MR of Indian Economy

Economic Intelligence Service
CMIE
Monthly Review of the Indian Economy

December 2009
Economic Intelligence Service
Monthly Review of the Indian Economy

December 2009
CMIE
CENTRE FOR MONITORING INDIAN ECONOMY PVT LTD
11 Apple Heritage, 54-C Andheri-Kurla Road, Andheri (East), Mumbai 400093 Tel: 022 - 3088 0099 Fax: 022 - 2687 0696 E-mail: info@cmie.com Website: www.cmie.com
Centre for Monitoring Indian Economy Pvt. Ltd., 2009 This document is meant strictly for the use of the addressees only. Information provided in this document should not be reproduced, published, re-sold or otherwise distributed in any medium without the prior written permission of Centre for Monitoring Indian Economy. Limited portions of the information provided in this document can be quoted in occasional reports, articles, studies without any written permission from Centre for Monitoring Indian Economy. However, this should be done with a clear acknowledgement to Centre for Monitoring Indian Economy as the source of the information. The acknowledgement should mention the name of the document, month of release and Centre for Monitoring Indian Economy, Mumbai. Centre for Monitoring Indian Economy takes every possible care to provide information using sources it believes are the most accurate and reliable. Centre for Monitoring Indian Economy, however, shall not be liable for any losses or consequences, if any, arising from the use of the information contained in the document.
Release Date: December 12, 2009
Mumbai (HO): 11 Apple Heritage, 54-C Andheri-Kurla Road, Andheri (East), Mumbai 400093 Tel: (022) 30880099 Fax: (022) 26870696 E-mail: info@cmie.com Ahmadabad: Tel: (079) 26420618 Fax: (079) 26564644 Bangalore: Tel: (080) 22244026 Fax: (080) 22244027 Bhopal: Tel: (0755) 5274239 Fax: (0755) 2555378 Bhubneshwar: Tel: (0674)2595403 Fax: (0674)2595137 Chandigarh: Tel: (0172) 5017078 Fax: (0172) 5017078 Chennai: Tel: (044) 28331545 Fax: (044) 28234784 Coimbatore: Tel: (422) 531761 Dehradun: Tel: (0135) 2733789 Fax: (0135) 2733779 Delhi: Tel: (011) 23310102 Fax: (011) 23310094 Hyderabad: Tel: (040) 66466091 Fax: (040) 66466096 Jaipur: Tel: (0141) 5107608 Fax: (0141) 5107609 Kolkata: Tel: (033) 22822563 Fax: (033) 22822565 Lucknow: Tel: (0522) 2286530 Fax: (0522) 2286555 Pune: Tel: (020) 24430475 Fax: (020) 24430475
Ranchi: Tel: (0651) 233072 Fax: (0651) 233072
ii
Contents
1. Executive Summary 2. Annual Indicators 3. Monthly Indicators 4. GDP Growth GDP growth revised upward to 6.7% PFCE growth revised upward to 5% GDP forecasts guarded but optimistic 5. Ination 6. Interest Rates & Debt Market Liquidity Short Term Interest Rates Long Term Interest Rates 7. Balance of Payments Exchange Rate Current Account Balance Capital Account Balance 8. Public Finance Central Government Finance Government Debt Floatations 10. Agriculture Progress of Agriculture Reservoir Levels 11. Energy
1 3 8
Ports & Shipping Civil Aviation Telecommunications 13. Industry Industrial Production
47 48 49
50 53 54 55 56 57 58 59 60 62
11 15 16 17
Food Products Textiles Chemicals Cement Steel Capital Goods Consumer Durables
22 23 25
Transport Equipment 14. Investment 15. Corporate Sector
26 28 29
Financial Performance Corporate Debt Mergers & Acquisitions 16. Capital Markets
63 67 68
31 36
Primary Capital Market Secondary Capital Markets Derivative Markets Institutional Activity Perceptions on Markets
70 71 73 74 75 76
37 41
Mutual Funds 17. Money & Banking Money Supply
77 80 84 87
Coal Crude Oil Electricity 12. Infrastructure Railways
42 43 45
Scheduled Commercial Banks 18. Foreign Trade 19. World Economy
46
December 2009
Monthly Review of the Indian Economy, Centre for Monitoring Indian Economy
Executive Summary
1 Movement in short term interest rates of up to one year exhibited a mixed trend in November 2009. While yields on 91-day treasury bills and on overnight rates inched up, those on 182-day and 364day T-bills eased a little. Any sharp upward movement is unlikely during the remaining months of the current financial year.
GDP Growth
Real GDP growth for 2009-10 is revised upwards to 6.7 per cent from a 6.2 per cent projected earlier. This revision was warranted because of less damage to the smaller crops than anticipated earlier. Performance of the industrial sector too has further improved in September 2009 and is expected to remain healthy in the remaining months of 2009-10. Performance of railways also turned out to be better than expectations. In the first half of 2009-10, the real GDP grew by a better-than-expected seven per cent, as compared to the 5.8 per cent growth recorded during the second half of 2008-09. The growth in the current year, however, was lower than the 7.8 per cent growth recorded in the first half of 2008-09.
Money Supply and Banking

Money supply is expected to end financial year 200910 with a 17 per cent growth compared to a 18.6 per cent growth in 2008-09. The slower growth in money supply in 2009-10 is on account of slower credit growth. We expect credit growth to be 12 per cent in 2009-10 compared to 17.5 per cent in 2008-09. Some of the effect of the sharp slowdown in credit growth on money supply will be offset by the very high government borrowing. Total government borrowing, central and state, is scheduled to be much higher at Rs.5.8 lakh crore for 2009-10 compared to Rs.3.8 lakh crore in 2008-09.
Ination
Inflation, measured by the WPI, during AprilOctober 2009 was 0.4 per cent, as compared to 11 per cent in the same period of 2008. In the remaining five months of the current fiscal year, average inflation is expected to go up to 4.5 per cent. Thus, the average inflation for 2009-10 works out to 2.1 per cent. This will be significantly lower than the 8.4 per cent recorded in the previous fiscal year. Inflation as measured by the consumer price index for industrial workers (CPI-IW) came down between July 2009 and October 2009. It peaked at 11.9 per cent in July 2009, before gradually falling to 11.5 per cent in October 2009. Average inflation during April-October 2009 was higher at 10.5 per cent, as compared to 8.7 per cent in the same period of 2008.
Public Finance
Gross tax revenue was down by 7.6 per cent during April-October 2009, as against an impressive 20.3 per cent increase recorded in the same period of 2008. Expenditure was up by 31.5 per cent. Gross fiscal deficit reached Rs.2.45 lakh crore during AprilOctober 2009, doubling from the Rs.1.17 lakh crore recorded in the same period a year ago. The drop in revenue receipts and surge in revenue expenditure led to a higher Rs.2.06 lakh crore deficit on revenue account.
Interest Rates
Interest rates continue to witness downward pressure due to the very slow credit growth, the comparatively much faster deposit mobilisation and the consequent abundant liquidity in the banking system. The weighted average benchmark PLR of banks remained at 12.60 per cent by the end of November 2009.
Agriculture
Rabi acreage increased by 1.5 per cent by 26 November 2009. Rabi sowings began late this season as kharif harvesting was delayed. Rabi acreage is likely to rise further. Rabi foodgrain production is projected to rise by 1.3 per cent whereas kharif foodgrain production is slated to fall by 19 per cent. Total foodgrain production is expected to decline by 9.7 per cent in 2009-10. Production of sugarcane,
December 2009
2 cotton and oilseeds is also slated to fall. In 2009-10, production of major agricultural crops is expected to decline by 7.5 per cent. However, output of minor crops is projected to increase by two per cent. Consequently, total agricultural crop production is expected to fall by 3.9 per cent in 2009-10. As crop production is projected to fall less sharply than anticipated, the GDP forecast of agricultural and allied products stands revised. We expect farm incomes to fall by 1.4 per cent against our earlier estimate of 3.7 per cent decline.
Executive Summary ity prices, cut in excise duty and softening of interest rates. We expect the corporate profit growth to remain robust at 43.4 per cent in the December 2009 quarter. However, PAT will fall by 6.3 per cent in the March 2010 quarter as profits of the petroleum products sector are expected to fall steeply. During 2009-10, corporate profits will rise by a robust 20.3 per cent. Sales will grow by a healthy 15.6 per cent in the second half of 2009-10 and the growth will average at four per cent for the entire year.
Industry & Investments

The Indian industry has recovered swiftly from the shock of the Global Liquidity Crisis. This is evident from the 6.5 per cent rise in the IIP in the first half of 2009-10. The manufacturing companies have also started building inventories in anticipation of a rise in demand. Looking at the healthy trend in the industrial activity so far, we have scaled up forecast for industrial growth in 2009-10 to 7.7 per cent from 7.2 per cent. While the consumption demand that got affected for a brief period last year has revived, the investment demand always remained healthy. Since the GLC hit India in October 2008, India saw high fresh announcements of projects worth Rs.20.8 lakh crore. Projects went under implementation at an accelerated pace too. Projects worth Rs.1.8 lakh crore were commissioned in the second half of 2008-09 and another Rs.1.9 lakh crore during April-November 2009. Projects worth Rs.2.6 lakh crore are scheduled for completion during December-March 2009-10.
Capital Market
The CMIE Overall Share Price Index (COSPI) rose by 7.6 per cent in November 2009. The highest gainer during the month was the CMIE minerals index, which rose by 33.8 per cent. Total Assets Under Management (AUM) of the mutual fund industry swelled to Rs.7.7 lakh crore in October 2009, the highest since April 2004.
External Sector
Exports declined by 6.6 per cent in October 2009, the lowest decline since April 2009. Imports also declined less sharply by 15 per cent. As a result, trade deficit contracted to USD 8.8 billion in October 2009 from USD 11.7 billion in October 2008. The exchange rate of the Indian currency is expected to average Rs. 47.7 for the year as a whole. It averaged Rs.48.11 during the first eight months of the year. It is expected to average Rs.47 per dollar during the remaining four months of 2009-10. The current account of the balance of payments is likely to see a deficit of USD 8.9 billion during October 2009-March 2010, marginally higher than the USD 8.3 billion during October 2008-March 2009. This is because although net invisibles earnings would be higher by USD 5.8 billion during October 2009-March 2010, the trade deficit would be higher by USD 6.4 billion during this period. Capital inflows to the tune of USD 20.4 billion are expected to take place during October 2009-March 2010.
Corporate Sector
Corporate sales declined by 5.8 per cent in the first half of 2009-10. This was a reflection of the fall in prices of commodities, particularly that of petroleum products. However, the Indian corporates strengthened their PAT by 27.9 per cent by retaining the partial benefits of the fall in commod-
December 2009
Indicators: Annual
Units
3
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Population & National Income

Population (as on 1 Oct) GNP GDP GDP GDP GNP: GDP: GDP: GDP: at at at at current market prices current market prices factor cost (current prices) factor cost (const. prices) capita capita capita capita (current prices) (current prices) (const. prices) (const. prices) mln. nos Rs. bln. Rs. bln. Rs. bln. % change Rupees Rupees Rupees % change 1,040 22,589 22,790 20,977 5.8 21,720 21,913 20,545 3.1 1,056 24,379 24,546 22,614 3.8 23,086 23,244 20,996 2.2 1,072 27,339 27,546 25,382 8.5 25,503 25,696 22,413 6.8 1,089 31,270 31,494 28,777 7.5 28,715 28,920 23,894 6.6 1,106 35,606 35,867 32,824 9.5 32,194 32,430 25,723 7.7 1,122 40,994 41,292 37,794 9.7 36,537 36,802 27,808 8.1 1,138 46,996 47,234 43,209 9.0 41,297 41,506 29,901 7.5 1,154
53,218 49,332 6.7
6.7
Per Per Per Per
46,116 31,278 4.6
Savings, Capital Formation & Consumption (current prices) Gross domestic savings % of GDP 23.5 Gross domestic capital formation % of GDP 24.2 Pvt capital formation % of GDP 17.3 Public sector capital formation % of GDP 6.9 Consumption Expenditure % of GDP 76.7 Pvt. nal cons. exp. % of GDP 64.4 Govt. nal cons. exp. % of GDP 12.4 Per capita pvt. nal cons. exp. Rupees 14,138 Value Added (Constant prices) Agriculture Industry (incl. construction) Service GDP (PPP) Per capita GDP (PPP)
26.3 25.2 19.1 6.1 75.1 63.2 11.9 14,703
29.8 26.8 20.5 6.3 73.0 61.7 11.3 15,891
31.7 31.6 24.7 6.9 69.2 58.4 10.7 16,971
34.2 34.8 27.2 7.6 67.8 57.4 10.5 18,665
35.7 36.4 28.4 8.0 66.1 55.9 10.2 20,676
37.7 38.7 29.6 9.1 65.1 55.0 10.1 22,899
39.7
66.3 54.7 11.6
% change % change % change
6.3 2.7 7.2 2,375 2,420
-7.2 7.1 7.5 2,574 2,580
10.0 7.4 8.5 2,773 2,730
10.3 9.1 2,930 2,840
5.8 10.2 10.6
4.0 11.0 11.2
4.9 8.1 10.9
1.6 3.9 9.7
-1.4 7.8 8.6
bln.
Industry
Index of industrial production Mining & quarrying Electricity Manufacturing Fertilisers Finished Steel Cement Automobiles Basic goods Capital goods Consumer goods Intermediate goods % % % % % % % % % % % % change change change change change change change change change change change change 2.6 0.5 3.1 2.9 -0.8 4.7 9.4 5.2 2.4 -3.4 6.0 1.6 10,759 2,137 1,016 5.8 5.8 3.2 6.0 -1.0 9.9 8.7 9.0 4.8 10.5 7.1 3.9 12,000 2,357 1,103 7.0 5.3 5.0 7.4 -1.0 9.8 5.5 19.7 5.5 13.6 7.2 6.4 13,701 2,653 1,232 8.4 4.4 5.2 9.1 7.5 11.8 8.6 15.1 5.5 13.9 11.7 6.1 15,947 3,126 1,410 8.2 1.0 5.2 9.1 -1.4 7.4 11.2 10.2 6.7 15.7 12.0 2.5 18,051 3,604 1,593 11.5 5.3 7.3 12.5 6.5 13.1 9.8 10.4 10.3 18.2 10.1 12.0 21,485 4,285 1,891 8.5 5.1 6.3 9.0 -9.2 6.2 8.1 7.2 7.0 18.0 6.1 8.9 24,598 4,886 2,166 2.6 2.6 2.8 2.6 -2.2 0.4 7.8 2.6 2.6 7.0 4.6 -2.0 7.7 10.6 5.9 7.5 10.0 6.5 13.0 9.7
Value of Output(Organised sector) Rs. bln. Gross value added: Factory sector Rs. bln. Gross value added: Non-Fact. sector Rs. bln.
Transport
Railways: freight trac Cargo handled at major ports mln. tns. mln. tns. 492.5 287.6 518.7 313.5 557.4 344.8 602.1 383.7 666.5 423.6 727.8 463.8 793.9 519.3 850.0 922.3 530.4 558.0 (Continued. . . )
December 2009
4
Units
Indicators: Annual
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Energy
Commercial energy production Commercial energy availability Coal Production (excl. lignite) Coal imports Power capacity Electricity generation (Pub Ut.) Thermal & nuclear Hydel T & D losses Crude oil production Crude oil imports Petroleum products imports Consumption of petro. products Consumption of petro. products Natural gas gross production Natural gas net production % change 3.1 3.8 5.0 4.9 4.4 5.2 3.7 % change 2.3 4.2 5.1 5.5 5.3 5.9 mln. tns 327.8 341.3 361.2 382.6 407.0 430.8 457.1 mln. tns 20.5 23.3 21.7 29.0 38.6 43.1 49.8 MW 1,05,046 1,07,877 1,12,684 1,18,426 1,24,287 1,23,572 1,30,557 bln. KwH 517.4 532.7 565.1 594.5 623.8 662.5 704.5 bln. KwH 439.9 468.7 489.9 505.3 515.7 546.1 575.8 bln. KwH 73.1 64.0 75.2 84.6 101.5 113.4 123.4 per cent 32.5 32.5 31.3 30.4 mln. tns. 32.0 33.0 33.4 34.0 32.2 34.0 34.1 mln. tns. 78.7 82.0 90.4 95.9 99.4 111.5 121.7 mln. tns. 7.0 7.2 8.0 8.8 11.7 17.7 22.7 mln. tns. 107.7 111.8 116.0 120.2 122.4 131.7 128.9 % change 0.7 3.8 3.8 3.6 1.8 7.6 -2.1 bln cu. mtrs 29.7 31.4 32.0 31.8 32.2 31.7 32.4 bln cu. mtrs 28.0 30.0 30.9 30.8 31.3 30.8 31.4 487.3 527.7
719.3
761.7
33.5
34.8
133.4 3.5 32.8
47.5
Agriculture
Production Foodgrain Rice Wheat Cereals Pulses Kharif foodgrains Rabi foodgrains Oilseeds Sugar cane mln. mln. mln. mln. mln. mln. mln. mln. mln. tns. tns. tns. tns. tns. tns. tns. tns. tns. 212.9 93.3 72.8 199.5 13.4 112.1 100.8 20.7 297.2 41.5 91.5 174.8 71.8 65.8 163.6 11.1 87.2 87.5 14.8 287.4 41.9 91.7 213.2 88.5 72.2 198.3 14.9 117.0 96.2 25.2 233.9 41.0 88.4 198.4 83.1 68.6 185.2 13.1 103.3 95.1 24.4 237.1 41.8 96.2 208.6 91.8 69.4 195.2 13.4 109.9 98.7 28.0 281.2 42.9 105.6 217.3 93.4 75.8 203.1 14.2 110.6 106.7 24.3 355.5 230.8 96.7 78.6 216.0 14.8 121.0 109.8 29.8 348.2 233.9 99.2 80.6 219.2 14.7 117.7 116.2 28.2 273.9 213.4 81.0 81.5 198.2 15.0
25.8 251.6
Gross Irrigated Area/ gross crop area per cent Fertilizer consumption Kg/hectares Yield Foodgrain Kharif foodgrains Rabi foodgrains Agricultural production Foodgrain Non-Foodgrain Per capita availability of foodgrain VOP VOP VOP VOP Agriculture Livestock Fishing Forestry
111.8
kg/hectare kg/hectare kg/hectare % change % change % change kg/p.a. Rs. Rs. Rs. Rs. bln. bln. bln. bln.
1734 1510 2076 8.0 8.9 6.7 151.9 4,062 1,472 274 232
1535 1272 1933 -16.3 -18.6 -12.6 180.4 3,865 1,541 300 234
1727 1551 2003 22.0 22.5 21.4 159.7 4,525 1,630 317 249
1652 1430 1988 -3.1 -7.0 2.6 168.9 4,581 1,802 322 259
1716 1511 2020 7.6 5.9 9.8 154.2 5,241 1,964 369 294
1756 1522 2091 3.5 3.9 2.9 162.2 5,744 2,140 392 310
1860 1644 2174 6.7 5.6 8.1 -1.5 1.4 -5.1 -7.5 -9.7 -4.6
6,538 2,406 422 323
Employment (Organised)
Public sector Private sector Registered jobseekers mln. nos. mln. nos. mln. nos. 18.8 8.4 41.6 18.6 8.4 40.7 18.2 8.2 40.9 18.0 8.4 39.7 18.2 8.8 40.0 41.4 38.9 (Continued. . . )
December 2009
Indicators: Annual
Units
5
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Corporate Sector (Non-nancial Cos.)

Sales Public Sector Private Sector Gross Fixed Assets Public Sector Private Sector PBDIT Public Sector Private Sector Prot after tax Public Sector Private Sector PBDIT/Sales Public Sector Private Sector PAT/Sales Public Sector Private Sector Debt/Equity Public Sector Private Sector VOP/GFA Public Sector Private Sector % % % % % % % % % % % % % % % % % % % % % % % % change change change change change change change change change change change change change change change change change change change change change change change change 2.49 2.65 2.39 9.92 8.86 10.78 4.79 11.68 -0.45 -8.52 36.94 -49.38 13.49 14.97 12.44 1.80 3.07 0.90 1.17 1.06 1.24 1.28 1.18 1.36 10.29 12.28 8.78 8.22 9.67 6.97 16.73 22.04 11.94 88.53 75.29 114.52 14.19 16.05 12.74 2.57 3.61 1.76 1.13 1.04 1.21 1.27 1.16 1.36 15.23 13.22 16.76 8.00 8.23 7.78 18.11 14.34 21.81 78.92 48.24 129.55 14.62 16.52 13.23 4.21 5.12 3.54 1.01 0.88 1.12 1.36 1.20 1.50 20.11 15.78 23.27 10.15 10.60 9.75 21.30 15.41 26.70 59.43 41.97 79.09 14.82 16.60 13.61 5.52 6.40 4.91 0.92 0.82 1.01 1.47 1.24 1.68 16.88 16.82 16.92 11.42 6.16 16.10 15.50 7.81 21.96 24.27 7.17 40.03 14.76 15.36 14.35 6.04 6.10 6.00 0.85 0.79 0.90 1.55 1.37 1.71 22.84 16.76 27.22 14.20 8.79 18.80 30.66 15.03 42.51 40.10 14.42 58.63 15.66 14.93 16.14 6.92 5.95 7.56 0.81 0.73 0.87 1.66 1.47 1.82 17.33 11.74 20.85 12.92 8.46 16.32 21.18 9.77 28.05 21.35 2.15 31.60 16.44 15.20 17.16 7.35 5.85 8.22 0.73 0.62 0.78 1.67 1.44 1.84 14.40 15.49 13.77 13.30 5.08 18.78 -2.39 -2.32 -2.43 -16.41 -13.81 -17.58 14.22 13.29 14.75 5.50 4.78 5.92 0.76 0.61 0.84 1.67 1.58 1.73
Capital Markets
Capital Issues Public Sector Private Sector Equity Debt GDRs/ADRs/ECBs/(oatations) GDRs/ADRs ECBs/FRNs Secondary Market No. of companies listed Market cap. all listed companies Market Capitalisation Returns on the CMIE Overall Share Price Index Trading volumes on BSE Trading volumes on NSE Number Rs. bln. % of GDP 5756 7421 32.6 5643 7241 29.5 5536 13764 50.0 4792 18775 59.6 4852 32142 89.6 4908 36909 89.4 4992 52972 112.1 5044 32240 60.6 Rs. Rs. Rs. Rs. Rs. bln. bln. bln. bln. bln. 494.0 314.3 174.6 97.8 396.2 494.9 494.9 446.1 309.0 136.2 103.8 342.3 188.3 188.3 541.7 401.3 140.4 235.1 306.6 993.2 271.4 721.9 635.2 323.4 311.8 321.0 314.2 3406.4 826.0 2569.0 812.3 472.8 339.4 345.9 466.4 9028.4 3565.4 4882.9 1238.4 424.3 814.2 802.8 435.7 2334.2 794.4 1539.8 1820.0 637.2 1182.8 1344.6 461.9 7921.8 7910.6 1068.3 372.3 695.9 321.8 537.7 288.4 288.4
mln. mln. mln.
per cent Rs. bln. Rs. bln.
8.8 3049 5132
5.4 3136 6180
115.7 5033 10995
28.1 5185 11401
71.2 8159 15696
10.2 9497 19453
30.1 15786 35510
-41.2 10993 27520
Public Finance (Centre, State & UTs)

Government receipts Government expenditure Plan outlay Rs. bln. Rs. bln. Rs. bln. 6154 6809 1863 7220 7251 2102 8159 8033 2248 9727 8961 1931 10566 10740 2472 12185 12153 3135
Finances of Central Govt.

Revenue receipts Tax receipt Direct Tax Indirect Tax Rs. bln. Rs. bln. Rs. bln. (% of GDP) Rs. bln. (% of GDP) 2013 1871 691 3.0 1180 5.2 2308 2163 829 3.4 1333 5.4 2638 2543 1050 3.8 1494 5.4 3060 3050 1320 4.2 1729 5.5 3471 3662 1573 4.4 2088 5.8 4344 4735 2195 5.3 2540 6.2 5419 5931 2956 6.3 2976 6.3 5622 6279 3446 2833 6096 6713 3796 2917
(Continued. . . )
December 2009
Indicators: Annual
Units 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Rs. bln. 3623 4132 4712 4983 5057 5834 7127 9010 9532 (% of GDP) 15.9 16.8 17.1 15.8 14.1 14.1 15.1 2851 Rs. bln. 1012 1115 1223 1323 1406 1699 2051 2830 % of Exp. 27.9 27.0 26.0 26.6 27.8 29.1 28.8 31.4 29.9 Rs. bln. 2611 3018 3489 3660 3651 4135 5076 6180 6681 % of Exp. 72.1 73.0 74.0 73.4 72.2 70.9 71.2 68.6 70.1 Rs. bln. 312 435 443 460 475 571 709 1292 1009 (% of Exp) 8.6 10.5 9.4 9.2 9.4 9.8 10.0 14.3 10.6 Rs. bln. 543 557 601 759 805 855 917 1711 1417 (% of Exp) 15.0 13.5 12.7 15.2 15.9 14.7 12.9 19.0 14.9 Rs. bln. 1075 1178 1241 1269 1326 1503 1710 1927 2255 (% of Exp) 29.7 28.5 26.3 25.5 26.2 25.8 24.0 21.4 23.7 Rs.Bln. Rs.Bln. Rs.Bln. (% of GDP) Rs. bln. % of GDP -15 1002 1410 6.2 9131 40.0
Expenditure Plan expenditure Non-plan expenditure Subsidies Defence Interest
Budget Decit Revenue Decit Gross Fiscal Decit Outstanding internal debt
1079 1451 5.9 10207 41.4
983 1233 4.5 11417 41.4
783 1258 4.0 12759 40.5
923 1464 4.1 13897 38.8
802 1426 3.5 15450 37.3
526 1269 2.7 18441
2413 3265 19725
2385 3328
Money, Banking & Interest Rates

Money supply (M3) SCBs Deposits SCBs Credit Nonfood credit % change Rs. bln. % change Rs. bln. % change Rs. bln. % change per cent per cent per cent 14.1 11,034 11.5 5,897 11.4 5,357 9.4 6.5 8.5 12.0 14.7 13,118 18.9 7,464 26.6 6,970 30.1 6.3 6.3 11.5 16.7 15,423 17.6 8,656 16.0 8,291 18.9 6.0 5.5 11.0 12.3 17,086 10.8 10,920 26.2 10,505 26.7 6.0 6.3 10.8 21.2 21,090 23.4 15,071 38.0 14,664 39.6 6.0 7.0 10.8 21.5 26,119 23.8 19,312 28.1 18,847 28.5 6.0 9.0 12.5 21.2 31,969 22.4 23,619 22.3 23,175 23.0 6.0 9.0 12.8 18.6 38,341 19.9 27,755 17.5 27,293 17.8 6.0 8.8 12.5 18.0
20.0 16.0
Bank rate (March-end) Interest on deposits (maximum) Prime lending rates (maximum)
Prices (Annual Averages)

Wholesale price index All Commodities Primary Articles Fuel, Power & Lubricant Manufactured Products Prices (Annual Averages) Consumer price index IW-General Index AL-General Index UNME-General Index % % % % change change change change 3.7 3.7 9.1 1.9 3.4 3.3 5.6 2.7 5.4 4.2 6.3 5.6 6.4 3.7 10.0 6.3 4.4 2.9 9.5 3.1 5.4 7.8 5.6 4.4 4.7 7.7 1.0 5.0 8.3 10.0 7.4 8.0 2.1 8.5 -2.9 1.1
% change % change % change
4.3 1.1 5.1
4.0 3.2 3.8
3.9 3.9 3.7
3.8 2.4 3.6
4.4 4.0 4.7
6.7 7.8 6.6
6.2 7.5 5.9
9.1 10.2 8.9
10.9
External Transactions
Exports Agro products Ores & minerals Manufactured goods Imports POL NonPOL Trade balance: DGCI&S Trade balance: RBI Gross invisible earnings Net invisibles Current account balance
mln.
% change mln. mln. mln. mln. % change mln. mln. mln. mln.
43,958 52,823 63,886 83,502 -0.4 20.2 20.9 30.7 5,919 6,723 7,538 8,471 1,266 2,000 2,370 5,076 33,469 40,324 48,525 60,706 51,567 61,533 78,203 1,11,472 3.0 19.3 27.1 42.5 14,042 17,674 20,584 29,832 37,525 43,859 57,619 81,640 -7,609 -8,710 -14,317 -27,970 -11,574 -10,690 -13,718 -33,702 36,737 14,974 3,400 41,925 17,035 6,345 53,508 27,801 14,083 69,533 31,232 -2,470
1,03,075 23.4 10,212 6,163 72,552 1,49,144 33.8 43,957 1,05,187 -46,069 -51,904
1,26,276 22.5 12,675 6,998 84,863 1,85,081 24.1 57,068 1,28,014 -58,805 -61,782
1,62,988 29.1 18,442 9,124 1,03,032 2,49,791 35.0 79,659 1,70,132 -86,803 -91,626
1,82,922 12.2 17,562 7,812 1,23,008 2,90,667 16.4 91,328 1,99,339 -1,07,745 -1,19,403
1,63,000 -11.0
2,67,000 -8.2 72,000 1,95,000 -1,04,000
mln. mln. mln.
89,687 1,14,558 1,48,604 1,62,556 42,002 52,217 74,592 89,586 90427 -9,902 -9,565 -17,034 -29,817 -16260 (Continued. . . )
December 2009
Indicators: Annual
Units % of GDP % of GDP % of GDP mln. nos.
7
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 9.2 10.4 10.6 11.9 12.7 13.8 13.9 15.8 10.8 12.1 13.0 15.9 18.4 20.3 21.3 25.1 -1.3 0.7 1.2 2.3 -0.4 -1.2 -1.1 -1.5 -2.5 2.38 2.45 2.93 3.60 4.10 4.67 5.27 5.13 8,551 1,117 -1,585 2,754 6,125 2,021 -1,881 10,840 -3,128 -1,692 2,978 5,036 979 6,667 16,736 -2,858 -2,925 3,642 4,322 11,356 3,199 28,022 1,923 5,194 -964 5,987 9,311 6,571 25,470 1,702 2,508 2,789 8,901 12,494 -2,924 45,203 1,07,993 1,775 2,114 16,103 22,633 4,321 179 22,739 34,236 7,004 29,394 -6,739 19,437 9,146 2,638 8,158 4,290 34,982 -13,855 -27,067 35766 3,185 1644 5017
Exports Imports Current account balance Tourist arrivals Foreign Capital Inow (net) Foreign aid (net) External comm. borrowings (net) NRI deposits (net) FDI Portfolio investments Others Debt servicing Repayments Interest payments Outstanding external debt
mln. mln. mln. mln. mln. mln. mln.
Debt service ratio Foreign exchange reserves (excl. gold mln. and SDRs): March-end Rupee exchange rate
mln. mln. mln. mln. % of GDP per cent
11,115 15,239 19,165 9,155 19,560 11,404 14,946 15,430 6,776 11,530 14,614 6,117 14,341 5,936 8,339 8,912 4,339 3,709 4,551 3,038 5,219 5,468 6,607 6,518 98,843 1,04,914 1,11,645 1,32,973 1,38,133 1,71,331 2,23,312 2,23,953 21.2 20.3 17.8 18.5 17.2 18.1 18.9 21.4 13.70 16.00 16.10 6.10 10.10 4.70 4.80 4.60 51,049 47.55 71,890 1,07,448 1,35,571 1,45,108 1,91,924 2,99,230 2,41,426 48.30 45.92 44.95 44.28 45.28 40.24 45.92
Rs/dollar
December 2009
Units
Nov 2008
Dec 2008
Jan 2009
Feb 2009
Mar 2009
Apr 2009
May 2009
Jun 2009
Jul 2009
Aug 2009
Sep 2009
Oct 2009
Nov 2009
December 2009 13.7 -53.9 35.2 91.1 21.8 5.3 35.8 93.4 10.9 -39.8 37.0 0.0 10.8 -52.8 8.4 -70.2 29.7 -32.0 45.4 -17.3 60.9 -51.4 302.4 -6.1 163.3 -33.3 177.1 -15.7 70.0 -5.9 54.5 81.1 (yoy) (yoy) (yoy) (yoy) 36.8 6.5 2.77 -0.5 42.5 5.0 2.85 -2.2 43.0 9.6 2.84 0.5 58.4 2.8 66.6 1.3 69.8 6.0 46.8 9.4 2.87 -0.3 60.0 1.3 72.2 3.0 48.3 6.3 2.66 -8.1 62.0 2.7 74.6 2.9 46.5 6.0 2.56 -6.2 56.8 -0.2 70.0 -0.9 55.7 5.2 2.86 -2.3 65.1 6.3 81.7 4.1 39.6 13.2 2.73 -3.1 63.0 7.1 69.9 3.1 40.0 10.2 2.78 -4.3 62.8 1.3 71.7 2.4 39.2 14.7 2.75 4.0 63.3 8.1 71.5 9.6 35.9 9.8 2.79 -0.4 63.5 4.3 71.7 5.8 37.7 13.0 2.77 -2.6 66.1 10.4 73.2 12.2 73.5 11.2 100 (yoy) 100 (yoy) 100 (yoy) 100 (yoy) 100 (yoy) 100 (yoy) 267.6 2.5 225.6 2.2 394.0 0.5 245.7 -3.9 369.5 0.3 283.0 12.4 284.0 -0.2 234.6 2.0 448.1 6.6 247.5 -8.9 338.9 -4.2 323.2 3.2 284.8 1.0 233.6 -0.7 394.2 15.9 247.5 -7.2 391.3 2.1 337.1 4.0 276.8 0.2 226.2 -0.1 398.9 11.8 251.6 -3.0 412.9 6.0 302.7 -3.4 305.9 0.3 251.1 1.9 508.9 -6.3 284.5 1.9 442.9 8.4 301.7 -1.0 269.3 1.1 231.3 4.5 294.4 -5.9 277.2 7.9 415.0 17.6 274.8 -10.5 280.3 2.1 239.2 3.8 336.5 -3.6 286.9 6.6 442.5 13.2 275.7 -5.5 291.6 8.3 244.1 10.7 438.0 13.4 288.5 7.9 435.0 16.2 276.5 0.7 290.9 7.2 239.0 4.7 380.8 1.7 298.6 9.8 485.7 21.3 280.9 5.8 293.7 11.0 247.7 9.6 404.2 8.7 295.0 14.2 482.6 22.3 274.9 6.4 301.4 9.1 239.9 6.7 530.6 12.8 286.1 10.8 544.7 22.2 265.4 2.6 155.8 5.6 2.5 0.7 2.6 2.7 143.4 9.0 1,378.2 5.3 4,323.0 -2.5 2.0 -0.2 2.2 1.6 -0.6 158.2 11.9 1,276.1 -7.0 4,334.0 -6.0 -17.2 1.0 0.7 1.8 1.0 161.3 8.5 1,095.5 -11.4 4,477.0 1.6 -10.3 0.2 -0.2 0.7 0.2 160.0 8.6 985.6 -15.0 4,398.0 -0.5 3.7 0.3 1.9 6.3 -0.3 181.1 10.5 1,095.4 19.6 4,736.0 -3.0 5.5 1.1 3.4 7.1 0.4 168.4 12.1 1,033.3 9.1 4,300.0 2.8 12.7 2.1 3.4 3.3 1.8 167.0 12.2 1,303.2 6.0 4,496.0 1.3 9.5 8.3 14.2 8.0 8.0 165.9 13.0 1,412.1 22.2 4,527.0 5.1 14.3 7.2 9.0 4.2 7.4 162.5 9.9 1,417.8 12.6 4,544.0 5.4 14.0 11.0 11.0 10.6 11.0 155.2 17.8 1,438.1 10.5 4,588.0 0.2 17.2 9.1 8.6 7.9 9.3 148.3 6.7 1,399.8 10.4 4,795.0 -1.7 15.8
Agriculture
Actual rainfall variation from normal Stock of foodgrain
mm per cent mln. tns. % change (yoy)
Energy/Infrastructure
Coal production
Crude oil production
Power generation
Railways: freight trac
mln. tns. % change mln. tns. % change bln. unit % change mln. tns. % change
Industry
Industrial Production Index
Basic goods
Capital goods
Intermediate goods
Consumer durables
Consumer non-durables
1993-94= % change 1993-94= % change 1993-94= % change 1993-94= % change 1993-94= % change 1993-94= % change
Industrial Production
Industrial Production Index Mining & quarrying Electricity Manufacturing Cement
Fertilisers
Finished Steel
Indicators: Monthly
Automobiles
% change (yoy) % change (yoy) % change (yoy) % change (yoy) Lakh tonnes % change (yoy) 000 tonnes % change (yoy) 000 tonnes % change (yoy) % change
15.9 42.8 (Continued. . . )
Units
Nov 2008
Dec 2008
Jan 2009
Feb 2009
Mar 2009
Apr 2009
May 2009
Jun 2009
Jul 2009
Aug 2009
Sep 2009
Oct 2009
Nov 2009
External Transactions
13,193 -6.6 21,995 -15.0 -8,802 266.8 262.4 46.57 46.72
Exports
Indicators: Monthly
Imports
Trade balance Forex reserves FDI actuals excl. acquisition Exchange rate
mln. % change (yoy) mln. % change (yoy) mln. bln. mln. Rs /

