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Current State Of Indian Economy - July 2009

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Current State Of Indian Economy - July 2009 Powered By Docstoc
					Current State Of Indian Economy
July 2009

Federation of Indian Chambers of Commerce and Industry New Delhi

Recent Trends in Indian Economy :
• GDP growth for 2008-09 was estimated at 6.7% as compared to the growth of 9.0% posted in the previous year. All the three segments of the GDP namely agriculture, forestry and fishing, industry and services sector were seen to post growth of 1.6%, 3.8% and 9.6% respectively in 2008-09 against the growth of 4.9%, 8% and 10.8% respectively in 2007-08. Going by the IIP numbers we see industrial growth showing weakness from October 2008 onwards on account of high demand uncertainties in the markets – both international and domestic as a result of the global economic crisis. Data further shows that due to shrinkage in demand in the markets, it is not only manufacturing industry but also the services sector that is getting hit. The government came up with a set of stimulus measures on three occasions to aid the ailing industry compromising on the deficits. These measures have however have led to widening of fiscal deficits. • An improvement in the production of six core infrastructure industries was witnessed in May 2009 coming mainly from cement , power and coal. Data as on July 8th 2009 shows 21 metrological subdivisions receiving normal –to-excess rainfall and 15 having deficient or scanty rainfall. This was better than the report of June 24th 2009 when 28 subdivisions were said to have received scanty rains. The country has 50 MT combined stock of rice and wheat which is almost double the buffer stocking norm of 26.9 MT to cope with any shortfall in food grain production. • The WPI based inflation has softened to below zero level. However, prices of items of mass consumption ( food articles) show not signs of softening and have risen substantially due to supply side constraints. Money supply expanded by 2.6% in April 2009 calculated over March 2009, compared to the increase of 0.6% recorded in the same month of previous year. Growth in bank credit to the government

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sector swelled compared to the previous year however, borrowings to the commercial sector slid. • In April 2009 aggregate deposits were seen to increase by 2.4% as compared to 0.1% recorded in the previous year. Investments in government and approved securities stepped up by 6% in the month of April 2009 from 4% recorded in the previous year. Stock markets are still in the readjustment mode after the budget announcements and fears over the rising deficits due to increased borrowings to aid the industry and to support schemes in the social sector. Lower corporate earnings and series of packages announced to support the injured industry has moderated growth in tax collections. The shrinkage in the international markets have hit country’s total external trade. Country’s merchandise exports and imports have fallen compared to the numbers achieved in the previous year without any indications of quick recovery. The issues related to fluctuations in the foreign exchange INR / USD by 3-4% are beyond the scope of hedging , compounding the problems of the already marred traders. Performance of inward investments has been fairly well. Foreign direct investment flows were observed to increase every month and in April of 2009 it totaled USD 2.3 billion.

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Contents

Title
1 2 3 4 5 6 7 8 9 10 Industrial Growth Core Infrastructure Industries Trends in Inflation Monetary Indicators Stock Market Trends Fiscal Management Foreign Trade Capital Inflows Foreign Exchange Reserves Trends in Exchange Rates

Page
6 8 10 12 16 18 20 21 22 23

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LIST OF TABLES ` Table-1.1 Table-2.1 Table-2.2 ] Table-3.1 Table-3.2 Table-4.1 Table-5.1 Table-6.1 Table-6.2 Table-7.1 Table-8.1 Table-9.1 Graph-10.1 Monthly trends in Wholesale Price Index Monthly trends in consumer prices Monetary indicators Month trends in major stock market indices Trends in tax collections of central government Trends in central government finances Monthly trends in growth of merchandize trade Monthly trends in foreign investments Monthly trends in foreign exchange reserves Monthly trends in exchange rate of Rupee 10 11 12-15 16 18 19 20 21 22 23 Growth of industry Growth in six core infrastructure industries-1 Growth in six core infrastructure industries-2 7 8 9

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1.

