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Economic Intelligence Service

CMIE

Monthly Review

of the Indian Economy

January

2008



Economic Intelligence Service

CENTRE FORMONITORING INDIAN ECONOMY PVT LTD

CMIE

Monthly Review of the Indian EconomyJanuary 2008

Website: www.cmie.com

11 Apple Heritage, 54-C Andheri-Kurla Road, Andheri (East), Mumbai 400093

Tel: 022 - 3088 0099 Fax: 022 - 2687 0696 E-mail: [email protected]



Centre for Monitoring Indian Economy Pvt. Ltd., 2007

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Limited portions of the information provided in this document can be quoted in occasionalreports, articles, studies without any written permission from Centre for Monitoring IndianEconomy. However, this should be done with a clear acknowledgement to Centre for MonitoringIndian Economy as the source of the information. The acknowledgement should mention thename of the document, month of release and ‘Centre for Monitoring Indian Economy, Mumbai’.

Centre for Monitoring Indian Economy takes every possible care to provide information usingsources it believes are the most accurate and reliable. Centre for Monitoring Indian Economy,however, shall not be liable for any losses or consequences, if any, arising from the use of theinformation contained in the document.

Mumbai (HO): 11 Apple Heritage, 54-C Andheri-Kurla Road, Andheri (East), Mumbai 400093

Tel: (022) 30880099 Fax: (022) 26870696 E-mail: [email protected]

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Contents 1

1. Executive Summary 2

2. Annual Indicators 4

3. Monthly Indicators 9

4. GDP Growth 12

5. Inflation 15

6. Interest Rates 18

7. Balance of Payments 20

8. Public Finance

Central Government Finance 22

Government Debt Floatations 26

9. Agriculture

Prospects 27

10. Energy

Coal 29

Crude Oil 30

Electricity 32

11. Infrastructure

Railways 33

Ports & Shipping 34

Civil Aviation 35

Telecommunications 36

12. Industry

Industrial Production 37

Sugar 40

Tea 41

Edible Oils & Vanaspati 42

Textiles 43

Man-made Fibre 44

Chemicals 45

Fertilisers 46

Cement 47

Steel 48

Non-ferrous Metals 49

Capital Goods 50

Consumer Durables 51

Transport Equipment 52

13. Corporate Sector

Financial Performance 54

Corporate Debt 55

14 Capital Markets

Primary Capital Market 56

Secondary Capital Markets 57

Mutual Funds 59

15. Money & Banking

Money Supply 60

Scheduled Commercial Banks 63

16. Foreign Trade 66

17. World Economy 75

Monthly Review of the Indian Economy, Centre for Monitoring Indian Economy January 2008



2 Executive Summary

GDP Growth

The Indian economy has been growing at an im-pressive pace of nine per cent per annum in recentyears. We believe that this pace would be sustained

in the coming quarters and in the next fiscal aswell. The rising consumption expenditure and do-mestic savings, the execution of the huge Rs.55.6lakh crore outstanding capital investments and thecontinuous pouring in of the fresh ones assures thatthe Indian economy would grow at 9.1 per cent in2007–08. These factors along with the apparentperception of low inflation are expected to sustainthe strong economic growth in the next fiscal. As-suming an adequate precipitation during the mon-soon, and a slight fall in interest rates in the early

months of the coming year, we expect the real GDPto grow at 9.1 per cent in 2008–09 as well.

Inflation

Inflation rose to 3.6 per cent in December 2007 fromits five–year low of 3.1 per cent in November 2007.This rise in headline inflation came mainly on ac-count of the continuous rise in prices of some fuelsand the lower base last year. While inflation in the

fuel group is expected to continue to rise due to thefirm trend in the prices of the non–administeredcrude derivatives, the fall in inflation in primaryarticles and manufactured products is likely to off-set this rise. We expect headline inflation to re-main steady at around 3.5 per cent till the end of 2007–08.

Interest rates

Interest rates are likely to remain stable in the nearterm. Banks are unlikely to make any firm cuts inBPLRs anytime before the policy announcement,but are likely to increase discounts to PLRs. Highamounts of term deposits mobilised at high inter-est rates in the recent past are deterring banks fromcutting lending rates.

Agriculture

Till 28 December 2007, rabi acreage was lower at519.3 lakh hectares as compared with 543 lakhhectares a year ago. Sowing was lagging in all threemajor groups of crops. Cereal sowing was down by3.7 per cent, pulses by 2.4 per cent and oilseeds by9.6 per cent.

Area sown under wheat stood at 249.3 lakhhectares, lower than the 263.3 lakh hectares sown inthe corresponding period a year ago. The acreagewas lower in Madhya Pradesh and Uttar Pradeshdue to moisture stress and initial higher temper-ature in several regions of Madhya Pradesh, Ut-tar Pradesh and Rajasthan. Among the oilseeds,

sowing of mustard fell short by 8.9 per cent till 27December 2007 as compared to the acreage in thesame period of last year. Progress of rabi ground-nut sowing was satisfactory. Till 28 December areasown stood at 4.5 lakh hectares, higher than the4.4 lakh hectares sown a year ago.

Energy & Infrastructure

During November 2007, coal production in In-

dia rose by a sharp 7.7 per cent to 39.2 milliontonnes. A less than proportionate increase in coaldespatches led to a 4.6 per cent rise in coal stocksto 27.5 million tonnes. Crude oil production in In-dia rose by marginal 56 basis points during April–November 2007. POL imports increased by 12.1per cent in USD terms. Domestic refinery through-put increased by 5.2 per cent. Demand for petro–products in India augmented by 4.5 per cent.

Railway revenue earning freight traffic grew by 8per cent during April–November 2007 compared to

10 per cent iin the same period of 2006. Cargotraffic was up by 13.2 per cent as against eight percent in the year–ago period. Passenger traffic atall airports was up by 26.7 per cent during the cur-rent year till October 2007. This is an impressivegrowth when reckoned over a 34.4 per cent increasewitnessed a year ago.

January 2008 Monthly Review of the Indian Economy, Centre for Monitoring Indian Economy



Executive Summary 3

Industry

Growth in industrial production fell to 5.3 per centin November 2007. This is a rather unusually sharpfall given that the IIP growth has been averaging

close to ten per cent during the past two years, ona year-over-year basis. The April–November 2007growth in the IIP stood at 9.2 per cent. Capitalgoods production grew by an accelerated 20.8 percent during April–November 2007 indicating thatinvestments continue to drive growth in IIP andGDP. A bounce back in the IIP growth rate is im-minent.

Corporate sector

We expect the Indian corporate sector to report asales growth of 13 per cent for the quarter ended31 December 2007. This is much slower than therobust 24.7 per cent growth witnessed in the cor-responding year–ago quarter. Corporate India hadgrown its net profits by 23.7 per cent in the Septem-ber 2007 quarter on the back of a 15.1 per centgrowth in sales revenues.

Capital Markets

The secondary equity market recovered in Decem-ber 2007. The COSPI gained 11.8 per cent. TheBSE Sensex and the NSE Nifty gained 4.8 percent and 6.5 per cent, respectively. Both the in-dices touched their lifetime highs during the month.FIIs and mutual funds were net buyers duringthe month. Indian companies continued to raiseresources from the primary market. Total re-sources amounting to Rs.21,112.3 crore were raisedin December 2007. Of the total amount raised,Rs.14,795.1 crore were raised through private place-

ment of debt as well as equity.

Public Finance

Gross fiscal deficit was lower at Rs.96,274 croreduring April–November 2007 as compared withRs.1,08,201 crore in the corresponding period of

2006. It was 63.8 per cent of budget estimates tillNovember 2007 as against 72.8 per cent a year ago.These favourable numbers reflect a higher 24.2 percent growth in revenue receipts than the 22.2 percent rise in expenditure.

Tax collections grew by 25 per cent in the currentfiscal year till November 2007, surpassing the an-nual budgeted growth of 17 per cent. Performanceof income tax and corporation tax was better thanthe custom and excise duties. Revenue from in-come tax was up by 38 per cent and corporationtax saw a growth of 42 per cent.

Money & Banking

Banks continued their robust mobilisation of funds.Total deposits of scheduled commercial banks grewby more than 25 per cent for the third consecutivemonth. Non–deposit borrowings of banks are alsowitnessing robust growth, particularly ‘other bor-rowings’ which grew by 28.7 per cent in Novem-ber 2007 and crossed the one lakh crore rupeesmark as on 30 November 2007. Bank credit contin-ued to grow at around 22–24 per cent, slower thandeposits. During April–November 2007, banks in-vested much more in securities than they did in thecorresponding year ago period. The investment–

deposit ratio of banks for the business done by themduring the April–December 2007 period stood at49.9 per cent compared to 22.1 per cent for thebusiness done by them in the corresponding year–ago period.

External sector

Capital inflows spiked to USD 33,902 million dur-ing the July–September 2007 quarter. Net cap-ital inflows during the September 2007 quarter

amounted to over 74 per cent of total net capital in-flows for the entire year ended 31 March 2007. For-eign portfolio investments amounted to USD 10,876million or nearly a third of total net capital inflowsinto the country. FDI inflow amounted to USD twobillion during this period. The quarter saw USD33,841 million being added to its forex reserves.




4 Indicators: Annual

Units 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Population & National IncomePopulation (as on 1 Oct) mln. nos 1001 1019 1038 1055 1073 1090 1107 1122

GNP at current market prices Rs. bln. 19366 20796 22610 24414 27472 31042 35422

GDP at current market prices Rs. bln. 19520 21024 22811 24581 27655 31266 35672 41257GDP at factor cost (current prices) Rs. bln. 17865 19254 21002 22653 25494 28559 32509 37435GDP at factor cost (const. prices) % change 6.4 4.4 5.8 3.8 8.5 7.5 9.0 9.4 9.1

GNP: Per capita (current prices) Rupees 19347 20409 21782 23141 25603 28479 31998GDP: Per capita (current prices) Rupees 19501 20632 21976 23299 25773 28684 32224 36771GDP: Per capita (const. prices) Rupees 19501 19930 20584 21007 22388 23874 25677 27704GDP: Per capita (const. prices) % change 5.5 2.2 3.3 2.1 6.6 6.6 7.6 7.9

Savings, Capital Formation & Consumption (current prices)Gross domestic savings % of GDP 24.8 23.7 23.5 26.4 29.7 31.1 32.4Gross domestic capital formation % of GDP 25.9 24.3 22.9 25.2 28.0 31.5 33.8

Pvt capital formation % of GDP 18.5 17.4 16.0 19.2 21.7 24.5 26.4Public sector capital formation % of GDP 7.4 6.9 6.9 6.1 6.3 7.1 7.4

Consumption Expenditure % of GDP 77.4 76.7 76.7 74.7 73.2 70.9 69.4Pvt. final cons. exp. % of GDP 64.4 64.0 64.3 62.9 62.0 59.9 58.1Govt. final cons. exp. % of GDP 12.9 12.6 12.4 11.9 11.2 11.0 11.3 11.3

Per capita pvt. final cons. exp. Rupees 12563 13213 14127 14646 15969 17190 18718

Value Added (Constant prices)Agriculture % change 2.7 -0.2 6.3 -7.2 10.0 6.0 2.7 3.9Industry (incl. construction) % change 4.6 6.4 2.7 7.1 7.4 9.8 9.6 10.9 9.4Service % change 9.5 5.7 7.2 7.4 8.5 9.6 9.8 11.0 10.7

GDP (PPP)°

bln. 2247 2375 2574 2773 2930Per capita GDP (PPP)

°

2330 2420 2580 2730 2840

IndustryIndex of industrial production % change 6.6 5.1 2.6 5.8 7.0 8.4 8.2 11.5 9.0

Mining & quarrying % change 1.0 3.7 0.5 5.8 5.3 4.4 1.0 5.3 6.0Electricity % change 7.3 4.0 3.1 3.2 5.0 5.2 5.2 7.3 7.8Manufacturing % change 7.2 5.4 2.9 6.0 7.4 9.1 9.1 12.5 9.5

Fertilisers % change 4.7 2.5 -1.0 -0.8 -1.6 8.1 1.3 2.8Finished Steel % change 12.1 9.6 4.4 7.9 8.7 8.4 6.0 16.5Cement % change 15.4 -0.6 9.4 8.7 5.5 8.6 11.2 9.5Automobiles % change 21.0 -5.7 6.1 8.1 19.9 15.1 10.2 10.4

Basic goods % change 5.5 3.9 2.4 4.8 5.5 5.5 6.7 10.3Capital goods % change 7.0 1.7 -3.4 10.5 13.6 13.9 15.7 18.2Consumer goods % change 5.7 8.0 6.0 7.1 7.2 11.7 12.0 10.1Intermediate goods % change 8.8 4.7 1.6 3.9 6.4 6.1 2.5 12.0

Value of Output(Organised sector) Rs. bln. 8945 10130 10759 12000 13701 15947 18047Gross value added: Factory sector Rs. bln. 1730 1993 2137 2357 2653 3126 3604Gross value added: Non-Fact. sector Rs. bln. 911 1011 1016 1103 1232 1410 1594

TransportRailways: freight traffic mln. tns. 456.4 473.5 492.5 518.7 557.4 602.1 666.5 726.0Cargo handled at ma jor ports mln. tns. 271.9 281.1 287.6 313.5 344.8 383.6 423.6 463.8

(Continued. . . )




Indicators: Annual 5

Units 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

EnergyCommercial energy production % change 1.5 3.0 3.1 3.8 5.0 4.9 3.4Commercial energy availability % change 5.4 2.8 2.3 4.2 5.1 5.1 0.1Coal Production (excl. lignite) mln. tns 304.1 313.7 327.8 341.3 361.2 382.6 407.0 430.9Coal imports mln. tns 19.7 20.9 20.5 23.3 21.7 29.0 38.4 45.0

Power capacity MW 97,884 1,01,626 1,05,046 1,07,877 1,12,684 1,18,426 1,17,630 1,23,572Electricity generation (Pub Ut.) bln. KwH 481.1 501.2 517.4 532.7 565.1 594.5 617.5 662.5

Thermal & nuclear bln. KwH 400.3 426.8 439.9 468.7 489.9 505.3 514.4 546.1Hydel bln. KwH 80.8 74.4 73.1 64.0 75.2 84.6 101.3 113.4

T & D losses per cent 30.9 32.9Crude oil production mln. tns. 31.9 32.4 32.0 33.0 33.4 34.0 32.2 34.0Crude oil imports mln. tns. 57.8 74.1 78.7 82.0 90.4 95.9 99.4Petroleum products imports mln. tns. 16.6 9.3 7.0 7.2 8.0 8.8 11.7Consumption of petro. products mln. tns. 102.6 107.0 107.7 111.8 116.0 120.2 122.3 119.8Consumption of petro. products % change 8.9 4.2 0.7 3.8 3.8 3.6 1.8 -2.0Natural gas gross production bln cu. mtrs 28.4 29.5 29.7 31.4 32.0 31.8 32.2 31.6Natural gas net production bln cu. mtrs 26.9 27.9 28.0 30.0 30.9 30.8 31.3

AgricultureProduction

Foodgrain mln. tns. 209.8 196.8 212.8 174.8 213.9 198.4 208.6 216.1 217.2Rice mln. tns. 89.7 85.0 93.3 71.8 88.5 83.1 91.8 92.8 93.0Wheat mln. tns. 76.4 69.7 72.8 65.8 72.2 68.6 69.3 74.9 75.0Cereals mln. tns. 196.4 185.7 199.5 163.7 198.3 185.2 195.2 201.9 202.6Pulses mln. tns. 13.4 11.1 13.4 11.1 14.9 13.1 13.4 14.2 14.6Kharif foodgrains mln. tns. 105.5 102.1 111.6 87.2 117.0 103.3 109.9 110.5Rabi foodgrains mln. tns. 104.3 94.7 100.5 87.5 96.2 95.0 98.7 105.6Oilseeds mln. tns. 20.7 18.4 20.7 14.8 25.2 24.4 28.0 23.9 27.0Sugar cane mln. tns. 299.3 296.0 297.2 287.4 233.9 237.1 281.2 345.3 365.0

Gross Irrigated Area/ gross crop area per cent 40.2 40.2 41.1 41.5 40.3Fertilizer consumption Kg/hectares 95.2 88.9 91.1 91.4 88.1

YieldFoodgrain kg/hectare 1704 1626 1746 1535 1735 1652

Kharif foodgrains kg/hectare 1441 1359 1510 1300 1557 1430Rabi foodgrains kg/hectare 2091 2122 2091 1970 1997 1988

