Part 1

INDIA ECONOMY REVIEW
Indias Foremost Investment Fortnightly
APRIL 2012
April 2012
Published by
Capital Market Publishers India Private Limited

401, Swastik Chambers, Sion Trombay Road, Chembur, Mumbai - 400 071, India Tel: Fax: Email: Website: 91-22-25229720 91-22-25220954 economy@capitalmarket.com www.capitalmarket.com/ier
Cover Price (Single issue) : Annual Subscription (12 monthly issues) : Outside India (12 monthly issues) :
Rs 1,500/Rs 15,000/US $ 500/-
Capital Market Publishers India Pvt Ltd., 2005 With its impeccable track record of providing exhaustive financial data and information to help investors make informed decisions, Capital Market now presents India Economy Review, a monthly update of the economy, a rich blend of macro economic fundamentals along with performance of key sectors of the economy, reflecting on the stock price movements of relevant scrips. The information in this publication is drawn from sources believed to be reliable. While every care is taken to ensure the accuracy of the data and information, Capital Market shall not be liable for losses or consequences, if any, arising from the use of the information contained in the publication. India Economy Review is strictly meant for the use of the addressees only. Information provided should not be reproduced, published, re-sold or otherwise distributed in any medium without the prior written permission of the publishers. Select portions of the information provided in this publication can be quoted in research reports, articles, studies without prior permission. However, this has to be acknowledged as: Source: India Economy Review, Mumbai, along with the month of the issue.
Branches and contact information

Ahmedabad: Tel. 079-2642 1534 / 35, 2656 4727 Bangalore: Chennai: Cochin: Delhi: Tel. 080-2557-2334 / 5 Tel. 044-246-12690 / 38 Tel. 0484-325 3420 Tel. 011-6640-3091 / 92 Hyderabad: Tel. 040-2326 4384 Kolkata: Mumbai: Pune: Tel. 033-3296 6683 Tel. 022-2522 9720 Tel. 020-2567 1605 / 1606
Contents
Birds Eye-view of Economy ......................................................................... Union Budget 2012-13 ............................................................................................ The Macro Picture
Economic Indicators
Price Indices ......................................................................................................... 15 Index of Industrial Production ........................................................................ 21 4 10
External Sector
Forex ...................................................................................................................... Foreign Trade ...................................................................................................... Balance of payment ............................................................................................ External Debt ...................................................................................................... 25 28 44 46
Public Finance .......................................................................................................... 47 Financial Sector

Capital Market ..................................................................................................... Mutual Fund ........................................................................................................ Insurance .............................................................................................................. Interest Rates ...................................................................................................... Money Supply ...................................................................................................... 50 53 56 59 61
The Sectoral Picture

Agri & Allied
Agriculture ............................................................................................................ Edible Oils ............................................................................................................. Rubber ................................................................................................................... Sugar ...................................................................................................................... Tea ......................................................................................................................... 64 66 68 70 72
Energy
Coal ........................................................................................................................ 74 Crude-oil & Refineries ....................................................................................... 75 Power ..................................................................................................................... 77
Infrastructure
Railways ................................................................................................................ Civil Aviation ........................................................................................................ Telecommunications .......................................................................................... Shipping & Ports ................................................................................................. 79 81 83 85
Manufacturing
Chemicals .............................................................................................................. 87 Polymers ................................................................................................................ 89 Fertilisers ............................................................................................................... 91 Cement .................................................................................................................. 93 Steel ........................................................................................................................ 95 Non-ferrous Metals ........................................................................................... 97 Capital Goods ...................................................................................................... 99 Consumer Durables ........................................................................................... 101 Textiles .................................................................................................................. 103 Man-made Fibres ................................................................................................. 105 Automobiles ......................................................................................................... 107
Service
Banking .................................................................................................................. 113 Hotel & Tourism ................................................................................................. 116
Economic Snapshot
Monthly ................................................................................................................ 117 Annual ................................................................................................................... 120 World ..................................................................................................................... 126
Capital Market
India Economy Review
I April 2012
Economy
Birds eye view
Implementation is the key
The year 2011-12 was a challenging one for fiscal management. Due to the slower economic growth, direct tax collection fell short of the Budget Estimates. The finance minister projected better revenue growth based on higher growth estimates, while expenditure also turned out to be higher than estimates. But, Indias GDP growth was much lower than the budgeted estimates and ended up with a slower pace of growth at 6.9% in real terms in 2011-12. Indias GDP growth in 2012-13 is expected improve to 7.6% (+/- 0.25%). The combined effect of lower tax and dis-investment receipts and higher expenditure, mainly on account of subsidies, pushed up the fiscal deficit to 5.9% of GDP in the Revised Estimates for 2011-12. The expenditure on subsidies for 2011-12 was revised upwards by 51% from budget estimate; majority of the uprise being under petroleum subsidies (190% rise). This subsidy burden for food and fertilizers was also seen rising in 2011-12 by 20% and 34% respectively. On the receipts side, major slippages were recorded under corporate tax collections (reduced margins due to rising input costs) and excise duty collection, and lower realization through the disinvestments route. Going forward, the deficit to GDP ratio for 2012-13 is estimated at 5.1%. The government has projected 22% growth in revenue receipt for 2012-13, while estimated 1.61% fall in fiscal deficit. However, going by the trends so far and considering the elevated crude oil prices, it looks like that the petroleum subsidy has been grossly under estimated for FY 2011-12 and FY 2012-13. Ironically, the government has indicated that the cut in petroleum subsidy for FY 2012-13 (BE Vs RE for FY 201112) is due to higher petroleum subsidy paid to Oil Marketing Companies in FY 2011-12. The trend indicates 5.18% is average fiscal deficit to GDP in India during 1991-92 to 2010-11. During same period GDP average stood at 6.32%. These numbers indicates 100 bps differences in averages. On this basis, GOI estimated 6.9% GDP growth rate for 2011-12 and 5.9% fiscal deficit to GDP is acceptable, however, 7.6% (+/- 0.25) for 2012-13 and 5.1% fiscal deficit to GDP projection appears difficult to achieve. It can work, if crude oil prices fall in line with expectations, and if the government gets projected funds from dis-investment and is able to contain outgo on subsidies. These assumptions are associated largely with political economy and global macro economy movement and less with domestic pure economic trend which obviously, raise concern on the Governments ability to contain fiscal deficit for FY 2012-13 to budgeted levels.
4
Evolution of Indias external debt
Twin deficit has added more worries
Apart from fiscal deficit, rising trade deficit is the matter to worry. On a Bop basis, Indias merchandise exports rose 7.9%, year-on-year, to US$71.13 billion during Q3FY12, as compared with a growth of 39.6% during corresponding quarter of 201011. Meanwhile, on a Bop basis, merchandise imports surged 22.0%, year-on-year, to US$118.8 billion during the quarter as compared with a growth of 24.7% during same quarter last year. The trade deficit in absolute terms widened to US$47.7 billion as compared with US$31.5 billion during the Q3FY11. Indias gold import more than doubled to US$16.743 billion (3.7% GDP) during Q3FY2012 from US$7.901 billion (1.8% of GDP) in Q3FY2011, while also increased from US$12.654 billion (2.8% of GDP) in previous quarter. The share of gold in Indias import bill has surged to 13% in AprilDecember 2011 from 8% in April-December 2010. In an effort to stem imports by the worlds biggest bullion buyer and shore up its current account, government doubled import duty on gold to 4% of value in its budget for FY 201213, and slapped a 0.3% excise on unbranded jewellery. But the strong bullion lobby may force the finance minister to withdraw excise duty on unbranded jewellery. Also, excise and customs duty on precious metals are not going to reduce the import, but only add to costs to the Indian customers.
Agriculture
As per the Economic Survey 2011-12 achieving minimum agricultural growth is a pre-requisite for inclusive growth, reduction of poverty levels, development of the rural economy and enhancing of farm incomes. In order to make 4% agricultural growth a reality, adequate efforts are required to focus on addressing the challenges in this sector. Declining
Capital Market India Economy Review I April 2012
(US $ billion)
Economy per capita availability of foodgrains has been a matter of major concern. There is a need for speedy improvement in yield in order to increase production through adequate investment in research and development. Rice procurement in the kharif marketing season 2011-12 (October-September) has touched 283.7 lakh tonne as on 23 March 2012 compared to 246.05 lakh tonnes same tome last season. Punjab has led the states by procuring 77.313 lakh tonnes followed by Andhra Pradesh with 44.83 lakh tonne, Chhattisgarh with 41.01 lakh tonnes and Uttar Pradesh with 29.48 lakh tonnes of rice. Meanwhile, Haryana and Orissa also procured significant amount of rice at 19.78 lakh tonnes and 18.77 lakh tonnes of rice.
FIIs: Net buyers in March 2012
Inflation
India Wholesale Price Index (WPI) inflation further rebounded from a 26-month low of 6.55% in January 2012 to 6.95% in February 2012. The inflation was easing sharply from 10.0% in September 2011 to 9.5% in November 2011 and further down to 26-month low of 6.55% in January 2012, but it has rebounded to 7.0% in February 2012 pushed up primary articles. Inflation has also increased above market expectations of 6.7% for February 2012. Capital Market had conducted the poll of economists for their projections of inflation figure for February 2012. As per the results of poll, the rate of inflation for February 2012 was expected to increase to 6.7%. Economists had forecasted inflation in the range of 6.3% to 7.0%, while the median of the economists forecasts of inflation stood at 6.7% for February 2012. The contribution of primary articles to the overall inflation jumped to 23.2% (at 162 bps to 6.95% inflation) in February 2012 from 9.1% (at 60 bps) in January 2012. The contribution of fuel product group declined to 28.4% (198 bps) in February 2012 from 33.1% (217 bps) in January 2012, while that of manufactured products declined to 48.4% (338 bps) from 57.7% (378 bps) during January 2012. The contribution of food item (food articles and food products) surged from 6.9% (45 bps) in January 2012 to 23.3% (162 bps) in February 2012, while that of non-food items (all commodities excluding food items) dipped to 76.2% (531 bps) in February 2012 from 93.2% (610 bps) in January 2012. The official WPI for All Commodities (Base: 200405=100) for the month of February 2012 rose 0.4% from the previous months level. The annual rate of inflation, based on monthly WPI, stood at 6.95% (Provisional) in February 2012 (over February 2011) as compared to 6.55% (Provisional) for the previous month and 8.66% during the corresponding month of the previous year. The index for Minerals group increased 1.6% while that of manufactured products group rose by 0.4% in February 2012 from the previous month level. Within the manufactured products group, the index for Beverages, Tobacco & Tobacco Products group rose by 1.3% due to higher prices of bidi
(6%) and soft drinks & carbonated water (3%). However, the prices of dried tobacco (8%) declined. The elevated crude oil prices remain a cause for concern. Also, weighted inflation of primary articles (in overall inflation) has been gradually easing from 3.15% August 2011 to mere 0.6% in January 2012. But with base effect waning, the inflation of primary articles has sizzled to 1.62% in February 2012. While US economic growth shows promises, the situation in EU is still weak. In this background, the RBI has preferred not to cut repo rates, thought it clearly indicated that they are poised to march downwards.
FIIs
FIIs were net buyers worth US $ 1684.82 million in equity market in March 2012. They were net buyers worth US $ 1540.36 million in March 2011. FIIs were net sellers worth US $ 1297.78 million in debt market in March 2012. They were net sellers worth US $ 5.26 million in March 2011. The market lost ground in choppy trade after Finance Minister Pranab Mukherjee in the Union Budget 2012-13 on 16 March 2012 set only modest targets for trimming a ballooning fiscal deficit and as there was lack of any big-bang reform announcement in the budget, dampening investor sentiment. A setback to the Congress party in assembly elections in five states clouded the UPA governments ability to push economic reforms. Volatility heightened during the last few trading sessions of the month as traders rolled over positions from the nearmonth March 2012 series to April 2012 series ahead of the expiry of March 2012 derivatives contracts. The March 2012 derivatives contracts expired on 29 March 2012. The market surged on the last trading session of the month as investors took heart after Finance Minister Pranab Mukherjee said on 30 March 2012, that the government doesnt intend to levy any tax on the holders of participatory notes (PN). Uncertainty on whether portfolio investments through participatory notes and those coming to India through tax havens like Mauritius could be subject to General Anti5
(US$ million)
Economy Avoidance Rules which comes into effect from 1 April 2012 had unnerved investors.
Exports growth
Foreign trade
Indias merchandise exports rose 4.3% to $24.62 billion in February 2012, compared to a 49.8% growth recorded in February 2011. Meanwhile, Indias merchandise imports increased 20.6% to $39.78 billion in February 2012. However, the trade deficit surged to $15.16 billion in February from $14.76 billion in February 2011. The oil import bill jumped 39.5% to $12.66 billion, while the non-oil import increased 13.5% to $27.122 billion in February 2012. The oil import has increased 41.0% to $132.56 billion, while non-oil import climbed up 24.9% to $301599 billion in April-February FY2012. The share of oil import bill in total imports stood at 31.8% in February 2012 and 30.5% in April-February FY2012. Crude oil imports surged 10.7% to 14.87 million tonnes in February 2012, while it has increased 5.3% to 157.135 million tonnes in April-February FY2012. Cumulative exports have increased 21.4% to $267.41 billion, while cumulative imports have advanced 29.4% to $434.16 billion during April-February FY2012. The cumulative trade deficit stood at $166.75 billion during April-February FY2012 compared to $115.26 billion in the same period last year. In rupee terms, exports increased 12.8% to Rs 121040 crore, while imports moved up 30.56% to Rs 195595 crore in February 2012. Trade deficit stood at Rs 74555 crore in February 2012. Cumulative exports increased 27.0% to Rs 1274840 crore, while cumulative imports moved up 35.3% to Rs 2069643 crore in April-February FY2012. The trade deficit stood at Rs 794803 crore in April-February FY2012 compared to Rs 525510 crore in April-February FY2011.
Indias foreign exchange reserves dipped by US $14.8 billion to US$296.688 billion in the quarter ended December 2011, which included valuation losses worth US$1.9 billion in Q3 of FY 2012 reflecting appreciation of the US dollar against major international currencies during the quarter.
Banking
The growth of scheduled commercial banks (SCBs) credit decelerated to 16.30% to Rs 44866.8 billion as on 9 March 2012. Last year, the bank credit recorded a growth of 23.26%. Demand for project loans in infrastructure and small and medium enterprises had increased leading to rise in demand for credit. Also, banks tend to shore up balance sheets towards the end of a financial year. Most banks have increased rates on term deposits to attract funds to support the spurt in credit growth. Liquidity tightness has also resulted in high demand for funds from banks. Total outstanding bank credit increased by Rs 791.5 billion in the latest fortnight to Rs 44866.8 billion due to rise in both non-food credit and food credit by Rs 785.3 billion and Rs 6.3 billion, respectively, during the fortnight. Non-food credit, accounting for almost a 98% of the share of the total credit, recorded a growth of 16.11% as on 9 March 2012 to Rs 44028.4 billion as against a rise of 23.10% a year ago. The RBI has lowered the non-food growth projection to 16% for 2011-12 from 18% projected earlier. Non-food credit registered a rise by Rs 5250.4 billion in the financial year till 9 March compared with the previous year, when it increased by Rs 5955.9 billion. All major sectors, recorded decelerated credit growth on a y-o-y basis in February 2012. Credit to agriculture on a y-o-y basis increased at a lower rate of 8.1% in February 2012 as compared with 18.3% in the previous year. Credit to industry increased by 19.1% (y-o-y) as compared with 26.5% in the previous year, led by infrastructure, metals and metal products, engineering, food processing, gems and jewellery, vehicles, vehicle parts and transport equipments, and mining and quarrying. Credit to the services sector
External debt
Indias external debt, as at end-September 2011 was placed at US $ 334.847 billion, recording an increase of $39.26 billion over the end-December 2010 level and $28.82 billion from end March 2011. About 39.3% of the increase in total external debt in April-December 2011 was on account of commercial borrowings, while short-term trade credits accounted for 45.3% of the increase, reflecting surge in imports. Excluding the valuation effects due to the appreciation of the US dollar against other major currencies, the increase in external debt would have been higher by US$41.0 billion end-December over end-March 2011, thus contributing to decline in debt stock by US$12.2 billion. Indias balance of payments (BoP) turned into deficit of US$12.8 billion in the quarter ended December 2011 after three years of consistent surplus. Earlier, India had recorded a BoP deficit of US$14.7 billion in Quarter ended December 2008. The sharp fall in capital account surplus by 42.9% to US$8.0 billion and 94.2% surge in current account deficit pushed Indias Balance of Payment into deficit during October-December 2011.
6
(% change)
Economy
Banking: Credit growth
Money Supply
(% change)
increased by 15.2% (y-o-y) in February 2012, lower than 24.2% in the previous year.
Money supply
The higher interest rate with huge government borrowing has created concern for liquidity. The call money rate touched double digit at the last day of March 2012. The Indian cash rate soared to a near three-and-a-half year high on 30 March for four-day loans, as banks scrambled to prop up their balance sheets as the fiscal year draws to a close. The annual growth rate of money supply stood at 13.1% as on 9 March 2012 compared with 16.7% growth recorded a year ago. In current financial year (FY) till 9 March 2012 growth rate of money supply stood at 12.1% compared with 15% growth recorded in the same period a year ago. Time deposit with banks is the major component in money supply. It has recorded 15.3% annual growth rate as on 9 March 2012 compared with 17.9% growth recorded a year ago. In current FY, till 9 March 2012, growth rate stood at 14.7% compared with 17.7% growth recorded in same period a year ago. In current FY, till 9 March 2012, currency with public recorded 12.9% growth compared with 20% growth rate registered in the same period a year ago. The annual growth rate as on 9 March 2012 stood at 12% compared with 19.2% growth recorded a year ago. Demand deposits with bank recorded 6.6% fall till 9 March 2012 in current FY compared with 6% negative growth rate recorded in the same period a year ago. The annual growth rate turned in to negative zone at 0.7% compared with 6.2% growth rate recorded last year.
rate of the Core industries was 4.4 % as against their growth at 5.8% during the corresponding period in 2010-11. Coal production (weight: 4.38% in six infra) registered a growth of 17.8% in February 2012 compared to its growth at (-) 5.8% in February 2011. However, in cumulative terms Coal production had a growth of 0.4% during April-February 2011-12 compared to its growth at (-) 0.1% during the same period of 2010-11. Crude Oil production (weight: 5.22%) registered a growth of 0.4% in February 2012 compared to its growth at 12.2% in February 2011. Cumulatively Crude Oil production registered a growth of 1.4% during AprilFebruary 2011-12 compared to its growth at 11.9% during the same period of 2010-11. Natural Gas production (weight: 1.71%) registered a growth of (-) 7.6% in February 2012 compared to its growth at (-) 7.3% in February 2011. Natural Gas production registered a cumulative growth of (-) 8.8% during AprilFebruary 2011-12 compared to its growth at 12.3% during the same period of 2010-11.Petroleum refinery production (weight: 5.94%) had a growth of 6.2% in February 2012 compared to its growth at 3.2% in February 2011. In
(% change)
Infrastructure industries: Growth rate SECTOR WEIGHT FEBRUARY APRIL-FEBRUARY (%) 2012 2011 2011-12 2010-11
Coal Crude Oil Natural gas Refinery Products Fertilisers Finished steel (carbon) Cement Electricity Overall Index 4.38 5.22 1.71 5.94 1.25 6.68 2.41 10.32 37.90 17.8 0.4 -7.6 6.2 4.1 4.3 10.8 8.0 6.8 -5.8 12.2 -7.3 3.2 4.8 18.5 6.5 7.2 6.4 0.4 1.4 -8.8 3.4 0.3 6.8 6.4 8.6 4.4 -0.1 11.9 12.3 2.5 -0.3 9.2 4.3 5.4 5.8
Infrastructure
The Eight core industries have a combined weight of 37.90 per cent in the Index of Industrial Production (IIP). The combined Index was 145.6 in February 2012 with a growth rate of 6.8% compared to their 6.4% Growth in February 2011. During April-February 2011-12, the cumulative growth
Source of data: Office of the Economic Advisor to Ministry of Commerce & Industry
Economy Indias crude oil production rose 0.4% to 2.997 million tonnes (mt) in February 2012, snapping a fall for the last four sequential months. Crude oil output of ONGC declined 1.2% to 1.838 mt, as its Mumbai high offshore output fell 0.9% to 1.27 mt and onshore product also dipped 2.1% to 0.568 mt. Crude oil production of Oil India increased 5.1% to 0.306 mt in February 2012. Output of private/JV companies increased 2.3% to 0.853 mt in February 2012. Crude oil output increased 1.4% to 34.869 mt in April-February FY2012, compared to an 11.9% growth recorded in same period last year.
Crude oil price
(US $ per barrel)
Coal
cumulative terms Petroleum refinery production registered a growth of 3.4% during April-February 2011-12 compared to its 2.5% growth during the same period of 2010-11. Fertilizer production (weight: 1.25%) registered a growth of 4.1% in February 2012 against its growth at 4.8% in February 2011. Cumulatively Fertilizer production had a growth of 0.3% during April-February 2011-12 corresponding to (-) 0.3% growth during the same period of 2010-11.Steel production (weight: 6.68%) had a growth rate of 4.3% in February 2012 against its 18.5% growth in February 2011. Cumulatively Steel production had a 6.8% growth during April-February 2011-12 compared to its 9.2% growth during the same period of 2010-11. Cement production (weight: 2.41%) registered a growth of 10.8% in February 2012 against its 6.5% growth in February 2011. The cumulative growth of Cement Production was 6.4% during April-February 2011-12 compared to its 4.3% growth during the same period of 2010-11.Electricity generation (weight: 10.32%) had an 8.0% growth in February 2012 compared to its 7.2% growth in February 2011. Electricity generation on the other hand had a cumulative growth of 8.6% during April-February 2011-12 as against its 5.4% growth during the same period of 2010-11.
From a 17.64% fall in September 2011, Indian coal production (weight: 4.38%) has been witnessing a steady pace of acceleration in growth, which pinnacled with an impressive 17.8% growth in February 2012. However, in cumulative terms coal production had a growth of 0.4% in April-February 201112, after (-) 0.1% during the same period of 2010-11. The government has decided after consultation with the concerned ministries that Coal India (CIL) will sign fuel supply agreements (FSAs) with power plants that have entered into long term power-purchase agreements (PPAs) with distribution companies (DISCOMS) and have been commissioned/would get commissioned on or before 31 March, 2015. It has been estimated that about 477 million tonnes of coal will be required in the terminal year of the 12th Plan (2016-17) for meeting the requirement of linkages to power sector by CIL, if 100% powerpurchase agreements (PPAs) are in place. The actual coal commitment would depend upon the percentage of PPAs signed.
Power
Crude oil
Brent crude oil price increased 4.6% to $124.54 per barrel in February 2012, in addition to a 6.8% increase recorded in February 2012. The price of Indian basket of crude oil also increased 4.9% to $123.6 a barrel in March, in addition to 6.6% increase registered during February 2012. The Indian rupee weakened 2.4% in March 2012, snapping gains for the previous two months, while the increase in crude oil price caused the increase in daily under-recoveries for oil marketing companies (OMCs) on the sale of diesel, PDS kerosene and domestic LPG to Rs 525 crore in March 2012 from Rs 468 crore in February, the data from Petroleum Planning and Analysis Cell (PPAC) showed. However, Brent crude oil prices have further increased to $125.43 a barrel in the early April 2012.
8
India added about 54,000 MW capacity in the 11th Five-Year Plan so far. The sector is set to miss the revised capacity addition target of 62000 MW in the current plan period (200712). The country is projected to see capacity addition of 76000 MW during the next five-year plan period ending March 2017. The government had earlier set a target for adding 78577 MW of capacity in the 11th Five-Year Plan period and it was scaled down to 62000 MW. Presently, the country has an installed power generation capacity of nearly 170000 MW. India power generation recorded 8.62% growth in February 2012 compared with a 7.17% growth in same month a year ago. Thermal power generation recorded 10.08% growth in February 2012 compared with a 4.25% growth in February 2011. Hydro power generation recorded a 0.12% fall in power generation in February 2012 compared with an 18.54% growth in same month a year ago. Nuclear power generation recorded a 2.28% growth in February 2012 compared with 57.62% growth in February 2011
IIP
Indias industrial production growth for January 2012 surprised the markets rising to a seven-month high of 6.82% compared
Economy with a 2.5% growth in December 2011. However, industrial production growth in January 2012 was only driven by consumer non-durables posting a record growth of 42.1%. Basic goods output rose 1.6%, but that of capital goods and intermediate goods declined 1.5% and 3.2% in January 2012. Further, production of consumer durable goods also declined 6.8%. In fact, excluding consumer non-durables, the industrial production is declining 1.0% in January 2012. As per the sectoral classification, growth of the output of manufacturing sector zoomed to 8.5%, driven by 92.6% growth in production food products and beverages, during January 2012 from 2.6% in December 2011. However, mining output continued to decline for the sixth sequential month at 2.7% during January 2012. Meanwhile, electricity generation growth eased to a 16-months low of 3.2% in January 2012. Industrial production data for December 2011 and October 2011 has undergone first and second revision, respectively. The IIP growth for December 2011 was revised upward to 2.5% from 1.8%, while that for October 2011 was scaled down to (-) 4.98% from (-) 4.74% at first revision. The IIP growth for October 2011 was originally reported at (-) 5.1% on 12 December 2011. As per the data complied by the Netherlands Bureau for Economic Policy Analysis, the growth of the world industrial production was 0.8%, on m-o-m basis, in January 2012 in addition to 1.0% growth in December 2011. Production expanded strongly in most regions, while emerging economies continued to outpace advanced economies. In the Euro Area too, production increased, following two monthly contractions.
IIP: Growth
Outlook
The Economic Survey has revealed that India has become the fourth largest economy in the world due to a strong economic growth but still has a low per capita income. Between 1980 and 2010, India achieved a growth of 6.2%, while the world as a whole registered a growth rate of 3.3%. As a result, Indias share in global GDP more than doubled from 2.5% in 1980 to 5.5% in 2010, it said. Consequently, Indias rank in per capita GDP showed an improvement from 117 in 1990 to 101 in 2000 and further to 94 in 2009. China, however, improved its rank from 127 to 74 during the same period. Meanwhile, the survey said any slowdown in euro zone, which accounts for 19% of the global GDP, could impact the Indian economy. The International Monetary Fund (IMF) has forecasted that the euro zone is likely to go through a mild recession in 2012. The inclusive growth rate is the key for sustainable long term growth. The lack of inclusiveness brings volatility to Indias growth. First, domestic growth of Indian economy is not inclusive and second, higher inflation affects the vulnerable sections more than the other section of the population. As a result, non-inclusive growth and higher inflation is a deadly combination, which can widen the already rich-poor gap. The real concern is lack of proper financial infrastructure.
We need to ensure financial inclusion. But after 6 decades of the independence, 4 decades of banks economic liberalization and 2 decades of unsuccessful attempts to develop proper financial infrastructure. Still more then 40% of population is unbanked (not able to access basic banking facilities). In many districts of the country, up to 90% of the population does not have access to organized credit. India doesnt have proper corporate debt market. The equity market has higher popularity due to the wide spread of technology however; data shows, only 5 % of population invests in the stock market. According to a Moodys report, Indias Baa3 rating incorporates Indias fiscal drawbacks, including the dominance in revenue by highly growth-elastic taxes and rigidities in expenditure that prevent significant cuts, leading to heightened fiscal fragility during a slowdown in growth. It also encompasses credit strengths, such as high GDP growth and savings rates, which allow the economy to absorb the governments large deficits. Over time, however, a failure to narrow fiscal deficits could endanger these credit strengths. Loose fiscal policy nourishes inflation, and persistent inflation, in turn, erodes the value of accumulated savings, raises capital costs, and discourages investment. If India has to accelerate the pace of its economic growth, on a sustainable basis, it has to embrace inclusive growth. Inclusive growth can be facilitated by a robust and healthy financial infrastructure. If the financial infrastructure is robust, healthy and inclusive, accelerating reforms in farm and manufacturing and infrastructure sector could become easier and effective. The budget was not highlighted any reforms but government dont need any specific day or event to work on reforms. Latest economy survey and planning commission report has raised many issues and suggested many ways to attain the same. We need to expand our industrial capacity, significantly step up investments in infrastructure. If these are done on a sustainable basis, we can improve our global competitiveness, which can add cream to our sustained growth. But this calls for initiatives to clear the impediments to growth, timely placement of orders, and appropriate implementation in a time bound manner.
9
(% change)
Union Budget 2012-13
Budget
Upside risks to fiscal deficit target
The main theme of the Union Budget 2012-13 was expected to be containing the high fiscal deficit. Accordingly, the finance minister hiked indirect taxes and service tax with control on expenditure. The Reserve Bank of India (RBI) was also urging for greater fiscal co-ordination to help it keep check on inflation and cut interest rates to support economic growth. The Union Budget has aimed to reduce fiscal deficit to 5.1% in 2012-13 and further trim it to 4.5% in 2013-14 and 3.9% in 2014-15. On reforms front, the FM announced various fiscal reforms, but the timing of Direct Tax-Code (DTC), Goods & Service Tax (GST) as well as direct subsidy disbursal remains the uncertain. Meanwhile, it is slated to miss the target to reduce fiscal deficit to 3.0% by 201314 as set by Thirteenth Finance Commission. 2011-12 was one of challenges for fiscal management. The combined effect of lower tax and disinvestment receipts and higher expenditure, mainly on account of subsidies, has pushed up the fiscal deficit to 5.9% of GDP in the Revised Estimates for 2011-12. The reduction in fiscal deficit to 5.1% in 2012-13 would be partly achieved by hiking excise and service taxes from 10% to 12%, and shifting from positive to negative list for service tax levy. The tax revenue growth would be supported with expected improvement in growth during next two fiscals. Divestment of stake in PSUs would generate Rs 30000 crore during 2012-13. Market loans are set to be about 10% higher at R 479000 crore (BE) for FY 2012-13, up from Rs 436414 (RE) for FY 2011-12. With higher redemption of g-sec at Rs 90616 crore for 2012-13, the gross supplies of g-sec for 2012-13 rises 11.7% to 5.69 lakh crore. The expectations for overall interest rate cuts from RBI for 2012-13 have eased, after the RBI sighted upside risks to inflation. Meanwhile, the relatively higher supplies of g-sec, Rs 15000-18000 crore per week, would continue to weigh up on yields during 2012-13. Besides achieving revenue and disinvestments targets, the achievement of fiscal deficit target critically hinges on how the government is going to reign in subsidies, which has always widely exceeded the budget estimates. The government expects 12% fall in subsidies expenditure for 2012-13, but global crude oil prices are sizzling. Meanwhile, the success of subsidies consolidation would critically depend on the implementation of subsidies reforms. There is optimism built into the budget in terms of expecting higher receipts, and under-estimating the expenditure. This is precisely what the government did last year too, which landed it in higher fiscal deficit of 5.9% for FY 2011-12 (revised) from estimated / budgeted 4.6%. On the positive side, the global fertilizer prices are easing,
10
and if this trend continues, the government may be able to contain fertilizer subsidy. Also, the government has targeted to reduce subsidies bill as percentage of GDP to 1.75% over next three years. Meanwhile, the telecom spectrum is expected garner non-tax revenue of Rs 58217 crore during 2012-13.
Five objectives
Focus on domestic demand driven growth recovery; Create conditions for rapid revival of high growth in private investment; Address supply bottlenecks in agriculture, energy and transport sectors. Intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts; and Expedite coordinated implementation of decisions being taken to improve delivery systems, governance, and transparency; and address the problem of black money and corruption in public life.
Economic Outlook
Indias GDP growth in 2012-13 to be 7.6% (+/- 0.25%) Inflation to be lower next year Current account deficit to be smaller aided by improvement in domestic financial savings
Fiscal Consolidation
Reduce the expenditure on Central subsidies to 1.75% of GDP over the next three years For 2012-13, Rs 30000 crore would be raised through disinvestment, keeping in view that at least 51% ownership and management control will remain with the Government
Strengthening Investment Environment
Introduce a new scheme called Rajiv Gandhi Equity Savings Scheme allowing for income tax deduction of 50% to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh The scheme will have a lock-in period of 3 years The details will be announced in due course
Capital Markets
Allowing Qualified Foreign Investors (QFIs) to access Indian Corporate Bond market; Simplifying the process of issuing Initial Public Offers (IPOs), lowering their costs and helping companies reach more retail investors in small towns Providing opportunities for wider shareholder participation
Union Budget 2012-13 in important decisions of the companies through electronic voting facilities Permitting two-way fungibility in Indian Depository Receipts
Micro, Small and Medium Enterprises Agriculture
Set up Rs 5000 cr. India Opportunities Venture Fund with SIDBI Plan outlay for Agriculture is being increased by 18% to Rs 20,208 crore in 2012-13 Outlay for Rashtriya Krishi Vikas Yojana (RKVY) increased from to Rs 9217 crore in 2012-13 Allocation for Green Revolution to Eastern India raised from Rs 400 crore in 2011-12 to Rs1000 crore in 2012-13 Rs 300 crore to Vidarbha Intensified Irrigation Development Programme Raise the target for agricultural credit in 2012-13 by Rs 1 lakh crore to Rs 5.75 lakh crore Interest subvention scheme for providing short term crop loans to farmers at 7% interest per annum will be continued in 2012-13. An additional subvention of 3% will be available to prompt paying farmers Allocate Rs 10000 crore to NABARD for refinancing the RRBs through this fund Kisan Credit Card (KCC) scheme will be modified to make KCC a smart card which could be used at ATMs Allocation for Accelerated Irrigation Benefit Programme (AIBP) raised by 13% to Rs 14242 crore
Capitalization of Banks
Provide Rs 15888 crore for capitalization of Public Sector Banks, Regional Rural Banks and other financial institutions including NABARD Examining the possibility of creating a financial holding company, which will raise resources to meet the capital requirements of Public Sector Banks Extend the scheme of capitalization of weak RRBs by another 2 years to enable all the States to contribute their share
Infrastructure
Tax-free bonds issuance doubled to Rs 60000 crore in FY 2013. Allow External Commercial Borrowings (ECB) to part finance rupee debt of existing power projects
Transport: Roads and Civil Aviation
Target of covering a length of 8800 kms under NHDP next year. The allocation of the Ministry has been enhanced by 14% to Rs 25360 crore in 2012-13 To encourage public private partnerships in road construction projects Allow ECB for capital expenditure on the maintenance and operations of toll systems for roads and highways so long as they are a part of the original project Permit ECB for working capital requirements of the airline industry for a period of one year, subject to a total ceiling of US Dollar 1 billion Allow foreign airlines to participate up to 49% is under active consideration of the Government Allow ECB for low cost affordable housing projects Set up Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans Enhance provisions under Rural Housing Fund from Rs 3000 crore to Rs 4000 crore Extend the scheme of interest subvention of 1% on housing loan up to Rs15 lakh where the cost of the house does not exceed Rs25 lakh for another year Enhance the limit of indirect finance under priority sector from Rs 5 lakh to Rs 10 lakh Announced Rs 500 crore pilot scheme in the Twelfth Plan for promotion and application of Geo-textiles in the NorthEast Region Set up a powerloom mega cluster in Ichalkaranji in Maharashtra with a Budget allocation of Rs 70 crore
Inclusion
Housing sector
Allocation for Scheduled Castes Sub Plan (SCSP) increased by 18% Rs 37113 crore Allocation for Tribal Sub Plan (TSP) raised by 17.6% to Rs 21710 crore Integrated Child Development Services (ICDS) scheme is being strengthened and re-structured with 58% increase in allocation to Rs 15850 crore Provide Rs 200 crore to enlarge the corpus of Womens SHGs Development Fund to Rs 300 crore Provide interest subvention to Women SHGs to avail loans up to Rs3 lakh at 7% per annum Women SHGs that repay loans in time will get additional 3% subvention, reducing the effective rate to 4%
Rural Development and Panchayati Raj
Textiles
Allocation for rural drinking water and sanitation increased 27% to Rs 14000 crore Allocation for Pradhan Mantri Gram Sadak Yojana (PMGSY) raised by 20% to Rs 24000 crore To carry the Backward Regions Grant Fund scheme into the Twelfth Plan with an enhanced allocation of Rs 12040 crore in 2012-13 Enhance the allocation under Rural Infrastructure Development Fund (RIDF) to Rs 20000 crore
Education and Health

