Analysis of RBIs Quarterly statements

Ratios by RBI
The structural liquidity deficit in the system necessitated a 125 bps cut in
CRR in Q4 of 2011-12, which was in addition to the 50 basis points, i.e.
from 5.5%, which came into effect on Jan 28, 2012, to infuse primary
liquidity of Rs 32,000 crores into the system. Although, global
developments since then have been more on the positive side, in view of
the slackening domestic growth consequent upon weak pipeline
investment and supply-side bottlenecks, the near-term prospects for
growth suggest, at best, room for a modest acceleration.
Repo rate followed an upward trend rising from 7.25 to 7.5 in the first
quarter which was then raised to 8 and then 8.25 in Q2, which was finally
raised to and stayed at 8.50 in Q3 and Q4.
CRR on the other hand remained constant at 6.00% from Q1 to Q3 and
was reduced to 5.50 and then to 4.75 in Q4 to infuse liquidity into the
system.
SLR at the same time continued to be at 24%.

Industrial Growth
Services
There has been a moderation in the growth of services exports to 5.9 per
cent during April-December 2011. Moderate growth on account of decline
in financial services and moderate growth in export of other business
servicesin receipts resulted in net services exports (US$ 44.1 billion) to
record a growth of 29.3 per cent during April-December 2011.

Balance of Payments:
BOP continued to be under stress through the first three quarters of 20112012. This happened mainly due to moderate capital inflows, which were
affected by the Euro crisis and deteriorating trade balance which was an
effect of a slowdown in exports and imports which were nearly inelastic for
certain products. The figures for the goods exports stood at $222 bn for
the first 3 quarters and that for imports stood at $354.3 US which lead up
to a trade balance of $ -132.3 bn.

Growth in exports of petroleum products, agriculture and allied products,

textile and textile roducts, gems & jewellery and chemicals & related
products was higher during April-December 2011 as compared with the
corresponding period of the previous year.
Import payments at US$ 354.3 billion, on a BoP basis, also registered a
growth of 29.5 per cent during April-December 2011 as compared with an
increase of 26.4 per cent in the corresponding period of the previous year.
Oil imports recorded an increase of nearly 45.0 per cent during AprilDecember 2011 (as compared with an increase of 22.0 per cent a year
ago).
With export growth remaining lower than the import growth, the trade
deficit widened to US$ 47.7 billion in Q3 of 2011-12.
CAD
The CAD widened to US$ 19.6 billion in Q3 as compared with US$ 18.4
billion in Q2 of 2011-12 and US$ 10.1 in Q3 of 2010-11 (Chart 3). At this
level, CAD worked out to 4.3 per cent of GDP in Q3 of 2011-12.
Higher trade deficit along with a deterioration in the primary income led to
a greater gap in CAD. Net Direct investment in Q3 fell from 16.2 in Q1 to
4.5 owing to a fall in direct investments to India from 26.1 in Q1 to 6.4 in
Q3.

Income
Primary income
Primary income balance, comprising compensation of employees and
investment income, during April-December 2011, continued a downward
trend from the preceding year mainly due to higher interest payment on
account of ECBs and external assistance.
Secondary Income
There was a sharp rise in net secondary income in Q3 of 2011-12 which,
was mainly due to weakening of Indian rupee which induced higher
workers remittances for family maintenance this however, was partly
offset by net outflow on account of primary income.
Capital Account
With volatile FII investments and sharp rise in inflows under currency and
deposits by the banking sector, net inflows showed a slight moderation

during the first 3 quarters of 2011-2012 owing to a fall in short term trade
credit and a sharp fall in FII investments.
As compared to $65 million surplus in 2010-2011, a surplus of $92 million
was recorded in the first three quarters of 2011-2012.
Group 6: Members:
Swati Sharma
Gowtham Bandi
Puneet Rastogi
Chandrakant
Amrita Nenvani
Maitreyee Apte
Vinay Alexander
Shivani Narang