Industrial Growth :

The recent data released on the Industrial growth continues to show weakness . The industry grew by 2.7% in May 2009 as compared to the growth of 4.4% posted in the corresponding month of the previous year. Mining and manufacturing sector related activities too were seen to slow down, as these posted growth of 3.7% and 2.5% in May 2009 as against the growth of 5.5% and 4.5% recorded in the corresponding month of the previous year. Production of electricity rose 3.3% in May this year compared to the growth of 2.0% in same month of previous year. On going by the use based category we observe growth in basic and intermediate goods increase by 3.8% and 6.1% respectively in May 2009 visa-vis the increase of 3.0% and 1.9% respectively in the previous fiscal . Weakness persisted in the production of capital goods that fell by 3.6 % in May 2009 from a positive growth of 4.3% recorded in the last year. Total consumer goods output slowed to a low of 1.2% in May 2009 compared to 7.4% in the same period of previous year. Positive growth in the consumer goods segment was seen to come only from the consumer durables registering 2.4% growth during the month of May 2009 in contrast to the growth of 2.8% in May, 2008. Of the 17 manufacturing industry segments, growth in 6 industry segments continues to remain negative even in May 2009. The industry segments that continued to post negative growth even in the second month of 2009-10 were food products, cotton textiles, wool, silk and manmade fibre textiles, Jute products , leather products and metal products. Two more industry segments that came in the negative category were beverages & tobacco and paper industry.

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1.1: Growth Of Industry: Recent Trends (in percentage) Weights Industry Mining Manufacturing Electricity Use Based Classification Basic Intermediate Capital Consumer Goods Consumer non Durables Consumer Durables
100 10.2 79.4 10.5 35.6 26.5 9.3 28.7 23.3 5.4

May 2008 4.4 5.5 4.5 2.0
3.0 1.9 4.3 7.4 9.0 2.8

May 2009 2.7 3.7 2.5 3.3
3.8 6.1 -3.6 1.2 -2.3 12.4

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

4.8 2.7 12.3 2.3 -8.5 27.3 Source: Central Statistical Organization

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2.

Core infrastructure industries

The data during the first two months of 2009-10 on six core infrastructure industry indicated improvement in output. The main drivers of growth seen in the six core infrastructure industry during the period were cement, power and coal posting growth of 11.7 % , 5.1% and 11.8% respectively in AprilMay 2009-10 compared to the growth of 5.4% , 1.7% and 9.5% respectively during the same period of previous fiscal. However, production of crude petroleum and petroleum refinery were badly hit. Table-2.1: Growth in six-core infrastructure industries (% change) All infrastructure industries 2008200909 10 2.3 5.0 3.1 2.8 3.8 5.4 2.1 4.0 2.1 1.9 1.1 1.8 1.4 3.2
2.7 3.9

Finished steel 200809 -0.6 3.3 5.6 6.0 3.4 2.1 -4.9 -2.5 -6.0 1.6 0.5 -2.2
1.4

Cement 200809 6.9 3.8 6.6 8.9 1.9 8.1 6.2 8.7 11.6 8.3 8.3 10.1
5.4

Crude petroleum 2008-09 1.0 3.2 -4.7 -3.0 -1.0 -0.4 -0.3 0.5 -0.3 -8.1 -6.2 -2.3 2009-10 -3.1 -4.3

April May June July August September October November December January February March
April-May

200910 2.8 1.4

200910 11.7 11.6

2.1

11.7 2.1 -3.7 Source: Ministry of Industry

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Table-2.2: Growth in six-core infrastructure industries (% change) Petroleum refinery April May June July August September October November December January February March Apr- May 2008-09 4.3 0.1 5.6 11.8 2.5 2.8 5.0 -1.1 3.0 -1.3 0.5 3.3 2.1 2009-10 -4.5 -4.3 Coal 2008-09 10.4 8.8 6.2 5.5 5.9 10.7 10.9 9.6 9.4 6.3 6.0 5.2 9.5 2009-10 13.2 10.2 Power 2008-09 2009-10 1.4 7.1 2.0 3.3 2.6 4.5 0.8 4.4 4.4 2.6 1.5 1.8 0.6 6.3 11.8 1.7 5.1 Source: Ministry of Industry

-4.4

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3.