Provided Rs 25555 crore, 21.7% higher over 2011-12, for
11
Union Budget 2012-13 commercial borrowings is proposed to be reduced from 20% to 5% for three years. These sectors are power; airlines; roads and bridges; ports and shipyards; affordable housing; fertilizer; and dams In order to reduce transaction costs in the capital markets, Securities Transaction Tax reduced by 20% (from 0.125% to 0.1%) on cash delivery transactions. Introduce a General Anti Avoidance Rule in order to counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel. Proposals on direct taxes are estimated to result in a net revenue loss of Rs 4500 crore for the year.
Union Budget 2012-13 ITEM 2010-11 ACTUAL

Revenue Receipts Tax Revenue Non-Tax Revenue Capital Receipts Recoveries of Loans Other Receipts Borrowings Total Receipts Non-Plan Expenditure On Revenue Account Interest Payments On Capital Account Plan Expenditure On Revenue Account On Capital Account Total Expenditure Creation of Capital Assets Capital Expenditure Deficits Revenue Deficit (as % of GDP) (as % of GDP) Fiscal Deficit (as % of GDP) Primary Deficit (as % of GDP) 252252 -3.3 -2.1 373591 -4.9 139569 -1.8 788471 569869 218602 408857 12420 22846 373591 818299 726491 234022 91808 379029 314232 64797
2011-12 (BE)
789892 664457 125435 467837 15020 40000 412817 816182 733558 267986 82624 441547 363604 77943
2011-12 (RE)
766989 642252 124737 551730 14258 15493 521980 892116 815740 275618 76376 426604 346201 80404
2012-13 (BE)
935685 771071 164614 555241 11650 30000 513590 969900 865596 319759 104304 521025 420513 100512
1197328 1257729 1318720 1490925
Indirect Taxes
Service Tax
To tax all services except those in the negative list. Raise the service tax rate from 10% to 12%, with consequential changes in rates for services that have individual tax rates. Proposals from service tax are expected to yield additional revenue of Rs 18660 crore.
1197328 1257729 1318720 1490925 1161940 1286109 137505 156780 394951 -4.4 257446 -2.9 521980 -5.9 246362 -2.8 164672 204816 350424 -3.4 185752 -1.8 513590 -5.1 193831 -1.9 87487 156605 146853 160567 307270 -3.4 160417 -1.8 412817 -4.6 144831 -1.6
Revenue Expenditure 1040723 1097162
Indirect taxes
Effective Revenue Deficit 164765
Raised the standard rate of excise duty from 10% to 12%, the merit rate from 5% to 6%, and the lower merit rate from 1% to 2%. the lower merit rate for coal, fertilizers, mobile phones and precious metal jewellery is being retained at 1%. No change is proposed in the peak rate of customs duty of 10% on non-agricultural goods. Barring a few individual items, the rates below the peak are also being retained. Proposals relating to indirect taxes are estimated to result in a net revenue gain of Rs 45940 crore, leaving a net gain of Rs 41440 crore in the Budget.
BE: Budget estimates, RE: Revised estimates, Figures in Rs cr. Source: Union Budget 2012-13
Outlook
Sarva Shiksha Abhiyan (SSA) Allocation to National Rural Health Mission raised by 14.9% to Rs 20822 crore
Tax Proposals
Direct Taxes
Enhance the exemption limit for the general category of individual taxpayers from Rs 1.8 lakh to Rs 2.0 lakh Increased the upper limit of the 20% tax slab from Rs 8 lakh to Rs 10 lakh Deduction of up to Rs 10000 for interest from savings bank accounts Deduction of up to Rs 5000 for preventive health check-up No change in corporate tax Rate of withholding tax on interest payments on external
12
The Union Budget 2012-13 has tried to tame down fiscal deficit by hiking excise and service tax, besides expecting increase in divestment revenues. Economic growth is set to be better in the ensuing fiscal, which can help some buoyancy in revenues. But the government has to keep a strong control on expenditure in general, and on subsidies in particular, if it has to keep a lid on fiscal deficit and net government borrowings. The budget has targeted revenues more from indirect taxes, and actually there is marginal reduction in direct tax revenues, and this is going to be inflationary. This is a cause for concern, and it appears that the RBI may not rush to cut repo rates sharply, and cumulatively the cuts may not be as aggressive as previously expected, for the current fiscal. It appears that the budgeted fuel and fertilizer subsidy for FY 2012-13 may end up grossly lower than the actual. This can potentially fan up fiscal deficit beyond budget levels.
Economic Survey 2011-12
Economic Survey
Urges for fiscal consolidation to improve long term outlook
The Economic Survey 2011-12 has painted an optimistic growth outlook picture projecting GDP growth to rebound to 7.6% in 2012-13 and further surge to 8.6% in 2013-14. The rebound in growth is expected on fiscal consolidation, which would boost domestic savings and investment rate. As per the Survey, the easing inflation would allow the Reserve Bank of India (RBI) to cut interest rates to support investment activity. Further, an increase in working age population of India is also anticipated to improve growth prospects in the medium to long term. The Economic Survey has expressed the need for greater attention to agriculture sector with all round efforts to raise productivity levels with higher investments in agriculture. As per the survey, the growth of the agriculture is necessary to stimulate overall economic growth and tame inflation. The Economic Survey expects the inflation to moderate to 6.5-7.0% by March 2012. As per the survey, the government measures to address supply-side issues, especially on the food side, and monetary tightening will help to keep inflationary pressures low in 2011-12. The Economic Survey emphasized the need for fiscal consolidation to improve medium to long term growth outlook. The fiscal slippage crowds out private investment while weighing up on inflation dynamics. The survey highlights the need to raise the tax to GDP ratio and trim unnecessary spending to bring down the fiscal gap. It suggests increasing the tax-toGDP ratio from 10.5% in 2011-12 to 13% by 2016-17. On the expenditure side, the survey argues the need to lower expenditure leakages.
2012, while inflation is expected to come down further during 2012-13. Meanwhile, the Economic Survey 2011-12 has urged to keep constant vigilance on inflation and to take steps in dealing with any unexpected developments. Recent geopolitical uncertainties are once again putting pressures on crude oil prices globally. This represents a major risk and challenge ahead and the best course of action would be to persist with regular step-adjustment of domestic energy prices, which will help with both reducing incipient structural inflationary pressures and fiscal consolidation efforts. The survey has expressed the need for renewed attention to structural ways of improving medium-term supply responses in agriculture and supply chains and infrastructure more broadly may be vital. Greater attention needs to be given to asset price bubbles in real estate and stock markets and their implications for the economy and to the strength of the financial system.
Financial Intermediation: Risk and liquidity management assumes greater significance
Fiscal consolidation: States doing well
Economic developments in the current fiscal have panned out very differently than was envisaged at the time of budget formulation. With a sharp deceleration in real GDP growth, particularly in the industry sector and continued high levels of prices in key commodities, a slippage is likely in the deficit targets envisaged at the time of Budget Estimates. However, with states performing better in overall terms, the combined deficit of the centre and states appears to be on firmer footing, which augurs well for strengthening medium-term macroeconomic prospects. Going forward, the Economic Survey 2011-12 has expressed the need to anchor fiscal consolidation on structural reforms in expenditure.
Since the Indian financial system is bank dominated, banks ability to withstand stress is critical to overall financial stability. With further globalization, consolidation, deregulation, and diversification of the financial system, the banking business may become more complex and riskier. Issues like risk and liquidity management and enhancing skill therefore assume greater significance. On recent liberalization of ECB policy, the Economic Survey 2011-12 said that it has to keep in view the need to maintain sustainable levels of external debt ratios. It expressed the need for development of the corporate bond market. The survey has expressed greater need for pension reform to facilitate the flow of long-term savings for development and establish a credible and sustainable social security system in the country. The development of the financial sector is critically dependent on financial inclusion, which is seen as an important determinant of economic growth. A major challenge in the times ahead would be to meet financing requirements, particularly of the unorganised sector and the self-employed in the micro and small business sector.
BOP: Discourage unproductive imports
Prices: Inflation to ease during 2012
The monetary policy tightening coupled with a favourable base effect in prices and continued global slowdown, are expected to moderate inflation to around 6.5-7.0% by March
The survey worries about Indias Balance of Payment (BoP) with trade deficit of more than 8% of GDP and CAD of more than 3%, which is a sign of growing imbalance. Thus, the Survey has expressed the need to discourage unproductive imports like gold and consumer goods to restore balance. In this respect, some weakening of the rupee is a positive
13
Economic Survey 2011-12 development, as it improves trade balance in the long run by increasing export competitiveness and lowering imports. Greater attention therefore has to be given to improving the composition of capital flows towards FDI. in favour of high value addition industries. Investment requirements in India will continue to exceed the availability of resources from domestic savings. The best way of covering this gap is through FDI. With the implementation of the Direct Taxes Code (DTC), it would become difficult to incentivize industry through tax exemptions. The new incentive mechanism will need to rely on providing non-tradable infrastructure services at global prices and in keeping with global standards. The new manufacturing sector will need to be environmentfriendly.
International Trade: To show sluggishness
The prospects for Indias trade sector, which was performing very well in the first half of 2011-12, seems to have slightly deteriorated in the second half of the year with the deepening euro zone crisis casting a shadow on the trade prospects of countries with close linkages to the euro zone area. Exports are likely to grow slowly in the coming months. On the other hand, import growth may only moderate with oil prices still above the US$100 per barrel mark and gold prices still at a high. On services trade front, the performance of software exports could largely depend on the developments in the major economies like the US, UK, and major euro area economies. However, there is no significant exposure to the countries which are presently facing crisis. Nevertheless, software exports may show some sluggishness. Import growth of services appears to be less elastic downwards as seen during the 2008 global crisis.
Services Sector: Challenge to accelerate growth
Agriculture: Need speedy improvement in yield
As per the Economic Survey 2011-12 achieving minimum agricultural growth is a pre-requisite for inclusive growth, reduction of poverty levels, development of the rural economy and enhancing of farm incomes. In order to make 4% agricultural growth a reality, adequate efforts are required to focus on addressing the challenges in this sector. Declining per capita availability of foodgrains has been a matter of major concern. There is a need for speedy improvement in yield in order to increase production through adequate investment in research and development.
The services sector has been a major and vital force steadily driving growth in the Indian economy for more than a decade. Growth in trade, hotels & restaurants, transport, storage and communication is more robust at 11.2% and retail-sector growth is expected to be more robust in 2012-13. With hardening of interest rates, the real worry would be with the real estate/ ownership of dwellings and business services segment, the growth of which has started decelerating and construction services with growth falling by nearly half. The outlook of the services sector in the domestic economy is linked to the prospects of the sector externally. While software service exports have continued to be steady, the unfolding events in the euro area could lead to some sluggishness in this sector. The fair-weather business services exports which have already shown signs of deceleration may not get better. Among the other two major services, transportation has already been affected, while travel and tourism could also be affected when the pockets of euro zone tourists are affected.
Energy and Infra: Attract large investment
Industry:To rebound during 2012-13