Agricultural production % change -0.4 -7.0 7.9 -16.1 22.4 -2.2 6.7 3.2 3.8Foodgrain % change 2.7 -6.7 8.9 -18.6 22.5 -7.1 5.9 3.4 0.5Non-Foodgrain % change -4.6 -7.6 6.3 -12.1 22.2 4.8 7.8 2.9 7.9Per capita availability of foodgrain kg/p.a. 165.9 151.1

VOP Agriculture Rs. bln. 3828 3735 4062 3865 4529 4493 4945VOP Livestock Rs. bln. 1295 1390 1471 1541 1629 1708 1852VOP Fishing Rs. bln. 223 252 274 300 317 338 407VOP Forestry Rs. bln. 199 214 232 234 249 254 268

Employment (Organised)

Public sector mln. nos. 19.3 19.1 18.8 18.6 18.2Private sector mln. nos. 8.6 8.7 8.4 8.4 8.2Registered jobseekers mln. nos. 40.3 41.2 41.6

(Continued. . . )





Units 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Corporate Sector (Non-financial Cos.)Sales % change 15.42 12.23 1.19 9.80 15.00 19.67 16.13

Public Sector % change 20.84 17.46 0.04 11.68 13.85 17.03 17.00Private Sector % change 11.86 8.76 2.03 8.38 15.87 21.66 15.51

Gross Fixed Assets % change 5.85 6.72 6.32 6.39 6.83 11.50 13.67

Public Sector % change 3.65 6.17 4.32 7.44 7.96 12.22 9.65Private Sector % change 7.67 7.10 8.00 5.43 5.78 10.81 17.61

PBDIT % change 7.83 8.51 2.32 16.52 17.41 21.53 13.87Public Sector % change 4.26 12.98 6.70 21.01 14.27 16.86 7.53Private Sector % change 10.63 5.55 -1.09 12.50 20.39 25.85 19.37

Profit after tax % change 6.08 8.85 -11.88 80.40 74.51 58.31 22.05Public Sector % change 2.54 23.24 31.73 60.43 50.14 44.85 7.23Private Sector % change 10.24 -4.22 -51.00 123.25 110.80 73.42 36.23

PBDIT/Sales per cent 13.33 12.84 13.46 14.37 14.76 15.03 15.26Public Sector per cent 13.66 12.72 14.78 16.13 16.49 16.50 16.07Private Sector per cent 13.10 12.93 12.52 13.00 13.49 13.95 14.68

PAT/Sales per cent 2.04 1.99 1.86 2.82 4.44 5.83 6.52Public Sector per cent 2.56 2.57 3.17 3.91 5.38 6.72 6.74Private Sector per cent 1.66 1.58 0.93 1.98 3.74 5.19 6.37

Debt/Equity times 1.21 1.18 1.13 1.10 0.97 0.87 0.78

Public Sector times 1.13 1.13 1.01 0.98 0.83 0.75 0.66Private Sector times 1.25 1.21 1.22 1.19 1.09 0.97 0.87

VOP/GFA times 1.19 1.26 1.16 1.17 1.28 1.37 1.35Public Sector times 1.09 1.27 1.06 1.07 1.13 1.17 1.16Private Sector times 1.27 1.25 1.24 1.26 1.41 1.55 1.53

Capital MarketsCapital Issues Rs. bln. 681.5 504.7 484.3 423.2 529.6 611.3 792.2 1158.6

Public Sector Rs. bln. 393.5 278.6 305.8 292.2 395.9 311.3 466.2 411.1Private Sector Rs. bln. 288.1 226.1 178.5 131.0 133.7 300.0 326.0 747.6Equity Rs. bln. 258.3 155.6 88.1 81.0 223.0 297.0 325.8 723.0Debt Rs. bln. 413.9 349.2 396.2 342.3 306.6 314.2 466.4 435.7

GDRs/ADRs/ECBs/(floatations)°

mln. 921.7 6 216.7 494.9 188.3 993.2 3 406.4 9 103.6 2 436.1GDRs/ADRs

°

mln. 821.8 475.0 494.9 188.3 271.4 826.0 3640.6 896.3ECBs/FRNs

°

mln. 99.9 5741.7 721.9 2569.0 4882.9 1539.8

Secondary Market

No. of companies listed Number 5712 5779 5771 5661 5562 4844 4974 5040Market cap. all listed companies Rs. bln. 11447 6420 7426 7246 13771 18785 32150 36849Market Capitalisation % of GDP 58.4 30.5 32.6 29.6 49.9 60.2 90.1

Returns on the CMIE Overall Share PriceIndex per cent 70.7 -43.4 8.8 5.4 115.7 28.1 71.2 10.2

Trading volumes on BSE Rs. bln. 6850 10000 3049 3136 5033 5185 8159 9497Trading volumes on NSE Rs. bln. 8390 13395 5132 6180 10995 11401 15696 19453

Public Finance (Centre, State & UTs)Government receipts Rs. bln. 5887 6166 6154 7220 8629 8972

Government expenditure Rs. bln. 5723 6157 6809 7251 8449 9023Plan outlay Rs. bln. 1606 1857 1863 2102 2693 3612

(Continued. . . )




Indicators: Annual 7

Units 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Finances of Central Govt.Revenue receipts Rs. bln. 1815 1926 2013 2308 2638 3060 3475 4233 4864

Tax receipt Rs. bln. 1718 1886 1871 2163 2543 3050 3662 4678 5481Direct Tax Rs. bln. 578 682 691 829 1050 1320 1650 2290 2672

(% of GDP) 3.0 3.2 3.0 3.4 3.8 4.2 4.6

Indirect Tax Rs. bln. 1139 1204 1180 1333 1494 1729 2012 2388 2809(% of GDP) 5.8 5.7 5.2 5.4 5.4 5.5 5.6

Expenditure Rs. bln. 2981 3256 3623 4132 4712 4983 5061 5816 6805(% of GDP) 15.3 15.5 15.9 16.8 17.0 15.9 14.2

Plan expenditure Rs. bln. 762 827 1012 1115 1223 1323 1406 1727 2051% of Exp. 25.6 25.4 27.9 27.0 26.0 26.6 27.8 29.7 30.1

Non-plan expenditure Rs. bln. 2219 2429 2611 3018 3489 3660 3655 4089 4754% of Exp. 74.4 74.6 72.1 73.0 74.0 73.4 72.2 70.3 69.9

Subsidies Rs. bln. 245 268 312 435 443 460 475 535 543(% of Exp) 8.2 8.2 8.6 10.5 9.4 9.2 9.4 9.2 8.0

Defence Rs. bln. 471 496 543 557 601 759 805 860 960(% of Exp) 15.8 15.2 15.0 13.5 12.7 15.2 15.9 14.8 14.1

Interest Rs. bln. 902 993 1075 1178 1241 1269 1326 1462 1590(% of Exp) 30.3 30.5 29.7 28.5 26.3 25.5 26.2 25.1 23.4

Budget Deficit Rs.Bln. 9 -12 -15Revenue Deficit Rs.Bln. 676 852 1002 1079 983 783 923 834 715Gross Fiscal Deficit Rs.Bln. 1047 1188 1410 1451 1233 1258 1464 1523 1509

(% of GDP) 5.4 5.7 6.2 5.9 4.5 4.0 4.1Outstanding internal debt Rs. bln. 7143 8037 9131 10207 11417 12759 13559 15220

% of GDP 36.9 38.4 40.0 41.4

Money, Banking & Interest RatesMoney supply (M3) % change 14.6 16.8 14.1 14.7 16.7 12.3 21.2 21.3SCB’s Deposits Rs. bln. 8516 9891 11034 13118 15423 17086 21090 26083

% change 19.3 16.2 11.5 18.9 17.6 10.8 23.4 23.7SCB’s Credit Rs. bln. 4541 5293 5897 7464 8656 10920 15071 19289

% change 23.1 16.6 11.4 26.6 16.0 26.2 38.0 28.0Non–food credit Rs. bln. 4291 4895 5357 6970 8291 10505 14664 18824

% change 21.9 14.1 9.4 30.1 18.9 26.7 39.6 28.4

Bank rate (March-end) per cent 8.0 7.0 6.5 6.3 6.0 6.0 6.0 6.0Interest on deposits (maximum) per cent 10.5 10.0 8.5 6.3 5.5 6.3 7.0 9.0Prime lending rates (maximum) per cent 12.5 12.0 12.0 11.5 11.0 10.8 10.8 12.5

Prices (Annual Averages)Wholesale price index

All Commodities % change 3.3 7.1 3.7 3.4 5.4 6.4 4.4 5.4 3.5Primary Articles % change 1.1 2.9 3.7 3.3 4.2 3.7 2.9 7.8Fuel, Power & Lubricant % change 9.1 28.5 9.1 5.6 6.3 10.0 9.5 5.6Manufactured Products % change 2.7 3.2 1.9 2.7 5.6 6.3 3.1 4.4

Prices (Annual Averages)

Consumer price indexIW-General Index % change 3.4 3.8 4.3 4.0 3.9 3.8 4.4 6.7AL-General Index % change 4.4 -0.3 1.1 3.2 3.9 2.4 4.0 7.8UNME-General Index % change 4.5 5.6 5.1 3.8 3.7 3.6 4.7 6.6

(Continued. . . )





Units 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

External TransactionsExports

°

mln. 36760 44147 43958 52823 63886 83502 103075 126246% change 10.7 20.1 -0.4 20.2 20.9 30.7 23.4 22.5

Agro products°

mln. 5615 5983 5919 6723 7538 8471 10212 12506Ores & minerals

°

mln. 917 1155 1266 2000 2370 5076 6163 7028

Manufactured goods ° mln. 29751 34391 33469 40324 48525 60706 72552 82762Imports

°

mln. 49799 50056 51567 61533 78203 111472 149144 190438% change 17.5 0.5 3.0 19.3 27.1 42.5 33.8 27.7

POL°

mln. 12627 15676 14042 17674 20584 29832 43957 57036Non–POL

°

mln. 37172 34381 37525 43859 57619 81640 105187 133402Trade balance: DGCI&S

°

mln. -13039 -5909 -7609 -8710 - 14317 - 27970 - 46069 - 64192Trade balance: RBI

°

mln. -17841 -12460 -11574 -10690 -13718 -33702 -51841 -64905

Gross invisible earnings°

mln. 30312 32267 36737 41925 53508 69533 92294 119163Net invisibles

°

mln. 13143 9794 14974 17035 27801 31232 42655 55296Current account balance

°

mln. -4698 -2666 3400 6345 14083 -2470 -9186 -9609Exports % of GDP 8.2 9.6 9.2 10.4 10.6 12.0 12.8 13.9Imports % of GDP 11.0 10.9 10.7 12.1 13.0 16.0 18.5 20.9Current account balance % of GDP -1.0 -0.6 0.7 1.2 2.3 -0.4 -1.1 -1.1Tourist arrivals mln. nos. 2.52 2.67 2.43 2.45

Foreign Capital Inflow (net)°

mln. 10184 8814 8551 10840 16736 28022 23400 44944Foreign aid (net)

°

mln. 891 410 1117 -3128 -2858 1923 1682 1770External comm. borrowings (net)

°

mln. 333 4303 -1585 -1692 -2925 5194 2723 16084NRI deposits (net)

°

mln. 1540 2316 2754 2978 3642 -964 2789 3895FDI

°

mln. 2167 4031 6125 5036 4322 5987 7661 19442Portfolio investments

°

mln. 3024 2760 2021 979 11356 9311 12494 7004Others

°

mln. 2229 -5006 -1881 6667 3199 6571 -3949 -3251FDI approvals ° mln. 4153 5527 3043 1638 1358

Debt servicing°

mln. 11543 12821 11115 15239 19165 9155 19560 11795Repayments

°

mln. 7059 8359 6776 11530 14614 6117 14341 7327Interest payments

°

mln. 4484 4462 4339 3709 4551 3038 5219 4468Outstanding external debt

°

mln. 98263 101326 98843 104914 111645 124160 127623 156649% of GDP 22.0 22.5 21.1 20.3 17.8 17.4 16.0 16.6

Debt service ratio per cent 17.10 16.60 13.70 16.00 16.10 6.00 9.90 4.80

Foreign exchange reserves (excl. goldand SDRs): March-end

°

mln. 35058 39554 51049 71890 107448 135571 145108 191924

Rupee exchange rate Rs/dollar 43.28 45.61 47.55 48.30 45.92 44.95 44.28 45.28




Indicators: Monthly 9

U n i t s

D e c

J a n

F e b

M a r

A p r

M a y

J u n

J u l

A u g

S e p

O c t

N o v

D e c

2 0 0 6

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

A g r i c u

l t u r e

A c t u a l r a i n f a l l

m m

1 2 . 0

1 . 8

3 0 . 4

3 2 . 2

2 7 . 2

4 7 . 8

1 5 2 . 8

2 5 8 . 7

2 9 8 . 6

1 9 4 . 1

v a r i a t i o n f r o m n o r m a l

p e r c e n t

- 2 3 . 6

- 9 2 . 3

3 2 . 2

1 3 . 8

- 2 0 . 0

- 3 0 . 5

8 . 4

- 0 . 3

- 2 . 4

1 3 . 6

S t o c k o f f o o d g r a i n

m l n . t n s .

1 7 . 7

1 7 . 7

2 5 . 1

2 5 . 9

% c h a n g e ( y o y )

- 8 . 1

6 . 7

9 . 9

1 6 . 2

E n e r g y

/ I n f r a s t r u c t u r e

C o a l p r o d u c t i o n

m l n . t n s .

3 9 . 5

4 2 . 2

3 9 . 3

4 8 . 5

3 1 . 7

3 3 . 5

3 2 . 3

3 1 . 0

3 1 . 7

3 1 . 0

3 6 . 7

3 9 . 2

% c h a n g e ( y o y )

3 . 0

1 0 . 0

6 . 6

1 0 . 6

0 . 5

0 . 9

1 . 3

1 . 1

8 . 7

6 . 2

9 . 2

7 . 7

C r u d e o i l p r o d u c t i o n

m l n . t n s .

2 . 9 2

2 . 9 0

2 . 6 7

2 . 9 3

2 . 7 9

2 . 8 2

2 . 7 7

2 . 8 9

2 . 8 8

2 . 7 9

2 . 9 2

2 . 8 2

% c h a n g e ( y o y )

1 0 . 7

4 . 7

4 . 9

3 . 2

1 . 4

- 1 . 6

- 1 . 8

0 . 9

6 . 5

- 0 . 7

- 0 . 1

0 . 3

P o w e r g e n e r a t i o n

b l n . u n i t

5 9 . 0

5 8 . 4

5 1 . 9

5 8 . 9

5 8 . 0

6 0 . 8

5 7 . 1

5 8 . 3

5 9 . 0

5 6 . 5

5 9 . 9

5 6 . 9

5 9 . 3

% c h a n g e ( y o y )

1 2 . 9

8 . 5

3 . 4

7 . 6

8 . 7

9 . 3

6 . 8

8 . 3

8 . 7

4 . 0

4 . 2

9 . 4

0 . 6

R a i l w a y s : f r e i g h t t r a ffi c

m l n . t n s .

