Current State

Of
Indian Economy
July 2009

Federation of Indian Chambers of Commerce and Industry

New Delhi
Recent Trends in Indian Economy :

• GDP growth for 2008-09 was estimated at 6.7% as compared to the

growth of 9.0% posted in the previous year. All the three segments of
the GDP namely agriculture, forestry and fishing, industry and
services sector were seen to post growth of 1.6%, 3.8% and 9.6%
respectively in 2008-09 against the growth of 4.9%, 8% and 10.8%
respectively in 2007-08.

• Going by the IIP numbers we see industrial growth showing weakness

from October 2008 onwards on account of high demand
uncertainties in the markets – both international and domestic as a
result of the global economic crisis.

Data further shows that due to shrinkage in demand in the markets, it

is not only manufacturing industry but also the services sector that is
getting hit. The government came up with a set of stimulus measures
on three occasions to aid the ailing industry compromising on the
deficits. These measures have however have led to widening of
fiscal deficits.

• An improvement in the production of six core infrastructure industries

was witnessed in May 2009 coming mainly from cement , power and
coal.

• Data as on July 8th 2009 shows 21 metrological subdivisions receiving

normal –to-excess rainfall and 15 having deficient or scanty rainfall.
This was better than the report of June 24th 2009 when 28 subdivisions
were said to have received scanty rains.

The country has 50 MT combined stock of rice and wheat which is

almost double the buffer stocking norm of 26.9 MT to cope with any
shortfall in food grain production.

• The WPI based inflation has softened to below zero level. However,
prices of items of mass consumption ( food articles) show not signs of
softening and have risen substantially due to supply side constraints.

• Money supply expanded by 2.6% in April 2009 calculated over

March 2009, compared to the increase of 0.6% recorded in the same
month of previous year. Growth in bank credit to the government

2
 sector swelled compared to the previous year however, borrowings
to the commercial sector slid.

• In April 2009 aggregate deposits were seen to increase by 2.4% as

compared to 0.1% recorded in the previous year. Investments in
government and approved securities stepped up by 6% in the
month of April 2009 from 4% recorded in the previous year.

• Stock markets are still in the readjustment mode after the budget
announcements and fears over the rising deficits due to increased
borrowings to aid the industry and to support schemes in the social
sector.

• Lower corporate earnings and series of packages announced to

support the injured industry has moderated growth in tax collections.

• The shrinkage in the international markets have hit country’s total

external trade. Country’s merchandise exports and imports have
fallen compared to the numbers achieved in the previous year
without any indications of quick recovery. The issues related to
fluctuations in the foreign exchange INR / USD by 3-4% are beyond
the scope of hedging , compounding the problems of the already
marred traders.

• Performance of inward investments has been fairly well. Foreign

direct investment flows were observed to increase every month and
in April of 2009 it totaled USD 2.3 billion.

3
 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

4
 LIST OF TABLES

Table-1.1 Growth of industry 7

Table-2.1 Growth in six core infrastructure industries-1 8

Table-2.2 Growth in six core infrastructure industries-2 9

]
Table-3.1 Monthly trends in Wholesale Price Index 10
Table-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 18

Table-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

5
1. Industrial Growth :

The recent data released on the Industrial growth continues to show

weakness . The industry grew by 2.7% in May 2009 as compared to the
growth of 4.4% posted in the corresponding month of the previous year.
Mining and manufacturing sector related activities too were seen to slow
down, as these posted growth of 3.7% and 2.5% in May 2009 as against the
growth of 5.5% and 4.5% recorded in the corresponding month of the
previous year. Production of electricity rose 3.3% in May this year compared
to the growth of 2.0% in same month of previous year.

On going by the use based category we observe growth in basic and

intermediate goods increase by 3.8% and 6.1% respectively in May 2009 vis-
a-vis the increase of 3.0% and 1.9% respectively in the previous fiscal .
Weakness persisted in the production of capital goods that fell by 3.6 % in
May 2009 from a positive growth of 4.3% recorded in the last year. Total
consumer goods output slowed to a low of 1.2% in May 2009 compared to
7.4% in the same period of previous year. Positive growth in the consumer
goods segment was seen to come only from the consumer durables
registering 2.4% growth during the month of May 2009 in contrast to the
growth of 2.8% in May, 2008.