As per Economic Survey, the challenge in the short term would, therefore, be to shore up business sentiment, spur investment in productive activities, and identify bottlenecks that can be removed in a reasonably short period of time. The survey expects Indias industrial sector to rebound in the next financial year. The New Manufacturing Policy (NMP) targets a growth of 14% per annum, which is necessary to take the share of manufacturing in GDP to 25% and increase the absorption of labour in this sector from around 50 million as of today to more than 150 million by 2022. As per the survey, there are several policy measures that would have to be pursued simultaneously with NMP. There is need to resolve the issue of availability of land for industrial and infrastructure use. Both forward and backward linkages of the manufacturing sector will need to be strengthened for making progress on the objectives laid out in the New Manufacturing Policy (NMP). Within manufacturing, there is a need to shift structurally
14
Total investment in infrastructure in the Eleventh Plan is estimated to increase to more than 8% of GDP in the terminal year of the Plan higher by 2.47 percentage points as compared to the Tenth Plan. The private sector is expected to be contributing nearly 36% of this investment. The key to global competitiveness of the Indian economy lies in building world class infrastructure and service delivery at competitive rates. The realization of investment targets for infrastructure during the Eleventh Plan gives hope that the financing of an even more ambitious Twelfth Plan target may be possible. Private-sector participation in financing of infrastructure has also generated optimism that public funding need not necessarily be the exclusive route for infrastructure investment. A conducive environment for private sector participation with a transparent and credible regulatory mechanism, therefore, could reduce the pressure on public-sector funding. There is a need for introducing more innovative schemes to attract large-scale investment into infrastructure. All efforts need to be made to attract big ticket long-term investors such as strategic investors, private equity funds, pension funds, and sovereign funds.
The Macro Picture I Economic Indicators I Price Indices
Price Indices
Budget and crude oil to impact
India Wholesale Price Index (WPI) inflation further rebounded from a 26-month low of 6.55% in January 2012 to 6.95% in February 2012. The inflation was easing sharply from 10.0% in September 2011 to 9.5% in November 2011 and further down to 26-month low of 6.55% in January 2012, but it has rebounded to 7.0% in February 2012 pushed up primary articles. Inflation has also increased above market expectations of 6.7% for February 2012. Capital Market had conducted the poll of economists for their projections of inflation figure for February 2012. As per the results of poll, the rate of inflation for February 2012 was expected to increase to 6.7%. Economists had forecasted inflation in the range of 6.3% to 7.0%, while the median of the economists forecasts of inflation stood at 6.7% for February 2012. The contribution of primary articles to the overall inflation jumped to 23.2% (at 162 bps to 6.95% inflation) in February 2012 from 9.1% (at 60 bps) in January 2012. The contribution of fuel product group declined to 28.4% (198 bps) in
All commodities
February 2012 from 33.1% (217 bps) in January 2012, while that of manufactured products declined to 48.4% (338 bps) from 57.7% (378 bps) during January 2012. The contribution YOY VARIATION % FEBRUARY 2010-11 2011-12
9.54 15.89 10.95 34.36 17.72 12.37 3.87 17.09 3.59 6.26 0.00 8.60 15.63 3.78 7.10 -1.20 9.60 6.59 2.53 11.14 3.38 2.96 7.68 6.77 10.68 6.95 6.28 6.07 -2.56 25.28 12.83 9.45 15.81 4.00 5.75 5.72 10.10 -0.70 8.21 3.20 5.49 2.13 7.99 6.71 10.44 2.78 3.21 5.68 5.94 7.31
Index of Wholesale Prices Base 2004-05 =100 BASE YEAR 2004-05=100 COMMODITY/ INDEX GROUP FEBRUARY WEIGHT (%) 2010-11 2011-12
ALL COMMODITIES I PRIMARY ARTICLE (A) Food Articles (B) Non-Food Articles (C) Minerals II FUEL POWER LIGHT & LUBRICANTS A. Coal Mining B. Minerals Oils C. Electricity III. MANUFACTURED PRODUCTS (A) Food Products (B) Beverages Tobacco & Tobacco Products (C) Textiles (D) Wood & Wood Products (E) Paper & Paper Products (F) Leather & Leather Products (G) Rubber & Plastic Products (H) Chemicals & Chemical Products (I) Non-Metallic Mineral Products (J) Basic Metals Alloys & Metals Products (K) Machinery & Machine Tools (L) Transport Equipment & Parts NON-FOOD MANUFACTURED PRODUCTS FOOD INFLATION NON-FOOD INFLATION 100.00 20.12 14.34 4.26 1.52 14.91 2.09 9.36 3.45 64.97 9.97 1.76 7.33 0.59 2.03 0.84 2.99 12.02 2.56 10.75 8.93 5.21 55.00 24.31 75.69 148.1 189.6 181.3 191.6 263.1 153.5 169.3 165.1 112.5 134.0 145.1 151.5 128.0 151.1 128.2 123.8 131.3 127.7 146.1 146.6 122.5 121.6 132.0 166.4 142.3 158.4 201.5 192.3 186.7 329.6 173.2 185.3 191.2 117.0 141.7 153.4 166.8 127.1 163.5 132.3 130.6 134.1 137.9 155.9 161.9 125.9 125.5 139.5 176.3 152.6
% change
CONTRIBUTION TO INFLATION FEBRUARY 2010-11 2011-12

9.54 3.87 1.90 1.54 0.45 1.86 0.10 1.67 0.10 3.80 0.00 0.16 0.94 0.02 0.13 -0.01 0.25 0.70 0.07 1.17 0.26 0.13 3.83 1.90 7.68 6.95 1.62 1.06 -0.14 0.68 1.98 0.23 1.65 0.10 3.38 0.56 0.18 -0.04 0.05 0.06 0.04 0.06 0.83 0.17 1.11 0.21 0.14 2.79 1.62 5.31
Capital Market
I April 2012
15
The Macro Picture I Economic Indicators I Price Indices of food item (food articles and food products) surged from 6.9% (45 bps) in January 2012 to 23.3% (162 bps) in February 2012, while that of non-food items (all commodities excluding food items) dipped to 76.2% (531 bps) in February 2012 from 93.2% (610 bps) in January 2012. The official WPI for All Commodities (Base: 200405=100) for the month of February 2012 rose 0.4% from the previous months level. The annual rate of inflation, based on monthly WPI, stood at 6.95% (Provisional) in February 2012 (over February 2011) as compared to 6.55% (Provisional) for the previous month and 8.66% during the corresponding month of the previous year. The index for Minerals group increased 1.6% while that of manufactured products group rose by 0.4% in February 2012 from the previous month level. Within the manufactured products group, the index for Beverages, Tobacco & Tobacco Products group rose by 1.3% due to higher prices of bidi (6%) and soft drinks & carbonated water (3%). However, the prices of dried tobacco (8%) declined. The elevated crude oil prices remain a cause for concern. Also, weighted inflation of primary articles (in overall inflation) has been gradually easing from 3.15% August 2011 to mere 0.6% in January 2012. But with base effect waning, the inflation of primary articles has sizzled to 1.62% in February 2012. While US economic growth shows promises, the situation in EU is still weak. In this background, the RBI has preferred not to cut repo rates, thought it clearly indicated that they are poised to march downwards.
Contribution to inflation
In February 2012, WPI-based inflation rate stood at 6.95%, of that 23.2% came from primary articles, followed by 48.4% from the manufactured products group and 28.4% from fuel products group. The WPI-based inflation for February 2012 was 40 bps up compared to 6.55% reading in January 2012. Within the primary articles, the contribution of food articles to overall inflation rebounded to 106 bps in February 2012 from (-) 10 bps in January 2012. Within the food articles, the contribution of vegetables, fish marine, garlic, turmeric and tea increased, while that of chilies, milk, fruits, pulses and cereals declined in February 2012. The contribution of nonfood articles dipped to (-) 14 bps from 03 bps in January 2012. Among the non-food articles, the contribution of raw cotton, oilseeds and raw rubber fell, while that of guer seed and flowers increased in February 2012. The contribution of mineral group increased to 68 bps in February 2012 from 66 bps in January 2012, due to increase in inflation for copper ore, while the inflation for iron ore eased in February 2012. FUEL POWER GROUP INDEX % CHANGE
148.1 148.6 150.2 151.3 153.5 157.7 159.5 160.4 161.6 165.6 167.1 168.3 170 171.6 172.7 172.8 173.2 11.02 10.32 11.26 11.41 12.37 12.56 13.04 12.32 12.85 12.04 12.91 14.02 14.79 15.48 14.98 14.21 12.83
Wholesale Price Index: Major Groups (2004-05:100 Base) BASE YEAR 2004-05 ALL COMMODITIES PRIMARY ARTICLES INDEX % CHANGE INDEX % CHANGE
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 142.9 143.8 146.0 148.0 148.1 149.5 152.1 152.4 153.1 154.2 154.9 156.2 157.0 157.4 157.3 157.7 158.4 9.08 8.20 9.45 9.47 9.54 9.68 9.74 9.56 9.51 9.36 9.78 10.00 9.87 9.46 7.74 6.55 6.95 183.4 185.3 192.0 195.3 189.6 188.2 196.8 194.9 195.9 198.2 199.4 202.9 203.5 201.8 198.9 199.7 201.5 18.09 14.67 18.37 18.44 15.89 13.44 15.09 12.92 11.31 11.47 12.46 12.22 10.96 8.90 3.59 2.25 6.28
MFD. GROUP INDEX % CHANGE

129.2 129.8 130.9 132.6 134.0 135.7 136.6 137.4 137.9 138.0 138.4 139.0 139.6 140.4 140.9 141.2 141.7 5.13 5.02 5.39 5.32 6.26 7.53 6.80 7.43 7.90 7.73 7.87 8.00 8.05 8.17 7.64 6.49 5.75
PROGRESSIVE
2010-11 2011-12
APRIL-FEB
142.8 155.5
APRIL-FEB
9.55 8.93
APRIL-FEB
181.9 199.4
APRIL-FEB
18.17 9.61
APRIL-FEB
147.5 167.5
APRIL-FEB
12.26 13.60
APRIL-FEB
129.6 139.2
APRIL-FEB
5.54 7.43
16
Capital Market
April 2012
The Macro Picture I Economic Indicators I Price Indices The contribution of fuel and power group increased eased from 217 bps in January 2012 to 198 bps during February 2012. Within the fuel products group, the contribution of mineral oils fell from 175 bps in January 2012 to 165 bps in February 2012. The contribution of coal also declined to 23 bps, while that of electricity was steady at 10 bps in February 2012. Within the mineral oils group, the contribution of petrol, naphtha, ATF dipped in February 2012. The contribution of manufactured products to overall inflation dipped from 378 bps in January 2012 to 338 bps in February 2012. Within manufactured products, the contribution of textiles declined to (-) 4 bps from 09 bps. Meanwhile, the contribution of chemical and chemical products, basic metal and non-metallic mineral product groups declined to 83 bps, 111 bps and 17 bps in February 2012. However, the contribution of food products and beverages groups to inflation moved up by 01 basis point each in February 2012. level. The annual rate of inflation, based on monthly WPI, stood at 6.95% (Provisional) in February 2012 (over February 2011) as compared to 6.55% (Provisional) for the previous month and 8.66% during the corresponding month of the previous year.
Primary Articles (Weight 20.12%)

The index for the primary articles group increased 0.9% in February 2012 from previous months level. The index for Food Articles group rose 0.5% in February from the previous month level due to higher prices of ragi (4%), barley and fruits & vegetables (3% each), maize (2%) and fish-marine, beef & buffalo meat, tea, poultry chicken and fish-inland (1% each). However, the prices of condiments & spices (5%), jowar and egg (3% each), arhar and masur (2% each) and urad, moong and gram (1 % each) declined. The domestic WPI for rice recorded 1.53% growth in February 2012 compared with a 3.84% growth in the same month a year ago. The WPI for wheat recorded 4.18% fall in February 2012 compared with 1.28% fall in February 2011. The WPI index for milk and products recorded 11.70% growth in February 2012 compared with a 12.54% growth recorded in the same month a year ago.
WPI Inflation (M-o-M Basis)

The official WPI for All Commodities (Base: 2004-05=100) for the month of February 2012 rose 0.4% from the previous months
Index Numbers of Wholesale Prices ( Base 2004-05=100) BASE YEAR 2004-05=100 COMMODITY/ INDEX GROUP APR-FEB WEIGHT(%) 2010-11 2011-12
ALL COMMODITIES 100.00 I PRIMARY ARTICLE 20.12 (A) Food Articles 14.34 (B) Non-Food Articles 4.26 (C) Minerals 1.52 II FUEL POWER LIGHT & LUBRICANTS 14.91 A. Coal Mining 2.09 B. Minerals Oils 9.36 C. Electricity 3.45 III. MANUFACTURED PRODUCTS 64.97 (A) Food Products 9.97 (B) Beverages Tobacco & Tobacco Prod. 1.76 (C) Textiles 7.33 (D) Wood & Wood Products 0.59 (E) Paper & Paper Products 2.03 (F) Leather & Leather Products 0.84 (G) Rubber & Plastic Products 2.99 (H) Chemicals & Chemical Products 12.02 (I) Non-Metallic Mineral Products 2.56 (J) Basic Metals Alloys & Metals Products 10.75 (K) Machinery & Machine Tools (L) Transport Equipment & Parts NON-FOOD MANUFACTURED PRODUCTS FOOD INFLATION NON-FOOD INFLATION 8.93 5.21 55.00 24.31 75.69 142.8 181.9 179.7 164.4 252.0 147.5 163.6 156.5 113.2 129.6 140.8 145.4 118.5 148.7 124.8 127.2 125.5 123.6 144.3 140.0 121.1 120.2 127.5 163.7 136.0 155.5 199.4 192.4 182.0 314.1 167.5 184.7 183.1 114.9 139.2 151.0 162.5 128.5 160.6 131.9 129.9 133.5 134.3 152.4 155.6 124.9 124.4 137.1 175.4 149.1
YOY VARIATION % APR-FEB 2010-11 2011-12

9.55 18.17 16.19 21.82 25.83 12.26 4.96 16.13 5.54 5.54 3.85 7.22 11.48 4.01 5.05 -0.94 6.32 5.14 2.59 8.39 2.78 2.96 5.88 11.51 8.81 8.93 9.61 7.06 10.73 24.62 13.60 12.90 17.01 1.43 7.43 7.23 11.73 8.52 7.98 5.69 2.09 6.43 8.67 5.65 11.11 3.10 3.51 7.47 7.12 9.64
CONTRIBUTION TO INFLATION APR-FEB 2010-11 2011-12

9.55 4.32 2.75 0.96 0.60 1.84 0.12 1.56 0.16 3.39 0.40 0.13 0.69 0.03 0.09 -0.01 0.17 0.56 0.07 0.89 0.22 0.14 2.99 3.15 6.40 8.93 2.46 1.27 0.53 0.66 2.09 0.31 1.75 0.04 4.38 0.71 0.21 0.52 0.05 0.10 0.02 0.17 0.90 0.15 1.17 0.23 0.15 3.67 1.98 6.95
Capital Market
I April 2012
17
The Macro Picture I Economic Indicators I Price Indices The index for Non-Food Articles group surged 2.1% from the previous month level due to higher prices of gaur seed (30%), flowers (26%), logs & timber and raw jute (9% each), gingelly seed (5%), groundnut seed and mesta (3% each) and cotton seed, soyabean and castor seed (1% each). However, the prices of copra (8%), niger seed (5%), raw cotton (3%), raw silk (2%) and raw rubber, rape & mustard seed and fodder (1% each) declined. The WPI index for oil seeds recorded 9.39% growth in February 2012 compared with a 7.90% growth in February 2011. The WPI of groundnut seed recorded 36.39% growth in February 2012 compared with 0.58% growth in same month a year ago. workers recorded a 7.57% growth in February 2012 compared with February 2011. The CPI for agriculture laborers recorded a 6.34% growth in February 2012 compared with February 2011. The CPI for rural laborers recorded 6.68% growth in February 2012 compared with February 2011
Near term concerns

The Indian economy is estimated to grow by 6.9% in 2011-12, after having grown at the rate of 8.4% in each of the two preceding years. This indicates a slowdown compared not just to the previous two years but 2003 to 2011 (except 2008-9). The decelerated GDP and industrial growth rate, rising inflation and twin deficit (fiscal and trade) are the main concerns for the policy makers in FY 2012-13. First, the Budget has set tough path while announcing higher government borrowing which makes the RBIs job more complex. The finance minister has raised concern for volatile global energy prices and indicted hike in domestic energy price as a spill over effect of rising global energy prices. Higher government borrowing means government will borrow more cash from the market compared with what it has a year ago. On other hand, hike in energy prices will boost inflation. These are two interlinked issues which has adverse impact on growth outlook. To address the rising fiscal deficit government has to borrow more or should get more revenue. The second option looks to be tough as economy activities have been slowing down and likely to be on the same path. Higher borrowing has wide range of adverse effects on the growth outlook. Higher govermeent borrowing at the higher interest rate is the major worry. Higher interest rate is the outcome of the higher inflation. Higher inflation is the result of structural imbalance in India. The economic survey has suggested many reforms which could not get the attention in the budget and, therefore, it will not get implemented. Looking ahead, vigilance is called forin getting back to a low-inflation/sustained high-growth path in India, by renewed focus on supply-side measures and improved fiscal consolidation, including steppedupregular adjustments in domestic energy prices. High levels of food stocks and producer responses to higher protein and other food prices should help maintain overall price stability ahead. The RBI will announce annual policy review on 17 April 2012. The call for CRR / rate cut will depend on inflation trend, global energy prices, growth outlook (budget document has raised concern for slowdown economy activities and estimated lower growth rate for year to come). The liquidity condition in favor of rate cut / CRR cut. The liquidity conditions continue to remain tight in the
Fuel & Power (Weight 14.91%)

The index for fuel and power group rose 0.2% due to higher prices of lignite (8%), furnace oil (5%) and light diesel oil and bitumen (2% each). However, the prices of aviation turbine fuel (2%) and naphtha (1%) declined.
Manufactured Products (Weight 64.97%)

The index for manufactured products group rose by 0.4% in February 2012 from the previous month level. Within the manufactured products group, the index for Beverages, Tobacco & Tobacco Products group rose by 1.3% due to higher prices of bidi (6%) and soft drinks & carbonated water (3%). However, prices of dried tobacco (8%) declined. The index for Textiles group rose by 0.4% due to higher prices of jute sacking cloth and cotton yarn (1% each). However, prices of jute yarn and man-made fabric (2% each) and tyre cord fabric (1%) declined. The index for Wood & Wood Products group rose by 0.2% due to higher prices of processed wood (1%). The index for Paper & Paper Products group declined by 0.1% due to lower prices of paper pulp (3%) and maplitho paper, printing and writing paper and computer stationery (1% each). However, the prices of books/ periodicals/ journals (1%) moved up. The index for Leather & Leather Products group declined by 0.5% due to lower prices of leather garments & jackets and leathers (1% each). The index for Rubber & Plastic Products group declined by 0.1% due to lower prices of tubes (1%). The index for Chemicals & Chemical Products group rose by 0.4% due to higher prices of distemper (3%), noncyclic compound and rubber chemicals (2% each) and di ammonium phosphate, basic inorganic chemicals and paints (1% each). However, the prices of hair / body oils and synthetic resin (1% each) declined.
Consumer price index

No relief has been visible in CPI in February. CPI for industrial
18
The Macro Picture I Economic Indicators I Price Indices banking system weighing up heavily on call money rates. The Indian cash rate soared to a near three-and-a-half year high on 30 March for four-day loans. Banks are paying out their loan disbursals by borrowing in call rate, and not many lenders were there in the market. Further, banks have been rushing to tweak their balance sheets, and also accessing the Reserve Bank of Indias repo counter to garner funds.
CPI for Agriculture Labourers
Outlook
The market condition creates strong case for rate cut / CRR reduction. However, liquidity addition will boost demand side inflation. FY 2011-12 inflation average (April February) stood at 8.94% which is above the RBIs projection. The inflation data for March 2012 as well as for full year will release on 13 April 2012 before the RBIs policy announcement. Looking to the numbers of the last 11 months, inflation rate will be around 8-8.5% for FY 2011-12. It is too early to take a call on inflation, which has upside from crude oil, hike in excise duties and service taxes. Apparently, the RBI will prefer to reduce CRR than repo rate cut. But considering the sluggish economic growth, RBI
may start rate cut from April 2012 itself. Having said that, the rate cuts for the current fiscal, may well be lower than earlier estimates, considering the possible upside to Indias WPI inflation. Beyond rates, the RBIs policy will be keenly watched for its FY 2012-13 projections.
Consumer Price Index

INDUSTRIAL WORKERS* BASE YEAR 2001 INDEX % CHANGE
181 182 185 188 185 185 186 187 189 193 194 197 198 199 197 198 199 9.70 8.33 9.47 9.30 8.82 8.82 9.41 8.72 8.62 8.43 8.99 10.06 9.39 9.34 6.49 5.32 7.57
YEAR
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12
AGRICULTURAL LABOURERS BASE YEAR 1986-87 INDEX % CHANGE

566 570 581 589 584 585 587 592 598 604 610 615 619 621 618 618 621 8.43 7.14 7.99 8.67 8.55 9.14 9.11 9.63 9.32 9.03 9.52 9.43 9.36 8.95 6.37 4.92 6.34
% change
RURAL LABOURERS BASE YEAR 1986-87 INDEX % CHANGE

565 569 580 588 584 584 587 592 597 604 610 614 620 621 619 619 623 8.45 6.95 8.01 8.69 8.55 8.96 9.11 9.63 9.14 9.03 9.71 9.25 9.73 9.14 6.72 5.27 6.68
PROGRESSIVE
2010-11 2011-12
APRIL-FEB
179 194
APRIL-FEB
10.6 8.4
APRIL-FEB
563 609
APRIL-FEB
10.1 8.3
APRIL-FEB
562 610
APRIL-FEB
10.1 8.5
* The base year for CPI-IW has been shifted to 2000-01 since January 2006.
Capital Market
I April 2012
19
The Macro Picture I Economic Indicators I Price Indices
Country-Wise Consumer Price Inflation (%)

SEP-11
OECD Austria Belgium Brazil Canada Chile China 3.26 3.55 3.55 7.31 3.17 3.27 6.10
Primary Articles FEB-12