10,206 -20.1 19,867 -2.2 -9,661 239.0 990 49.00 12,153 -5.2 18,145 -2.0 -5,992 246.6 1,280 48.64 11,423 -22.4 16,299 -27.7 -4,876 238.9 2,573 48.83 10,933 -27.7 13,115 -36.8 -2,182 238.7 1,166 49.26 12,901 -25.2 15,827 -30.3 -2,926 241.4 1,781 51.23 10,743 -33.2 15,748 -36.6 -5,005 241.5 2,081 50.06 11,015 -29.2 16,220 -39.2 -5,205 251.5 2,017 48.53 12,815 -27.7 18,978 -29.3 -6,163 254.1 2,533 47.77 13,622 -28.4 19,620 -37.1 -5,998 260.6 2,005 48.48 14,288 -19.4 22,659 -32.4 -8,371 261.2 3,214 48.34 13,608 -13.8 21,376 -31.4 -7,768 264.4 1,466 48.44
Capital Markets
bln. bln. bln. bln. -6.5 35.4 96.2 237 990.7 291 606.8 259 999.6 283 589.8 305 688.7 256 1,136.8 239 628.8 11.7 38.5 101.4 -4.6 35.3 95.6 -4.4 28.6 78.9 7.8 34.9 101.4 16.3 52.3 156.9 35.8 64.3 191.3 -2.4 72.4 219.3 8.2 60.4 185.3 2.6 58.2 173.8 119.1 0.0 1.5 117.6 164.7 0.4 13.5 150.8 127.4 0.0 0.0 127.4 74.9 15.2 0.0 59.7 102.1 0.0 6.4 95.7 75.4 0.0 0.0 75.4 137.4 0.0 0.2 137.2 97.0 3.0 0.1 93.9 242.7 36.8 0.2 205.7 198.5 67.0 2.0 129.6 201.4 33.8 18.2 149.4 7.7 62.1 182.5 140.5 19.8 2.2 118.5 -6.6 57.0 181.5 57.1 7.0 0.0 50.0 7.6 52.6 162.2
Capital Issue Public Issue Rights Issue Private Placements Monthly returns on CMIE Overall Share Price Index Avg.daily turnover on BSE Avg.daily turnover on NSE
Rs. Rs. Rs. Rs.
per cent Rs. bln. Rs. bln.
Monthly Review of the Indian Economy, Centre for Monitoring Indian Economy (yoy) (yoy) (yoy) (yoy) (yoy) -1,786 0.0 28,430 24.6 43,842 19.1 26,425 26.0 25,921 26.0 6.0 13.5 7.12 -1,553 0.0 28,569 22.5 44,367 19.7 26,472 23.2 25,941 23.0 6.0 13.3 5.02 -477 0.0 28,592 20.5 45,635 19.9 26,378 20.7 25,923 20.8 6.0 12.5 4.78 -400 0.0 28,964 17.5 46,547 19.9 26,679 18.3 26,195 18.5 6.0 12.5 4.74 618 0.0 30,133 16.9 47,640 18.6 27,755 17.5 27,293 17.8 6.0 12.5 4.94 505 0.0 29,788 17.3 48,764 20.7 27,445 18.0 26,955 18.0 6.0 12.3 3.31 573 0.0 29,765 15.4 49,354 20.5 27,460 15.8 26,872 15.7 6.0 12.3 3.31 503 0.0 30,056 15.2 49,344 20.1 27,776 15.1 27,212 15.1 6.0 12.3 3.31 279 0.0 30,487 16.2 50,237 21.1 28,070 17.0 27,581 17.1 6.0 12.0 3.23 101 0.0 30,532 14.1 50,431 19.3 28,067 14.1 27,576 14.1 6.0 12.0 3.39 353 0.0 31,212 12.6 50,958 19.0 28,732 12.6 28,307 13.0 6.0 12.0 3.39 696 0.0 31,121 9.7 51,553 18.3 28,996 9.5 28,597 10.1 6.0 12.0 3.23 6.0 12.0 3.27 625.3 179.4 560.7 518.1 713.7 -5.0 789.8 581.5 422.4 674.2 446.2 272.9 (Continued. . . )
Industrial entrepreneurs memoranda
Nos. Rs. bln.
Money, Banking & Interest Rates
Net RBI credit to Central government Bank credit to commercial sector Money supply (M3)
SCBs Credit
Nonfood credit
Bank rate (Month-end) Prime lending rates (maximum) Yield on 91-day T bills
Rs. bln. % change Rs. bln. % change Rs. bln. % change Rs. bln. % change Rs. bln. % change per cent per cent per cent
Central government market borrowings (net)
(Rs.bln.)
December 2009
10
Units
Nov 2008
Dec 2008
Jan 2009
Feb 2009
Mar 2009
Apr 2009
May 2009
Jun 2009
Jul 2009
Aug 2009
Sep 2009
Oct 2009
Nov 2009
December 2009 234.2 8.5 250.9 12.1 348.0 6.4 203.0 7.8 229.7 6.2 247.3 11.2 331.0 -0.2 201.1 6.6 228.9 4.9 248.6 10.7 328.8 -1.7 199.9 5.2 227.6 3.5 246.4 6.9 323.9 -3.4 199.5 4.8 228.2 1.2 248.2 5.2 321.0 -6.0 200.6 2.3 231.5 1.3 254.4 6.6 323.4 -5.7 203.0 1.8 234.3 1.4 257.2 6.3 325.7 -6.1 205.9 2.2 235.0 -1.0 259.8 6.5 327.5 -12.5 205.8 0.6 238.4 -0.7 266.6 7.2 338.2 -10.3 206.4 0.0 240.6 -0.3 269.2 8.0 342.9 -9.3 207.9 0.0 242.7 0.5 273.4 8.4 344.6 -8.2 208.6 0.3 242.1 1.3 273.4 8.7 345.0 -6.6 208.3 1.3 165.0 11.5 522.0 13.7 148.0 10.4 460.0 11.1 575.0 10.8 460.0 11.1 147.0 9.7 459.0 11.1 569.0 9.8 459.0 11.1 148.0 10.4 461.0 11.6 574.0 10.4 461.0 11.4 148.0 9.6 462.0 10.8 575.0 9.9 462.0 10.8 148.0 8.0 463.0 9.5 577.0 9.3 464.0 9.7 150.0 8.7 468.0 9.1 583.0 8.8 468.0 9.1 151.0 8.6 475.0 10.2 589.0 9.7 475.0 10.2 153.0 9.3 484.0 11.5 595.0 9.6 484.0 11.3 160.0 11.9 499.0 12.9 624.0 13.0 498.0 12.7 162.0 11.7 508.0 12.9 631.0 12.9 507.0 12.7 163.0 11.6 515.0 13.2 635.0 12.4 514.0 13.0 521.0 13.5
Prices
Wholesale price index All Commodities
Primary Articles
Fuel, Power & Lubricant
Manufactured Products
199394=100 % change (yoy) 199394=100 % change (yoy) 199394=100 % change (yoy) 199394=100 % change (yoy)
Consumer price index IW-General Index
AL-General Index
UNME-General Index
RL-General Index
2001 = 100 % change (yoy) 198687=100 % change (yoy) 198485=100 % change (yoy) 198687=100 % change (yoy)
Indicators: Monthly
GDP Growth
11 In the first half of 2009-10, the real GDP grew by a better-than-expected seven per cent, as compared to the 5.8 per cent growth recorded during the second half of 2008-09. The growth in the current year, however, was lower than the 7.8 per cent growth recorded in the first half of 2008-09. The performance of the economy in the first half of 2009-10 shows that the economy has overcome the effect of the GLC. The export sector was one of the major segments of the economy to be hit badly by the GLC. This segment too has shown signs of recovery. The rate of decline in exports shrank to 13.8 per cent in September 2009 and further to 6.6 per cent in October 2009, from a 20-30 per cent decline recorded in each month from April 2009 to August 2009.
GDP growth revised upward to 6.7%

Real GDP growth for 2009-10 is revised upwards to 6.7 per cent, from a 6.2 per cent growth projected in the previous month. This sharp revision was warranted because of less damage to the smaller crops than anticipated earlier. Performance of the industrial sector too has further improved in September 2009 and is expected to remain healthy in the remaining months of 2009-10. Performance of railways also turned out to be better than expectations. The industrial sector (including construction) is projected to grow by 7.8 per cent and the services sector by 8.6 per cent. The agricultural and allied sector is projected to shrink by 1.4 per cent. All these growth numbers are revised compared to our earlier projections.
Table 4.1 Growth in Real Gross Domestic Product at factor cost (%): By economic activity
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 CMIE projections -1.4 -1.8 2.0 4.0 7.8 10.6 7.5 6.5 8.0 8.6 8.6 4.4 4.0 8.0 13.8 8.5 5.0 5.0 22.0 8.5 9.0 8.0 8.9 10.0 8.0 6.7
Agriculture, forestry & shing Agriculture Forestry & logging Fishing Industry Mining & quarrying Manufacturing Electricity, gas & water supply Construction Service Trade, hotels, transp., storage & commun Trade, hotels & restaurants Trade Hotels & restaurants Transport, storage & communication Railways Transport by other means Storage Communication Fin., insur., real est.& business serv. Banking & insurance Real est., ownership of dwellings & business services Community, social & personal services Public administration & defence Other community & personal services Gross domestic product at factor cost
10.0 10.8 -1.1 3.6 7.4 3.1 6.6 4.8 12.0 8.5 12.0 10.1 10.2 8.6 15.3 5.9 11.9 5.1 26.1 5.6 2.2 8.3 5.4 2.6 7.6 8.5
0.0 0.1 2.1 -2.0 10.3 8.2 8.7 7.9 16.1 9.1 10.7 7.7 7.3 11.4 15.6 7.3 12.1 13.5 24.5 8.7 8.8 8.6 6.8 6.5 7.1 7.5
5.8 6.0 1.3 7.3 10.2 4.9 9.1 5.1 16.2 10.6 12.1 10.3 9.8 14.6 14.9 8.8 8.3 1.2 26.8 11.4 14.2 9.2 7.1 4.9 8.6 9.5
4.0 4.1 2.4 3.0 11.0 8.8 11.8 5.3 11.8 11.2 12.8 10.4 9.9 15.9 16.3 10.0 8.8 3.1 27.7 13.8 20.3 8.6 5.7 4.0 6.9 9.7
4.9 5.0 2.1 4.6 8.1 3.3 8.2 5.3 10.1 10.9 12.4 10.1 10.0 11.5 15.5 9.3 7.7 -1.4 25.6 11.7 15.4 8.5 6.8 4.2 8.5 9.0
1.6 1.4 2.0 6.0 3.9 3.6 2.4 3.4 7.2 9.7 9.0 6.5 6.8 4.5 12.4 5.5 5.4 5.0 20.3 7.8 11.2 4.6 13.1 24.7 5.5 6.7
December 2009
12
GDP Growth year and is projected to remain healthy in the second half. This itself provides corporates with liquidity in the form of internal accruals. The real GDP from the industrial sector including construction is now projected to grow by 7.8 per cent, as against 7.4 per cent projected earlier. The growth in 2009-10 will be much higher than the 3.9 per cent increase recorded in 2008-09.
Industrial sector recovers from the GLC

The industrial sector has recovered from the shock of the Global Liquidity Crisis. The IIP of the manufacturing sector grew by a healthy 9.2 per cent during July-September 2009. The sector had grown by a meagre 0.5 per cent and 0.3 per cent in the quarters ended December 2008 and March 2009, respectively. We expect the growth in the IIP to gain further momentum in the second half of the current fiscal year. The IIP is projected to grow by nine per cent in the second half, as compared to 6.5 per cent growth clocked in the first half and 0.3 per cent in the second half of 2008-09. The expected strong growth in cement and steel production suggests that growth in the construction sector will be better at eight per cent in 2009-10 than the 7.2 per cent recorded in 2008-09. In the first half of 2009-10, the construction sector grew by 6.8 per cent. The construction activities are expected to remain robust in the second half. Projects worth Rs.1.9 lakh crore have been commissioned in the first eight months of 2009-10 and Rs.2.6 lakh crore will be commissioned in the remaining months of the year. As a result, we expect growth in the construction sector to accelerate to 9.8 per cent in the second half of the year. Growth in bank credit to the commercial sector is very slow in the current fiscal year. But corporates are not facing any liquidity problem. They have been able to raise resources directly from the markets. Their profit was high in the first half of the Figure 4.1 Industrial sector (including construction): Annual real GDP growth (%)
12 10.3 10 8 6 4 2.7 2 0 2000-01 2002-03 2004-05 2006-07 2009-10 3.9 7.1 7.4 10.2 8.1 11.0 (CMIE projection)
Agricultural and allied sector to dip by 1.4%

We have carried out a major revision in our projected growth of the agricultural and allied sector for 2009-10; from -3.7 per cent to -1.4 per cent. This revision is largely because of less-than-anticipated damage occurred to the smaller crops including several horticulture crops, straw & stalks, etc in the just concluded kharif season and an expected good rabi season. Earlier we had projected a 7.5 per cent decline in the overall crop production in 2009-10 because of poor rainfall. The behaviour of prices of several horticultural crops indicated that the damage to the horticultural crop was minimum as compared to the bigger kharif crops such as cereal, sugarcane, fibres and major vegetables & fruits. Most of the kharif crop production is estimated to have fallen sharply in the range of 5-18 per cent on account of the poor rainfall in the southwest monsoon season. We expect rabi foodgrain crop to grow by 1.3 per cent. As a result, production of major crops will be down by 7.5 per cent in 2009-10. Figure 4.2 Industrial sector (including construction): Quarterly y-o-y real GDP growth (%)
12 10 9.2 9.1 8.2 6.2 6.0 6.1 5.0 8.3 (CMIE Forecast) 8.7 9.4
7.8
8 6 4
2.3 2 0 1.4 J07 S07 D07 M08 J08 S08 D08 M09 J09 S09 D09 M10
December 2009
GDP Growth Production of the horticultural and other smaller crops is projected to grow by two per cent in 200910. This growth will be sharply lower than an estimated 5.3 per cent increase recorded in 2008-09. These crops together account for 35-38 per cent of the total crop production. Thus, the overall crop production will see a lower 3.9 per cent decline in 2009-10, as against a 7.5 per cent decline projected earlier. The fall in total crop production will be partly compensated by growth in livestock, forestry & logging and fishing. In 2009-10, the livestock sector is projected to grow by four per cent, while the others will grow by two per cent. The entire sector, agricultural and allied activities, is now projected to shrink by only 1.4 per cent as against a 3.7 per cent decline projected earlier. This revision will push up the GDP growth by 40 basis points.
13 telecommunication sector has been growing at close to 40 per cent each month on a year-on-year basis. The GDP from this sector is also revised upward. The net impact of all the above revisions will lead to a 0.1 percentage point rise in the growth rate of the services sector as a whole. The services sector is therefore projected to grow by 8.6 per cent in 2009-10. This will however be the lowest growth since 2002-03. Of the three major segments of the services sector, the finance, insurance, real estate & business services segment will be the only one to grow at a higher rate of 8.5 per cent in 2009-10, as compared to 7.8 per cent in 2008-09. Growth in transport other than railways is expected to remain fractionally lower at five per cent than the 5.4 per cent recorded in 2008-09. The impressive turnaround in industrial activities will increase railways freight movement and cargo movement in ports in the second half. The outlook for international trade is poor and agriculture crop production is projected to fall. As a result, we expect the growth in trade to fall to four per cent from an estimated 6.8 per cent in 200809 and the 9.4 per cent per annum in the preceding five years. Trade accounts for 14 per cent of Indias GDP. As a result, the trade-hotel-transportcommunication segment of the services sector is projected to grow by a lower 8.6 per cent in 2009-10, as compared to a nine per cent growth achieved in 2008-09. These growth rates are well below the 12 per cent recorded between 2003-04 and 2007-08. Figure 4.4 Quarterly y-o-y growth in services sector (%)
12 (CMIE Forecast) 3.0 2.7 2.2 2.7 2.4 0.9 -0.8 -2.4 10 8 6 4 2 -5.1 11.8 10.8 10.3 10.3 10.2 9.8 10.2 8.6 7.8 (CMIE Forecast) 9.3 8.5 8.9
Services sector to grow by 8.6%

For 2009-10, the growth in the banking and insurance segment has been scaled down to nine per cent from 12 per cent projected earlier. This downward revision reflects an expected fall in income of the banking sector. The performance of the railways sector has improved. Volume of goods carried by the Indian Railway was up by 7.2 per cent during April-October 2009. This growth rate is expected to improve in the second half of the year. Therefore, growth in GDP from railways is also revised upwards to 8.5 per cent from seven per cent. The Figure 4.3 Quarterly y-o-y growth in agricultural and allied sector (%)
8 6 4 2 0 -2 -4 -6 4.3 3.9 8.1
J07 S07 D07 M08 J08 S08 D08 M09 J09 S09 D09 M10
J07 S07 D07 M08 J08 S08 D08 M09 J09 S09 D09 M10
December 2009
14
GDP Growth Some segments of the manufacturing sector grew at a rapid pace in the recent quarter. These include textiles, chemicals, cement, steel, automobiles and machinery & equipment. The industrial sector (including construction) grew by 8.3 per cent in the quarter ended September 2009. This was the highest growth in the last eight quarters. To a great extent, the growth in the second quarter was aided by an increase in government spending. This is reflected in a 27 per cent increase in the government final consumption expenditure during the quarter ended September 2009. This is also reflected (on the supply side) in the community, social and personal services, which grew by 12.7 per cent during the September 2009 quarter. This enabled the services sector to grow by a higher 9.3 per cent, as compared to the 7.8-8.6 per cent growth recorded in each of the preceding two quarters. The agriculture and allied sector grew by a lower 0.9 per cent in the quarter ended September 2009, as compared to 3.9 per cent a year ago. It registered a positive growth in spite of an expected sharp fall in kharif production on account of drought. According to the CSO, this happened because only a very small portion of the anticipated kharif crop production accrues between July and September.
GDP grows by an impressive 7.9%

Indias real GDP grew by an impressive 7.9 per cent in the September 2009 quarter, according to data released by the Central Statistical Organisation (CSO). This is the fastest GDP growth recorded in the last six quarters. The growth in quarterly GDP had dropped in the third quarter of the financial year 2008-09; from 7.8 per cent in the September 2008 quarter to 5.8 per cent in the December 2008 quarter. It remained at that level in the following quarter, too. The major contributor to the GDP growth was the manufacturing sector. The CSO pegged manufacturing growth at 9.2 per cent, as compared to -1.4 to 3.4 per cent growth recorded during each of the preceding three quarters. In the June 2009 quarter, the manufacturing sector had grown by 3.4 per cent while in March 2009 quarter it had recorded a 1.4 per cent decline. In the quarters ended December 2008 and March 2009, the manufacturing sector had suffered because of the Global Liquidity Crisis. RBI followed an easy monetary policy to neutralise the adverse impact of the GLC on liquidity. By November 2008, RBI had pumped huge liquidity into the system. As result, liquidity remained comfortable in the first half of 2009-10.
Table 4.2 Sectoral Real GDP at factor cost: Quarterly y-o-y growth (%)
Agriculture Industry Mining, quarrying 9.2 11.4 0.1 3.8 4.2 4.7 4.6 3.7 4.9 1.6 7.9 9.5 4.2 8.7 Manufacturing 11.1 12.6 10.0 8.2 8.6 6.3 5.5 5.1 0.9 -1.4 3.4 9.2 5.3 6.3 Elec., gas & water 7.2 5.1 6.9 5.9 3.8 4.6 2.7 3.8 3.5 3.6 6.2 7.4 3.3 6.8 Construction 10.4 12.2 11.0 13.4 9.7 6.9 8.4 9.6 4.2 6.8 7.1 6.5 9.0 6.8 Service Trade, hotels, transp., comm. 12.6 13.0 13.1 10.9 11.7 13.8 13.0 12.1 5.9 6.3 8.1 8.5 12.5 8.3 Fin., insur., real est. 14.5 13.4 12.6 12.4 11.9 10.3 6.9 6.4 8.3 9.5 8.1 7.7 6.6 7.9 Comm social, perso. serv 4.2 3.9 4.5 7.1 5.5 9.5 8.2 9.0 22.5 12.5 6.8 12.7 8.6 9.9 GDP at factor cost 9.3 10.0 9.2 9.0 9.3 8.6 7.8 7.7 5.8 5.8 6.1 7.9 7.8 7.0
Oct-Dec 06 Jan-Mar 07 Apr-Jun 07 Jul-Sep 07 Oct-Dec 07 Jan-Mar 08 Apr-Jun 08 Jul-Sep 08 Oct-Dec 08 Jan-Mar 09 Apr-Jun 09 Jul-Sep 09 Apr-Sep 08 Apr-Sep 09
4.2 5.3 4.3 3.9 8.1 2.2 3.0 2.7 -0.8 2.7 2.4 0.9 2.9 1.7
10.5 11.8 9.2 9.1 8.2 6.2 6.0 6.1 2.3 1.4 5.0 8.3 6.1 6.7
11.0 10.7 10.8 10.3 10.3 11.8 10.2 9.8 10.2 8.6 7.8 9.3 10.0 8.5
December 2009
GDP Growth
15 able; so the interest rates are unlikely to go up in the near future. The fall in income from the agricultural sector on account of a decline in crop production is expected to be compensated by the increase in wages and salaries in the public and private sectors. The adverse impact of the Global Liquidity Crisis has almost become history. The fear of layoffs has diminished discernibly.
PFCE growth revised upward to 5%

Consumer spending has bounced back strongly. After growing by a meagre 1.6 per cent in the quarter ended June 2009, it grew by 5.6 per cent in the September 2009 quarter. This was the highest growth in the last six quarters. The consumers willingness to spend was hurt in 2008-09 because of the Global Liquidity Crisis (GLC). During that year, the PFCE was up by 2.9 per cent, as against 5-8 per cent from 2003-04 to 2007-08. The quarterly results of companies engaged in automobiles, retail, fast moving consumer goods and consumer durables confirm this. IIP data also reveals strong growth in the production of consumer durables in the first half of the current fiscal year. During this period, the production index of consumer durables was up by 19 per cent, as compared to 7.2 per cent in the same period of 2008-09. In the remaining two quarters of the current fiscal year, we expect real PFCE to grow by 6.1 per cent and 6.7 per cent, respectively. As a result, we have revised our PFCE growth projection to five per cent in real terms in 2009-10, from 4.5 per cent. Interest rates, vagaries of the monsoon and the consumer inflation are the three major factors that can influence demand. Liquidity will remain comfort-
GFCF grows by 7.3%

In the quarter ended September 2009, gross fixed capital formation (GFCF) grew by 7.3 per cent. This is the highest growth in the last four quarters. We expect real growth in GFCF to accelerate in the second half of the current fiscal year to 6.4 per cent. Our close monitoring of capital expenditure through CMIEs CapEx service reveals that investments worth Rs.2.6 lakh crore are scheduled for commissioning between December 2009 and March 2010, as compared to Rs.1.9 lakh crore in the first eight months of the fiscal. The encouraging signs of revival in investments are reflected in our projected 15 per cent growth in real GFCF during 2009-10. After growing in the range of 14-18 per cent between 2003-04 and 2007-08, the growth in GFCF dropped to 8.2 per cent in 2008-09, reflecting the adverse impact of the GLC on investments.
Table 4.3 Real GDP by expenditure: Quarterly growth (%) and projection for 2009-10
Private Govt. Total Gross Change Valu- Exports Imports DisceGDP nal nal xed in ables pency at consumption consumption capital stocks market expenditure expenditure formation prices 8.4 -2.4 6.6 13.6 54.1 -8.0 -4.0 -0.7 9.2 7.5 10.0 7.8 16.0 51.7 1.4 -4.8 -3.6 -52.4 8.8 8.9 2.0 8.0 14.1 52.2 16.5 6.1 6.7 -25.2 9.4 5.7 19.5 8.0 9.3 62.0 0.4 12.6 27.2 105.5 9.0 4.5 -0.2 3.8 9.2 6.0 14.8 25.6 27.4 8.2 2.1 2.2 2.1 12.5 5.6 35.0 24.3 35.3 263.4 7.8 2.3 56.6 9.0 5.1 1.4 33.9 7.1 21.7 18.9 4.8 2.7 21.5 6.1 6.4 -0.9 23.7 -0.8 -5.7 -57.2 4.1 1.6 10.2 2.8 4.2 3.2 18.4 -10.9 -21.2 6.0 5.6 26.9 8.4 7.3 -45.4 -23.0 -15.0 -29.8 -70.7 6.7 3.3 0.9 3.0 10.9 5.8 25.5 25.1 31.4 8.0 3.6 18.1 5.6 5.8 -21.3 -5.1 -12.6 -25.7 6.4 2.9 20.2 5.4 8.2 2.9 27.5 12.8 17.9 81.8 6.1 5.0 7.0 5.3 15.0 1.5 1.0 -18.0 -25.0 6.3
Apr-Jun 07 Jul-Sep 07 Oct-Dec 07 Jan-Mar 08 Apr-Jun 08 Jul-Sep 08 Oct-Dec 08 Jan-Mar 09 Apr-Jun 09 Jul-Sep 09 Apr-Sep 08 Apr-Sep 09 2008-09 2009-10
December 2009
16
GDP Growth members felt that GDP growth will exceed six per cent in 2009-10. According to the report, while industry and services have recovered on the back of the governments stimulus package, the performance of agriculture is causing concern. Economic indicators are looking up, industrial production has shown a significant upturn, business confidence has surged, financial markets have stabilised and capital inflows have returned. Despite these upside prospects, the performance of agriculture is likely to pose some downside risks to the growth outlook for Indian economy in 2009-10. According to financial services firm Nomura, the Indian economy is likely to grow by eight per cent in 2010-11, propelled by domestic demand. The fundamental drivers of domestic demand are falling into place. We expect growth to rebound to eight per cent in FY11, Nomura said in a report. It further said that there is an upside risk to its six per cent GDP forecast for the current fiscal. HSBC has retained its India GDP growth forecast of 6.2 per cent in FY10 but hiked the outlook for the next fiscal by 0.5 per cent to 8.5 per cent. Table 4.4 Indias GDP growth (%): Projections of other organisations
Release Year ending March month 2010 2011 2009 CMIE December 6.7 OECD November 6.1 7.2 NCAER November 6.9 EAC to PM October 6.5 RBI October 6.0 Morgan Stanley October 6.4 8.0 Citigroup October 5.8 IMF@ October 5.4 6.4 ADB September 6.0 7.0 Planning Commission September 6.3 8.0 Nomura September 6.0 7.5 Assocham August 4.7-5.6 Standard & Poors August 5.8-6.3 6.8-7.3 Moodys August 6.4 Bank of America-ML July 7.3 World Bank@ June 5.1 8.0 Barclays Capital June 7.2 7.5 @ = Year ended December of the previous year
GDP forecasts guarded but optimistic

In November 2009, the OECD, in its outlook revised Indias GDP growth to 6.1 per cent during 2009-10 from 5.9 per cent projected earlier. The outlook says that the Indian economy has weathered the global downturn relatively well. After slowing down sharply in late 2008, growth recovered during the first half of 2009 and recent high-frequency indicators suggest that the momentum is strengthening. In the near term, the ongoing recovery will be only modestly hampered by the poor monsoon in 2009. Growth is projected to reach over 7.3 per cent in 2010-11 and 7.6 per cent in 2011-12. On 1 December 2009, the chairman of the Prime Ministers Economic Advisory Council said that the Indian economy might grow close to seven per cent this fiscal riding on the back of a good showing in manufacturing and services sectors. In October, the council had pegged its GDP growth forecast for the current fiscal at 6.5 per cent. In October 2009, the RBI has retained its growth projection for GDP for 2009-10 at six per cent with an upward bias. It assumed there would be a modest decline in agricultural production and a faster recovery in industrial production. Earlier, the Reserve Bank of India in its policy statement of 28 July 2008 had estimated economic growth in 2009-10 at six per cent with an upward bias. In November 2009, the National Council of Applied Economic Research (NCAER) lowered the economic growth projection to 6.9 per cent for the current fiscal from its earlier estimate of 7.2 per cent. This is mainly on account of lower farm output. While agricultural Gross Domestic Product (GDP) is projected to decrease by 1.5 per cent, industrial GDP (inclusive of construction) is projected to increase by 6.9 per cent. Members of CIIs National Council, at a meeting held in Mumbai on 13 November 2009, felt that demand is picking up across sectors and the economy is getting back on track. According to the CEO snap poll conducted at the meeting, over 70 per cent of
December 2009
Inflation
17 recorded during April-October 2009. Prices of manufactured goods are projected to rise by 1.4 per cent, as against 0.9 per cent recorded during AprilOctober 2009. In fiscal 2009-10, the commodity groups beside fuel where inflation will be negative, include leather & leather products (-1 per cent), basic metal alloys & metal products (-10.2 per cent) and machinery & machine tools (-1.4 per cent). Within the manufactured goods sector, manufactured food products will be the only segment which will see a higher 13.5 per cent inflation during 2009-10, as compared to 10 per cent in the previous year. Figure 5.1 Inflation to decline sharply (%)
8.4 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 (CMIE Forecast) 2.1 3.7 3.4 7.1 6.4 5.4 4.4 5.4 4.7
Ination likely at 2.1% in 2009-10

Inflation, measured by the WPI, during AprilOctober 2009 was 0.4 per cent, as compared to 11 per cent in the same period of 2008. In the remaining five months of the current fiscal year, average inflation is expected to go up to 4.5 per cent. Thus, the average inflation for 2009-10 works out to 2.1 per cent. This will be significantly lower than the 8.4 per cent recorded in the previous fiscal year. Inflation is expected to inch up to five per cent in January 2010 and will remain fractionally above this level in February and March 2010. Commodity wise inflation reveals that the overall inflation is not as benign as it appears. Inflation in food articles is expected to remain high at 13.4 per cent in the current fiscal year, on top of the eight per cent recorded in the previous fiscal year. Excluding food-related items, inflation during AprilOctober 2009 works out to a negative 2.2 per cent, as against a 0.4 per cent for all commodities. Inflation in primary articles will be 9.9 per cent between November 2009 and March 2010, as compared to the 7.5 per cent recorded during April-October 2009. Prices of the fuel group are projected to rise by 5.2 per cent year-on-year during November 2009 to March 2010, as against an 8.6 per cent decline
Table 5.1 Changes in wholesale price index by major product groups (% change)
Weight (%) 22.03 14.23 63.75 11.54 1.34 9.80 0.17 2.04 1.02 2.39 11.93 2.52 8.34 8.36 4.29 100.00 200607 7.8 5.6 4.4 3.2 7.4 2.2 6.1 6.9 -4.4 6.6 3.0 12.9 6.7 5.6 1.6 5.4 200708 7.6 1.0 5.0 4.3 10.2 -1.1 4.7 1.8 4.2 7.2 5.6 8.9 6.9 7.1 2.7 4.7 200809 10.1 7.4 8.1 10.0 9.5 6.0 8.3 4.4 1.1 4.7 7.2 3.8 14.4 4.7 5.2 8.4 200910 CMIE proj. 8.5 -2.9 1.1 13.5 4.5 3.2 1.6 1.2 -1.0 2.7 3.5 3.4 -10.2 -1.4 0.1 2.1
Primary articles Fuel, power, light & lubricant Manufactured products Food products Beverages tobacco & tobacco products Textiles Wood & wood products Paper & paper products Leather & leather products Rubber & plastic products Chemicals & chemical products Non-metallic mineral products Basic metals alloys & metals products Machinery & machine tools Transport equipment & parts All commodities
December 2009
18
Inflation The supply constraints in commodities is the single biggest factor responsible for the surge in inflation in the current year. The main culprit is the sharp drop in foodgrain production. Sugar production has been low too, causing higher inflation in sugar prices and therefore in the inflation in manufactured food products. Some of the inflation (such as in sugar) can be tackled through prudent supply management. Imports can be used effectively to augment the supply in the domestic market. Figure 5.2 Monthly Changes in Overall WPI (%)
Ination reaches 1.3% in October
The Ministry of Industry has discontinued the release of weekly inflation data from October 2009. The latest available monthly inflation data is for the month of October 2009, which was released in November 2009. In October 2009, inflation as measured by the change in wholesale price index (WPI) was 1.3 per cent. After remaining negative from June to August, the WPI inflation turned positive to 0.5 per cent in September 2009. This turnaround was partly because of an erosion of the higher base-year values and a surge in prices of food products. The recent increase is also on account of a hike in the prices of petrol and diesel (effective 2 July 2009), and an increase in prices of freely priced products under the fuel group and drugs & medicines. The decline in fuel prices has come down to 6.6 per cent in October 2009 from 12.5 per cent in June 2009. Inflation in drugs & medicines was also high in the range of 19-21 per cent from May 2009 to October 2009, as against 1.9 per cent in the entire fiscal 2008-09.
14 12 10 8 6 4 2 0 -2
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2008-09 2009-10
Table 5.2 Changes in Wholesale Price Index (%): Broad Groups

All Commodities (avg. index) 239.0 234.2 229.7 228.9 227.6 228.2 231.5 234.3 235.0 238.4 240.8 242.7 242.2 Apr-Oct 237.0 237.8 Apr-Mar 233.9 All Primary Primary Fuel Fuel Mfd. Commodities Articles Articles group group products (% chg.) (avg. index) (% chg.) (avg. index) (% chg.) (avg. index) 11.1 251.5 12.4 369.2 14.1 205.7 8.5 250.9 12.1 348.0 6.4 203.0 6.1 247.3 11.1 331.0 -0.2 201.1 5.0 248.6 10.7 328.8 -1.7 199.9 3.5 246.4 6.9 323.9 -3.4 199.5 1.2 248.2 5.2 321.0 -6.0 200.6 1.3 254.4 6.6 323.4 -5.7 203.0 1.4 257.2 6.3 325.7 -6.1 205.9 -1.0 259.8 6.5 327.5 -12.5 205.8 -0.7 266.6 7.2 338.2 -10.3 206.4 -0.2 269.2 8.0 342.9 -9.3 208.1 0.5 275.8 9.4 344.6 -8.2 208.6 1.3 273.4 8.7 345.0 -6.6 208.5 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 11.0 246.6 10.7 366.3 13.7 204.8 0.4 265.2 7.5 335.3 -8.4 206.6 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 8.4 247.3 10.1 351.4 7.4 203.1 Mfd. products (% chg.) 9.4 7.8 6.6 5.3 4.8 2.3 1.8 2.2 0.6 0.0 0.1 0.3 1.4 Apr-Oct 10.1 0.9 Apr-Mar 8.1
Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 2008-09 2009-10 2008-09
December 2009
Inflation
19 ing April-October 2009. the WPI of vegetables rose by 28.6 per cent year-on-year, as against a four per cent rise a year ago. Prices of other primary foods rose by 20.1 per cent year-on-year, on top of a 30 per cent rise recorded a year ago. The reduced supply of vegetables also pushed up prices of eggs, meat & fish by 14 per cent during April-October 2009, as compared to 3.7 per cent a year ago. To rein in the food inflation, supply of food articles will have to be augmented. This can be done through utilisation of foodgrain stocks and imports. The large stock of foodgrain with the public agencies should help mitigate any adverse impact due to supply constraint. The Economic Advisory Council to the Prime Minister has pointed out in its Outlook for 2009-10, Inflationary pressure on food front will continue to be a major problem for policy formulation for the rest of 2009-10 and up to the beginning of the next monsoon season. The supply response will have to be a more co-ordinated release of stocks through the public distribution system combined with some open market sales of public stocks if the need is felt. Precautionary arrangements for importing some rice to replenish public stocks must be considered. Considerable attention needs to be paid to the rabi season to try and ensure a strong harvest which will be the surest antidote to food price pressures.
Ination in primary articles drops

Inflation in the primary articles group was 8.7 per cent in October 2009. This was lower than the 9.4 per cent in the preceding month and 12.4 per cent a year go. This drop was on account of softening of inflation in the foodgrain and vegetables groups. Inflation in foodgrains came down to 13.3 per cent in October 2009 from 14.2 per cent in September 2009. In the case of vegetables, it dropped to 11.1 per cent from 44.9 per cent. In the current fiscal year, till October 2009, the sharp rise in prices of pulses has been one of the major sources of inflation in primary articles. During April-October 2009, inflation in pulses was 19.4 per cent, as compared to 2.6 per cent a year ago. During the one year period ending October 2009, inflation in pulses has more-than-doubled from 8.9 per cent in October 2008 to 22.8 per cent in October 2009. Demand for pulses has gone up in the recent years because of various employment generation schemes, while production stagnated in the range of 14-15 million tonnes in a year. In addition, a decline in production of other agricultural crops in 2008-09 and 2009-10 because of poor monsoon and a hike in minimum support prices are responsible for higher inflation in food articles. Dur-
Table 5.3 Inflation as measured by Wholesale Price Index: Primary articles (Per cent)
Weight 15.40 5.01 2.92 4.37 2.21 0.66 0.24 6.14 1.52 2.67 1.95 0.48 0.30 0.19 22.03 Food articles Food grain Fruits & vegetables Milk Eggs, meat & sh Condiments & spices Other food articles Non-food articles Fibres Oil seeds Other non-food articles Minerals Metallic minerals Other minerals Primary articles Apr08 -Jun08 5.7 5.9 3.3 8.4 1.7 9.7 25.4 14.0 22.2 19.5 2.5 46.0 49.6 16.0 9.6 Jul08 -Sep08 6.9 6.6 4.7 7.0 5.7 14.9 35.7 17.0 32.1 17.7 6.7 48.3 51.6 21.7 11.3 Oct08 -Dec08 10.1 9.7 15.2 7.1 6.5 12.5 40.6 11.7 23.2 14.0 1.9 42.2 45.2 18.6 11.9 Jan09 -Mar09 9.3 12.0 9.4 7.6 4.9 10.2 26.1 2.6 8.6 1.2 0.7 10.6 12.3 -6.6 7.5 Apr09 -Jun09 9.3 13.5 10.5 6.5 2.6 9.9 26.3 1.7 -0.7 1.5 3.6 -3.8 -3.0 -11.8 6.5 Jul09 -Sep09 14.4 14.0 17.5 9.6 20.9 10.0 13.6 -3.1 -10.9 -1.2 0.3 -10.2 -9.6 -15.4 8.2 Sep 2009 15.7 14.2 24.6 9.7 18.4 13.7 7.3 -3.2 -13.0 1.0 -1.6 -6.4 -5.1 -18.3 9.4 Oct 2009 13.3 13.3 11.1 10.0 23.1 14.9 4.9 -0.8 -7.6 0.6 2.3 -3.7 -1.9 -19.8 8.7
December 2009
20
Inflation In the textile segment, inflation was higher at four per cent, compared to 3.8 per cent a year ago. The WPI of the remaining 10 segments of manufactured goods has either declined or risen by a significantly lower rate. Sugar prices are expected to remain high on account of lower production in 2008-09 and an expected fall in production in 2009-10. This will keep inflation in manufactured goods high in the second half of 2009-10. Inflation in manufactured food products is expected to spurt from 12.2 per cent in September 2009 to 20 per cent in December 2009. The OctoberDecember period is the festival season, when demand for goods remains high.
Ination in manufactured goods rises to 1.6%

The Ministry of Industry has discontinued the release of weekly inflation data for manufactured goods. The latest data available is for the month of October 2009. In this month, inflation in manufactured goods was 1.4 per cent. This is a sharp rise after remaining less than one per cent between June 2009 and September 2009. This rise is largely because of higher inflation in manufactured food products and textile items. In October 2009, inflation in food products spiked to 16.6 per cent from 1.2 per cent in the quarter ended September 2009. The WPI of textile products rose by 3.1 per cent in October 2009, as compared to a 0.9 per cent during July-September 2009 quarter. Average inflation in manufactured goods was 0.9 per cent during April-October 2009, as compared to 10.1 per cent in the corresponding period of 2008. Food products and textiles were the only segments of the manufacturing sector which recorded higher inflation during April-October 2009. Inflation in manufactured food products was 12.5 per cent during April-October 2009, fractionally higher than the 12.3 per cent in the same period a year ago. Higher inflation in food products was on account of a spurt in prices of sugar, khandsari & gur, fish and tea. Inflation in these items was in the range of 22-48 per cent during April-October 2009.
Figure 5.3 Inflation in manufactured goods expected to rise in the last quarters of 2009-10 (%)
12 10 8 6 4 2 0 3.9 2.7 1.0 0.1 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09 Mar10 1.6 9.2 7.9 11.2 (CMIE Projection)
Table 5.4 Inflation as measured by Wholesale Price Index: Manufactured goods (Per cent)
Weight 11.54 1.34 9.80 0.17 2.04 1.02 2.39 11.93 2.52 8.34 8.36 4.29 63.75 Apr08 Jul08 Oct08 Jan09 Apr09 Jul09 Sep Oct -Jun08 -Sep08 -Dec08 -Mar09 -Jun09 -Sep09 2009 2009 Food products 11.7 14.2 6.1 8.4 12.6 11.2 12.2 16.6 Beverages tobacco & tobacco products 8.9 10.7 9.1 9.4 5.8 4.5 3.1 4.4 Textiles -0.7 7.4 8.2 9.3 7.8 0.9 1.3 3.1 Wood & wood products 5.3 9.8 9.8 8.5 4.5 0.3 0.3 0.3 Paper & paper products 2.8 4.0 5.9 4.9 3.3 0.9 0.1 -0.8 Leather & leather products 1.3 0.6 0.6 1.7 -0.5 -1.2 -1.2 -1.2 Rubber & plastic products 5.7 6.8 4.0 2.3 3.3 1.5 0.4 0.2 Chemicals & chemical products 8.4 10.2 7.9 2.4 3.3 2.4 2.0 2.3 Non-metallic mineral products 5.5 4.1 3.4 2.1 2.6 4.3 3.3 3.0 Basic metals alloys & metals products 21.1 22.4 15.6 -0.4 -13.9 -14.1 -13.3 -13.0 Machinery & machine tools 5.7 5.7 4.9 2.7 -1.0 -2.0 -1.9 -1.5 Transport equipment & parts 6.2 6.6 5.5 2.7 0.7 0.0 -0.5 -0.8 Manufactures products 9.2 11.2 7.9 4.1 1.5 0.1 0.3 1.4
December 2009
Inflation
21 for rent-free accommodation, reflecting the impact of the Sixth Pay Commission award on CPI inflation. The housing index in CPI is compiled once in every six months in January and July. The index would, therefore, remain at the elevated level in the months to come. For 2009-10, we have maintained our forecast that CPI-IW will rise by 10.9 per cent. The CPI-IW inflation is projected to remained at 12.1 per cent and 11.1 per cent, respectively, in the third and fourth quarters. Figure 5.4 Changes in CPI-IW (%)
10.9 10 8 6.7 6 4 2 0 3.8 4.3 4.0 3.9 3.8 4.4 6.2 9.1
CPI-IW-based ination continues to drop

