India Market

Economic Snapshot of India

• Quarterly GDP at factor cost at constant (1999-2000) prices for Q1 of 2008-09 is estimated at Rs 7,82,357 crore, as against Rs. 7,24,949 crore in Q1 of 2007-08, showing a growth rate of 7.9 per cent over the corresponding quarter of previous year.
• GDP at factor cost at current prices in Q1 of 2008-09, is estimated at Rs. 11,52,530 crore, as against Rs. 9,90,868 crore in Q1, 2007-08, showing an increase of 16.3 per cent.
• The per capita income at current prices during 2007-08 is estimated to attain a level of Rs.33,299 as compared to the Quick Estimates for the year 2006-07 of Rs.29,642, showing a rise of 12.3 per cent.
• According to a report by the Centre for Monitoring Indian Economy (CMIE), India continues to attract fresh capital investments. The report states that the relentless rise in the flow of fresh capital investments reflects India Inc's confidence in the continuation of buoyancy in the consumption demand. The report informed that even though rising interest rates might affect the profitability of Indian corporates, it is not a very significant burden to make them cancel their fresh investment plans or stall those under implementation. CMIE's close monitoring of projects through the CMIE CapEx service shows acceleration in the announcement of fresh investment. The CaPex service, with new projects worth US$ 44.89 billion in July, said that on an average, the monthly capturing of fresh investments was US$ 15.32 billion in 2005-06, which increased to US$ 25.18 billion in 2006-07, and to US$ 32.97 billion in 2007-08. In the first quarter of the current fiscal, CMIE CapEx service received projects worth US$ 117.70 billion, averaging at US$ 39.14 billion, the report informed. Clearly, rising inflation has not impacted the inflow of fresh capital investment in the country.
• Financial services major Citigroup has projected that India's economic growth in this fiscal would moderate to 7.7 per cent from 9.1 per cent in 2007-08, a forecast pretty similar to the estimate given by PM's Economic Advisory Council on August. Citi attributes the decline in the GDP growth to a fallout of weak global trend, continuing credit crisis, fiscal profligacy and politics, but adds that lower oil prices and faster structural reforms could boost India's economic growth.
• Investment banking firm Edelweiss expects "some level of moderation" in India's growth story in the short-term, but is positive about it in the long term. Moderation in the economy in the short-term could be because of high inflation, rising commodity prices, high oil prices, increasing fiscal deficits and global uncertainties, Edelweiss said in its annual report. Despite the BSE Sensex swinging between 12,500 in March 2007 and 21,000 in March 2008, fund mobilization through the primary and secondary markets is preferred, it said. About $18 billion was raised through both primary and secondary offerings in the last year, it noted. Funds raised through IPOs, private equity placements, follow-on issues and Qualified Institutional Placements continue to be robust. The Indian debt market would continue to perform better provided issues such as non-availability of trading platform, central clearing and settlement, stringent documentation requirements and secondary market volumes are addressed, the report said. These issues deter issuers from raising money via the bond route, Edelweiss noted. India's debt market is expected to grow from $400 billion in 2006 to $1.5 trillion by 2016.
• Food grain stocks were 34.17 million tonnes as on August 1, 2008.
• Broad Money (M3) growth (year-on-year) was 21.0 per cent as on August 29, 2008 as
  compared with 20.3 per cent last year.
• Exports grew by 24.6 per cent in Dollar terms and 27.6 per cent in Rupee terms during April-July, 2008.
• Imports increased by 34.2 per cent in Dollar terms and 37.3 per cent in Rupee terms during April-July, 2008.
• Forex reserves stood at US $ 288.811 billion for the week ended September 06,2008.
• Rupee depreciated against US dollar and appreciated against, Pound Sterling, Euro and Japanese Yen in August, 2008 over July, 2008.
• The inflation rate was 12.14 per cent for the week ended September 06,2008.
• Tax revenue (net to Centre) during April- July, 2008-09 was higher by 26.7 per cent
  compared with corresponding period 2007-08.
• Fiscal deficit during April- July, 2008-09 declined by 10.4 per cent over corresponding
  period last year.
• Revenue deficit during April-July, 2008-09 was higher by 21.6 per cent over corresponding period last year. 