2.84 2.53 3.66 5.85 2.63 4.42 3.24 3.69 2.80 4.21 3.12 2.29 2.28 3.36 2.10 5.88 6.33 7.57 3.56 2.18 1.66 3.25 0.30 3.05 3.87 1.15 4.29 3.60 3.74 3.82 2.92 6.31 2.82 1.98 1.92 -0.88 2.42 10.43 2.87
% Change
OCT-11
3.13 3.45 3.57 6.97 2.90 3.67 5.63 2.27 2.76 4.39 3.54 2.35 2.49 4.99 3.00 3.85 5.26 9.39 4.42 2.85 2.75 3.36 -0.20 3.38 3.20 1.40 4.02 4.24 7.19 4.46 2.73 6.22 3.91 3.01 2.57 -0.13 2.61 7.66 3.53
NOV-11
3.13 3.64 3.85 6.64 2.89 3.93 4.27 2.52 2.60 4.15 3.36 2.51 2.40 4.84 2.93 4.25 5.22 9.34 4.15 2.95 2.56 3.26 -0.50 3.56 3.48 1.16 4.63 3.95 6.78 4.64 2.69 6.21 3.90 2.87 2.47 -0.53 2.60 9.49 3.39
DEC-11
2.91 3.16 3.49 6.50 2.30 4.44 4.06 2.42 2.51 3.74 2.90 2.47 2.10 4.20 2.42 4.07 5.25 6.49 3.79 2.45 2.18 3.29 -0.20 3.18 3.82 0.15 4.61 3.62 6.11 4.43 2.00 6.38 3.67 2.38 1.96 -0.72 2.38 10.45 2.96
JAN-12
2.84 2.97 3.65 6.22 2.46 4.23 4.58 3.53 2.76 4.52 3.17 2.35 2.11 3.59 2.32 5.42 6.53 5.32 3.65 2.16 1.96 3.16 0.10 2.93 4.05 0.54 4.03 3.51 4.14 3.89 2.32 6.44 3.20 2.00 1.86 -0.79 2.36 10.61 2.93
Czech Republic 1.83 Denmark Estonia Finland France Germany Great Britain Greece Hungary Iceland India Indonesia Ireland Israel Italy Japan Luxembourg Mexico Norway Poland Portugal Russia Slovakia Slovenia South Africa South Korea Spain Sweden Switzerland Netherlands Turkey United States 2.52 5.15 3.70 2.24 2.59 5.19 3.05 3.54 5.68 10.06 4.61 2.55 2.94 3.08 0.00 3.34 3.14 1.56 3.86 3.56 7.20 4.26 2.06 5.70 4.25 3.14 2.89 0.49 2.71 6.15 3.87
Fuel, Power, Light & Lubricants
Manufacturing products
20
Capital Market
April 2012
The Macro Picture I Economic Indicators I Index of Industrial Production
IIP
Growth remains highly volatile and narrow
Indias industrial production growth for January 2012 surprised the markets rising to a seven-month high of 6.82% compared with a 2.5% growth in December 2011. However, industrial production growth in January 2012 was only driven by consumer non-durables posting a record growth of 42.1%. Basic goods output rose 1.6%, but that of capital goods and intermediate goods declined 1.5% and 3.2% in January 2012. Further, production of consumer durable goods also declined 6.8%. In fact, excluding consumer non-durables, the industrial production is declining 1.0% in January 2012. As per the sectoral classification, growth of the output of manufacturing sector zoomed to 8.5%, driven by 92.6% growth in production food products and beverages, during January 2012 from 2.6% in December 2011. However, mining output continued to decline for the sixth sequential month at 2.7% during January 2012. Meanwhile, electricity generation growth eased to a 16-months low of 3.2% in January 2012. Industrial production data for December 2011 and October 2011 has undergone first and second revision, respectively. The IIP growth for December 2011 was revised upward to 2.5% from 1.8%, while that for October 2011 was scaled down to (-) 4.98% from (-) 4.74% at first revision. The IIP growth for October 2011 was originally reported at (-) 5.1% on 12 December 2011. Growth of the industrial production has decelerated to 4.0% in April-January FY2012 compared to 8.3% growth in April-January FY2011. The manufacturing and electricity
Index of Industrial Production (Base 2004-05:100)

DESCRIPTION WEIGHT
Main Classification Mining Manufacturing Electricity Basic goods Capital goods Intermediate goods Consumer goods Durables Non-durables General Index 141.6 755.3 103.2 355.7 92.6 265.1 286.6 53.7 233.0 1000.0 -2.7 8.5 3.2 1.6 -1.5 -3.2 20.2 -6.8 42.1 6.8 -2.6 4.5 8.8 5.7 -2.8 -1.1 7.3 3.9 10.2 4.0 -0.31 6.83 0.28 0.65 -0.20 -0.43 6.76 -1.02 7.78 6.82 -0.30 3.57 0.76 2.25 -0.41 -0.15 2.34 0.57 1.76 4.04
GROWTH (%) JAN APR-JAN 2012 2011-12
CONTRIBUTION TO GROWTH JAN APR-JAN 2012 2011-12
Use Based Classification
generation recorded a growth of 4.5% and 8.8%, but the mining output declined 2.6% during April-January FY2012. As per the use-based classification the growth of the basic goods production decelerated to 5.7%, but intermediate and capital goods have recorded fall in production at 2.8% and 1.1%. Growth of consumer durables goods production has decelerated to 3.9%, while that of consumer non-durable goods accelerated to 10.2% during April-January FY2012. As growth was not broad-based in January 2012, in terms of industries, only thirteen (13) industry groups out of the twenty two (22) industry groups in the manufacturing sector have shown positive growth, compared to sixteen (16) recording a positive growth in December 2011. The industry group Food products and beverages has shown the highest and record growth of 92.6%, followed by 56.1% in Publishing, printing & reproduction of recorded media and 29.9% in Medical, precision & optical instruments, watches and clocks. On the other hand, the industry group Electrical machinery & apparatus has shown a negative growth of 30.5% followed by 14.1% in Office, accounting & computing machinery and 13.8% in Radio, TV and communication equipment & apparatus. Some of the important items of consumer goods showing high positive growth during the current month and thus contributing to the growth of the overall index for the month include Zarda /Chewing Tobacco (127.3%), Marble Tiles/ Slabs (69.4%), Newspapers (57.1%) and Pens of all kind (31.8%). However, some important items of the consumer goods are also showing negative growth. These are: Vitamins [(-) 54.2%], Air-Conditioner (Room) [(-) 47.5%], Fruit Pulp [(-) 33.2%], Antibiotics and its Preparations [(-) 16.4%] and Gems and Jewellery [(-) 15.5%]. Some of the other important items showing high positive growth are: Petroleum Coke (246.6%), Lens of all kind (72.0%), Insulated Cables/ Wires all kind (57.5%), Boilers (46.4%) and Heat Exchangers (46.3%). The other important items showing negative growth during the month are: Colour TV Picture Tubes [(-) 91.9%], UPS/ Inverter/ Converter ((-) 79.4%), Cement Machinery [() 73.6%] and Cable, Rubber Insulated [(-) 66.2%].
Contribution to Growth
The manufacturing index contributed 683 bps or 100.1% of the 6.82% growth in industrial production in January 2012. The electricity sector also contributed to the growth in industrial production by 28 bps or 4.0% during January 2012. But the mining sector had a negative contribution of 31 bps (or 4.48%) to IIP growth in January 2012.
21
Capital Market
I April 2012
The Macro Picture I Economic Indicators I Index of Industrial Production Among the 22 manufacturing industries group, the Food products and beverages group had the largest positive share of 733 bps to the 6.82% growth in industrial production followed by Motor vehicles, trailers & semi-trailers group contributing 95 bps during January 2012. The industry group Fabricated metal products, except machinery & equipment and Publishing, printing & reproduction of recorded media garnered 59 bps and 53 bps to the overall IIP growth in January 2012. Meanwhile, the Other non-metallic mineral products, Other transport equipment and Medical, precision & optical instruments, watches and clocks contributed 32 bps, 12 bps and 10 bps, respectively to the IIP growth. On the other hand, the industry groups Electrical machinery & apparatus n.e.c. and Radio, TV and communication equipment & apparatus and Machinery and equipment n.e.c. had a negative contribution of 132 bps, 78 bps and 40 bps, respectively, to the IIP growth. Meanwhile, industry groups Chemicals and chemical products, Coke, refined petroleum products & nuclear fuel and Textiles also had a negative share of 36 bps, 33 bps and 13 bps, respectively. As per the use-based classification, capital goods had a negative contribution of 20 bps to 6.82% increase in the industrial production during January 2012. The intermediate goods also had a negative share of 43 bps, while consumer non-durable contributed strongly by (+) 778 bps to IIP Growth in January 2012. The basic goods also had a positive share of
Index of Industrial Production (2-Digit Level) (Base: 2004-05:100) DESCRIPTION WEIGHT INDEX JAN APR-JAN BASE:2004-05=100 2012 2011-12
Acceleration Basic metals Food products and beverages Coke, refined petroleum products & nuclear fuel Other non-metallic mineral products Tobacco products Publishing, printing & reproduction of recorded media Wood and products of wood & cork except furniture; articles of straw & plating materials Medical, precision & optical instruments, watches and clocks Office, accounting & computing machinery Deceleration Motor vehicles, trailers & semi-trailers Fabricated metal products, except machinery & equipment Other transport equipment Paper and paper products Radio, TV and communication equipment & apparatus Luggage, handbags, saddlery, harness & footwear; tanning and dressing of leather products Negative Chemicals and chemical products Textiles Machinery and equipment n.e.c. Furniture; manufacturing n.e.c. Wearing apparel; dressing and dyeing of fur Rubber and plastics products Electrical machinery & apparatus n.e.c. 100.59 61.64 37.63 29.97 27.82 20.25 19.80 119.5 138.4 246.5 137.2 151.3 195.6 266.6 122.5 133.0 231.1 139.0 132.9 183.0 380.4 40.64 30.85 18.25 9.99 9.89 5.82 293.1 212.6 228.5 140.7 863.9 117.2 251.2 192.5 232.7 137.0 966.8 117.5 113.35 72.76 67.15 43.14 15.70 10.78 10.51 5.67 3.05 195.8 368.7 128.4 170.2 109.5 240.7 166.5 138.1 127.3 191.1 169.6 124.7 156.2 110.6 183.8 157.0 116.6 144.8
% GROWTH JAN APR-JAN 2012 2011-12

0.20 92.63 -6.35 8.27 3.20 56.10 8.40 29.92 -14.10 16.36 18.64 5.30 4.45 -13.78 -1.35 -5.01 -2.67 -6.98 -2.83 3.99 2.52 -30.46 9.82 28.35 2.97 4.95 4.48 24.14 1.45 12.71 4.07 12.12 13.84 14.26 5.02 5.24 3.97 -0.44 -2.56 -3.00 -1.77 -3.86 -1.34 -21.89
RELATIVE CONTRIBUTION (%) JAN APR-JAN 2012 2011-12

0.03 7.33 -0.33 0.32 0.03 0.53 0.08 0.10 -0.04 0.95 0.59 0.12 0.03 -0.78 -0.01 -0.36 -0.13 -0.40 -0.07 0.09 0.06 -1.32 1.19 1.68 0.15 0.20 0.05 0.24 0.01 0.05 0.01 0.68 0.44 0.33 0.04 0.29 0.02 -0.03 -0.13 -0.17 -0.05 -0.09 -0.03 -1.30
22
Capital Market
April 2012
The Macro Picture I Economic Indicators I Index of Industrial Production cooker and cylinders increased 8.8%, 6.8% and 8.8%, but the production of electrical stamping laminates, fasteners and spun pipes fell 2.9%, 8.7% and 3.3% in January 2012. Publishing, printing & reproduction of recorded media: Group output zoomed 56.1% in January 2012, while it increased 24.1% during April-January FY2012. Within the group, the production of books and newspapers surged 44.5% and 57.1% during January 2012. Other non-metallic mineral products: Group output increased 8.3% during January 2012 and 5.0% in April-January FY2012. Within the group, the production of cement, glass bottles and marble tiles increased 10.9%, 8.3% and 69.4%, respectively, in January 2012. The production of granites and grinding wheels rose 12.8% and 2.5%, while that of fiber glass and glass sheet increased 8.6% and 2.5%. But production of railway sleepers and HT insulators fell 36.1% and 13.6% in January 2012. Other transport equipment: The group output increased 5.3% during January 2012 and 14.3% in April-January FY2012. Within the group, the production of motor cycles, three wheelers and scooters moved up 8.0%, 6.0% and 20.3%. Production of railway wheel and railway coach increased 8.9% and 2.8%, but that of railway wagons and railway axle declined 58.7% and 20.4%. Further, the production of locomotives of all type and shipbuilding also dipped 5.9% and 0.8% in January 2012. Electrical machinery & apparatus: The group output dipped 30.5% in January 2012, contributing negatively by 132 bps to the overall growth in Indias industrial production, while plunged 21.9% during April-January FY2012. Within the group, the output of rubber insulated cables plunged 66.2%, while that of DC motors and switch gears also declined 51.4% and 18.0%, respectively in January 2012. However, the production of electric motors and inverters fell 15.6% and 79.6%, while that of magnets and fluorescent tubes also dipped 51.4% and 6.5%, respectively. The output of insulated cables, storage batteries and generators increased 57.5%, 24.2% and 26.7%. Radio,TV and communication equipment & apparatus: The group output dipped 13.8% in January 2012, while it rose 5.2% in April-January FY2012. Within group, output of telephone instruments, colour TV sets and colour picture tubes dipped 12.0%, 25.6% and 91.8%, respectively, while that of printed circuit board also declined 15.4% in January 2012. However, output of IC chips and power capacitors increased 13.1% and 12.4% in January 2012. Machinery and equipment: Output of group declined 7.0% in January 2012, while it fell 3.0% in April-January FY2012. Within the group, output of air-conditioners and cement machinery declined 47.5% and 73.2%, respectively, in January 2012. The production of sugar machinery, chillers, plastic machinery and refrigerators declined 27.4%, 67.1%, 11.1%
23
World Industrial Prod Excluding Construction WEIGHTS NOV-11 DEC-11 JAN-12

World (production weights) Advanced Economies (a) United States Japan Euro Area Emerging Economies Asia Central and Eastern Europe Latin America Africa and Middle East 100.0 65.1 21.7 11.6 20.2 34.9 17.0 5.0 6.4 6.5 3.7 0.5 3.8 -4.2 0.3 6.6 8.5 4.5 0.2 3.4 3.7 0.0 3.5 -2.9 -1.4 6.9 9.0 3.5 0.5 3.6 3.6 0.6 3.5 -1.1 -1.0 6.3 8.3 3.6 -0.4 3.8
Source: Netherlands Bureau for Economic Policy Analysis, Seasonally and working day adjusted (CPB)
65 bps, but consumer durables had a negative share of 102 bps to the IIP growth.
Industry wise performance

Mining Index: The mining sector continued to record a fall in production for the sixth sequential week at 2.7% during January 2012. Coal production increased 7.5% to 54.2 million tonnes, but the crude oil production, which carries the largest 39.8% weight in the mining index, 2.0% to 3.173 million tonnes. The natural gas production carrying 13.42% weight also declined 8.9%, while recording fall for the fourteenth sequential month. Food products and beverages: Group production zoomed at record pace of 92.6% in January 2012 and surged 28.4% in April-January FY2012. The production of sugar and edible oils zoomed 174.7% and 87.4% largely contributing to the IIP growth, while that of soyabean extraction and instant food mixes moved up 81.9% and 13.8% in January 2012. The production chocolate, starch and poultry feed also increased 21.0%, 49.3% and 18.0%, respectively in January 2012. However, the production of fruit pulp, rice, cashew kernels and tea declined 33.2%, 11.0%, 4.6% and 10.7%, respectively. Motor vehicles, trailers & semi-trailers: Group output increased 16.4% in January 2012, while it improved 12.1% in April-January FY2012. Within the group, the production of passenger cars increased 10.3%, while that of commercial vehicles galloped 23.6% in January 2012. Meanwhile, output of utility vehicle and auto ancillary & parts increased 17.4% and 7.9%, respectively in January 2012. Fabricated metal products: Group output increased 18.6% in January 2012 and 13.8% in April-January FY2012. The production of boilers, stamping & forgings, aluminium utensils and steel structures moved up 47.8%, 13.1%, 58.2% and 23.9%, respectively. Meanwhile, output of razor blades, pressure
The Macro Picture I Economic Indicators I Index of Industrial Production
IIP use-based classification
Eight core infra sector

The growth of the output of eight core infrastructure industries rebounded to 6.8% during February 2012 from 0.7% in January 2012. The growth of January 2012 has been scaled up from 0.5% reported earlier. The growth of the output of eight core infrastructure sectors has moderated to 4.4% during AprilFebruary FY2012, compared to 5.8% growth recorded in corresponding period of previous year. The production of coal increased at record pace of 17.8% for current base, while that for crude oil rose 0.4% in February 2012 snapping fall for previous four months. The growth of the production of refiner products and electricity generation rebounded to 6.2% and 8.0%, respectively. The output of cement surged 10.8%, while that for fertilizers and steel increased 4.0% and 4.3% in February 2012. But, the production of natural gas continued to decline at 7.64% during February 2012.
and 15.5%, respectively. Meanwhile, production of packaging machinery and drilling equipment increased 204.0% and 65.8%, while that of tractors, food processing machinery and turbines & accessories moved up 12.2%, 609.4% and 80.1%, respectively. Production of food heat exchangers and engines also rose 48.0% and 8.1%, respectively. Chemicals and chemical products: Group output declined 5.0% in January 2012, while also fell 0.4% during April-January FY2012. Within the group, the production of polypropylene, purified terephthalic acid and diammonium phosphate increased 480.4%, 35.1% and 32.1%, respectively. Production of ayurvedic medicaments, guergum splits and cypermethrin also moved up 18.2%, 86.0% and 267.7%, respectively. However, production of polystyerene, vitamins and antibiotics declined 52.4%, 84.7% and 13.0%, respectively. Further, the output of linear low density polyethylene, ethylene and high density polyethylene also fell 26.5%, 9.3% and 23.6%, respectively. Coke, refined petroleum products & nuclear fuel: The group dipped 6.3% during January 2012, while the group output increased 3.0% in April-January FY2012. Within the group, the output of LPG, petrol and diesel declined 19.0%, 19.5% and 3.5% during January 2012. Indias overall petroleum refinery production has declined 4.6% during January 2012. The production of furnace oil, kerosene and propylene also declined 16.0%, 13.8% and 6.7%, respectively. However, the production of petcoke jumped 245.3% in January 2012, while that of naphtha, washed coal and bitumen also increased 21.6%, 7.7% and 4.7%, respectively during January 2012. Textiles: Group output declined 2.7% in January 2012 and 2.6% in April-January 2012. Within the group, the production of cotton yarn, tarapaulin and non-cotton yarn declined 6.0%, 63.2% and 5.1%, respectively, in January 2012. Production of nylon yarn, cotton knitted cloth and elastic tape also fell 31.5%, 5.0% and 61.5%, in January 2012. Meanwhile, production of terry towel, sutli and Hessian increased 14.8%, 1900.0% and 21.5%, in January 2012.
% change
World Industrial production

As per the data complied by the Netherlands Bureau for Economic Policy Analysis, the growth of the world industrial production was 0.8%, on m-o-m basis, in January 2012 in addition to 1.0% growth in December 2011. Production expanded strongly in most regions, while emerging economies continued to outpace advanced economies. In the Euro Area too, production increased, following two monthly contractions. Industrial output in emerging economies improved 1.0%, while that in advanced countries rose 0.6% in January 2012 from December 2011 level. Among the advanced economies, industrial production growth in US stood at 0.3%, while that for Euro area and Japan was at 0.2% and 2.2%, respectively. Among the emerging economies, the industrial output in Asia rose 1.2%, while that in Central and Eastern Europe rose 1.3%. But industrial output in Latin America fell 0.6% in January 2012.
Outlook
India started off Calendar Year 2012 on strong note with healthy 6.8% in January 2012, up from mere 2.5% growth in December 2011. Strong growth in consumer non durables has helped arrest the sharp deceleration in Indias Index of Industrial production in January 2012. We expect the growth to improve in February 2012, factoring in 29 days in February 2012 as against 28 days in February 2011. But, the major concerns are the highly volatile and narrow based growth in industrial production in the recent months. Also, the sharp fall in interest rates seems unlikely in FY2013 on upside risks to inflation, which would continue to weigh up on performance of interest sensitive sectors. Having said that, the overall traction in 2012 appears better than 2011, as the country enters 12th Five-Year Plan on the one hand, and as US economy shows signs of recovery, while there is hope that EU debt crisis may not worsen any further any time sooner.
24
The Macro Picture I External Sector I Forex
Forex
Rupee registers worst fall in four months
The Indian rupee shed considerable gains in March, ending at its lowest level in nearly two and half months. The rupee, as per the RBI reference rate, ended February at 48.94 to a dollar and depreciated past the crucial 49, 50 as well as 51 per dollar through the month. Weakness in the domestic currency was mainly on account of a rising dollar overseas coupled with strong domestic demand for dollar from oil importers. Rupee lost more than Rs 2 per dollar that accounts to near 5% over the previous month. The Indian unit has suffered its worst fall in four months. The domestic currency slipped during the month tracking weak cues from global peers on concerns of slowing Chinese economy and firm crude oil prices. Chinas 2012 growth forecast cut to 7.5% from 8.0% coupled with worries over Greece has largely weighed on investor sentiments across the globe. Meanwhile, investors were concerned about high crude oil prices. India imports two-thirds of its oil consumption, so an increase in oil prices will hurt its fiscal balance substantially. Oil has advanced this year amid concern that sanctions against Irans nuclear program will disrupt crude supplies from the second-biggest producer in the Organization of Petroleum-Exporting Countries. The RBI disclosed this month that the current account deficit of the balance of payments (BoP) had risen to 4.3% of gross domestic product (GDP) at the end of the third quarter
US$ vs Rupee
Indias foreign exchange reserves MONTH TOTAL FOREIGN FOREIGN EXCH. RESERVES CUR. ASSETS
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 24-Feb-12 23-Mar-12 299,224 301,592 304818 313,511 311,516 315,715 319,090 321,982 311,482 316,210 307,884 296,688 292,766 295,047 295,140 269,893 271,988 274,330 282,037 279,537 283,458 286,160 286,034 275,699 282,087 272,771 262,933 258,830 261,101 259,740
GOLD
21,924 22,143 22,972 23,790 24,391 24,668 25,349 28,319 28,667 26,896 28,041 26,620 26,728 26,727 28,127
SDRS
5,150 5,187 4,569 4,671 4,613 4,614 4,609 4,638 4,504 4,574 4,476 4,429 4,475 4,480 4,448
Figures in US$ million * Provisional
ended December compared with 2.3% in the same period in the previous fiscal. For the first time since 2008-09, capital inflows were unable to finance the current account deficit, forcing a drawdown of foreign exchange reserves. The drawdown from the foreign exchange reserves was $12.8 billion as compared with an accretion of $4 billion in the December quarter in the previous year. Meanwhile, the foreign exchange reserves declined $7.1 billion during AprilDecember 2011 as against a rise of $11 billion during the same period the previous year. Indias total foreign exchange reserves are around $295 billion. The BoP deficit has strong implications for the rupee. A continuing deficit would further weaken the currency, making all imports more expensive. With reserves enough to just feed about 5 months of imports and repay one year debt, the deficit number is probably the worst the country is facing since 1991 when India pledged its gold to avoid defaults. Meanwhile, crucial event for the month, the Union Budget 2012-13, too, was unappealing to investors and failed to perk up the domestic markets. There was nothing positive in the budget for the rupees appreciation vis--vis the dollar because there was nothing really in the budget that would boost forex inflows. Domestic equities that rupee normally trails also did not cheer as finance minister Pranab Mukherjees budget failed to give any roadmap about the reform process and plans to revive the economy. The government played it safe, pledging reforms but setting only modest targets for trimming a ballooning fiscal deficit, disappointing investors. Mukherjee has pegged Indias GDP growth for 2012-13 is be at 7.6% +/-0.25% and has estimated 2011-12 growth at 6.9%. The government projected its budget
25
Capital Market
April 2012
US$ vs Rupees
The Macro Picture I External Sector I Forex deficit for the year ending March 2013 at 5.1% of gross domestic product. For the current fiscal year ending March 2012, the deficit is estimated at 5.9%, sharply higher than the initial forecast of 4.6%. Meanwhile, the RBI maintained a status quo in its mid monetary policy review saying that the risks to inflation have increased due to higher crude prices, the large fiscal deficit and a weakening local currency. RBI said recent growth-inflation dynamics prompted the central bank to indicate that no further tightening is required and that future actions will be towards lowering the rates. However, notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions, RBI said. The RBI decided to inject permanent primary liquidity into the system by reducing the CRR so as to ensure smooth flow of credit to productive sectors of the economy. The apex bank cut its cash reserve ratio (CRR) by 75 basis points to 4.75% effective March 10. The CRR stood at 5.5% earlier. The CRR cut will inject Rs 48,000 crore of liquidity into the banking system.
Euro vs US$
The domestic wholesale price index (WPI) rose a fasterthan-expected 6.95% in February from a year earlier, mainly driven by a surge in food prices. Meanwhile, industrial production grew 6.8% in January 2012 from a year earlier, sharply higher than a revised 2.5% rise in December 2011, helped by a strong rebound in manufacturing output.
Foreign Investments, NRI Deposits (US$ Million) and ECBs Approvals MONTHS EQUITY ACQUISITION FII NET ADR/GDRS TOTAL OF SHARES INFLOWS INVESTMENT
Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Apr-Jan 2010-11 Apr-Jan 2011-12 Figure in US$ million 2179 2213 1380 1785 1330 2118 1392 1,628 2,014 1,042 1,274 1,075 3,121 4,664 5,656 1,099 2,830 1,766 1,161 2,538 1,353 2,004 17081 26192 378 384 307 349 181 1492 42 338 164 222 319 315 203 202 2,220 46 341 228 177 1,228 90 503 3857 5238 3159 -491 871 8750 -440 10449 28630 -19,921 -1,551 1,575 -1,600 -9 3,440 -1,709 741 1540 -1821 -1308 -516 76 2302 5,392 31031 8137 156 579 379 364 128 74 110 49 116 94 105 125 48 20 24 161 84 30 1955 597 5494 2254 2677 10899 890 12695 30096 -18,183 512 2,733 -326 1,160 6,666 3,080 6,445 2,639 1,033 619 729 2,614 3,655 7,426 50067 34906
Euro vs US $
NRI DEPOSITS**
319 523 278 936 -129 237 257 -174 103 274 165 451 407 257 489 93 1040 1654 937 1517 869 1,712 2624 8975
ECBS* APPROVALS
2818 696 1791 1165 1089 3091 800 1129 3416 2709 1441 5631 2065 2653 3335 4169 3708 2362 2475 1587 4468 2701 18704 29523
*External Commercial Borrowings **NRI deposit represents inflows (+)/outflows() during the month
26
Capital Market
I April 2012
The Macro Picture I External Sector I Forex
Exchange rate of rupee