Of the 17 manufacturing industry segments, growth in 6 industry segments

continues to remain negative even in May 2009. The industry segments that
continued to post negative growth even in the second month of 2009-10
were food products, cotton textiles, wool, silk and manmade fibre textiles,
Jute products , leather products and metal products. Two more industry
segments that came in the negative category were beverages & tobacco
and paper industry.

6
1.1: Growth Of Industry: Recent Trends (in percentage)

May May
Weights
2008 2009
Industry 100 4.4 2.7
Mining 10.2 5.5 3.7
Manufacturing 79.4 4.5 2.5
Electricity 10.5 2.0 3.3
Use Based Classification
Basic 35.6 3.0 3.8
Intermediate 26.5 1.9 6.1
Capital 9.3 4.3 -3.6
Consumer Goods 28.7 7.4 1.2
Consumer non Durables 23.3 9.0 -2.3
Consumer Durables 5.4 2.8 12.4

16 industry sectors
Food Products 9.1 -9.3 -14.7
Beverages, Tobacco and Related Products 2.4 34.6 -10.3
Cotton Textiles 5.5 4.4 -4.1
Wool, Silk and man-made fibre textiles 2.3 11.2 -7.6
Jute and other vegetable fibre Textiles (except
cotton) 0.6 -9.0 -20.0
Textile Products (including Wearing Apparel) 2.5 8.7 9.8
Wood and Wood Products; Furniture and
Fixtures 2.7 -30.6 15.3
Paper & Paper Products and Printing,
Publishing & Allied Industries 2.6 3.6 -0.6
Leather and Leather & Fur Products 1.1 9.5 -9.6
Basic Chemicals & Chemical Products (except
products of Petroleum & Coal) 14.0 8.7 4.6
Rubber, Plastic, Petroleum and Coal Products 5.7 -10.2 16.4
Non-Metallic Mineral Products 4.4 1.3 6.1
Basic Metal and Alloy Industries 7.5 4.1 5.4
Metal Products and Parts, except Machinery
and Equipment 2.8 -4.2 -5.7
Machinery and Equipment other than Transport
equipment 9.6 4.8 2.7
Transport Equipment and Parts 4.0 12.3 2.3
Other Manufacturing Industries 2.5 -8.5 27.3
Source: Central Statistical Organization

7
2. Core infrastructure industries

The data during the first two months of 2009-10 on six core infrastructure
industry indicated improvement in output. The main drivers of growth seen
in the six core infrastructure industry during the period were cement, power
and coal posting growth of 11.7 % , 5.1% and 11.8% respectively in April-
May 2009-10 compared to the growth of 5.4% , 1.7% and 9.5% respectively
during the same period of previous fiscal. However, production of crude
petroleum and petroleum refinery were badly hit.

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

All infrastructure
Finished steel Cement Crude petroleum
industries
2008- 2009- 2008- 2009- 2008- 2009-
09 10 09 10 09 10 2008-09 2009-10
April 2.3 5.0 -0.6 2.8 6.9 11.7 1.0 -3.1
May 3.1 2.8 3.3 1.4 3.8 11.6 3.2 -4.3
June 3.8 5.6 6.6 -4.7
July 5.4 6.0 8.9 -3.0
August 2.1 3.4 1.9 -1.0
September 4.0 2.1 8.1 -0.4
October 2.1 -4.9 6.2 -0.3
November 1.9 -2.5 8.7 0.5
December 1.1 -6.0 11.6 -0.3
January 1.8 1.6 8.3 -8.1
February 1.4 0.5 8.3 -6.2
March 3.2 -2.2 10.1 -2.3
April-May 2.7 3.9 1.4 2.1 5.4 11.7 2.1 -3.7
Source: Ministry of Industry

8
Table-2.2: Growth in six-core infrastructure industries (% change)

Petroleum refinery Coal Power

2008-09 2009-10 2008-09 2009-10 2008-09 2009-10
April 4.3 -4.5 10.4 13.2 1.4 7.1
May 0.1 -4.3 8.8 10.2 2.0 3.3
June 5.6 6.2 2.6
July 11.8 5.5 4.5
August 2.5 5.9 0.8
September 2.8 10.7 4.4
October 5.0 10.9 4.4
November -1.1 9.6 2.6
December 3.0 9.4 1.5
January -1.3 6.3 1.8
February 0.5 6.0 0.6
March 3.3 5.2 6.3
Apr- May 2.1 -4.4 9.5 11.8 1.7 5.1
Source: Ministry of Industry

9
3. Inflation Trends

Slowdown in the economy and rapid decline in global commodity prices

toned down the overall inflation to below 0 levels for the first time in 35
years. However, it was found that prices of some of the items of mass
consumption were still rising. While, the average overall inflation numbers for
the month of June 2009 turned negative however, food articles falling within
the category of primary commodities continue to rise by 8.6% in June 2009
on YoY terms compared to 6% in the previous year. Furthers food articles
was also seen to get dearer (m-o-m basis) over May 2009.