6 3 . 6

6 5 . 7

6 1 . 7

7 2 . 1

6 0 . 7

6 3 . 9

6 0 . 5

6 1 . 8

6 1 . 8

6 0 . 8

6 6 . 1

6 5 . 7

% c h a n g e ( y o y )

7 . 5

6 . 5

6 . 8

8 . 9

4 . 5

7 . 2

3 . 9

7 . 7

1 1 . 7

9 . 0

1 2 . 4

7 . 5

I n d u s t r y

I n d u s t r i a l P r o d u c t i o n I n d e x

1 9 9 3 - 9 4 = 1 0 0

2 6 3 . 7

2 6 5 . 5

2 5 2 . 2

2 8 9 . 1

2 5 0 . 7

2 6 3 . 1

2 5 5 . 3

2 5 5 . 0

2 6 0 . 3

2 6 0 . 0

2 6 2 . 1

2 6 2 . 0

% c h a n g e ( y o y )

1 3 . 4

1 1 . 6

1 1 . 0

1 4 . 8

1 1 . 3

1 0 . 6

8 . 9

8 . 3

1 0 . 9

6 . 8

1 2 . 0

5 . 3

B a s i c g o o d s

1 9 9 3 - 9 4 = 1 0 0

2 2 2 . 5

2 2 7 . 1

2 1 0 . 9

2 3 8 . 4

2 1 2 . 8

2 2 3 . 6

2 1 5 . 8

2 1 6 . 7

2 1 7 . 6

2 1 4 . 0

2 2 7 . 5

2 2 0 . 0

% c h a n g e ( y o y )

1 2 . 4

1 2 . 0

1 0 . 7

1 1 . 9

8 . 6

1 0 . 3

9 . 2

8 . 7

1 2 . 7

6 . 5

6 . 7

4 . 8

C a p i t a l g o o d s

1 9 9 3 - 9 4 = 1 0 0

3 5 7 . 6

3 3 1 . 3

3 2 2 . 3

4 5 1 . 7

2 7 8 . 4

3 3 4 . 7

3 5 8 . 3

3 1 7 . 4

3 6 8 . 6

3 8 7 . 9

3 4 8 . 7

3 9 3 . 2

% c h a n g e ( y o y )

2 6 . 2

1 6 . 3

1 8 . 0

1 8 . 1

1 0 . 9

2 2 . 4

2 3 . 1

1 2 . 3

3 0 . 8

2 0 . 5

2 0 . 2

2 4 . 5

I n t e r m e d i a t e g o o d s

1 9 9 3 - 9 4 = 1 0 0

2 5 2 . 6

2 4 6 . 9

2 3 9 . 0

2 6 6 . 3

2 4 9 . 2

2 6 4 . 2

2 6 0 . 1

2 6 4 . 1

2 7 3 . 3

2 6 5 . 5

2 6 0 . 7

2 5 9 . 9

% c h a n g e ( y o y )

1 2 . 7

1 3 . 7

1 3 . 3

1 5 . 3

1 0 . 6

8 . 8

8 . 6

7 . 7

1 3 . 8

1 0 . 4

1 3 . 9

7 . 3

C o n s u m e r d u r a b l e s

1 9 9 3 - 9 4 = 1 0 0

3 4 4 . 1

3 8 5 . 5

3 7 7 . 9

4 1 6 . 9

3 4 1 . 8

3 8 0 . 3

3 5 7 . 9

3 5 1 . 5

3 7 9 . 7

3 8 9 . 3

4 3 3 . 4

3 7 4 . 0

% c h a n g e ( y o y )

1 . 8

5 . 3

1 . 8

3 . 8

2 . 4

- 0 . 7

- 3 . 6

- 2 . 7

- 6 . 1

- 7 . 2

9 . 3

- 4 . 1

C o n s u m e r n o n - d u

r a b l e s

1 9 9 3 - 9 4 = 1 0 0

2 8 4 . 0

2 9 1 . 8

2 7 4 . 0

2 9 8 . 9

2 7 9 . 2

2 6 7 . 7

2 4 6 . 0

2 5 6 . 8

2 4 0 . 8

2 4 4 . 3

2 4 3 . 3

2 5 1 . 5

% c h a n g e ( y o y )

1 3 . 5

9 . 1

9 . 3

2 0 . 2

1 8 . 7

1 2 . 1

6 . 3

1 0 . 5

2 . 4

1 . 6

1 4 . 7

- 2 . 1

I n d u s t r i a

l P

r o d u c t i o n

I n d u s t r i a l P r o d u c t i o n I n d e x

% c h a n g e ( y o y )

1 3 . 4

1 1 . 6

1 1 . 0

1 4 . 8

1 1 . 3

1 0 . 6

8 . 9

8 . 3

1 0 . 9

6 . 8

1 2 . 0

5 . 3

M i n i n g & q u a r r y i n g

% c h a n g e ( y o y )

6 . 1

7 . 7

7 . 5

8 . 0

2 . 6

3 . 8

1 . 5

3 . 2

1 4 . 7

4 . 9

5 . 7

3 . 5

E l e c t r i c i t y

% c h a n g e ( y o y )

9 . 1

8 . 3

3 . 3

7 . 9

8 . 7

9 . 4

6 . 8

7 . 5

9 . 2

4 . 5

4 . 2

5 . 8

M a n u f a c t u r i n g

% c h a n g e ( y o y )

1 4 . 5

1 2 . 3

1 2 . 0

1 6 . 0

1 2 . 4

1 1 . 3

9 . 7

8 . 8

1 0 . 7

7 . 1

1 3 . 3

5 . 4

C e m e n t

L a k h t o n n e s

1 3 5 . 0

1 4 0 . 9

1 3 0 . 4

1 4 9 . 9

1 4 0 . 1

1 4 2 . 6

1 3 6 . 6

1 3 3 . 7

1 2 8 . 5

1 2 7 . 5

1 3 8 . 1

1 3 0 . 6

% c h a n g e ( y o y )

8 . 3

7 . 8

6 . 4

6 . 0

6 . 4

1 0 . 3

6 . 0

9 . 8

1 7 . 4

5 . 3

7 . 4

4 . 7

F e r t i l i s e r s

’ 0 0 0 t o n n e s

1 , 4 9 0 . 8 1 , 3 9 3 . 9 1 , 3 6 8 . 7 1 , 2 8 2 . 3 1 , 0 0 5 . 4 1 , 1 6 2 . 4

1 , 2 3 5 . 7 1 , 3 5 0 . 1 1 , 2 6 2 . 7 1 , 2 6 7 . 6 1 , 3 4 7 . 9

1 , 3 2 2 . 3

% c h a n g e ( y o y )

7 . 2

2 . 1

1 4 . 8

1 1 . 3

- 9 . 7

- 8 . 2

- 1 . 4

1 . 0

- 1 3 . 2

- 7 . 8

- 7 . 8

F i n i s h e d S t e e l

’ 0 0 0 t o n n e s

4 , 3 5 6 . 0 4 , 3 5 0 . 0 4 , 2 2 8 . 0 4 , 9 3 8 . 0 4 , 0 7 9 . 0 4 , 1 7 1 . 0

3 , 9 7 6 . 0 4 , 6 6 8 . 0 4 , 3 1 0 . 0 4 , 2 7 2 . 0 4 , 4 4 5 . 0

% c h a n g e ( y o y )

1 0 . 0

8 . 3

1 3 . 4

1 4 . 6

8 . 5

1 1 . 8

5 . 0

6 . 6

8 . 5

8 . 6

4 . 9

A u t o m o b i l e s

% c h a n g e

9 . 0

1 2 . 9

1 2 . 5

5 . 5

9 . 0

6 . 4

1 4 . 7

7 . 6

1 2 . 6

6 . 8

1 8 . 1

- 2 . 6

9 . 3

( C o n t i n u e d . . . )






Indicators: Monthly 11

U n i t s

D e c

J a n

F e b

M a r

A p r

M a y

J u n

J u l

A u g

S e p

O c t

N o v

D e c

2 0 0 6

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

2 0 0 7

P r i c e s

W h o l e s a l e p r i c e i n d

e x

A l l C o m m o d i t i e s

1 9 9 3 – 9 4 = 1 0 0

2 0 8 . 4

2 0 8 . 8

2 0 8 . 9

2 0 9 . 8

2 1 1 . 5

2 1 2 . 3

2 1 2 . 3

2 1 3 . 6

2 1 3 . 8

2 1 5 . 1

2 1 5 . 2

2 1 5 . 5

% c h a n g e ( y o y )

5 . 7

6 . 4

6 . 3

6 . 6

6 . 3

5 . 5

4 . 5

4 . 7

4 . 1

3 . 5

3 . 1

3 . 1

P r i m a r y A r t i c l e s

1 9 9 3 – 9 4 = 1 0 0

2 1 3 . 0

2 1 4 . 2

2 1 5 . 0

2 1 4 . 6

2 1 9 . 2

2 2 0 . 9

2 2 0 . 6

2 2 4 . 5

2 2 3 . 8

2 2 6 . 0

2 2 3 . 8

2 2 3 . 6

% c h a n g e ( y o y )

9 . 0

1 0 . 0

1 1 . 4

1 1 . 8

1 1 . 9

1 0 . 1

7 . 6

1 0 . 7

9 . 2

6 . 7

4 . 9

4 . 5

F u e l , P o w e r & L u

b r i c a n t

1 9 9 3 – 9 4 = 1 0 0

3 2 2 . 3

3 2 2 . 1

3 1 9 . 8

3 1 9 . 8

3 2 0 . 4

3 2 2 . 1

3 2 2 . 0

3 2 1 . 9

3 2 2 . 4

3 2 1 . 9

3 2 3 . 7

3 2 5 . 9

% c h a n g e ( y o y )

3 . 7

3 . 6

1 . 8

1 . 4

1 . 1

0 . 6

- 0 . 8

- 1 . 6

- 2 . 0

- 2 . 6

- 1 . 6

- 0 . 2

M a n u f a c t u r e d P r o d u c t s

1 9 9 3 – 9 4 = 1 0 0

1 8 1 . 5

1 8 1 . 7

1 8 2 . 0

1 8 3 . 5

1 8 4 . 6

1 8 4 . 8

1 8 4 . 9

1 8 5 . 7

1 8 6 . 1

1 8 7 . 5

1 8 8 . 0

1 8 8 . 1

% c h a n g e ( y o y )

5 . 2

6 . 1

6 . 2

6 . 8

6 . 2

5 . 6

5 . 5

4 . 9

4 . 6

4 . 7

4 . 3

3 . 9

C o n s u m e r p r i c e i n d

e x

I W - G e n e r a l I n d e x

2 0 0 1 = 1 0 0

1 2 7 . 0

1 2 7 . 0

1 2 8 . 0

1 2 7 . 0

1 2 8 . 0

1 2 9 . 0

1 3 0 . 0

1 3 2 . 0

1 3 3 . 0

1 3 3 . 0

1 3 4 . 0

1 3 4 . 0

% c h a n g e ( y o y )

6 . 9

6 . 7

7 . 6

6 . 7

6 . 7

6 . 6

5 . 7

6 . 5

7 . 3

6 . 4

5 . 5

5 . 5

A L - G e n e r a l I n d e x

1 9 8 6 – 8 7 = 1 0 0

3 9 0 . 0

3 9 1 . 0

3 9 2 . 0

3 9 2 . 0

3 9 4 . 0

3 9 5 . 0

3 9 9 . 0

4 0 4 . 0

4 0 8 . 0

4 1 0 . 0

4 1 3 . 0

4 1 4 . 0

% c h a n g e ( y o y )

8 . 9

9 . 5

9 . 8

9 . 5

9 . 4

8 . 2

7 . 8

8 . 6

8 . 8

7 . 9

7 . 0

6 . 2

U N M E - G e n e r a l I n d e x

1 9 8 4 – 8 5 = 1 0 0

4 9 3 . 0

4 9 6 . 0

4 9 7 . 0

4 9 8 . 0

5 0 1 . 0

5 0 3 . 0

5 0 6 . 0

5 1 4 . 0

5 1 5 . 0

5 1 6 . 0

5 2 0 . 0

5 1 9 . 0

% c h a n g e ( y o y )

6 . 9

7 . 4

7 . 8

7 . 6

7 . 7

6 . 8

6 . 1

6 . 9

6 . 4

5 . 7

5 . 5

5 . 1

R L - G e n e r a l I n d e x

1 9 8 6 – 8 7 = 1 0 0

3 9 1 . 0

3 9 1 . 0

3 9 3 . 0

3 9 3 . 0

3 9 5 . 0

3 9 6 . 0

4 0 0 . 0

4 0 4 . 0

4 0 8 . 0

4 1 0 . 0

4 1 3 . 0

4 1 4 . 0

% c h a n g e ( y o y )

8 . 3

8 . 9

9 . 5

9 . 2

9 . 1

7 . 9

7 . 5

8 . 0

8 . 5

7 . 6

6 . 7

5 . 9




12 GDP Growth

Investments to drive economic growth

The Indian economy has been growing at a impres-sive pace of nine per cent per annum in recent years.We believe that this pace would be sustained in

the coming quarters and in the next fiscal as well.Our confidence is based on the outcome of our closemonitoring of the investments scenario in the coun-try.

The CMIE CapEx service captured fresh invest-ments worth Rs.4,89,139 crore in the quarter ended

December 2007. This is the second large amountof fresh investments captured in a quarter in atleast the past 12 years. Outstanding investmentsat the end of December 2007 stood at Rs.55.6 lakhcrore, implying a robust 38.3 per cent rise over the

corresponding level a year ago. 2007 is the fourthconsecutive year of rapid growth in investments.It is this momentum of fresh investments that hasfuelled the economic boom seen in the GDP esti-mates of the recent past. And, it is the same thatsustains the optimism regarding the future.

Figure 4.1 Trend in growth of GDP and grosscapital formation (%)

GDP Gross capital formation

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07-5

0

5

10

15

20

Figure 4.2 Gross capital formation as a percent-age of GDP (%)

23.9 23.224.8

26.028.4

30.6 32.2

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-070

5

10

15

20

25

30

Table 4.1 GDP by expenditure or demand (at constant 1999–00 prices)

Private final Government finalconsumption consumption Gross capital

GDP exp enditure % share in exp enditure % share in formation % share in(Rs.crore) (Rs.crore) GDP (Rs.crore) GDP (Rs.crore) GDP

1998–99 18,17,752 11,90,267 65.5 2,23,521 12.3 4,07,811 22.41999–00 19,52,036 12,57,541 64.4 2,52,744 12.9 5,09,518 26.1

2000–01 20,30,867 12,86,314 63.3 2,53,952 12.5 4,84,951 23.92001–02 21,36,635 13,63,797 63.8 2,58,943 12.1 4,95,113 23.2

2002–03 22,16,260 13,93,435 62.9 2,58,030 11.6 5,48,554 24.82003–04 24,02,247 14,89,043 62.0 2,64,464 11.0 6,24,680 26.0

2004–05 26,02,235 15,69,130 60.3 2,78,757 10.7 7,37,823 28.4

2005–06 28,42,478 16,75,025 58.9 3,06,087 10.8 8,70,619 30.6

2006–07 31,08,360 17,78,697 57.2 3,33,713 10.7 10,02,379 32.2Apr–Sep 2007 15,51,412 8,84,396 57.0 1,72,954 11.1 5,36,144 34.6




GDP Growth 13

Real GDP grew by over–nine per cent in 2005–06and 2006–07. During both these years, gross capi-tal formation grew by over 15 per cent. The shareof capital formation in GDP crossed 30 per cent inthese years.

In the first half of 2007–08, gross capital formationrose again by 15 per cent and GDP again by nineper cent. The share of capital formation in GDP(the rate of investments) rose to 34.6 per cent. Thisis a quick sharp increase since its level of 23 per centin 2001–02.

With fresh investment proposals continuing to pourin, we expect the current economic growth to besustained in the near future. Around 47 per cent of the outstanding investments as of December 2007

are under implementation. These amount to a sub-stantial Rs.26 lakh crore. While these investmentswould generate demand for capital goods and con-struction industry in the near term, their eventualcommissioning would ensure sustained growth inthe medium term.

The current investment boom is larger and morecredible than the one witnessed in the mid–1990s.

The individual projects are larger in size and arefinanced largely from internal accruals. The shareof the private sector in investments has increased –from 23 per cent as of March 2003 to 59 per centas of December 2007.

Indian corporates are back into investing into build-ing gross fixed assets. This is seen in their auditedaccounts. And, this is a confirmation of the returnof the investments boom in India.

Figure 4.3 Growth in GFA of manufacturing com-panies (weighted average %)

1993-94 1996-97 1999-00 2002-03 2006-070

5

10

15

20

Table 4.2 Quarterly real GDP growth and forecast for 2007–08 (%)

Agri-culture

Indus-try

Min-ing,

quarry-ing

Manu-factur-

ing

Elec.,gas &water

Con-struc-

tion

Service Trade,hotels,

transp.,comm.

Fin.,insur.,

realest.

Commsocial,perso.

serv

GDPat

factorcost

Apr–Jun 05 4.0 10.5 6.1 10.7 7.4 12.7 9.2 10.2 8.9 7.5 8.4Jul–Sep 05 4.0 7.7 0.1 8.1 2.6 11.3 9.3 9.5 10.6 7.9 8.0

Oct–Dec 05 8.7 9.6 2.7 8.2 5.0 16.6 9.5 10.0 9.8 8.3 9.3

Jan–Mar 06 6.2 10.4 5.2 9.4 6.1 16.1 11.1 11.8 14.2 7.2 10.0Apr–Jun 06 2.8 10.6 3.7 12.3 5.8 10.5 11.7 12.4 10.8 11.3 9.6

Jul–Sep 06 2.9 11.3 3.9 12.7 8.1 11.1 11.8 14.2 11.1 8.3 10.2

Oct–Dec 06 1.6 10.6 5.5 11.8 9.1 10.0 11.0 13.1 11.2 6.7 8.7Jan–Mar 07 3.8 11.2 7.1 12.4 6.9 11.2 9.9 12.4 9.3 5.7 9.1

Apr–Jun 07 3.8 10.6 3.2 11.9 8.3 10.7 10.6 12.0 11.0 7.6 9.3

Jul–Sep 07 3.6 9.1 7.7 8.6 7.3 11.1 10.2 11.4 10.6 7.8 8.9

2005–06 6.0 9.6 3.6 9.1 5.3 14.2 9.8 10.4 10.9 7.7 9.0

2006–07 2.7 10.9 5.1 12.3 7.4 10.7 11.0 13.0 10.6 7.8 9.42007–08* 3.9 9.4 6.0 9.5 7.8 10.5 10.7 12.0 11.0 8.0 9.1

* CMIE forecast




14 GDP Growth

Consumption expenditure growth accel-erates

The rapidly rising share of investments in GDP hasled to a decline in the share of private final con-

sumption expenditure in GDP. This fell from 64 percent in 2001–02 to 57 per cent in 2006–07. But, thisfall in its share does not reduce the importance of consumption expenditure in the economic growthseen today.