Inflation Trends

Slowdown in the economy and rapid decline in global commodity prices toned down the overall inflation to below 0 levels for the first time in 35 years. However, it was found that prices of some of the items of mass consumption were still rising. While, the average overall inflation numbers for the month of June 2009 turned negative however, food articles falling within the category of primary commodities continue to rise by 8.6% in June 2009 on YoY terms compared to 6% in the previous year. Furthers food articles was also seen to get dearer (m-o-m basis) over May 2009. In June 2009 prices of non food articles, fuel leather and basic metals dropped by 2%, 12.6%, 1% and 14% respectively from positive growth of 17%, 16%, 1.6% and 21% seen in the previous year. Table-3.1. Monthly trends in Wholesale price index- monthly average (% change)

2008-09 All Commodities I Primary Article (A) Food Articles (B) Non-Food Articles II Fuel Power Light & Lubricants 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
May 8.9 9.5 5.7 13.9 7.7 9.0 11.5 8.2 -1.6 6.3 3.1 1.1 5.7 8.7 5.7 20.3 5.5 6.4 Jun 11.8 10.6 5.9 17.1 16.3 10.6 14.4 7.9 3.6 9.8 3.5 1.6 6.0 9.8 5.0 21.3 6.5 6.1 May 0.8 6.2 8.3 1.4 -6.5 1.4 13.6 5.8 8.3 3.6 2.9 0.0 2.6 1.4 2.2 -13.2 -0.9 0.3

2009-10
Jun -1.4 5.4 8.6 -2.0 -12.6 0.4 11.1 5.7 4.3 0.3 2.5 -1.0 2.6 1.7 2.9 -14.0 -2.3 0.6
Source: RBI

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Table-3.2: Monthly trends in consumer prices (% change)
CPI-IW 2007-08 2008-09 6.7 7.8 6.6 7.8 5.7 7.7 6.5 8.3 7.3 9.0 6.4 9.8 5.5 10.4 5.5 10.4 5.5 9.7 5.5 10.4 5.5 7.9 CPI-UNME 2007-08 2008-09 7.7 7.0 6.8 6.8 6.1 7.3 6.9 7.4 6.4 8.5 5.7 9.5 5.5 10.4 5.1 10.8 5.1 9.8 5.1 6.0 CPI-AL 2007-08 2008-09 9.4 8.9 8.2 9.1 7.4 8.8 8.6 9.4 10.3 8.8 7.9 11.0 7.0 11.1 6.2 11.1 5.9 11.1 5.6 11.4 6.4 7.9 CPI-RL 2007-08 2008-09 9.1 8.6 7.9 8.8 7.5 8.8 8.0 9.4
8.5 10.3

April May June July August September October November December January February March

7.6 6.7 5.9 5.6 5.9 6.1 7.6

11.0 11.1 11.1 11.1 11.1

Source: Ministry of Labor, Center for Monitoring Indian Economy

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4. Monetary Indicators: Money supply in April 2009 calculated over March 2009 shows, M3 swelled by 2.6% in April 2009 compared to 0.6% growth recorded in the corresponding period of previous year. The net bank credit to the government sector swelled by 4.1% from 0.1% growth posted in the previous year. Growth in the bank credit to the commercial sector remained negative. The net foreign exchange of banks continue to slide by 1.4% compared to an increase of 1.4% recorded in the previous year. Aggregate deposits expanded by 2.4% in April 2009 as against the Y-o-Y variation of 0.1% seen in the same month of the previous year. Investment stepped up by 6% compared to 4% in the previous year. Table-4.1: Monetary sector indicators – up to April (April 2009-10 over March 2008-09)
Variation in M3 (Rs crore) 2008-09 2009-10 22235 123424 75113 84387 140700 208571 264364 331450 374193 423509 508078 635810 740332 Variation in net bank credit to government (Rs crore) 2008-09 529 14613 32597 69352 66866 61550 79275 144131 192566 251500 289967 340250 2009-10 52775 Variation in M3 (%) 2008-09 2009-10 0.6 2.6 1.9 2.1 3.5 5.2 6.6 8.3 9.3 10.6 12.7 15.9 18.4 Variation in net bank credit to government (%) 2008-09 0.1 1.6 3.6 7.6 7.4 6.8 8.7 15.9 21.2 27.7 32.0 37.6 2009-10 4.1

April May June July August September October November December January February March

April May June July August September October November December January February March