In June 2009 prices of non food articles, fuel leather and basic metals
dropped by 2%, 12.6%, 1% and 14% respectively from positive growth of
17%, 16%, 1.6% and 21% seen in the previous year.

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

2008-09 2009-10
May Jun May Jun
All Commodities 8.9 11.8 0.8 -1.4
I Primary Article 9.5 10.6 6.2 5.4
(A) Food Articles 5.7 5.9 8.3 8.6
(B) Non-Food Articles 13.9 17.1 1.4 -2.0
II Fuel Power Light & Lubricants 7.7 16.3 -6.5 -12.6
III Manufactured Products 9.0 10.6 1.4 0.4
(A) Food Products 11.5 14.4 13.6 11.1
(B) Beverages, Tobacco & Tobacco Products 8.2 7.9 5.8 5.7
(C) Textiles -1.6 3.6 8.3 4.3
(D) Wood & Wood Products 6.3 9.8 3.6 0.3
(E) Paper & Paper Products 3.1 3.5 2.9 2.5
(F) Leather & Leather Products 1.1 1.6 0.0 -1.0
(G) Rubber & Plastic Products 5.7 6.0 2.6 2.6
(H) Chemicals & Chemical Products 8.7 9.8 1.4 1.7
(I) Non-Metallic Mineral Products 5.7 5.0 2.2 2.9
(J) Basic Metals Alloys & Metals Products 20.3 21.3 -13.2 -14.0
(K) Machinery & Machine Tools 5.5 6.5 -0.9 -2.3
(L) Transport Equipment & Parts 6.4 6.1 0.3 0.6
Source: RBI

10
Table-3.2: Monthly trends in consumer prices (% change)

CPI-IW CPI-UNME CPI-AL CPI-RL

2007-08 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 8.8
July 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 5.6 11.4 5.9 11.1
February 5.5 6.0 6.4 6.1
March 7.9 - 7.9 7.6
Source: Ministry of Labor, Center for Monitoring Indian Economy

11
4. Monetary Indicators:
Money supply in April 2009 calculated over March 2009 shows, M3 swelled
by 2.6% in April 2009 compared to 0.6% growth recorded in the
corresponding period of previous year. The net bank credit to the
government sector swelled by 4.1% from 0.1% growth posted in the previous
year. Growth in the bank credit to the commercial sector remained
negative. The net foreign exchange of banks continue to slide by 1.4%
compared to an increase of 1.4% recorded in the previous year.

Aggregate deposits expanded by 2.4% in April 2009 as against the Y-o-Y

variation of 0.1% seen in the same month of the previous year. Investment
stepped up by 6% compared to 4% in the previous year.

Table-4.1: Monetary sector indicators – up to April (April 2009-10 over March 2008-09)

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

2008-09 2009-10 2008-09 2009-10
April 22235 123424 0.6 2.6
May 75113 1.9
June 84387 2.1
July 140700 3.5
August 208571 5.2
September 264364 6.6
October 331450 8.3
November 374193 9.3
December 423509 10.6
January 508078 12.7
February 635810 15.9
March 740332 18.4
Variation in net bank credit to Variation in net bank credit to
government (Rs crore) government (%)
2008-09 2009-10 2008-09 2009-10
April 529 52775 0.1 4.1
May 14613 1.6
June 32597 3.6
July 69352 7.6
August 66866 7.4
September 61550 6.8
October 79275 8.7
November 144131 15.9
December 192566 21.2
January 251500 27.7
February 289967 32.0
March 340250 37.6