Inflation as measured by the consumer price index for industrial workers (CPI-IW) came down between July 2009 and October 2009. It peaked at 11.9 per cent in July 2009, before gradually falling to 11.5 per cent in October 2009. Data available till September for major commodity groups showed that inflation in food products dropped to 13.5 per cent in September 2009 from 14.7 per cent in July 2009. Inflation in pulses, meat, fish & eggs, condiments & spices and vegetables & fruits also declined between July 2009 and September 2009. Average inflation during April-October 2009 was higher at 10.5 per cent, as compared to 8.7 per cent in the same period of 2008. Commodity-wise data revealed that inflation in pulses surged to 36.7 per cent during April-September 2009, as against 10 per cent in the corresponding period of 2008. Inflation also remained high in vegetables & fruits (22 per cent), condiment & spices (14.7 per cent) and housing (14.1 per cent). A year ago, inflation in these groups was 2.5 per cent, 1.2 per cent and 4.3 per cent, respectively. The sharp rise in the CPI-IW for housing was on account of a revision of imputed rent
00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 (CMIE Projection)
Table 5.5 Inflation as measured by changes in Consumer Price Indices

CPI-IW CPI-IW CPI-AL CPI-AL CPI-RL CPI-RL CPI-UNME (Index base (% change) (Index base (% change) (Index base (% change) (Index base 2001) 86-87) 86-87) 84-85) 148 10.4 459 11.1 459 11.1 574 148 10.4 460 11.1 460 11.1 575 147 9.7 459 11.1 459 11.1 569 148 10.4 461 11.6 461 11.4 574 148 9.6 462 10.8 462 10.8 575 148 8.0 463 9.5 464 9.7 577 150 8.7 468 9.1 468 9.1 583 151 8.6 475 10.2 475 10.2 589 153 9.3 484 11.5 484 11.3 595 160 11.9 499 12.9 498 12.7 624 162 11.7 508 12.9 507 12.7 631 163 11.6 515 13.2 514 13.0 635 165 11.5 522 13.7 521 13.5 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Sep 143 8.7 443 9.8 443 9.7 549 158 10.5 496 12.0 495 11.8 610 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 145 9.1 450 10.2 451 10.2 561 CPI-UNME (% change) 10.4 10.8 9.8 10.4 9.9 9.3 8.8 9.7 9.6 13.0 12.9 12.4 Apr-Sep 7.8 11.1 Apr-Mar 8.9
December 2009
22
Interest Rates & Debt Market: Liquidity cent by the end of November 2009 compared to 7.30 per cent at the beginning of that month. Net of cash reserve ratio, we expect the banking system to mobilise Rs.6.6 lakh crore during 2009-10. By 11 November 2009, it had mobilised Rs.3.2 lakh crore. It will mobilise Rs.3.4 lakh crore during the remaining period of the year. Similarly, we expect bank credit to top Rs.3.3 lakh crore for the year as a whole. Till 11 November 2009, banks had doled out Rs.1.2 lakh crore. They will disburse Rs.2.2 lakh crore during the remaining period of the year. The difference in itself is more than sufficient to cover the balance government borrowing. Table 6.1 Liquidity scenario: 2009-10 (Rs.crore)
Apr 09Nov 09 Liquidity demand CG Borrowing SG Borrowing Incremental credit Total demand Liquidity supply Deposit mobilisation Maturing Gsecs Net LAF surplus MSS balance OMO infusion Overseas inow Total supply 3,54,000 87,453 1,23,221 5,64,674 3,34,223 36,580 2,515 69,304 57,487 42,745 5,42,854 Dec 09Mar 10 97,193 38,547 2,09,796 3,45,536 3,21,410 16,576 88,680 18,773 22,513 45,875 5,13,827 2009-10
Liquidity conditions to remain very comfortable

Liquidity conditions will remain very comfortable during the remaining months of the current financial year. Two factors will be mainly responsible for this. The front-loaded government borrowing: The Central Government and the state governments have completed 77 per cent of their scheduled borrowing in the first eight months of the year itself. Their borrowing during December 2008-March 2009 will be much lower, thereby increasing the funds at the disposal of banks. Slow credit growth: Growth in bank credit at less than 10 per cent is far behind the pace of deposit mobilisation. Banks are growing deposits at around 19 per cent. This is increasing the liquidity in the banking system. The abundant liquidity conditions in the banking system are reflected in the Rs.88,680 crore parked by banks with the liquidity adjustment facility of the RBI. It is also reflected in the easing of yields since mid-October 2009. The yield on the benchmark 10-year government paper eased to 7.19 per
4,51,193 1,26,000 3,33,017 9,10,210 6,55,633 53,156 2,515 88,077 80,000 88,620 9,68,001
Table 6.2 Net liquidity of the banking system blocked with the RBI (Rs.crore)
Month End Deposits under MSS Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 1,32,531 1,20,050 1,08,764 1,01,991 88,077 70,216 39,890 22,890 21,063 18,773 18,773 18,773 18,773 Central govt. Reverse repo: Repo: ostd deposits with ostd RBI 101 7,710 16,550 101 47,665 6,600 100 56,510 620 101 62,550 1,700 101 16,845 14,330 101 89,350 90 101 1,11,165 0 101 88,335 300 10,413 1,40,460 300 31,462 1,21,365 50 30,875 60,760 2,000 19,491 84,570 0 4,909 88,680 0 Net liquidity blocked with RBI 1,23,792 1,61,216 1,64,754 1,62,942 90,693 1,59,577 1,51,156 1,11,026 1,71,636 1,71,550 1,08,408 1,22,834 1,12,362 RBIs Net Purchase of USD -15,195 -1,546 -141 1,132 -17,357 -12,450 -6,974 4,987 -266 874 387
December 2009
Interest Rates & Debt Market: Short Term Interest Rates
23
Mixed movement in short term rates in November

Movement in short term interest rates of up to one year exhibited a mixed trend in November 2009. While yields on 91-day T-bills and on overnight rates inched up, those on 182-day and 364-day Tbills eased a little. Yields on 91-day T-bills inched up from 3.23 per cent at the end of October 2009 to 3.27 per cent in November 2009. The weighted average inter-bank call money rate inched up to 3.23 per cent from 3.12 per cent in the preceding month. The weighted average CBLO rate too inched up from 2.42 per cent to 2.73 per cent. The notice money rate range edged up from 1.50-3.32 per cent in October to 1.50-3.35 per cent in November 2009. Figure 6.1 Overnight rates: Nov. 2008-09 (%)
8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
On the other hand, interest rates on instruments of slightly longer duration eased a tad. The 182-day Tbill auctions closed November 2009 at 3.73 per cent compared to 4.04 per cent at the end of October. The yield contraction in the 364-day T-bill auctions was a tad less. Yields on this one-year paper moved down from 4.53 per cent at end-October to 4.44 per cent at end-November. The remaining months of the current year are expected to see the banking system remain flush with liquidity. As a result, short term yields are unlikely to see any significant rise at least till the end of the current financial year. Liquidity conditions in the financial markets even outside the banking system are reflected in further lowering of coupon rates on commercial papers (CPs). Figure 6.2 Overnight rates: Nov. 2009 (%)
4.8 4.6 4.4 4.2 4.0 3.8 3.6 3.4 3.2 3.0
Nov08
Jan09 Call rate
Apr09 Reverse Repo
Jul09 Repo
Oct09 Nov09
03 Nov 09 Call rate
13 Nov 09 Reverse Repo
25 Nov 09 Repo
30 Nov 09
Table 6.3 Yields on treasury bills (%)

91-day T-bills auction 1st 2nd 3rd 4th 5th 7.37 7.33 7.29 7.12 6.59 5.64 5.43 5.02 4.69 4.69 4.57 4.65 4.78 4.82 4.37 4.74 4.74 4.65 4.57 4.86 4.94 4.49 4.08 3.80 3.35 3.31 3.14 3.27 3.27 3.31 3.35 3.35 3.35 3.31 3.10 3.23 3.27 3.27 3.23 3.27 3.35 3.35 3.39 3.39 3.39 3.39 3.39 3.14 3.23 3.23 3.23 3.23 3.27 3.27 3.27 3.27 182-day T-bills auction 364-day T-bills auction 1st 2nd 3rd 1st 2nd 3rd 7.19 7.04 7.35 7.07 5.59 5.09 6.28 5.34 4.62 4.54 4.77 4.49 4.58 4.69 4.71 4.57 4.64 4.60 5.09 4.98 5.49 4.69 4.06 3.54 4.38 3.75 3.48 3.58 3.49 3.67 3.58 3.52 3.99 3.98 3.42 3.46 3.80 3.68 3.79 3.75 3.92 4.16 4.33 3.98 4.02 4.59 4.32 3.79 4.04 3.96 4.58 4.53 3.81 3.73 4.52 4.44
Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009
December 2009
24
Interest Rates & Debt Market: Short Term Interest Rates was reflected in the easing of coupon rates on certificates of deposits issued by banks. The rate range further eased a tad to 3.70-6.05 per cent in November 2009 from 3.70-6.51 per cent in October 2009.
Corporates raised CPs at 2.98-9.00 per cent in October 2009 compared to 3.20-9.05 per cent in September 2009. Investors were also willing to accept lower interest rates on deposits parked with banks. This
Table 6.4 Short term interest rates on instruments of less than one year tenure(%)
Call money rates CBLO Repo market MIBOR Term Notice CP Low High Wtd Low High Wtd Mkt. Rev. Repo money money avg. avg. repo repo 4.00 19.00 7.10 0.50 7.90 5.71 6.55 6.00 7.50 6.82 7.40-12.10 3.00-21.00 9.00-15.50 3.00 7.00 5.91 0.25 6.75 4.84 5.33 5.00 6.50 5.27 6.30-11.00 3.05-6.70 10.40-16.00 2.00 10.00 4.07 0.50 5.25 3.56 4.07 4.00 5.50 4.23 4.47-9.25 2.10-6.00 6.75-14.00 2.00 4.50 3.95 2.00 6.00 3.68 3.85 4.00 5.50 4.16 4.20-8.70 2.00-5.54 5.25-12.50 2.00 5.75 4.12 0.49 5.25 3.36 3.59 3.50 5.00 5.02 4.30-9.50 2.00-5.25 6.40-12.50 1.20 4.90 3.13 0.01 5.00 2.07 2.26 3.25 4.75 3.31 3.30-7.50 1.75-4.90 3.30-12.50 0.50 3.75 3.11 0.01 3.75 1.99 2.34 3.25 4.75 3.30 3.45-7.25 1.00-3.35 2.83-9.90 1.00 3.40 3.22 0.20 5.85 2.51 2.59 3.25 4.75 3.30 2.60-6.75 1.00-3.40 3.20-12.00 1.25 3.35 3.19 0.02 3.50 2.66 2.81 3.25 4.75 3.28 3.35-6.75 1.25-3.35 3.04-8.90 1.25 3.45 3.20 0.01 4.00 2.44 2.59 3.25 4.75 3.29 3.35-6.90 1.00-4.00 3.05-9.35 1.50 4.30 3.23 0.15 4.00 2.59 2.72 3.25 4.75 3.33 2.90-7.05 1.75-4.00 3.20-9.05 1.50 4.40 3.12 0.01 5.00 2.42 2.57 3.25 4.75 3.30 2.75-6.95 1.50-3.32 2.98-9.00 2.00 3.50 3.23 0.10 7.00 2.73 2.66 3.25 4.75 3.30 3.25-6.75 1.50-3.35 Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- AprAprAprAprAprNov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Oct 1.00 22.00 8.15 0.02 16.00 7.00 7.30 6.82 7.02-16.00 1.00-23.00 7.15-17.75 0.50 4.90 3.18 0.01 7.00 2.42 2.57 3.25 4.75 3.30 2.60-7.50 1.00-4.90 2.83-12.50 = Commercial paper, CD = Certicate of deposit, MIBOR = Mumbai interbank oer CD
8.80-11.75 7.00-11.50 5.25-11.50 5.40-11.50 6.00-11.50 3.90-11.50 3.65-7.60 3.60-8.00 3.34-8.25 3.60-8.00 3.70-6.51 3.70-6.05 AprOct 7.70-21.00 3.34-11.50
2008-09 2009-10 Note: CP
Table 6.5 Turnover in money markets (Rs.crore)

Call money Repo average average turnover turnover Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 2008-09 2009-10 9,584 11,194 9,960 5,764 8,144 1,229 9,515 777 10,727 2,315 7,666 648 8,689 8,745 42 6,508 427 6,720 127 8,039 87 6,785 6,766 Apr-Nov Apr-Nov 7,494 160 Reverse Market Repo CBLO Term money Notice Commercial Repo average average average money paper average turnover turnover turnover average turnover turnover 9,579 11,041 18,554 185 2,588 5,495 26,840 13,442 26,868 237 2,003 3,244 38,499 13,587 24,450 241 2,608 15,537 45,105 14,747 30,616 371 3,160 6,049 30,750 15,923 39,388 214 2,669 3,476 87,720 13,451 31,859 128 3,805 10,593 1,12,871 18,756 41,556 102 1,410 12,315 1,02,188 16,859 45,026 121 1,514 17,315 1,09,610 14,625 37,752 172 1,587 19,661 1,03,629 19,432 48,392 115 1,348 15,515 1,00,470 21,311 50,949 121 1,799 20,334 87,920 17,662 48,006 38 1,261 19,066 90,187 17,761 48,441 76 1,082 Apr-Nov Apr-Nov Apr-Nov Apr-Nov Apr-Nov Apr-Oct 71,145 99,812 17,508 44,118 110 1,683 1,14,799 Certicate of deposit
6,290 12,220 40,430 17,484 46,979 26,710 15,294 18,615 37,026 20,865 26,615 26,746 Apr-Oct 1,00,306 1,71,871
December 2009
Interest Rates & Debt Market: Long Term Interest Rates
25
Downward pressure on lending rates

Three factors continue to put downward pressure on interest rates on lending the very slow credit growth, the comparatively much faster deposit mobilisation and the consequent abundant liquidity in the banking system. Credit growth slowed down from 18 per cent at the beginning of the year to 10.1 per cent by 21 November 2009. It is unlikely to climb up to the rates seen in 2007-09. We expect credit growth to be 12 per cent for 2009-10. Secondly, deposit mobilisation continues to be much higher at around 19 per cent. Net of CRR, banks are expected to mobilise Rs.3.2 lakh crore worth of deposits compared to an expected credit deployment of a much lower Rs.2.1 lakh crore during December 2009-March 2010. Consequently, banks will be flush with liquidity during the remaining months of the current financial year. Liquidity available to them would be Rs.5.1 lakh crore while their liquidity requirement would be only Rs.3.5 lakh crore. Even if the RBI does not infuse any liquidity through open market operations or desequestering of the market stabilisation scheme, there would be more-than-sufficent liquidity with banks to put downward pressure on interest rates.
10-year gsec yields dip in November

The surplus liquidity with banks and the low issuance of dated government securities resulted in banks chasing government paper thereby putting downward pressure on yields. Surplus liquidity parked by banks at the the RBIs LAF facility topped Rs.1.26 lakh crore as on 3 December 2009. And, the Central Government issued just Rs.29,000 crore worth of dated seurities during November 2009 compared to an average of more than Rs.46,000 crore per month till October. As a result, yields on the benchmark 10-year goverment paper slipped from 7.3 per cent on 30 October 2009 to 7.17 per cent by 27 November 2009 before recovering to 7.24 per cent by 30 November 2009. Figure 6.3 Yield on 10year Govt. Security (%)
8.0 7.5 7.0 6.5 6.0 5.5 5.0
Nov08 Dec08 Feb09 Mar09 May09 Jul09 Aug09 Oct09 Nov09
Table 6.6 Prime lending rates (%)

Bank State Bank Of India Punjab National Bank Canara Bank Bank Of Baroda Bank Of India Union Bank Of India Indian Overseas Bank Corporation Bank Dena Bank ICICI Bank Axis Bank HDFC Bank Weighted PLR Mar 2008 12.25 12.50 12.75 12.75 12.75 12.75 13.25 13.00 13.00 15.75 14.75 15.00 13.33 Jun 2008 12.75 12.50 12.75 12.75 12.75 12.75 13.25 13.00 13.00 15.75 15.25 15.25 13.46 Sep 2008 13.75 14.00 14.00 14.00 14.00 14.00 14.00 14.00 14.25 17.25 15.75 16.50 14.57 Mar 2009 12.25 11.50 12.50 12.50 12.50 12.50 12.50 12.50 12.75 16.75 15.25 16.00 13.22 Apr 2009 12.25 11.50 12.00 12.00 12.50 12.00 12.50 12.00 12.50 16.25 15.25 16.00 13.03 May 2009 12.25 11.00 12.00 12.00 12.00 12.00 12.50 12.00 12.50 16.25 14.75 16.00 12.95 Jun 2009 11.75 11.00 12.00 12.00 12.00 12.00 12.50 12.00 12.50 14.75 14.75 16.00 12.72 Jul 2009 11.75 11.00 12.00 12.00 12.00 11.75 12.00 12.00 12.50 14.75 14.75 15.75 12.61 Aug 2009 11.75 11.00 12.00 12.00 12.00 11.75 12.00 12.00 12.50 14.75 14.75 15.75 12.60 Sep 2009 11.75 11.00 12.00 12.00 12.00 11.75 12.00 12.00 12.50 14.75 14.75 15.75 12.60 Oct 2009 11.75 11.00 12.00 12.00 12.00 11.75 12.00 12.00 12.50 14.75 14.75 15.75 12.60 Nov 2009 11.75 11.00 12.00 12.00 12.00 11.75 12.00 12.00 12.50 14.75 14.75 15.75 12.60
December 2009
26
Balance of Payments: Exchange Rate lar chase of the dollar by oil companies to pay for their oil imports and the intervention by the Reserve Bank of India in the forex market will keep the rupee range bound between Rs.46.5 per dollar and Rs.47.5 per dollar in the coming months. Crude prices are expected to be higher during the second half of the year compared to the first half. Besides, the ongoing industrial recovery will increase some demand for imported intermediates and capital goods. Consequently, even though the exchange rate stood at Rs.46.27 per dollar as on 2 December 2009, it is likely to average around Rs.47 per dollar during December 2009-March 2010. This translates into an average of Rs.47.7 for the year as a whole. Table 7.1 Forward premia on the dollar (%)
RBI NSE 1-mth 3-mth 6-mth 1-mth 3-mth 6-mth 5.7 4.4 2.9 11.2 7.0 8.1 4.5 3.2 2.4 9.1 4.7 2.1 3.6 3.1 2.4 -2.6 0.9 2.5 3.4 2.5 1.9 9.7 4.3 2.5 4.7 3.7 3.1 -0.8 2.6 2.4 3.6 3.4 2.9 0.3 2.5 1.8 3.7 3.6 3.2 -1.1 1.8 2.8 3.1 2.9 2.7 4.2 4.5 1.9 2.9 2.7 2.6 -2.3 0.8 2.2 2.6 2.5 2.5 1.7 2.2 1.8 2.6 2.8 2.9 3.6 2.6 2.3 2.4 2.7 3.0 -5.5 0.0 0.5 2.2 2.2 2.3 2.2 2.0 0.8
Exchange rate to average Rs.47.7 during 2009-10

The exchange rate of the Indian currency is expected to average Rs. 47.7 for the year as a whole. It averaged Rs.48.11 during the first eight months of the year. It is expected to average Rs.47 per dollar during the remaining four months of 2009-10. The rupee continously appreciated from Rs.50.95 per dollar as on 31 March 2009 to Rs.46.27 per dollar by 2 December 2009. The steepest appreciation was during October 2009. It averaged Rs.46.7 per dollar in October compared to Rs.48.4 per dollar in September. The main reason for the appreciation of the rupee against the dollar was the sharp rise in capital inflows. From an outflow of USD 5.2 billion in the March 2009 quarter the capital account of the balance of payments saw a capital inflow of USD 6.6 billion in the June 2009 quarter. We estimate the capital inflows to have been even higher at USD 9.4 billion in the September 2009 quarter resulting in the appreciation in the rupee. The international weakening of the dollar against other major currencies like the Euro, the pound and the yen also contributed to the strengthening of the rupee against the dollar. Left alone the rupee would appreciate to even Rs.45 per dollar. However, we believe that the irregu-
Table 7.2 Rs/ November 2008-November 2009

52.0 51.0 50.0 49.0 48.0 47.0 46.0
Table 7.3 Rs./ November 2009
47.0 46.8 46.6 46.4 46.2 46.0
Nov08
Dec08
Feb09
May09
Jun09
Aug09
Oct09 Nov09
03 Nov
09 Nov
13 Nov
19 Nov
25 Nov
30 Nov
December 2009
Balance of Payments: Exchange Rate Table 7.4 Foreign currency reserves, RBI intervention, exchange rate & forward premia
RBI intervention in forex market (Mln. US ) Exchange Rate Purchase Sales Net purchase Outstanding Foreign Rs./dollar App./Dep. forward liab currency (-) over a (-)/assets reserves year ago 2,355 5,456 -3,101 -487 238,968 49.00 -19.52 2,005 2,323 -318 -1,752 246,603 48.63 -18.91 1,055 1,084 -29 -1,723 238,894 48.83 -19.37 1,063 833 230 -1,953 238,715 49.26 -19.34 360 3,748 -3,388 -2,042 241,426 51.23 -21.22 204 2,691 -2,487 -1,071 241,487 50.06 -20.05 923 2,360 -1,437 131 251,456 48.51 -13.16 1,279 235 1,044 745 254,093 47.77 -10.36 570 625 -55 800 260,631 48.48 -11.63 415 234 181 619 261,247 48.34 -11.17 260 180 80 539 264,373 48.44 -5.94 266,768 46.72 4.14 46.57 5.22 AprAprAprAprAprAprAprSep Sep Sep Sep Oct Nov Nov 17,765 27,415 -9,650 44.16 -8.27 3,651 6,325 -2,674 48.07 -8.14
27
2008-09 2009-10
December 2009
28
Balance of Payments: Current Account Balance expected to contribute to increasing imports. We expect imports in the second half of 2009-10 to be higher by USD 16.8 billion compared to imports in the second half of 2008-09. Exports, on the other hand, are not expected to increase significantly in absolute terms. This is because in advanced economies private consumption remains constrained, recession-like conditions still persist and recovery is expected to be quite slow, as stated by the Reserve Bank of India. Consequently, we expect exports to be higher by USD 10.4 billion in the second half of 2009-10 compared to the second half of 2008-09. Figure 7.1 Current account balance as percentage of GDP (%)
1.7 1.0 0.0 -1.0 -2.0 -3.0 -4.0 -5.0 Dec 07 Jun 08 -4.3 -4.5 Dec 08 Jun 09 Sep 09 -1.4 -2.1 -3.0 -0.5 -0.9 (CMIE Forecast)
Current account decit to be USD 8.9 billion during second half of 2009-10
The current account of the balance of payments is likely to see a deficit of USD 8.9 billion during October 2009-March 2010. This is marginally higher than the USD 8.3 billion deficit during October 2008-March 2009. This slightly higher deficit is because although net invisibles earnings would be higher by USD 5.8 billion during October 2009-March 2010, the trade deficit would be higher by USD 6.4 billion during this period. Trade deficit during the second half of 2009-10 is likely to be USD 55.7 billion as imports will amount to USD 143.2 billion, against which we will export only USD 87.5 billion. Imports had bottomed at USD 54.4 billion in the March 2009 quarter. As economic activity began recovering, they picked up to USD 64.8 billion in the June 2009 quarter. As economic activity further improves in the country, we expect imports to continue growing sequentially. Crude prices are expected to be higher in the second half than in the first half of the year. This is also
Table 7.5 Balance of Payments Statistics: Current account (US million)

Apr 08- Jul 08- Oct 08- Jan 09- Apr 09Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Trade balance -31,425 -38,676 -34,704 -14,598 -25,987 Exports 49,120 48,987 37,257 39,820 38,788 Imports 80,545 87,663 71,961 54,418 64,774 Net invisibles earnings 22,406 26,164 21,671 19,345 20,179 Tourist earnings 340 82 971 69 282 Miscellaneous 11,853 14,708 12,880 10,750 8,973 Income account -865 -783 -1,631 -1,232 -1,737 Remittances 11,612 12,936 9,963 9,536 12,939 Ocial transfers 41 -46 187 50 -61 Transportation -717 -780 -638 424 -287 Insurance 122 61 75 20 73 GNIE 20 -14 -136 -272 -3 Current account balance -9,019 -12,512 -13,033 4,747 -5,808 Per cent to GDP -3.0 -4.3 -4.5 1.7 -2.1 Jul 09- Oct 09- Jan 10- 2008-09 2009-10 Sep 09 Dec 09 Mar 10 Forecast Estimate Forecast Forecast -26,000 -26,700 -29,000 -119,403 -107,687 42,000 43,500 44,000 175,184 168,288 68,000 70,200 73,000 294,587 275,974 23,460 22,529 24,259 89,586 90,427 198 411 465 1,462 1,356 11,000 11,200 11,500 50,191 42,673 -870 -1,150 -900 -4,511 -4,657 13,200 12,000 12,500 44,047 50,639 53 45 66 232 103 -300 -200 400 -1,711 -387 194 201 206 278 674 -15 22 22 -402 26 -2,540 -4,171 -4,741 -29,817 -17,260 -0.9 -1.3 -1.4 -2.8 -1.4
December 2009
Balance of Payments: Capital Account Balance
29 we believe that external financing conditions have not eased off completely. We believe that Indian corporates will raise only about USD 1.5 billion by way of ECBs (net) during October 2009-March 2010 compared to USD five billion during the corresponding year ago period. This will take total inflows due to external commercial borrowings during 2009-10 to USD 2.1 billion compared to USD 8.2 billion in the preceding year. We believe that there will continue to be outflows on the banking capital account for the year 2009-10 as a whole. We believe that the account will see an outflow of USD 8.7 billion. Figure 7.2 Net capital inflows (USD million)
30000 25000 20000 15000 10000 5000 0 -5000 -10000 Dec 07 Jun 08 Dec 08 Jun 09 Sep 09 (CMIE Forecast)
Capital inows of USD 20.4 billion expected during second half

Capital inflows to the tune of USD 20.4 billion are expected to take place during October 2009-March 2010. Foreign direct investment (FDI) is expected to contribute a major share to the capital inflows. We expect FDI worth USD 9.8 billion to flow in during the second half of 2009-10. This is due to the relatively much better prospects of the Indian economy compared to other economies. Foreign institutional investors brought in USD 15.3 billion during April-September 2009. They are expected to bring in a lesser but healthy amount of USD 7.3 billion during October 2009-March 2010. This will take the total inflow on the portfolio investment account of the balance of payments to USD 22.6 billion during 2009-10. In this context, it may be recalled that this account had witnessed an outflow of USD 14 billion in 2008-09. The turnaround in the FII flows and the continuation of the FDI inflows are expected to result into a net capital inflow of USD 36.5 billion in 2009-10 compared to an inflow of USD 9.2 billion in 2008-09. Although corporate filings with the RBI for external commercial borrowings (ECBs) remain robust,
Table 7.6 Balance of payments: Capital account (US million)

Apr 08- Jul 08- Oct 08- Jan 09- Apr 09Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Capital inow (net) 11,135 7,565 -4,266 -5,288 6,736 Loans and assistance 5,029 3,759 1,926 -1,423 -1,539 Foreign assistance 351 518 992 777 85 ECB 1,467 1,690 3,884 1,117 -356 NRI Deposits 814 259 1,042 2,175 1,817 IMF 0 0 0 0 0 Short term loans 2,397 1,292 -3,992 -5,492 -3,085 Foreign investments 4,756 3,590 -5,376 492 15,102 FDI 8,967 4,900 444 3,185 6,834 Portfolio investments -4,211 -1,310 -5,820 -2,693 8,268 Bank cap.(excl. NRI dep.) 1,882 1,865 -5,998 -5,436 -5,182 Rupee debt servicing -30 -3 -68 -23 Other capital inows -502 -1,646 5,182 1,147 -1,622 Errors and omissions 119 213 -582 841 -813 Increase/decrease in reserves 2,235 -4,734 -17,881 300 115 Currency reserves (March-end) 302,340 277,300 246,603 241,426 254,093 Jul 09- Oct 09- Jan 10- 2008-09 2009-10 Sep 09 Dec 09 Mar 10 Forecast Estimate Forecast Forecast 9,396 7,070 13,332 9,146 36,534 300 1,300 2,800 9,291 2,861 300 1,100 1,700 2,638 3,185 1,000 700 800 8,158 2,144 1,500 1,200 800 4,290 5,317 0 0 0 0 0 -2,500 -1,700 -500 -5,795 -7,785 13,500 9,000 8,100 3,462 45,702 6,500 5,000 4,800 17,496 23,134 7,000 4,000 3,300 -14,034 22,568 -3,500 -2,000 1,700 -7,687 -8,982 -4 -30 -48 -101 -105 -900 -1,200 780 4,181 -2,942 591 6,856 2,899 8,591 -20,080 18,461 264,373 241,426
December 2009
30
Balance of Payments: Capital Account Balance For the year as a whole, the Economic Advisory Council to the Prime Minister believes that net FDI inflows will top USD 23 billion. NRI deposit flows continue to be volatile. In August 2009, there was an outflow of USD 509 million on this account. In September, there was an inflow of USD 857 million. According to the Economic Outlook for 2009-10, with improvement in global financial conditions Indian corporates have been increasingly able to raise loan finance. This seems to have been reflected in the high USD 2.6 billion worth of foreign commercial borrowing intentions filed by corporates in October 2009.
FII inow of USD 15.3 billion during April-September 2009

Foreign institutional investors (FIIs) poured USD 15.3 billion into India in the first six months of the current year. In the corresponding period of the previous year, they had taken away USD 6.6 billion. FII inflows into India had renewed right at the beginning of the current year. Of the USD 15.3 billion, the FIIs poured a third in the month of September 2009 itself. Inflows on account of foreign direct investment slowed a little, but yet were a healthy USD 1.5 billion in September 2009. In August 2009, they were a very high USD 3.2 billion.
Table 7.7 Foreign Investments & NRI Deposits (US Million)

FDI excl. acquisition of shares 1,295 990 1,280 2,573 1,166 1,781 2,081 2,017 2,533 2,005 3,214 1,466 FII Net Acquisition Investments of shares -5,250 -574 30 -614 -1,085 -909 2,245 5,639 343 2,067 -29 4,999 202 93 82 160 300 175 258 78 49 1,471 54 46 Foreign Oshore equity funds issues 7 Total Investment -3,746 509 1,392 2,119 381 1,067 4,617 7,734 2,935 6,508 4,842 6,511 Apr-Sep 11,730 33,147 Foreign NRI deposits Commercial Borrowing* 1,125 -1,815 1,702 667 1,669 822 1,337 10 453 -289 1,114 1,537 299 828 494 2,666 1,919 -469 2,015 917 1,090 -509 1,510 857 2,586 Apr-Oct Apr-Sep 12,087 -3050 9,912 4,290
Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009
20 33 10 965 1,603
Apr-Sep Apr-Sep Apr-Sep Apr-Aug Apr-Dec 2008-09 13,590 -6,615 3,620 1,135 2009-10 13,316 15,264 1,956 2,611 Note: * approvals (intentions) of corporates, not actuals
December 2009
Public Finance: Central Government Finance
31 excise duty so far. While the Index of Industrial Production of the manufacturing segment grew by 9.2 per cent in June-September 2009, excise duty collection was down by 22 per cent. Concessions in excise duties announced in stimulus packages are responsible for the decline. After the transfer of states share, the tax revenue fell by 8.2 per cent to Rs.2.13 lakh crore during April-October 2009, as compared to Rs.2.32 lakh crore in the same period of 2008. An impressive growth in non-tax revenue compensated partially for the decline in net tax revenue. During April-October 2009, net tax revenue was down by Rs.18,500 crore as compared to a year ago. Of this, Rs.13,579 crore was made up by the increase in non-tax revenue. During April-October 2009, non-tax revenue was up by a robust 23.8 per cent, as compared to an 11.3 per cent increase in the same period of 2008. This impressive growth was powered by a 38.4 per cent increase in revenue from dividends and profits. During April-October 2009, the revenue from dividends and profits amounted to Rs.37,128 crore as against Rs.26,824 crore in the same period of 2008. RBI transferred a profit of Rs.25,009 crore to the Union government in August 2009, as compared to Rs.15,011 crore a year ago.
Gross tax collections continue to decline

The impressive performance of the economy in the first half of the current fiscal has not yet reflected in the tax revenue collections. During April-October 2009, tax revenue was lower than in the same period of 2008-09. The decline was limited to the indirect tax collections. Direct tax collections grew by 7.9 per cent year-on-year. During April-October 2009, gross tax revenue was down by 7.6 per cent, as against an impressive 20.3 per cent increase recorded in the same period of 2008. The Global Liquidity Crisis has had a greater impact on revenue from indirect taxes than from direct taxes. Indirect tax collection, including excise, customs and service taxes, was down by 23 per cent during April-October 2009, as against a 14 per cent increase recorded in the same period of 2008. The decline is attributed to a reduction in excise duty to combat the adverse impact of the Global Liquidity Crisis. Direct tax collection was up by 7.9 per cent during April-October 2009. This growth is significantly lower than the 27.3 per cent increase witnessed during April-October 2008. The impressive growth in the manufacturing sector has not led to a corresponding rise in revenue from Table 8.1 Monthly non-debt receipts (Rs. crore)
Tax revenue Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 2008-09 2009-10 30,149 21,162 56,369 19,344 27,119 91,336 7,462 18,690 37,189 22,968 20,528 78,832 28,227 Apr-Oct 2,32,396 2,13,896 Non-tax revenue 14,353 4,412 4,594 9,534 5,463 15,918 4,384 1,642 2,628 10,415 31,292 8,441 11,781 Apr-Oct 57,004 70,583
Revenue receipt 44,502 25,574 60,963 28,878 32,582 1,07,254 11,846 20,332 39,817 33,383 51,820 87,273 40,008 Apr-Oct 2,89,400 2,84,479
Recoveries of loans 396 715 377 432 345 2,407 213 18 443 638 510 480 700 Apr-Oct 1,882 3,002
Other receipt
503
2,013 2,287 5 Apr-Oct 43 4,305
Total Receipts 44,898 26,289 61,340 29,310 32,927 1,10,164 12,059 20,350 40,260 34,021 54,343 90,040 40,713 Apr-Oct 2,91,325 2,91,786
December 2009
32
Public Finance: Central Government Finance Indirect tax collections amounted to Rs.1.2 lakh crore during April-October 2009. For the fiscal year, it has been budgeted at Rs.2.7 lakh crore. To reach this level, revenue from indirect taxes should be 2.25 times of the first seven months. This is a stiff target to achieve in the light of the performance till October 2009. In the past eight years, the ratio has gone beyond two per cent only twice. Thus, the revenue from indirect taxes is expected to remain lower than the BE. We expect a shortfall of Rs.30,000 crore. Imports are expected to remain significantly lower than in the previous fiscal year. Besides, depreciation of the rupee will be lower in 2009-10 than in 2008-09. These two factors will hurt the revenue from customs duties in the current fiscal year. Since 2000-10, gross tax revenue during November to March has accounted for 50-55 per cent of the total tax revenue during a fiscal year. In 2008-09, it fell to 47 per cent because of the GLC. Though the share will improve to 51 per cent in the current fiscal year, it will be lower than the pre-crisis levels. The budget for 2009-10 includes a sum of Rs.35,000 crore revenue from auction of 3G spectrum. The auction of 3G is expected to take place in the last quarter of the current fiscal year. This is a part of the non-tax revenue.
Tax revenue to remain lower than the BE level

In the final budget for 2009-10, gross tax revenue has been placed at Rs.6.41 lakh crore for 2009-10, as compared to the actual revenue of Rs.6.10 lakh crore in 2008-09. This implies a 5.1 per cent growth during 2009-10. It is better than the 2.7 per cent growth achieved during 2008-09, but nowhere near the over-20 per cent increase recorded regularly in the years before. Revenue from all sources has been budgeted to remain lower during 2009-10 than the revised estimates for 2008-09, barring corporate tax. Corporate tax collection is budgeted to grow by 15.6 per cent. Direct tax collection has been budgeted at Rs.3.7 lakh crore. The performance till October 2009 shows that the revenue from direct taxes will reach this budgeted estimate comfortably. This is because of a sequential improvement in the economic performance. Besides, tax collections in the second half remain better than the first half of the year. Between November and March of a fiscal year, the direct tax collection remains close to 2.4 times of the first seven months of the fiscal year. Table 8.2 Monthly gross tax revenue declines
Corporation Income tax Custom Excise Other Taxes Total tax Total tax Tax duties duties revenue revenue (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (% chg.) Oct-08 7,682 7,702 9,881 10,286 7,566 43,117 -4.6 Nov-08 3,906 5,870 9,220 9,935 5,252 34,183 -3.5 Dec-08 35,455 10,906 7,399 9,017 6,577 69,354 -18.6 Jan-09 6,179 5,773 5,893 7,427 6,841 32,113 -16.3 Feb-09 13,664 8,851 5,269 6,604 5,419 39,807 3.5 Mar-09 49,935 24,576 5,945 17,601 12,933 1,10,990 -12.6 Apr-09 3,310 9,489 4,206 -78 2,942 19,869 -17.0 May-09 7,271 6,151 7,538 5,780 4,382 31,122 -8.3 Jun-09 25,606 5,797 5,818 7,086 5,350 49,657 -11.0 Jul-09 7,888 7,111 7,111 6,934 6,307 35,351 -10.5 Aug-09 5,838 6,310 6,417 8,580 5,132 32,277 -13.1 Sep-09 54,592 14,845 6,654 8,591 5,922 90,604 0.8 Oct-09 6,983 10,029 7,412 8,616 6,941 39,981 -7.3 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 2008-09 1,04,673 54,051 66,122 58,156 40,256 3,23,258 20.3 2009-10 1,11,488 59,732 45,156 45,509 36,976 2,98,861 -7.5 Note: Data in the above table are net of the refunds but before the transfer of states share
December 2009
Public Finance: Central Government Finance
33 of the current fis cal year from November 2009 to March 2010. During April-October 2009, major expenditure heads were interest payments, defence, transfers to states, Department of Food and Public Distribution (food subsidies), Department of Fertilisers (fertiliser subsidies), Ministry of Rural Development and pensions. These together accounted for 67 per cent of the total expenditure (Rs.5.3 lakh crore). They grew by 23 per cent during April-October 2009. During April-October 2009, 91 per cent of the total expenditure was revenue expenditure. During the period, it rose by a healthy 30.5 per cent, on top of the 24 per cent increase recorded in the same period of 2008. About 70 per cent of the revenue expenditure (Rs.3.65 lakh crore) was on interest payment, major subsidies, pension and defence services. Total expenditure in these heads amounted to Rs.2.58 lakh crore. Capital expenditure, with a low share, also grew by an impressive 43 per cent during April-October 2009, as against a steep 50 per cent fall a year ago.
Robust growth in expenditure continues