Private final consumption expenditure (PFCE)grew by an impressive 6.2 per cent in 2006–07 and6.7 per cent in 2005–06. This is way above thegrowth rates of the 1990s (4.6 per cent per an-num) and the early years of the current decade (3.5per cent per annum). This accelerated growth in

PFCE is what is sustaining the investment boom.As domestic consumption demand keeps rising, en-trepreneurs continue to have reason to invest. Thiscreates additional demand for labour and feeds thevirtuous cycle of growth.

Interestingly, the capital formation is financedlargely through domestic savings. The domesticsavings rate has increased from 23.5 per cent in2001–02 to 32.4 in 2005–06. Foreign investmentshave played a marginal role in the current invest-ment boom.

Indian households are using their additional incometo consume a lot more than they did earlier and si-multaneously save a lot more than they did before.Evidently, the households are earning a lot morethan earlier. We expect this virtuous cycle to con-tinue into 2008–09.

Real GDP to grow by 9.1 per cent in2008–09

In spite of the recent slowdown in industrial pro-duction (as reflected in the IIP), we expect the In-dian economy to register a growth of 9.1 per centin 2008–09. The growth would be fuelled by the

continued rise in capital formation and a continu-ation of the more–than–six per cent growth in pri-vate final consumption expenditure. These are verylikely because of the build–up of investment propos-als during the current year. Low inflation and an

apparent perception of low inflation is expected tokeep domestic consumer spending buoyant.

The rising rupee aides this growth story as it re-duces the cost of imports of capital goods and alsointermediates. India has a trade deficit and there-fore the rising rupee helps a larger number of im-porters than it hurts exporters.

This prediction of a 9.1 per cent growth in realGDP is based on the assumption of an adequateprecipitation during the monsoon, and a slight fall

in interest rates in the early months of the comingyear.

Finance Minister, P.Chidambaram has advisedbanks to reduce interest rates in the interest of growth. The Minister is also quite sanguine aboutgrowth. The Minister was quoted as “I am notchanging my growth forecast for 2007–08. Mygrowth forecast continues to be close to nine percent... For the next year, I am confident that withmore investments taking place, we can aim to grow

at nine per cent” in the newspapers on 31 Decem-ber 2007. We agree with the Minister’s optimism.

Figure 4.4 Annual Real GDP growth (%)

(CMIE Forecast)

7.5

9.09.4 9.1 9.1

2004-05 2005-06 2006-07 2007-08 2008-090

2

4

6

8

10

12




Inflation 15

Inflation to remain stable

Average monthly inflation, measured in the WPI,rose to 3.6 per cent in December 2007 from its five–year low of 3.1 per cent in November 2007. Thisrise in headline inflation came mainly on account of the continuous rise in prices of the fuel group andits lower base last year.

After peaking in November, the international crudeoil prices sustained their high levels in December.Both, the Brent and the Dubai, ruled 47–48 percent above their year–ago levels in December 2007.Following the upsurge in the international crudeoil prices, the Indian companies hiked the pricesof the non–administered crude derivatives such as

aviation turbine fuel, naphtha, bitumen and fur-nace oil. These price hikes along with the low baselast year turned inflation in fuels positive. Aver-age monthly inflation in the fuel group ruled at 2.1per cent in December 2007 after remaining in thenegative zone for six consecutive months. This wasalso the highest monthly inflation measured in thefuel group in the last 11 months. While we expectinflation in the non–administered crude derivatives

to continue to rise in the coming months, that inthe administered fuels such as diesel and petrol isalso expected to go up a tad because of the lowbase last year.

While the appreciation of Indian rupee vis–a–visthe USD is offsetting the impact of the rise in theinternational crude oil prices to some extent, the ro-bust rise in tax collection and reducing fiscal deficithave put the government in a comfortable positionto help the Indian oil companies reduce their losseswithout hurting the interest of the common man.

Figure 5.1 Wholesale Price Index (% change)

Dec 05 Jul 06 Feb 07 Sep 07 Dec 07

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Table 5.1 Wholesale Price Index: Major Groups

All All Primary Primary Fuel group Fuel group Mfd. Mfd.Commodities Commodities Articles Articles products products

(avg. (% chg.) (avg. (% chg.) (avg. (% chg.) (avg. (% chg.)index) index) index) index)

Dec 2006 208.4 5.7 213.0 9.0 322.3 3.7 181.5 5.2Jan 2007 208.8 6.4 214.2 10.0 322.1 3.6 181.7 6.1

Feb 2007 208.9 6.3 215.0 11.4 319.8 1.8 182.0 6.2

Mar 2007 209.8 6.6 214.6 11.8 319.8 1.4 183.5 6.8Apr 2007 211.5 6.3 219.2 11.9 320.4 1.1 184.6 6.2

May 2007 212.3 5.5 220.9 10.1 322.1 0.6 184.8 5.6

Jun 2007 212.3 4.5 220.6 7.6 322.0 -0.8 184.9 5.5

Jul 2007 213.6 4.7 224.5 10.7 321.9 -1.6 185.7 4.9

Aug 2007 213.8 4.1 223.8 9.2 322.4 -2.0 186.1 4.6

Sep 2007 215.1 3.5 226.0 6.7 321.9 -2.6 187.5 4.7Oct 2007 215.2 3.1 223.8 4.9 323.7 -1.6 188.0 4.3

Nov 2007 215.5 3.1 223.6 4.5 325.9 -0.2 188.1 3.9Dec 2007 215.8 3.6 222.9 4.7 329.0 2.1 188.2 3.7

Apr 06–Dec 06 205.1 5.1 206.7 6.7 325.0 6.7 177.9 3.8

Apr 07–Dec 07 213.9 4.3 222.8 7.8 323.2 -0.6 186.4 4.8

Apr 06–Mar 07 206.1 5.4 208.6 7.8 323.9 5.6 179.0 4.4




16 Inflation

Although the government has not ruled out a pricehike completely, it is considering other options suchas excise duty cut (suggested by left parties) andcut in sales tax on petroleum products by the stategovernments. Thus, it appears unlikely that the

government would hike the prices of administeredpetroleum products.

We believe that the current spike in the interna-tional crude oil prices lacks any fundamental sup-port. Demand–supply balances have not changedso dramatically over the past one year to warrantthe hike in crude oil prices. Thus, a moderation inthe prices is expected in the coming months. Thelikely rise in inflation in the fuel group is expectedto get offset by the fall in inflation in the primary

articles and manufactured products. Inflation inprimary articles ruled at an average 4.7 per centin December 2007. Prices of primary articles havebeen falling for the last three months with supplyside constraints easing off. This coupled with thehigher base last year is expected to bring down in-flation in primary articles further.

With no spike expected in prices of any of themanufactured products, the high base is going toplay a major role in bringing inflation down in theWPI of manufactured products. We expect infla-tion in manufactured products to fall in the coming

months from its current level of 3.7 per cent (De-cember 2007). Manufactured products carry thehighest weight of 63.75 per cent in the WPI andany fall in inflation in the same has a major impacton the headline inflation. We expect the headlineinflation in the WPI to remain stable in the comingmonths. The fiscal 2007–08 is expected to end withan annual inflation of 3.5 per cent, much below theRBI’s target of containing inflation close to five percent.

Inflation is expected to remain low at the consumer

level also. Inflation for the urban consumers, mea-sured in the CPI–IW, has already come down to 5.5per cent in November 2007 from a high 7.3 per centin August 2007. Although inflation for the agricul-tural labourers and rural labourers remained a littlehigher than that for the industrial workers, it hasalso eased substantially since August 2007.

Table 5.2 Consumer Price Indices

CPI-IW CPI-IW CPI-AL CPI-AL CPI-RL CPI-RL CPI-UNME CPI-UNME(Index base (% change) (Index base (% change) (Index base (% change) (Index base (% change)2001) 86–87) 86–87) 84–85)

Nov 2006 127 6.3 390 8.3 391 8.0 494 6.7

Dec 2006 127 6.9 390 8.9 391 8.3 493 6.9

Jan 2007 127 6.7 391 9.5 391 8.9 496 7.4

Feb 2007 128 7.6 392 9.8 393 9.5 497 7.8

Mar 2007 127 6.7 392 9.5 393 9.2 498 7.6Apr 2007 128 6.7 394 9.4 395 9.1 501 7.7

May 2007 129 6.6 395 8.2 396 7.9 503 6.8

Jun 2007 130 5.7 399 7.8 400 7.5 506 6.1Jul 2007 132 6.5 404 8.6 404 8.0 514 6.9

Aug 2007 133 7.3 408 8.8 408 8.5 515 6.4

Sep 2007 133 6.4 410 7.9 410 7.6 516 5.7

Oct 2007 134 5.5 413 7.0 413 6.7 520 5.5Nov 2007 134 5.5 414 6.2 414 5.9 519 5.1

2006–07 124 6.6 375 7.0 376 6.8 482 6.2

2007–08 132 6.3 405 8.0 405 7.6 512 6.3

2006–07 125 6.7 380 7.8 382 7.5 486 6.6




Inflation 17

Table 5.3 Inflation as measured by Wholesale Price Index: Major Commodity Groups (Per cent)

weight Apr06 Apr07 24 Nov 01 Dec 08 Dec 15 Dec 22 Dec–Oct06 –Oct07 2007 2007 2007 2007 2007

22.03 Primary articles 6.30 8.78 4.50 5.28 4.79 4.70 4.2715.40 Food articles 6.61 7.24 2.78 3.73 2.92 2.98 2.93

5.01 Food grains 9.47 6.30 2.17 1.64 1.26 1.02 0.702.92 Fruits & vegetables 1.02 7.65 -4.03 -0.52 -3.09 -2.67 -1.744.37 Milk 5.22 7.96 9.42 10.20 10.20 10.20 10.20

2.21 Eggs, meat & fish 5.33 7.34 5.06 5.40 4.19 4.65 3.10

0.66 Condiments & spices 26.62 9.03 -3.65 -1.91 -0.86 -0.90 0.160.24 Other food articles 22.81 0.28 -6.11 -6.11 -6.11 -6.11 -4.51

6.14 Non-food articles 1.45 13.46 10.12 10.53 10.77 10.39 8.54

1.52 Fibres 5.44 12.29 12.79 16.05 16.43 15.80 16.84

2.67 Oil seeds -4.95 28.60 16.45 16.26 17.20 17.85 13.01

1.95 Other non-food articles 6.32 -0.71 1.75 1.28 0.70 -0.43 -0.69

0.48 Minerals 37.09 6.75 0.59 0.59 0.59 0.59 1.900.30 Metallic minerals 43.32 7.36 0.85 0.85 0.85 0.85 2.33

0.19 Other minerals 2.22 2.00 -1.41 -1.41 -1.41 -1.41 -1.4914.23 Fuel, power, light & lubricant 7.45 -0.98 -0.18 1.92 1.86 1.77 2.58

1.75 Coal minning 0.00 -0.00 0.00 0.00 0.00 0.00 0.006.99 Minerals oils 11.59 -2.27 0.64 4.31 4.17 4.01 4.885.48 Electricity 2.48 1.14 -1.73 -1.73 -1.73 -1.73 -0.73

63.75 Manufactured products 3.35 5.14 3.75 3.86 3.92 3.58 3.52

11.54 Food products 2.33 3.33 2.07 2.24 3.01 3.50 3.761.34 Beverages tobacco & tobacco products 6.65 11.14 6.30 5.87 5.87 9.35 9.35

9.80 Textiles 2.07 0.49 -0.38 0.23 0.30 -2.80 -3.25

0.17 Wood & wood products 9.35 6.46 7.15 7.15 0.37 0.37 0.372.04 Paper & paper products 6.76 2.28 1.35 1.46 1.25 1.25 1.25

1.02 Leather & leather products -5.97 6.28 5.02 5.02 5.02 1.09 1.09

2.39 Rubber & plastic products 5.55 7.29 4.98 5.19 5.19 5.61 6.7311.93 Chemicals & chemical products 3.20 4.85 5.41 5.73 5.68 5.62 5.57

2.52 Non-metallic mineral products 12.58 9.29 9.30 8.63 8.68 8.68 8.79

8.34 Basic metals alloys & metals products 2.82 7.57 3.56 3.81 3.34 2.49 2.408.36 Machinery & machine tools 4.02 8.54 6.75 6.21 6.14 6.14 5.41

4.29 Transport equipment & parts 1.54 1.72 1.72 1.72 1.72 1.90 2.15

100.00 All commodities 4.90 4.55 3.01 3.75 3.65 3.45 3.50




18 Interest Rates

Interest rates outlook stable to declining

Interest rates are likely to remain stable in thenear term. Any major cuts in benchmark lendingrates by banks look unlikely until the next policy

announcement by the banking regulator. An im-portant reason for banks not cutting interest ratesis the large amounts of term deposit mobilisationby them at high interest rates in the recent past.Banks will not be willing to take a hit on theirnet interest margins by reducing lending rates whentheir average cost of deposits remains high.

In the first week of January 2008 State Bank of In-dia revised interest rates on domestic term depositsand reset the maturity period. The maximum in-terest rate on deposits in different maturity peri-

ods in the 46 days to less than a year duration was6.5 per cent. The bank revised it to 7.5 per cent,payable on deposits in the 181 days to less thanyear bucket.

State Bank of India believes that interest rates willremain stable in the near term. HDFC bank tooopined that interest rates will not come down im-mediately. While it is experiencing satisfactory de-mand levels for car loans, demand for two-wheelerloans is almost nil due to high interest rates. Thebank believes that auto loans will not becomecheaper but will remain stable for now.

Union Bank believes banks have begun reducingdeposit rates and that interest rates are bound tocome down. Bank of Baroda CMD A K Khandel-wal believes short-term interest rates are likely toremain stable on comfortable liquidity position.

Although most banks believe that interest ratesare unlikely to soften in the immediate future, thedownward pressure on interest rates is quite strong.Inflation has remained below four per cent for 19consecutive weeks. Credit growth has slowed downfrom over 30 per cent to about 23 per cent.

Figure 6.1 Interest Rates (%)

91-day T-bills 364-day T-bills Reverse Repo Rate Bank Rate

Dec06 Mar07 Jun07 Sep07 Dec07

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Table 6.1 Interest Rates and Yield on T-Bills (Per cent)

91-day 182-day 364-dayT-bills T-bills T-billsauction auction auction Reverse Bank

1st 2nd 3rd 4th 5th 6th 7th 1st 2nd 3rd 4th 1st 2nd 3rd Repo Rate PLR

Jan 2007 7.12 7.12 7.12 7.37 7.13 7.73 7.17 7.25 6.00 6.00 11.50-12.00

Feb 2007 7.54 7.50 8.08 7.75 7.60 7.71 7.68 7.82 6.00 6.00 12.25-12.50Mar 2007 7.46 7.46 7.46 7.96 7.96 7.73 8.18 7.71 7.81 7.96 6.00 6.00 12.25-12.50

Apr 2007 7.91 7.33 7.46 7.33 7.97 7.73 7.68 7.72 6.00 6.00 12.75-13.25

May 2007 7.66 7.58 7.62 7.62 7.71 7.73 7.75 7.78 6.00 6.00 12.75-13.25Jun 2007 7.37 7.21 7.71 7.75 7.17 7.12 7.37 7.60 7.79 7.79 7.64 7.67 7.63 6.00 6.00 12.75-13.25

Jul 2007 6.17 5.10 4.49 4.45 6.04 5.80 7.15 6.56 6.00 6.00 12.75-13.25

Aug 2007 6.46 6.55 6.71 6.79 7.08 7.25 7.45 7.23 7.47 7.50 6.00 6.00 12.75-13.25

Sep 2007 7.04 7.08 6.96 7.17 7.38 7.23 7.45 7.48 6.00 6.00 12.75-13.25

Oct 2007 7.12 6.96 7.08 7.00 7.30 7.43 7.35 7.34 6.00 6.00 12.75-13.25Nov 2007 7.29 7.29 7.50 7.50 7.50 7.55 7.58 7.68 7.74 7.72 6.00 6.00 12.75-13.25

Dec 2007 7.50 7.42 7.33 7.33 7.58 7.58 7.69 7.64 6.00 6.00 12.75-13.25




Interest Rates 19

High inflation and robust credit growth were thetwo main reasons why the Reserve Bank of Indiahad pushed up interest rates by consecutive CRRhikes and increases in the reverse repo and reporates. Both these factors are now well within the

RBI’s comfort zone.