US$ 01-Mar-12 02-Mar-12 05-Mar-12 06-Mar-12 07-Mar-12 09-Mar-12 12-Mar-12 13-Mar-12 14-Mar-12 15-Mar-12 16-Mar-12 19-Mar-12 20-Mar-12 21-Mar-12 22-Mar-12 26-Mar-12 27-Mar-12 28-Mar-12 29-Mar-12 30-Mar-12 High Low App./Dep.(%)* 49.15 49.35 49.80 50.03 50.57 50.02 49.94 49.85 49.90 50.22 50.31 50.12 50.25 50.59 50.91 51.31 50.91 50.92 51.15 51.16 49.15 51.31 -4.53 GBP 78.25 78.68 78.79 79.32 79.57 79.01 78.25 77.97 78.15 78.64 79.05 79.37 79.76 80.34 80.77 81.37 81.27 81.21 81.41 81.80 77.97 81.80 -4.93 EURO 65.57 65.63 65.74 66.02 66.50 66.18 65.40 65.62 65.09 65.54 65.83 66.00 66.52 67.14 67.40 67.98 67.99 67.85 68.22 68.34 65.09 68.34 -3.64 YEN 60.67 60.61 61.39 62.63 61.31 60.72 60.67 59.97 59.92 60.28 60.12 60.25 60.44 61.09 62.13 61.47 61.52 62.02 62.43 59.92 62.63 -2.45
US$ million
Foreign Exchange Reserves & Currency Assets
61.27
by 3.64% against the euro. The European unit shed nearly 2.5% against the US dollar by mid March but rebounded back by the end of the month. The single common currency registered a high of 65.09 and a low of 68.34 through the period. Rupee declined the least against the Japanese yen, recording a decline or 2.5%. Rupee ended the month at 62.43 versus yen as compared to previous month close at 60.94.
Outlook
*Appreciation/Depreciation over the previous month. Depreciation(-)
Rupee Vs majors
Rupee registered significant losses against the US dollar in March, depreciating past the Rs 49, 50 and 51 per dollar levels. The domestic currency ended the month at Rs 51.16 as compared to 48.94 a month earlier. The rupee registered a high of 49.15 and a low of 51.31. Hammered by investor jitters over the impact of high global oil prices on the domestic economy, rupee suffered the worst fall in four months, shedding 4.53% in March. The US dollar was seen extending its gains early during the month over persistent worries about the state of the world economy. Thereafter, investors risk appetite improved slightly as euro zone worries subsided and growth prospects for the US economy improved. However, these positives were tempered by rising crude oil prices and Chinas decision to slow down the pace of growth to slowest in seven years, which sparked global growth concerns. The European unit, that rupee is seen trailing since a while, managed to recoup some of its losses during the latter part of the month. As against the Great Britain pound, rupee fell by near 5% during the month. Commencing February at 78.25, rupee recorded a high of 77.97 and low of 81.80. The rupee dipped
The Indian rupee has suffered its worst fall in four months, shedding almost 5% against the US dollar in March. The decline came mainly on the back of waning investor sentiments over the impact of high global oil prices and heightened worries over the domestic conditions with crimped growth and widened deficits. Indias position of commercial transactions with the rest of the world, fell to a deficit in the December quarter for the first time since the Lehman Brothers collapse, as imports far exceeded exports and capital flows slowed. The rupee is thus unlikely to make much headway. On the global front, risk sensitive assets would continue to take a beating if the euro zone worries and global growth concerns relating to higher crude oil prices intensify, thereby weakening emerging market currencies like rupee. Investors would watch for global risk trends as well as domestic developments which could support the flow of capital into India. Domestically, timing and magnitude of monetary easing by the RBI in times of rising crude prices that could pressurize inflation would also be looked at as rate cuts are likely to spur portfolio investments in equities and as a lower interest rate regime would be helpful in boosting growth and corporate profitability. Thus, for the upcoming month, the rupee could broadly be under pressure owing to higher crude oil prices and global condition hampering capital flows, although small gains could be seen on the back of favourable domestic events. Movement in rupee against the US dollar could be in a wide range of 49.85-52.15 during the month ahead.
27
The Macro Picture I External Sector I Foreign Trade
Foreign Trade
Trade deficit widens sharply
Indias merchandise exports rose 4.3% to $24.62 billion in February 2012, compared to a 49.8% growth recorded in February 2011. Meanwhile, Indias merchandise imports increased 20.6% to $39.78 billion in February 2012. However, the trade deficit surged to $15.16 billion in February from $14.76 billion in February 2011. The oil import bill jumped 39.5% to $12.66 billion, while the non-oil import increased 13.5% to $27.122 billion in February 2012. The oil import has increased 41.0% to $132.56 billion, while non-oil import climbed up 24.9% to $301599 billion in April-February FY2012. The share of oil import bill in total imports stood at 31.8% in February 2012 and 30.5% in April-February FY2012. Crude oil imports surged 10.7% to 14.87 million tonnes in February 2012, while it has increased 5.3% to 157.135 million tonnes in April-February FY2012. Cumulative exports have increased 21.4% to $267.41 billion, while cumulative imports have advanced 29.4% to $434.16 billion during April-February FY2012. The cumulative trade deficit stood at $166.75 billion during AprilFebruary FY2012 compared to $115.26 billion in the same period last year. In rupee terms, exports increased 12.8% to Rs 121040 crore, while imports moved up 30.56% to Rs 195595 crore in February 2012. Trade deficit stood at Rs 74555 crore in February 2012. Cumulative exports increased 27.0% to Rs 1274840 crore, while cumulative imports moved up 35.3% to Rs 2069643 crore in April-February FY2012. The trade deficit stood at Rs 794803 crore in April-February FY2012 compared to Rs 525510 crore in April-February FY2011. In April-February 2012, the following sectors have done well with regard to exports- engineering (US $ 54.5 billion) which registered the growth of 20.9%, petroleum & oil products 46% (US $ 53 billion), Gems & Jewellery registered the growth of 28.8% (US $ 40.6 billion), Drugs and pharmaceuticals 11.4% (US $ 11.4 billion), leather 20.4% (US $ 4.1 billion), Cotton yarn and fabric made-up 18.5% (US $ 6.1 billion), electronics 3.5% (US $ 8 billion), Readymade garments, 19% ( US $ 12.1 billion). In April-February 2012, the import growth estimates on the following sectors are: POL 41% (US $ 132.6 billion), Gold and silver 38.5% (US$ 54.5 billion), machinery 27% (US $ 32.2 billion), electronics 21.8% (US $ 30.1 billion) and coal 72% (US $ 15.5 billion).
Export growth
Commodity-wise exports
Indias merchandise exports increased 8.4% to Rs 128950.94 crore in December 2011, while they increased
28
32.6% to Rs 1034316.48 crore in April-December 2011. Exports of manufactured goods rose 1.1% in December 2011, while their share in Indias total exports stood at 60.62%. Among the manufactured goods, exports of engineering goods (contributing 22.75% of total exports) dipped 13.0%, while those of chemical products (9.68%) increased 22.8% in December 2011. Exports of textiles (8.9%) increased 15.2%, while that of gems & jewellery (12.62%) declined 2.2%. Exports of ores & mineral (3.08%) plunged 31.7%, while those of other commodities (2.48%) surged 36.5%. The exports of petroleum products (18.3%) and agricultural commodities (15.48%) increased 32.3% and 27.9%, respectively in December 2011. Exports of agricultural and allied products as a group surged 27.7% to Rs 19967.6 crore in December 2011. Within the group, exports of non-basmati rice, guergum meal and wheat zoomed multifold to Rs 1498.4 crore, Rs 1673.1 crore and Rs 238.8 crore in December 2011, while those of basmati rice and meat and preparations surged 65.0% to Rs 1792.1 crore and 53.7% to Rs 1455.8 crore. Exports of spices and marine products increased 62.2% to Rs 1512.2 crore and 32.1% to Rs 1338.1 crore. Further, exports of groundnut, other cereals and oil meals increased 145.7% to Rs 594.8 crore, 59.2% to Rs 865 crore and 16.1% to Rs 1902.5 crore, respectively. Exports of cashew and castor oil doubled to Rs 485.8 crore and Rs 309.2 crore, while those of tea and coffee increased 2.7% and 15.2% in December 2011. However, exports of sugar and raw cotton declined 79.6% to Rs 404.1 crore and 22.4% to Rs 3087.3 crore, while that of molasses also dipped 95% during December 2011. Exports of ores and minerals dipped 31.7% to Rs 3969.3 crore in December 2011. Within this group, exports of iron
% change
The Macro Picture I External Sector I Foreign Trade ore surged 70.1% to Rs 2442.8 crore, but exports of processed minerals plunged 69.3% to Rs 810.2 crore. Meanwhile, exports of other ores & minerals also dipped 59.2% to Rs 677.8 crore in December 2011. Engineering goods exports dipped 13.0% to Rs 29333.7 crore in December 2011. Within the group, exports of non-ferrous metal dipped 84.1% to Rs 1326.4 crore, while those of ferro alloys also fell 49.7% to Rs 585.0 crore. Further, exports of aluminium and primary & semi-finished steel declined 50.9% to Rs 385.3 crore and 12.9% to Rs 2100.0 crore. However, exports of machinery & instruments and electronic goods increased 24.7% to Rs 6759.0 crore and 28.4% to Rs 4546.6 crore, while that of manufactures of metal rose 28.4% to Rs 4690.2 crore. Exports of transport equipment and residual engineering increased 10.1% to Rs 8074.9 crore and 63.7% to Rs 160.9 crore, while those of iron & steel improved 12.1% to Rs 565.1 crore in December 2011. Exports of chemical goods increased 22.8% to Rs 12483.3 crore in December 2011. Among chemical products, exports of drugs, pharmaceuticals & fine chemical surged 52.8% to Rs 6607.0 crore, while those of organic/inorganic/agro chemicals increased 7.5% to Rs 2586.5 crore. Exports of cosmetics advanced 35.4% to Rs 726.3 crore, but those of dyes and residual chemicals declined 14.8% to Rs 1401.5 crore and 15.3% to Rs 730.5 crore in December 2011. Exports of textiles including RMG increased 15.2% to Rs 11509.6 crore in December 2011. Exports of textile yarns, fabrics and made-up articles moved up 8.2% to Rs 5442.5 crore, while those of RMG climbed up 22.3% to Rs 6067.1 crore in December 2011. Within the textiles group, exports of cotton yarn, fabrics, and made-up rose 4.1% to Rs 3038.1 crore, while that of man made yarn, fabric and made-ups surged 19.3% to Rs 2066.3 crore. Within RMG group, exports of the RMG cotton including accessories and manmade fibers increased 18.4% to Rs 4512.9 crore and 36.4% to Rs 784.5 crore in December 2011. Exports of gems & Jewellery (accounting for 12.62% of the total exports) declined 2.2% to Rs 16269.0 crore, while those of leather & leather products jumped 32.5% to Rs 2100.4 crore in December 2011. Exports of other manufacturing goods increased 31.3% to Rs 5483.1 crore, as exports of plastic & linoleum products improved 24.1% to Rs 2646.5 crore. Exports of paper/wood products increased 28.7% to Rs 792.0 crore, while that of rubber products jumped 63.2% to Rs 1233.8 crore. Exports of petroleum, crude and products galloped 32.3% to Rs 23653.3 crore, while exports of other commodities improved 36.5% to Rs 3195.1 crore in December 2011. crore in April-December 2011. Imports of petroleum, crude and products surged 47.1% to Rs 61408.7 crore in December 2011. The average price of the Indian basket of crude oil was 19.4% higher at $107.2 a barrel in December 2011 compared to $89.78 a barrel in December 2010. Imports of nonpetroleum, oil and lubricant (non-POL) items increased 46.9% to Rs 147675.9 crore in December 2011. Capital goods imports, which accounted for 14.9% of the total imports, increased 45.8% to Rs 31165.3 crore in December 2011. Within the capital goods group, imports of machinery except electronics gained 47.5% to Rs 13307.2 crore, while those of project goods and professional instruments zoomed 126.8% to Rs 4775.7 crore and 66.5% to Rs 2541.5 crore in December 2011. Imports of electrical machinery increased 75.1% to Rs 2248.6 crore, while those of transport equipment rose 7.8% to Rs 7002.8 crore in December 2011. Imports of chemicals and related products nearly doubled to Rs 18756.9 crore in December 2011. In chemicals and related products group, imports of organic chemical improved 23.3% to Rs 5429.3 crore, while those of inorganic chemicals and fertilizers zoomed 139.8% to Rs 2520.6 crore and 427.4% to Rs 7444.5 crore. Imports of chemical material increased 18.5% to Rs 1248.0 crore, while those of pharmaceutical products and dyes advanced 40.3% to Rs 1353.7 crore and 38.7% to Rs 551.7 crore in December 2011. Imports of food and related products increased 49.0% to Rs 5326.6 crore in December 2011. Within the group, imports of vegetable oil jumped 77.2% to Rs 3793.1 crore, while imports of pulses galloped 11.9% to Rs 842.6 crore. Imports of spices increased 15.1% to Rs 162.6 crore, but that of fruits declined 8.1% to Rs 337.6 crore in December 2011. Imports of other non-POL items, accounting for 40.9% of the total imports, increased 38.3% to Rs 85430.7 crore in December 2011. Within the group, imports of gold increased 37.6% to Rs 18694.2 crore, while those of electronic goods, silver and coal improved 77.8% to Rs 15058.5 crore, 235.9% to Rs 1530.2 crore and 150.8% to Rs 7406.7 crore in December 2011. Imports of iron & steel advanced 72.7% to Rs 5402.1 crore, while those of metalifers ores and manufactures of metal increased 26.7% to Rs 6157.9 crore and 86.9% to Rs 2274.4 crore. Imports of artificial resins galloped 41.9% to Rs 3357.5 crore, while those of non-ferrous metals and paper manufactures surged 40.1% to Rs 1985.9 crore and 56.1% to Rs 689.4 crore, while that of pearls & precious stones dipped 13.1% to Rs 15367.2 crore in December 2011.
Regional Trade
Commodity-wise imports
Indias imports of goods surged 46.9% to Rs 209084.6 crore in December 2011, while it improved 36.3% to Rs 1673723.0
India exported goods to 229 counties during April-December 2011. UAE was the single largest destination for the Indias exports cornering share of 11.91%. Indias other major destinations for exports were USA (share of 11.57% in total export), Singapore (5.95%), China (5.97%), Hong Kong (4.24%)
29
The Macro Picture I External Sector I Foreign Trade and so on. About 28 countries accounted for about 80% of the Indias total exports. As per region-wise trade, India earned 51.94% of the export revenue from Asia and ASEAN region (covering East Asia, WANA, NE Asia and South Asia), while Europe (covering 27 EU Countries, East Europe and other WE countries) contributed 20.1% of the share. Other regions like America (Latin & North), Africa and Baltic served 16.88%, 6.67% and 1.03% of the share, respectively. India imported goods from 211 countries during AprilDecember 2011. Country wise, China was the largest source of Indias imports (12.35%), followed by UAE (7.33%), Switzerland (6.54%), Saudi Arabia (6.3%), USA (4.91%) and so on. However, only 22 countries accounted for 80% of the total imports. Region wise, 62.1% of the Indias import came from Asia and ASEAN region, while 18.83%% was sourced from Europe region. Other major sources of import included America (9.0%), Africa (7.16%) and Baltic (1.58%).
Outlook
Indias merchandise trade deficit is widening sharply on strong import growth and weak export growth. Trade deficit as a percentage of GDP stood at 8.9% up to February during 201112 and it is well set to surge to reach 10% for 2011-12. Rising import bill amid steady foreign exchange reserves is a cause of concerns. The forex cover to import has been declining sharply from peak of 17 months in March 2004 to 12 months in March 2006, 10 months in March 2009, 08 months in September 2011 and further down to 07 months in February 2012. That India will pay in Indian rupee for crude oil imports from Iran can take some pressure off the rupee. But much depends on FII inflows, FDI inflows, and our ability to step up exports, and the trend in global crude oil prices.
Indias foreign trade - Cumulative ( US$ million) MONTHS EXPORTS * % CHANGE IMPORTS * % CHANGE OIL IMPORTS* % CHANGE
Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 245868 23849 49791 79004 108348 134503 147713 170107 192694 217664 242792 267410 39.2 34.4 45.28 45.71 53.98 54.21 40.36 38.11 33.21 25.84 23.47 21.42 350695 32834 73741 110614 151040 189394 233510 273468 309530 350936 391459 434160 25.8 14.1 33.30 36.22 40.00 40.37 32.41 30.96 30.24 30.37 29.40 29.41 101689 10186 20347 30527 41973 52251 70349 81922 94117 105589 117914 132560 19.0 7.7 12.89 18.10 22.72 27.09 42.39 40.82 42.67 40.39 38.83 41.00
NON OIL IMPORTS*

249006 22648 53394 80087 109067 137143 163161 191546 215414 245347 273545 301599
% CHANGE TRADE BALANCE

28.9 17.3 43.17 44.68 48.03 46.19 28.52 27.15 25.46 26.49 25.71 24.89 -104827 -8985 -23951 -31610 -42692 -54891 -73461 -93691 -116836 -133272 -148668 -166750
% CHANGE
2.7 -18.5 13.80 17.15 13.79 15.05 3.29 9.39 25.62 38.52 40.39 44.67
Indias Merchandise Trade (Rs Crore) MONTH EXPORTS MONTHLY CUMULATIVE

Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 *Figures are in US $ million 131082 105819 116488 131031 130339 110084 118234 97875 113520 131776 130129 121040 1118823 105819 222307 353339 483677 602032 723432 820679 893094 1024707 1153800 1274840
IMPORTS MONTHLY CUMULATIVE

156314 145686 183691 165386 179561 173663 164759 194636 182689 198873 205911 195595 1596869 145686 329377 494763 674324 847987 1055339 1251948 1435305 1651240 1859168 2069643
TRADE BALANCE MONTHLY CUMULATIVE

-25232 -39867 -67203 -34355 -49222 -63579 -46525 -96761 -69169 -67097 -75782 -74555 -478047 -39867 -107069 -141424 -190647 -245955 -331907 -431269 -542211 -626533 -705369 -794803
EXPORTS % CHANGE
42.2 34.0 53.8 41.1 72.4 40.3 41.0 22.9 17.3 24.5 24.5 12.8
IMPORT % CHANGE
16.0 13.8 51.0 37.2 43.7 37.9 21.2 35.0 40.7 39.8 36.0 30.6
30
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Exports Commoditywise
Indias exports of principal commodities (Rs Lakhs) DECEMBER APR-DEC 2011 2011-12
All Commodities AGRICULTURAL & ALLIED PRODUCTS TEA COFFEE Pulses RICE -BASMOTI RICE(OTHER THAN BASMOTI) WHEAT Other Cereal DAIRY PRODUCTS FLORICLTR PRODUCTS TOBACCO UNMANUFACTURED TOBACCO MANUFACTURED SPICES SUGAR MOLLASES CASHEW NUT SHELL LIQUID CASHEW SESAME SEEDS GROUNDNUT SPIRIT & BEVERAGES GUERGAM MEAL OIL MEALS CASTOR OIL SHELLAC NIGER SEEDS FRUITS / VEGETABLE SEEDS FRESH FRUITS FRESH VEGETABLES PROCESSED VEGETABLES PROCESSED FRUITS & JUICES MISC PROCESSED ITEMS MEAT & PREPARATIONS MARINE PRODUCTS COTTON RAW INCLD. WASTE POULTRY PRODUCTS ORES & MINERALS IRON ORE MICA 12,895,093.60 103,431,648.24 1,996,761.29 12,107,771.26 38,821.86 26,680.64 7,922.47 179,209.98 149,836.62 23880.45 86,498.00 3,702.87 2,922.03 21,054.47 13,184.33 125,165.46 40,412.46 1501.89 796.88 48,577.30 22,709.87 59,484.07 16,704.48 167,311.95 190,250.03 30,921.08 3,752.63 1,030.46 2,039.16 24,601.02 26,219.17 7,921.65 16,408.22 39,709.52 145,578.05 158,626.64 308,725.56 4,600.02 396,926.86 244,275.82 2,235.34 292,746.25 308,924.80 88,439.96 1,127,142.57 435,400.38
DEC-11
8.39 27.74 2.65 15.21 -6.86 65.01 9052.28
GROWTH % APR-DEC FY 12
32.6 57.91 15.73 66.93 32.3 48.34 2242.77 119508.78 85.35 -26.85 22.4 -20.4 34.65 70.22 54.27 -67.55 122.3 72.02 28.69 168.35 71.85 360.83 16.1 67.67 80.47 444.36 39.88 4.51 14.14 41.04 58.03 46.91 57.31 45.16 36.88 19.68 -15.75 -12.83 37.26
DEC-11
100 15.48 0.3 0.21 0.06 1.39 1.16 0.19 0.67 0.03 0.02 0.16 0.1 0.97 0.31 0.01 0.01 0.38 0.18 0.46 0.13 1.3 1.48 0.24 0.03 0.01 0.02 0.19 0.2 0.06 0.13 0.31 1.13 1.23 2.39 0.04 3.08 1.89 0.02
SHARE % APR-DEC FY 12
100 11.71 0.28 0.3 0.09 1.09 0.42 0.07 0.36 0.04 0.03 0.19 0.08 0.94 0.58 0.01 0 0.32 0.2 0.37 0.1 0.79 0.77 0.35 0.02 0.01 0.02 0.15 0.22 0.08 0.12 0.26 0.96 1.27 1.22 0.02 2.73 1.5 0.02
67866.02 2809364.71 376,965.97 39,670.42 26,313.07 191,630.82 77,579.30 971,790.56 600,658.73 14,647.97 5,106.89 331,649.88 208,141.68 381,187.38 99,018.83 816,193.72 798,216.57 365,266.14 18,500.37 10,485.31 17,993.84 156,710.62 227,269.77 77,856.27 119,239.70 266,958.63 988,562.10 1,308,904.56 1,264,965.31 25,766.87 2,827,591.98 1,553,150.90 18,303.33 59.17 -49.2 67 -13.82 64.86 62.23 -79.55 -95.02 128.86 99.54 -14.35 145.71 111.76 420.16 16.14 109.33 124.27 61.46 21.95 41.8 94.88 60.55 62.55 64.96 53.71 32.13 -22.36 89.6 -31.65 70.12 52.25
Capital Market
I April 2012
31
The Macro Picture I External Sector I Foreign Trade I Exports Commoditywise DECEMBER 2011
COAL PROCESSED MINERALS OTHER ORES AND MINERALS MANUFACTURED GOOD LEATHER & LEATHER MANUFACTURERS FINISHED LEATHER LEATHER GOODS LEATHER GARMENTS FOOTWEAR OF LEATHER LEATHER FOOTWEAR COMPONENT SADDLERY & HARNESS CHEMICALS & RELATED PRODUCTS DRUGS,PHRMCUTES & FINE CHEMLS DYES/INTMDTES & COAR TAR CHEML INORGANIC/ORGANIC/AGRO CHEMLS COSMETICS/TOILETRIES ETC. PAINTS/ENAMELS/VARNISHES ETC. RESIDL CHEMICL & ALLIED PRDCTS ENGINEERING GOODS FERRO ALLOYS ALUMINIUM OTHR THAN PRDCTS NON-FERROUS METALS MANUFACTURES OF METALS MACHINE TOOLS MACHINERRY AND INSTRUMENTS TRANSPORT EQUIPMENTS RESIDUAL ENGINEERING ITEMS IRON&STL BAR/ROD ETC&FRRO ALOY PRMRY & SEMI-FNSHD IRON & STL ELECTRONIC GOODS PROJECT GOODS 1619.76 81,018.06 67,777.88
APR-DEC 2011-12
22,848.57 607,401.72 625,887.46
GROWTH % DEC-11 APR-DEC FY 12