Central government expenditure has been rising at a brisk pace from August 2009. In August, it was up by 52 per cent. The expenditure rose by 52 per cent in September and 48 per cent in October 2009. As a result, expenditure during April-October 2009 stood higher at Rs.5.36 lakh crore, as compared to 4.08 lakh crore in the corresponding period of 2008. This implies a hefty 31.5 per cent increase. The expenditure during April-October 2009 was 54 per cent of the budget estimates for the entire fiscal year. During 2009-10, Central government expenditure is budgeted at Rs.10.2 lakh crore. To reach this level, expenditure in the remaining months, from November 2009 to March 2010, should be to the order of Rs.4.84 lakh crore. This will be just 2.3 per cent higher than the expenditure in the same period of 2008-09. In the previous year, the expenditure had gone up by a hefty 38 per cent during November 2008 to March 2009. This high growth will pull down expenditure growth in the remaining months
Table 8.3 Monthly Central Government Expenditure (Rs.crore)

Interest Payments Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 2008-09 2009-10 (% Change) 14,788 10,831 12,055 24,526 17,538 24,686 11,677 14,261 9,506 16,694 19,995 14,536 14,424 Apr-Oct 1,00,849 1,01,093 0.2 Non-plan Expenditure Other Revenue Capital Total rev. expendi. expendi. expendi. 28,935 43,723 4,305 48,028 55,517 66,348 2,989 69,337 52,148 64,203 4,222 68,425 17,104 41,630 3,949 45,579 19,136 36,674 7,075 43,749 49,773 74,459 15,813 90,272 32,526 44,203 2,429 46,632 21,561 35,822 3,788 39,610 42,990 52,496 3,447 55,943 31,930 48,624 4,059 52,683 27,049 47,044 3,363 50,407 58,566 73,102 3,693 76,795 49,820 64,244 2,523 66,767 Apr-Oct Apr-Oct Apr-Oct Apr-Oct 1,72,358 2,73,207 15,450 2,88,657 2,64,442 3,65,535 23,302 3,88,837 53.4 33.8 50.8 34.7 Plan Expenditure Revenue Capital Total Total expendi. expendi. expendi. 9,493 13,563 29,226 22,668 31,171 35,328 18,002 15,114 13,948 11,947 25,083 24,069 17,575 Apr-Oct 1,03,220 1,25,738 21.8 1,793 11,286 59,314 2,829 16,392 85,729 5,441 34,667 1,03,092 5,616 28,284 73,863 2,325 33,496 77,245 7,545 42,873 1,33,145 1,583 19,585 66,217 2,226 17,340 56,950 3,913 17,861 73,804 3,643 15,590 68,273 2,589 27,672 78,079 4,661 28,730 1,05,525 3,671 21,246 88,013 Apr-Oct Apr-Oct Apr-Oct 16,518 1,19,738 4,08,395 22,286 1,48,024 5,36,861 34.9 23.6 31.5
December 2009
34
Public Finance: Central Government Finance Net government market borrowings have been placed at Rs.3.98 lakh crore during the current fiscal year. This is 52 per cent higher than the Rs.2.62 lakh crore in the previous year. The remaining Rs.0.8 lakh crore will be raised between November 2009 and March 2010. The drop in revenue receipts and surge in revenue expenditure led to a higher Rs.2.06 lakh crore deficit on revenue account. A year ago, the revenue deficit was Rs.0.87 lakh crore. Figure 8.1 Gross fiscal deficit in 2008-09 will reach 6.8% of GDP
7.0 6.0 5.0 (BE)
Gross scal decit doubles in April-October 2009

Gross fiscal deficit (GFD) reached Rs.2.45 lakh crore during April-October 2009, doubling from the Rs.1.17 lakh crore recorded in the same period a year ago. A surge in revenue expenditure and a fall in revenue receipts were responsible for the higher GFD. Compared to the BE for the entire fiscal year, the deficit till October 2009 stood at 61 per cent as against 88 per cent in the corresponding period of 2008-09. It should be noted here that the budgeted GFD for 2008-09 was revised substantially to Rs.3.26 lakh crore from Rs.1.33 lakh crore. Using the revised number, the ratio for the previous year dropped to 36 per cent. GFD is budgeted at Rs.4.01 lakh crore for the fiscal year 2009-10. This is estimated at 6.8 per cent of the GDP, higher than the 6.2 per cent ratio in 2008-09. Almost the entire deficit will be financed through market borrowings. During April-October 2009, net market borrowings stood at Rs.3.18 lakh crore, as against Rs.0.72 lakh crore in the corresponding period of 2008.
4.0 3.0 2.0 1.0 0.0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Table 8.4 Gross fiscal deficit and its sources of financing (Rs.crore)
Gross scal decit 14416 59440 41752 44553 44318 22981 54158 36600 33544 34252 23736 15485 47300 Apr-Oct 117070 245075 109.3 External nancing 784 1126 2142 64 448 4119 401 332 -392 429 394 1810 798 Apr-Oct 3099 3772 21.7 Market borrowings 6538 62527 17944 56069 51806 71372 -500 78975 58154 42244 67424 44621 27294 Apr-Oct 72053 318212 341.6 Small Savings -2938 -2940 -2244 -2611 -1273 1027 -183 1597 2485 2950 2945 3115 3358 Apr-Oct -6021 16267 0.00 PPF State provident fund 468 117 602 489 268 5532 1241 169 1226 390 106 2358 957 Apr-Oct 587 6448 998.1 Special Deposits -372 -407 -23 -104 -65 774 -384 -260 -132 22 -62 -92 -7 Apr-Oct -853 -915 0.00 Other nancing 9681 -1042 22892 -10170 -7862 -64057 47146 -44588 -28240 -12229 -47473 -36694 14482 Apr-Oct 49716 -107597 -316.4 Revenue decit 8714 54337 32466 35420 35263 2533 50359 30604 26627 27188 20307 9898 41811 Apr-Oct 87027 206794 137.6
Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 2007-08 2008-09 % Change
255 59 439 816 996 4214 6437 375 443 446 402 367 418 Apr-Oct -1511 8888 0.00
December 2009
Public Finance: Central Government Finance Table 8.5 Budget Estimates for 2009-10
Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Revenue receipts (1+2) Tax revenue (net to centre) Non-tax revenue Capital receipts (5+6+7) Recoveries of loans Other receipts Borrowings and other liab. Total receipts (1+4) Non-plan expenditure (10+12) On revenue account of which, Interest payments On capital account Plan expenditure (14+15) On revenue account On capital account Total expenditure (9+13) Revenue expenditure Capital expenditure Revenue decit (17-1) % of GDP Fiscal decit (16-(1+5+6)) % of GDP Primary decit (20-11) % of GDP 2007-08 Actual 5,41,864 4,39,547 1,02,317 1,70,807 5,100 38,795 1,26,912 7,12,671 5,07,689 4,20,861 1,71,030 86,728 2,05,082 1,73,572 31,510 7,12,671 5,94,433 1,18,238 52,569 -1.1 1,26,912 -2.70 -44,118 -0.9 2008-09 Budget Estimates 6,02,935 5,07,150 95,785 1,47,949 4,497 10,165 1,33,287 7,50,884 5,07,498 4,48,352 1,90,807 59,146 2,43,386 2,09,767 33,619 7,50,884 6,58,119 92,765 55,184 -1.0 1,33,287 -2.50 -57,520 -1.1 2008-09 Revised Estimates 5,62,173 4,65,970 9,62,03 3,38,780 9,698 2,567 3,26,515 9,00,953 6,17,996 5,61,790 1,92,694 5,62,06 2,82,957 2,41,656 41,301 9,00,953 8,03,446 97,507 2,41,273 -4.4 3,26,515 -6.00 1,33,821 -2.5 2009-10 Budget Estimates 6,14,497 4,74,218 1,40,279 40,6341 4,225 1,120 4,00,996 1,02,0838 6,95,689 6,18,834 2,25,511 76,855 3,25,149 2,78,398 46,751 10,20,838 8,97,232 1,23,606 2,82,735 -4.8 4,00,996 -6.80 1,75,485 -3.0
35
December 2009
36
Public Finance: Government Debt Floatations months of the fiscal indicating that the borrowing is very well front-loaded. This is seen in the low issuance of just Rs.29,000 crore worth of dated securities during November 2009 compared to an average of more than Rs.46,000 crore during the first seven months. The low government borrowing will only add to the easy liquidity conditions in the banking system. Banks had parked Rs.88,680 crore at the reverse repo window of the RBI as at end-November 2009. Credit growth is trailing deposit mobilisation by a wide margin. This is putting downward pressure on yields on government paper. The 10-year benchmark yield already began easing since mid-October 2009. From 7.41 per cent as on 17 October 2009 it eased to 7.19 per cent as on 28 November 2009. Yields are likely to remain subdued during the rest of 2009-10.
Government borrowing through 77 per cent

The Central Government and the state governments together have completed borrowing 76.5 per cent of their scheduled 2009-10 borrowing by end-November 2009. They borrowed Rs.4.4 lakh crore from the market through issuance of dated securities. Of this, the Central Governments share was Rs.3.54 lakh crore. The Central Government is scheduled to borrow Rs.0.97 lakh crore during the remaining four months of the fiscal. The state governments are yet to borrow Rs.0.39 lakh crore. Together, they are to borrow Rs.1.4 lakh crore during December 2008-March 2009. In effect, the government will be borrowing 23 per cent of the scheduled borrowing during the last four
Table 8.6 Central and State Government Market Borrowings (Rs.crore)

Central Government Borrowings 182 Days 364 Days Tbills Dated T-bills T-bills Total Securities: Total Nov 2008 23,970 4,000 4,000 31,970 39,000 Dec 2008 19,976 1,000 2,250 23,226 10,000 Jan 2009 32,502 3,000 3,014 38,515 35,000 Feb 2009 23,547 3,000 6,109 32,655 37,000 Mar 2009 19,500 4,500 6,274 30,274 34,000 Apr 2009 37,500 4,875 2,000 44,375 48,000 May 2009 23,000 4,000 2,000 29,000 54,000 Jun 2009 19,500 1,000 2,000 22,500 60,000 Jul 2009 34,000 3,000 3,259 40,259 39,000 Aug 2009 23,000 3,000 2,042 28,042 48,000 Sep 2009 19,500 4,500 5,033 29,033 46,000 Oct 2009 30,000 5,000 4,000 39,000 30,000 Nov 2009 22,000 4,000 4,034 30,034 29,000 Apr-Nov Apr-Nov Apr-Nov Apr-Nov Apr-Nov 2008-09 1,70,033 32,803 36,904 2,39,740 1,45,000 2009-10 2,08,500 29,375 24,369 2,62,244 3,54,000 Note: Dated securities auctioned includes amount devolved on Primary Dealers 91 Days T-bills Total State Total Govt. Govt. Borrowings Borrowings 8,445 10,705 18,498 13,511 44,783 7,316 7,000 5,950 12,300 12,374 18,271 13,519 10,722 Apr-Nov 30,641 87,453 79,415 43,932 92,013 83,166 1,09,057 99,691 90,000 88,450 91,559 88,417 93,304 82,519 69,756 Apr-Nov 4,15,381 7,03,696
70,970 33,226 73,515 69,655 64,274 92,375 83,000 82,500 79,259 76,042 75,033 69,000 59,034 Apr-Nov 3,84,740 6,16,244
December 2009
Agriculture: Progress of Agriculture
37 Farmers are expected to increase acreage under rabi crops to make up for the loss in kharif crop production. State governments have also taken various measures to encourage farmers to bring more area under rabi crops and also to boost yield. In Uttar Pradesh, which was hit by severe drought during the 2009 monsoon, the state government decided to increase the quantity of subsidised seeds by almost three times in the rabi season. The Karnataka, Andhra Pradesh, Madhya Pradesh, Punjab and Rajasthan government were also offering rabi seeds at highly subsidised rates. The Rajasthan government decided to supply water from the Indira Gandhi Canal to farmers for irrigation of rabi crops in three shifts. Wheat is most important rabi crop, accounting for 70 per cent of the rabi foodgrain production and almost half of the total area sown. Wheat acreage increased by five per cent to 137 lakh hectares by end-November 2009. The same increased in Madhya Pradesh and Uttar Pradesh, whereas it declined in Punjab. The government increased the minimum support price (MSP) of wheat by Rs.20 to Rs.1,100 per quintal in November 2009. This two per cent increase is marginal compared to the eight per cent increase announced for the 2008-09 wheat crop. Inspite of the small increase in MSP, we do not expect a shift to other crops as farmers will increase acreage to make up for the kharif losses.
Rabi acreage increases

Rabi sowing activities were gathering pace and acreage was up by 1.5 per cent by end-November 2009. Sowing was completed on 359.4 lakh hectares, covering around 61 per cent of the normal rabi area sown. Acreage under major rabi crops like wheat, gram and rapeseed & mustard increased, whereas area sown under jowar and groundnut declined. Acreage will increase further as kharif harvesting, which was delayed due to late sowing, ends. Unseasonal rains in October and November had also slowed down rabi sowing activities. The satisfactory progress of sowing activities in the ongoing rabi season came as a relief after the dismal performance in the kharif season. Kharif acreage had dropped by 5.3 per cent in 2009 following the worst southwest monsoon in the past 37 years. Rainfall activity picked up towards the fag end of the monsoon season as withdrawal of the southwest monsoon was delayed by three weeks. States like Uttar Pradesh, Madhya Pradesh, Karnataka and Andhra Pradesh, which faced severe drought conditions during the monsoon season, received heavy rains in the first week of October. Good precipitation was also recorded in Gujarat and Jharkhand too. Late showers have led to higher moisture content in the soil and this is expected to boost the rabi yield. Table 9.1 Rabi acreage rises (Lakh hectares)
Crops As on Normal Area
Sown Area 2008 185.7 130.3 46.3 1.1 91.9 61.3 11.5 76.3 58.4 3.0 354.0
Sown Area 2009 189.4 137.0 41.4 2.2 94.2 61.9 13.7 75.8 60.1 2.4 359.4
Cereals, of which Wheat Jowar Rice Pulses, of which Gram Masoor Oilseeds, of which Rapeseed & Mustard Groundnuts Total
26 26 26 26 26 26 26 26 26 26 26
Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov
373.9 271.0 47.5 39.8 116.8 71.7 14.3 98.9 65.7 8.9 589.6
% of Normal Area 2008 49.7 48.1 97.5 2.9 78.7 85.6 80.1 77.1 88.9 33.1 60.0
% of Normal Area 2009 50.7 50.6 87.1 5.6 80.7 86.4 95.7 76.6 91.5 27.2 61.0
% change 2009 over 2008 2.0 5.1 -10.7 96.5 2.4 1.0 19.5 -0.7 2.9 -18.0 1.5
December 2009
38 Acreage under rapeseed & mustard increased by three per cent to 60.1 lakh hectares by endNovember 2009. In Uttar Pradesh, more than five lakh hectares of additional area was brought under the oilseed. However, in Rajasthan, the state with the highest area, area sown declined by 17 per cent. We expect acreage under rapeseed & mustard to rise by four per cent in 2009-10. Groundnut is another important oilseed grown in the rabi season. Acreage was down by 18 per cent by end-November 2009. However, it is expected to pick up as sowings begin after November in Karnataka and much later in Gujarat and Maharashtra. Groundnut acreage was up by eight per cent in Andhra Pradesh. In the pulses group, gram is the most important crop grown in the rabi season. Acreage was up by one per cent by end-November 2009. In Madhya Pradesh, acreage expanded by 31 per cent to 29.1 lakh hectares by end-November 2009. It has surpassed the total area covered under gram during the previous rabi season. With sowing activities in progress, acreage could still rise further. However, by 26 November 2009, acreage in Rajasthan was 37 per cent less compared to the previous year. We expect the acreage to rise following heavy rains in East Rajasthan in the third week of November.
Agriculture: Progress of Agriculture Rice acreage is also significant in the rabi season. West Bengal accounts for 35 per cent of rabi rice acreage, but sowing commences only in January. Acreage in Andhra Pradesh, which also accounts for almost 30 per cent of rabi rice acreage, had doubled by end-November 2009. It had still to gather pace as acreage was a mere 15 per cent of the normal area sown. By 26 November 2009, area sown under jowar declined by 11 per cent. Maharashtra, which accounts for 65 per cent of area sown, recorded a 12 per cent fall. Heavy rains lashed the main jowar growing areas of Vidarbha and Madhya Maharashtra in the second and third week of November 2009 as cyclone Phyan hit the state. This is likely to have delayed sowing but it is expected to pick up in the weeks to follow.
Rabi production to rise by 1.3%

We expect rabi foodgrain production to reach an alltime high level of 117.7 million tonnes in 2009-10. This is an increase of 1.3 per cent. Though not very significant, it has to be viewed in comparison to the strong rise of 5.8 per cent in rabi grain output of 2008-09.
Table 9.2 Agricultural crop production to decline in 2009-10

2006-07 Million tonnes 2007-08 2008-09 Final 4th adv. est. est. 230.8 233.9 96.7 99.2 78.6 80.6 40.8 39.5 14.8 14.7 2009-10 CMIE proj. 213.5 81.0 81.5 35.7 15.3 25.9 5.8 9.1 7.6 22.0 251.6 2007-08 % change 2008-09 2009-10 CMIE proj. 1.4 -9.7 2.5 -18.3 2.6 1.1 -3.3 -9.4 -1.2 2.9 -5.1 -4.6 -3.4 -7.6 -20.1 -21.0 -9.7 -8.1 26.3 1.8 -10.5 -5.0 -21.3 -8.2 -1.5 -7.5 5.3 2.0 0.1 -3.9
Foodgrains, of which 217.3 Rice 93.4 Wheat 75.8 Coarse cereals 33.9 Pulses 14.2 Non-food crops Oilseeds (major nine), of which 24.3 29.8 28.2 Groundnut 4.9 9.2 7.3 Soyabean 8.9 11.0 9.9 Rapeseed and mustard 7.4 5.8 7.4 Cotton (bales) 22.6 25.9 23.2 Sugarcane 355.5 348.2 273.9 All major crops (weighted) Minor crops (weighted) All agricultural crops (weighted) Includes small horticulture crops, straws & stalks, byproducts etc.
5.6 3.6 3.6 20.1 4.3 8.1 18.6 88.9 24.0 -21.6 14.4 -2.1 6.9 3.3 5.9
December 2009
Agriculture: Progress of Agriculture Wheat production is projected to reach 81.5 million tonnes in 2009-10 from 80.6 million tonnes in 200809. Rabi rice output is projected to reach 15 million tonnes during 2009-10. This will be an increase of three per cent over and above the 3.8 per cent rise in 2008-09. Gram production is expected to rise by two per cent. This is lower than our previous forecast of a four per cent increase, as acreage is not likely to rise as much as was anticipated earlier.
39 groundnut, sunflower and nigerseed are slated to witness a fall in production due to a fall in acreage and yield. This will be reflected in a 7.6 per cent decline in total oilseeds production in 2009-10. Total production of major agricultural crops which includes cereals, pulses, oilseeds, cotton and sugarcane is projected to fall by 7.5 per cent in 2009-10. This will be the second successive year to register a decline in major crop output. These crops account for 62 per cent of total crop production. Minor crops comprising of horticulture, floriculture, by-products etc. account for the the remaining 38 per cent. The high rainfall deficit in the 2009 southwest monsoon season was expected to hit production of these crops also. However, the price trend of these commodities in the recent weeks has not shown any significant increase. This indicates that the production was not adversely affected by deficient rains. Hence, we expect production of horticulture and floriculture crops to grow by two per cent in 2009-10 against our earlier estimate of a sharp fall. Consequently, we expect total crop production to fall less sharply by 3.9 per cent compared to our earlier estimate of a 7.4 per cent decline.
Lower fall estimated in total crop output

Kharif foodgrain production is slated to fall by 19 per cent to 95.6 million tonnes in 2009-10. The erratic and poor rainfall led to a fall in acreage and yield. The increase in rabi grain output will not be adequate enough to make up for the loss. Hence, total foodgrain production is projected to fall by 9.7 per cent in 2009-10. Figure 9.1 Major crops output to fall in 200910(%)
22.4 20 15 10 5 0 -5 -10 -15 -20 2000-01 -16.1 2002-03 2004-05 2006-07 2009-10 -7.2 -2.2 -1.5 -7.5 7.9 7.6 3.5 6.7 (CMIE Forecast)
Agriculture and allied sector GDP to fall less sharply

The estimate of a lower decline in crop production has warranted a revision in the GDP of agriculture and allied sector. It is projected to decline by 1.4 per cent in 2009-10 against our previous expectation of a 3.7 per cent decline. Against the decline in crop production, GDP of allied sectors of agriculture are expected to grow at a robust rate in 2009-10. Livestock GDP accounts for close to one-fourth of the total agriculture and allied sector GDP. It is projected to grow by four per cent in 2009-10. Forestry & logging and fishing, whose share is much smaller, are also expected to grow by two and four per cent, respectively. As per data released by CSO, the GDP of agriculture and allied sector grew by 0.9 per cent in the June-September 2009 quarter compared to four per cent rise in June-September 2008. The slowdown in
Non-foodgrain production is also expected to decline by 4.6 per cent because of the decline in sugarcane, cotton and oilseeds production. Sugarcane production is slated to fall by 8.2 per cent to 251.6 million tonnes in 2009-10. The decline is in addition to the 21 per cent fall in 2008-09. Cotton production is likely to fall by five per cent to 22 million tonnes. Production of rapeseed and mustard is projected to increase by 1.8 per cent to 7.5 million tonnes. Production of groundnut during the rabi season is also expected to rise by three per cent. However, the oilseeds sown during the kharif season like soyabean,
December 2009
40 growth can be attributed to the low level of agricultural activity, as drought conditions and poor rains resulted in a decline in kharif acreage. The sector was not as severely affected as was anticipated. According to CSO, almost 82 per cent of the estimates of GDP of this sector in Q2 are based on the anticipated production of fruits and vegetables, other crops, livestock products, forestry and fisheries. These are estimated to have increased by three-four per cent as a result of which the sector could record positive growth. The full impact of the sharp fall in kharif crop production will be reflected in the third quarter of 2009-10. Table 9.3 Growth in real GDP of agriculture and allied activities(%)
Crops Live- Forestry, Fishing Agricultural stock logging and allied activities 200304 14.4 1.0 -1.1 3.6 10.0 200405 -2.2 6.6 2.1 -2.0 0.0 200506 6.4 4.8 1.3 7.3 5.8 200607 3.9 4.5 2.4 3.0 4.0 200708 5.6 3.3 2.1 4.6 4.9 200809 0.3 5.5 2.0 6.0 1.6 200910 -3.9 4.0 2.0 4.0 -1.4 CMIE estimate CMIE projections
Agriculture: Progress of Agriculture The increase in rice procurement in Punjab and Haryana indicates that production in these states was not adversely affected as irrigation facilities appear to have more than made up for the poor rains during the southwest monsoon season. As rice procurement remained satisfactory, the government postponed its plans to import rice. In anticipation of a 15 million shortfall in kharif rice production, the government had floated tenders to import rice.
Sugarcane FRP provision modied

On 6 November 2009, the government had announced a Fair and Remunerative Price (FRP) of Rs.129.84 per quintal for sugarcane which replaced the Statutory Minimum Price (SMP) of Rs.107.76 per quintal. The FRP was to replace the SMP. In case the state government announced a higher State Advised Price (SAP), the difference between the FRP and the SAP was to be borne by the state government. However, there was stiff opposition by farmers to this provision. Farmers in the sugarcane growing belt of the north refused to cut their cane crop till the issue was resolved. Finally, the government relented. If the SAP of the state government was higher than the FRP of the Central government, the difference would have to be paid to the farmers by sugar mills and not the State government. In December, sugar mills in Uttar Pradesh increased the price of sugarcane for the third time in less than a month. They have offered to pay a price of Rs.200-205 per quintal to farmers against the SAP of Rs.165-170 per quintal. It was raised to prevent the diversion of cane to jaggery and khandsari makers.
Rice procurement in full swing

Procurement of kharif rice is progressing in full swing in Punjab and Haryana. By 26 November 2009, government agencies had procured 118.7 lakh tonnes of rice compared to 110.3 lakh tonnes procured by end-November 2008. In Punjab, 92.1 lakh tonnes of rice was procured by end-November 2009 compared to 85.5 lakh tonnes procured in 2008-09. In Haryana, 17.8 lakh tonnes of rice was procured by end-November 2009, 3.6 lakh tonnes more than the rice procured in 2008-09. In all other states, procurement was down by almost 50 per cent.
December 2009
Agriculture: Reservoir Levels
41 In the months to follow, reservoir levels will continue to deplete further as post-monsoon and summer rainfall do not contribute substantially to reservoir levels. In Karnataka, Kerala, Tamil Nadu, Madhya Pradesh and Jharkhand, reservoir levels were significantly higher by end-November 2009 when compared to the year ago levels. In Punjab (-51%), West Bengal (-56%) and Himachal Pradesh (-45%) water levels had declined by end-November 2009. Table 9.4 Levels in major reservoirs (TM CUM)
2005 2006 2007 2008 January 51.77 76.87 82.35 71.46 February 43.49 62.50 71.08 61.80 March 32.35 51.61 169.53 49.98 April 29.10 42.20 44.14 44.19 May 23.12 30.09 33.33 32.84 June 14.11 29.74 27.71 33.08 July 56.37 62.26 76.92 48.49 August 97.72 113.84 107.56 95.81 September 109.70 120.45 120.45 111.19 October 109.80 114.84 118.82 108.11 November 101.02 100.10 108.87 95.67 December 89.12 92.30 96.72 85.60 2009 65.99 54.41 38.98 25.56 18.90 14.18 52.79 63.45 88.97 94.50 88.47
Depleting reservoir levels a cause for concern

The depleting reservoir levels remain a cause for concern. Live water storage in major reservoirs stood at 88.5 bcm by end-November 2009. This was the lowest level recorded in end-November in the past four years. Water levels, which were rising on a monthly basis since July 2009, declined by seven per cent in November. Reservoir levels had failed to replenish adequately during the monsoon season of 2008 because of low precipitation in July 2008. The shortfall continued in the subsequent months. The situation was aggravated further due to the rainfall deficit of 23 per cent during the 2009 southwest monsoon season. The heavy rains in the first week October 2009 helped to improve the reservoir levels. The cyclone Phyan that hit the western states of Gujarat and Maharashtra brought heavy rains in its wake. Though these unseasonal rains helped, water levels remained lower than the year-ago levels by 7.5 per cent.
Table 9.5 Levels in major reservoirs remain lower than last year
No. of reservoirs Andhra Pradesh 5 Chhattisgarh 2 Gujarat 8 Himachal Pradesh 2 Jharkhand 5 Karnataka 14 Kerala 5 Madhya Pradesh 5 Maharashtra 11 Orissa 7 Punjab 1 Rajasthan 3 Tamil Nadu 6 Tripura 1 Uttar Pradesh 2 Uttaranchal 2 West Bengal 2 India 81 FRL Full Reservoir Level Live Storage at FRL in TM CUM 20.04 3.82 10.91 12.39 1.79 23.31 3.61 26.86 10.98 15.34 2.34 3.28 4.23 0.31 6.36 4.82 1.39 151.77 Live Storage in TM CUM % change As % of Live 27 Nov 2008 26 Nov 2009 Storage at FRL 14.66 14.09 -3.89 70.31 2.56 1.72 -32.81 45.03 6.61 5.11 -22.69 46.84 10.04 5.50 -45.22 44.39 1.24 1.34 8.06 74.86 15.02 18.46 22.90 79.19 2.29 2.97 29.69 82.27 10.42 12.84 23.22 47.80 8.34 6.32 -24.22 57.56 11.32 9.49 -16.17 61.86 1.26 0.62 -50.79 26.50 1.90 1.25 -34.21 38.11 2.35 2.93 24.68 69.27 0.07 0.11 57.14 35.48 3.03 2.47 -18.48 38.84 3.71 2.78 -25.07 57.68 0.79 0.35 -55.70 25.18 95.67 88.47 -7.53 58.29
December 2009
42
Energy: Coal resorts to imports. In 2008-09, coal imports rose by 12.7 per cent. Considering the demand-supply mismatch, the Indian companies are planning to acquire coal blocks abroad. Coal India, the largest producer of coal in India, has acquired two blocks in Mozambique having one billion tonnes in reserve. The company is now targeting coal blocks in USA, South Africa, Indonesia and Australia. Figure 10.1 Coal production (Million tonnes)
55 50 45 40 35 30
Coal production to grow 8.2% in 2009-10

We expect coal production to grow by 8.2 per cent in 2009-10. A healthy growth in the production of Coal India will drive this growth. Cumulative coal production grew briskly during April-October 2009, reporting 10.2 per cent growth. Coal despatches, on the other hand, grew at a slower pace of 5.3 per cent. Consequently, coal stocks grew at a faster pace of 22.2 per cent to 301.3 million tonnes. Although, coal production grew briskly in the first half of 2009-10, a more-than-10 per cent growth in coal production is not sustainable. We expect it to decelerate in the coming months due to the high base effect. Power, cement and steel industries are the major consumers of coal. Demand for coal from these industries has been spiralling in the last few years, whereas the domestic coal production is not sufficient to meet the aggregate demand. Hence, India
Table 10.1 Coal Production higher by 10.2% during April-October 2009

Coal Coal Prod. Prod. (Million (% chg.) tonnes) Oct 2008 40.45 10.6 Nov 2008 42.97 9.6 Dec 2008 46.82 9.4 Jan 2009 48.29 6.3 Feb 2009 46.49 6.0 Mar 2009 55.70 5.2 Apr 2009 39.61 13.2 May 2009 40.04 10.2 Jun 2009 39.22 14.7 Jul 2009 35.91 9.8 Aug 2009 37.67 13.0 Sep 2009 36.75 6.5 Oct 2009 42.49 5.0 Apr-Oct Apr-Oct 2007-08 227.50 3.7 2008-09 248.83 9.4 2009-10 274.13 10.2 Apr-Mar Apr-Mar 2008-09 487.25 6.6 Monthly gures may not add up to Coal Stocks (Million tonnes) 15.2 28.13 -12.9 29.81 -7.4 32.24 -32.5 35.07 -0.4 39.89 36.9 48.93 48.34 46.44 45.21 42.32 40.34 39.30 39.38 Apr-Mar Apr-Mar Apr-Oct 54.04 13.1 220.67 60.88 12.7 246.64 301.33 Apr-Mar Apr-Mar Apr-Mar 60.88 12.7 432.58 the total due to revisions Coal Imports (Million tonnes) 5.37 4.08 4.24 3.35 4.71 6.01 Coal Imports (% chg.) Coal Stocks (% chg.) 10.7 8.6 8.2 5.9 6.9 6.2 10.9 11.2 14.8 21.6 28.8 42.0 40.0 Apr-Oct 11.6 11.8 22.2 Apr-Mar 9.7 Coal Despatches (Million tonnes) 40.37 41.33 43.62 45.10 41.44 47.52 40.31 41.46 40.15 37.95 38.49 37.90 42.27 Apr-Oct 246.60 264.56 278.53 Apr-Mar 483.58 Coal Despatches (% chg.) 10.4 11.4 8.1 10.7 5.1 11.8 7.6 8.9 10.0 2.1 4.7 -0.8 4.7 Apr-Oct 7.8 7.3 5.3 Apr-Mar -0.6
December 2009
Energy: Crude Oil
43
Oil prices range-bound between USD 75-80 per barrel

Crude oil prices were volatile in the range of USD 75-80 per barrel in November 2009. A continuing weakness in the US dollar and strong equity markets supported oil prices during the month. However, higher oil and gasoline inventories in the US maintained a downward pressure on prices. In November 2009, the Brent rose by 5.3 per cent as compared to the previous month and averaged to USD 76.7 per barrel. The Dubai rose by 5.7 per cent to USD 77.2 per barrel. A slow recovery in demand and an abundant oil supply are expected to cap any rally in oil prices in the next four months. In October 2009, oil supply was higher by 0.6 million barrels per day (mb/d) to 85.6 mb/d as compared to last month. The International Energy Agency (IEA) has projected that oil demand will improve to 84.8 mb/d in the December 2009 quarter and to 86 mb/d in the March 2010 quarter. However, considering the pace of increase in oil supply, we expect supply to outpace demand in the next two quarters. This will maintain a downward pressure on oil prices.
RIL to become largest gas producer in country

The natural gas output grew by 30.6 per cent to 25,389 million cubic metres during April-October 2009 as compared to the year-ago period. The increase in production from RILs KG D6 field contributed to higher output. RIL is expected to surpass ONGC and become the largest gas producer in the country by December 2009. ONGCs share in domestic gas output declined to 49 per cent in October 2009 from 70.5 per cent in March 2009. The share of private & joint venture companies increased to 45.6 per cent in October 2009 from 22.7 per cent in March 2009. Domestic crude oil output grew by three per cent to 28.5 lakh tonnes in October 2009 as compared to the previous month. Increase in oil output by ONGC contributed to this increase. ONGC, which accounts for 75 per cent of domestic oil production, recorded a 3.3 per cent increase in output to 21.2 lakh tonnes in October 2009 as compared to last month. The companys ageing Mumbai High field saw a 3.4 per cent growth in production to 14.7 lakh tonnes. The Mumbai High field accounts for 51 per cent of oil production in the country.
Table 10.2 Crude Oil Production, Crude Throughput and Imports

Crude Oil Crude Oil Natural Gas Natural Gas Crude Crude POL Prod. Prod. Prod. Prod. Throughput Throughput Imports (Lakh tonnes) (% chg.) (m.cu.mtr) (% chg.) (Lakh tonnes) (% chg.) (US million) Oct 2008 29.17 -0.2 40.34 7.5 7,285 Nov 2008 28.37 0.5 2,750 -0.51 38.38 -5.5 5,896 Dec 2008 28.74 -0.3 2,795 -1.93 38.38 -9.9 4,305 Jan 2009 26.60 -8.1 2,586 -4.04 40.41 -5.5 4,204 Feb 2009 25.59 -6.2 2,442 -7.22 40.44 7.1 3,287 Mar 2009 28.57 -2.3 2,830 3.17 45.21 7.3 4,172 Apr 2009 27.30 -3.1 2,931 5.02 43.56 4.4 3,634 May 2009 27.83 -4.3 3,411 18.15 39.98 -4.2 4,135 Jun 2009 27.52 4.0 3,588 36.32 41.12 -2.2 4,999 Jul 2009 27.90 -0.4 3,758 35.57 39.41 -7.6 5,638 Aug 2009 27.74 -2.6 3,873 38.03 42.46 6.4 6,281 Sep 2009 27.70 -0.5 3,746 37.42 42.26 12.6 6,343 Oct 2009 28.54 -2.2 4,082 44.19 46.00 14.0 6,608 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 2008-09 197.19 -0.7 19,446 3.89 285.94 6.6 70,570 2009-10 194.53 -1.3 25,389 30.56 294.78 3.1 42,864 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 2008-09 335.06 -1.8 32,849 1.38 129.13 94.7 91,328 Monthly gures may not add up to the total due to revisions POL Imports (% chg.) 11.6 -9.0 -36.9 -50.6 -57.4 -53.9 -58.5 -60.6 -50.6 -55.5 -45.5 -33.5 -9.3 Apr-Oct 71.4 -39.3 Apr-Mar 14.6
December 2009
44
Energy: Crude Oil in throughput was due to maintenance shutdowns by refiners and a sharp fall in exports of petroproducts. We expect growth in throughput to accelerate in the second half of 2009-10 due to a healthy growth in consumption and an improvement in exports of petroleum products.
Throughput higher by 7.2 lakh tonnes in October 2009

In October 2009, refineries processed 142.6 lakh tonnes of crude oil, 7.2 lakh tonnes more than the previous month. Indian Oil Corporation (IOC), Bharat Petroleum (BPCL) and Mangalore Refinery & Petrochemicals (MRPL) contributed to the increase in refinery throughput during the month. IOC processed 46 lakh tonnes of crude oil in October 2009, 3.74 lakh tonnes more than the previous month. It accounted for 52.2 per cent of the increase in throughput during the month. BPCLs refinery throughput was 18.6 lakh tonnes, 1.63 lakh tonnes more than the previous month. MRPLs refinery throughput grew by 14.3 per cent to 11.6 lakh tonnes in October 2009 as compared to last month. Among private refiners, Reliance Industries recorded a 1.4 per cent growth in throughput to 30.2 lakh tonnes as compared to the previous month. In the first half of 2009-10, throughput was down by 3.6 per cent to 779.9 lakh tonnes. The fall
Petro-products consumption up by 8.3% in October 2009

Consumption of petro-products grew by 8.3 per cent (8.7 lakh tonnes) to 114.7 lakh tonnes in October 2009 as compared to the previous month. With the exception of naphtha and light diesel oil, consumption of other petroleum products like auto fuels, bitumen, ATF, LPG, kerosene, lubes/greases, furnace oil / LSHS (low sulphur heavy stock) recorded a healthy growth. During the month, demand for petrol and diesel grew by 18.6 per cent and 12.5 per cent, respectively, to 11.1 lakh tonnes and 47.6 lakh tonnes. Auto fuels accounted for 80 per cent of the increase in consumption in October 2009.
Table 10.3 Consumption of Major Petroleum Products (000 tonnes)

Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 LPG % chg. Petrol % chg. Diesel % chg. Kerosene % chg. Naphtha % chg. Total 1,021 -9.6 937 10.2 4,241 6.3 770 -1.3 1,072 -10.3 10,595 1,016 -2.0 917 6.0 4,476 8.9 781 -1.4 1,080 -2.9 11,079 1,082 1.8 930 5.7 4,451 1.9 797 2.4 1,360 31.1 11,628 1,061 -1.2 967 9.0 4,391 2.0 780 0.3 1,414 10.9 11,506 1,051 -6.7 944 15.0 4,305 4.5 776 -1.0 1,211 4.7 11,292 1,087 -0.3 1,059 13.1 4,790 8.6 777 -0.6 1,189 -3.1 12,374 990 -1.2 1,017 7.7 4,729 4.9 765 0.5 1,047 -2.0 11,582 996 -0.9 1,105 4.9 4,752 -1.2 770 0.3 764 -28.9 11,483 1,006 10.1 1,103 37.4 4,861 19.5 782 0.9 930 -14.5 11,684 1,071 9.3 1,006 10.1 4,527 10.9 783 1.4 906 -16.2 10,973 1,047 7.8 1,048 17.5 4,179 15.2 769 1.3 943 -13.6 10,771 1,051 2.0 1,037 15.2 4,121 4.7 766 -3.0 908 -20.8 10,697 1,131 10.8 1,111 18.6 4,769 12.4 783 1.7 822 -23.3 11,473 AprApr- AprApr- AprAprAprAprAprAprAprOct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct 6,981 3.1 6,442 8.4 29,275 11.1 5,395 -1.0 7,620 1.8 75,549 7,291 4.4 7,426 15.3 31,943 9.1 5,419 0.4 6,325 -17.0 78,946 AprApr- AprApr- AprAprAprAprAprAprAprMar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar 12,193 0.2 11,257 9.0 51,668 8.4 9,303 -0.7 13,875 4.4 1,33,400 % chg. -2.7 2.9 4.6 0.5 -0.4 5.5 1.0 -1.4 10.8 3.8 6.6 0.8 8.3 AprOct 4.2 4.5 AprMar 3.5
2008-09 2009-10
2008-09
December 2009
Energy: Electricity
45 during the period. We expect thermal power generation to grow by 8.5 per cent this year. The hydel power generation, on the other hand, fell by 7.3 per cent during April-October 2009. A deficient rainfall took its toll on hydel power generation this year. However, y-o-y decline in hydel power output will come down in the coming months and we expect it to decline by 5.3 per cent in 2009-10. Figure 10.2 Power Generation (billion kwh)
66 65 64 63 62 61 60
Power generation to grow by 5.9% in 2009-10