12
 Variation in bank credit to commercial Variation in bank credit to
sector (Rs crore) commercial sector (%)

2008-09 2008-09
April -38443 -23545 -1.5 -0.8
May 18626 0.7
June 42252 1.6
July 57878 2.3
August 106693 4.2
September 196248 7.6
October 266620 10.4
November 285691 11.1
December 298809 11.6
January 300584 11.7
February 331758 12.9
March 432850 16.8
Variation in net foreign exchange assets Variation in net foreign
of banks (Rs crore) exchange assets of banks (%)
2008-09 2009-10 2008-09 2009-10
April 18732 -18897 1.4 -1.4
May 113765 9.0
June 103932 8.0
July 75552 5.8
August 54821 4.2
September 77194 6.0
October 12706 1.0
November -46375 -3.6
December -82201 -6.3
January -50810 -3.0
February -15845 -1.2
March 19316 1.5
Variation in non-monetary liabilities of Variation in non-monetary
banks (Rs crore) liabilities of banks (%)
2008-09 2009-10 2008-09 2009-10
April -25665 -113091 -5.4 -13.0
May 71891 9.7
June 94555 12.2
July 62244 8.0
August 19970 2.6
September 70928 9.2
October 27452 3.5
November 9554 1.2
December -13871 -1.8
January -6341 -0.8
February -29466 -3.8
March 52845 6.9

Variation of aggregate deposits of SCB Variation in aggregate deposits

(Rs crore) of SCB (%)

13
 2008-09 2008-09
April 4433 92683 0.1 2.4
May 56760 1.8
June 52837 1.7
July 115943 3.6
August 194522 6.1
September 245198 7.7
October 318500 10
November 452567 14.2

December 372413 11.6

January 433140 13.5
February 538924 16.9
March 633382 19.8
Variation in investments of SCB Variation in investments of
(Rs crore) SCB (%)
2008-09 2009-10 2008-09 2009-10
April 46389 69715 4.8 6.0
May 34147 3.5
June 36233 3.7
July 20135 2.1
August 46723 4.8
September 15526 1.6
October 34216 3.5
November 127431 13.1
December 118304 12.2
January 168741 17.4
February 215975 22.2
March 194031 20.0

Variation in total credit of SCB Variation in total credit of SCB

(Rs crore) (%)
2008-09 2009-10 2008-09 2009-10
April -36780 -23838 -1.6 -0.9
May 10455 0.4
June 30534 1.3
July 44520 1.9
August 96420 4.1
September 180554 7.6
October 289611 12.3
November 359819 15.2
December 283501 12.0
January 283247 12.0
February 306177 13.0
March 408099 17.3
Variation in food credit of Variation in non-food credit of
SCB (Rs crore) SCB (Rs crore)
2008-09 2009-10 2008-09 2009-10
April -3375 2765 -8863 7952
May 3980 6474
June 5748 24786

14
July -508 45029
August -56 96476
September 776 179777
October 7074 282537
November 5995 353824
December 8724 274777
January 5296 277950
February 4031 302145
March 1812 406287
Source: Reserve Bank of India

15
5. Stock Market Trends

The Indian stock market plunged below ( BSE –Sensex) 10 K points in

December 2008 from a high 20K in January 2008 and it took more than a
quarter to get the index back to above 10K level . The BSE index scaled to
15K points after the elections however the budget announcements
weakened the investment sentiments, only to readjust.

Table-5.1: Monthly trends in stock market indices (beginning of month figures)

Date BSE Sensex % Change S&P CNX NIFTY % Change
1.1.05 6679 7.2 2115 7.8
1.2.05 6552 -1.9 2058 -2.7
1.3.05 6651 1.5 2084 1.3
1.4.05 6605 -0.7 2068 -0.8
1.5.05 6195 -6.2 1917 -7.3
1.6.05 6730 8.6 2088 8.9
1.7.05 7210 7.1 2211 5.9
1.8.05 7669 6.4 2318 4.8
1.9.05 7876 2.7 2406 3.8
1.10.05 8492 7.8 2574 6.9
1.11.05 7944 -6.5 2387 -7.3
1.12.05 8944 12.5 2699 4.8
2.01.06 9390 5.0 2835 5.0
1.02.06 9859 5.0 2971 4.8
1.03.06 10566 7.7 3123 5.1
3.04.06 11564 9.4 3473 11.2
1.05.06 12128 4.9 3605 3.8
1.06.06 10071 -17.0 2962 -17.8
3.07.06 10695 6.1 3150 6.3
1.08.06 10751 0.5 3147 -0.1
1.09.06 11778 9.5 3435 9.1
3.10.06 12366 5.0 3569 3.9
1.11.06 13033 5.4 3767 5.5
1.12.06 13844 6.2 3997 6.1
2.01.07 13942 0.7 4007 0.3
1.02.07 14267 2.3 4137 3.2
1.03.07 13159 -7.7 3811 -7.8
2.04.07 12455 -5.3 3633 -4.7
3.05.07 14078 13.0 4150 14.2
1.06.07 14570 3.5 4297 3.5
2.07.07 14664 0.6 4313 0.4
1.08.07 14935 1.8 4345 0.7
3.09.07 15422 3.2 4474 2.9
1.10.07 17328 12.3 5068 13.2
1.11.07 19724 15.7 5866 13.8
1.12.07 19363 -1.8 5762 -1.8
1.01.08 20300 4.8 6144 6.6
1.02.08 18242 -10.1 5317 -13.5
3.03.08 16677 -8.5 4953 -6.8
1.04.08 15626 -6.3 4739 -4.3