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Variation in bank credit to commercial sector (Rs crore) 2008-09 -38443 -23545 18626 42252 57878 106693 196248 266620 285691 298809 300584 331758 432850 Variation in net foreign exchange assets of banks (Rs crore) 2008-09 2009-10 18732 -18897 113765 103932 75552 54821 77194 12706 -46375 -82201 -50810 -15845 19316 Variation in non-monetary liabilities of banks (Rs crore) 2008-09 2009-10 -25665 -113091 71891 94555 62244 19970 70928 27452 9554 -13871 -6341 -29466 52845 Variation of aggregate deposits of SCB (Rs crore)

Variation in bank credit to commercial sector (%) 2008-09 -1.5 -0.8 0.7 1.6 2.3 4.2 7.6 10.4 11.1 11.6 11.7 12.9 16.8 Variation in net foreign exchange assets of banks (%) 2008-09 2009-10 1.4 -1.4 9.0 8.0 5.8 4.2 6.0 1.0 -3.6 -6.3 -3.0 -1.2 1.5 Variation in non-monetary liabilities of banks (%) 2008-09 2009-10 -5.4 -13.0 9.7 12.2 8.0 2.6 9.2 3.5 1.2 -1.8 -0.8 -3.8 6.9 Variation in aggregate deposits of SCB (%)

April May June July August September October November December January February March

April May June July August September October November December January February March

April May June July August September October November December January February March

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April May June July August September October November December January February March

April May June July August September October November December January February March

2008-09 4433 92683 56760 52837 115943 194522 245198 318500 452567 372413 433140 538924 633382 Variation in investments of SCB (Rs crore) 2008-09 2009-10 46389 69715 34147 36233 20135 46723 15526 34216 127431 118304 168741 215975 194031 Variation in total credit of SCB (Rs crore) 2008-09 2009-10 -36780 -23838 10455 30534 44520 96420 180554 289611 359819 283501 283247 306177 408099 Variation in food credit of SCB (Rs crore) 2008-09 2009-10 -3375 2765 3980 5748

2008-09

0.1
1.8 1.7 3.6 6.1 7.7 10
14.2

2.4

11.6 13.5

16.9 19.8 Variation in investments of SCB (%) 2008-09 2009-10 4.8 6.0 3.5 3.7 2.1 4.8 1.6 3.5 13.1 12.2 17.4 22.2 20.0 Variation in total credit of SCB (%) 2008-09 2009-10 -1.6 -0.9 0.4 1.3 1.9 4.1 7.6 12.3 15.2 12.0 12.0 13.0 17.3 Variation in non-food credit of SCB (Rs crore) 2008-09 2009-10 -8863 7952 6474 24786

April May June July August September October November December January February March

April May June

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July August September October November December January February March

-508 -56 776 7074 5995 8724 5296 4031 1812

45029 96476 179777 282537 353824 274777 277950 302145 406287
Source: Reserve Bank of India

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5.

Stock Market Trends

The Indian stock market plunged below ( BSE –Sensex) 10 K points in December 2008 from a high 20K in January 2008 and it took more than a quarter to get the index back to above 10K level . The BSE index scaled to 15K points after the elections however the budget announcements weakened the investment sentiments, only to readjust. Table-5.1: Monthly trends in stock market indices (beginning of month figures)
Date 1.1.05 1.2.05 1.3.05 1.4.05 1.5.05 1.6.05 1.7.05 1.8.05 1.9.05 1.10.05 1.11.05 1.12.05 2.01.06 1.02.06 1.03.06 3.04.06 1.05.06 1.06.06 3.07.06 1.08.06 1.09.06 3.10.06 1.11.06 1.12.06 2.01.07 1.02.07 1.03.07 2.04.07 3.05.07 1.06.07 2.07.07 1.08.07 3.09.07 1.10.07 1.11.07 1.12.07 1.01.08 1.02.08 3.03.08 1.04.08 BSE Sensex 6679 6552 6651 6605 6195 6730 7210 7669 7876 8492 7944 8944 9390 9859 10566 11564 12128 10071 10695 10751 11778 12366 13033 13844 13942 14267 13159 12455 14078 14570 14664 14935 15422 17328 19724 19363 20300 18242 16677 15626 % Change 7.2 -1.9 1.5 -0.7 -6.2 8.6 7.1 6.4 2.7 7.8 -6.5 12.5 5.0 5.0 7.7 9.4 4.9 -17.0 6.1 0.5 9.5 5.0 5.4 6.2 0.7 2.3 -7.7 -5.3 13.0 3.5 0.6 1.8 3.2 12.3 15.7 -1.8 4.8 -10.1 -8.5 -6.3 S&P CNX NIFTY 2115 2058 2084 2068 1917 2088 2211 2318 2406 2574 2387 2699 2835 2971 3123 3473 3605 2962 3150 3147 3435 3569 3767 3997 4007 4137 3811 3633 4150 4297 4313 4345 4474 5068 5866 5762 6144 5317 4953 4739 % Change 7.8 -2.7 1.3 -0.8 -7.3 8.9 5.9 4.8 3.8 6.9 -7.3 4.8 5.0 4.8 5.1 11.2 3.8 -17.8 6.3 -0.1 9.1 3.9 5.5 6.1 0.3 3.2 -7.8 -4.7 14.2 3.5 0.4 0.7 2.9 13.2 13.8 -1.8 6.6 -13.5 -6.8 -4.3