Power generation will grow by 5.9 per cent in 200910. A healthy growth in thermal and nuclear power generation will push up the total generation this year. Higher power generation will also bring down the power deficit in India by 30 basis points to 10.8 per cent. With improved availability of uranium from domestic as well as international sources, nuclear power generation bounced backed by 17.4 per cent during April-October 2009. We expect that it will grow by 30.9 per cent in 2009-10, after having suffered setbacks since 2003 due to unavailability of uranium. During April-October 2009, thermal power generation grew by 9.7 per cent. This was fuelled by the gas-based thermal plants, which got a fillip due to the availability gas from the KG-basin project. Coal-based plants also recorded a decent growth
59 58 57
Table 10.4 Thermal & nuclear power output up 9.9% during April-October 2009
Therm. & nuc. power generation (Billion kWh) 51.72 50.13 53.01 54.32 50.44 58.06 55.18 55.18 53.04 51.36 52.50 50.40 54.70 Apr-Oct 338.84 372.36 Apr-Mar 604.81 Therm. & nuc. power generation (% change) 8.2 4.7 3.4 4.0 1.2 8.6 9.2 6.5 12.6 9.3 17.1 9.9 5.8 Apr-Oct 5.5 9.9 Apr-Mar 5.0 Hydel power generation (Billion kWh) 9.97 7.89 6.93 6.99 6.59 7.12 7.63 8.56 9.62 11.23 12.55 12.47 9.81 Apr-Oct 77.54 71.87 Apr-Mar 113.07 Hydel power generation (% change) -10.9 -8.3 -10.6 -12.4 -6.1 -6.8 -5.0 -13.8 -9.4 -12.6 -9.5 1.6 -1.6 Apr-Oct -8.1 -7.3 Apr-Mar -8.4 Total power generation (Billion kWh) 62.34 58.35 60.14 61.44 57.12 65.06 62.99 64.07 63.19 63.48 66.08 63.80 65.25 Apr-Oct 421.47 448.85 Apr-Mar 723.58 Total power generation (% change) 4.4 2.6 1.5 1.8 0.3 6.3 7.1 3.3 8.0 4.2 10.6 7.9 4.7 Apr-Oct 2.8 6.5 Apr-Mar 2.7 PLF of Therm. plants (%) 76.7 76.6 79.3 81.3 83.4 85.5 82.8 79.2 77.6 72.2 72.2 71.7 75.1 Apr-Oct 74.4 75.8 Apr-Mar 77.2 Power shortages
(%) 11.4 12.2 11.7 11.8 11.8 10.9 11.2 8.8 10.6 8.3 10.9 9.6 9.4 Apr-Oct 10.6 9.8 Apr-Mar 11.1
December 2009
46
Infrastructure: Railways 2009-10 to 8.5 per cent from our earlier forecast of seven per cent. Table 11.1 IRs revenues up 18.5% y-o-y in October 2009
Million tonnes 66.08 66.62 72.15 74.55 70.02 81.71 69.85 71.66 71.53 71.68 73.22 69.83 73.46 Apr-Oct 467.97 501.28 Apr-Mar 833.31 % change -0.1 1.3 3.0 2.9 -0.9 4.1 3.1 2.4 9.6 5.8 12.2 6.0 11.2 Apr-Oct 7.2 7.1 Apr-Mar 4.9 Rs. crore 4,053.44 4,082.36 4,640.91 4,934.18 4,633.83 5,286.19 4,571.07 4,642.03 4,551.64 4,508.04 4,695.45 4,443.92 4,801.95 Apr-Oct 29,555.92 32,216.25 Apr-Mar 53,137.60 % change 1.9 2.2 6.9 8.8 5.2 8.8 4.0 0.9 7.8 6.7 15.7 11.0 18.5 Apr-Oct 16.3 9.0 Apr-Mar 11.7
IRs freight trac up 11.2% in October 2009

In October 2009, the Indian Railways (IR) freight earnings grew the fastest in 18 months. This was driven by higher freight traffic volumes and improved realisations. During the month, IR handled 73.5 million tonnes of cargo traffic, up 11.2 per cent compared y-o-y. This volume was the highest since February 2009 (excepting March 2009 as freight volumes typically soar to a years high in March). Iron ore (excluding for steel plants), which was the second largest commodity with a 10.9 per cent share in IRs freight traffic, grew the fastest among all commodities in October 2009. It shot up by 95.6 per cent to eight million tonnes during the month, backed by a strong pick-up in domestic and export demand. Iron ore for exports, which constituted 53.6 per cent of IRs iron ore freight traffic (excluding for steel plants) more than doubled y-o-y, led by a strong demand from China. Foodgrain was the next fastest growing commodity of IRs freight traffic in October 2009. It grew by a robust 37.1 per cent, mainly due to a low base a year ago. Its share in IRs total freight traffic stood at a minuscule four per cent. Coal was the largest commodity of freight traffic handled by IR in October 2009. It had a 43.7 per cent share in IRs freight traffic during the month. It grew by three per cent y-o-y to 32.1 million tonnes. Compared to the preceding month, coal freight traffic was higher by 7.7 per cent. Iron ore for steel plants fell the steepest among all commodities in October 2009, by 10.1 per cent, yo-y. This fall was mainly due to a high base in the year-ago month. Although iron ore for steel plants fell y-o-y, its freight volumes were the highest in a year during the month signalling healthy pick up in steel demand. Raw material for steel (excluding iron ore) followed with a y-o-y decline of 9.1 per cent. As foreign trade begins to grow in the second half of 2009-10 and growth in manufacturing activity strengthens, IRs freight traffic is expected to grow at a healthy pace in the coming months. We revise our forecast for rail freight traffic growth for the year
Table 11.2 Commodity-wise traffic (Apr-Oct 09)

Million tonnes Coal For steel plants For washeries For thermal power house For public use Iron ore (excluding for steel plants) For export For other domestic users Raw material for steel plant except iron ore Iron ore for steel plants Pig iron and nished steel From steel plants From other points Cement Foodgrains Fertilisers POL Container Service Other goods Total 220.01 22.38 0.77 151.35 45.51 51.66 26.46 25.20 6.79 25.89 17.67 13.76 3.91 52.46 19.85 25.54 22.86 20.11 38.44 501.28 % chg. over 08-09 9.0 -5.7 -9.4 8.4 20.7 0.7 1.7 -0.2 3.7 -0.2 14.1 16.0 7.7 10.2 2.1 4.5 1.5 18.3 7.4 7.1 % share in total 43.9 4.5 0.2 30.2 9.1 10.3 5.3 5.0 1.4 5.2 3.5 2.7 0.8 10.5 4.0 5.1 4.6 4.0 7.7 100.0
December 2009
Infrastructure: Ports & Shipping
47 Major ports are expected to handle 558 million tonnes of cargo traffic in 2009-10. As export trade begins to grow in the second half of 2009-10 as against a decline in the first half, we expect cargo traffic growth to accelerate to 5.2 per cent (2.1 per cent a year ago) during the year. Table 11.3 Cargo traffic volumes spike in October 2009
Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 2008-09 2009-10 2008-09 000 tonnes 42,180 42,754 45,331 45,329 42,941 48,101 45,409 45,739 45,400 43,495 45,049 42,469 46,607 Apr-Oct 3,05,174 3,14,630 Apr-Mar 5,30,369 % change (y-o-y) -5.2 -4.6 -0.4 -5.2 -3.2 -1.7 -1.6 8.1 -1.7 2.9 5.3 10.5 Apr-Oct 5.7 3.1 Apr-Mar 2.1
Cargo trac up 10.5% in October 2009

Cargo traffic growth jumped to its highest mark in 18 months in October 2009, helped by a low base and a narrowing y-o-y fall in exports. Cargo traffic at major ports shot up by 10.5 per cent to 46.6 million tonnes in October 2009. These volumes were the highest recorded since April 2008 (excepting March 2009 as cargo volumes typically soar to a years high in March). Cargo traffic rose y-o-y at eight of the 12 major ports in October 2009. It grew the fastest at Paradip port by 44.5 per cent, due to a sharp rise in its Petroleum, Oil and Lubricants (POL) and iron ore cargo traffic. It fell the sharpest at JNPT and Ennore ports by nearly eight per cent, each. Kandla port handled the highest cargo traffic volume of 6.9 million tonnes in October. Iron ore was the fastest growing commodity of cargo traffic among larger commodities (having a monthly volume of more than one million tonnes) in October 2009. It grew by a phenomenal 63.2 per cent y-o-y to 8.1 million tonnes aided by a low base and strong demand from China. This was the third month in a row when iron ore cargo traffic grew in doubledigits. It was the second largest commodity with a share of 17.4 per cent in total port cargo traffic. Coal cargo volumes at major ports continued to decline y-o-y for the sixth month in a row in October 2009. This was mainly due to a fall in coal imports as domestic production rose. It fell by 6.2 per cent to 5.8 million tonnes. This fall was the steepest among all larger commodities during the month. Its share in total cargo traffic stood at 12.3 per cent. Fertiliser cargo traffic, which has been falling in double digits since the last three months, fell by a minuscule 0.4 per cent in October 2009 compared to a year ago. Its volumes stood at 2.1 million tonnes, the highest in the last 11 months. This represented an increase of 33.6 per cent compared to the preceding month. The sharp rise can be attributed to higher fertiliser imports by India to ensure enough supply for the upcoming rabi season.
Table 11.4 Kandla port leads (Apr-Oct 2009)

000 tonnes 46,234 38,536 35,749 34,201 31,651 31,235 20,793 20,227 19,755 13,707 9,084 7,222 6,236 3,14,630 % change (y-o-y) 6.3 1.1 1.7 -3.1 26.8 2.4 -2.6 21.3 -21.9 5.9 -1.9 31.3 -6.5 3.1 % share 14.7 12.2 11.4 10.9 10.1 9.9 6.6 6.4 6.3 4.4 2.9 2.3 2.0 100.0
Kandla Visakhapatnam Chennai Jawaharlal Nehru Paradip Mumbai New Mangalore Mormugao Haldia Tuticorin Cochin Kolkata Ennore Total
December 2009
48
Infrastructure: Civil Aviation gust 2009 compared y-o-y. Of this, the share of Jet Airways-JetLite combine was the highest at 26.4 per cent, followed by Kingfisher (22.6 per cent) and NACIL (16.6 per cent). At 13.9 per cent, Indigos share was the highest among low-cost carriers (LCCs). LCCs reported higher Passenger Load Factors (PLF) in August 2009 compared to full-fledged airlines. Regional carrier MDLR, which operates in the northern cities, reported the highest PLF of 90.1 per cent. After raising Aviation Turbine Fuel (ATF) prices for two fortnights in a row in November, Oil Marketing Companies (OMCs) reduced prices in December 2009. The ATF price ex-Mumbai stood at Rs.41,237/kilolitre on December 1, 2009, down 1.1 per cent compared to the preceding fortnight. During April-August 2009, air passenger traffic grew by 3.8 per cent y-o-y against a minuscule 0.6 per cent decline a year ago. This growth is expected to accelerate to 9.5 per cent in 2009-10 led by higher travel demand due to the peak season and a faster recovery in the economy. Air cargo traffic is expected to grow by 7.4 per cent during the year.
Air passenger trac grows 17.4% in August 2009

Air passenger traffic at all airports shot up by 17.4 per cent y-o-y in August 2009 led by low year-ago base and higher demand for travel as the economy recovers. This growth was driven by a robust 22.7 per cent y-o-y growth in domestic air passenger traffic, which accounted for 71.3 per cent of the total passenger traffic during the month. Airports in India handled 70.4 lakh passengers in August 2009. Delhi airport handled 14.2 lakh domestic passengers, the highest among all airports. Among the metro airports, domestic air passenger traffic grew the fastest at the Kolkata airport by 33.4 per cent y-o-y. Delhi airport came next with a growth of 28.1 per cent during the month. International air passenger traffic grew by 5.9 per cent to 28.3 lakh passengers in August 2009. This number was the highest since February 2009. Air passenger traffic flown by domestic scheduled carriers grew by 25.8 per cent to 36.8 lakh in Au-
Table 11.5 Air passenger traffic grows in double digits for the second month in a row in August 2009
Domestic Trac PassPassCargo Cargo engers engers (Lakh) (% chg) (000) (% chg) 57.4 -17.3 47.8 3.4 52.0 -20.7 50.4 3.8 61.1 -14.0 46.3 -7.7 60.3 -20.8 42.9 -11.7 64.5 -18.5 42.5 -14.0 65.2 -15.3 44.5 -7.3 64.8 -8.9 42.1 -10.8 62.1 -15.4 47.9 -2.4 64.1 -15.4 45.2 0.2 76.6 -5.9 48.5 3.5 72.7 5.2 51.3 15.0 69.4 18.2 56.9 23.2 70.4 22.7 57.6 20.3 International Trac PassPassCargo Cargo engers engers (Lakh) (% chg) (000) (% chg) 26.7 9.3 100.4 5.8 23.5 6.1 104.5 9.0 25.7 12.1 95.3 0.3 28.1 7.3 89.5 -1.7 29.5 3.6 87.3 -11.4 29.4 0.5 81.5 -8.7 24.6 -3.0 84.9 -11.6 26.1 -1.8 102.1 -5.5 25.8 3.5 95.5 -5.3 26.9 3.2 97.9 -4.3 26.8 5.0 98.9 -1.0 27.9 7.6 101.2 0.7 28.3 5.9 102.3 1.9 Total Trac PassPassCargo Cargo engers engers (Lakh) (% chg) (000) (% chg) 84.1 -10.3 148.2 5.0 75.5 -14.0 154.8 7.3 86.8 -7.7 141.7 -2.4 88.4 -13.6 132.4 -5.2 94.0 -12.6 129.8 -12.3 94.6 -11.0 126.0 -8.2 89.4 -7.3 126.9 -11.3 88.2 -11.8 150.0 -4.5 89.9 -10.7 140.7 -3.6 103.5 -3.7 146.4 -1.8 99.5 5.1 150.2 4.0 97.3 15.0 158.1 7.8 98.7 17.4 159.9 7.9
Aug 2008 Sep 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 200809 200910 200809
Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug Apr-Aug 342.3 -4.1 231.9 29.2 129.1 10.1 504.1 6.6 471.4 -0.6 736.0 12.8 353.6 3.3 261.3 12.7 135.7 5.1 495.8 -1.6 489.2 3.8 757.1 2.9 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 773.0 -11.2 547.9 -3.6 315.8 5.9 1,149.4 0.2 1,088.8 -6.9 1,697.3 -1.0
December 2009
Infrastructure: Telecommunications
49 with a share of 23.7 per cent. It added 3.9 million wireless subscribers during the month. Prior to July, the company used to account for around 5-8 per cent of the total wireless additions. However, it aggressively launched its GSM services in the last week of June 2009, with an attractive per second billing scheme. The company grew its wireless subscriber base at a robust pace. It introduced the per character SMS scheme, too, for its GSM subscribers. In addition, the company also launched attractive call rates for its CDMA subscribers. However, it has not given a bifurcation of its CDMA and GSM subscribers. TTSL also topped the monthly wireline subscriber additions in October 2009. The company added 64,650 wireline subscribers, outpacing Bharti Airtel, the leader in this segment. However, a hefty fall in monthly wireline subscribers by BSNL resulted in an overall fall of 53,092 wireline subscribers. The total wireline subscriber base stood at 37.2 million at the end of October 2009. Of the 23 Circles, Andra Pradesh Circle added the highest number of wireless subscribers (1.4 million) with a share of 8.3 per cent in the total subscriber additions. Tamil Nadu and Karnataka Circles followed, with a share of eight per cent and 7.2 per cent, respectively.
Per second billing increases monthly subscriber additions in October 2009

The telecom industry added 16.6 million subscribers in October 2009 compared to 14.9 million in the previous month, taking the total subscriber base to 525.6 million. This is the highest-ever monthly addition in at least the last 30 months. The growth was mainly driven by the launch of the attractive per second billing scheme by Tata Teleservices Ltd (TTSL). A similar scenario in the monthly additions was witnessed during January-March 2009 when Reliance Communication (RCom) had launched its GSM services by offering discounted tariff plans. While wireless subscriber additions grew by 60 per cent, wireline subscriber base continued to shrink. Teledensity increased from 43.5 per cent in September 2009 to 44.9 per cent in October 2009. We expect the wireless subscriber base to touch 561.7 million in 2009-10. It will be buoyed by TTSL, which plans to complete its pan-India GSM roll-out project by March 2010. The wireline subscriber base will continue to contract. The total subscriber base (wireless plus wireline) will reach 597.2 million in 2009-10. TTSL topped monthly wireless subscriber additions for the third consecutive month in October 2009,
Table 11.6 While wireless subscriber base up by 50 per cent, wireline base continues to shrink in October 2009
Total % chg. Wireline Subscribers (000 nos.) (%) (000 nos.) Oct 2008 3,63,948.2 41.9 38,219.6 Nov 2008 3,74,126.0 41.3 38,049.6 Dec 2008 3,84,792.0 41.0 37,898.2 Jan 2009 4,00,045.5 42.1 37,750.3 Feb 2009 4,13,849.2 42.7 37,729.0 Mar 2009 4,29,725.2 43.0 37,964.6 Apr 2009 4,41,475.2 43.1 37,811.9 May 2009 4,52,911.2 42.9 37,664.7 Jun 2009 4,64,825.3 42.7 37,543.0 Jul 2009 4,79,070.9 43.1 37,411.9 Aug 2009 4,94,069.9 43.7 37,326.0 Sep 2009 5,09,032.5 43.9 37,306.3 Oct 2009 5,25,650.4 44.4 37,253.2 Note: Data is subjected to All Companies. % chg. (%) -3.0 -3.2 -3.5 -3.7 -3.7 -3.7 -3.6 -3.6 -3.5 -3.5 -3.4 -2.7 -2.5 Wireless (000 nos.) 3,25,728.6 3,36,076.5 3,46,893.8 3,62,295.2 3,76,120.2 3,91,760.6 4,03,663.3 4,15,246.4 4,27,282.4 4,41,659.0 4,56,743.9 4,71,726.2 4,88,397.2 % chg. (%) 50.0 49.1 48.5 49.5 49.9 50.1 49.9 49.4 48.9 49.2 49.6 49.6 49.9
December 2009
50
Industry: Industrial Production a healthy six per cent growth in September 2008. The DIPP also scaled up its IIP growth numbers for August 2009 to 11 per cent from 10.4 per cent. This pushed up the cumulative growth in the IIP during April-September 2009 to 6.5 per cent. In the same period of the last year, IIP had grown by five per cent. The growth in the IIP in the first half of 2009-10 was broad-based. Electricity generation increased by 6.8 per cent because of the improved availability of the key inputs, coal, natural gas and uranium. The commencement of natural gas production from KG basin by Reliance and an 11.6 per cent rise in coal production pushed up the mining & quarrying output by 8.1 per cent during April-September 2009. The poor rainfall this year allowed the mines to remain open for a longer duration in the rainy season, which helped the coal output to grow by double-digits.
Indian industry back on growth trajectory

The Indian industry recovered swiftly from the shock of the Global Liquidity Crisis (GLC) received in October 2008. The signs of improvement are visible across indicators released by different sources. Some of the important indicators that confirm the recovery in the Indian industry are the Index of Industrial Production (IIP) numbers released by the Department of Industrial Promotion & Planning (DIPP), Ministry of Commerce, quarterly financial results of companies, excise duty data released by the Ministry of Finance.
IIP rises by 6.5% in rst half of 2009-10

The IIP rose by 8.6 per cent in September 2009 compared to a year ago. The rise came on top of
Table 12.1 Broad-based growth in IIP in first half of 2009-10

Weight (%) Mining & quarrying 10.47 Manufacturing 79.36 Food products 9.08 Beverages & tobacco 2.38 Cotton textiles 5.52 Wool, silk & man-made txtl. 2.26 Jute textiles 0.59 Textile products 2.54 Wood products 2.70 Paper products 2.65 Leather products 1.14 Chemical products 14.00 Rubber, plastic, petro.& coal prod. 5.73 Non-metallic mineral prod. 4.40 Basic metals 7.45 Machinery & equipments 9.57 Transport equipment 3.98 Miscelleneous industries 2.56 Electricity 10.17 General 100.00 Basic goods 35.57 Capital goods 9.26 Intermediate goods 26.51 Consumer goods 28.66 Consumer durables 5.37 Consumer non-durables 23.30 Mar Apr May Jun Jul Aug Sep Apr 07- Apr 082009 2009 2009 2009 2009 2009 2009 Sep 07 Sep 08 1.9 3.4 3.4 14.2 9.0 11.0 8.6 4.9 3.9 -0.3 0.4 1.8 8.0 7.4 11.0 9.3 10.0 5.3 -36.0 -33.3 -9.7 0.1 1.3 -5.7 -10.2 13.3 -1.0 16.1 -4.6 -10.1 -3.4 3.4 5.8 -3.8 9.2 20.3 -0.7 0.6 -3.6 -1.9 3.6 5.6 1.7 6.1 0.1 -4.4 23.5 -10.7 5.2 33.5 20.1 6.5 4.7 -0.9 -1.9 2.8 -20.3 -31.1 -23.4 -10.2 -15.3 18.9 -5.4 16.7 12.2 3.9 8.7 6.9 23.0 0.8 3.2 5.2 -17.7 22.8 16.4 6.4 1.7 -3.5 2.9 78.8 -6.1 4.0 -3.2 1.4 12.9 1.6 -0.3 -2.2 0.9 4.6 -18.2 -11.1 -10.9 11.0 16.1 -0.5 1.0 9.7 -1.8 14.7 -0.9 2.1 4.8 5.8 14.6 20.1 8.7 6.1 6.7 7.2 17.4 7.6 12.7 21.4 10.1 11.9 -4.0 5.5 9.6 6.0 9.4 7.6 7.4 2.9 8.6 0.6 -4.5 4.7 5.5 12.8 3.6 8.5 5.5 18.5 6.7 0.5 5.2 2.9 12.9 11.7 14.6 16.5 11.2 10.1 11.3 6.7 2.0 12.3 10.8 13.6 8.9 1.8 12.2 -20.3 -5.0 16.2 32.6 0.8 10.5 24.5 12.8 -1.1 6.3 7.1 3.3 8.0 4.2 10.6 7.9 7.7 2.6 0.3 1.1 2.1 8.3 7.2 11.0 9.1 9.5 5.0 1.9 4.5 3.8 10.7 4.7 9.6 6.7 9.3 3.9 -6.3 -5.9 -3.6 13.4 1.7 8.7 12.8 20.2 10.7 1.9 7.9 6.6 7.9 9.8 14.2 10.8 9.9 0.4 1.3 -4.6 -1.1 4.4 9.8 10.5 8.2 5.5 7.6 8.4 17.6 13.2 16.2 21.3 22.3 22.2 -3.2 7.2 -1.0 -10.5 -5.5 0.7 5.8 6.4 2.6 8.8 7.7 Apr 09Sep 09 8.1 6.3 -11.7 -2.6 0.9 11.7 -16.3 9.0 6.8 1.5 1.1 7.5 12.6 7.1 6.8 11.0 9.1 13.9 6.8 6.5 6.7 5.3 9.5 4.3 18.9 -0.5
December 2009
Industry: Industrial Production Production in the manufacturing sector went up by 6.3 per cent during April-September 2009. Production of wool, silk & man-made textiles, rubber, plastic & petroleum products, machinery and miscellaneous items grew by over 10 per cent. Sectors like basic metals, non-metallic minerals, chemicals and automobiles too reported a healthy 7-9 per cent production growth.
51 the government had cut the levy by four percentage points (33 per cent) for most items following the GLC last year. Thus, we can conclude that a healthy rise in production must have restricted the fall in excise collection.
Rise in consumption demand to continue

The gross domestic product (GDP) data reflects a considerable improvement in the growth in consumption demand from 1.6 per cent in the June 2009 quarter to 5.6 per cent in the September 2009 quarter. We expect this buoyant trend to continue in the coming quarters. The impact of the fall in agricultural output on farm income in the second half of 2009-10 will get offset by the rise in the MSPs and the market prices of agricultural commodities to large extent. Also, the farming community accounts for less than 20 per cent of the total population of the country. A significant amount of the remaining rural population is enjoying the benefits of the National Rural Employment Guarantee Scheme. Consumption in the urban areas has started rising as the fears of a large scale job cuts have vanished. Fresh hiring too has started and salaries are headed northwards again. The revival in the Indian stock market has started bringing higher returns to the urban population on its savings and has restored the sense of financial security among them. This will help the urban consumer allocate more funds to his current purchases. Inflation at the consumer level is above 10 per cent. But, a majority of this is because of food products. Being necessary items, people cannot cut down on consumption of food products. The rise in salary levels will ensure that people do not go slow on purchases of other goods either. Inflation in the CPI has remained around 10 per cent for more than the last one year. However, consumption expenditure has still returned to healthy growth in the September 2009 quarter. This confirms that the high inflation will not have a dampening impact on the consumption demand in the future as well. We expect the strong investment demand and robust capacity additions scheduled also to contribute to the industrial growth. (For details refer to page: 62)
December 2009
Corporates start building inventories in anticipation of rise in demand

The lack of availability of affordable credit and widespread fears of a job-cut following the GLC, had prompted Indian consumers to hold back their purchases. However, having realised that the GLC did not impact India as much as they had feared, India consumers have started buying again. In response to this, the Indian manufacturers have started accelerating their production. This is evident from the inventory figures released by the companies in their interim results. Interim results of over 2,000 manufacturing companies listed on the Indian bourses reveal that they had liquidated inventories amounting to four per cent of sales in the December 2008 quarter and 2.3 per cent of sales in the March 2009 quarter. At the same time, the y-o-y growth in the IIP had fallen to a meagre 0.3-0.5 per cent. This implies that because of the slump in the domestic demand, manufacturers went slow on fresh production and utilised the inventories to generate sales. However, demand recovered in the first half 2009-10, following which companies accelerated their production. This is not only reflected in the IIP growth, but also in the inventory levels of the listed companies. The manufacturing companies held inventories amounting to 1.6 per cent of sales in the June 2009 quarter. The ratio went up to 3.6 per cent in the September quarter.
Smaller fall in excise duty in spite of rate cut

The excise duty collection data released by the Ministry of Finance also implies a healthy rise in production of goods during April-September 2009. During this period, the central excise collection declined by 22.9 per cent. This fall is too small considering that
52
Industry: Industrial Production Higher coal supply and availability of gas from KGbasin will push up thermal power generation by 8.5 per cent in 2009-10. Nuclear power generation will also rise by a robust 30.9 per cent on account of a rise in imports and increased domestic supply of uranium. Thus, we expect the growth in power generation to accelerate to 5.9 per cent in 2009-10 from 2.8 per cent in 2008-09. Figure 12.1 Industrial growth to accelerate in 2009-10
12 10 8.4 8 6 4 2 0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2.7 7.0 8.2 8.5 7.7 11.5 (CMIE Forecast)
Industrial forecast for 2009-10 scaled up to 7.7%

Taking cognisance of the healthy growth in the IIP in the first half of 2009-10, we have scaled up our growth forecast for industrial production in 2009-10 to 7.7 per cent from 7.2 per cent. We now expect the manufacturing output to grow by 7.5 per cent as compared to the meagre 2.8 per cent growth in 2008-09. The improvement in production will be seen across all industries. The sectors which will report above 10 per cent growth are machinery, transport equipments, non-metallic minerals, wool, silk & man-made fibres and other manufacturing industries. A majority of these had reported either a fall in production or a slump in growth last year. We expect the mining & quarrying output to grow by 10.6 per cent in 2009-10. This will be the highest annual growth since 1983-84. The growth will be mainly driven by the 44.8 per cent rise expected in the natural gas production. Coal output will grow by 8.2 per cent, and crude oil output by a modest 3.8 per cent.
Table 12.2 Industrial growth to more-than-double in 2009-10

Weight (%) 100.00 10.47 10.17 79.36 9.08 2.38 5.52 2.26 0.59 2.54 2.70 2.65 1.14 14.00 5.73 4.40 7.45 2.81 9.57 3.98 2.56 2004-05 (% chg) 8.4 4.4 5.2 9.1 -0.4 10.8 7.5 3.5 3.7 19.2 -8.5 10.5 6.8 14.5 2.4 1.5 5.4 5.8 19.8 4.1 18.6 2005-06 (% chg) 8.2 1.0 5.2 9.1 2.0 15.7 8.5 -0.0 0.5 16.4 -5.7 -0.9 -4.8 8.3 4.3 11.0 15.8 -1.2 11.9 12.7 25.2 2006-07 (% chg) 11.5 5.3 7.3 12.5 8.5 11.1 14.8 7.8 -15.8 11.5 29.1 8.7 0.6 9.6 12.9 12.8 22.8 11.4 14.2 15.0 7.7 2007-08 (% chg) 8.5 5.1 6.4 9.0 7.0 16.3 4.3 4.8 33.0 3.7 40.5 2.7 11.7 10.6 8.9 5.7 12.1 -5.6 10.4 2.9 19.8 2008-09 (% chg) 2.7 2.6 2.8 2.7 -9.8 16.2 -1.9 0.0 -10.1 5.7 -9.6 1.6 -6.9 4.1 -1.5 1.2 4.0 -4.0 8.8 2.5 0.4 2009-10 (F) (% chg) 7.7 10.6 5.9 7.5 -2.7 2.0 4.7 10.0 -4.2 9.3 10.0 5.1 3.5 7.6 15.1 10.5 8.6 6.8 10.1 10.6 13.5
Index of Industrial Production Mining & quarrying Electricity Manufacturing Food products Beverages & tobacco Cotton textiles Wool, silk & manmade textiles Jute textiles Textile products Wood products Paper products Leather products Chemical products Rubber, plastic, petroleum & coal prod. Non-metallic mineral prod. Basic metals Metal products Machinery & equipments Transport equipment Miscellaneous industries
December 2009
Industry: Food Products
53 Edible oil prices, however, weakened by 8.4 per cent during April-September 2009 in spite of a fall in the domestic output. Since around 50 per cent of the edible oils consumption in India is met through imports, the domestic prices closely follow the international price trend. And, international prices of edible oils are subdued due to the sharp rise expected in the global edible oil supply without a proportionate rise in consumption. Figure 12.2 Inflation in manufactured food products (%)
18 16 14 12 10 8 6 4
Food product prices rise on supply constraints

Inflation in manufactured food products has risen rapidly since January 2009. It rose from 4.2 per cent in December 2008 to 17.4 per cent by mid November 2009, mainly driven by the rise in prices of sugar, tea, coffee and dairy products. Small grade sugar prices in Mumbai rose by 83.3 per cent between January and November 2009. The rise in the prices of tea & coffee and dairy products was to the tune of 14.4 per cent and 6.2 per cent, respectively. The sharp rise in prices of these food products is due to supply constraints. Poor rainfall this year has taken a toll on the output of sugarcane (raw material for production of sugar), cattle feed and tea. Sugar production plummeted by 80.4 per cent in the first half of 2009-10, while the fall in milk powder production and tea production was 28.8 per cent and 0.3 per cent, respectively. These commodities are witnessing a demand-supply mismatch in the global market as well. Hence, their prices are rising in the international market too.
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Table 12.3 Fall in sugar and tea production pushes prices up

Sugar Prodn. Prodn. Prices Prices (000 tns) (% chg.) (Rs./qtl.) (% chg.) 1,586.6 9.4 1,824 34.3 4,164.8 -10.6 1,885 39.0 3,909.0 -27.4 2,009 41.3 2,605.4 -49.6 2,147 52.2 1,203.2 -74.3 2,113 40.0 314.0 -88.0 2,297 53.1 109.3 -91.7 2,332 57.7 94.0 -72.1 2,436 64.8 62.0 -61.8 2,432 54.0 95.4 -9.6 2,893 53.5 3,035 70.9 3,018 69.7 3,456 89.5 Oct-Aug Oct-Aug Oct-Nov Oct-Nov 26,228.6 -6.5 1,662 21.9 14,438.1 -45.0 2,737 64.7 Oct-Sep Oct-Sep Oct-Sep Oct-Sep 26,357.0 -7.1 1,384 -21.2 1,788 29.2 Prodn. (Tonnes) 89,656 58,613 21,570 15,275 45,036 62,590 71,374 1,18,050 1,26,987 1,34,376 1,01,468 Tea Prodn. Prices Prices (% chg.) (Rs./Kgs) (% chg.) -2.5 94 37.3 16.8 89 20.7 -0.2 86 23.9 -14.0 80 30.6 -10.9 78 32.4 -21.8 92 37.9 1.6 116 48.7 12.0 113 33.8 -3.0 109 22.7 9.2 110 18.0 -5.2 110 10.9 Palm oil Prices Prices (Rs./10 kg) (% chg.) 256 -43.2 258 -43.4 281 -43.1 282 -46.4 307 -45.4 361 -20.7 385 -22.5 349 -32.3 312 -36.1 350 -12.2 331 -6.8 314 2.0 327 28.0 Nov-Nov Nov-Nov 256 -43.2 327 28.0 Nov-Oct Nov-Oct 459 10.9 315 -31.3
Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 2008-09 2009-10 2007-08 2008-09
Jan-Sep 7,06,744 6,96,726 Jan-Dec 9,80,818
Jan-Sep 2.5 -1.4 Jan-Dec 3.8
Jan-Sep Jan-Sep 78 21.2 99 27.7 Jan-Dec Jan-Dec 82 25.7
December 2009
54
Industry: Textiles Over the April-September 2009 period, production of synthetic fabric was 15.8 per cent higher compared to a year ago. This was due to an unusually high growth in April, July and August 2009 on a low base in the year-ago months. Since these spurts in the growth rate are unlikely to be repeated in the coming months, we expect synthetic fabric production to increase by 12.9 per cent on a y-o-y basis in 2009-10. The price of cotton has surged in October and November 2009 due to a resurgence in domestic demand and exports, particularly to China. In November 2009, the price of cotton yarn is around five per cent higher compared to a year ago. The price of most synthetic yarns and fibres is at close to yearago levels. In March 2009, exports of yarns, fabrics & madeups is almost 34 per cent less than a year ago, as per the latest data released by the DGCIS (Directorate General Commercial Intelligence & Statistics). However, exports of readymade garments increased by a strong 19 per cent compared to a year ago. In 200809, the readymade garment industry weathered the recession in developed countries and increased exports by a modest 13 per cent.
Synthetic textiles leading recovery in textiles

The textile industry is en route to recovery after being adversely affected by the Global Liquidity Crisis. The growth will be led by a smart revival in the synthetic textile industry. Production of most manmade fibres and yarns has reached pre-crisis levels and is expected to sustain at these levels or increase in the coming months. This has necessitated the upward revision in our production estimates. Also, in 2009-10, synthetic fabric production is expected to increase by 12.9 per cent, while total fabric production is expected to increase by nine per cent compared to a year ago. In 2009-10, production of Polyester Staple Fibre and Polyester Filament Yarn is expected to increase by 18.6 per cent and 9.6 per cent, respectively, compared to the year-ago. The production of Viscose Staple Fibre and Viscose Filament Yarn will be 19.2 per cent and three per cent higher, respectively. The production of Acrylic Fibre and Nylon Fibre will increase by 28.1 per cent and 12.2 per cent, respectively. Table 12.4 Textiles industry on road to recovery
Sep 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 2007-08 2008-09 2009-10 2008-09
Spun Yarn Fabrics PFY Production Yarns, fabrics, Readymade Production Production madeups Exports garments Exports (000 tns) (% chg.) (m.sq.mtr) (% chg.) (Tonnes) (% chg.) (US mln) (% chg.) (US mln) (% chg.) 319.10 -5.7 4,461.47 1.9 85,814 -26.1 603.3 -12.9 685.0 -1.8 307.46 -9.1 4,292.07 -3.5 1,01,485 -11.9 652.9 -10.4 687.0 -5.6 314.05 0.3 4,632.48 2.1 1,08,663 -6.5 547.7 -17.7 645.8 -7.7 332.26 -3.2 4,684.01 1.1 1,21,583 -4.4 591.5 2.0 914.6 32.6 324.88 -4.8 4,545.17 -2.9 1,20,576 -2.1 533.5 -24.4 944.7 2.4 308.94 -5.9 4,825.02 6.2 1,17,744 1.2 520.9 -23.7 930.0 -2.1 331.53 -1.2 5,135.07 2.0 1,20,887 -1.6 500.0 -33.8 1,145.8 19.0 332.52 1.1 5,136.93 17.0 1,20,147 4.7 334.89 -2.6 4,781.50 -7.5 1,21,441 -2.4 339.17 -0.9 4,991.68 5.1 1,18,468 1.4 350.34 3.6 5,214.01 22.9 1,23,609 4.6 348.61 6.8 5,014.49 17.6 1,26,030 51.3 326.21 2.2 4,583.00 2.7 1,15,150 34.2 Apr-Sep Apr-Sep Apr-Sep Apr-Sep Apr-Sep Apr-Sep Apr-Mar Apr-Mar Apr-Mar Apr-Mar 2,002.92 6.2 27,142.02 3.3 6,99,109 16.4 8,029.9 15.7 9,692.1 9.1 1,998.60 -0.2 27,276.93 0.5 6,43,203 -8.0 7,617.4 -5.1 10,951.8 13.0 2,031.74 1.7 29,721.61 9.0 7,24,846 12.7 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 3,917.72 -2.1 55,390.75 -1.1 13,34,141 -6.0 7,617.4 -5.1 10,951.8 13.0
December 2009
Industry: Chemicals
55 cent, respectively, in the first half of 2009-10, as compared to the year-ago period. In September 2009, the chemical production index fell by a marginal 0.6 per cent as compared to the previous month. Chemicals like titanium dioxide, soda ash and calcium carbide recorded a decline in production. Figure 12.3 Production Index of Chemicals & Chemical Products (% change over previous year)
20 15 10 5 0 -5 -10
Chemical production index up by 7.5% in rst half of 2009-10

The chemical production index was up by 7.5 per cent in the first half of 2009-10 as compared to the year-ago period. Chemicals that recorded a growth in production were methanol, titanium dioxide and soda ash. Other chemicals like chlorine, caustic soda, ethylene and sulphuric acid recorded a decline in production. The production of methanol grew by 6.3 per cent to 1.5 lakh tonnes in the first half of 2009-10 as compared to the year-ago period. The output of titanium dioxide and soda ash went up by 6.2 per cent and 0.7 per cent, respectively, to 0.3 lakh tonnes and 9.7 lakh tonnes. The production of chlorine was down by 0.1 per cent to 7.2 lakh tonnes in the first half of 2009-10 as compared to the year-ago period. The output of sulphuric acid fell by 8.8 per cent to 29.2 lakh tonnes during the same period. The output of caustic soda and ethylene declined by 1.3 per cent and 4.2 per
Table 12.5 Production Statistics of Selected Chemical Products