16
2.05.08 17600 12.6 5228 10.3
2.06.08 16063 -8.7 4739 -9.3
1.07.08 12961 -19.3 3896 -17.8
1.08.08 14656 13.1 4413 13.3
1.09.08 14498 -1.1 4447 0.8
1.10.08 13055 -9.9 3950 -11.1
3.11.08 10337 -20.8 3043 -23.0
1.12.08 8839 -14.5 2682 -11.9
26.12.08 9328 5.5 2857 6.5
30.01.09 9424 1.0 2874 0.5
02.03.09 8607 -8.7 2674 -7.0
31.03.09 9708 12.8 3020 12.9
29.04.09 11403 17.5 3473 15.0
Source: Reserve Bank of India

17
6 Fiscal Management

Total tax collections were severely hit during the period under study. Tax
collections shrunk by 12% in May 2009 as against an expansion of more than
36 % in the same period of previous year. Thinner corporate earnings and
greater tax relief sized the growth in tax collections. Tax collected from the
corporate sources was observed to increase by 10% in May 2009 compared
to a growth of 60% in the previous year. Contribution from income tax
during the month rose by only 11.7% compared to the increase of 76%
recorded in the previous year.

Increase in the taxes received from the indirect sources however plunged
to negative on account of tax relief given by the government. The tax
collection will get thinner on account of steps taken by the government to
aid the industry.

Budgeted outlay for 2009-10 shows an increase of 36% over the budget
estimates of last year. With 36% budgeted increase the government has
planned a gross market borrowing programme of Rs 4,51,093 crore,
however the actual market borrowings targeted would be 3,97,957 crore
after the net scheduled repayments of Rs 53,135 crore. This market
borrowing may go up if the government is again forced to announce
stimulus measures.

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

Gross tax revenue Corporation tax Income tax

2008-09 2009-10 2008-09 2009-10 2008-09 2009-10
April 52.2 -16.9 55.0 -8.4 127.7 20.0
May 36.1 -11.8 58.1 10.1 76.0 11.7
June 28.4 43.4 50.0
July 26.2 41.6 42.0
August 25.0 45.9 35.7
September 25.3 38.2 30.7
October 20.3 30.3 21.9
November 17.5 26.4 19.0
December 9.6 11.9 6.8
January 7.2 11.9 5.4
February 6.9 17.9 7.5
March 2.7 10.8 7.1
Customs Excise duties Other taxes
2008-09 2009-10 2008-09 2009-10 2008-09 2009-10
April 25.0 -52..6 -28.3 --114.2 9.04 -5.4
May 24.1 -38.2 1.3 -23.3 26.7 -18.7
June 19.9 -0.9 26.0
July 19.2 4.0 24.7
August 17.0 6.5 17.4

18
September 16.8 6.6 30.7
October 14.4 6.3 16.2
November 13.7 5.1 6.1
December 11.1 2.1 -2.6
January 6.4 -2.6 -6.4
February 1.7 -7.1 -10.0
March -4.1 -12.0 -11.5

Service Tax 2008-09 2009-10

April 62.3 -0.04
May 40.7 -2.60
June 34.2
July 29.7
August 28.6
September 31.8
October 31.8
November 30.2
December 25.4
January 24.6
February 22.2
March 18.6
Source: Controller General of Accounts

Table-6.2 Trends in central government finances: May 2009

Actual to budget estimates

( in Rs crores)
2008-09 2009-10
Revenue receipts 36030 32178
Tax revenue 31958 26152
Non tax revenue 4072 6026
Non debt capital receipts 254 231
Recovery of loans 254 231
Total receipts 36284 32409
Non plan expenditure 71496 86242
On revenue account 69931 80025
On capital account 1565 6217
Plan expenditure 37989 36925
On revenue account 33830 33116
On capital account 4139 3809
Total expenditure 109485 123167
Fiscal deficit 73201 90758
Revenue deficit 67731 80963
Primary deficit 45972 64820
Source: Controller General of Accounts

19
7 Foreign Trade

Decline in total merchandise trade continues. Performance of merchandise

exports remain bad as it posted negative growth for straight eighth months.
Exports registered a negative growth of 30% in May 2009 compared to an
increase of 12% in the same month of previous year. Imports too were seen
to weaken, slipping by 60% in May 2009.