• India is set to undergo a major transformation over the next two decades with sustained growth resulting in dramatic poverty reduction and the formation of a half a billion strong middle class. This unique period in India's evolution will see total consumption will see total consumption in the country quadrupling, making India the fifth largest consumer market in the world by 2025.
• The growth of the passenger vehicles segment during April - July 2008 was 10.97 percent, which is lower than the first quarter growth of 15.08 percent. Passenger Cars grew by 8.91 percent, Utility Vehicles by 16.03 percent and Multi Purpose Vehicles by 24.62 percent in this period. The overall Commercial Vehicles also grew by 8.00 percent, which is lower than the first quarter growth of 9.59 percent. Medium & Heavy Commercial Vehicles grew at 5.45 percent and Light Commercial Vehicles recorded a growth of 11.13 percent. Three Wheelers sales recorded improvement in April - July 2008 over the first quarter growth. Three Wheelers sales grew by 3.28 percent. While Passenger Carriers grew by 18.62 percent during April - July 2008, Goods Carriers declined by 21.71 percent. Two Wheelers also registered higher growth of 9.91 percent during this period than the first quarter growth of 7.15 percent. Motorcycles and Scooters grew by 10.95 percent and 7.03 percent respectively. Mopeds grew by 3.38 percent. Electric two wheelers segment also grew by 20.50 percent.
• Total 8.81 million telephone connections (Wireline and Wireless) have been added during June 2008 as compared to 8.46 million connections added in May 2008.The total number of telephone connections reaches 325.78 million at the end of June 2008 as compared to 316.97 million in May 2008.The overall tele-density is 28.33% at the end of June 2008 as against 27.59% in May 2008.The total wireless subscribers (GSM, CDMA & WLL(F)) base stood at 286.86 million at the end of June 2008. A total of 8.94 million wireless subscribers have been added during the month of June 2008 as against 8.62 million wireless subscribers added during the month of May 2008. In the wireline segment, the subscriber base has slightly decreased to 38.92 million in the month of June 2008 as against 39.05 million subscribers in May 2008.

• According to the information furnished by the Department of Agriculture and Cooperation (DAC), which has been used in compiling the estimate of GDP from agriculture in Q1 of 2008-09, the production of crops rice, wheat, coarse cereals and pulses during the Rabi season (which ended in June, 2008) of 2007-08 recorded growth rates of 3.3 per cent, 3.4 per cent, 8.6 per cent, and (-) 7.9 per cent, respectively over the production in the corresponding season of previous agriculture year. Among the commercial crops, the production of oilseeds declined by 12.6 per cent during the rabi season of 2007-08, while the production of cotton and sugarcane recorded growth rates of 14.0 per cent and (-) 4.2 per cent, respectively during the agriculture year 2007-08.
• According to an official of the government's agri-trade promotion body, Apeda, India's exports of agricultural and processed food products saw a 38 per cent increase in the 2007-08 fiscal, chiefly on account of a considerable increase in shipments of coarse cereals like maize, jowar and barley. Export figures for agricultural products went up to US$ 6.59 billion in 2007-08, against US$ 4.79 billion last year. The exports of cereals, excluding rice and wheat, increased five-fold to around US$ 680.13 million in 2007-08 fiscal, against US$ 136.73 million in the April-March period of 2006-07. The Apeda official informed that the rise in exports in value terms is important for India as the rupee had appreciated last year. In the basmati rice category, exports went up to US$ 991.83 million from US$ 637.65 million. In terms of quantity, exports increased to 11.81 lakh tons from 10.45 lakh tons in the review period. Non-Basmati rice exports went up to US$ 1.68 billion from US$ 968.77 million in the last fiscal. In quantity terms, shipments increased to 53.14 lakh tons from 37.02 lakh tons in the 2006-07 fiscal. Basmati exporters got an increased value of US$ 845.06 a tonne in 2007-08 fiscal, against US$ 616.71 per tonne in the last fiscal. In the livestock products category, Indian exports went up to US$ 1.15 billion against US$ 942.32 million due to increased exports in dairy products, with shipments worth US$ 210.50 million against US$ 113.57 million in the corresponding period, in the last fiscal.
• India is likely to become the second largest consumer of rubber in the world due to an increased appetite for the commodity, while the rest of the world slows down on consuming rubber, experts speaking at the 'Rubber Summit' said. India is classified as a consuming country by the International Rubber Study Group (IRSG) and in the race to dethrone US for the second position from the current fourth ranking. According to the statistics with IRSG, India consumed 1,141,000 tonne rubber in 2007 with a share of 5% of the total global consumption. The forecast of IRSG says that Indian demand for rubber shall exceed 2188, 000 tonne by 2020 and the share should increase to 7% of the total global demand.
• India's natural rubber exports have surged 38 per cent in the April-July period of the current financial year. In Q1 ( April-June) alone, total exports had registered a growth of 26 per cent, according to the latest estimates of the Rubber Board. Total exports increased to 23,998 tonnes during April-July as against 14,816 tonnes in the same period of the previous financial year. As global market conditions were favorable for exports in July, a total of 10,862 tonnes were exported during the month. Total imports for the first four months of 2008-09 were 23,782 tonnes as against 28,315 tonnes in the same period last year.
• India's tea exports increased by 15 per cent during January to June 2008, and production during the same period rose by 3 per cent. According to data released by the Tea Board, the total tea produce went up to 345.68 million kg compared to 334.71 million kg in the corresponding period in 2007; and tea exports went up to 87.41 million kg against 76.97 million kg. In terms of value, exports between January and June 2008 touched US$ 210.31 million compared to US$ 182.47 million in the same period in 2007. Likewise, the exports went up to US$ 37.12 million in June 2008, against US$ 30.45 million, in June 2007. In June 2008, tea production fell to 105.44 million kg, a 3 per cent decrease against 108.29 million kg in June 2007. "The fall in production is very marginal. There is no major reason behind it. It is basically due to weather-related issues," Tea Board Chairman Basudeb Banerjee assured. However, tea exports continued to show an upward trend at 13.74 million kg against 11.97 million kg in June 2007.  