Chlorine Sulphuric acid Prodn. (Tonnes) 5,50,391 5,49,543 5,24,738 5,79,232 5,45,984 4,97,903 4,92,768 4,69,635 4,52,063 4,78,532 5,14,088 5,03,843 5,04,911 Apr-Sep 32,04,648 29,23,072 Apr-Mar 63,94,816 Caustic soda Prodn. (000 tns) 175.9 175.5 155.8 155.9 158.3 160.2 176.8 165.7 171.0 171.1 177.4 175.9 176.6 Apr-Sep 1,051.6 1,037.7 Apr-Mar 2,034.1 Soda ash Titanium dioxide Prodn. (Tonnes) 5,225 4,316 4,118 3,688 3,849 4,167 5,622 5,557 6,007 4,435 5,339 5,705 5,505 Apr-Sep 30,639 32,548 Apr-Mar 56,399 Calcium carbide Prodn. (Tonnes) 6,723 5,988 3,616 2,329 2,899 2,747 2,734 1,669 1,291 2,998 1,684 1,733 1,410 Apr-Sep 47,513 10,785 Apr-Mar 67,826 Ethylene Methanol Phenol
Sep 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 2008-09 2009-10 2008-09
Prodn. (000 tns) 120.2 121.5 106.3 107.2 108.2 109.4 116.0 114.3 118.5 117.2 122.2 121.8 123.3 Apr-Sep 718.1 717.3 Apr-Mar 1,386.7
Prodn. (000 tns) 151.9 156.7 188.2 183.7 169.0 154.8 173.9 176.4 185.6 154.1 150.0 158.9 153.6 Apr-Sep 972.0 978.5 Apr-Mar 1,998.1
Prodn. (Tonnes) 2,37,046 2,37,483 2,10,312 2,12,362 2,20,518 2,03,592 2,27,251 2,09,287 1,87,781 2,06,716 2,15,331 2,24,851 2,27,982 Apr-Sep 13,27,266 12,71,948 Apr-Mar 26,38,784
Prodn. (Tonnes) 28,500 25,542 18,261 17,895 15,648 15,592 14,664 17,309 16,884 24,280 29,311 30,218 34,889 Apr-Sep 1,43,813 1,52,891 Apr-Mar 2,51,415
Prodn. (Tonnes) 6,779 6,594 3,453 5,692 6,332 6,338 7,302 2,622 4,492 6,433 4,730 6,192 6,785 Apr-Sep 37,796 31,254 Apr-Mar 73,507
December 2009
56
Cement already recovered in October, rising by five per cent over the previous month to 153.7 lakh tonnes. We expect cement despatches to be higher by 14.2 per cent during October-March 2009-10, as against 11.5 per cent in April-September 2009. For the full year, we expect despatches to rise by 13 per cent, the fastest since 1999-00. Healthy demand and high capacity addition will boost cement production by 13 per cent in 2009-10. Figure 12.4 Cement prices in Mumbai (Rs./50 kg bag)
260 255 250 245 240 235
Cement prices to weaken further in spite of healthy demand

Cement prices continued to fall in November 2009. The decline was across the board and sharper compared to October. Prices fell the most in Mumbai and Hyderabad, by Rs.15 and Rs.22 per 50 kg bag. Hyderabad has become the cheapest cement market, with prices ruling at Rs.145 per 50 kg bag. Healthy demand restricted the fall in prices to Rs.3-4 per bag in Delhi and Kolkata. Cement prices have been falling continuously since July 2009. This is mainly due to the huge 21 million tonnes capacity addition in the industry during April-September 2009. Another 33.8 million tonnes will be added in the second half of 2009-10. Total capacity addition during 2009-10 will be 54.8 million tonnes, the highest in any financial year. This will put further downward pressure on prices. The falling prices are not a reflection of weakening of demand. We expect cement despatches to pick up in the second half of 2009-10, driven by healthy demand in the peak construction season. They have
Table 12.6 Fall in cement prices sharper in November

Prodn. (Lakh tonnes) 143.39 158.17 161.29 159.96 181.11 168.43 167.01 165.86 162.52 155.20 148.30 155.82 Prodn. (% chg.) 9.0 11.9 8.5 8.6 10.5 12.1 12.2 13.0 9.9 17.8 6.7 5.6 Despatches (Lakh tonnes) 144.3 160.1 161.3 160.7 181.3 166.5 164.8 167.0 159.5 154.4 147.1 153.7 Despatches (% chg.) 11.2 12.1 8.3 8.7 10.4 13.1 10.9 12.8 7.0 17.0 5.7 7.5 Capacity Utilisation (%) 83.34 91.71 93.38 92.37 102.61 92.33 89.49 87.83 85.83 81.68 77.10 80.20 Prices (Mumbai) (Rs./50 kg) 255 247 245 248 255 259 260 260 259 257 255 249 234 Apr-Nov 254 254 Apr-Mar 252
Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 2008-09 2009-10
Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 1,010.35 6.7 1,002.4 6.7 85.34 1,123.10 11.2 1,113.1 11.0 98.87 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 2008-09 1,814.17 7.8 1,810.1 8.0 88.57 Average retail price based on CMIEs independent polling of traders. Mumbai prices are wholesale prices.
December 2009
Industry: Steel
57 December-March. We expect production to grow by 6.5 per cent in 2009-10. Steel prices fell across all the product categories in November 2009 in spite of a healthy demand. Domestic steel producers reduced prices in response to a fall in global prices. Hot rolled coil (HRC) prices in China had fallen by 15.7 per cent in early November to Yuan 3,710 per tonne after hitting a high of Yuan 4,400 per tonne in August 2009. China reported a record crude steel production of 51.7 million tonnes in October 2009, which was higher by 42.2 per cent y-o-y. This created a surplus situation leading to a crash in prices. The fall in steel prices in China impacted the international steel prices. The decline in prices in November was sharper for long steel products as compared to flat products. Average prices of TMT bars in the Gobindgarh market fell by 6.5 per cent over the previous month. Prices of joists, channels and angles fell by an average 10 per cent. Flat products were cheaper by 3-5 per cent in November as compared to October 2009.
Steel production at a six-month high in September 2009, prices fall in November

Finished steel production has been rising steadily since May 2009. In September, production rose to 48 lakh tonnes from 45.9 lakh tonnes in August 2009. Although production was lower by 1.7 per cent y-o-y, it was the highest since the beginning of 2009-10. The rise in production was driven by flat products. A healthy demand for flat steel from automobile and consumer durable companies led to a 14.6 per cent month-on-month rise in its production. Cumulative production has grown by 2.8 per cent in the first half of 2009-10. We expect steel production to grow by a higher 10.5 per cent during October-March 2009-10. The recovery in the real estate sector and the governments huge thrust on infrastructure development will spur the demand for long products. Demand for flat steel will sustain as sales of automobiles and consumer durable products are expected to be robust in the second half. Production will also get a boost as fresh capacities of 4.6 million tonnes will come on stream during
Table 12.7 Steel consumption grows by a healthy 6.5 per cent in the first half of 2009-10
Finished steel Production (000 tns) (% chg.) 4,323 -2.5 4,334 -6.0 4,477 1.6 4,398 -0.5 4,736 -3.0 4,300 2.8 4,496 1.3 4,527 5.1 4,544 5.4 4,588 0.2 4,795 -1.7 Finished steel Consumption (000 tns) (% chg.) 4,175 -17.6 3,831 -17.0 4,185 -0.6 4,352 4.6 4,869 11.4 3,423 -1.6 4,286 11.1 4,333 2.5 4,466 16.1 4,342 2.2 4,354 8.5 Hot rolled coils Kolkata Price (Rs./Tonnes) (% chg.) 43,440.5 17.4 39,221.5 9.0 34,794.5 -6.4 33,667.0 -12.2 34,313.5 -18.5 34,318.5 -26.7 33,994.0 -28.0 33,993.0 -28.3 33,999.0 -25.1 34,246.0 -24.5 34,589.5 -24.0 34,726.0 -23.5 34,670.5 -20.2 Apr-Nov Apr-Nov 45,821.4 27.2 34,317.1 -25.1 Apr-Mar Apr-Mar 42,380.7 15.1 Cold rolled coils Kolkata Price (Rs./Tonnes) (% chg.) 45,196.5 10.5 40,463.5 1.5 38,866.5 -6.3 35,966.0 -19.2 36,356.0 -22.4 35,424.0 -26.8 36,796.0 -26.3 36,130.0 -25.2 36,098.0 -26.0 36,842.0 -25.2 38,066.5 -23.4 38,131.0 -22.8 37,983.0 -16.0 Apr-Nov Apr-Nov 48,609.3 21.1 36,933.8 -24.0 Apr-Mar Apr-Mar 45,043.8 9.4
Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 2008-09 2009-10 2008-09
Apr-Sep 26,710 27,449 Apr-Mar 53,520
Apr-Sep 5.3 2.8 Apr-Mar 0.4
Apr-Sep 23,672 25,204 Apr-Mar 48,833
Apr-Sep 3.0 6.5 Apr-Mar -1.2
December 2009
58
Industry: Capital Goods crore. This is equivalent to almost three times their trailing four quarter sales. Thus, companies have enough orders to generate revenues for at least the next three years. Driven by healthy order book positions, we expect the production of capital goods to rise at a faster pace during 2009-10 than in 2008-09. Table 12.8 Order book-to-sales ratio of companies
Order Book Rs.cr. BHEL 1,25,800 Siemens 10,292 Suzlon Energy 8,285 ABB 8,023 BEML 5,838 Thermax 4,603 Areva T & D India 4,538 Mcnally Bharat Engg. 2,925 Elecon Engn. 1,772 Total 1,72,076 As on Sales Order Rs. book crore to sales 29,398 4.28 8,458 1.22 4,486 1.85 6,601 1.22 2,844 2.05 2,961 1.55 3,312 1.37 1,338 2.19 1,012 1.75 60,410 2.85
Capital goods production index rises 12.8% in September 2009

Driven by a robust rise in the production of cutting tools, insulated cables, power driven pumps and power and distribution transformers, the production index of capital goods rose by a healthy 12.8 per cent in September 2009. During the month, the production index of machinery and equipments rose by a much faster 16.5 per cent. The cumulative production index of machinery and equipments during the first half of the year was up by 11 per cent. However, inflated adjusted sales of these companies have risen by a slower 4.6 per cent during the period. The governments thrust to develop infrastructure in the country in order to foster overall economic growth will lead to an increase in demand for capital goods in the coming years. The unexecuted order book position of major companies at the end of the September 2009 quarter stood at Rs.1,72,076
Sep Sep Sep Sep Sep Sep Sep Sep Sep
2009 2009 2009 2009 2009 2009 2009 2009 2009
Table 12.9 Transport equipments production index rises 8.9% in September 2009
Machinery and equip. Prodn. (Index) 475.4 406.6 427.8 421.3 436.5 447.2 532.6 375.1 412.3 482.1 454.0 471.6 554.0 Apr-Sep 374.9 412.9 458.2 Apr-Mar 429.1 Machinery and equip. Prodn. (% chg.) 18.8 2.1 10.3 2.0 18.3 16.0 0.5 5.2 2.9 12.9 11.7 14.6 16.5 Apr-Sep 11.2 10.1 11.0 Apr-Mar 8.8 Transport equipment Prodn. (Index) 442.5 387.5 354.6 295.9 345.1 378.9 482.2 393.2 413.7 426.9 454.7 459.1 482.1 Apr-Sep 358.3 401.8 438.3 Apr-Mar 387.9 Transport equipment Prodn. (% chg.) 16.7 -6.9 -9.0 -17.8 -14.1 -2.9 11.3 6.7 2.0 12.3 10.8 13.6 8.9 Apr-Sep 1.8 12.2 9.1 Apr-Mar 2.5 Capital goods Prodn. (Index) 470.2 365.7 394.0 448.1 394.2 398.9 508.9 294.4 336.5 438.0 380.8 404.2 530.6 Apr-Sep 341.1 377.5 397.4 Apr-Mar 397.9 Capital goods Prodn. (% chg.) 20.8 4.2 0.5 6.6 15.9 11.8 -6.3 -5.9 -3.6 13.4 1.7 8.7 12.8 Apr-Sep 20.2 10.7 5.3 Apr-Mar 7.3 Capital goods Imports ( mln) 3,564.9 3,393.3 3,016.2 4,109.2 3,137.2 2,537.5 3,033.0 Capital goods Imports (% chg.) 44.7 -2.3 -21.1 48.9 -26.4 -34.1 -23.1
Sep 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 2007-08 2008-09 2009-10 2008-09
Apr-Mar 49,847.2 47,117.8 Apr-Mar 47,117.8
Apr-Mar 61.9 -5.5 Apr-Mar -5.5
December 2009
Industry: Consumer Durables
59 grew by a healthy 32.4 per cent. Hitachi Home & Life Solutions witnessed a rise of 33 per cent in net sales. We expect that demand for consumer durables will continue to remain healthy in the second of 2009-10. Figure 12.5 Production Index of Consumer Durables Goods (% change over previous year)
25 20 15 10 5 0
Demand for consumer durables upbeat

The pick-up in consumer spending in rural and urban markets during the festive season has accelerated the demand for white goods since the last few months. This is also evident from the monthly production data of washing machines, air-conditioners and refrigerators. Production of domestic refrigerators continued to rise for the fourth straight month in September 2009. It was higher by 30.9 per cent to 8.8 lakh units in September 2009 compared to a year ago. Production of window type air-conditioners grew by a robust 166.6 per cent (y-o-y) to 0.7 lakh units. Washing machine production increased by 38.8 per cent (y-o-y) to 3.1 lakh units in September 2009. The buoyant demand was also reflected in the financial performance of the white goods companies during the September 2009 quarter. Net sales of Whirlpool of India, the largest refrigerator company,
-5
Table 12.10 Production Statistics of Selected Consumer Durables Goods

Air RefrigElectric TV condierators fans receivers tioners Prodn. Prodn. Prodn. Prodn. Prodn. Prodn. (Nos.) (Nos.) (Nos.) (000 nos) (Lakh nos) (000 nos) Sep 2008 3,80,957.0 2,24,680.0 25,776.0 672.7 8.9 755.3 Oct 2008 3,29,445.0 2,71,419.0 35,136.0 709.0 8.4 773.5 Nov 2008 3,61,474.0 2,22,437.0 27,502.0 414.4 7.6 626.1 Dec 2008 3,88,613.0 2,00,607.0 16,616.0 351.5 8.2 669.0 Jan 2009 3,69,712.0 1,94,348.0 61,532.0 584.0 9.6 738.0 Feb 2009 3,73,335.0 2,05,077.0 1,14,286.0 759.7 10.4 691.1 Mar 2009 3,90,955.0 1,74,235.0 1,85,626.0 957.1 11.3 665.8 Apr 2009 3,66,539.0 1,80,074.0 2,05,243.0 924.9 9.8 673.5 May 2009 4,27,092.0 2,00,275.0 1,71,834.0 888.0 10.7 717.6 Jun 2009 4,61,581.0 2,49,741.0 58,934.0 670.9 10.6 760.4 Jul 2009 4,81,182.0 3,21,284.0 68,897.0 694.8 10.7 878.6 Aug 2009 4,52,463.0 3,07,056.0 52,157.0 755.2 10.9 980.1 Sep 2009 4,65,331.0 3,12,032.0 68,730.0 880.3 11.2 949.6 Apr-Sep Apr-Sep Apr-Sep Apr-Sep Apr-Sep Apr-Sep 2008-09 19,92,312.0 10,76,419.0 3,61,207.0 3,839.0 59.8 3,410.7 2009-10 26,54,188.0 15,70,462.0 6,25,795.0 4,814.1 63.8 4,959.8 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 2008-09 42,05,846.0 23,44,542.0 8,01,905.0 7,614.7 115.3 7,574.2 Ocial statistics underestimate the production of pressure cookers, washing machines, refrigerators and TV receivers. Pressure cookers Washing machines Wrist watches Prodn. (000 nos) 1,231.0 1,254.0 1,045.0 1,112.0 890.0 721.0 648.0 537.0 792.3 862.0 1,162.7 1,042.5 1,180.5 Apr-Sep 6,257.0 5,577.0 Apr-Mar 11,927.0 Bicycles
Prodn. (000 nos) 997.4 783.3 748.7 771.2 928.9 1,034.8 1,092.8 884.9 932.8 924.2 995.9 1,038.9 1,081.9 Apr-Sep 5,763.6 5,858.6 Apr-Mar 11,123.4
December 2009
60
Industry: Transport Equipment nario has led to the growth in demand, the exceptional rate of growth in sales is due to a low base. Two-wheeler sales rose by 11 per cent to 8.5 lakh vehicles in October 2009 compared y-o-y. This was lower than our expectation considering a low base. A strike in the Manesar-Gurgaon belt led to a sharp fall in two-wheeler production of Honda Motorcycles in October 2009, restricting the industrys growth to 11.5 per cent. Figure 12.6 Production Index of Transport Equipment (% change over previous year)
20 15 10 5 0 -5 -10 -15 -20
Healthy growth in automobile sales

Automobile offtake continues to grow at a healthy pace. Sales of every automobile segment grew by double-digits in October 2009 compared to the same month a year ago. Healthy domestic demand continued to drive growth in sales. Passenger cars and multi-utility vehicles (PC&MUV) sales rose by a brisk 29.7 per cent in October 2009 compared to October 2008. For the fourth successive month in October 2009, sales grew by over 20 per cent. Sales peaked during the month, crossing the two lakh vehicles mark for the second successive month. Every segment of the PC&MUV industry contributed to the healthy growth recorded in October 2009. Domestic PC&MUV sales rose by a robust 33.1 per cent while exports grew by a slower 16.7 per cent in October 2009 compared to October 2008. Commercial vehicles sales rose by 46 per cent to 46,427 vehicles in October 2009 compared to the same month a year ago. While the pick-up in manufacturing and mining activities together with softened interest rates and an improved liquidity sce-
Table 12.11 Passenger Cars and Multi-utility Vehicles: Production, Sales and Exports
Prodn. (Nos.) Oct 2008 1,59,697 Nov 2008 1,47,041 Dec 2008 85,071 Jan 2009 1,43,438 Feb 2009 1,64,777 Mar 2009 1,90,987 Apr 2009 1,60,013 May 2009 1,67,859 Jun 2009 1,67,825 Jul 2009 1,86,103 Aug 2009 1,85,969 Sep 2009 1,94,548 Oct 2009 1,95,203 Apr-Oct 2008-09 10,99,602 2009-10 12,57,123 Apr-Mar 2008-09 18,38,697 Monthly gures may not add Prodn. Sales Sales Export Export (% chg.) (Nos.) (% chg.) (Nos.) (% chg.) 1.7 1,59,337 2.6 33,061 99.4 1.0 1,34,811 -8.2 34,828 120.8 -33.3 1,27,910 -3.6 28,558 64.7 -9.3 1,58,900 -5.0 21,616 8.5 -4.9 1,71,297 16.9 26,278 28.8 7.2 1,98,703 3.5 33,787 34.0 -0.4 1,65,156 8.6 29,459 34.0 5.3 1,70,586 4.5 29,763 39.2 14.3 1,78,540 16.2 38,297 58.9 13.7 1,81,431 27.5 33,789 20.8 24.1 1,93,445 25.3 41,345 37.2 23.9 2,06,516 20.6 38,992 21.6 22.2 2,06,610 29.7 38,567 16.7 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 11.0 10,96,155 11.5 1,90,662 59.2 14.3 13,02,373 18.8 2,50,212 31.2 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 3.4 18,87,619 6.7 3,35,739 53.7 up to the cumulative total due to revisions. Sales includes exports.
December 2009
Industry: Transport Equipment Table 12.12 Commercial Vehicles: Production, Sales and Exports
Prodn. (Nos.) Oct 2008 36,519 Nov 2008 20,306 Dec 2008 14,883 Jan 2009 18,567 Feb 2009 30,940 Mar 2009 40,383 Apr 2009 33,997 May 2009 33,548 Jun 2009 36,198 Jul 2009 42,052 Aug 2009 43,750 Sep 2009 47,209 Oct 2009 44,655 Apr-Oct 2008-09 2,92,531 2009-10 2,81,554 Apr-Mar 2008-09 4,17,126 Monthly gures may not add Prodn. Sales Sales Export Export (% chg.) (Nos.) (% chg.) (Nos.) (% chg.) -24.7 31,796 -34.9 3,748 -25.8 -57.3 23,376 -48.0 2,739 -33.2 -69.5 20,282 -58.2 2,362 -57.4 -63.5 24,927 -52.3 1,770 -64.6 -40.0 33,086 -34.4 2,017 -59.5 -28.7 44,729 -30.2 2,848 -61.3 -18.7 31,513 -13.0 1,671 -35.9 -27.1 33,072 -18.9 2,272 -51.1 -10.7 39,227 -15.1 3,034 -37.5 -3.9 40,832 5.2 3,208 -28.4 -2.8 44,066 10.8 3,442 -37.3 22.3 49,373 3.4 3,854 -24.2 22.3 46,427 46.0 3,825 2.1 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct -0.4 2,81,128 -2.8 30,925 -3.4 -3.8 2,84,807 1.3 21,356 -30.9 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar -24.0 4,26,795 -22.3 42,673 -27.7 up to the cumulative total due to revisions. Sales includes exports.
61
Table 12.13 Two-wheelers: Production, Sales and Exports

Prodn. (Nos.) Oct 2008 7,05,799 Nov 2008 6,43,734 Dec 2008 5,28,481 Jan 2009 6,27,280 Feb 2009 6,95,304 Mar 2009 7,47,966 Apr 2009 7,58,532 May 2009 8,04,973 Jun 2009 7,88,793 Jul 2009 8,57,433 Aug 2009 8,51,000 Sep 2009 9,08,153 Oct 2009 8,26,383 Apr-Oct 2008-09 51,42,825 2009-10 57,95,267 Apr-Mar 2008-09 84,18,626 Monthly gures may not add Prodn. Sales Sales Export Export (% chg.) (Nos.) (% chg.) (Nos.) (% chg.) -15.1 7,69,149 -10.5 92,907 37.2 -5.0 6,56,747 -9.2 89,245 51.2 -16.2 5,52,058 -10.1 90,756 32.8 -8.7 6,51,293 -2.1 69,551 16.4 13.7 7,03,359 12.8 72,510 -10.0 7.0 7,23,538 2.5 69,521 -7.6 15.3 7,68,262 9.4 67,267 -21.7 9.3 8,08,075 11.5 80,138 3.7 12.6 7,94,185 14.9 87,248 -2.0 13.5 8,12,536 18.2 92,868 5.5 14.7 8,66,633 21.6 89,856 -1.9 7.5 9,33,712 7.8 95,562 8.8 17.1 8,53,929 11.0 1,03,700 11.6 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 8.9 51,55,279 8.9 6,12,591 28.5 12.7 58,37,332 13.2 6,16,639 0.7 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 4.9 84,41,844 4.6 10,04,174 22.5 up to the cumulative total due to revisions. Sales includes exports.
December 2009
62
Investments Table 13.1 Scheduled capacity additions in 2009-10

Sector/ products Cotton & Blended Yarn Cloth Apparels Crude oil Natural gas Petroleum Products Caustic soda Soda Ash Newsprint & paper Fertilisers Pesticides Cement Steel Primary aluminium Bearings Boilers Turbines Diesel engines Generators Transformers Refrigerators Cars Two-wheelers Tyres LNG storage & distb. Electricty generation Hotels Retail Exhibition of lms Scheduled capacity % change additions in Capacity Units capacity 000 spindles 40,062 1.4 Looms Million Nos Tonnes MCM Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Nos Mw Nos Nos Nos Mva Nos Nos Nos Nos Km Mw Rooms Lc.Sq. Ft. Seats 58,574 11,721 21,200,000 29,891 13,730,000 128,700 396,000 830,000 604,500 21,000 5,480,0000 4,900,000 372,000 40,000,000 5,000 350 60,000 10,000 28,000 600,000 200,000 2,668,500 79,26,000 2,923 12,024 10,529 88 20,398 0.01
Investment demand continues to remain high

The investment demand in India remained almost unaffected by the Global Liquidity Crisis. A huge number of fresh projects entailing an investment of Rs.20.8 lakh crore were announced since the GLC hit Indian shores in October 2008. The enthusiasm amongst the investors did not just remain on paper. A lot of projects went under implementation during this period too. Net addition of projects under implementation went up rapidly from Rs.1.3 lakh crore in the December 2008 quarter to Rs.3.6 lakh crore in the September 2009 quarter. Projects entailing an investment of Rs.1.8 lakh crore were commissioned in the second half of 2008-09. The trend continued in the first half of 2009-10. During this period, projects worth Rs.1.5 crore were commissioned. In the first two months of the second half, projects entailing Rs.40,758 crore of investment were commissioned. And, another Rs.2.6 lakh crore of projects are scheduled for commissioning in the remaining months of 2009-10. The total project commissioning during 2009-10 will be to the tune of Rs.4.5 lakh crore, the highest ever in Indias history. Major capacity additions are expected in the cement, steel, aluminium, automobile, paper, soda ash, tyres and electricity sectors.
7.7 4.1 13.2
24.5 6.0 25.0
8.2 8.1
Table 13.2 Projects worth Rs.1.5 lakh crore commissioned in first half of 2009-10
Project Under - Under ImplemenNew Implementation tation Stalled Projects (Nos.) (Rs.crore) (Nos.) (Rs.crore) (Nos.) (Rs.crore) 4,969 18,23,011 137 91,847 1,125 5,19,214 5,209 20,18,256 139 91,995 1,165 3,82,215 5,459 21,19,526 145 1,02,645 908 3,75,745 5,752 22,37,598 147 1,02,715 782 3,82,889 5,887 23,48,806 148 1,14,814 1,038 4,91,184 5,909 24,09,411 153 1,17,020 713 4,45,562 5,948 25,86,170 153 1,16,223 631 4,41,250 5,996 28,47,551 168 1,27,266 498 4,96,709 6,126 31,75,892 176 1,21,718 642 5,37,180 6,076 33,15,362 220 1,49,514 413 4,08,708 6,164 35,18,555 270 1,74,694 687 8,39,488 6,507 38,23,344 294 2,03,819 501 1,76,477 7,027 41,87,950 325 2,54,537 595 3,24,345 Total Projects Projects Investment Completed Shelved (Nos.) (Rs.crore) (Nos.) (Rs.crore) (Nos.) (Rs.crore) 12,275 39,30,221 203 25,874 18 19,391 13,124 42,01,862 382 51,682 34 6,302 13,542 45,44,380 373 77,703 30 11,752 13,014 49,11,782 258 36,903 35 12,411 13,729 53,61,904 258 50,574 9 308 14,154 58,39,649 378 58,020 64 32,884 14,219 63,28,925 377 81,864 48 27,836 14,135 70,24,495 209 54,521 32 12,459 14,479 74,86,344 231 47,850 36 32,467 14,465 80,02,880 354 89,542 39 33,833 14,692 87,49,449 359 94,482 40 70,125 14,772 89,85,394 258 1,00,686 78 9,091 14,958 92,56,531 227 53,730 50 20,060
Sep 06 Dec 06 Mar 07 Jun 07 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09
December 2009
Corporate Sector: Financial Performance
63 Sales of the petroleum products sector will rise by 22.9 per cent as prices of non-administered fuels will rise in tandem with the rise in crude oil prices. The rest of the manufacturing sector and the nonfinancial service sector will report a 13 per cent and an 11.8 per cent rise in sales, respectively. Corporate profits will rise by a handsome 43.4 per cent in the December 2009 quarter. However, they will fall by 6.3 per cent in the March 2010 quarter, reflecting an 83.5 per cent fall expected in the net profits of the petroleum products sector. The sectors profits will shrink due to the expected rise in crude oil prices without a proportionate rise in auto-fuel prices. The rise in ATF prices (a crude oil derivative) will increase the losses of the aviation sector. This, along with the fall in PAT of the hotels, shipping and telecom sectors will restrict the growth in PAT of the non-financial services to 0.7 per cent in the second half of 2009-10. The PAT of the banking sector, which rose by a robust 41 per cent in the first half of 2009-10, will fall by 3.7 per cent in the second half because of the slowdown in credit growth and a significant rise in the provisioning and contingencies expenses. This will pull down the corporate margin to around eight per cent in the second half of 2009-10 from its current level of nine per cent. In 2009-10, Corporate India will report a robust 20.3 per cent rise in PAT on a sales growth of four per cent.
Corporate PAT up 27.9% in rst half

Corporate India made the most of the fall in commodity prices, cut in excise duty and the fears of job loss spread after the Global Liquidity Crisis (GLC). Companies did not pass on the benefits of the fall in commodity prices and excise cut completely to the consumer. They curtailed their expenses on marketing & selling and other items and went slow on the rise in salaries. This, along with the fall in interest rates, helped them report a 27.9 per cent rise in PAT in spite of a 5.8 per cent fall in sales in the first half of 2009-10. Corporates sales fell in the first half of 2009-10, only because of the steep 26.2 per cent fall in sales of the petroleum products sector. The rest of Corporate India managed to report a 2.9 per cent growth in sales, in spite of a fall in commodity prices and slump in exports following the GLC.
Corporate sales to rise in second half

We expect the trend in corporate sales to reverse in the second half of 2009-10. Unlike in the first half, sales will mark a 15.6 per cent (y-o-y) rise in the second half of 2009-10. Sales will rise by 11.2 per cent in the December 2009 quarter and by 20 per cent in the March 2010 quarter. The improvement will mainly be on account of a sequential rise in commodity prices, sustained improvement in demand and low base last year.
Table 14.1 Corporate sales dip in first half of 2009-10 (% change over year-ago quarter)
Dec 09 Mar 10 Jun 10 Sep 10 Forecast Forecast Forecast Forecast Income 12.5 1.3 -3.6 -5.0 10.6 19.0 17.4 16.1 Sales 12.3 0.1 -5.7 -5.9 11.2 20.0 18.5 16.5 Other income 16.3 34.0 68.9 23.2 -1.0 -0.7 -4.6 8.1 Total expenses 13.9 -2.7 -7.0 -7.4 11.3 23.5 19.6 15.8 Salaries & wages 25.4 13.8 7.9 3.7 4.6 17.0 13.4 16.4 Selling & marketing 10.6 -3.5 -9.4 -6.5 6.9 10.6 9.3 9.7 Other expenses 22.5 -1.8 -7.0 -6.0 8.0 15.0 19.3 17.2 Depreciation 16.1 16.3 19.5 19.4 14.6 7.6 13.4 12.8 Tax provision -21.8 -2.4 20.9 18.5 21.6 9.8 -4.1 6.1 PAT -27.7 15.4 19.9 37.3 43.4 -6.3 -6.8 0.6 Other income/Income (%) 4.3 4.9 4.9 3.9 3.9 4.2 4.1 3.7 PAT/Income (%) 6.3 9.6 9.6 8.9 8.0 7.8 7.7 7.7 All income and prot gures are net of prior period and extraordinary transactions. PBDIT is net of other income in PBDIT/Net sales ratio. Growth is not calculated when gures are negative. Dec 08 Mar 09 Jun 09 Sep 09
December 2009
64
Corporate Sector: Financial Performance excise duty by the government in December 2008 and February 2009, several manufacturers had cut their prices. However, these price-cuts were only partial. The manufacturing companies did not pass on the benefit of the fall in raw material prices, power & fuel expenses and the excise cut completely to the consumer. This helped the manufacturing sector (excluding petroleum products) report a 9.4 per cent rise in net profits. The petroleum products sector reported net profits, amounting to 3.8 per cent of income as against the losses amounting to 0.9 per cent of income incurred in the first half of 2008-09. A steeper fall in crude oil prices compared to the final products prices helped the sector return to profits. The profits made by the petroleum products sector pushed up the profits growth of the entire manufacturing sector to 54.8 per cent in the first half of 2009-10.
Manufacturing sectors sales fall in rst half of 2009-10

The manufacturing sector suffered an 11.5 per cent fall in net sales in the first half of 2009-10 compared to the first half of the last year. The 28.2 per cent slump in the sales of the petroleum products sector pushed down the overall sales of the manufacturing sector. A fall in prices and exports of petroleum products adversely affected the sales performance of the sector. Its share in the total sales of the manufacturing sector fell to 37.5 per cent from 45 per cent in the September 2008 quarter. The rest of the manufacturing industries collectively reported a 0.4 per cent rise in net sales in the first half of 2009-10. Demand for goods which had fallen substantially following the Global Liquidity Crisis, recovered well in the first half of 2009-10. However, unit realisations continued to remain lower than their year-ago levels. Following the slump in commodity prices in October 2008 and reduction in
Table 14.2 Refineries lead to fall in sales of manufacturing sector (% change over year-ago quarter)
Dec 09 Mar 10 Jun 10 Sep 10 Forecast Forecast Forecast Forecast Income 6.5 -4.6 -11.3 -10.5 11.0 22.8 18.1 14.8 Net sales 6.1 -5.1 -12.4 -10.8 11.4 23.2 19.1 15.4 Total expenses 6.9 -10.3 -14.6 -13.1 12.7 30.3 20.2 13.1 Raw materials 4.3 -15.9 -19.0 -16.4 14.8 38.3 23.1 13.7 Salaries & wages 18.6 1.9 -1.2 0.2 4.5 16.1 15.0 15.9 Power & fuel 19.1 4.6 -0.6 -5.6 0.1 21.4 23.6 20.0 Selling & marketing 23.5 30.0 13.6 3.7 -8.9 -8.2 -1.0 -13.5 Other expenses 18.2 1.6 -14.1 -11.5 6.4 9.9 16.4 10.9 Depreciation 12.9 13.9 20.0 22.5 22.5 20.3 18.0 10.8 Interest expenses 76.3 48.7 14.9 -5.5 -20.6 -1.9 16.2 17.4 Tax provision -50.2 -7.8 24.6 17.8 69.4 3.9 -16.6 -5.8 PBDIT -26.6 22.3 20.4 44.9 46.6 -11.3 -8.2 -0.3 PAT -58.1 30.8 20.6 122.4 127.4 -28.0 -22.1 -8.9 Other income/Income (%) 1.8 1.9 2.3 1.5 1.4 1.4 1.5 1.0 Raw material/Net sales (%) 68.9 63.7 69.5 72.5 71.9 72.0 73.1 73.1 Interest/PBDIT (%) 30.6 16.2 14.8 15.1 16.1 16.4 17.6 17.4 PBDIT/Net Sales (%) 7.7 14.3 13.2 12.1 10.8 10.5 10.3 10.4 PBDIT/Income (%) 9.4 15.9 15.2 13.5 12.1 11.8 11.7 11.2 PAT/Income (%) 2.6 8.2 7.1 6.2 5.4 5.1 4.7 4.7 All income and prot gures are net of prior period and extraordinary transactions. PBDIT is net of other income in PBDIT/Net sales ratio. Growth is not calculated when gures are negative. Dec 08 Mar 09 Jun 09 Sep 09
December 2009
Corporate Sector: Financial Performance
65 sales will rise by 13 per cent in the second half of 2009-10. This will be quite impressive compared to the meagre 0.4 per cent growth recorded in the first half of 2009-10. A sustained improvement in demand, steady rise in prices of most commodities and recovery in the export demand will lead to this growth. The low base last year will play its part too. For the year 2009-10, the sales growth of the manufacturing sector will be a meagre 0.9 per cent. Figure 14.1 Manufacturing: Profit margins(%)
16 14 12 10 8 6 4 2 0
Reneries to pull down manufacturing sectors PAT growth in second half

The petroleum products sector will report a 67.8 per cent fall in PAT in the second half of 2009-10 due to the rise in prices of crude oil. Crude oil prices will firm up in the coming months and will start reporting a y-o-y rise. However, the government is unlikely to hike the prices of auto fuels, which account for around 50 per cent of the sales of the petroleum products companies. The rest of the manufacturing sector (excluding petroleum products) will report a 91.4 per cent rise in profits. Thus, the overall manufacturing sector will report a robust 54.8 per cent rise in PAT in the second half of 2009-10. For the entire fiscal, the PAT growth will be 30.3 per cent. The sectors which will drive this growth are edible oils & products, beer & alcohol, ready-made garments, drugs, plastics, polymers, tyres, glass, cement, steel tubes & pipes and automobiles. The manufacturing sector (excluding petroleum products) will do well on the sales front too. Its
(CMIE Forecast)
S04
J05
M06
D06
S07
J08
M09
D09
S10
PBDIT/Income
PAT/Income
Table 14.3 Manufacturing sector (excluding refineries) to almost double its PAT in second half of 2009-10 (% change over year-ago quarter)
Dec 08 Income Net sales Total expenses Raw materials Salaries & wages Power & fuel Selling & marketing Other expenses Depreciation Interest expenses Tax provision PBDIT PAT Other income/Income Raw material/Net sales Interest/PBDIT PBDIT/Net Sales (%) PBDIT/Income (%) PAT/Income (%) 4.8 4.6 10.1 8.8 11.7 19.1 5.9 17.6 12.4 45.5 -42.7 -30.6 -62.4 2.0 62.0 28.9 10.0 11.8 3.1 Mar 09 1.5 1.6 0.0 -1.1 -1.1 4.6 19.0 0.2 15.3 37.7 -24.9 -12.7 -30.4 2.0 58.8 20.8 13.1 14.8 5.8 Jun 09 2.1 1.2 -0.8 -1.9 2.8 -0.6 8.5 -8.2 15.9 20.9 5.9 7.5 0.8 2.5 58.4 17.0 15.5 17.7 7.9 Sep 09 -0.5 -0.4 -3.2 -4.4 -2.2 -5.6 0.8 -8.9 13.8 7.7 14.4 15.0 18.1 1.7 58.6 15.1 16.6 18.0 8.6 Dec 09 Forecast 10.6 10.9 5.6 4.7 8.1 0.1 10.7 1.5 14.4 -2.4 75.0 65.2 175.7 1.7 58.5 16.2 16.2 17.7 8.3 Mar 10 Forecast 14.7 14.9 16.0 16.1 16.2 21.3 3.2 12.7 13.2 8.7 37.9 31.4 49.0 1.7 58.9 15.9 16.0 17.4 8.0 Jun 10 Forecast 13.4 14.1 14.4 14.7 15.3 23.6 16.3 13.9 14.5 13.7 6.5 8.7 5.5 2.0 58.2 16.8 15.6 17.2 7.7 Sep 10 Forecast 12.0 12.1 13.0 13.3 15.0 20.0 5.7 11.9 14.6 14.1 3.1 5.0 -0.4 1.6 58.7 16.0 15.7 17.1 7.8
December 2009
66
Corporate Sector: Financial Performance ber 2009 quarter. The growth will accelerate to 15.5 per cent in the March 2010 quarter. Software, shipping, aviation and hotels sectors will report an improvement in sales, backed by the revival expected in the global economy in the second half of 200910. Health services and LNG storage & distribution sectors, which remained unaffected by the GLC, will report a slight acceleration in the sales growth in the second half of 2009-10. During 2009-10, the sales growth will average at six per cent. The profit performance of the non-financial services sector, however, will continue to remain poor in the second half of 2009-10. Its PAT will grow by a meagre 0.7 per cent. This is because the hotels, telecom and shipping sectors will report a y-o-y fall in PAT. The increasing competition in the telecom sector is pushing companies to slash tariffs, which will result in a fall in their profits. The shipping sector will suffer a fall in profits because of poor tanker freight rates. The losses incurred by the aviation sector will aggravate in the second half due to the rise in fuel prices. The impressive profit performance of the health services, LNG storage & distribution and retail trade sectors, will be adequate to just about wipe off the impact of the fall in profits of the above mentioned sectors. For the financial year 2009-10, the PAT growth will average at 5.2 per cent.
Non-nancial services sales and prots fall