Table-7.1: Monthly trends in growth of merchandize trade (% change) up to May 2009

Exports Oil imports Non-oil imports Total imports

2008- 2009- 2008- 2009- 2008- 2009- 2008- 2009-
09 10 09 10 09 10 09 10
April 31.5 -33.2 46.2 -58.5 32.3 -24.6 36.6 -36.6
May 12.9 -29.2 50.8 -60.6 17.4 -25.4 27.1 -39.2
June 23.5 53.4 13.9 25.9
July 31.2 69.3 38.7 48.1
August - - - -
September 10.4 57.1 36.2 43.3
October -12.1 22 5.5 10.6
November -9.9 11.9 3.4 6.1
December -1.1 30.9 31.9 8.8
January -15.9 47.5 0.5 -18.2
February -21.7 47.5 10.2 -23.3
March -33.3 58.1 18.9 -34.0
Source: Ministry of Commerce

20
8. Capital Inflows

Foreign investment received in 2008-09 was USD 35.1 billion, slightly higher
than the FDI received in 2007-08 (USD 34.3 billion). A significant difference in
the total investments of 2008-09 and 2007-08 has been on due to the inflow
and outflow of foreign investment observed in 2007-08 and 2008-09
respectively. In the first month of the fiscal 2009-10 the country attracted
investment of USD 2.3 billion with USD 2.2 billion of portfolio investments.

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

Foreign direct Portfolio Total foreign investments

investments investments
2008-09 2009-10 2008-09 2009-10 2008-09 2009-10
April 3749 2339 -880 2278 2869 4617
May 3932 -288 3644
June 2392 -3010 -618
July 2247 -492 1775
August 2328 593 2921
September 2562 -1403 1159
October 1497 -5243 -3746
November 1083 -574 509
December 1362 30 1392
January 2733 -614 2119
February 1466 -1085 381
March 1956 -889 1067
Apr-March 35146 -13855 21291
Source: Reserve Bank of India

21
9. Foreign Exchange Reserves

An expansion was seen in the country’s forex reserves as it crossed USD 260
billion from USD 250 billion about a month back. This was on the back of
Foreign currency assets which is expressed in US dollar terms and includes
appreciation or depreciation of non-US currencies and increase in the inflows
of foreign institutional investments in the country.

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

2006- % 2007-08 % 2008-09 % 2009-10 %

07 Change Change Change Change
April 160.6 5.9 204.1 2.5 314.5 1.5 251.7 0.0
May 164.5 2.4 208.3 2.0 312.5 -0.6 262.3 4.2
June 162.9 -0.9 213.4 2.4 312.0 -0.1
July 164.0 0.6 229.3 7.4 306.1 -1.8
August 166.4 1.4 228.8 -0.2 295.3 -3.5
September 165.3 -0.6 247.7 8.2 286.3 -3.0
October 167.1 1.1 262.4 5.9 252.8 -11.7
November 175.5 5.0 273.5 4.2 247.6 -2.0
December 177.2 1.0 275.9 0.8 255.9 3.3
January 180.0 1.6 288.3 4.4 248.6 -2.8
February 194.6 8.1 301.2 4.4 249.2 0.2
March 199.1 2.3 309.7 2.8 251.7 1.0
Source: Reserve Bank of India

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10. Trends in the Exchange Rates

The rapid fluctuations in the exchange rate between the USD and Indian
Rupee lowered the margins of trading community. We have seen the Indian
Rupees against the USD shuttling between 47- 50 . This kind of movement can
only be partly covered through forward contracts.

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

60 80
70
50
60
40
50
Re/ USD

Re/Euro
30 40
2006-07 2007-08 2008-09 30
20
20
10
10
0 0
Jul

Jul

Jul
Jun

Oct

Jan
Feb

Jun

Oct

Jan
Feb

Jun

Oct

Jan
Feb

June
Mar

Mar

Mar
May

Nov
Dec

May

Nov
Dec

May

Nov
Dec
Sep

Sep

Sep
Aug

Aug

Aug
Apr

Apr

Apr

May
April
USD Euro

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