-72.45 -69.28 -59.18 1.11 32.51 50.5 52.42 48.27 9.01 39.46 20.15 22.8 52.75 -14.81 7.46 35.42 10.59 -15.25 -12.96 -59.66 -50.91 -84.06 28.39 -10.88 24.65 10.07 63.73 12.08 -12.87 28.4 -85.4 8.2 22.11 4.14 -52.08 19.26 49.77 4.6 -38.53 22.11 -40.33 19.34 30.64 35.39 31.49 42.33 62.41 24.67 44.15 38.96 32.03 32.34 39.74 29.57 41.47 22.98 17.96 17.54 -26.03 -20.39 -49.57 9.01 13.55 29.17 30.11 1457.3 50.86 20.83 22.71 -19.46 26.93 53.83 22.33 -38.72 36.21 61.41 8.43 -53.02
SHARE % DEC-11 APR-DEC FY 12

0.01 0.63 0.53 60.62 1.63 0.36 0.39 0.22 0.54 0.09 0.03 9.68 5.12 1.09 2.01 0.56 0.33 0.57 22.75 0.45 0.3 1.03 3.64 0.11 5.24 6.26 0.12 0.44 1.63 3.53 0 4.22 0.14 2.36 0.07 1.6 0.06 0.14 0.02 0.02 0.59 0.61 63.67 1.62 0.35 0.37 0.2 0.56 0.1 0.04 8.88 4.36 1.33 1.83 0.54 0.29 0.53 23.72 0.58 0.22 1.22 3.15 0.11 4.75 7.4 0.97 0.51 1.69 3.12 0.02 4.36 0.17 2.29 0.07 1.77 0.05 0.14 0.02
7,816,566.43 65,856,498.78 210,040.57 46,033.21 49,729.37 27,772.59 70,080.09 12,109.12 4,316.19 1,248,326.46 660,704.10 140,153.26 258,646.02 72,628.42 43,141.76 73,052.90 1,677,389.43 366,134.04 379,654.75 208,705.58 579,154.95 105,020.70 38,719.41 9,181,041.46 4,513,803.60 1,370,595.18 1,889,784.03 556,352.81 304,333.20 546,172.64
2,933,366.07 24,534,529.96 58,495.96 38,525.24 132,644.88 469,020.58 13,669.52 675,899.75 807,494.44 16,089.80 56,512.66 209,999.63 454,658.15 355.46 597,154.78 229,240.64 1,260,425.08 3,254,431.33 112,861.46 4,914,730.27 7,652,203.14 999,530.63 526,246.57 1,749,082.52 3,222,222.43 16,401.11 4,505,632.67 177,146.95 2,372,333.31 72,845.29 1,829,167.63 54,139.49 144,425.01 20,228.68
TEXTILES YARN,FABRICS,MADEUP ARTICLES544,249.40 HANDLOOM PRODUCTS COTTON YARN,FABRICS,MADEUPSETC NATRL SILK YARN,FABRICS,MADEUP MANMADE YARN,FABRICS,MADEUPS WOLLEN YARN,FABRICS,MADEUPSETC JUTE JUTE YARN 17,715.70 303,806.51 8,987.42 206,630.07 7,109.70 18,258.11 2,814.82
32
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Exports Commoditywise DECEMBER 2011
JUTE HESSIAN OTHER JUTE MANUFACTURES CARPETS CARPET(EXCL. SILK) HANDMADE SILK CARPET OTHER TEXTILES EXC RMG FLOOR CVRNG OF JUTE MANMADE STAPLE FIBRE COIR & COIR MANUFACTURES SILK WASTE READY MADE GARMENTS RMG COTTON INCL ACCESSORIES RMG SILK RMG MANMADE FIBRES RMG WOOL RMG OF OTHR TEXTLE MATRL OTHER MANUFACTURED GOODS SPORTS GOODS RUBR MFD. PRDCTS EXCPT FOOTWR FOOTWEAR OF RUBBER/CANVAS ETC. GEMS & JEWELLARY GLS/GLSWR/CERMCS/REFTRS/CMNT/ PAPER/WOOD PRODUCTS PLASTIC & LINOLEUM PRODUCTS COMP.SOFTWARE IN PHYSICAL FORM HANDCRFS(EXCL.HANDMADE CRPTS) PETROLEUM, CRUDE & PRODUCTS OTHER COMMODITIES 9,933.58 5,509.71 41,995.92 41,908.15 87.77 38,401.24 2,307.22 25,174.75 10,033.72 885.55 606,713.99 451,290.10 10,498.03 78,452.52 13,142.95 53,330.39
APR-DEC 2011-12
67,190.55 57,005.78 294,976.45 293,154.03 1822.42 281,278.47 18,919.70 186,372.24 72,782.38 3204.15 4,636,555.09 3,272,006.75 97,131.97 704,284.92 141,073.57 422,057.88
DEC-11
43.05 -7.12 -32.83 -32.15 -88.4 46.98 -16.66 44.37 72.48 754.61 22.34 18.41 5.69 36.38 33.4 42.32 4.54 42.72 63.21 31.12 -2.18 33.04 28.66 24.06 86.17 -76.85 32.32 36.45
26.23 54.47 -17.65 -17.85 33.82 27.95 -28.81 32.77 45.86 7.05 32.48 27.63 25.73 54.04 32.05 43.12 51.64 23.61 55.31 35.98 51.63 37.5 72.6 52 -52.37 -10.71 56.69 -34.44
DEC-11
0.08 0.04 0.33 0.32 0 0.3 0.02 0.2 0.08 0.01 4.7 3.5 0.08 0.61 0.1 0.41 16.87 0.07 0.96 0.02 12.62 0.51 0.61 2.05 0.02 0.02 18.34 2.48
0.06 0.06 0.29 0.28 0 0.27 0.02 0.18 0.07 0 4.48 3.16 0.09 0.68 0.14 0.41 19.92 0.07 0.83 0.02 15.35 0.46 0.88 2.23 0.01 0.06 19.58 2.31
2,175,214.67 20,600,670.24 8,944.39 123,384.46 2,969.99 69,664.10 855,735.39 24,969.69
1,626,902.70 15,879,275.20 65,122.87 79,200.58 264,650.42 2053.82 1,985.44 474,329.34 911,100.76 2,309,912.16 10,094.99 65,588.61
2,365,329.36 20,251,339.11 319,509.66 2,388,447.11
Capital Market
I April 2012
33
The Macro Picture I External Sector I Foreign Trade I Imports Commoditywise
Indias imports of principal commodities (Rs Lakhs) DECEMBER APR-DEC 2011 2011-12
All Commodities PETROLEUM, CRUDE & PRODUCTS NON-POLITEMS FOOD AND RELATED PRODUCTS WHEAT RICE OTHER CEREAL CEREAL PREPARATION PULSES TEA MILK AND CREAM FRUITS & NUTS EXCL CASHEW NUTS SPICES SUGAR VEGETABLE OILS FIXED (EDIBLE) 20,908,459.31 167,372,303.54 6,140,868.42 51,203,030.80
DEC-11
46.94 47.12 46.87 49.03 ---66.06 14.03 11.85 -15.76 390.36 -8.07 15.12 -97.65 77.22 49.57 24.42 1.58 40.14 92.61 55.01 113.62 -11.22 98.77 36.53 23.26 139.81 38.69 40.33 427.39 18.45 45.81 37.12 47.53 75.11 7.79 126.77 66.53 38.28 --
36.29 49.23 31.27 34.32 -653.43 -21.85 28.3 6.53 3.31 63.74 25.37 35.47 -92.15 60.01 25.54 36.81 3.55 23.1 40.92 30.96 63.05 -37.03 29.43 27.73 18.4 55.67 27.08 17.9 39.81 25.33 24.79 43.17 31.7 38.94 -6.5 43.77 22.79 34.26 --
DEC-11
100 29.37 70.63 2.55 -0 0 0.01 0.4 0.01 0.07 0.16 0.08 0 1.81 0.83 0.01 0.05 0.19 0.12 0.38 0.06 0.03 8.97 0.1 2.6 1.21 0.26 0.65 3.56 0.6 14.91 0.62 6.36 1.08 3.35 2.28 1.22 40.86 --
100 30.59 69.41 2.83 -0 0 0.01 0.38 0.01 0.04 0.2 0.09 0.01 2.08 0.84 0.01 0.06 0.22 0.07 0.4 0.07 0.02 7.86 0.1 2.8 1.16 0.32 0.61 2.12 0.76 13.02 0.62 6.27 1.05 2.19 1.78 1.1 42.51 --
14,767,590.89 116,169,272.74 532,658.17 -148.22 132.43 2,296.58 84,264.91 1,296.98 14,944.21 33,761.52 16,264.97 240.00 379,308.35 4,736,790.61 0 506.76 2,319.06 21,896.93 630,006.45 17,358.39 74,883.57 330,138.07 154,241.98 21,391.57 3,484,047.83 1,408,192.38 14,579.09 96,323.54 360,240.75 125,339.46 661,290.33 110,167.50 40,251.71 13,159,406.16 160,287.00 4,691,591.28 1,936,179.25 528,004.61 1,021,512.65 3,550,895.72 1,270,935.65 21,797,539.96 1,044,388.63 10,488,449.40 1,762,391.73 3,671,641.11 2,985,351.66 1,845,317.43 71,145,659.43 0
TEXTILES YARN,FABRICS,MADEUP ARTICLES 173,664.86 WOOLEN YARN & FABRICS COTTON YARN & FABRICS M-MADE F'MNT/SPUN YRN(INC.WAS) MADEUP TEXTILE ARTICL OTHR TXTL YRN,FABS,MADEUP ARTL READYMADE G'MENTS(WOVN & KNIT) SILK YARN & FABRICS CHEMICALS & RELATED PRODUCTS ESSENTIAL OIL & COSMETIC PREPN ORGANIC CHEMICALS INORGANIC CHEMICALS DYENG,TANNG,COLRNG MATRLS MEDICINAL & PHRMACUTICL PRODTS FERTILEZERS MANUFACTURED CHEMICAL MATRL & PRODCTS CAPITAL GOODS MACHINE TOOLS MACHRY EXCPT ELEC & ELECTRONIC ELEC MACHRY EXCPT ELECTRONIC TRANSPORT EQUIPMENTS PROJECT GOODS PROFSNL INST,ETC EXCPT ELCTRNC OTHER NON-POL ITEMS CASHEW NUTS 1,515.58 11,163.24 39,193.10 24,120.23 79,652.63 12,563.96 5,456.12 1,875,689.65 20,908.97 542,929.86 252,056.68 55,169.08 135,370.32 744,451.96 124,802.78 3,116,529.86 128,949.73 1,330,717.08 224,861.03 700,280.99 477,568.55 254,152.48 8,543,074.39 --
34
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Imports Commoditywise DECEMBER 2011
OIL SEEDS NATURAL RUBBER SYNTHC & RECLMD RUBBER PULP AND WASTE PAPER WOOD AND WOOD PRODUCTS JUTE, RAW SILK,RAW WOOL, RAW SYNTHETIC & REGENERATED FIBRES RAW HIDES & SKINS WOOLEN AND COTTON RAGS ETC. LEATHER VEGETABLES AND ANIMAL FATS FERTILIZERS,CRUDE COTTON RAW:COMB./UNCOMB./WASTE SULPHR & UNROSTD IRON PYRTS OTHER CRUDE MINERALS METALIFERS ORES & METAL SCRAP COAL,COKE & BRIQUITTES ETC. ARTFCL RESNS,PLSTC MATRLS, ETC. NEWSPRINT PAPER BOARD & MANUFACTURES PRNTD BOOKS,NWSPAPRS,JRNLS ETC CEMENT PERLS PRCUS SEMIPRCS STONES NON-METAC MNRL MNFS EXCL PERLS PRIMRY STEL,PIG IRON BASD ITM IRON & STEEL NON-FERROUS METALS GOLD SILVER MANUFACTURES OF METALS ELECTRONIC GOODS COMP.SOFTWARE IN PHYSICAL FORM OTHER COMMODITIES 1035.61 41,640.29 59,398.23 52,232.71 118,171.30 0.00 9,251.99 13,748.94 10,441.19 3,785.03 2,684.34 17,991.38 220.95 55,682.84 3,665.18 22,373.75 26,627.84 615,785.63 740,673.53 335,749.10 49,823.88 68,935.12 35,936.86 2,940.76 1,536,720.23 95,425.36 42,367.83 540,209.01 198,588.95 1,869,419.25 153,018.94 227,440.26 1,505,849.78 85,238.33 525,973.96
APR-DEC 2011-12
4,839.45 288,846.04 567,565.30 480,099.41 877,800.22 32,190.75 82,090.78 142,008.22 108,497.54 33,777.80 12,831.35 161,355.86 1550.11 502,940.71 63,695.29 172,954.08 209,910.01 4,771,294.10 5,962,701.48 2,605,775.28 387,773.72 557,756.62 289,129.68 22,070.05 10,787,818.47 720,630.48 338,520.78 3,867,308.10 1,756,799.59 19,393,127.05 2,039,042.08 1,403,423.24 11,902,885.88 596,649.91 3,921,684.20
GROWTH % DEC-11 APR-DEC FY 12

-17.64 76.5 40.12 34.59 106.21 -5.16 40.34 42.43 4.26 185.98 37.8 108.03 79.13 -4.9 105.33 129.4 26.72 150.83 41.91 60.74 56.08 173.87 42.05 -13.1 67.04 69.16 72.72 40.15 37.59 235.85 86.91 77.83 -5.84 63.08 -37.76 15.45 52.46 21.57 59.1 64.06 19.71 28.52 63.33 1.63 42.1 13.37 9.88 114.75 59.1 125.33 39.41 44.75 69.21 6.9 33.18 29.14 35.61 -15.67 3.88 38.36 58.32 14.17 25.96 49.69 296.23 36.52 28.17 71.54 21.77
SHARE % DEC-11 APR-DEC FY 12

0 0.2 0.28 0.25 0.57 -0.04 0.07 0.05 0.02 0.01 0.09 0 0.27 0.02 0.11 0.13 2.95 3.54 1.61 0.24 0.33 0.17 0.01 7.35 0.46 0.2 2.58 0.95 8.94 0.73 1.09 7.2 0.41 2.52 0 0.17 0.34 0.29 0.52 0.02 0.05 0.08 0.06 0.02 0.01 0.1 0 0.3 0.04 0.1 0.13 2.85 3.56 1.56 0.23 0.33 0.17 0.01 6.45 0.43 0.2 2.31 1.05 11.59 1.22 0.84 7.11 0.36 2.34
Capital Market
I April 2012
35
The Macro Picture I External Sector I Foreign Trade I Exports Countrywise
Indias exports (Rs Lakhs)* COUNTRIES DEC 2011

U ARAB EMTS USA CHINA P RP SINGAPORE HONG KONG NETHERLAND UNSPECIFIED UK GERMANY BELGIUM INDONESIA SAUDI ARAB BRAZIL JAPAN ITALY SOUTH AFRICA FRANCE SRI LANKA DSR KOREA RP ISRAEL MALAYSIA VIETNAM SOC REP TURKEY TAIWAN BANGLADESH PR SPAIN THAILAND NIGERIA IRAN BAHAMAS EGYPT A RP AUSTRALIA NEPAL CANADA KENYA RUSSIA MAURITIUS TANZANIA REP SWITZERLAND PAKISTAN IR MEXICO 1,538,340.25 1,516,837.27 888,298.19 760,712.25 469,597.15 437,587.70 1,629.26 386,990.67 344,243.94 277,491.05 277,352.65 209,663.69 201,896.60 274,654.83 191,033.11 195,049.86 301,443.07 185,846.14 167,675.90 160,525.90 219,022.67 225,519.66 157,875.66 147,282.87 210,467.17 127,704.02 134,183.99 130,699.77 120,492.46 132,632.10 146,040.68 114,719.28 108,882.22 120,374.37 65,643.72 78,225.40 92,259.92 35,671.64 50,182.87 59,237.98 68,493.95
APR-DEC 2011-12
12,316,198.16 11,964,676.63 6,172,908.90 6,154,817.60 4,384,258.15 3,541,378.51 3,297,500.75 3,041,922.49 2,805,743.55 2,497,042.18 2,215,731.34 1,967,171.88 1,956,281.07 1,940,296.51 1,734,579.96 1,628,346.11 1,549,306.73 1,535,898.07 1,488,681.12 1,364,038.41 1,345,199.86 1,293,404.11 1,253,274.99 1,190,832.67 1,164,028.29 1,019,924.97 975,791.03 935,082.10 913,461.75 887,936.28 800,659.88 771,533.81 704,636.84 692,966.46 678,893.23 647,574.07 592,371.79 558,075.14 551,674.34 486,510.93 466,709.45
DEC 11
1.44 48.91 -43.84 88 0.53 7.75 -90.67 39.93 9.92 1.54 0.9 28.58 64.24 36.38 -21.07 31.81 76.93 -24.56 -25.69 21.53 25.68 25.08 4.88 7.18 19.23 36.56 17.67 7.7 -32.97 95.01 130.31 26.59 15.54 96.14 -38.77 53.81 139.2 -42.29 64.13 -75.83 77.36
23.19 46.78 0.8 96.11 35.91 48.95 232.15 36.32 36.74 41.62 26.76 22.45 53.49 15.65 19.19 13.92 -3.03 35.73 22.46 37.21 1.85 47.25 48.82 63.84 11.03 27.91 28.51 30.22 -4 19.41 12.58 32.08 6.1 59.6 -11.49 27.75 148.39 34.29 165.14 -40.12 81.79
DEC-11
11.93 11.76 6.89 5.9 3.64 3.39 0.01 3 2.67 2.15 2.15 1.63 1.57 2.13 1.48 1.51 2.34 1.44 1.3 1.24 1.7 1.75 1.22 1.14 1.63 0.99 1.04 1.01 0.93 1.03 1.13 0.89 0.84 0.93 0.51 0.61 0.72 0.28 0.39 0.46 0.53
11.91 11.57 5.97 5.95 4.24 3.42 3.19 2.94 2.71 2.41 2.14 1.9 1.89 1.88 1.68 1.57 1.5 1.48 1.44 1.32 1.3 1.25 1.21 1.15 1.13 0.99 0.94 0.9 0.88 0.86 0.77 0.75 0.68 0.67 0.66 0.63 0.57 0.54 0.53 0.47 0.45
36
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Exports Countrywise COUNTRIES
KUWAIT BRUNEI OMAN MALTA PHILIPPINES QATAR COLOMBIA ALGERIA GREECE SWEDEN GHANA POLAND SUDAN JORDAN DENMARK IRAQ BENIN YEMEN REPUBLC MOZAMBIQUE SYRIA PERU PORTUGAL CHILE UKRAINE MYANMAR ARGENTINA AFGHANISTAN TIS DJIBOUTI ETHIOPIA UGANDA ANGOLA BAHARAIN IS CONGO P REP AUSTRIA MOROCCO TOGO NORWAY IRELAND Grand Total
DEC 2011
57,840.94 2,290.38 50,948.07 3,945.52 50,332.03 63,157.28 45,853.04 37,773.23 12,311.77 40,043.49 40,498.88 33,246.93 25,154.20 29,884.03 31,146.55 45,636.89 20,020.15 22,749.15 42,772.88 23,238.32 28,803.80 18,755.61 25,698.79 25,579.43 34,210.69 24,523.55 20,078.97 26,184.66 25,089.87 23,991.57 24,889.34 14,421.55 10,295.10 13,156.95 17,847.98 38,879.71 10,069.07 16,390.44 12,895,093.57
APR-DEC 2011-12
423,394.22 403,298.02 359,465.96 352,101.26 350,615.56 343,337.46 311,194.93 300,976.35 298,514.88 286,787.04 280,730.11 273,266.04 270,533.59 267,068.50 261,345.95 251,119.62 246,229.85 217,444.81 201,248.40 191,515.01 188,981.36 187,212.93 179,699.31 177,519.67 175,312.29 172,653.13 172,048.12 166,473.82 164,535.93 152,910.90 143,166.34 138,873.09 128,257.62 126,238.38 125,440.06 123,114.77 122,864.50 120,439.06 103,431,648.33
DEC 11
-8.4 39.79 -21.12 -94.83 43.27 272.78 71.39 -24.12 5.49 49.98 39.84 -17.07 23.91 91.55 -2.23 -1.42 62.38 88.12 114.01 -27.86 63.33 -4.83 -6.99 -84.44 165.6 38.06 7.7 93.39 104.54 84.06 62.34 40.37 -17.91 -82.57 -1.96 292.87 29.67 -2.98 8.39
-35.72 4676.54 13.39 6.53 25.07 184.74 69.28 -1.28 216.95 44.36 57.92 23.06 67.55 94.17 21.85 -6.4 180.63 27.38 4.73 15.92 40.14 17.33 -3.42 -43.5 70.18 21.96 29.42 58.13 77.8 73.82 -28.89 -43.91 73.4 -57.9 22.54 91.26 115.96 31.89 32.6
DEC-11
0.45 0.02 0.4 0.03 0.39 0.49 0.36 0.29 0.1 0.31 0.31 0.26 0.2 0.23 0.24 0.35 0.16 0.18 0.33 0.18 0.22 0.15 0.2 0.2 0.27 0.19 0.16 0.2 0.19 0.19 0.19 0.11 0.08 0.1 0.14 0.3 0.08 0.13 100
0.41 0.39 0.35 0.34 0.34 0.33 0.3 0.29 0.29 0.28 0.27 0.26 0.26 0.26 0.25 0.24 0.24 0.21 0.19 0.19 0.18 0.18 0.17 0.17 0.17 0.17 0.17 0.16 0.16 0.15 0.14 0.13 0.12 0.12 0.12 0.12 0.12 0.12 100
Capital Market
I April 2012
37
The Macro Picture I External Sector I Foreign Trade I Exports Countrywise
Country Wise Monthly Merchandise Exports (US $ Million) MAY-11 JUN-11 JUL-11 AUG-11 SEP-11
North America Canada Mexico USA, a Argentina Brazil Chile Colombia Peru Bolivia Costa Rica El Salvador Guatemala Paraguay Ecuador Uruguay Europe EU (27) Intra-EU (27) Extra-EU (27) Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Slovak Republic 538412 350847 187564 16256 44003 160 14429 10006 1610 7177 53876 131738 3054 9930 10415 48057 1145 2545 1840 275 57579 16811 5310 7117 522566 343017 179548 15037 42385 158 14646 9800 1373 7013 51749 126441 2909 9491 11893 46912 1117 2534 1721 406 55930 16317 5163 6956 501791 317522 184269 15135 38556 159 12936 9215 1334 6270 49257 121942 2867 8934 9846 50301 1078 2359 1741 249 54814 15080 5388 6142 475962 299950 176013 14160 38368 137 12923 9839 1480 6724 43857 121868 2565 9302 9837 34676 1234 2508 1777 261 54886 15962 4194 6462 525056 343453 181602 15811 40011 144 14283 9772 1508 6822 51222 130502 2826 9902 11084 45438 1220 2556 1920 309 56384 16648 5221 7102 38380 31097 124000 8043 23209 7713 5149 4098 693 932 484 890 568 2015 786 38162 30409 122913 7922 23689 6291 4709 4212 697 874 466 876 487 1868 723 37165 27852 120376 7317 22252 6982 4890 4272 805 848 472 824 578 1981 697 39335 31487 126766 8255 26159 6633 4965 4642 829 830 421 852 590 1758 754 39543 28814 127219 7959 23285 6469 4482 3986 845 887 439 818 506 1858 750
OCT-11
38242 30088 131323 7528 22140 6446 4713 3828 737 865 389 732 406 1834 620 508214 327826 180388 15068 39288 141 14042 9264 1430 6061 49863 121932 2558 9503 10240 44039 1218 2418 1615 376 54397 16412 5207 7383
NOV-11
38612 31017 126192 6920 21774 6769 5155 3299 721 903 389 791 410 1859 629 520762 335007 185756 15593 39140 162 14179 9670 1447 6664 51898 128448 2581 10140 11743 43960 1209 2429 2032 467 56279 15659 5236 7240
DEC-11
38694 29142 126847 6269 22127 6310 5501 4385 639 839 426 1026 318 1970 693 459626 280938 178687 13093 34771 135 11764 8570 1237 6194 47077 111797 2590 7871 9127 41581 1072 2297 1683 338 52297 13292 4254 5758
JAN-12
36791 27257 118232 5909 16141 7636 4691 3995 ... 844 449 789 335 2094 604 450842 293718 157124 12698 34755 115 12602 8716 1216 5834 45931 110697 2025 8152 9916 35191 951 2099 ... 349 53268 13798 4557 5796
FEB-12
... 29959 ... 6098 18028 6315 ... ... ... 854 450 ... 311 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
South and Central America
38
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Exports Countrywise MAY-11
Slovenia Spain Sweden United Kingdom Bulgaria Romania EFTA Switzerland Iceland Norway Turkey Belarus Kazakhstan Russian Federation Ukraine Africa Algeria Egypt Morocco Tunisia South Africa Middle East Israel Asia Australia New Zealand China Hong Kong, China domestic exports re-exports India Indonesia Japan Korea, Republic of Malaysia Philippines Singapore Taipei, Chinese Thailand Viet Nam 24210 3676 157051 36010 788 35223 25742 17801 58571 47415 18284 4108 34149 27856 19436 7233 23543 3223 161895 37536 713 36823 24915 17608 71724 46738 19096 4128 35179 25160 20648 8460 23925 3135 175152 36738 656 36082 26708 16921 72821 48952 19781 4429 34606 28123 21522 9323 25930 2877 173242 39745 761 38983 24570 18571 69355 45756 19616 4123 36713 25780 21569 9247 24022 2803 169587 34877 625 34253 23652 16985 77746 46520 19019 3897 35535 24611 21509 7944 23603 3062 157367 39306 676 38630 22395 16804 71731 46637 20175 4088 33916 27025 17190 8394 22254 3020 174431 35800 661 35139 22322 17114 66979 46055 18032 3342 33346 24674 15496 8854 24610 3303 174670 34947 605 34342 25016 17464 72232 47747 19205 3407 34441 23946 17016 9087 19322 2990 149925 33402 476 32926 25347 15248 58594 41349 17687 4123 31735 21080 15737 7095 20690 3000 114471 33497 562 32935 24618 ... 71225 47200 ... ... 36124 23405 19039 8200 6274 6530 5844 5341 5846 4587 5311 5305 5000 4370 6100 2880 1810 1808 8200 6090 2972 1899 1676 8909 6160 2669 1926 1525 8311 5800 2230 1714 1345 8630 6360 2345 1667 1352 8952 5770 2397 1797 1527 7679 6310 2441 1671 1253 8417 5950 2678 1769 1569 7703 ... 2263 1493 1174 6745 ... ... ... 1544 7345 22179 485 12433 10944 3636 7327 43646 5700 19867 450 11983 11353 3475 9870 44180 6167 20844 446 13701 11865 3724 5358 41970 5356 18817 472 13510 11248 3612 9249 44550 5780 20482 535 13693 10753 3516 9061 43858 5968 20065 454 12582 11917 3387 5972 46297 5756 20779 457 13898 11085 3581 8214 47378 6276 17501 437 13818 12506 3892 7922 50979 6474 18166 383 13807 10360 3413 8264 40128 5327 19199 439 14796 11777 ... ... ... ... 3123 26358 17269 40429 2382 5514
JUN-11
3109 25891 15936 39980 2297 5400
JUL-11
2982 23653 14351 39152 2632 5417
AUG-11
2638 19952 15259 37608 2520 4965
SEP-11
3120 27027 16523 39577 2358 5768
OCT-11
2904 27494 15518 41733 2475 5636
NOV-11
3056 26997 15404 41179 2378 5574
DEC-11
2508 21669 14174 38066 2089 4321
JAN-12
2423 21153 14151 36424 1848 4462
FEB-12
... ... ... ... ... ...
Commonwealth of Independent States
a FAS.: Free Alongside Ship.
Capital Market
I April 2012
39
The Macro Picture I External Sector I Foreign Trade I Imports Countrywise
Indias imports (Rs Lakhs)