The non-financials services sector, which was growing at around 30 per cent till the December 2009 quarter, reported a sharp fall in growth in the two quarters that followed. And, its sales dipped by 2.7 per cent in the September 2009 quarter. This was the first quarter of a fall in sales after 29 quarters of growth. The fall was witnessed across most nonfinancials services. Hotels, recreational services, wholesale trading, shipping, aviation and transport logistics services sectors suffered a fall in sales. The y-o-y sales growth of the software sector too dipped to a meagre 1.9 per cent due to the cutdown on IT budgets, price negotiations and delays in decision making by clients in EU and the US. During the March and June 2009 quarters, the non-financial services sector combated the slowdown well. It grew its PAT by 8.2 per cent and 23.3 per cent, respectively, by curbing the selling & marketing and other expenses. However, in the September 2009 quarter, PAT fell by 2.8 per cent. The PAT margin too shrank to 9.1 per cent from 11 per cent in the preceding two quarters. We expect the non-financial services sector to report a healthy 8.3 per cent sales growth in the Decem-
Table 14.4 Non-financial services sales to grow in second half of 2009-10 (% change over year-ago quarter)
Dec 09 Mar 10 Jun 10 Sep 10 Forecast Forecast Forecast Forecast Income 28.0 3.5 5.5 -2.8 7.4 13.0 17.6 20.6 Sales 28.6 1.0 4.2 -2.7 8.3 15.5 19.4 20.7 Total expenses 32.4 2.3 2.8 -3.3 7.8 15.6 20.6 22.5 Salaries & wages 31.4 17.2 6.0 1.3 8.0 14.9 17.6 18.9 Selling & marketing 32.4 5.5 -0.6 0.1 11.2 17.1 12.6 16.2 Other expenses 43.8 -15.5 -9.0 -14.1 2.5 16.3 19.1 23.9 Depreciation 17.8 22.6 20.3 8.8 0.0 -2.7 3.6 13.4 Interest expenses 63.5 19.1 6.3 -11.9 -15.3 9.7 17.0 10.5 Tax provision -16.9 -1.8 -2.1 47.1 52.7 6.7 23.2 45.5 PBDIT 3.5 11.6 17.0 2.8 4.5 -0.2 4.0 12.9 PAT -9.9 8.4 23.3 -2.8 4.6 -2.4 -2.4 5.1 Other income/Income (%) 3.0 4.8 3.6 2.0 2.1 2.6 2.1 1.9 Interest/PBDIT (%) 16.9 12.0 10.4 14.4 13.6 12.7 11.2 13.5 PBDIT/Sales (%) 15.6 18.0 17.7 17.3 15.6 17.3 16.4 16.4 PBDIT/Income (%) 18.1 22.0 20.7 19.0 17.4 19.4 18.2 18.0 PAT/Income (%) 8.6 11.3 10.9 9.1 8.3 9.8 9.1 8.2 All income and prot gures are net of prior period and extraordinary transactions. PBDIT is net of other income in PBDIT/Net sales ratio. Growth is not calculated when gures are negative. Dec 08 Mar 09 Jun 09 Sep 09
December 2009
Corporate Sector: Corporate Debt
67 Two-year papers by financial companies carried coupons of 6.63-7.75 per cent. In all, about Rs.3,281 crore were raised by corporates in November 2009 for differing tenures at coupon rates ranging from 5.60 per cent to 10.60 per cent. Table 14.5 Debt floatations plunge
No. of issues 20 30 20 11 33 24 16 33 34 36 52 33 22 108 250 Amount raised (Rs.cr) 8,146 14,934 12,616 7,395 8,766 5,536 8,473 8,357 9,126 10,358 7,710 6,673 3,281 30,931 59,514 Interest rate (%) 10.00-13.75 8.60-13.25 6.85-16.00 8.90-12.00 8.15-13.00 6.50-10.00 2.00-11.00 6.10-14.35 4.40-11.75 7.55-11.50 3.30-11.00 3.00-10.75 5.60-10.60 7.00-24.00 2.00-14.35
10-year funds raised at 8.75-9.85% during November 2009

Corporates raised 10-year paper at coupon rates of 8.75-9.85 per cent during November 2009. Infrastructure Development Finance Company raised Rs.100 crore for a 10 year tenure at 8.75 per cent. This was 149 basis points higher than the average yield on the 10 year government paper in November 2009. Mahindra Financial had to offer 9.85 per cent on its 10-year papers worth Rs.150 crore. JSW Steel raised Rs.175 crore through an eight-year paper at a coupon of 10.6 per cent. PNB Housing Finance raised Rs.120 crore through a five-year paper offering 8.55 per cent. Three-year papers floated by financial companies in November 2009 carried a very wide spread. While Exim Bank raised Rs.500 crore at 5.56 per cent, Reliance Capital had to offer a very steep 9.22 per cent. LIC Housing raised Rs.500 crore at a reasonable 7.76 per cent coupon.
Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 Apr 08-Nov 08 Apr 09-Nov 09
Table 14.6 Reliance Capital raises three-year paper at a steep 9.22%

Company Export-Import Bank Of India Housing Development Finance Corpn. Ltd. L I C Housing Finance Ltd. Bajaj Auto Finance Ltd. Great Eastern Shipping Co. Ltd. L I C Housing Finance Ltd. J S W Steel Ltd. Infrastructure Development Finance Co. Ltd. P N B Housing Finance Ltd. State Bank Of Mysore Infrastructure Development Finance Co. Ltd. Mahindra & Mahindra Financial Services Ltd. Amount (Rs.crore) 500.0 500.0 300.0 210.0 200.0 200.0 175.0 150.0 125.0 100.0 100.0 100.0 Type NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) NCD (Fixed) 120 3 Tenure (Mths) 36 13 36 14 36 120 36 14 96 24 120 60 Coupon (%) 5.60 5.69 7.76 6.10 9.00 9.60 7.76 6.10 10.60 6.63 8.55 9.10 8.75
December 2009
68
Corporate Sector: Mergers & Acquisitions dia reports suggest that Reliance may pay USD 12 billion for the bankrupt petrochemical company. The acquisition will enable Reliance to expand its presence in the international petrochemicals market and gain access to LyondellBasells polyproplene and its derivatives products. Reportedly, Lyondell registered a loss of USD 5.9 billion for the year ended December 2008. Although its revenues stood at USD 1 billion, its debt burden payable in 2009 rose to USD 22.9 billion, forcing it to file for bankruptcy. Figure 14.2 Acquisitions (Rs.crore)
14000 12000 10000 8000 6000
November 2009 abuzz with M&A activity

The CMIE M&A database captured 29 substantial acquisitions of shares worth Rs.2,239.9 crore and eight asset sales amounting to approximately Rs.2,408.4 crore in November 2009. It also captured 18 merger announcements and the open offer of Golden Tobacco during the month. Bulk of the M&A activity during the month took place in the financial services sector. November 2009 was abuzz with speculation of possible takeovers involving well known Indian corporates. From the Oberois to the Ambanis, the Japanese and the Patni brothers, this space grabbed the headlines of many a pink page during the month.
Reliance Industries in talks to buy LyondellBasell

Reliance Industries informed the bourses on 21 November 2009 that it had submitted a non-binding all-cash bid for a controlling stake in Rotterdambased Petrochemical major LyondellBasell. While it is still early days for the deal to go through, me-
4000 2000 0 Oct 08 Dec 08 Feb 09 Apr 09 Jun 09 Aug 09 Oct 09
Table 14.7 Mergers & Acquisitions activity in November 2009

Open Oers Sale of Assets Acquisitions Mergers (Nos.) (Rs.crore) (Nos.) (Rs.crore) (Nos.) (Rs.crore) (Nos.) 7 1,025.74 10 146.90 48 17,985.81 4 7 145.04 6 15.55 54 1,676.72 11 4 103.91 7 46 1,176.27 15 4 347.08 19 29 1,475.78 11 8 1,053.22 6 12.00 59 4,548.04 24 6 12,309.89 15 15.85 44 15,325.35 15 3 138.94 6 28 2,796.46 6 7 1,199.39 9 41 7,474.86 17 6 120.11 10 75 4,715.53 16 13 148.35 10 909.00 52 3,861.97 15 9 587.01 3 65 14,893.58 15 6 9.72 7 44 5,196.84 10 1 44.46 8 2,408.44 29 2,239.91 18 Apr-Nov Apr-Nov Apr-Nov Apr-Nov Apr-Nov Apr-Nov Apr-Nov 66 11,619.37 94 11,679.84 521 62,777.00 103 51 14,557.87 68 3,333.29 378 56,504.52 112 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 89 13,268.62 132 11,707.39 709 71,653.80 164
December 2009
Corporate Sector: Mergers & Acquisitions
69 the Patni brothers held 48.3 per cent in the company, General Atlantic held 18 per cent. The promoters have been trying to sell their stake in the company for quite some time. NTT joins the list of potential suitors, which include L&T Infotech and Japans Fujitsu. The deal is expected to further enhance NTTs presence in India, after its subsidiary NTT-Docomo acquired 26 per cent in Tata Teleservices.
EIH takeover battlelines drawn

Media reports suggest that the Oberoi family, which owns 43 per cent in hotel firm EIH, may sell 17 per cent to Max Indias Chairman Analjit Singh for up to Rs.1,250 crore. This will trigger an open offer in which Singh is expected to raise his stake in the company to 26 per cent. Singh and the Oberoi family will own a combined 52 per cent stake in EIH, hoping to thwart takeover attempts by ITC which operates the second largest hotel chain in India. Irked by this development, YC Deveshwar, ITC Chairman said that ITC was averse to hostile approaches for takeovers but if someone else entered the fray, they would rethink their approach. ITC owns a 14.98 per cent stake in EIH. Media reports suggest that the company is exploring the possibility of increasing its stake to 25 per cent. Crossing the 15 per cent threshhold limit will mean that the company will have to make an open offer to the shareholders of the company, thereby taking its stake to 35 per cent. As the company wants only 25 per cent of EIH, it is expected to price the open offer at a price close to the market price, thereby allowing the open offer to fail. This will enable it to pick up the required shares in EIH through the creeping acquisition route (five per cent annually).
Great Oshore to belong to Bharati Shipyard

In a surprising development, ABG Shipyard, which had launched a bid against Bharati Shipyards open offer for a 20 per cent stake in Great Offshore, sold off its 8.3 per cent stake (30,78,000 shares) in the company for approximately Rs.575 per share. It had acquired the shares at a much lower cost of Rs.410 per share. In June 2009, Bharati Shipyard launched an open offer to acquire an additional 20 per cent stake (78.3 lakh shares) in Great Offshore at Rs.344 per share. Great Offshore being Bharati Shipyards major client, Bharatis interest in the company is very strategic. Following Bharatis bid, rival ABG Shipyard launched a counter bid for Rs.375 per share for a 33.9 cent stake (125.7 lakh shares) in Great Offshore. In a series of counterbids that followed, Bharati shipyards revised price reached Rs.590 in December 2009. This was a staggering 71.5 per cent higher compared to its initial bid price of Rs.344. The open offer which commenced on 3 December 2009, will end on 22 December 2009.
NTT interested in owning Patni

Japanese conglomerate NTT Group is in talks to acquire a majority stake in Mumbai-based Patni Computer Systems. The NTT Group plans to acquire the 66 per cent stake held by the Patni brothers, Narendrakumar, Gajendra Kumar and Ashok Kumar and private equity firm General Atlantic. While
December 2009
70
Capital Markets: Primary Capital Market would get a higher price for his shares rather than restricting his issue price to a price band. Institutional investors would get the required number of shares they had asked for at the bid price entered by them. Critics of the pure auction method opined that the new method is unlikely to significantly impact the way funds are raised in an FPO as the price band would be narrow since the market price of the company would act like the cap price. Figure 15.1 Resources raised from domestic primary capital markets
40000 35000 30000 25000 20000 15000 10000 5000 0
SEBI introduces pure auction method of book building for follow on public oers (FPO)
Total floatations raised in November 2009 stood at Rs.6,619.9 crore. We cannot say that there was a drastic dip in capital raised from the primary market in November 2009 as data for November 2009 is yet to come in. Market regulator SEBI introduced the pure auction method of book building for follow on public offers (FPO). According to the new method, institutional bidders could bid for shares at any price above the floor price. The allotment of shares would be done on price priority basis and at differential prices. However, retail individual investors would be allotted shares at the floor price. According to SEBI Chairman, C B Bhave, the issuer could have a pure auction for the QIB portion but not the retail portion. He also said that it would be permissible for the issuer to allot shares to the highest bidder. Some market participants believe that the issuer would stand to benefit from the new process as he
Nov 08 Total
Feb 09
May 09 Domestic
Aug 09 Overseas
Nov 09
Table 15.1 Resources raised from capital markets: By issue types (Rs.crore)
Total Floatations 11,905.94 16,474.38 12,735.61 7,493.29 10,356.69 7,542.13 13,873.12 9,748.43 36,621.92 19,853.57 20,661.66 19,457.41 6,619.94 Apr-Nov 61,090.04 1,34,378.19 Apr-Mar 1,08,150.00 Domestic Floatations 11,905.94 16,474.38 12,735.61 7,493.29 10,212.29 7,542.13 13,741.19 9,700.30 24,266.80 19,853.57 20,143.33 14,046.27 5,705.74 Apr-Nov 59,910.16 1,14,999.33 Apr-Mar 1,06,825.72 Domestic Shares 3,759.44 1,540.23 119.96 98.29 1,446.78 2,006.13 5,268.52 1,343.45 15,140.80 9,495.12 12,433.31 7,373.74 2,424.29 Apr-Nov 28,978.88 55,485.37 Apr-Mar 32,184.14 Domestic Debt 8,146.50 14,934.15 12,615.65 7,395.00 8,765.50 5,536.00 8,472.67 8,356.85 9,126.00 10,358.45 7,710.02 6,672.52 3,281.45 Apr-Nov 30,931.28 59,513.96 Apr-Mar 74,641.58 Public 0.00 41.25 0.00 1,524.48 0.00 0.00 0.00 300.58 3,678.69 6,697.94 3,384.43 1,976.85 704.44 Apr-Nov 1,961.26 16,742.94 Apr-Mar 3,526.99 Rights 146.86 1,349.92 0.48 3.50 638.97 0.00 23.86 5.29 19.55 198.08 1,819.96 221.54 0.00 Apr-Nov 9,677.51 2,288.28 Apr-Mar 11,670.39 PPL 11,759.08 15,083.21 12,735.12 5,965.31 9,573.31 7,542.13 13,717.33 9,394.43 20,568.57 12,957.55 14,938.93 11,847.88 5,001.30 Apr-Nov 48,271.38 95,961.81 Apr-Mar 91,628.34 Overseas Floatations 0.00 0.00 0.00 0.00 144.40 0.00 131.93 48.13 12,355.11 0.00 518.33 5,411.14 914.21 Apr-Nov 1,179.88 19,378.86 Apr-Mar 1,324.28
December 2009
Capital Markets: Secondary Capital Markets
71 ings agencies downgraded a number of Dubai statebacked companies. On the other hand, economic data remained positive with the October 2009 numbers indicating a lower decline of 6.6 per cent in exports (USD 13.2 billion in October 2009 vis-a-vis USD 14.1 billion last year). Also, the IIP grew by 9.3 per cent during September 2009 on a y-o-y basis. The GDP growth was recorded at 7.9 per cent for the September 2009 quarter beating expectations of many economic forecasters. Figure 15.2 CMIE Overall Share Price Index (Cum. Daily Returns (%): November 2009)
8 6 4
Markets thrive on domestic cues

The CMIE Overall Share Price Index (COSPI) rose by 7.6 per cent in November 2009 compared to the 6.6 per cent decline in the previous month. The highest gainer during the month was the CMIE minerals index, which rose by 33.8 per cent. The month, however, was plagued by its share of willies. It started on a jittery note with COSPI declining by 3.2 per cent on 3 November 2009, the highest fall in the month. As per media reports, the Australian Central Banks interest rate hike for the second time this year fueled speculation that borrowing costs would begin to rise propelling Governments to pull back the various fiscal stimuli announced by them to prop up their economies thereby hampering the fragile recovery process. The second major fall occurred on 26 and 27 November 2009. Dubai World, which had bulk (USD 59 billion) of the UAEs total debt of USD 80 billion, asked its creditors to postpone its forthcoming payments until May 2010. It also hired global accountancy group Deloitte to help with its financial restructuring. Consequently, major credit rat-
2 0 -2 -4
3Nov09
12Nov09
21Nov09
30Nov09
Table 15.2 COSPI and key secondary market indicators

No. of Cos COSPI Mkt. Cap of COSPI Cos P/E of COSPI Cos Returns on COSPI Volatility Liquidity Returns on Equally Wtd. COSPI (%) -9.42 13.70 -7.84 -5.04 3.56 22.78 47.19 -3.94 6.51 13.66 8.83 -6.06 7.25 Mkt Cap. of all listed Cos (Rs.crore) 29,57,021 32,82,344 31,36,037 30,04,721 32,23,923 37,28,897 50,09,203 48,95,493 52,93,463 54,55,523 59,98,436 56,42,438 59,68,068 No. of Listed Cos
2,256 2,125 2,087 2,036 2,063 2,159 2,163 2,392 2,319 2,456 2,572 2,631 2,540
(Rs.crore) 27,78,905 31,03,839 29,58,051 28,33,673 30,56,926 35,57,238 48,39,777 47,25,657 51,19,576 52,81,491 57,37,134 53,99,302 57,85,123
(Times) 16.13 18.03 18.45 18.82 20.14 23.45 31.61 19.61 20.46 21.41 23.16 20.50 21.55
(%) -6.50 11.70 -4.59 -4.35 7.77 16.30 35.77 -2.36 8.16 2.57 7.71 -6.55 7.62
(%) 3.18 2.12 2.49 1.52 2.00 2.18 3.76 1.98 2.07 1.62 0.81 1.08 1.52
(Times) 1.67 1.42 1.36 1.37 1.24 1.06 0.80 0.88 0.84 0.84 0.80 0.88 0.85
5,051 5,046 5,046 5,042 5,044 5,045 5,045 5,048 5,045 5,049 5,054 5,060 5,062
December 2009
72 At it meeting held on 9 November 2009, market regulator SEBI brought about some changes to the Listing Agreement/ Issue of Capital and disclosure requirements (ICDR). Shares reserved for a companys employees in public issues will have a ceiling of Rs.1 lakh on the value of allotment per employee and five per cent of the post issued capital will be reserved for employees. Currently, ICDR regulations permit reservation of up to 10 per cent of the issue size for employees with no ceiling on the number of shares that could be allotted. All listed entities, with subsidiaries, have an option to submit consolidated financial statements as per IFRS, but these entities will have to continue filing their stand-alone results as per Indian GAAP. Companies have to disclose balance sheet items, with audited figures or unaudited figures with limited review, on a half-yearly basis. Firms will mandatorily disclose audited results within 45 days of the end of the quarter. Audited annual results have to be disclosed within 60 days (from the existing 90 days) for companies opting to submit annual audited results on a stand-alone basis in lieu of the last quarter un-audited financial results. In order to enable well established and compliant listed companies to access the Indian primary market quickly through follow-on public offerings and rights issues, SEBI introduced the concept of Fast Track Issues (FTIs) in November 2007. In this meeting, the SEBI Board relaxed certain requirements of FTIs. The average market capitalisation of public shareholding of the issuer stands reduced to Rs.5,000 crore rupees from Rs.10,000 crore. Also, the annualised trading turnover will be pegged to free float for companies whose public shareholding is less than 15 per cent of the issued capital. For rights issues, the issuer is required to give only the audited accounts of the last financial
Capital Markets: Secondary Capital Markets year and audited or unaudited financials with limited review results for the said period instead of five years restated financials which were required earlier. The Board decided that the requirement for disclosure of financials in FPOs of identical instruments quoted on a stock exchange may be brought on par with rights issues for companies that are eligible to make an issue under the fast track route. The regulator also issued guidelines for companies listed on the Small and Medium Enterprises exchange. Some of the important guidelines are as follows:Companies listed on the SME exchanges would be exempted from eligibility norms applicable for IPOs & FPOs Minimum IPO application size and trading lot for SMEs will be Rs 1 lakh. Companies desirous of listing on the SME platform should have an upper limit of Rs.25 crore paid-up capital. For listing on NSE and BSE, minimum paid-up capital of Rs.10 crore will be required. A minimum number of investors shall be specified for the IPO only. There shall be no continuing requirement of maintaining the minimum number of investors. Companies listed on the SME exchange shall compulsorily migrate to an equity exchange on exceeding the Rs.25 crore post issue paid up capital limit. If a follow on offer/rights issue results in the crossing of the Rs.25 crore mark, the company will have to migrate to the equity exchange. Companies will have to prepare their financial results on a half yearly basis instead of a quarterly basis. Companies will have to comply with all the provisions of corporate governance.
December 2009
Capital Markets: Derivative Markets
73 outlook on the index. Yet, the index PCR continued to remain above one. This indicated that there were more put options written during the month than call options. The stock PCR increased steadily from 0.32 times on 18 November 2009 to 0.46 times in 26 November 2009, signalling a bullish outlook on the stocks in which options were traded. However, it fell to 0.24 at the end of the month, signalling a bearish outlook on stocks in which options were traded. The turnover in the derivatives segment of the NSE added up to Rs.16,61,816 crore, the highest in atleast the last 13 months. This was more than twice the turnover recorded in the year-ago month. Table 15.3 Avg. PCR: Option PCR inches up
Index option Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 0.97 0.94 0.91 0.93 0.93 1.29 1.17 1.25 Stock option 0.45 0.33 0.23 0.31 0.31 0.31 0.29 0.36 Total option 0.95 0.92 0.87 0.90 0.89 1.21 1.10 1.19
Derivative market remains bullish in November 2009

In November 2009, the index return and change in outstanding open interest indicated a strong upward trend. The NSE Nifty yielded positive daily returns for 60 per cent of the trading days in the month. The open interest also increased during most part of the month, signalling a bullish trend in the market. On 26 November, the day the news of the Dubai World debt crisis broke out, the index shed 2 per cent and turnover touched a record high of Rs.1,37,130 crore. Open interest inched up too though marginally. On 27 November 2009, as the index fell again, the turnover and the open interest declined by a sharp 30 per cent, indicating a bullish sentiment. The NIFTY yielded a return of over four per cent in the next four trading days. The movement in stock and index put call ratios (PCR) indicated a bullish sentiment during 20-25 November 2009. However, the trend reversed towards the end of the month. The index PCR inched up from 1.1 times on 20 November 2009 to 1.33 times in 25 November 2009, indicating a bullish outlook on the index. It fell to 1.18 at the end of the month, signalling a bearish
Table 15.4 Trade Statistics NSE (Derivatives): Record high turnover in November 2009
Index Index Stock option option option Notional Premium Notional turnover* turnover* (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) Nov 2008 2,56,950 1,87,211 2,92,134 9,475 9,061 Dec 2008 2,69,997 2,30,466 3,13,615 8,518 15,088 Jan 2009 2,34,141 2,15,830 3,09,271 8,203 18,876 Feb 2009 2,05,679 1,85,121 3,05,599 7,040 15,971 Mar 2009 2,76,677 2,89,362 4,44,099 10,222 29,793 Apr 2009 3,01,764 3,56,383 4,53,788 9,548 31,427 May 2009 3,17,415 4,48,155 4,30,515 10,546 31,168 Jun 2009 3,46,934 5,89,657 5,45,643 10,373 49,746 Jul 2009 3,82,924 4,50,632 7,01,247 12,626 38,706 Aug 2009 3,66,312 4,12,363 6,58,757 11,189 36,214 Sep 2009 3,02,425 4,34,119 6,09,076 9,354 42,758 Oct 2009 3,29,610 4,65,829 6,69,591 9,477 45,387 Nov 2009 3,63,523 4,38,220 8,16,408 43,666 Note: *Notional turnover = (strike price + premium) * quantity Index future turnover Stock future turnover Stock option Premium (Rs.crore) 432 694 834 600 997 1,291 1,578 2,097 1,331 1,103 1,259 1,142 Total turnover Total Premium
(Rs.crore) 7,45,356 8,29,166 7,78,118 7,12,370 10,39,930 11,43,362 12,27,252 15,31,980 15,73,509 14,73,646 13,88,378 15,10,417 16,61,816
(Rs.crore) 9,907 9,212 9,037 7,640 11,219 10,839 12,124 12,470 13,957 12,292 10,613 10,619
December 2009
74
Capital Markets: Institutional Activity He was of the opinion that the participatory note (PN) regime was not required to be tweaked at least in the near term, as many foreign portfolio investors were opting to register directly with the regulator. PNs are derivative instruments whose underlying is shares of Indian companies issued by foreign portfolio investors to overseas investors who do not wish to invest directly in India. Asked if there was any move to further ease FII registration norms, CB Bhave, Chairman SEBI said that there werent any more issues that needed further relaxation and that the feedback received from participants was that they were comfortable with the current process. For the third consecutive month, mutual funds remained bearish on Indian equities. They withdrew Rs.695.4 crore in November 2009 over the Rs.5,194.4 crore withdrawn in October 2009. Unlike FIIs, their sales exceeded purchases during the April-November 2009 period over the year-ago period.
SEBI not to tweak PN route norms in near future

From a high of Rs.19,939.4 crore in September 2009, FII interest in equities remained muted thereafter. Net FII investment in equities stood at Rs.5,469 crore in November 2009, lower than the Rs.8,303.8 crore invested in October 2009. Nevertheless, FII net investment remained strong at Rs.80,581.8 crore during the April-November 2009 period vis-a-vis the Rs.42,899.9 crore outflow a year-ago, a fall-out of the GLC. In an interview to the Economic Times dated 7 December 2009, CB Bhave, Chairman SEBI said that unless foreign portfolio investors were allowed entry and exit without being hobbled, it would be difficult to attract foreign investments into equities. He was replying to a query on whether the regulator would control the inflows into the country.
Table 15.5 Equity transactions by FIIs (Rs.crore)

All India Purchase Nov 2008 28,462.6 Dec 2008 29,711.2 Jan 2009 28,679.2 Feb 2009 21,863.2 Mar 2009 32,177.4 Apr 2009 40,881.7 May 2009 77,886.4 Jun 2009 64,250.0 Jul 2009 70,256.4 Aug 2009 51,979.9 Sep 2009 69,884.9 Oct 2009 69,514.8 Nov 2009 49,974.5 Apr-Nov 2008-09 4,39,642.4 2009-10 4,94,628.6 Apr-Mar 2008-09 5,52,073.4 Source: SEBI All India Sales 31,824.1 28,391.8 32,929.4 24,553.7 31,908.4 33,497.5 57,279.5 61,025.1 58,631.1 47,951.2 49,945.4 61,210.7 44,505.3 Apr-Nov 4,82,542.4 4,14,045.8 Apr-Mar 6,00,325.7 All India Net -3,362.1 1,319.1 -4,250.3 -2,690.3 269.2 7,384.1 20,606.9 3,224.7 11,625.0 4,028.9 19,939.4 8,303.8 5,469.0 Apr-Nov -42,899.9 80,581.8 Apr-Mar -48,252.2
Table 15.6 Equity transactions by Mutual Funds (Rs.crore)

Net investment Nov 2008 8,458.20 8,827.90 -369.70 Dec 2008 9,530.20 9,603.20 -73.00 Jan 2009 10,249.40 11,114.50 -865.10 Feb 2009 6,063.30 7,559.10 -1,495.80 Mar 2009 11,723.00 10,246.00 1,477.00 Apr 2009 12,137.80 12,098.90 38.90 May 2009 18,956.70 16,665.70 2,291.00 Jun 2009 22,215.10 21,375.90 839.20 Jul 2009 22,559.50 20,731.80 1,827.70 Aug 2009 17,451.50 16,880.90 570.60 Sep 2009 15,852.90 18,186.60 -2,333.70 Oct 2009 16,252.00 21,446.40 -5,194.40 Nov 2009 14,751.80 15,447.20 -695.40 Apr-Nov Apr-Nov Apr-Nov 2008-09 1,03,791.80 96,450.20 7,341.60 2009-10 1,40,177.30 1,42,833.40 -2,656.10 Apr-Mar Apr-Mar Apr-Mar 2008-09 1,41,357.70 1,34,973.00 6,384.70 Data is provisional and subject to revision/correction. Source: SEBI Purchase Sales
December 2009
Capital Markets: Perceptions on Markets
75 Royal Bank of Scotland is underweight on India. The market can go a bit higher but it would be volatile in 2010, says Emil Wolter, Head of Regional Asian Equity Strategist, RBS. According to him, valuations are stretched. Going forward, he also sees regulators tightening liquidity and raising interest rates. He said this to CNBC TV 18, on 2 December 2009. In an interview to CNBC TV 18 on 2 December 2009, Vibhav Kapoor of IL&FS said, I think the broad range is 4,750-5,200, but maybe with the momentum temporarily it could stretch to 5,300. But I think the sustainable range still remains 4,750 to 5,200. According to him, valuations are suddenly becoming stretched in many of the stocks. There is a feeling of sort of momentum play being there, which we know can turn at any point of time. Global markets, which are really the drivers of this rally, also perhaps could be going in for an intermediate correction, sometime in the next couple of weeks. In an interview to CNBC TV 18 on 18 November 2009, Nitin Rakesh, CEO of Motilal Oswal Asset Management Company said, that Where we stand today, all triggers point to the fact that the markets should continue to stay buoyant and there will be periods of going above and below the mean as well. But overall as I said, all signs are that we have strong global tailwinds, strong liquidity flows, good growth environment in most sectors and companies. So we continue to be positive.
Markets likely to remain range-bound

At the end of November 2009, market participants felt that valuations looked overstretched and markets would remain range-bound in the near term. Many believed that the global markets and a possibility of rising domestic interest rates would determine the direction of the market. According to Manishi Raychaudhuri, Managing Director and Head of Research, BNP Paribas Securities, As far as the last few days of the year are concerned, the market is likely to move in a range, which it has kind of marked out for itself, which is somewhere in the range of 15,500 to 17,500 partly because many of the investors both long only and hedge funds are unlikely or possibly unwilling to take fresh positions at this point of time. He said this to CNBC TV 18 on 2 December 2009. Mickey Doshi, MD and Country Head at Credit Suisse said that a correction of 15-20 per cent on the downside from the current level was possible. According to him, a lot of liquidity has been induced because of stimulus and because of global stimulus, money is coming into the system. Another possible trigger, according to him, would be a rate hike. Interest rates can bottom out and start going up which makes an alternative class more attractive. He was speaking to CNBC TV 18 on 2 December 2009.
Table 15.7 Average daily trading volumes decline in November 2009

BSE Sensex (1978-79=100) (% change) 9,093 -7.10 9,647 6.10 9,424 -2.31 8,892 -5.65 9,709 9.19 11,403 17.46 14,625 28.26 14,494 -0.90 15,670 8.12 15,667 -0.02 17,127 9.32 15,896 -7.18 16,926 6.48 Avg. Daily Vol.(Rs.crore) A-Group B-Group Total 3,241 241 3,539 3,575 229 3,851 3,140 342 3,525 2,464 336 2,859 3,042 385 3,489 4,299 817 5,232 5,262 1,022 6,427 5,776 1,297 7,236 4,926 1,005 6,043 4,121 1,535 5,825 4,186 1,799 6,211 3,990 1,502 5,700 3,766 1,323 5,257 NSE 50 Index Avg. Daily Vol. (3rd Nov95=1000) (% change) (Rs.crore) 2,755 -4.52 9,618 2,959 7.41 10,141 2,875 -2.85 9,559 2,764 -3.87 7,887 3,021 9.31 10,140 3,474 15.00 15,688 4,449 28.07 19,128 4,291 -3.55 21,928 4,636 8.05 18,528 4,662 0.55 17,379 5,084 9.05 18,253 4,712 -7.32 18,148 5,033 6.81 16,224
December 2009
76
Capital Markets: Mutual Funds When asked if the regulator was concerned that a significant amount of money flowing into mutual funds were from institutional investors in spite of the regulator asking mutual funds to increase their retail base, SEBI Chairman CB Bhave said that the regulator was planning to tighten the 20-25 rule (minimum of 20 investors and no investor holding more than 25 per cent in a scheme). Figure 15.3 Assets Under Management (Rs.crore)
800000 700000 600000 500000 400000 300000 200000 100000 0 Oct 08 Dec 08 Feb 09 Apr 09 Jun 09 Aug 09 Oct 09
Highest AUM in October 2009 since April 2004

Total Assets Under Management (AUM) of the mutual fund industry swelled to Rs.7.7 lakh crore in October 2009, the highest since April 2004. Reliance Capital Asset Management retained its leadership position with an average of Rs.1.2 lakh crore of assets under its management followed by HDFC Asset Management Company (Rs.93,316 crore). Total sales of the industry rose by 31.7 per cent in October 2009 aided by both the new as well as existing scheme sales. According to A Balasubramanian, CEO, Birla Sun Life Asset Management, retail money parked in bank deposits offering highlyattractive rates had begun to mature and was flowing into the short-term bond funds and monthly income plans. A total of 57 money market oriented schemes collected Rs.7 crore while 173 income schemes mopped up Rs.3.5 lakh in October 2009.
Table 15.8 Assets under management increase in October 2009

Schemes Launched (in Nos.) 68 36 21 5 3 22 4 6 6 5 7 15 15 Apr-Oct 464 58 Apr-Mar 551 New Schemes Sales (Rs.crore) 7,004 4,229 762 37 10 4,854 119 1,462 494 2,818 722 2,296 6,270 Apr-Oct 93,285 14,181 Apr-Mar 1,03,177 Existing Schemes Sales (Rs.crore) 3,32,616 3,27,697 4,26,831 5,03,626 4,81,510 6,14,645 7,08,362 6,66,417 7,18,553 9,26,108 9,17,938 7,94,848 10,43,925 Apr-Oct 29,68,867 57,76,151 Apr-Mar 53,23,176 Total Sales (Rs.crore) 3,39,620 3,31,926 4,27,593 5,03,663 4,81,520 6,19,499 7,08,481 6,67,879 7,19,047 9,28,926 9,18,660 7,97,144 10,50,195 Apr-Oct 30,62,152 57,90,332 Apr-Mar 54,26,353 Total Redemption (Rs.crore) 3,86,413 3,18,136 4,27,495 4,36,860 4,47,491 7,18,196 5,54,289 6,37,731 8,02,984 8,05,247 8,85,987 9,41,471 9,08,904 Apr-Oct 31,06,472 55,36,613 Apr-Mar 54,54,650 Total Net investments (Rs.crore) -46,793 13,790 98 66,803 34,029 -98,697 1,54,192 30,148 -83,937 1,23,679 32,673 -1,44,327 1,41,291 Apr-Oct -44,320 2,53,719 Apr-Mar -28,297 Assets Under Management (Rs.crore) 3,94,711 4,05,112 4,13,365 4,78,258 5,08,670 4,17,300 5,93,516 6,64,450 5,82,679 7,21,886 7,56,638 6,27,999 7,74,796 Apr-Oct 36,68,700 47,21,964 Apr-Mar 58,91,405
December 2009
Money & Banking: Money Supply
77 high government borrowing. Total government borrowing, central and state, is scheduled to be much higher at Rs.5.8 lakh crore for 2009-10 compared to Rs.3.8 lakh crore in 2008-09. Foreign exchange assets of banks reported an improved growth of 8.7 per cent on as 20 November 2009. This was the fastest that they grew since 19 December 2008. Figure 16.1 Growth in money supply (%)
23.0 22.0 21.0 20.0 19.0 18.0
Money supply to end 2009-10 with 17% growth

Money supply is expected to end financial year 200910 with a 17 per cent growth compared to a 18.6 per cent growth in 2008-09. It was growing by more than 20 per cent till end-July 2009 and slowed thereafter to 18.3 per cent by end October 2009. It recovered a little to 18.4 per cent as on 20 November 2009. Growth in time deposits, the biggest component of money supply, slowed from over 23 per cent till midJune 2009 to 18.9 per cent by mid-November 2009. It is unlikely to slow down significantly further given that investors are likely to make term deposits to avail of the income tax exemption allowed on five year fixed deposits. The slower growth in money supply in 2009-10 is on account of slower credit growth. We expect credit growth to be 12 per cent in 2009-10 compared to 17.5 per cent in 2008-09. Some of the effect of the sharp slowdown in credit growth on money supply will be offset by the very
Table 16.1 Sources of Money Supply (% change over previous year)

RBI Comm. Net RBI Comm. Bank Foreign Govt. NNML* of credit banks bank credit banks credit exch. currency RBI to govt. credit credit to comm. credit to comm. assets liab. to to govt. to govt. sector to comm. sector of banks public sector 24 Oct 08 10.9 16.0 -0.2 27.0 27.0 22.4 9.9 140.7 21 Nov 08 10.1 21.0 -11.2 24.9 24.9 12.6 8.4 114.5 19 Dec 08 15.5 31.0 -6.2 22.5 22.5 11.7 9.4 112.2 30 Jan 09 22.4 35.1 202.8 18.3 18.4 6.5 9.6 100.8 27 Feb 09 19.4 38.7 301.7 17.3 17.5 5.9 9.3 88.2 31 Mar 09 19.3 41.0 672.9 16.5 16.9 4.4 9.0 84.5 24 Apr 09 20.6 47.5 842.6 16.9 17.3 1.5 8.6 74.0 22 May 09 22.3 47.7 839.6 15.2 15.6 -7.7 8.8 15.9 19 Jun 09 27.7 48.6 805.2 15.1 15.5 -1.9 8.1 26.1 31 Jul 09 32.2 45.5 744.0 15.1 15.5 4.6 7.3 47.0 28 Aug 09 34.0 47.3 636.9 13.8 14.1 6.1 6.1 54.9 25 Sep 09 38.4 50.9 478.8 12.2 12.6 -0.4 8.8 16.0 23 Oct 09 28.1 46.6 370.0 9.6 9.7 3.3 7.9 16.4 20 Nov 09 27.4 41.8 256.4 10.0 10.2 8.7 7.3 19.6 *NNML: Net non monetary liabilities Net NNML*
43.7 31.1 31.6 20.7 9.5 15.5 7.5 -13.1 0.5 10.2 13.4 2.9 -2.0 4.0
December 2009
78 Table 16.2 Components of Money Supply

Outstanding(Rs.crore) Currency Deposit M1 Time with money of deposits public the with public banks 6,10,860 5,16,924 11,28,196 32,25,770 6,18,986 4,96,095 11,14,972 32,70,611 6,26,489 4,98,775 11,25,264 33,11,422 6,33,804 5,21,058 11,54,861 34,08,651 6,50,120 5,36,492 11,86,612 34,68,070 6,66,364 5,86,820 12,53,184 35,10,835 6,87,520 5,67,639 12,55,159 36,21,289 6,95,219 5,73,317 12,68,537 36,69,741 6,90,813 5,58,499 12,49,312 36,87,409 6,76,143 5,91,452 12,67,595 37,56,145 6,79,226 6,00,835 12,80,061 37,64,270 6,93,445 6,13,770 13,07,215 37,88,598 7,13,005 5,97,832 13,10,837 38,44,491 7,23,575 5,81,707 13,05,282 38,90,003 Broad money (M3) 43,57,968 43,88,871 44,36,686 45,63,513 46,54,682 47,64,019 48,76,448 49,38,278 49,36,721 50,23,740 50,44,332 50,95,812 51,55,329 51,95,285
Currency with public
24 21 19 30 27 31 24 22 19 31 28 25 23 20
Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09
% change over previous year Deposit M1 Time Broad money of deposits money the with (M3) public banks 20.7 12.5 16.8 21.7 20.5 17.9 2.3 10.4 22.5 19.2 17.3 2.3 10.2 23.4 19.7 17.5 -8.2 4.3 23.7 18.1 17.3 5.0 11.4 23.2 19.9 17.3 0.5 8.7 22.5 18.6 16.7 9.8 13.4 23.5 20.7 15.4 12.1 13.9 23.1 20.6 14.3 10.8 12.7 23.0 20.2 14.3 14.1 14.2 22.0 20.0 15.8 14.1 15.0 20.9 19.4 18.3 10.1 14.3 20.7 19.0 16.7 15.7 16.2 19.2 18.3 16.9 17.3 17.1 18.9 18.4
Table 16.3 Sources of Money Supply (Rs.crore)