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2.05.08 2.06.08 1.07.08 1.08.08 1.09.08 1.10.08 3.11.08 1.12.08 26.12.08 30.01.09 02.03.09 31.03.09 29.04.09

17600 16063 12961 14656 14498 13055 10337 8839 9328 9424 8607 9708 11403

12.6 -8.7 -19.3 13.1 -1.1 -9.9 -20.8 -14.5 5.5 1.0 -8.7 12.8 17.5

5228 4739 3896 4413 4447 3950 3043 2682 2857 2874 2674 3020 3473

10.3 -9.3 -17.8 13.3 0.8 -11.1 -23.0 -11.9 6.5 0.5 -7.0 12.9 15.0

Source: Reserve Bank of India

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6

Fiscal Management

Total tax collections were severely hit during the period under study. Tax collections shrunk by 12% in May 2009 as against an expansion of more than 36 % in the same period of previous year. Thinner corporate earnings and greater tax relief sized the growth in tax collections. Tax collected from the corporate sources was observed to increase by 10% in May 2009 compared to a growth of 60% in the previous year. Contribution from income tax during the month rose by only 11.7% compared to the increase of 76% recorded in the previous year. Increase in the taxes received from the indirect sources however plunged to negative on account of tax relief given by the government. The tax collection will get thinner on account of steps taken by the government to aid the industry. Budgeted outlay for 2009-10 shows an increase of 36% over the budget estimates of last year. With 36% budgeted increase the government has planned a gross market borrowing programme of Rs 4,51,093 crore, however the actual market borrowings targeted would be 3,97,957 crore after the net scheduled repayments of Rs 53,135 crore. This market borrowing may go up if the government is again forced to announce stimulus measures.

Table-6.1: Trends in cumulative tax collections of central government (%) Gross tax revenue
April May June July August September October November December January February March 2008-09 52.2 36.1 28.4 26.2 25.0 25.3 20.3 17.5 9.6 7.2 6.9 2.7 2008-09 25.0 24.1 19.9 19.2 17.0 2009-10 -16.9 -11.8

Corporation tax
2008-09 55.0 58.1 43.4 41.6 45.9 38.2 30.3 26.4 11.9 11.9 17.9 10.8 2008-09 -28.3 1.3 -0.9 4.0 6.5 2009-10 -8.4 10.1

Income tax
2008-09 127.7 76.0 50.0 42.0 35.7 30.7 21.9 19.0 6.8 5.4 7.5 7.1 2008-09 9.04 26.7 26.0 24.7 17.4 2009-10 20.0 11.7

Customs
April May June July August 2009-10 -52..6 -38.2

Excise duties
2009-10 --114.2 -23.3

Other taxes
2009-10 -5.4 -18.7

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September October November December January February March

16.8 14.4 13.7 11.1 6.4 1.7 -4.1
2008-09

6.6 6.3 5.1 2.1 -2.6 -7.1 -12.0
2009-10

30.7 16.2 6.1 -2.6 -6.4 -10.0 -11.5

Service Tax April May June July August September October November December January February March