• Resource mobilization through primary markets in August 2008 witnessed a seven fold increase over the previous month to Rs 15,211.9 crore. Stable secondary markets and decent valuations prompted Indian corporate to tap the primary markets. During the month, entire resources were mobilized through the domestic market.
• Resources raised from domestic shares, in August 2008, stood at Rs 13,011.9 crore.
• The broader index COSPI generated nominal returns of 0.9 per cent in August 2008. Liquidity remained stable at 1.1 times.
• The BSE Sensex and the NSE Nifty posted gains of 1.5 per cent and 0.6 per cent, respectively, in August 2008.
• FIIs continued to remain net sellers in the secondary market. In August 2008,FIIs sold equities worth Rs 2,065.8 crore. With this selling, FIIs have sold equities worth Rs 29,572.7 crore (around USD seven billion) since January 2008.
• Mutual funds sold equities worth Rs 676 crore in August 2008.Aggregate mutual fund investment in the sector between January-July 2008 stood at Rs 10,109.5 crore (around USD 2.4 billion) 

• As on 15 August 2008,growth in money supply (M3) stood at 20.6 per cent.
• Growth in narrow money increased from 13 to 18.5 per cent. This increase is essentially in the growth in cash with public. Growth in currency with public has increased steadily from 11 per cent as of end-August 2007 to 21 per cent as of mid-August 2008.
• Money supply had persistently remained above indicative projections even in the preceding two years i.e. 2005-06 and 2006-07 on the back of sizeable accretions to the Reserve Bank's foreign exchange assets and an acceleration in credit and deposit growth. Accretion to foreign exchange reserves remained the primary driver of growth in money supply in 2007-08.
• CMIE expects strong overseas capital inflows and healthy growth in bank credit to result in a 20 per cent growth in money supply for 2008-09 as a whole.
• For the second year running, HDFC Bank has featured in the prestigious 'Forbes Asia's Fabulous 50 List of companies' chosen from 500 publicly traded (listed) companies in Asia Pacific with revenues or market capitalization in excess of $5 billion (Rs 22,330 crore).HDFC bank is the only bank from India, and only four of the 'Fab 50' companies are banks.
• Indian banks appear to be headed for better profits this quarter in sharp contrast to banks in the West which are issuing profit warnings amidst massive writedowns. Most banks in India are likely to show better profits for the quarter ending September compared with the previous quarter (June 2008).Profits are likely to be higher because of their hike in lending rates coupled with an improvement in prices of government securities. It may be recalled that in the first fortnight of August, several banks raised their lending and deposit rates.
• India's first exchange for trading in foreign currency derivatives is likely to go live on the NSE's platform. NSE, the country’s largest stock exchange by volumes, got an in-principle approval from the Securities and Exchange Board of India (SEBI) to start an exchange to trade foreign currency derivatives, sources said. According to plans, NSE will have a separate segment on its existing stock and derivatives bourse to trade in forex derivatives. It would also use its clearing corporation to settle the trades on the new segment.“ It’s not only the NSE brokers, most of the large and medium sized banks have been very supportive in NSE’s endeavour to start a currency exchange,’’ a source said. “They will get another asset class to invest in,’’ the source added.
• The banc assurance segment in the insurance industry has been growing at a steady pace and is competing with the traditional sale of insurance by agents. The growth of this channel is also quite phenomenal in the business of major life insurers such as Life Insurance Corporation of India (LIC) and SBI Life. We are quite happy with the way in which banc assurance is growing. The sales through this channel registered an of about 60 per cent in 2007-08, Mr. Surya Roy, Executive Director and Head of Banc assurance at LIC, told Business Line over phone from Mumbai while declining to give exact figures. In the case of SBI Life, the integrated banc assurance business increased over 100 per cent to Rs 2,000 crore in a total business of Rs 5,6000 crore. This year too, we are expecting a similar growth in this segment,'Mr Uday Shankar Roy, CEO and Managing Director, SBI Life Insurance, said.