Comm. RBI Comm. banks credit banks credit to comm. credit to govt. sector to comm. sector 24 Oct 08 -1,08,911 10,99,674 1,381 28,34,487 21 Nov 08 -61,506 11,10,842 1,514 28,46,296 19 Dec 08 -31,632 11,33,913 1,381 28,55,494 30 Jan 09 -46,952 12,18,181 4,399 28,54,812 27 Feb 09 -39,791 12,36,710 6,841 28,89,535 31 Mar 09 61,580 12,15,619 13,820 29,99,517 24 Apr 09 51,150 12,86,112 13,036 29,65,777 22 May 09 57,275 13,03,833 12,995 29,69,996 19 Jun 09 50,435 13,39,520 12,745 30,02,232 31 Jul 09 27,846 13,84,953 11,656 30,37,003 28 Aug 09 10,151 14,20,112 10,176 30,43,039 25 Sep 09 35,482 14,24,124 10,807 31,10,418 23 Oct 09 43,722 14,08,389 6,491 31,05,649 20 Nov 09 72,328 14,15,255 5,396 31,32,112 *NNML: Net non monetary liabilities RBI credit to govt. Foreign Govt. NNML* of Net exch. currency RBI NNML* assets liab. to of banks public 13,04,772 12,45,691 12,36,799 12,57,323 13,03,156 13,52,184 13,33,287 13,00,114 13,35,434 13,75,027 13,93,023 13,64,380 13,48,070 13,54,053 9,731 9,787 9,841 9,917 9,984 10,054 10,121 10,212 10,212 10,212 10,212 10,504 10,504 10,504 3,33,117 3,24,871 2,98,807 3,13,735 3,56,854 3,87,927 3,78,042 3,53,101 3,88,008 4,20,337 4,14,170 4,05,107 3,87,606 3,88,563 7,83,168 7,63,756 7,69,109 7,34,167 7,51,753 8,88,754 7,83,034 7,16,146 8,13,856 8,22,957 8,42,382 8,59,904 7,67,497 7,94,365 M3
43,57,968 43,88,871 44,36,686 45,63,513 46,54,682 47,64,019 48,76,448 49,38,278 49,36,721 50,23,740 50,44,332 50,95,812 51,55,329 51,95,285
December 2009
79 The sharp rise in RBI credit to the Central Government compared to the latters surplus with the RBI till end February 2009 and the improvement in foreign exchange assets of the RBI are responsible for the improvement in the growth of reserve money.
Growth in reserve money improves

Growth in reserve money improved to 11.8 per cent as on 27 November 2009 compared to 6.6 per cent as on 30 October 2009. It has been continuously improving since end-August 2009. It had continuously declined during May-August 2009.
Figure 16.2 M3 to reserve money ratio (%)

5.4 5.2 5.0 4.8 4.6 4.4
Figure 16.3 Growth in reserve money (%)

30 25 20 15 10 5 0
4.2
Dec 06
Oct 07
Aug 08
Jun 09 Nov 09
Table 16.4 Sources of Reserve Money

Outstanding(Rs.crore) RBI RBI Foreign Others Reserve credit credit exch Money to to banks assets central & comm. of RBI govt. sector -9,080 23,932 12,43,184 -3,22,907 9,35,129 -36,126 23,841 12,30,176 -3,24,014 8,93,877 -35,101 15,616 12,16,630 -3,08,662 8,88,483 -47,690 10,660 12,14,592 -4,11,946 8,74,480 -39,992 13,954 12,60,424 -4,48,760 8,87,717 61,761 24,177 12,80,116 -4,73,780 9,88,001 50,460 15,948 12,61,219 -4,37,549 9,60,395 61,170 13,697 12,35,717 -3,55,565 9,55,019 43,634 11,665 12,77,467 -3,91,948 9,40,818 27,887 11,952 13,02,959 -4,41,642 9,32,632 10,102 10,176 13,20,955 -4,54,144 9,37,324 35,296 10,807 13,13,485 -4,44,064 9,65,172 69,611 6,054 13,04,615 -3,83,794 9,96,486 67,722 5,415 13,11,858 -3,85,777 9,99,218 % change over previous year RBI RBI Foreign Reserve credit credit exch Money to to banks assets central & comm. of RBI govt. sector 1,605.8 18.7 20.2 1,041.3 13.6 9.9 304.7 12.1 6.9 387.6 5.6 -0.3 458.2 5.0 4.4 279.1 3.6 6.4 758.8 0.5 8.1 232.5 -7.6 -0.2 152.3 -4.1 -1.0 225.7 0.8 -1.1 193.3 2.3 -1.1 35.4 -2.7 0.9 -74.7 4.9 6.6 -77.3 6.6 11.8
31 28 26 30 27 31 24 29 26 31 28 25 30 27
December 2009
80
Money & Banking: Scheduled Commercial Banks consequently new announcements during the June 2009 quarter had fallen to Rs.1.7 lakh crore. They picked up in the September 2009 quarter to Rs.3.2 lakh crore and further to Rs.3.3 lakh crore during 1 October 2009-7 December 2009. The healthy rabi crop expected is also expected to contribute to improvement in agricultural credit. We also expect some improvement in retail credit due to traction from the housing and automobile sectors. Credit demand from oil companies may also see some rise as crude prices are expected to be higher in the March 2010 quarter than in the December 2009 quarter. Figure 16.4 Growth in non-food credit decelerates (%)
28 26 24 22 20 18 16 14 12 10
Growth in bank credit back into double digits

Growth in scheduled commercial bank credit inched back into double digits by mid-November 2009 after slipping into single digits at the end of October. As on 20 November 2009, bank credit was 10.1 per cent higher than its year-ago level. We expect growth in bank credit to further improve during the remaining months of the current year. We expect 2009-10 to end with a 12 per cent growth in scheduled commercial bank credit. The improvement in credit growth is expected due to continuation of the improved industrial activity, the ongoing capex investments by corporates and healthy agricultural credit offtake due to a healthy rabi crop. From 2.1 per cent in May 2009, growth in industrial production picked up to average 7.22-10.96 per cent during the June-September 2009. We expect the improved industrial activity to continue during the remaining months of the year thereby resulting in improved demand for bank credit for working capital. We also expect an improvement in credit demand for capital expenditures by companies. Corporates had reined in announcements of capacity expansions and
Table 16.5 Assets of Scheduled Commercial Banks (% change over previous year)
Cash in Balance hand with RBI Assets Invst. Invst. Food Loans Inland Foreign Nonwith govt. oth. credit bill bill food banking secu. secu. purch. & purch. & credit system disc. disc. 60.6 6.0 -11.6 40.2 28.6 22.4 22.8 28.2 70.9 10.7 -17.0 29.3 26.6 12.0 12.4 26.0 29.6 18.7 -18.1 29.5 23.8 12.3 3.6 23.0 21.8 23.5 -24.3 10.5 20.2 5.6 -5.3 19.5 45.1 20.6 -19.7 9.3 19.1 5.7 -6.1 18.5 34.9 20.6 -18.6 4.1 18.3 3.2 -4.6 17.8 45.0 21.9 -19.0 19.4 18.9 4.3 -9.2 18.0 32.5 23.8 36.5 8.2 17.4 0.1 -18.3 16.5 12.2 33.2 36.8 11.4 16.1 -3.2 -14.1 15.2 4.9 33.3 36.2 10.2 16.6 3.7 -11.9 15.9 -1.5 34.8 36.2 10.8 14.9 3.0 -12.3 14.2 -11.4 39.6 29.2 -6.1 13.3 8.0 -13.3 13.0 -34.3 34.9 19.6 -22.5 9.9 11.3 -15.4 10.1 -34.8 27.5 26.2 -15.3 10.4 11.5 -10.9 10.6 Total bank credit 28.4 26.0 23.2 19.3 18.3 17.5 18.0 16.3 15.1 15.8 14.1 12.6 9.5 10.1
31 28 26 30 27 27 24 22 26 31 28 25 30 20
51.7 25.3 24.3 17.3 19.9 12.4 28.3 41.3 32.0 21.1 10.4 5.0 -1.9 3.0
17.0 -6.4 -14.7 -32.9 -23.5 -7.4 -12.5 -17.7 -32.5 -31.1 -32.4 -29.1 -8.9 10.0
December 2009
Money & Banking: Scheduled Commercial Banks Table 16.6 Outstanding sectoral credit
29 Aug 08 Non-food credit 23,14,897 Agri. & allied 2,62,481 Industry 9,32,313 SSI 1,30,554 Personal loan 5,52,090 Housing 2,68,804 Advance against FD 44,100 Credit cards 29,056 Education 23,795 Consumer durables 8,003 Services 5,68,013 Transport operators 35,989 Prof. & other serv. 38,494 Trade 1,29,353 Real estate loans 68,196 NBFC 77,039 19 Dec 08 24,70,164 2,89,501 10,18,564 1,46,833 5,68,474 2,71,683 50,055 29,359 26,760 9,122 5,93,625 38,145 40,653 1,40,142 76,463 86,120 Rs.crore 27 Feb 09 24,92,685 2,97,753 10,39,821 2,39,399 5,55,392 2,72,376 45,779 28,926 27,832 8,211 5,99,719 38,638 39,841 1,38,187 90,765 90,521 22 May 09 25,58,250 3,29,757 10,40,363 2,69,466 5,57,482 2,75,514 45,801 26,977 28,690 7,997 6,30,648 39,032 44,665 1,42,042 94,499 94,668 Growth(%) 28 Aug 29 Aug 19 Dec 27 Feb 22 09 08 08 09 26,23,551 26.8 24.8 19.5 3,29,847 18.5 22.7 21.5 10,96,764 30.6 30.2 25.8 2,77,728 9.7 7.4 69.4 5,64,689 17.4 14.6 8.5 2,84,721 13.9 8.8 7.5 44,760 7.3 23.6 6.7 24,889 86.3 69.6 8.8 32,017 38.4 37.0 33.8 7,832 -7.9 0.6 -14.5 6,32,251 35.3 27.6 19.2 39,250 27.5 30.6 17.6 46,383 56.0 55.6 48.8 1,47,354 21.7 19.7 14.9 96,701 46.3 48.1 61.4 1,01,281 62.7 40.1 41.7 May 28 Aug 09 09 17.6 13.3 24.5 25.7 21.2 17.6 52.9 112.7 5.6 2.3 5.0 5.9 8.5 1.5 1.4 -14.3 34.4 34.6 -3.6 -2.1 20.5 11.3 10.7 9.1 39.8 20.5 16.0 13.9 54.8 41.8 31.5 31.5
81
Table 16.7 Outstanding industry-wise credit

29 Aug 08 Priority sector 7,66,506 Industry 9,32,313 Food processing 50,415 Textiles 96,982 Paper & paper products 14,446 Petroleum etc. 62,460 Chemicals 69,883 Rubber, plastic etc. 12,128 Iron and steel 88,276 Other metals 26,429 Engineering 56,562 transport equipments 33,192 Gems and jewellery 27,254 Construction 31,037 Infrastructure 2,09,390 19 Dec 08 7,64,060 10,18,564 52,661 1,02,009 15,752 79,681 74,694 12,767 96,832 29,070 63,705 35,794 28,131 34,901 2,37,236 Rs.crore 27 Feb 09 8,28,892 10,39,821 53,855 1,03,732 16,491 72,762 73,269 13,269 1,00,383 30,111 66,868 35,505 27,242 38,207 2,56,860 22 May 09 9,07,956 10,40,363 53,392 1,01,734 15,811 50,841 70,758 13,405 1,02,439 30,504 65,266 32,995 27,861 37,752 2,74,758 Growth(%) 28 Aug 29 Aug 19 Dec 27 Feb 22 09 08 08 09 9,27,322 20.8 13.0 19.2 10,96,764 30.6 30.2 25.8 53,137 25.6 17.6 10.7 1,06,033 23.1 18.4 12.5 15,795 23.9 25.4 23.4 60,273 91.8 114.5 78.2 73,303 27.1 28.0 19.4 13,496 30.4 34.0 34.0 1,08,758 33.7 24.7 37.0 31,271 27.4 34.8 26.5 61,766 24.4 28.3 31.2 35,850 27.5 28.3 25.2 29,141 15.1 13.0 9.9 37,421 48.3 57.0 58.8 3,03,013 35.8 38.5 35.1 May 28 Aug 09 09 22.7 21.0 21.2 17.6 5.7 5.4 8.3 9.3 14.4 9.3 7.5 -3.5 8.2 4.9 20.6 11.3 29.9 23.2 21.5 18.3 24.2 9.2 9.9 8.0 12.2 6.9 44.7 20.6 35.1 44.7
December 2009
82
Money & Banking: Scheduled Commercial Banks cent. The weighted average bank PLR was 12.60 per cent in November.
Corporates borrow less during April-November 2009

The demand for external funds from corporates was lower at Rs.3.6 lakh crore during April-November 2009 compared to nearly Rs.4 lakh crore during the corresponding year-ago period. This is mainly on account of two reasons lower working capital requirement due to lower commodity prices and higher internal accruals. Corporate India reported accelerated profit growth of 15.4 per cent, 19.9 per cent and 37.5 per cent in the latest three quarters. It is expected to post an even higher 44.7 per cent growth in the December 2009 quarter. Corporates met 64.2 per cent of their external fund requirements through non-bank sources during April-November 2009. External funds refer to funds not generated by companies through internal accruals but borrowed from others. The proportion was 33 per cent in the corresponding year-ago period. This may be because corporates are finding non-bank sources of funds to be cheaper than bank lending rates. For example, in November 2009, fiveyear paper was raised at a coupon of 8.55 per cent while three year papers was floated at 5.66-9.22 per
Deposit mobilisation remains robust

Deposit mobilisation remained robust at over 19 per cent as on 21 November 2009. Banks had ended 2008-09 with 19.9 per cent deposit growth. Growth in term deposits eased from around 24 per ent till end-March 2009 to 19.3 per cent by 20 November 2009. However, this was partially offset by a turnaround in demand deposit growth. Demand deposits were 0.23 per cent lower as on 28 March 2009 on an year-on-year basis. As on 20 November 2009, demand deposit growth had accelerated to 17.1 per cent. We expect the year to end with an 18 per cent growth in total deposits. Table 16.8 Sources of external funds for corporates (April to date)
Date Non-food credit 20 Nov Commercial paper 15 Oct Total oatations 30 Nov Equity oatations 30 Nov Debt oatations 30 Nov ECB 31 Oct Total a) Total oatations include equity b) ECB includes FCCBs 2008-09 2,66,274 16,767 61,075 30,144 30,931 52,627 3,96,744 as well as 2009-10 1,27,580 47,759 1,33,614 70,612 63,001 47,862 3,56,815 debt
Table 16.9 Assets of Scheduled Commercial Banks (Rs.crore)

Cash in Balance hand with RBI Assets with banking system 1,27,149 1,29,819 1,07,238 1,05,897 1,18,622 1,22,571 1,15,754 1,14,755 1,07,688 95,756 96,581 91,405 83,515 79,058 Invst. Invst. Food govt. oth. credit secu. secu. 9,88,906 10,49,160 10,77,126 11,58,338 11,76,105 11,55,786 12,25,715 12,49,566 12,99,787 13,19,125 13,53,376 13,57,137 13,33,996 13,47,011 12,185 11,414 10,870 9,967 10,452 10,624 10,378 17,485 16,896 16,476 16,085 15,885 14,568 14,188 51,473 50,394 53,123 45,521 48,430 46,211 48,976 58,780 56,416 48,891 49,111 42,418 39,904 41,852 Loans Inland Foreign bill bill purch. & purch. & disc. disc. 55,607 48,339 50,918 46,078 51,718 44,381 50,801 41,359 52,378 41,880 54,871 45,001 55,563 41,371 54,004 37,897 53,761 39,571 56,612 38,905 57,311 41,231 61,102 43,144 61,904 40,912 57,418 41,749 Nonfood credit 25,97,188 25,92,149 25,94,118 25,92,259 26,19,498 27,29,338 26,95,514 26,87,890 27,21,882 27,58,142 27,58,472 28,30,737 28,59,666 28,56,918 Total bank credit 26,48,660 26,42,543 26,47,241 26,37,780 26,67,928 27,75,549 27,44,490 27,46,670 27,78,299 28,07,033 28,07,583 28,73,155 28,99,570 28,98,770
31 28 26 30 27 27 24 22 26 31 28 25 30 20
26,424 23,100 23,226 21,609 21,322 20,281 23,338 26,800 25,390 23,800 23,429 24,665 25,926 23,548
2,65,773 2,33,607 2,19,867 1,96,677 1,94,466 2,38,195 2,22,852 2,16,462 2,06,391 2,09,614 2,10,431 2,25,681 2,42,199 2,32,481
25,44,714 25,45,547 25,51,143 25,45,620 25,73,670 26,75,677 26,47,556 26,54,769 26,84,967 27,11,516 27,09,041 27,68,910 27,96,753 27,99,603
December 2009
Money & Banking: Scheduled Commercial Banks Table 16.10 Liabilities with Scheduled Commercial Banks (% change over previous year)
Demand Time Total Liab. to Other deposits deposits deposits bank demand & time liab. 11.4 22.3 20.7 52.6 26.8 1.7 23.3 20.0 64.6 17.3 3.1 24.0 20.9 21.7 9.0 -10.2 24.4 18.7 13.2 4.1 3.5 24.0 20.9 22.1 2.4 -0.2 23.9 19.9 2.0 3.1 8.6 24.8 22.4 11.3 3.3 12.0 24.4 22.7 3.3 4.0 9.1 23.7 21.6 -19.9 4.6 14.7 22.9 21.8 -14.0 12.3 14.3 21.5 20.5 -15.7 11.0 10.6 21.4 19.8 -25.9 6.8 13.7 19.8 18.9 -38.2 -17.6 17.1 19.3 19.0 -37.9 6.7 Other borrowings 25.1 17.1 31.7 19.6 5.6 7.0 2.9 14.8 8.7 -0.4 10.9 -15.8 14.6 -12.7
83
31 28 26 30 27 27 24 22 26 31 28 25 30 20
Table 16.11 Liabilities with Scheduled Commercial Banks (Rs.crore)

Demand deposits 31 28 26 30 27 27 24 22 26 31 28 25 30 20 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 4,75,193 4,54,602 4,58,379 4,62,461 4,75,791 5,23,085 5,01,341 5,05,603 5,03,552 5,28,170 5,36,508 5,51,572 5,40,137 5,19,139 Time deposits 30,40,730 30,88,329 31,11,426 32,05,913 32,58,948 33,11,025 34,18,330 34,66,627 34,79,830 35,41,220 35,45,160 35,68,435 36,41,556 36,66,785 Total Borrowing Liab. to Other deposits from RBI bank demand & time liab. 35,15,923 8,454 1,28,446 3,71,817 35,42,931 6,029 1,27,413 3,03,684 35,69,805 13,516 1,04,008 3,05,809 36,68,375 6,261 95,272 3,04,993 37,34,739 7,113 1,02,158 3,02,367 38,34,110 11,728 1,00,116 3,07,520 39,19,671 2,902 97,722 2,98,820 39,72,231 410 94,807 2,99,444 39,83,382 400 89,972 3,01,396 40,69,390 296 84,833 3,19,765 40,81,669 0 87,414 3,18,021 41,20,007 0 78,803 3,16,687 41,81,693 0 79,389 3,06,371 41,85,923 0 73,618 3,16,400 Other borrowings 1,15,080 1,25,690 1,25,818 1,14,178 1,15,244 1,13,936 1,04,111 1,19,490 1,17,613 1,02,817 1,18,092 94,589 1,31,832 97,377
December 2009
84
Foreign Trade by the Global Liquidity Crisis. This led to a contraction in world demand, which was reflected in a fall in exports. There has been a continuous fall in Indias exports for more than a year since October 2008. During October-March 2008-09, exports declined by 17 per cent. The fall worsened in the months that followed, with exports plummeting by 25.6 per cent in AprilOctober 2009. Figure 17.1 Exports(US Million)
19000 18000 17000 16000 15000 14000 13000 12000 11000 10000
Exports decline slows to 6.6% in October

Exports declined by 6.6 per cent in October 2009, falling for the 13th consecutive month. However, the magnitude of decline was arrested. In April 2009, exports recorded the steepest fall of 33 per cent. In September, the decline had slowed to 13.8 per cent and it was down to single digits in October 2009. Exports would have posted an increase in October 2009, but for the sharp revision in the year-ago data. During the month, exports amounted to USD 13.6 billion, whereas the unrevised data for October 2008 was USD 12.7 billion. This translates into an increase of seven per cent. However, October 2008 data was revised upwards by a whopping USD 1.5 billion to USD 14.1 billion, which led to a decline in October 2009. Sharp revisions in data have become a regular feature of this sector and make it difficult to project the future trend. During April-September 2008, exports rose by a hefty 65 per cent. However, towards the end of September 2009, the developed countries were hit
Table 17.1 Monthly Foreign Trade Statistics

Exports Imports Trade bal. Exports Imports Exports Imports Trade bal. Exports (mln) ( mln) (mln) (% chg.) (% chg.) (Rs.crore) (Rs.crore) (Rs.crore) (% chg.) Oct 2008 14,129 25,867 -11,738 -3.1 22.8 68,754 1,25,868 -57,114 19.3 Nov 2008 10,206 19,867 -9,661 -20.1 -2.2 50,011 97,348 -47,337 -0.7 Dec 2008 12,153 18,145 -5,992 -5.2 -2.0 59,098 88,240 -29,142 16.8 Jan 2009 11,423 16,299 -4,876 -22.4 -27.7 55,778 79,590 -23,812 -3.7 Feb 2009 10,933 13,115 -2,182 -27.7 -36.8 53,855 64,603 -10,748 -10.3 Mar 2009 12,901 15,827 -2,926 -25.2 -30.3 66,093 81,081 -14,988 -5.1 Apr 2009 10,743 15,748 -5,005 -33.2 -36.6 53,779 78,832 -25,053 -16.4 May 2009 11,015 16,220 -5,205 -29.2 -39.2 53,435 78,682 -25,247 -18.4 Jun 2009 12,815 18,978 -6,163 -27.7 -29.3 61,217 90,657 -29,440 -19.4 Jul 2009 13,622 19,620 -5,998 -28.4 -37.1 66,041 95,118 -29,077 -19.0 Aug 2009 14,288 22,659 -8,371 -19.4 -32.4 69,066 1,09,533 -40,467 -9.2 Sep 2009 13,608 21,376 -7,768 -13.8 -31.4 65,916 1,03,546 -37,630 -8.4 Oct 2009 13,193 21,995 -8,802 -6.6 -15.0 61,639 1,02,759 -41,120 -10.3 Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct Apr-Oct 2008-09 1,22,463 2,10,492 -88,029 39.4 58.3 5,33,205 9,16,483 -3,83,278 49.3 2009-10 91,082 1,48,382 -57,300 -25.6 -29.5 4,39,835 7,16,535 -2,76,700 -17.5 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 2008-09 1,82,922 2,90,667 -1,07,745 12.2 16.4 8,39,978 13,34,745 -4,94,767 28.1 Note: Monthly data may not add up to the cumulative data because of revisions in monthly data. Monthly revisions are not released but are included in the cumulative data. Imports (% chg.) 51.2 21.5 20.9 -10.3 -21.6 -11.6 -20.6 -30.0 -21.2 -28.8 -23.9 -27.0 -18.4 Apr-Oct 69.5 -21.8 Apr-Mar 32.8
December 2009
Foreign Trade However, the sharp decline has been arrested in recent months. We expect exports to increase from November 2009 as there have been strong indications of a revival in world demand. Consequently, total exports are expected to decline by 11 per cent in 2009-10. The US economy grew by 3.5 per cent in the third quarter of 2009 after declining for the previous one year. The US had slid into a recession after the liquidity crisis hit the economy in September 2008. Figure 17.2 Exports projected to fall by 11 per cent in 2009-10 (%)
30 25 20 15 10 5 0 -5 -10 -15 02-03 04-05 06-07 -11.0 08-09 09-10 20.2 20.9 30.7 23.4 22.5 29.0 (CMIE Forecast)
85 than anticipated earlier, according to the IMFs September 2009 outlook. It expects world GDP to fall by 1.1 per cent in 2009, an upward revision from its earlier estimate of a 1.4 per cent fall. In 2010, it is projected to grow at a faster rate of 3.1 per cent against the previous projection of 2.5 per cent. Besides the revival in demand, the lower base will also contribute to growth in the second half of 2009-10. Various incentives provided by the government to help the beleaguered export sector will also lead to higher exports. The government was also likely to announce another incentive package for the labourintensive export sector in December 2009, according to the Minister of State for Commerce and Industry.
Steep fall in imports continues

12.2
Imports declined for the 12th month in a row. However, the rate of decline was arrested. In October 2009, imports fell by 15 per cent. In the previous nine months, the decline was in the range of 2839 per cent. Both POL and non-POL imports declined less sharply than the steep fall in the previous months. In October 2009, POL imports declined by nine per cent to USD 6.6 billion. In the past one year, they had dropped by more than 35 per cent, with the steepest fall of 61 per cent recorded in June 2009. POL imports had been falling because of the sharp fall in international crude prices. The trend was reversed as crude prices, particularly that of the Dubai, increased by seven per cent in October 2009.
USA was an important market for Indias exports accounting for 11 per cent of total exports. A revival in the US economy will be reflected in higher demand for Indias exports. Export orders are likely to witness a spurt prior to the festive season of Christmas and New Year. World demand is expected to contract less sharply
Table 17.2 Exports and imports projected to decline in 2009-10

Billon % change 200506 200607 200708 200809 200910 200506 200607 200708 200809 200910 CMIE CMIE proj. proj. Exports 103.1 126.3 163.0 182.9 163.0 23.4 22.5 29.0 12.2 -11.0 Imports 149.1 185.1 251.6 290.7 267.0 33.8 24.1 35.9 15.5 -8.2 POL imports 43.9 57.1 79.7 91.3 72.0 47.3 29.8 39.6 14.5 -21.1 NonPOL imports 105.2 128.0 171.8 199.3 195.0 28.8 21.7 32.9 16.0 -2.2 Trade balance -46.0 -58.8 -88.6 -107.7 -104.0
December 2009
86 Non-POL imports also declined less sharply when compared with the previous months. In October 2009, they were down by 17 per cent to USD 15.4 billion. During April-September 2009, they had declined by 33 per cent. Table 17.3 Imports fall sharply: April-October
US million % change 2008-09 2009-10 2008-09 2009-10 70570 42864 71.4 -39.3 139922 105518 52.4 -24.6 210492 148382 58.3 -29.5
Foreign Trade will also boost imports of export-related goods like pearls, precious and semi-precious stones. A fall in kharif production will also lead to higher imports of food related items like sugar and pulses. Figure 17.3 Imports projected to decline by 8.2 per cent in 2009-10 (%)
42.5 40 33.8 30 20 10 19.3 15.5 27.1 24.1 35.9 (CMIE Forecast)
POL Non-POL Total
Though imports declined sharply on a year-on-year basis, there was a significant increase on a monthon-month basis. From USD 15.7 billion in April 2009, imports rose to USD 22 billion in October. So even as imports recorded a 29.5 per cent decline during April-October 2009, we expect the remaining five months to witness a hefty rise. This will lead to a moderate fall of 8.2 per cent in imports during 2009-10. Both POL as well as non-POL imports are expected to increase sharply in the coming months. In November, crude prices averaged USD 77 per barrel compared to USD 51 per barrel in April 2009. As the world economy revives, prices are likely to move up further. So crude prices are likely to rise by atleast 65 per cent during November 2009 to March 2010 compared to the same period of 200809. Hence, the POL import bill will rise by more than 50 per cent. The domestic economy grew by 7.9 per cent in JulySeptember 2009 as per CSO, the fastest growth in the past four quarters. As the economy gathers pace, demand for non-POL imports is expected to improve significantly. A revival in export demand
0 -10 -8.2 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10
International commodity prices have also started firming up in recent months, though there is a yearon-year decline. The low base effect will also be reflected in a strong increase in the coming months, particularly in the last quarter of 2009-10.
Trade decit projected at USD 104 billion in 2009-10

At USD 57.3 billion, trade deficit declined by 35 per cent in April-October 2009. A steeper fall in imports compared to exports was reflected in the fall in deficit. As imports are likely to rise faster than exports in the recent few months, we expect deficit to increase. In 2009-10, we expect a trade deficit of USD 104 billion. This will be 3.5 per cent less than the trade deficit of USD 107.8 billion in 2008-09.
December 2009
World Economy
Table 18.1 Real GDP Growth and Consumer Prices (% change over a year ago)
Real GDP 2007 2008 2009 World 5.2 3.0 -1.1 Advanced economies Australia 4.0 2.4 0.7 Austria 3.5 2.0 -3.8 Belgium 2.6 1.0 -3.2 Canada 2.5 0.4 -2.5 Denmark 1.6 -1.2 -2.4 Finland 4.2 1.0 -6.4 France 2.3 0.3 -2.4 Germany 2.5 1.2 -5.3 Greece 4.0 2.9 -0.8 Hong Kong 6.4 2.4 -3.6 Israel 5.2 4.0 -0.1 Italy 1.6 -1.0 -5.1 Japan 2.3 -0.7 -5.4 Korea South 5.1 2.2 -1.0 Netherland 3.6 2.0 -4.2 New Zealand 3.2 0.2 -2.2 Norway 3.1 2.1 -1.9 Portugal 1.9 0.0 -3.0 Singapore 7.8 1.1 -3.3 Spain 3.6 0.9 -3.8 Sweden 2.6 -0.2 -4.8 Switzerland 3.6 1.8 -2.0 Taiwan 5.7 0.1 -4.1 UK 2.6 0.7 -4.4 USA 2.1 0.4 -2.7 Euro area 2.7 0.7 -4.2 Selected Asian countries Bangladesh 6.3 6.0 5.4 China 13.0 9.0 8.5 INDIA 9.4 7.3 5.4 Indonesia 6.3 6.1 4.0 Malaysia 6.2 4.6 -3.6 Pakistan 5.6 2.0 2.0 Philippines 7.1 3.8 1.0 Thailand 4.9 2.6 -3.5 Selected Latin American countries Argentina 8.7 6.8 -2.5 Brazil 5.7 5.1 -0.7 Chile 4.7 3.2 -1.7 Colombia 7.5 2.5 -0.3 Ecuador 2.5 6.5 -1.0 Mexico 3.3 1.3 -7.3 Peru 8.9 9.8 1.5 Uruguay 7.6 8.9 0.6 Venezuela 8.4 4.8 -2.0 2010 3.1 2.0 0.3 0.0 2.1 0.9 0.9 0.9 0.3 -0.1 3.5 2.4 0.2 1.7 3.6 0.7 2.2 1.3 0.4 4.1 -0.7 1.2 0.5 3.7 0.9 1.5 0.3 5.4 9.0 6.4 4.8 2.5 3.0 3.2 3.7 1.5 3.5 4.0 2.5 1.5 3.3 5.8 3.5 -0.4 2007 Consumer Prices 2008 2009 2010
87
2.3 2.2 1.8 2.1 1.7 1.6 1.6 2.3 3.0 2.0 0.5 2.0 0.0 2.5 1.6 2.4 0.7 2.4 2.1 2.8 1.7 0.7 1.8 2.3 2.9 2.1 9.1 4.8 6.4 6.0 2.0 7.8 2.8 2.2 8.8 3.6 4.4 5.5 2.3 4.0 1.8 8.1 18.7
4.4 3.2 4.5 2.4 3.4 3.9 3.2 2.8 4.2 4.3 4.6 3.5 1.4 4.7 2.2 4.0 3.8 2.7 6.5 4.1 3.3 2.4 3.5 3.6 3.8 3.3 7.7 5.9 8.3 9.8 5.4 12.0 9.3 5.5 8.6 5.7 8.7 7.0 8.4 5.1 5.8 7.9 30.4
1.6 0.5 0.2 0.1 1.7 1.0 0.3 0.1 1.1 -1.0 3.6 0.7 -1.1 2.6 0.9 1.5 2.3 -0.6 -0.2 -0.3 2.2 -0.4 -0.5 1.9 -0.4 0.3 5.3 -0.1 8.7 5.0 -0.1. 20.8 2.8 -1.2
1.5 1.0 1.0 1.3 2.0 1.1 1.1 0.2 1.7 0.5 2.0 0.9 -0.8 2.5 1.0 1.0 1.8 1.0 1.6 0.9 2.4 0.5 1.5 1.5 1.7 0.8 5.6 0.6 8.4 6.2 1.2 10.0 4.0 2.1
5.6 5.0 4.8 4.1 2.0 2.3 4.6 3.7 5.0 3.0 5.4 3.5 3.2 2.0 7.5 7.4 29.5 30.0 (Continued. . . )
December 2009
88
World Economy
Table 18.1 Real GDP Growth and Consumer Prices (% change over a year ago)
Real GDP Consumer Prices 2007 2008 2009 2010 2007 2008 2009 2010 Selected African countries Algeria 3.0 3.0 2.1 3.7 3.6 4.5 4.6 3.4 Morocco 2.7 5.6 5.0 3.2 2.0 3.9 2.8 2.8 Tunisia 6.3 4.6 3.0 4.0 3.1 5.0 3.5 3.4 Cameroon 3.3 2.9 1.6 2.7 1.1 5.3 2.9 2.0 Cote dIvoire 1.6 2.3 3.7 4.0 1.9 6.3 5.9 3.2 Ghana 5.7 7.3 4.5 5.0 10.7 16.5 18.5 10.2 Kenya 7.1 1.7 2.5 4.0 9.8 13.1 12.0 7.8 Nigeria 7.0 6.0 2.9 5.0 5.4 11.6 12.0 8.8 Tanzania 7.1 7.4 5.0 5.6 7.0 10.3 10.6 4.9 South Africa 5.1 3.1 -2.2 1.7 7.1 11.5 7.2 6.2 Uganda 8.4 9.0 7.0 6.0 6.8 7.3 14.2 10.8 Selected Other European countries Bulgaria 6.2 6.0 -6.5 -2.5 7.6 12.0 2.7 1.6 Czech Republic 6.1 2.7 -4.3 1.3 2.9 6.3 1.0 1.1 Estonia 7.2 -3.6 -14.0 -2.6 6.6 10.4 0.0 -0.2 Hungary 1.2 0.6 -6.7 -0.9 7.9 6.1 4.5 4.1 Latvia 10.0 -4.6 -18.0 -4.0 10.1 15.3 3.1 -3.5 Lithuania 8.9 3.0 -18.5 -4.0 5.8 11.1 3.5 -2.9 Poland 6.8 4.9 1.0 2.2 2.5 4.2 3.4 2.6 Romania 6.2 7.1 -8.5 0.5 4.8 7.8 5.5 3.6 Slovak Republic 10.4 6.4 -4.7 3.7 2.7 4.6 1.5 2.3 Commonwealth of Independent States Armenia 13.7 6.8 -15.6 1.2 4.4 9.0 3.0 3.2 Azerbaijan 23.4 11.6 7.5 7.4 16.6 20.8 2.2 5.3 Belarus 8.6 10.0 -1.2 1.8 8.4 14.8 13.0 8.3 Georgia 12.3 2.1 -4.0 2.0 9.2 10.0 1.2 3.0 Kazakhastan 8.9 3.2 -2.0 2.0 10.8 17.2 7.5 6.6 Kyrgyz Republic 8.5 7.6 1.5 3.0 10.2 24.5 8.0 6.7 Moldova 3.0 7.2 -9.0 0.0 12.4 12.7 1.4 7.7 Russia 8.1 5.6 -7.5 1.5 9.0 14.1 12.3 9.9 Ukraine 7.9 2.1 -14.0 2.7 12.8 25.2 16.3 10.3 Tajikistan 7.8 7.9 2.0 3.0 13.2 20.4 8.0 10.9 Uzbekistan 9.5 9.0 7.0 7.0 12.3 12.7 12.5 9.5 Note: All the data given in the table are sourced from World Economic Outlook: October 2009, IMF
December 2009
References
Monthly Economic Report, Ministry of Finance, Selected Monthly Indicators, Ministry of Finance, Quick Estimate, cso, Weekly Statistical Supplement, rbi, Monthly Bulletin, rbi, Monthly Abstract of Statistics, cso, National Accounts Statistics, cso, Indian Ports Association, Index Numbers of Wholesale Prices, Ministry of Industry, Consumer Price Index Numbers for Industrial Workers, Ministry of Labour, Consumer Price Index Numbers for Urban Non-manual Employees, cso, Director General of Commercial Intelligence & Statistics, Ministry of Commerce, Indian Sugar, Indian Sugar Mills Association, Tea Board, Jute Statistics, Indian Jute Mills Association, Monthly Bulletin, Association of Synthetic Fibre Industry, Fertiliser News, Fertiliser Association of India, Cement Manufacturers Association, Flash Report, Society of Indian Automobile Manufacturers, Oce of the Textile Commissioner, Petrochemical Data Service, Joint Plant Committee, Rubber News, Rubber Board, Minerals & Metals Review, Steel Scenario, Spark Steel, All India Sponge Iron Production, Sponge Iron Manufacturers Association, Indian Electrical & Electronics Manufacturers Association, Company News & Notes, sebi Newsletter, sebi, sebi Market Review, sebi, bse Daily Bulletin, bse, bse Key Statistics on Mumbai Stock Exchange, bse, International Financial Statistics, imf, Commodity Price Data, World Bank, Financial Times, Economic Times, Business Standard, Financial Express, Hindu Business Line, Times of India, Indian Express, The Hindu, Free Press Journal, Newstime, Deccan Herald, Rajasthan Patrika, Dainik Jagran, Punjab Kesari, Press Information Bureau, Press Releases, rbi, bse, sebi, Company, Annual Reports of Cos., Prospectuses of Cos., House Journals of Cos., Solvent Extractors Association of India
EIS
Economic Intelligence Service features a series of documents which provide you with detailed and up-to-date information on the Indian economy. The documents are presented in a simple and analytical framework which reveal the current trends in the economy and future prospects. Centre for Monitoring Indian Economy is a Mumbai based economic and business information and research organisation. Established in 1976, it is widely regarded as an authoritative and independent think-tank. Economic Intelligence Service is one of the several services offered by the Centre. The Monthly Review of Indian Economy is issued every month under the EIS. Besides, documents issued annually are listed below. Agriculture Money & Banking Energy National Income Infrastructure Public Finance Industry: Financial Aggregates Foreign Trade & BoP Industry: Market Size & Shares Corporate Sector Proles of Districts Capital Markets
C ENTRE F OR M ONITORING I NDIAN E CONOMY P VT LTD

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Economic Intelligence Service

Monthly Review of the Indian Economy

Economic Intelligence Service

Monthly Review of the Indian Economy

Release Date: December 12, 2009

Ranchi: Tel: (0651) 233072 Fax: (0651) 233072

Transport Equipment 14. Investment 15. Corporate Sector

Mutual Funds 17. Money & Banking Money Supply

Coal Crude Oil Electricity 12. Infrastructure Railways

Scheduled Commercial Banks 18. Foreign Trade 19. World Economy

Money Supply and Banking

Industry & Investments

Population & National Income

53,218 49,332 6.7

Per Per Per Per

46,116 31,278 4.6

26.3 25.2 19.1 6.1 75.1 63.2 11.9 14,703

29.8 26.8 20.5 6.3 73.0 61.7 11.3 15,891

31.7 31.6 24.7 6.9 69.2 58.4 10.7 16,971

34.2 34.8 27.2 7.6 67.8 57.4 10.5 18,665

35.7 36.4 28.4 8.0 66.1 55.9 10.2 20,676

37.7 38.7 29.6 9.1 65.1 55.0 10.1 22,899

66.3 54.7 11.6

% change % change % change

6.3 2.7 7.2 2,375 2,420

-7.2 7.1 7.5 2,574 2,580

10.0 7.4 8.5 2,773 2,730

10.3 9.1 2,930 2,840

5.8 10.2 10.6

4.0 11.0 11.2

4.9 8.1 10.9

1.6 3.9 9.7

-1.4 7.8 8.6

133.4 3.5 32.8

6,538 2,406 422 323

Corporate Sector (Non-nancial Cos.)

mln. mln. mln.

per cent Rs. bln. Rs. bln.

8.8 3049 5132

5.4 3136 6180

115.7 5033 10995

28.1 5185 11401

71.2 8159 15696

10.2 9497 19453

30.1 15786 35510

-41.2 10993 27520

Public Finance (Centre, State & UTs)

Finances of Central Govt.

Expenditure Plan expenditure Non-plan expenditure Subsidies Defence Interest

1079 1451 5.9 10207 41.4

983 1233 4.5 11417 41.4

783 1258 4.0 12759 40.5

923 1464 4.1 13897 38.8

802 1426 3.5 15450 37.3

526 1269 2.7 18441

2413 3265 19725

Money, Banking & Interest Rates

Prices (Annual Averages)

% change % change % change

4.3 1.1 5.1

4.0 3.2 3.8

3.9 3.9 3.7

3.8 2.4 3.6