years, slowed to 1.8% in 2012-13 due to irregular monsoons. However, the Survey expects that an average 4% growth may be possible in the 12th Plan period. Services sector contributing for about 59% of total GDP has slowed to 6.6% growth during 2012-13 against 8.2% in 2011-12. Gross fiscal deficit is expected to be 5.1% of GDP in 2012-13 against 5.7% in the previous year but, is expected to go well beyond estimate due to shortfall in revenues on account of fall in corporate profits and rise in expenditure by the government.

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Chart 1: Current Account Balance (as percentage to GDP)

2.25 1.25 0.25
2011-12 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

-0.75 -1.75 -2.75 -3.75 -4.75

2010-11

-4.6

2012-13

Macro-economic update
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Feb 27, 2013

CCIL Economic Research

WPI based inflation muted in the current financial year and declined to a three year low of 6.62 per cent in Jan 2013 and is expected to be in the range of 6.2% to 6.6% by the end of Mar 2013 due to moderation in manufacturing and global commodity prices. Monetary policy remained focused on controlling inflation and anchoring inflationary expectations, though became slightly accommodative in 2012-13 due to moderation in inflation. The RBI has cut the cash reserve ratio (CRR) by 75 bps in three steps (25 bps each effective 22nd Sep12, 3rd Nov12 and 9th Feb13), while repo rate has also been reduced by 75bps (50bps in Apr12 and Jan13) during the year so far. Non-food Credit growth noted to have decelerated to 16.17% as at the end of Dec 2012 against 17.32% at the same time in the previous year, while deposits growth slowed rather steeply to 12.87% from 16.25% in the corresponding period a year ago. The Current Account Deficit (CAD) as percentage to GDP increased to a record high of 4.6% during the first half of 2012-13 against 4.0% in the first half of 2011-12 due to a significant increase in gold imports. Trade deficit widened by 7.9% to US $ 167.2 billion during Apr-Jan 2012-13 from US $ 154.9 billion in the corresponding period of 2011-12. Net capital inflows increased moderately to US$ 40 billion in the first half of 2012-13 compared to US$43.5 during Apr-Sep 2011-12. Net FDI was higher at US$12.8 billion during Apr-Sep of 2012-13 compared to US$15.7 billion in Apr-Sep of 2011-12, whereas net portfolio investments increased substantially from US$1.8 billion to US$5.8 billion during the respective periods. Foreign exchange reserves remained largely the same at US$ 295.5 billion as at end of Jan13 compared to US$ 294.4 billion at the end of Mar 2012. Indias external debt increased by US$ 20.2 billion at 5.8% to US$ 365.3 billion at end of Sep 2012 compared to US$ 345.4 billion at the end Mar 2012. Further, the foreign exchange reserves declined to 80% of total external debt stock as at the end of Sep12.

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Macro-economic update

Feb 27, 2013

CCIL Economic Research

Economic Research Department The Clearing Corporation of India Limited Plot No FP 822, Off. S. K. Bole Road, College Lane, Opp NEAT House, Near Agar Bazaar, Dadar (W), Mumbai 400 028 Phone: 61546311/13 res_sur@ccilindia.co.in gcnath@ccilindia.co.in tlingareddy@ccilindia.co.in
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