Surplus liquidity in the banking system crossed theone lakh crore rupees mark in August 2007 andmore than doubled to cross the two lakh rupeesmark in October 2007. As foreign inflows continueto remain robust liquidity in the banking system isalso expected to remain at these very robust levels.

As a result although banks will look to the RBIfor interest rate signals they are likely to increasetheir discounts to their PLRs on loans to corporates

as cited in media reports. At present, benchmarkprime lending rates of banks range between 12.75per cent to 13.5 per cent.

In December 2007, short term lending rates as in-dicated by 91–day T-bill auctions eased a tad to-

wards the end of the month. From 7.50 per centduring the second half of November 2007, yields on91–day T-bills fell to 7.33 per cent during the thirdand the fourth auction in December 2007. Simi-larly, the 364–day T-bill auctiuon saw yields easing

from 7.72–7.74 per cent in November to 7.64–7.69per cent in December. Call money rates, anotherindicator of short term rates, hardened during De-cember 2007. The weighted average call money raterose from 7.06 per cent in November to 7.43 percent in December. Yields on the 182-day T-bills,however, remained strong at 7.58 per cent.

The average turnover in the call money market alsofell from Rs.8,783 crore in November to Rs.7,877crore in December. Activity on the LAF win-

dow was dull too. Average outstanding auction onthe reverse repo window dropped to Rs.1,003 crorefrom Rs.4,521 crore in the preceeding month. sim-ilarly, on the repo window too average outstandingauctions fell from Rs.5,167 crore to Rs.1,253 crore.

Table 6.2 Call Money Market and Repo Auction

Call money Call money rates(%) Term money Reverse repo RepoAvg. Low High Weighted Avg. Avg. of Avg. of Avg. of Avg. of

turnover avg. turnover out- auctions. out- auctions.

standing standing(Per (Per (Per(Rs.crore) cent) cent) cent) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore)

Dec 2006 10954 5.00 19.00 8.47 275.00 8185 10081 8383 10478

Jan 2007 10570 5.75 19.00 8.06 278.00 1921 2305 10578 12693

Feb 2007 10209 3.00 8.25 7.07 331.00 4934 6031 2887 3528Mar 2007 10261 2.50 75.00 13.00 549.00 3454 4105 12186 14335

Apr 2007 13391 1.50 20.00 8.70 271.00 1042 1207 8279 9586

May 2007 9084 0.10 9.50 6.60 170.00 1159 1380 6827 7190Jun 2007 7336 0.05 9.00 2.48 186.00 2114 2616 745 922

Jul 2007 8457 0.01 4.75 0.59 141.00 2517 2997 0 0

Aug 2007 10731 0.05 50.00 6.41 154.00 19292 20470 0 0Sep 2007 10343 0.00 7.95 6.06 146.00 16821 19344 475 546

Oct 2007 8468 3.00 6.60 6.01 77.00 31700 37464 0 0

Nov 2007 8783 1.00 9.75 7.06 62.00 4521 5167 6973 7969Dec 2007 7877 5.50 7.85 7.43 272.00 1003 1253 66 82

Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec

2006–07 9573 0.00 19.00 6.29 299.00 28620 34233 1067 1186

2007–08 9455 0.00 50.00 5.46 152.00 9834 8453 2740 3465




20 Balance of Payments

Capital inflows spike in Sep ’07 quarter

Quarterly data on balance of payments statisticsreleased by the Reserve Bank of India for the July–September 2007 quarter reveals that capital in-

flows spiked to USD 33,902 million during the quar-ter. Net capital inflows during the September 2007quarter amounted to over 74 per cent of total netcapital inflows for the entire year ended 31 March2007.

These strong capital inflows are largely being

driven by portfolio investments of foreign insti-tutional investors. Foreign portfolio investmentsamounted to USD 10,876 million or nearly a thirdof total net capital inflows into the country.

As much as 65 per cent of the foreign portfo-lio investments that came into India during theJuly–September 2007 quarter were in the month of September itself. Of the USD 10,876 million, aboutUSD 7,057 million flowed into India in Septemberitself.

Figure 7.1 Net capital inflows (USD million)

Jun 2003 Jun 2004 Jun 2005 Jun 2006 Sep 20070

5000

10000

15000

20000

25000

30000

35000

Figure 7.2 Rupees per dollar exchange rate

Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-0739.0

40.0

41.0

42.0

43.0

44.0

45.0

46.0

Table 7.1 Foreign Investments & NRI Deposits (US ° Million)

FDI excl. FII net Acquisition of Foreign equity Offshore Total NRI depositsacquisition of investments shares issues funds Investment

shares

Sep 2006 419 1,064 497 174 0 2,154 615Oct 2006 1,295 1,703 403 52 0 3,453 549

Nov 2006 1,105 2,159 46 77 0 3,387 794

Dec 2006 1,978 -507 3,152 78 0 4,701 1,055Jan 2007 655 24 1,266 1,578 0 3,523 162

Feb 2007 623 2,385 75 245 0 3,328 78

Mar 2007 474 -2,433 129 25 2 -1,803 792

Apr 2007 683 1,963 868 11 0 3,525 1,344

May 2007 1,897 1,847 223 5 0 3,972 1

Jun 2007 1,089 3,279 149 292 85 4,894 18

Jul 2007 692 4,685 13 2,028 0 7,418 482Aug 2007 588 -3,323 243 448 0 -2,044 -340

Sep 2007 318 7,057 395 1 23 7,794 898

Apr–Sep Apr–Sep Apr–Sep Apr–Sep Apr–Sep Apr–Sep Apr–Sep

2006–07 3,177 -106 1,207 1,721 0 5,999 1,528

2007–08 5,267 15,508 1,891 2,785 108 25,559 2,403




Balance of Payments 21

Other capital inflows, which mainly comprise ‘leadsand lags’ in export receipts, spiked to USD 7.1 bil-lion during the quarter thereby contributing to therobust increase in capital inflows. These were thehighest ever.

Foreign direct investments continued to be robust.More than USD two billion flowed into the countryduring the September 2007 quarter.

Foreign currency reserves continue to rise. TheSeptember 2007 quarter saw the country add USD33,841 million to its forex reserves, a whopping 51per cent year–on–year rise. This is the highest ad-dition to the forex reserves in any quarter.

The swelling reserves and robust capital inflows arekeeping up the pressure of appreication on the ru-pee vis–a–vis the dollar. The rupee appreciatedagainst the dollar from 41.23 in the June 2007quarter to 40.5 in the September 2007 quarter. It

further appreciated to 39.5 in the December 2007quarter indicating inflows remained robust even inthe December quarter. The rupee averaged 40.39during the current financial year till end-Decembercompared to 45.63 in the corresponding year–agoperiod representing an appreciation of about 13 percent.

Table 7.2 Balance of Payments Statistics (US°

million)2005–

062006–

07Apr06–Jun

06

Jul06–Sep

06

Oct06–Dec

06

Jan07–

Mar07

Apr07–Jun

07

Jul07–Sep

07

Trade balance -51,904 -63,171 -16,946 -16,757 -16,865 -15,232 -20,690 -21,711

Exports 1,05,152 1,28,083 29,674 31,836 30,664 34,052 35,790 37,875

Imports 1,57,056 1,91,254 46,620 48,593 47,529 49,284 56,480 59,586Net invisibles earnings 42,002 53,405 12,379 10,482 14,090 17,795 15,493 16,195

Tourist earnings 1,215 2,438 220 -16 792 1,207 207 169Miscellaneous 24,236 28,983 7,972 6,802 6,849 8,861 8,245 7,147

Income account -5,855 -6,573 -1,278 -1,821 -1,221 -885 -863 -581

Remittances 24,493 27,941 5,713 5,371 7,654 8,611 8,340 10,080

Official transfers 194 227 -21 14 190 42 -13 36Transportation -2,012 -18 -314 32 -255 -188 -639 -675

Insurance -54 560 111 161 92 194 232 81GNIE -215 -153 -24 -61 -11 -47 -16 -62

Current account balance -9,902 -9,766 -4,567 -6,275 -2,775 2,563 -5,197 -5,516

Per cent to GDP -1.2 -1.1 -2.3 -3.1 -1.1 0.3 -2.0 -2.1Capital inflow (net) 25,470 45,779 10,564 8,780 10,482 17,134 16,506 33,902

Foreign assistance 1,702 1,767 49 337 633 751 276 453

External commercialborrowing 2,508 16,155 3,959 1,761 3,994 6,673 6,963 3,594

NRI Deposits 2,789 4,321 1,231 908 1,236 631 -447 369IMF 0 0 0 0 0 0 0 0

Short term 3,699 6,612 417 2,683 -316 1,620 2,153 3,558Foreign investments 15,528 15,541 911 5,062 6,127 3,883 9,196 13,018

FDI 3,034 8,479 1,416 2,912 2,558 2,037 1,738 2,142Portfolio investments 12,494 7,062 -505 2,150 3,569 1,846 7,458 10,876

Other bank capital -1,416 -2,408 3,759 -2,626 -4,576 1,634 -472 5,813

Other capital 1,232 3,953 305 655 3,386 2,035 -1,120 7,098

Rupee debt servicing -572 -162 -67 0 -2 -93 -43 -1Currency reserves (March-end) 1,45,108 1,91,924 1,55,968 1,58,340 1,70,187 1,91,924 2,06,114 2,39,955




22 Public Finance: Central Government Finance

Gross fiscal deficit down

During April–November 2007, gross fiscal deficitwas lower at Rs.96,274 crore as compared withRs.1,08,201 crore in the corresponding period of

2006. The deficit till November was also lower at63.8 per cent of budget estimates as against 72.8per cent a year ago. These favourable numbers re-flect a higher 24.2 per cent growth in revenue re-ceipts than the 22.2 per cent rise in expenditure.

However, the growth in revenue receipts in the cur-rent fiscal year was lower than the 27.3 per cent in-crease witnessed in the same period of 2006. On theother hand, the growth in expenditure was higherthan the 14.9 per cent increase witnessed a yearago.

The higher growth in expenditure, till November2007, is largely attributed to a one time payment of Rs.35,531 crore made by the government to RBI toacquire its share in SBI. In addition to this, higherexpenditure growth was partly due to increased re-quirements of fertiliser and food subsidy and oninterest payments as a result of higher borrowingunder MSS.

During April–November 2007, Department of Fer-tilisers spent Rs.25,731 crore which was 14 per centmore than the Rs.22,532 crore budgeted for the en-tire fiscal year. Subsidies on fertilisers account foralmost the entire budgeted amount of the the de-

partment’s expenditure.

Interest payments rose by 18 per cent during April–November 2007 as against nine per cent increasebudgeted for the entire fiscal year. This reflects inpart, hardening of interest rates and growing lia-bilities under MSS.

Net liabilities under MSS swelled by Rs.96,743crore to Rs.1,59,717 crore as of December 2007from Rs.62,972 crore as of March 2007. In the

corresponding period a year ago, the increasewas Rs.8,252 crore only–from Rs.29,062 crore toRs.37,314 crore. According to the Mid-year Re-view released by Ministry of Finance, the weightedaverage interest rate of Central government securi-ties was up at 8.2 per cent during April–October2007 as compared with 7.91 per cent for those is-sued during the corresponding period of previousyear.

Table 8.1 Gross Fiscal Deficit and Its Sources of Financing (Rs.crore)

Gross External Market Small PPF State Special Other Revenuefiscal financing borrowings Savings provident D eposits financing deficit

deficit fund

Nov 2006 21101 785 19314 3676 434 -146 -50 -2912 17184

Dec 2006 -13347 1107 12397 3041 426 543 -46 -30815 -17706

Jan 2007 16182 -424 6885 1266 780 43 -18 7650 14059Feb 2007 10781 1366 13327 -263 939 -135 -85 -4368 1575

Mar 2007 20976 2459 7157 1809 8795 4377 705 -4326 -2001Apr 2007 27814 175 -12549 -428 -755 505 -111 40977 25975

May 2007 34321 339 16143 -802 -21 -459 -21 19142 33360

Jun 2007 50269 282 54309 -2190 48 353 -126 -2407 9311

Jul 2007 17004 239 16841 -1721 175 -298 1148 620 13754

Aug 2007 -26070 454 30059 -1720 198 -325 -34 -54702 -28885

Sep 2007 -22138 989 -10682 -887 301 416 9 -12284 7609Oct 2007 1056 621 6608 -1334 232 -238 -23 -4810 -3562

Nov 2007 14018 708 14464 -709 285 -47 27 -710 12412

Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2005–06 108201 3965 92074 31691 7311 205 -352 -26693 844832006–07 96274 3807 115193 -9792 463 -94 870 -14173 69974

%Change -11.02 -3.98 25.11 -35.18 -93.67 -77.65 0.00 -46.90 -17.17




Public Finance: Central Government Finance 23

A large part of the expenditure, till November 2007,was in the form of transfers. The largest, 25 percent of total expenditure was interest payments. Itwas followed by transfers to State governments &UTs (11.3 per cent), payments to financial institu-

tions (8.4 per cent), expenditure incurred by theDepartment of Fertilisers (6.3 per cent) and De-partment of Food and Public Distribution (4.7 percent). The expenditure under the last two headsare mostly subsidies.

Department of Road Transport and Highwaysspent Rs.11,256 crore during April–November2007. This amount was 30 per cent higher thanthe Rs.8,628 crore spent in the corresponding pe-riod of 2006.

Gross tax collections continued to grow more thanthe 17 per cent growth budgeted for the fiscalyear. Till November 2007, 25 per cent increase wasrecorded in gross tax revenue. Performance of in-come tax and corporation tax was better than thecustom and excise duties.

During April–November 2007, revenue from income

tax was up by 38 per cent and corporation tax sawa growth of 42 per cent. The growth in income taxwas an improvement over 28 per cent increase wit-nessed in the corresponding period of 2006 whilethat in corporate tax it was a deceleration from 54

per cent, yet a robust growth.

Table 8.2 Major heads of Central government ex-penditure during April–November 2007

Rs. Share Changecrore in over

total 2006(%) (%)

Interest payments 1,03,648 25.2 17.9Transfer to states & UTs 46,418 11.3 5.3

Defence services 40,328 9.8 -6.6

Payments to financial inst. 34,528 8.4 6108.8

Department of fertilisers 25,731 6.3 54.7

Ministry of rural dev. 22,289 5.4 28.6Dept of food & public dist. 19,220 4.7 4.9

Ministry of human resource dev. 14,144 3.4 -17.9

Pension (defence and others) 13,578 3.3 6.7Dept of road trans. & highways 11,256 2.7 30.5

Police 10,861 2.6 7.2

Other expenditure 69,026 16.9 133.9

Total expenditure 4,11,375 100.0 22.2

Table 8.3 Central Government Expenditure (Rs.crore)

Non-plan Expenditure Plan Expenditure

Interest Other rev. Revenue Capital Total Revenue Capital Total TotalPayments expendi. expendi. expendi. expendi. expendi. Expenditure

Nov 2006 13,793 15,669 29,462 1,914 31,376 12,438 3,456 15,894 47,270

Dec 2006 4,691 18,972 23,663 3,147 26,810 18,356 2,016 20,372 47,182

Jan 2007 22,830 18,636 41,466 1,729 43,195 7,555 1,245 8,800 51,995Feb 2007 10,505 5,913 16,418 3,117 19,535 13,330 2,263 15,593 35,128

Mar 2007 23,584 36,385 59,969 18,058 78,027 27,695 6,426 34,121 1,12,148Apr 2007 11,449 15,105 26,554 672 27,226 7,527 1,479 9,006 36,232

May 2007 14,772 24,550 39,322 1,067 40,389 11,831 2,298 14,129 54,518

Jun 2007 8,053 19,591 27,644 36,740 64,384 20,196 4,570 24,766 89,150Jul 2007 14,662 19,912 34,574 1,671 36,245 10,043 1,875 11,918 48,163

Aug 2007 14,103 15,125 29,228 1,570 30,798 10,679 1,827 12,506 43,304

Sep 2007 9,781 20,406 30,187 1,905 32,092 11,295 3,138 14,433 46,525Oct 2007 17,163 19,125 36,288 2,127 38,415 8,740 3,855 12,595 51,010

Nov 2007 13,665 15,137 28,802 405 29,207 11,697 1,569 13,266 42,473

Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 87,943 1,42,185 2,30,128 15,265 2,45,393 75,545 15,601 91,146 3,36,5392007–08 1,03,648 1,48,951 2,52,599 46,157 2,98,756 92,008 20,611 1,12,619 4,11,375

(%Change) 17.86 4.76 9.76 202.37 21.75 21.79 32.11 23.56 22.24






Public Finance: Central Government Finance 25

The Review further points out that the deficit tar-gets envisaged under the FRBM Rules at the endof the second quarter were based on the historicaltrends. However, with various cash managementinitiatives being introduced for achieving greater

evenness in the spread of expenditure over the fi-nancial year, the fiscal deficit target as a propor-tion to BE at the end of the second quarter, shouldbe optimally closer to 50 per cent. Thus the re-view suggested that the slippage in target as com-pared to FRBM prescriptions need not necessarilybe viewed as a result of poor fiscal management.