COUNTRIES
CHINA P RP U ARAB EMTS SWITZERLAND SAUDI ARAB USA IRAQ GERMANY INDONESIA NIGERIA KUWAIT AUSTRALIA KOREA RP QATAR JAPAN HONG KONG IRAN SOUTH AFRICA BELGIUM MALAYSIA SINGAPORE UK ANGOLA VENEZUELA UNSPECIFIED ITALY TAIWAN THAILAND RUSSIA OMAN FRANCE BRAZIL EGYPT A RP CANADA ISRAEL NETHERLAND UKRAINE MEXICO ALGERIA SWEDEN FINLAND CHILE SPAIN VIETNAM SOC REP
DEC 2011
2,955,733.09 1,416,940.01 942,792.07 1,379,225.63 1,117,015.92 739,113.07 692,902.67 577,650.09 554,331.42 698,146.91 595,455.58 510,658.03 533,031.62 552,115.52 518,123.05 599,853.02 471,753.20 506,992.17 495,375.55 266,515.56 319,727.86 280,296.56 282,145.05 52,064.76 272,259.14 194,725.01 217,691.94 299,826.59 115,966.27 181,396.91 33,573.98 153,167.05 152,314.37 153,216.31 92,835.19 125,430.63 110,854.68 61,410.74 79,650.06 96,246.49 150,773.83 73,751.78 107,992.73
APR-DEC 2011-12
20,728,739.92 12,303,646.74 10,984,095.56 10,577,526.31 8,243,174.37 6,293,375.67 5,500,871.86 5,092,279.20 5,047,842.89 4,983,427.05 4,907,965.33 4,383,694.89 4,321,659.48 4,111,022.20 3,870,224.00 3,854,638.41 3,489,207.34 3,414,103.09 3,272,560.89 2,997,978.11 2,779,722.24 2,128,370.88 2,122,252.25 2,062,739.63 1,942,001.12 1,911,709.04 1,829,123.08 1,601,909.85 1,366,981.17 1,313,855.77 1,289,476.23 1,132,887.58 899,320.45 891,532.55 830,980.25 753,700.77 736,570.83 732,926.21 714,608.35 702,004.59 687,296.28 645,699.77 622,586.24
DEC-11
77.55 24.62 1.22 49.23 51.30 152.51 67.02 32.44 45.49 55.61 62.15 53.27 92.86 94.07 2.69 8.27 104.68 28.88 110.11 1.25 30.55 -39.17 15.53 -17.41 73.98 44.60 33.56 195.19 -35.28 24.67 -44.97 130.61 88.14 108.98 53.71 184.27 279.54 7031.74 38.17 21.21 55.82 42.29 87.17
37.34 13.91 42.48 53.11 16.87 149.32 36.22 53.73 40.39 59.87 26.78 25.70 95.66 40.78 35.14 5.40 40.16 25.47 57.37 19.67 54.68 25.66 26.69 154.12 32.26 46.82 26.85 20.29 25.03 4.57 12.37 172.15 16.64 21.93 26.62 69.62 190.44 6.46 40.60 31.06 21.66 20.38 64.91
DEC-11
14.11 6.77 4.50 6.59 5.33 3.53 3.31 2.76 2.65 3.33 2.84 2.44 2.55 2.64 2.47 2.86 2.25 2.42 2.37 1.27 1.53 1.34 1.35 0.25 1.30 0.93 1.04 1.43 0.55 0.87 0.16 0.73 0.73 0.73 0.44 0.60 0.53 0.29 0.38 0.46 0.72 0.35 0.52
12.35 7.33 6.54 6.30 4.91 3.75 3.28 3.03 3.01 2.97 2.92 2.61 2.57 2.45 2.31 2.30 2.08 2.03 1.95 1.79 1.66 1.27 1.26 1.23 1.16 1.14 1.09 0.95 0.81 0.78 0.77 0.67 0.54 0.53 0.50 0.45 0.44 0.44 0.43 0.42 0.41 0.38 0.37
40
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Imports Countrywise COUNTRIES
MOROCCO JORDAN MYANMAR ARGENTINA AUSTRIA YEMEN REPUBLC NORWAY TURKEY BRUNEI NEW ZEALAND SRI LANKA DSR BAHARAIN IS COLOMBIA CZECH REPUBLIC POLAND DENMARK PERU BANGLADESH PR COTE D IVOIRE PHILIPPINES SUDAN GHANA CAMEROON HUNGARY AZERBAIJAN GUINEA BISSAU IRELAND SENEGAL NEPAL PAKISTAN IR ROMANIA BENIN PORTUGAL LITHUANIA TRINIDAD ESTONIA PANAMA REPUBLIC BHUTAN TANZANIA REP COSTA RICA Grand Total
DEC 2011
117,401.49 60,291.15 58,509.57 9,954.77 70,903.36 35,139.27 112,037.31 47,847.78 60.28 38,966.42 33,734.52 20,466.41 70,141.54 31,437.16 30,473.78 28,458.45 18,129.59 4,297.61 41,874.78 18,491.26 2,499.71 15,128.67 1,142.40 11,838.15 7,443.22 15,878.31 11,203.78 8,673.31 11,369.91 22,126.08 3,139.49 11,222.92 14,506.81 327.51 40,049.25 2,160.21 8,894.00 18,807.10 7,365.86 20940490.34
APR-DEC 2011-12
608,875.08 480,249.57 474,862.43 397,107.94 387,632.26 358,992.15 347,288.75 330,018.23 282,410.59 273,457.61 270,816.81 260,285.68 255,391.64 245,657.13 229,077.63 221,161.00 180,551.04 178,424.53 170,787.38 168,709.09 166,345.93 164,356.88 147,282.08 140,838.25 140,776.70 139,032.45 137,007.58 136,775.87 124,063.02 123,849.57 122,404.94 118,939.07 104,909.48 95,536.76 94,703.55 75,951.29 71,443.84 69,460.46 64,969.22 63,726.89 167847777.1
DEC-11
734.61 177.15 148.72 89.01 97.49 -58.36 599.77 102.81 73.72 16.34 -17.86 -37.69 112.89 30.57 106.65 66.55 109.74 -79.25 429.17 100.01 -94.41 257.65 -27.79 43.16 581.08 112.04 78.37 -67.20 8.79 237.94 -1.33 334.16 1930.54 95.89 5142.05 -73.08 -5.13 -48.82 151.68 47.16
98.03 57.92 31.03 10.01 38.94 -53.14 -7.99 27.03 373.69 13.83 60.54 5.21 -17.30 13.46 65.99 37.45 176.41 35.27 68.77 8.44 -26.71 179.95 146.25 18.16 236.16 406.18 64.36 137.56 -31.74 9.05 80.82 99.67 279.51 69.96 160.33 327.46 -15.91 6.78 -31.53 82.61 36.68
DEC-11
0.56 0.29 0.28 0.05 0.34 0.17 0.54 0.23 0.00 0.19 0.16 0.10 0.33 0.15 0.15 0.14 0.09 0.02 0.20 0.09 0.01 0.07 0.01 0.06 0.04 0.08 0.05 0.04 0.05 0.11 0.01 0.05 0.07 0.00 0.19 0.01 0.04 0.09 0.04 100.00
0.36 0.29 0.28 0.24 0.23 0.21 0.21 0.20 0.17 0.16 0.16 0.16 0.15 0.15 0.14 0.13 0.11 0.11 0.10 0.10 0.10 0.10 0.09 0.08 0.08 0.08 0.08 0.08 0.07 0.07 0.07 0.07 0.06 0.06 0.06 0.05 0.04 0.04 0.04 0.04 100.00
Capital Market
I April 2012
41
The Macro Picture I External Sector I Foreign Trade I Imports Countrywise
Country Wise Monthly Merchandise Imports (US $ Million)

MAY-11
North America Canada FOB Mexico USA Argentina Brazil Chile Colombia Peru Bolivia Costa Rica El Salvador Guatemala Paraguay FOB Ecuador Uruguay Europe EU (27) a Intra-EU (27) a Extra-EU (27) Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Slovak Republic FOB 557729 350847 206881 17087 42899 753 13607 8952 1643 7711 65108 110935 5337 8928 5283 51257 1399 2859 2426 535 52819 18784 7802 7094 541604 343017 198587 15888 40705 778 13617 8413 1439 6930 61104 108630 5681 8671 5536 49365 1352 2785 2375 492 51622 18608 6629 6793 515498 317522 197975 16273 36685 715 12235 7862 1439 6562 58429 107240 5266 8416 4975 48130 1497 2624 2322 489 49185 17287 6998 6217 503121 299950 203172 15985 37971 795 12871 8397 1562 7256 54053 105275 5319 8639 5307 38844 1495 2774 2717 429 51509 17813 6074 6314 540854 343453 197401 16814 38232 627 12982 8525 1514 6838 61219 107038 5297 8867 5231 48028 1453 2732 2343 413 51354 17560 7023 6688 524470 327826 196644 16208 36898 683 12589 8048 1467 6926 59466 106620 4038 8806 5210 45485 1464 2750 2890 582 49787 17631 6472 6671 531234 335007 196227 16880 37970 717 13112 8212 1500 7130 60611 106794 4157 9198 5409 46106 1389 2739 2350 621 49571 17191 6403 6936 457570 280938 176632 13976 34587 651 11255 7836 1305 6897 54189 94932 3809 7446 4897 40065 1309 2468 2256 454 46255 14964 5722 5764 481543 293718 187826 13828 34037 557 11106 7737 1280 5539 55924 93898 3388 7608 5761 40806 1176 2392 ... 368 47594 15143 5964 5571 ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 38702 31449 193843 6363 20624 6290 4931 3383 534 1339 942 1536 982 2049 1020 39623 31192 196888 6904 20146 6197 4553 3313 668 1298 879 1461 1026 2095 920 37222 29886 192258 6645 20005 6572 4564 3103 676 1424 925 1328 960 1904 863 40046 33245 201357 7616 23303 6962 4757 3572 722 1459 874 1504 1095 2123 900 38496 31540 194650 6895 21152 6771 5067 3286 745 1347 851 1419 1061 2193 889 39162 31446 196582 6306 20670 5953 4842 3308 709 1401 754 1401 1042 2155 871 38229 32149 195079 6236 22140 6494 5060 3247 745 1492 797 1412 1026 2263 909 35640 29971 189148 5989 19130 6281 4505 3333 698 1355 868 1298 918 2211 944 35186 28289 188384 5358 18210 5994 4421 3384 ... 1465 833 1336 778 2120 895 ... 30320 ... 4757 17040 6039 ... ... ... 1345 835 ... 765 ... 821
JUN -11
JUL -11
AUG -11
SEP-11
OCT-11
NOV-11
DEC-11
JAN-12
FEB-12
South and Central America
42
Capital Market
I April 2012
The Macro Picture I External Sector I Foreign Trade I Imports Countrywise MAY-11
Slovenia Spain Sweden United Kingdom Bulgaria Romania EFTA Switzerland Iceland Norway Turkey 18398 469 8056 21106 18165 401 7478 21604 17532 392 6710 21061 3568 2884 27416 6527 3790 4937 3566 1916 8885 6628 21146 3048 144788 41350 40951 15840 71942 44293 16625 5300 30027 24737 18724 8221 17955 429 7506 19679 3751 3363 30111 7214 3800 5277 3842 1919 9158 6316 21565 3456 155434 44205 39477 14765 79423 45383 15938 5220 34543 23135 22773 9643 18288 430 7757 21203 3622 3279 27355 7385 4170 5428 3544 2046 8620 5586 20471 3445 155045 40005 35042 14925 73988 45249 15896 5380 30198 22803 21276 9445 17477 414 7961 19919 3820 3402 29387 7544 3500 5668 3452 2249 8881 5816 20969 3240 140303 42282 40825 15674 75417 42732 15939 5320 30152 23685 18203 9144 17630 421 7850 18649 3909 3890 30326 7677 3210 4501 3405 1869 9406 6252 21709 3466 159830 41469 35922 15393 75889 43008 15023 5290 32386 21463 16872 9421 15660 468 6850 20594 4430 3916 30539 7890 4690 5286 4102 2096 7128 5760 20317 3067 158216 41236 37753 15640 74907 45488 16577 4910 28566 21627 19148 9356 16271 324 6479 17374 3279 2670 19595 5385 ... 5100 3419 1841 8431 6434 19883 3117 122683 34543 40108 15054 77779 43382 14877 5440 30802 20660 16864 6923 16169 365 6948 17713 ... ... ... ... ... ... ... 1959 8322 6113 19208 2865 145954 39402 39782 ... 63107 45000 ... ... 31655 20576 18509 9000 3289 31188 16512 54259 2834 7223
JUN -11
3019 31469 14809 53500 2736 6699
JUL -11
2907 27759 13196 54199 2708 6393
AUG -11
2795 26935 14444 51445 2785 6231
SEP-11
3206 34170 14988 56206 2750 6901
OCT-11
2952 32237 14518 55331 3002 6709
NOV-11
3119 30524 14754 57240 3026 6859
DEC-11
2671 27582 13840 48516 2644 5713
JAN-12
2503 26245 12550 51385 2184 5058
FEB-12
... ... ... ... ... ...
Commonwealth of Independent States Belarus 3711 3988 Kazakhstan Ukraine Africa Algeria Egypt Morocco Tunisia South Africa FOB Middle East Israel - excl military imports 6794 Asia Australia - customs basis 19220 New Zealand China Hong Kong, China India Indonesia Japan Korea, Republic of Malaysia Philippines Singapore Taipei, Chinese Thailand Viet Nam 3238 144109 40602 45201 14609 69163 45285 15468 5186 31733 26625 19184 8654 19509 3059 139702 42708 39036 15430 70923 44820 16492 4772 31455 23783 19804 8620 6148 4080 5723 3881 2226 8350 4540 4854 3937 2138 8192 3650 6767 3983 27709 6788 Russian Federation FOB 28145
a includes an adjustment for under-recorded intra-EU imports
Capital Market
I April 2012
43
The Macro Picture I External Sector I Balance of payment
Balance of payment
Indias balance of payments (BoP) turned into deficit of US$12.8 billion in the quarter ended December 2011 after three years of consistent surplus. Earlier, India had recorded a BoP deficit of US$14.7 billion in Quarter ended December 2008. The sharp fall in capital account surplus by 42.9% to US$8.0 billion and 94.2% surge in current account deficit pushed Indias Balance of Payment into deficit during October-December 2011. Indias foreign exchange reserves dipped by US $14.8 billion to US$296.688 billion in the quarter ended December 2011, which included valuation losses worth US$1.9 billion in Q3 of FY 2012 reflecting appreciation of the US dollar against major international currencies during the quarter. The continuous increase in Indias trade deficit to record level of US$47.7 billion in the quarter ended December 2011, weighed on current account deficit. On a BoP basis, Indias merchandise exports rose mere 7.9% to US$71.1 billion, while imports surged 22.0% to U$118.8 billion in Q3 of FY 2012. Thus, the trade deficit widened 51.4% to US$47.7 billion in Q3FY12 from US$31.5 billion in Q3 of FY 2011. Import growth was boosted by 111.9% surge in gold import to US$16.743 billion in Q3 of FY 2012, accounting for 35.1% of the trade deficit. Net invisible inflows zoomed 31.4% to touch record level of US$28.302 billion in Q3 of FY 2012, on y-o-y basis, mainly due to strong growth in receipts led by insurance and software services inflows. The inflow of transfer incomes recorded strong growth, while income outflows were steady in Q3 of FY 2012. The current account deficit increased to US$19.42 billion (4.3% of GDP) in Q3 of FY 2012 from US$18.41 billion (4.1 % of GDP) in Q2 of FY 2012, while it was almost double compared to US$9.98 billion (2.2% of GDP) in Q3 of FY 2011. The record inflows of invisible flows helped to contain some of the increase in trade deficit during Q3 of FY 2012. However, the capital account surplus (including errors and
India records BoP deficit after three years
omissions) narrowed from US$22.25 billion in Q1 of FY 2012, US$17.22 billion in Q2 of FY 2012 and further down to US$7.99 billion in Q3 of FY 2012, mainly due to weak loan inflows and outflows of banking capital. However, the capital account inflows were supported by sharp increase in foreign direct investment, NRI deposits, other capital and rebound in portfolio inflows.
Trade deficit zooms to record level on doubling gold import

On a BoP basis, Indias merchandise exports rose 7.9%, year-onyear, to US$71.13 billion during Q3 of FY 2012, as compared with a growth of 39.6% during corresponding quarter of 201011. Meanwhile, on a BoP basis, merchandise imports surged 22.0%, year-on-year, to US$118.8 billion during the quarter as compared with a growth of 24.7% during same quarter last year. The trade deficit in absolute terms widened to US$47.7 billion as compared with US$31.5 billion during the Q3 of FY 2011.
Net invisibles surge on strong transfer income inflows

Net invisibles inflows surged 31.4% to touch record level of US$28.3 billion in Q3 of FY 2012, compared to 15.2% increased recorded in Q3 of FY 2011. Invisibles receipts recorded a growth of 3.6% to US$57.67 billion, while invisible outflows dipped 14.0% to US$29.37 billion in Q3 of FY 2012. Among the major components, net services inflows surged 19.9% to US$15.07 billion with strong growth for insurance (245.1% to US$0.36 billion), transportation (from outflows of US$0.271 billion to inflows of US$0.14 billion) and software services (12.6% to US$15.81 billion). Net private transfer inflows surged 30.6% to US$17.544 billion, with workers remittances rising 19.7% to US$8.00 billion during the quarter ended December 2011. However, the pace of investment income outflows has been easing sharply from 391.5% in Q2 of FY 2011 to 114.9% in Q3 of FY 2011, 73.5% in Q1 of FY 2012, 6.2% in Q2 of FY 2012 and further lower to 5.2% at US$4.55 billion in Q3 of FY 2012. Further, there was net inflow on compensation for employees during AprilDecember FY 2012 compared to outflows for last four sequential years.
Major items of Indias Balance of Payments ITEM / QUARTER ENDING SEP-10 DEC-10 MAR-11 JUN-11 SEP-11 DEC-11
Exports Imports Trade Balance (1-2) Invisibles, net Capital A/c Balance* Change in Reserves# 52.0 89.0 -37.0 20.1 21.6 -3.3 65.9 97.4 -31.5 21.5 -10.0 13.8 -4.0 77.2 107.1 -29.9 24.5 -5.4 7.4 -2.0 74.2 115.6 -41.4 25.6 -15.8 22.3 -5.4 76.4 119.8 -43.4 25.0 -18.4 17.2 -0.3 71.1 118.8 -47.7 28.3 -19.4 8.0 12.8
Current A/c Balance (3+4) -16.9
Invisible surplus finances 59.3% of trade deficit