62.3 40.7 34.2 29.7 28.6 31.8 31.8 30.2

-0.04 -2.60

25.4 24.6 22.2 18.6

Source: Controller General of Accounts

Table-6.2 Trends in central government finances: May 2009 Actual to budget estimates ( in Rs crores) 2008-09
Revenue receipts Tax revenue Non tax revenue Non debt capital receipts Recovery of loans Total receipts Non plan expenditure On revenue account On capital account Plan expenditure On revenue account On capital account Total expenditure Fiscal deficit Revenue deficit Primary deficit
36030 31958 4072 254 254 36284 71496 69931 1565 37989 33830 4139 109485 73201 67731 45972

2009-10
32178 26152 6026 231 231 32409 86242 80025 6217 36925 33116 3809 123167 90758 80963 64820
Source: Controller General of Accounts

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7

Foreign Trade

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

Table-7.1: Monthly trends in growth of merchandize trade (% change) up to May 2009
Exports 2008200909 10 31.5 -33.2 12.9 -29.2 23.5 31.2 10.4 -12.1 -9.9 -1.1 -15.9 -21.7 -33.3 Oil imports 2008200909 10 46.2 -58.5 50.8 -60.6 53.4 69.3 57.1 22 11.9 30.9 47.5 47.5 58.1 Non-oil imports 2008200909 10 32.3 -24.6 17.4 -25.4 13.9 38.7 36.2 5.5 3.4 31.9 0.5 10.2 18.9 Total imports 2008200909 10 36.6 -36.6 27.1 -39.2 25.9 48.1 43.3 10.6 6.1 8.8 -18.2 -23.3 -34.0

April May June July August September October November December January February March

Source: Ministry of Commerce

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8.

Capital Inflows

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

Table-8.1: Monthly trends in foreign investments ($ million) Foreign direct investments
April May June July August September October November December January February March Apr-March 2008-09 3749 3932 2392 2247 2328 2562 1497 1083 1362 2733 1466 1956 35146 2009-10 2339

Portfolio investments
2008-09 -880 -288 -3010 -492 593 -1403 -5243 -574 30 -614 -1085 -889 -13855 2009-10 2278

Total foreign investments
2008-09 2869 3644 -618 1775 2921 1159 -3746 509 1392 2119 381 1067 21291 2009-10 4617

Source: Reserve Bank of India

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9.

Foreign Exchange Reserves

An expansion was seen in the country’s forex reserves as it crossed USD 260 billion from USD 250 billion about a month back. This was on the back of Foreign currency assets which is expressed in US dollar terms and includes appreciation or depreciation of non-US currencies and increase in the inflows of foreign institutional investments in the country. Table-9.1: Monthly trends in foreign exchange reserves ($ billion)

200607
April May June July August September October November December January February March 160.6 164.5 162.9 164.0 166.4 165.3 167.1 175.5 177.2 180.0 194.6 199.1

% Change
5.9 2.4 -0.9 0.6 1.4 -0.6 1.1 5.0 1.0 1.6 8.1 2.3

2007-08
204.1 208.3 213.4 229.3 228.8 247.7 262.4 273.5 275.9 288.3 301.2 309.7

% Change
2.5 2.0 2.4 7.4 -0.2 8.2 5.9 4.2 0.8 4.4 4.4 2.8

2008-09
314.5 312.5 312.0 306.1 295.3 286.3 252.8 247.6 255.9 248.6 249.2 251.7

% Change
1.5 -0.6 -0.1 -1.8 -3.5 -3.0 -11.7 -2.0 3.3 -2.8 0.2 1.0

2009-10
251.7 262.3

% Change
0.0 4.2

Source: Reserve Bank of India

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10.

Trends in the Exchange Rates

The rapid fluctuations in the exchange rate between the USD and Indian Rupee lowered the margins of trading community. We have seen the Indian Rupees against the USD shuttling between 47- 50 . This kind of movement can only be partly covered through forward contracts. Graph 10.1: Exchange rate of Rupee (per unit of other currencies).
60 50 80 70 60

Re/ USD

40 30

50 40

Re/Euro

2006-07
20 10 0

2007-08

2008-09

30 20 10 0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar April May June

USD

Euro

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