The Ministry of Finance is more optimistic in thesecond half of the year than anticipated at the timeof budget estimates. As mentioned in the review“notwithstanding the deviations witnessed in the

first half of the year, the government is confidentof successfully navigating through the FRBM roadmap and ensuring compliance of the end-of-the-year fiscal targets on the strength of determinedpursuit of various fiscal consolidation measures in

conjunction with growth dividends.”

Table 8.5 Outcome versus mid-year benchmarksunder FRBM Rules (% of BE)

Variable Performance bench April-Septembermarks under FRBM 2006 2007

Non-debt Not less thanreceipts 40 per cent 39.9 44.8

Fiscal Not more thandeficit 45 per cent 58.2 53.8

Revenue Not more thandeficit 45 per cent 81.8 85.5

Table 8.6 Gross tax revenueCorporation Income Custom Excise Other Total Total

Tax tax duties duties taxes tax taxrevenue revenue

(Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (% chg.)

Nov-06 4,442 3,552 7,949 9,466 3,894 29,303 41.44

Dec-06 33,256 9,909 6,847 9,693 3,965 63,670 39.77

Jan-07 4,306 4,643 6,914 10,973 5,548 32,384 31.01Feb-07 3,545 4,727 6,871 9,749 3,915 28,807 10.10

Mar-07 41,689 19,997 8,889 25,163 9,867 1,05,605 28.12Apr-07 2,333 3,471 7,099 766 2,051 15,720 5.45

May-07 3,739 4,484 8,224 6,569 3,619 26,635 61.67

Jun-07 18,710 5,385 8,053 9,599 4,393 46,140 22.40Jul-07 4,935 5,636 8,334 8,928 5,009 32,842 19.86

Aug-07 3,657 4,767 8,597 9,335 4,488 30,844 18.12

Sep-07 36,802 11,703 7,790 9,692 5,323 71,310 25.36Oct-07 10,170 8,899 9,685 9,815 6,628 45,197 32.63

Nov-07 5,575 5,996 8,497 10,110 5,239 35,417 20.86

Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 60,595 36,516 56,808 62,123 26,816 2,42,858 31.072007–08 85,921 50,341 66,280 64,814 36,749 3,04,105 25.22

Note: Data in the above table are net of the refunds but before the transfer of states’ share




26 Public Finance: Government Debt Floatations

Sharp spike in 91–day T-bill borrowingsin Dec ’07

Government borrowings by way of treasury bills

were higher in December 2007 compared to the bor-rowings in November 2007. The borrowings werehigher in December than in November across allmaturities viz. 91 days, 182 days and 364 days. Incase of 91–day T-bill borrowings, there was a sharpspike from Rs.4,767 in November to Rs.14,450 inDecember.

Dated borrowings were, however, lower at Rs.7,000crore compared to Rs.10,000 crore in November.State government borrowings were even lower at

Rs.2,963 crore compared to an unusually highRs.10,512 crore in the preceeding month.

Total government borrowings in December 2007stood at Rs.27,788 crore, lower than the Rs.28280

crore in November 2007 but higher than theRs.21,243 crore in December 2006.

Total government borrowings for the April–December 2007 period stood at Rs.3,22,613 crore,about 41 per cent higher than in the correspondingyear ago period.

Total state government borrowings for the April–December 2007 period stood at Rs.33,838 crore,about 161 per cent higher than in the correspond-ing year ago period.

Table 8.7 Central and State Government Market Borrowings (Rs.crore)

Central Government Borrowings State Total91 Days 182 Days 364 Days Dated Govt. Govt.

T-Bills T-Bills T-Bills Securities: Borrowings BorrowingsTotal

Dec 2006 7030 1000 2250 9000 1963 21243

Jan 2007 5100 1400 3657 9000 1515 20672Feb 2007 10855 1000 2096 9000 3600 26551

Mar 2007 14800 1825 4721 7000 3021 31368

Apr 2007 4800 1524 2430 16000 1837 26591May 2007 6804 1862 2000 18000 1750 30416

Jun 2007 40643 7000 5614 20000 3566 76823

Jul 2007 9850 1900 2583 19000 1389 34723Aug 2007 8103 3000 3033 17000 3484 34621

Sep 2007 16500 1855 2375 3000 3074 26804

Oct 2007 9281 2000 2024 18000 5263 36568Nov 2007 4767 1000 2000 10000 10512 28280

Dec 2007 14450 1125 2250 7000 2963 27788

Apr 06–Dec 06 52599 16562 25501 121000 12989 228652

Apr 07–Dec 07 115199 21266 24310 128000 33838 322613

Note: Dated securities auctioned includes amount devolved on Primary Dealers






28 Agriculture: Prospects

Kharif 2007 harvesting is over. Area sown underfoodgrain, oilseeds, sugarcane and cotton in thekharif 2007 was more than in kharif 2006. Be-cause of this, production of all major crops is esti-mated to be higher in the current agricultural year

than in the previous year. However, the growthwould be more pronounced in non–food crops suchas oilseeds, cotton and sugarcane. Higher prices of these commodities and satisfactory rainfall had en-couraged farmers to bring more area under thesecrops.

Non-food crops production is estimated to grow byan impressive 7.9 per cent during 2007–08 as com-pared with 3.1 per cent increase achieved in theprevious year. This impressive growth would comefrom 19 per cent increase in sugarcane productionand 11.7 per cent increase in oilseeds production.Growth in oilseeds would be a recovery over a 16per cent decline recorded in 2006–07.

On the other hand, foodgrain is estimated to see amarginal rise of 0.5 per cent in 2007–08 as againsta 3.4 per cent increase recorded in the precedingyear. After showing an impressive eight p er centincrease in 2006–07, wheat production is projected

to grow by 0.8 per cent in 2007–08. In quantity,wheat production is placed at 75.5 million tonnes.

Overall agricultural crops production is estimatedto grow by 3.8 per cent during 2007–08. This is

a robust growth, which would come on top of the2.9 per cent increase recorded in the previous year.Moreover, it would be the third consecutive yearof healthy growth after a 2.2 per cent decline wit-nessed in 2004–05.

Livestock, fishing and forestry & logging is esti-mated to grow by four per cent during 2007–08.With this, the GDP from agriculture and alliedactivities would be higher by 3.8 per cent in thecurrent fiscal year.

In spite of estimated higher production, rice pro-

curement by the government agencies was expectedto fall short of the target fixed by the government.In the first three months, the procurement was at11.56 million tonnes till 24 December 2007 as com-pared with 11.91 million tonnes procured in thesame period of 2006. According to official sources,total procurement could reach to 25 million tonnesin the current marketing season. The target for theyear is 27.6 million tonnes.

Table 10.2 Estimates of Production of Major Crops

Million tonnes % change2004–05 2005–06 2006–7 2007–08 2004–05 2005–06 2006–07 2007–08

(cmie proj) (cmie proj)

Foodgrain 198.4 208.6 216.1 217.2 -7.1 5.9 3.4 0.5

Cereals 185.2 195.2 201.9 202.6 -6.4 6.3 3.1 0.3

Pulses 13.1 13.4 14.2 14.6 -12.5 2.0 6.1 2.2

Oilseeds 24.4 28.0 23.9 27.0 -1.0 13.6 -16.0 11.7

Cotton (million bales) 16.4 18.5 22.7 27.0 19.7 12.6 22.7 19.0

Sugarcane 237.1 281.2 345.3 365.0 1.4 18.6 22.8 5.7

All commodities index -2.2 6.7 3.2 3.8Foodgrains index -7.1 5.9 3.4 0.5Non-food crop index 4.8 7.8 2.9 7.9




Energy: Coal 29

Coal stocks rise in November

At 39.2 million tonnes, coal production in Indiarose by a sharp 7.7 per cent during November 2007over the corresponding month last year. This isthe highest production recorded in the last eightmonths. While coal output recorded a sharp rise,increase in coal despatches was proportionatelylower. This led to a rise in coal stocks to 27.5 mil-lion tonnes as at the end of November 2007. Coalstocks were 4.6 per cent higher than the year–agolevel.

Cumulative production of coal recorded a 4.3 percent increase to 266.7 million tonnes during April–November 2007. Growth in coal production picked

up since August 2007. However, growth in coaldespatches was higher indicating increased demandfor coal. Coal despatches rose by a sharper 7.7 percent as compared to 5.9 per cent increase registered

in the corresponding period last year.

During April–August 2007, coal imports increasedto 21.6 million tonnes. This is 20.1 per cent higherthan 12.5 per cent rise witnessed during the year–

ago level.

Figure 11.1 Coal production (Million tonnes)

2006-07 2007-08

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

30

35

40

45

50

Table 11.1 Coal Statistics: Production, despatches, stocks and imports

Coal Coal Coal Coal Coal Coal Coal CoalProd. Prod. Imports Imports Stocks Stocks Despatches Despatches

(Million (% chg) (Million (% chg) (Million (% chg) (Million (% chg)tonnes) tonnes) tonnes) tonnes)

Nov 2006 36.40 4.7 4.30 15.4 26.27 41.8 35.03 7.4

Dec 2006 39.50 3.0 3.21 -20.3 29.03 37.9 36.65 2.7Jan 2007 42.15 10.0 3.99 14.6 33.17 46.2 37.79 5.6

Feb 2007 39.35 6.6 4.30 60.0 36.75 36.4 35.31 8.4

Mar 2007 48.49 10.6 5.92 34.5 44.89 30.9 40.12 10.3Apr 2007 31.69 0.5 4.96 33.0 40.59 25.1 35.77 6.3

May 2007 33.54 0.9 4.74 15.9 37.08 17.0 36.21 6.4Jun 2007 32.34 1.3 3.97 5.9 34.16 11.8 35.39 7.8

Jul 2007 31.04 1.1 3.56 10.6 30.54 9.7 34.70 3.3

Aug 2007 31.74 8.7 4.33 39.5 27.37 6.7 35.02 12.9Sep 2007 31.02 6.2 25.46 3.8 32.81 7.6

Oct 2007 36.67 9.2 25.41 1.7 36.62 10.8

Nov 2007 39.20 7.7 27.48 4.6 36.95 5.5

Apr–Nov Apr–Nov Apr–Aug Apr–Aug Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 255.70 4.7 18.00 12.5 263.33 5.92007–08 266.70 4.3 21.63 20.1 283.50 7.7

Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar

2006–07 425.11 5.9 48.10 16.7 413.50 6.2

Monthly figures may not add up to the total due to revisions




30 Energy: Crude Oil

Crude oil prices remain firm

Benchmark international prices of crude oil in theLondon market remained firm during December2007. They averaged 47 p er cent higher than the

year–ago levels. Consequently, the Indian basketof crude oil averaged at USD 88.32 per barrel ascompared to USD 59.94 a barrel during the corre-sponding month last year. In line with crude oil,global petro–products prices also became dearer by42–47 per cent.

During April–November 2007, the upstream oilcompanies registered a production rise of 56 ba-sis points over the year–ago level. The growthrate receded this year as compared to 5.5 per centrecorded in the corresponding period last year.Output by private and joint venture companies roseby 1.95 lakh tonnes to 32.1 lakh tonnes. This risewas marginally offset by a 3.9 per cent decline incumulative production witnessed by Oil India. Pro-duction by ONGC remained constant at 226.9 lakhtonnes.

POL imports increased by 16.7 per cent to USD5,823 million in November. Despite appreciation of Indian rupee by 12.1 per cent against USD, POLimports recorded a 2.6 per cent rise to Rs.22,966crore during the month on account of surge in price

of Indian basket of crude oil.

Figure 11.2 Crude Oil Production (Lakh tonnes)

2006-07 2007-08

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar26.5

27.0

27.5

28.0

28.5

29.0

29.5

Table 11.2 Crude Oil Production, Crude Throughput and Imports

Crude Oil Crude Oil Crude Crude POL POLProd. Prod. Throughput Throughput imports imports

(Lakh tonnes) (% change) (Lakh tonnes) (% change) (US°

million) (% change)Nov 2006 28.14 9.8 123.31 16.4 4,989 48.3

Dec 2006 29.24 10.7 122.83 6.2 4,393 18.2

Jan 2007 29.01 4.7 127.46 9.2 3,758 -9.8Feb 2007 26.66 4.9 120.87 11.3 4,496 9.4

Mar 2007 29.34 3.2 135.24 13.4 4,919 17.0

Apr 2007 27.91 1.4 125.18 15.1 5,488 38.2May 2007 28.18 -1.6 133.26 14.9 5,612 15.6

Jun 2007 27.74 -1.8 129.32 9.9 5,888 21.2

Jul 2007 28.88 0.9 127.98 4.7 5,440 6.2Aug 2007 28.76 6.5 130.95 8.2 6,205 11.9

Sep 2007 27.94 -0.7 127.40 6.9 5,557 9.3

Oct 2007 29.24 -0.1 126.79 2.8 6,126 14.6Nov 2007 28.22 0.3 129.73 5.2 5,823 16.7

Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 225.62 5.5 951.53 13.5 39,339 41.72007–08 226.89 0.6 1,030.61 8.3 43,349 10.2

Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar

2006–07 339.87 5.6 1,465.52 12.6 57,036 29.8

Monthly figures may not add up to the total due to revisions




Energy: Crude Oil 31

At 129.7 lakh tonnes, refinery throughput in Indiawitnessed a 5.2 per cent increase during Novem-ber. During April–November 2007, refineries regis-tered an output of 1,030 lakh tonnes, up by 8.3 percent over the year–ago level. Cumulative produc-

tion surpassed the planned target by seven per cent.Indian Oil Corporation which accounts for close to30 per cent of the total domestic throughput mainlyled to the rise in total cumulative production by ex-isting refineries. Its refinery at Panipat witnesseda 62.9 per cent growth to 87.2 lakh tonnes. Thegrowth in total output was also contributed by thenewly setup refinery by Essar Oil. Refinery util-isation by all refineries declined sharply to 103.8per cent as compared to 107.5 per cent registeredduring the first eight months of 2007–08.

Petro–products demand in line with ourestimate

During April–November 2007, consumption forpetro–products in India rose to 816 lakh tonnes,

up by 4.5 per cent over the year–ago level. De-mand for petrol and diesel also surged by 11.8 percent and 9.7 per cent, respectively. Consumption of LPG continued to increase for the fifth consecutivemonth in November and registered a cumulativegrowth of 10.2 per cent. The pick–up in demandfor petro–products during October and November2007 by 10.2 per cent and 7.5 per cent, respectivelypulled up the growth in cumulative consumption.