The invisibles surplus surge 31.4% helped to contain some of the 51.4% jump in trade deficit during quarter ended December 2011. Current account deficit zoomed 94.6% to US$19.4 billion in Q3 of FY 2012, while rising to 4.3% of
(-Indicates increase;+ indicates decrease), *: Including errors and omissions. #: On BoP basis (i.e., excluding valuation).
44
The Macro Picture I External Sector I Balance of payment GDP during from 4.1% of GDP in Q2 of FY 2012, but it was double compared to 2.2% of GDP in Q3 of FY 2011. The invisible surplus at US$28.3 billion financed 59.3% of the trade deficit in Q3 of FY 2012 as against 57.6% during Q2 of FY 2012 and 68.3% in Q3 of FY 2011.
FIIs inflow rebounds

The portfolio inflows, representing inflows/outflows of foreign institutional investors (FIIs) into/from domestic equity assets, have shown decline of 69.9% to US$1.898 billion in Q3 of FY 2012 compared to US$6.30 billion in Q3 of FY 2011, but it has rebounded compared to outflow of US$1.196 billion in Q2 of FY 2012.
Gold import weighing on current account deficit

Indias gold import more than doubled to US$16.743 billion (3.7% GDP) during Q3 of FY 2012 from US$7.901 billion (1.8% of GDP) in Q3 of FY 2011, while also increased from US$12.654 billion (2.8% of GDP) in previous quarter. Excluding net gold import, Indias current account deficit stood at US$2.879 billion (0.6% of GDP) in Q3 of FY 2012 compared to US$5.738 billion (1.3% of GDP) in Q2 of FY 2012, showing decline in current account deficit as a percentage of GDP in Q3 of FY 2012 from Q2 of FY 2012. Infact, Indias current account was in surplus at US$0.401 billion (0.1% of GDP) during Q1 of FY 2012, excluding net gold import of US$16.103 billion.
Loan inflows dip

Net loans inflows dipped 57.7% to US$2.695 billion in Q3 of FY 2012 compared to of US$6.376 billion in Q3 of FY 2011. The external assistance increased 20.0% to US$1.385 billion, but inflows of external commercial borrowings plunged 62.8% to US$1.441 billion in Q3 of FY 2012, while the inflow of short term credit recorded an outflow of US$0.131 billion compared to inflows of US$1.345 billion in Q3 of FY 2011.
NRI deposits surge

Banking capital of commercial banks recorded net outflow of US$5.487 billion in Q3 of FY 2012 compared to inflows of US$4.90 billion in Q3 of FY 2011, mainly due to sharp surge assets of commercial banks assets abroad. However, the inflows of NRI deposits jumped sharply from US$185 million in Q3 of FY 2012 to US$3.323 billion in Q3 of FY 2012.
Net FDI inflows rise as outflow declines

Net FDI inflows to India (inward FDI minus outward FDI) surged 275.9% to US$4.485 billion during Q3 of FY 2012 as compared to US$1.193 billion in the corresponding quarter of last year. Higher net FDI was mainly on account of sharp decline in the gross FDI outflows of 61.5% to US$1.91 billion in Q3 of FY 2012.
Valuation losses weigh on forex reserves

With capital account surplus at US$8.0 billion being insufficient to finance current account deficit of US$19.4 billion, there was a net drawdown foreign exchange reserves of US$12.8 billion during the quarter. In nominal terms (i.e., including valuation changes), foreign exchange reserves have declined by US$14.8 billion during the quarter, due to valuation losses worth US$1.9 billion, reflecting appreciation of US dollar against major international currencies during the quarter. The US Dollar Index measuring the strength of US currency against six peers improved 3.9% during Q3 of FY 2012 in addition to 0.6% increase in Q2 of FY 2012.
Sources of Variation in Forex Reserves ITEMS MAR-11 JUN-11 SEP-11 DEC-11

I. II. Current Account Balance Capital Account (net) (a to f) a. Foreign Investment (i+ii) (i) Foreign Direct Investment (ii) Portfolio Investment Of which: FIIs ADRs/GDRs c. Banking Capital of which: NRI Deposits d. Short-Term Trade Credit e. External Assistance f . Other items in capital account III. Valuation Change Total (I+II+III) BOP Figures in US$ billion -4.7 6.7 -0.9 -1.1 0.2 0.0 -0.1 0.2 -0.7 0.9 2.7 0.7 2.7 5.4 7.5 2.0 -14.2 19.7 9.7 7.2 2.5 0.0 2.5 0.3 2.9 12.7 1.2 3.1 0.4 -9.1 5.4 10.9 5.5 -18.6 18.9 4.0 5.1 -1.2 0.0 -1.6 0.2 7.7 6.6 2.7 2.8 0.3 -2.5 -4.5 -4.2 0.3 -20.8 7.9 5.8 3.9 1.9 0.0 1.8 0.1 -0.7 -5.4 3.4 -0.1 1.4 6.9 -1.9 -14.8 -12.9
Outlook
Indias forex reserves have declined by US$1.548 billion to US$ 295.14 billion as of 23 March 2012 from end of December 2011 levels. This fall is in addition to US$ 14.8 billion plunge in Q3 of FY 2012 and US$4.233 billion dip in Q2 of FY 2012. The forex reserves have declined in spite of likely valuation gains during Q4 of FY 2012 due to 0.9% weakening of US dollar Index during Q4 of FY 2012. The decline in forex reserves must have been caused by continued forex market intervention by the RBI to support weak Indian Rupee as well as wide trade deficit and weak loan inflows would have weighed up on forex reserves in Q4 of FY 2012. However, the inflows from FIIs, NRI deposits, FDI, tourism etc has been strong during Q4 of FY 2012. Indias BoP has moved into deficit in April-December FY 2012, while it would record deficit for FY2012 again after two years.
45
b. External Commercial Borrowings 2.3
Capital Market
I April 2012
External Sector I External Debt
External Debt
Short-term credit rising on strong import growth
Indias external debt, as at end-September 2011 was placed at US $ 334.847 billion, recording an increase of $39.26 billion over the end-December 2010 level and $28.82 billion from end March 2011. About 39.3% of the increase in total external debt in April-December 2011 was on account of commercial borrowings, while short-term trade credits accounted for 45.3% of the increase, reflecting surge in imports. Excluding the valuation effects due to the appreciation of the US dollar against other major currencies, the increase in external debt would have been higher by US$41.0 billion end-December over end-March 2011, thus contributing to decline in debt stock by US$12.2 billion. The long-term debt at US$256.895 billion and shortterm debt at US$78.052 billion accounted for 76.7% and 23.3%, respectively, of the total external debt as at endDecember 2011. The share of commercial borrowings in total external debt continued to increase, cornering largest share at 29.9% as at end-December 2011, followed by the short-term debt (23.3%), NRI deposits (15.7%) and multilateral debt (14.9%). The ratio of short-term debt to foreign exchange reserves rose sharply to 26.3% as at end-December 2011 from 23.0% as at end-September 2011. Debt denominated in US dollars accounted for the highest share with 56.9% in the total external debt end December 2011 followed by the Indian rupee (18.6%) and Japanese Yen (10.4%). The ratio of foreign exchange reserves to external debt as at end December 2011 declined sharply to 88.6% from 96.2% at end September 2011. Indias external debt to GDP ratio jumped to 20.0% end December 2011 from 17.8% at end-March 2011.
Evolution of Indias external debt
December 2011. The ratio of concessional debt to total external debt declined to 14.4%, reflecting the increasing share of non-government debt.
Currency Composition of External Debt

The currency composition of Indias external debt consists of major international currencies such as US dollar, Japanese yen, euro, pound sterling, special drawing rights (SDR) and the domestic currency, i.e., the Indian rupee. The US dollardenominated debt continued to be the largest component with a share of 56.9% in the total external debt as at end- December 2011. The share of the Indian rupee in the total external debt stock accounted for 18.6%, followed by Japanese yen (10.4%), SDR (8.9%) and euro (3.8%) at end December 2011.
Components of External Debt

Loans under external assistance (multilateral and bilateral debt) increased by US$2.853 billion in April-December 2011. The commercial borrowings surged by US$11.338 billion, while export credit galloped US$1.244 billion at end-December 2011 over its level as at end-March 2011. The overall long term debt increased US$15.756 billon, while short-tem debt increased by US$13.062 billion, primarily on account of sharp increase in short-term trade credits.
Outlook
Indias external debt stock doubled in 16 years from US$83.80 billion in March 1991 to US$172.36 billion in March 2007, but it further doubled in just five years to US$334.95 billion in December 2011. The share of concessional or the government in total external debt has been declining, while that of private and short term credit is rising. The rising foreign debt amid recent sharp weakening of the Indian rupee has raised concerns for higher debt service burden, which can impact the profitability and the balance sheets of corporate borrowers. However, a reduction in withholding tax on interest payment on external commercial borrowing from 20% to 5% for certain sectors in Union Budget 201213 would help to reduce debt service burden. The US dollar has weakened during Q4 of FY 2012 adding to the debt strong through valuation changes, while import growth remains strong pushing up short-term credit.
Government and Non-Government Debt

Government debt stood at US$81.2 billion, while the nongovernment debt amounted to US$253.8 billion at end December 2011. The share of the government debt in total external debt declined from around 33% end March 2006 to 25.5% at end March 2011 and further to 24.3% at end
46
(US $ billion)
The Macro Picture I Public Finance
Public Finance
Slippage on revenue and expenditure
The finance minister has projected quite impractical numbers for growth and expenditure and for revenue generation too. The GDP growth is estimated at 6.9% in real terms in 201112. Headline inflation is expected to moderate further in next few months and remain stable thereafter. Indias GDP growth in 2012-13 is expected to be 7.6% +/- 0.25 per cent. Above all, key numbers are deficit to GDP ratio. The 201213 estimated deficit to GDP ratio stands at 5.1% according to the budget speech. The combined effect of lower tax and disinvestment receipts and higher expenditure, mainly on account of subsidies, has pushed the fiscal deficit to 5.9 per cent of GDP in the Revised Estimates for 2011-12. The expenditure on subsidies for 2011-12 was revised upwards by 51% to Rs 216297 crore from the budget estimate of Rs 143570 crore; majority of the increase being under petroleum subsidies (190% rise). This subsidy burden for food and fertilizers was also seen rising in 2011-12 by 20% and 34% respectively. On the receipts side, major slippages were recorded under corporate tax collections (reduced margins due to rising input costs) and excise duty collection, reduced fresh investments under the small savings scheme (due to relatively attractive investment avenue in bank FDs) as well as lower realization through the disinvestment route. The government has projected 22% growth in revenue
receipt for FY 2012-13. Against the background of higher fiscal deficit of FY 2011-12, GOI projected 1.61% fall in fiscal deficit as Finance minister projected fiscal deficit at Rs 513590 crore for FY 2012-13 compared with Rs 521980 crore estimated for FY 2011-12 (The final number for FY 2011-12 not yet released). This increase in actual fiscal deficit has occurred on account of a higher than estimated increase in the non-plan expenditure on the revenue account (mainly subsidies), and also the fall in revenue as well as capital receipts.
The current scenario

The concern for the higher fiscal deficit has been growing month by month. In the current FY, till February 2012 fiscal deficit to budgetary estimates (BE) stood at 94.6% compared with 68.6% in the same period a year ago. The consistent rise in the fiscal deficit has become serious concern for the government. The fiscal deficit recorded a 10.92% growth in February 2012 to Rs 58638 crore compared with Rs 52866 crore in February 2011. In April-February 2011-12, gross fiscal deficit recorded a 79.42% growth rate compared with the same period a year ago. Revenue deficit to BE stood at 96.6% in April-February 201112 compared with 74.4% in same period a year ago. Primary deficit to BE stood at 104.5% till February 2012 in the current
GOI-Central government receipts MONTH TAX REVENUE NON-TAX REVENUE

Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct 2011 Nov-11 Dec-11 Jan 2012 Feb 2012 3774 19329 55596 35379 30817 109836 36770 28969 99944 38153 35027 3106 2507 6608 10856 20578 7142 17414 4132 5734 12489 8769
REVENUE RECEIPT
6880 21836 62204 46235 51395 116978 54184 33101 105678 50642 43796
RECOVERIES OF LOANS
5589 86 824 1613 887 1025 898 859 2334 1110 2496
OTHER RECEIPTS
0 1145 0 0 0 1586 0 0 12 0 0
TOTAL RECEIPTS
12469 23067 63028 47848 52282 119589 55082 33960 108024 51752 46292
APR-FEB
2010-11 2011-12 % change Figures in Rs crore 460624 493594 7.16
APR-FEB
209742 99335 -52.64
APR-FEB
670366 592929 -11.55
APR-FEB
10506 17721 68.68
APR-FEB
22745 2743 -87.94
APR-FEB
703617 613393 -12.82
Capital Market
I April 2012
47
The Macro Picture I Public Finance FY compared with 46.1% in April-February 2010-11. Revenue deficit recorded a 4.74% growth in February 2012 compared with February 2011. It has recorded 90.06% growth rate in April-February 2011-12 compared with same period a year ago. February 2011-12, growth rate stood at 16.5% compared with April-February 2010-11. Plan expenditure recorded 9.41% fall in February 2012 compared with February 2011. In April-February 2011-12, the growth rate stood at 5.7% compared with April-February 2010-11. Total expenditure to BE stood at 83.9% till February 2012 in the current FY compared with 80.4% in same period a year ago. It has recorded 10.24% growth in February2012 compared with February 2011. In April- February 2011-12, growth rate stood at 13.1% compared with same period last year.
Financing of deficit
External borrowing and market borrowing are two major sources to fund the deficit. External borrowing to BE stood at 70% in April-February 2011-12 compared with 75% in same period a year ago. Market borrowing ( domestic ) to BE stood at 100% till February 2012 in the current FY compared with 93% in April-February 2010-11. External finance recorded 382.25% growth in February 2012 compared with February 2011. In April-February 201112, growth rate turned in to negative at 56.62% compared with April-February 2010-11. Market borrowing recorded a 72.12% growth rate till February 2012 in the current FY compared with same period a year ago.
Revenue
Revenue receipt to BE stood at 77.3% in April-February 201112 compared with 85.5% in same period last year. It has recorded 5.52% growth rate in February 2012 compared with same month a year ago. In April-February 2011-12, growth rate turned in to negative zone at 11.55% compared with April-February 2010-11. Tax revenue to BE stood at 76.9% till February 2012 in the current FY compared with 81.7% in same period a year ago. It has recorded 2.58% growth rate in February 2012 compared with February 2011. In April-February 2011-12, the growth rate recorded 7.16% compared with April-February 2010-11. Non-tax revenue to BE stood at 79.6% till February 2012 in the current FY compared with 95.3% in same period last year. It has recorded a 19.18% growth rate in February 2012 compared with February 2011. Revenue receipt to BE stood at 77.3% till February 2012
Expenditure
Non-plan expenditure to BE stood at 87.3% till February 2012 in the current FY compared with 81.3% in the same period a year ago. Plan expenditure to BE stood at 77% till February 2012 in the current FY compared with 78.6% in the same period a year ago. Non-plan expenditure recorded a 23.26% growth in February 2012 compared with February 2011. In April-
Gross fiscal deficit and its financing MONTH GFD EXTERNAL MARKET FINANCE BORROWINGS
Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct 2011 Nov-11 Dec-11 jan 2012 Feb 2012 74661.00 56065.00 31927.00 66100.00 44770.00 7287.00 26199.00 46360.00 27643.00 53921.00 58638.00 555.04 1179.66 -953.32 547.03 247.28 792.50 3496.78 618.27 575.03 -143.18 290.99 43921.89 61243.43 69446.30 30178.11 45327.43 26957.23 32728.74 32845.91 41497.44 89819.68 76432.24
SMALL SAVINGS
-1909.36 -826.64 820.10 -2691.21 -1583.12 -1682.33 -1725.07 -1426.64 -2788.86 -3803.84 -2772.22
PPF
-1488.64 540.23 279.15 722.47 651.48 619.63 298.40 890.56 1418.06 2027.52 1820.38
STATE PROVIDENT FUNDS

1346.81 -729.98 446.57 126.92 12.48 958.93 672.58 289.11 773.25 5.66 518.38
SPECIAL DEPOSITS
-60.05 -465.91 -53.03 -632.91 -532.31 -643.36 -92.06 123.20 -945.94 -234.83 -184.44
OTHER FINANCING
-23673.14 8831.31 -19240.82 -883.32 3182.41 -17234.73 -14066.71 20043.39 -18545.92 -3663.88 17786.30
REVENUE DEFICIT
60615.00 49454.00 24552.00 60299.00 35080.00 -8220.00 21232.00 37445.00 5647.00 48279.00 47083.00
APR-FEB
2010-11 2011-12 % 275088.00 493571.00 79.42
APR-FEB
16611.96 7206.08 -56.62
APR-FEB
319773.21 550398.40 72.12
APR-FEB
35660.60 -20389.19 -157.18
APR-FEB
8412.96 7779.24 -7.53
APR-FEB
5767.47 4420.71 -23.35
APR-FEB
-1877.27 -3721.64 98.25
APR-FEB
APR-FEB
-28965.31 200707.00 -47465.11 381466.00 63.87 90.06
Figures in Rs crore
48
Capital Market
I April 2012
The Macro Picture I Public Finance in the current FY compared with 85.5% in same period a year ago. It has recorded 5.52% growth rate in February 2012 compared with February 2011. However, growth rate turned in to negative zone at 11.55% in April-February 2012 compared with April-February 2011. Overall, total receipt to BE stood at 77% in April-February 2011-12 compared with 86.3% in same period a year ago. It has recorded a 9.41% growth rate in February 2012 compared with February 2011. In April- February 2011-12, growth rate stood at 9.41% compared with same period a year ago. finally adding upward pressure on fiscal deficit. In FY 2009-10, fiscal deficit to GDP stood at 6.39% which is the highest rate in last 21 years. The estimated ratio for 201112 is 5.9% and 5.1% for FY 2012-13. The government said it proposes to bring down expenditure on subsidies towards food, oil and fertilisers to 1.75% of the GDP in the next three years, from 2% estimated in FY 2012-13. For 2012-13, the government proposes to bring fiscal deficit down to 5.1% of the GDP and reduce outgo on major subsidies to Rs 1.79 lakh crore from Rs 2.08 lakh crore estimated in the current fiscal. The governments subsidy burden this fiscal will surpass the budget estimates due to higher payout in fuel subsidies following high global crude oil prices, the Economic Survey 2011-12 said. With international crude prices averaging US$ 111 per barrel in 2011 against US$ 80 a barrel in the previous year, the governments payout to keep domestic retail price of auto and cooking fuels as well as fertilizers would see a substantial rise. The FY 2013 budget target for petroleum subsidy is set at only Rs 43580 crore, and the actual are set to be higher. The petroleum subsidy, which was budgeted at Rs 23640 crore for FY 2011-2012 has been revised to Rs 68481 crore. Going by the trend so far and considering the elevated crude oil prices, it looks like that the petroleum subsidy has been grossly under estimated for FY 2011-12 and FY 2012-13. There is urgent need for fiscal discipline to avoid further damage. PLAN EXPENDITURE CAPITAL EXPEND.
5495 17681 2599 4327 3809 3453 5096 7506 3388 3276 9547 2428 5413
Fiscal deficit set to widen a major concern

Fiscal deficit is set to add more worry for India compared with higher inflation. The consistent higher fiscal deficit has always resulted in downgrade of ratings. The US and Greece are two major country which have lost top rating grade due to the growing fiscal debt. The average fiscal deficit to GDP is 5.1% in India (1991-92 to 2010-11). From 2004-05 , we have seem significant fall in fiscal deficit however it could not sustain due to the global financial crisis which forced GOI to announce stimulus packages to boost demand and growth. These actions had adverse impact on government borrowing which grew significantly in the period FY 2008-09 2011. On other hand, decelerated economy growth and weak demand resulted in fall in revenue which is
Central government expenditure NON-PLAN EXPENDITURE MONTH INTEREST OTHER REV. REVENUE CAPITAL PAYMENTS EXPENDITURE EXPENDITURE EXPENDITURE
Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct 2011 Nov-11 Dec-11 Jan 2012 Feb 2012 29402 33570 15078 21342 13767 17354 32702 22256 22022 21389 13519 25606 30978 24641 85383 38009 26410 37546 65089 38535 48187 33412 32348 51727 58686 30975 54043 118953 53087 47752 51313 82443 71237 70443 55434 53737 65246 84292 61953 3225 34476 17036 3515 4390 3961 5481 10612 2477 6498 14795 4324 8638
TOTAL
57268 153429 70123 51267 55703 86404 76718 81055 57911 60235 80041 88616 70591
REVENUE EXPEND.
32413 49104 14408 23538 35443 24091 15238 38315 19982 16809 46079 14629 28926
TOTAL
37908 66785 17007 27865 39252 27544 20334 45821 23370 20085 55626 17057 34339
TOTAL EXPEND.
95176 220214 87130 79132 94955 113948 97052 126876 81281 80320 135667 105673 104930
APR-FEB
2010-11 2011-12 % Changes Figures in Rs crore 201169 236013 17.32
APR-FEB
406645 460924 13.35
APR-FEB
607814 696937 14.66
APR-FEB
60326 81727 35.48
APR-FEB
668140 778664 16.54
APR-FEB
263259 277458 5.39
APR-FEB
47306 50842 7.47
APR-FEB
310565 328300 5.71
APR-FEB
978705 1106964 13.10
Capital Market
I April 2012
49

Part 1

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Part 1

Uploaded by

Copyright:

Available Formats

INDIA ECONOMY REVIEW

Indias Foremost Investment Fortnightly

Capital Market Publishers India Private Limited

Rs 1,500/Rs 15,000/US $ 500/-

Branches and contact information

Public Finance .......................................................................................................... 47 Financial Sector

The Sectoral Picture

India Economy Review

Birds eye view

Implementation is the key

Evolution of Indias external debt

Twin deficit has added more worries

FIIs: Net buyers in March 2012

Banking: Credit growth

Crude oil price

(US $ per barrel)

Union Budget 2012-13

Upside risks to fiscal deficit target

Strengthening Investment Environment

Micro, Small and Medium Enterprises Agriculture

Transport: Roads and Civil Aviation

Rural Development and Panchayati Raj

Education and Health

Union Budget 2012-13 ITEM 2010-11 ACTUAL

1197328 1257729 1318720 1490925

Revenue Expenditure 1040723 1097162

Effective Revenue Deficit 164765

Economic Survey 2011-12

Urges for fiscal consolidation to improve long term outlook

Financial Intermediation: Risk and liquidity management assumes greater significance

Fiscal consolidation: States doing well

BOP: Discourage unproductive imports

Prices: Inflation to ease during 2012

International Trade: To show sluggishness

Services Sector: Challenge to accelerate growth

Agriculture: Need speedy improvement in yield

Energy and Infra: Attract large investment

Industry:To rebound during 2012-13

The Macro Picture I Economic Indicators I Price Indices

Budget and crude oil to impact

CONTRIBUTION TO INFLATION FEBRUARY 2010-11 2011-12

India Economy Review

MFD. GROUP INDEX % CHANGE

India Economy Review

Primary Articles (Weight 20.12%)

WPI Inflation (M-o-M Basis)

YOY VARIATION % APR-FEB 2010-11 2011-12

CONTRIBUTION TO INFLATION APR-FEB 2010-11 2011-12

India Economy Review

Near term concerns

Fuel & Power (Weight 14.91%)

Manufactured Products (Weight 64.97%)

Consumer price index

CPI for Agriculture Labourers

Consumer Price Index

AGRICULTURAL LABOURERS BASE YEAR 1986-87 INDEX % CHANGE

RURAL LABOURERS BASE YEAR 1986-87 INDEX % CHANGE

India Economy Review

The Macro Picture I Economic Indicators I Price Indices

Country-Wise Consumer Price Inflation (%)

Primary Articles FEB-12

Fuel, Power, Light & Lubricants

India Economy Review