Table 11.3 Consumption of Major Petroleum Products (’000 tonnes)

LPG % chg. Petrol % chg. Diesel % chg. Kero- % chg. Naphtha % chg. Total % chg.sene

Nov 2006 928 -9.2 738 5.3 3,721 8.4 788 -15.9 1,214 41.5 10,051 5.8

Dec 2006 976 4.8 803 9.5 3,969 7.7 699 -11.6 1,969 82.7 10,147 0.4

Jan 2007 973 5.9 775 8.8 3,683 7.4 844 6.6 900 -16.0 10,297 5.7Feb 2007 953 8.5 750 4.5 3,470 1.2 802 3.1 959 -10.2 9,737 3.6

Mar 2007 972 11.6 883 15.6 3,993 11.6 788 0.6 1,155 10.7 11,572 13.2

Apr 2007 911 13.3 821 11.7 3,965 8.4 768 0.7 1,052 4.8 10,273 5.0May 2007 917 6.9 918 1.9 4,124 1.0 782 -0.3 1,134 -5.9 10,782 -1.5

Jun 2007 880 6.3 854 20.5 3,929 19.9 775 -7.0 1,003 -22.2 10,263 4.6Jul 2007 945 9.6 856 17.6 3,691 14.0 772 -2.8 887 -13.3 9,621 2.9

Aug 2007 992 10.3 825 8.8 3,311 5.7 776 -5.0 1,201 19.9 9,646 5.8

Sep 2007 1,000 10.5 813 8.4 3,334 2.8 793 -0.4 1,061 8.6 9,500 2.1Oct 2007 1,026 14.4 851 11.2 4,004 17.2 780 1.8 1,170 7.7 10,711 10.2

Nov 2007 1,025 10.5 864 17.1 4,115 10.6 790 0.3 1,133 -6.7 10,807 7.5

Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr–Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov

2006–07 6,981 1.8 6,084 6.4 27,769 6.5 6,341 -0.9 8,801 10.9 78,092 5.92007–08 7,696 10.2 6,802 11.8 30,473 9.7 6,236 -1.7 8,641 -1.8 81,603 4.5

Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr–Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar

2006–07 10,855 3.8 9,295 7.5 42,884 6.7 9,474 -0.7 13,784 13.0 1,19,845 5.9




32 Energy: Electricity

Power generation up 6.6%

The healthy rise in total power generation in In-dia continued during April–December 2007. Ris-ing by 6.6 per cent over the year–ago level, total

power generation rose to 525.9 billion kwh. Whilehydel power generation recorded highest growth of 9.8 per cent to 100.8 billion kwh, output by ther-mal and nuclear power plants recorded a rise of 5.3per cent over the corresponding year–ago period.While higher PLF at 76.7 per cent accounted forthe rise in thermal p ower generation, output bynuclear power plants dipped. However, both thesources of power accounted for 64 per cent increasein cumulative power generation during the said pe-riod.

With availability of power increasing by 7.5 percent and requirement augmenting by seven percent, power shortage in India during April–November 2007 witnessed an improvement. Powerdeficit stood at 7.9 per cent as compared to 8.4 per

cent during the year–ago period. However, peakpower deficit rose from 12.2 per cent to 12.9 percent. Power shortage in India is likely to declineon account of increase in total power generation,higher PLF and slower growth in demand from the

agricultural sector on account of higher reservoirlevels.

Figure 11.3 Power Generation (billion kwh)

2006-07 2007-08

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar51

52

53

54

55

56

57

58

59

60

61

Table 11.4 Power Generation StatisticsTherm. & Therm. & Hydel Hydel Total Total PLF of Power

nuc. nuc. power power power power therm. shortagespower power generation generation generation generation plants

generation generation

(Billion (% (Billion (% (Billion (% (%) (%)kWh) change) kWh) change) kWh) change)

Dec 2006 49.99 10.9 8.72 22.6 58.97 12.9 79.10 12.17

Jan 2007 50.61 8.6 7.56 6.1 58.35 8.5 82.60 12.51Feb 2007 46.86 7.9 5.83 -14.1 51.91 3.4 82.20 11.71

Mar 2007 50.67 5.7 7.96 17.7 58.86 7.6 82.70 10.36

Apr 2007 48.96 6.8 8.72 16.7 58.01 8.7 82.30 11.66May 2007 50.84 8.9 9.57 8.8 60.78 9.3 83.50 8.05

Jun 2007 46.59 6.0 10.01 8.3 57.08 6.8 76.80 6.41

Jul 2007 42.25 -1.2 15.35 42.0 58.32 8.3 70.00 5.37Aug 2007 42.50 7.7 15.64 8.1 59.04 8.7 73.10 5.35

Sep 2007 41.94 2.4 13.73 4.8 56.55 4.0 71.40 5.14

Oct 2007 47.83 4.4 11.35 0.9 59.89 4.2 76.70 10.14Nov 2007 47.87 9.4 8.65 9.6 56.86 9.4 79.60 10.40

Dec 2007 51.40 2.8 7.73 -11.3 59.33 0.6

Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Dec Apr–Nov Apr–Nov

2006–07 399.20 6.0 91.75 13.8 493.38 7.5 74.10 8.39

2007–08 420.19 5.3 100.75 9.8 525.86 6.6 76.70 7.87


2006–07 546.15 6.2 113.36 11.9 662.51 7.3 76.80 9.57




Infrastructure: Railways 33

Indian Railways freight traffic up 7.5%

After growing by a robust 12.4 per cent in Oc-tober, Indian Railways’ (IR) monthly revenue–earning freight traffic grew by 7.5 per cent to 65.7million tonnes in October 2007. This growth wasalso lower than its year ago growth of 11 per cent.However, the IR was successful in meeting its tar-get of 65.3 million tonnes during the month. IR’sfreight earnings during November were higher by10.7 per cent to Rs.3,992.8 crore on a year–on–yearbasis.

Coal was the major commodity handled during theperiod April–November 2007 with a share of 42.9per cent in total traffic. Coal traffic grew by 8.4

per cent to 215.1 million tonnes during the period.Cement which had a share of 10 per cent in totalrailway traffic during the period rose by 5.4 percent to 50.4 million tonnes.

Iron ore for export was the fastest growing com-modity handled by the IR during the April–November 2007. It grew by 35 per cent to 33.7 mil-lion tonnes. Other goods which included pig ironand finished steel from other points, iron ore for

other domestic users, container service and othergoods, grew by 11.6 per cent to 82.6 million tonnes.It had a share of 16.5 per cent in total railway traf-fic. Foodgrain traffic dipped by 13.9 per cent to22.3 million tonnes during the period.

During April–November 2007, IR carried a total of 501.4 million tonnes of revenue earning traffic, upeight per cent over its year–ago levels. Its freightearnings during the period grew by a faster 11 percent to Rs.29,416.4 crore

Figure 12.1 Revenue-Earning Freight Traffic onRailways (Million tonnes)

2006-07 2007-08


56

58

60

62

64

66

68

70

72

Table 12.1 Monthly Revenue-Earning FreightTraffic On Railways

Million % changetonnes

Nov 2006 61.06 11.0

Dec 2006 63.56 7.5

Jan 2007 65.74 6.5

Feb 2007 61.67 6.8

Mar 2007 72.07 8.9Apr 2007 60.68 4.5

May 2007 63.85 7.2

Jun 2007 60.46 3.9Jul 2007 61.80 7.7

Aug 2007 61.84 11.7

Sep 2007 60.77 9.0Oct 2007 66.05 12.4

Nov 2007 65.67 7.5

Apr 06–Nov 06 464.39 10.1

Apr 07–Nov 07 501.38 8.0

Apr 06–Mar 07 728.41 9.2

Table 12.2 Commodity-wise Railway Freight Traf-fic: April–November 2007

Million % chg. % sharetonnes over

06–07

Coal 215.05 8.4 42.9

Cement 50.37 5.4 10.0

Raw material tosteel plants 35.22 2.8 7.0

Iron ore for export 33.71 35.0 6.7

Fertilisers 24.54 6.4 4.9

POL 23.27 1.7 4.6Foodgrain 22.27 -13.9 4.4

Pig iron and finished steelfrom steel plants 14.38 9.0 2.9

Other goods 82.57 11.6 16.5

Total 501.38 8.0 100.0




34 Infrastructure: Ports & Shipping

Cargo traffic growth slows down to 8.9%

Cargo traffic at major ports grew by 8.9 per cent to44.8 million tonnes in November 2007. This growthwas the slowest recorded in the last five months.

POL was the largest commodity handled at majorports with a share of 30.9 per cent in total porttraffic during the month. Iron ore cargo followedwith a share of 19 per cent.

Cargo traffic at JNPT port grew the fastest by25.4 per cent in November 2007. It handled 4.6million tonnes of cargo traffic during the month.Container cargo had the largest share of 93.6 percent in total cargo traffic handled by JNPT dur-ing the month. Mormugao port came next with a

growth of 23.8 per cent in total cargo traffic han-dled in November. It handled the highest iron orecargo of 3.3 million tonnes among all major portsin November. Vishakhapatnam port handled thelargest cargo traffic of 5.7 million tonnes in Novem-ber 2007, up by a robust 22 per cent over the corre-sponding month of the previous year. Kandla portcame a close second by handling a cargo traffic of 5.3 million tonnes. However, it registered a slowergrowth of 11.6 per cent in cargo traffic.

Table 12.3 Port-wise Traffic: April–November

2007’000 % change % Share

tonnes

Kandla 41,895 25.6 12.6Visakhapatnam 42,127 17.2 12.6

Mumbai 38,163 13.3 11.4

Chennai 37,796 8.6 11.3

Jawaharlal Nehru 35,168 23.2 10.5

Haldia 28,977 4.4 8.7

Paradip 26,857 9.7 8.1New Mangalore 24,270 14.7 7.3

Mormugao 19,692 0.2 5.9

Tuticorin 13,482 14.4 4.0

Cochin 10,399 0.5 3.1Ennore 7,628 18.0 2.3

Kolkata 7,055 6.4 2.1

Total 3,33,509 13.2 100.0

Kolkata port recorded the sharpest fall of 26.3 per

cent in cargo traffic to 1.4 million tonnes in Novem-ber 2007. Though cargo traffic at the port was sig-nificantly lower on a year–on–year basis, it was thehighest handled since March 2007. The increasecame on the back of a larger quantity of POL traf-

fic handled during November compared to the pre-vious months.

During April–November 2007, cargo traffic at major ports grew by 13.2 per cent to 333.5 milliontonnes. CMIE projects cargo traffic at major portsto grow by 10 per cent during 2007–08.

Table 12.4 Traffic at Major Ports

’000tonnes

%change

Nov 2006 41,140 17.0

Dec 2006 42,124 10.6Jan 2007 42,183 13.2

Feb 2007 39,127 14.1

Mar 2007 45,224 11.6Apr 2007 40,538 23.6

May 2007 43,064 12.4Jun 2007 39,390 7.6

Jul 2007 41,439 16.4

Aug 2007 40,032 11.5Sep 2007 39,668 11.3

Oct 2007 44,491 14.7

Nov 2007 44,816 8.9

Apr 06–Nov 06 2,94,605 8.0

Apr 07–Nov 07 3,33,509 13.2

Apr 06–Mar 07 4,63,839 9.5

Figure 12.2 Cargo Handled at Major Ports (Mil-lion tonnes)

2006-07 2007-08


34

36

38

40

42

44

46




Infrastructure: Civil Aviation 35

Air passenger traffic up 22.5% in October

Air passenger traffic growth which slowed down to21.8 per cent in September 2007 continued to growat a slow pace even in October. Passenger traffic

at all airports grew by 22.5 per cent to 93.9 lakhduring the month.

The moderation in growth came on the back of asubdued growth in domestic passenger traffic whichformed a major 75.6 per cent of the total air pas-senger traffic in October 2007. Domestic air pas-senger traffic growth slowed down to around 24per cent during September and October 2007 com-pared to the robust growth achieved in the pastfew months. Domestic passenger traffic at Hyder-abad airport grew by 29 per cent in October 2007,

much slower than the 48 per cent growth achievedduring the same month a year ago. Similarly, Ban-galore airport too recorded a slower 27 per centgrowth in traffic as compared to 29 per cent growth

achieved a year ago. Domestic passenger traffic atthe busiest airports of Mumbai and Delhi grew by18 per cent and 22 per cent, respectively during themonth.

International passenger traffic grew by a healthy17.5 per cent to 22.9 lakh passengers during Octo-ber 2007. International passenger traffic at Mum-bai and Delhi airport grew by 10 per cent each dur-ing October 2007. Kolkata airport witnessed thefastest rise of 40 per cent in international passen-ger traffic among all airports during the month.

During the period April–October 2007, total pas-senger traffic grew by 26.7 per cent to 655.7 lakhpassengers. CMIE projects passenger traffic at allairports to grow by 23 per cent during the year

2007–08. ATF price ex–Mumbai was lowered by4.1 per cent to Rs.47,045/kilolitre for January 2008.However, airlines did not decide on any cut in thefuel surcharge.

Table 12.5 Airport Performance All India

Domestic Traffic International Traffic Total TrafficPass- Pass- Pass- Pass- Pass- Pass-

Aircraft Aircraft engers engers Aircraft Aircraft engers engers Aircraft Aircraft engers engers(’000) (% chg) (Lakh) (% chg) (’000) (% chg) (Lakh) (% chg) (’000) (% chg) (Lakh) (% chg)

Oct 2006 73.9 36.4 57.2 34.6 17.5 10.6 19.5 12.7 91.4 30.6 76.6 28.2

Nov 2006 76.4 36.5 59.0 30.6 18.1 9.3 21.3 13.3 94.5 30.3 80.3 25.5Dec 2006 79.4 33.3 69.4 39.0 19.6 6.6 25.4 13.3 99.0 27.0 94.8 31.0

Jan 2007 80.0 33.0 68.2 37.5 20.1 11.0 26.4 16.8 100.1 27.9 94.5 31.0

Feb 2007 75.2 28.0 64.4 32.6 17.4 8.2 22.3 13.4 92.6 23.7 86.7 27.1Mar 2007 83.3 27.6 66.2 28.3 19.7 12.1 23.6 16.6 103.0 24.3 89.8 25.0

Apr 2007 82.1 30.2 70.8 31.0 19.2 12.8 22.8 18.6 101.4 26.5 93.6 27.7

May 2007 86.1 32.3 76.1 29.9 19.4 12.9 23.3 17.0 105.5 28.3 99.4 26.7Jun 2007 83.0 31.5 71.8 34.2 18.8 11.3 23.0 15.3 101.8 27.3 94.8 29.1

Jul 2007 86.0 30.4 68.9 34.7 19.7 12.6 23.7 16.2 105.7 26.7 92.5 29.5

Aug 2007 87.0 30.4 69.4 34.1 19.9 14.3 24.3 18.8 107.0 27.1 93.7 29.7Sep 2007 85.0 24.6 65.5 24.0 19.6 14.3 22.2 15.6 104.6 22.5 87.6 21.8

Oct 2007 89.9 21.7 71.0 24.2 20.6 17.6 22.9 17.5 110.5 20.9 93.9 22.5

Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr–

Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct2006–07 466.1 34.1 378.9 43.0 120.7 15.8 138.5 15.5 586.8 29.8 517.4 34.4

2007–08 599.3 28.6 493.5 30.2 137.4 13.8 162.2 17.1 736.7 25.6 655.7 26.7

Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr– Apr–Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar

2006–07 860.0 32.8 706.1 38.5 215.5 12.9 257.5 15.1 1,075.5 28.3 963.6 31.4




36 Infrastructure: Telecommunications

Wireless segment adds highest sub-scribers

In November 2007, 8.22 million subscribers wereadded taking the total outstanding telephone sub-

scriber base to 264.77 million. The overall teleden-sity reached 23.2 per cent in November 2007.

Wireless services providers added 8.32 million sub-scriber in November 2007, the highest monthlyaddition ever made. The total wireless sub-scribers base comprising of GSM, CDMA andWLL(F)reached 225.46 million

In November 2007, GSM service providers added6.14 million subscribers representing a growth of 21.8 per cent over the year–ago period. This is the

slowest growth in subscriber addition since April2007. Growth in cellular subscriber base at 46.5for the period April–November 2007 is slower whencompared to the 113.6 per cent growth in the year–ago period. Total GSM subscriber base stood at166.16 million subscribers, higher by 64.9 per centover the year–ago period.

In November 2007, wireline subscriber base de-clined by one lakh subscribers to 39.31 million sub-scribers. This is a decline of 2.6 per cent in thesubscriber base over the year–ago period.

Tamil Nadu made the highest addition of 8.34 lakhsubscribers in November 2007. Andaman & Nico-bar, Delhi, Madhya Pradesh, Maharashtra, Mum-bai and Uttar Pradesh (E) were the other circlesadding more than five lakh subscribers each.

Table 12.6 GSM Cellular Services

New Cellular Outstanding CellularSubscribers Subscribers

(Lakh nos.) (% chg.) (Lakh nos.) (% chg.)

Nov 2006 50.44 116.7 1007.86 82.2Dec 2006 46.39 45.5 1054.25 80.2

Jan 2007 49.94 42.1 1104.20 78.0

Feb 2007 48.77 53.9 1152.97 76.9Mar 2007 61.35 21.0 1214.31 72.8

Apr 2007 41.34 121.7 1255.66 74.1

May 2007 50.42 59.2 1306.08 73.5Jun 2007 51.79 62.1 1357.87 73.0

Jul 2007 60.61 54.2 1418.47 72.1

Aug 2007 62.41 48.4 1480.89 71.0Sep 2007 59.03 34.3 1539.91 69.2

Oct 2007 60.22 27.4 1600.14 67.1

Nov 2007 61.44 21.8 1661.57 64.9

Apr-Nov Apr-Nov Nov Nov

2006–07 305.28 113.6 1007.86 82.22007–08 447.26 46.5 1661.57 64.9

Apr-Mar Apr-Mar Mar Mar

2006–07 511.73 75.1 1214.31 72.8

Table 12.7 Total Outstanding Subscribers

Total % chg. Total % chg. Mobile % chg. Mobile % chg.Subs- Land- GSM WLL

cribers line (F+M)(excl. WLL(F))

(’000 nos.) (%) (’000 nos.) (%) (’000 nos.) (%) (’000 nos.) (%)

Nov 2006 1,83,459.0 52.89 40,348.5 -2.00 1,00,786.0 82.20 42,324.5 80.07

Dec 2006 1,89,921.9 52.10 40,327.4 -1.97 1,05,425.2 80.20 44,169.3 75.12Jan 2007 1,96,708.7 51.54 40,322.9 -1.91 1,10,419.6 78.04 45,966.2 72.28

Feb 2007 2,02,916.8 51.00 40,386.8 -1.90 1,15,296.6 76.87 47,233.4 68.52

Mar 2007 2,06,827.7 46.15 40,777.7 -2.03 1,21,431.2 72.84 44,618.8 50.53Apr 2007 2,11,754.1 46.84 40,539.9 -2.10 1,25,565.5 74.10 45,648.7 48.83

May 2007 2,18,056.4 46.76 40,266.4 -2.83 1,30,608.0 73.47 47,182.0 48.12Jun 2007 2,25,010.2 46.90 40,088.0 -2.50 1,35,786.7 73.01 49,135.5 46.35Jul 2007 2,32,878.3 47.04 39,893.2 -2.44 1,41,847.5 72.11 51,137.6 45.82

Aug 2007 2,41,035.6 46.91 39,734.2 -2.33 1,48,088.6 70.96 53,212.8 44.73

Sep 2007 2,48,667.4 46.26 39,579.1 -2.28 1,53,991.3 69.20 55,097.0 43.10Oct 2007 2,56,549.8 45.12 39,413.6 -2.72 1,60,013.6 67.13 57,122.6 40.97

Nov 2007 2,64,773.6 44.32 39,311.9 -2.57 1,66,157.4 64.86 59,304.3 40.12




Industry: Industrial Production 37

IIP unusually slows to 5.3 per cent

Growth in industrial production, as measured bythe changes in the Index of Industrial Production(IIP), fell sharply to 5.3 per cent in November 2007.

This is a rather unusually sharp fall given that theIIP growth has been averaging close to ten per centduring the past two years, on a year-over-year ba-sis.

We believe that this decline in the growth of IIPis partly the result of a cyclical fall in sugar pro-duction. During the first few months of its crush-ing season, growth in sugar production is suscep-tible to wide variations in growth rates because of small production levels during these months. Asa result, growth rates are often abnormal. For ex-

ample, in November 2007, sugar production wasdown by 40.2 per cent. This does not have anysignificant impact upon the annual sugar produc-tion since November production has less than fiveper cent share in total production. However, sugarcontinues to have a significant share in the IIP evenduring this month. As a result, its 40 per cent de-cline leads to a 15 per cent decline in the index forfood products and this drags the IIP growth down.

Besides the decline in the food index, the indicesfor jute textiles and metal products have also de-

clined. Both these have relatively small weightsin the IIP. The significant decline besides food istransport equipment. This index declined by 0.7per cent. This largely reflects the decline in theproduction of commercial vehicles. This is partly

the result of a shift in production in favour of highertonnage vehicles.

Growth in the IIP and also the GDP have beendriven by growth in investments. This has beenreflected in the acceleration in the index for capi-tal goods. During April-November 2007, the indexfor capital goods increased by 20.8 per cent com-pared to 17.4 per cent in the corresponding periodof the previous year. This acceleration is main-tained in the November 2007 IIP as well. The cap-ital goods index grew by a robust 24.5 per cent in

the month. We also see that the imports of capitalgoods grew by an equally robust 30 per cent duringApril-August 2007. The continued growth in thethe capital goods segment implies that the growthdynamics of the industrial sector are in place.

The stray nature of the decline in the food indexand the continuation of the growth in the capi-tal goods index implies that the decline in the IIPin November is not a cause for concern. The IIPis likely to bounce back with robust growth ratesagain in the coming months.

Figure 13.1 Index of Industrial Production (%change over previous year)

2006-07 2007-08


4

6

8

10

12

14

16

Figure 13.2 Index of Industrial Production:Growth forecast

(CMIE Forecast)

5.8

7.0

8.4 8.2

11.3

9.0

2002-03 2003-04 2004-05 2005-06 2006-07 2007-080

2

4

6

8

10

12




38 Industry: Industrial Production

However, the 4.1 per cent fall in the consumerdurables production index is worrisome. This indexhad recovered in October with a handsome increaseof 9.3 p er cent. Its fall back to the negative zoneindicates that its recovery is not complete. We be-

lieve that the demand for consumer durables wasadversely affected by the sharp increase in inter-est rates earlier in the current fiscal. As interestrates stabilise and decline, the demand for con-sumer durables is expected to pick up again.

There are other reasons to believe that the fall of the IIP in November is an aberation and not atrend. Demand for coal has accelerated since Au-gust. Power generation and shortages have bothincreased. Shortages shot up to over ten per cent in

October and November 2007 indicating an increasein demand. Petroleum products consumption in-creased sharply in October and November to 10.2and 7.5 per cent respectively again indicating a risein demand.

Table 13.1 % Change in Index of Industrial Production by Industry Group

Weight May Jun Jul Aug Sep Oct Nov Apr 05– Apr 06– Apr 07–

(%) 2007 2007 2007 2007 2007 2007 2007 Nov 05 Nov 06 Nov 07Mining & quarrying 10.47 3.8 1.5 3.2 14.7 4.9 5.7 3.5 0.5 4.2 4.8

Manufacturing 79.36 11.3 9.7 8.8 10.7 7.1 13.4 5.4 9.4 11.8 9.8Food products 9.08 23.4 0.5 -4.4 1.1 -2.4 1.7 -15.1 -4.6 2.5 6.8

Beverages & tobacco 2.38 11.6 12.2 8.8 8.3 5.1 18.1 7.5 17.4 13.0 9.5

Cotton textiles 5.52 5.4 7.0 6.3 3.9 4.8 7.2 0.6 11.3 13.0 5.5Wool, silk & man–madetextiles 2.26 8.6 1.8 5.6 8.6 4.6 8.4 0.0 -0.8 7.6 4.5

Jute textiles 0.59 40.4 35.2 16.1 9.5 4.7 1.2 -3.4 2.6 2.3 13.3

Textile products 2.54 2.9 2.5 4.0 -2.1 0.3 15.4 4.8 20.6 12.2 4.8

Wood products 2.70 118.1 103.8 66.7 62.1 72.5 73.7 37.7 -3.5 2.4 72.6Paper products 2.65 0.6 3.3 -5.8 4.0 2.4 5.8 1.9 5.2 8.9 1.6

Leather products 1.14 6.5 7.7 8.8 10.5 13.4 31.6 10.8 -0.1 -3.4 12.2

Chemical products 14.00 5.9 7.7 15.8 9.2 6.8 15.4 7.6 11.7 9.2 9.4Rubber, plastic, petroleum &coal prod. 5.73 11.2 11.2 8.4 18.1 7.3 8.0 7.1 2.8 11.9 10.8

Non-metallic mineral prod. 4.40 8.6 3.7 10.6 14.4 7.5 14.5 0.8 8.3 13.6 8.4

Basic metals 7.45 21.4 21.3 17.7 19.0 14.1 11.0 5.1 15.6 20.5 15.6

Metal products 2.81 5.4 -7.8 -6.2 -3.6 4.2 -19.8 -5.7 -2.2 7.0 -4.4

Machinery & equipments 9.57 19.5 11.0 8.9 10.5 5.9 19.6 11.2 10.8 15.0 12.2

Transport equipment 3.98 -0.8 0.9 -2.8 11.0 -1.4 11.4 -0.7 12.5 16.3 2.7Miscellaneous industries 2.56 -3.0 33.4 3.5 22.7 28.1 3 2.9 43.9 23.0 10.8 19.1

Electricity 10.17 9.4 6.8 7.5 9.2 4.5 4.2 5.8 5.0 7.3 7.0

General 100.00 10.6 8.9 8.3 10.9 6.8 12.0 5.3 8.3 10.9 9.2Basic goods 35.56 10.3 9.2 8.7 12.7 6.5 6.7 4.8 6.1 9.5 8.4

Capital goods 9.26 22.4 23.1 12.3 30.8 20.5 20.2 24.5 16.2 17.4 20.8

Intermediate goods 26.51 8.8 8.6 7.7 13.8 10.4 13.9 7.3 2.5 11.1 10.1

Consumer goods 28.66 8.7 3.6 7.1 0.0 -0.9 13.1 -2.6 13.2 9.9 5.2Consumer durables 5.37 -0.7 -3.6 -2.7 -6.2 -7.2 9.3 -4.1 14.2 12.4 -1.7

Consumer non-durables 23.30 12.1 6.3 10.5 2.4 1.6 14.7 -2.1 12.9 8.9 7.8




Industry: Industrial Production 39

Table 13.2 Index of Industrial Production by Major Industry Group (Base 1993–94=100)

Weight May Jun Jul Aug Sep Oct Nov Apr 05– Apr 06– Apr 07–(%) 2007 2007 2007 2007 2007 2007 2007 Nov 05 Nov 06 Nov 07

Mining & quarrying 10.47 1 68.1 1 58.6 1 57.0 1 56.0 1 54.0 1 70.5 1 69.6 148.2 154.4 161.9

Manufacturing 79.36 280.5 273.6 272.9 279.2 280.4 279.4 280.8 225.4 252.1 276.7

Electricity 10.17 225.6 211.7 216.2 219.9 210.1 221.4 210.9 188.5 202.2 216.4Basic goods 35.56 223.6 215.8 216.7 217.6 214.0 227.5 220.0 184.2 201.6 218.5

Capital goods 9.26 334.7 358.3 317.4 368.6 387.9 348.7 393.2 245.7 288.5 348.4

Intermediate go ods 26.51 264.2 260.1 264.1 273.3 265.5 260.7 259.9 214.2 238.1 262.1

Consumer goods 28.66 288.8 266.9 274.5 266.8 271.4 278.9 274.4 239.3 262.9 276.6

Consumer durables 5.37 380.3 357.9 351.5 379.7 389.3 433.4 374.0 340.2 382.4 376.0Consumer non-durables 23.30 267.7 246.0 256.8 240.8 244.3 243.3 251.5 216.0 235.3 253.7

General 100.00 263.1 255.3 255.0 260.3 260.0 262.1 262.0 213.6 236.8 258.6






Industry: Tea 41

Tea prices scale to one–year high in De-cember

After witnessing a decline (y–o–y) in production forthe last four months, tea production rose by 5.5 per

cent in November 2007. During January–November2007, production of tea declined by 1.8 per cent to894.5 million kgs as compared to the modest 3.6per cent growth in the corresponding year–ago pe-riod. Fall in production, increased domestic con-sumption and less carry over stock are pushing teaprices up. In December 2007, all–India tea auctionprice scaled to its one–year high of Rs.71.7 per kg.As compared to the previous month, the averageauction price remained stagnant in North India atRs.75 per kg in December 2007. However, it was

up by 13.4 per cent as compared to the year–agolevel. In South India prices recovered marginallyby 0.5 per cent to Rs.50 per kg.

In August 2007, tea exports declined by 4.8 percent to 19.2 million kgs as against the robust 30per cent growth witnessed in the year–ago month.Bumper crop in Kenya, appreciation of Indian ru-

pee vis–a-vis the USD, payment problems in Iraqand the shifting consumer preference from CTC toOrthodox variety have all taken a toll on tea ex-ports.

The government is taking various steps to ensurethe revival of the tea gardens. As per media re-ports, a Special Purpose Tea Fund has been an-nounced by the Union Minister of State, to impartloans and subsidies to the gardens.

Table 13.4 Tea Production by Major ProducingStates: January–November

Tonnes % change2006 2007 2006 2007

Northern India 703763 692607 5.15 -1.59

Assam 470334 462719 2.54 -1.62West Bengal 221271 217179 11.18 -1.85

Others 12158 12709 4.96 4.53Southern India 207513 201906 -1.16 -2.70

Tamil Nadu 139541 140457 -2.33 0.66

Kerala 63145 56768 1.74 -10.10Karnataka 4827 4681 -4.02 -3.02

India 911276 894513 3.64 -1.84

Table 13.5 Tea Statistics: Production, Exports and Prices

Prodn. Prodn. Export(Qty)

Export(Qty)

Export(Val)

Export(Val)

Prices* Prices*

(Tonnes) (% chg.) (Tonnes) (% chg.) (Rs.crore) (% chg.) (Rs./kg) (% chg.)Dec 2006 46,825 -3.92 16,046 -8.98 156.68 -3.04 63.29 3.89

Jan 2007 21,004 -12.29 13,823 12.48 121.50 1.18 61.12 5.28

Feb 2007 15,018 -5.53 12,915 17.96 122.15 -0.82 58.58 1.27Mar 2007 50,656 -12.84 30,024 164.87 96.25 -31.68 54.82 7.48

Apr 2007 65,371 15.85 7,977 -13.71 85.93 -15.50 65.07 7.08

May 2007 74,370 2.11 7,493 -28.95 90.79 -32.84 67.93 8.53Jun 2007 1,08,291 0.79 11,790 -7.93 122.56 -24.35 67.91 -2.16

Jul 2007 1,25,083 -1.67 10,348 -44.38 133.08 -35.61 70.13 -0.13

Aug 2007 1,16,275 -4.54 19,236 -4.79 210.55 -8.74 66.46 -3.46Sep 2007 1,13,195 -9.07 65.10 -8.28

Oct 2007 1,13,297 -2.27 64.47 -3.66

Nov 2007 91,953 5.47 68.32 6.85Dec 2007 71.70 13.30

Jan–Nov Jan–Nov Jan–Aug Jan–Aug Jan–Aug Jan–Aug Jan–Dec Jan–Dec

2006–06 9,11,276 3.64 1,05,979 -1.71 1,220.36 9.81 63.65 12.282007–07 8,94,513 -1.84 1,13,606 7.20 982.80 -19.47 65.13 2.33


2006–07 9,46,814 1.72 64.29 12.71

Monthly figures may not add up to the total due to revisions. *Average prices in Auction centres.








44 Industry: Man-made Fibre

Healthy rise in polyester and viscose pro-duction

In September 2007, production of polyester staplefibre (PSF) continued to rise at a healthy pace for

the second month in a row. Output rose by astrong 23 per cent during the month. Aggregateproduction during the first half of 2007–08 grew by13.7 per cent, over and above the growth of 27 percent witnessed during the corresponding period lastyear.

Similarly, production of polyester filament yarn(PFY) maintained its double–digit rise for thefourth consecutive month. Output grew by ahealthy 14.1 per cent in September. Aggregate pro-

duction during the first half of 2007–08 rose by astrong 15.1 per cent over and above the growth of 11.2 per cent registered during the correspondingperiod last year.

Production of viscose staple fibre (VSF) continued

to rise at a slow pace for the second consecutivemonth. Output in September increased by a mod-est 2.2 per cent to 22,840 tonnes. However, therobust growth witnessed during May–July 2007 re-sulted in cumulative output rising by a healthy 25.3

per cent during the first half of 2007–08.

Figure 13.6 Production of Polyester FilamentYarn (Tonnes)

2006-07 2007-08


95000

100000

105000

110000

115000

120000

Table 13.8 Production Statistics: Polyester Filament Yarn, Polyester & Viscose Staple Fibre

PolyesterFilament

Yarn

PolyesterFilament

Yarn

PolyesterStaple Fibre

PolyesterStaple Fibre

ViscoseStaple Fibre

ViscoseStaple Fibre

Prodn. Prodn. Prodn. Prodn. Prodn. Prodn.

(Tonnes) (% chg.) (Tonnes) (% chg.) (Tonnes) (% chg.)Sep 2006 1,01,847 21.59 67,157 36.17 22,344 14.16

Oct 2006 1,01,362 19.92 70,963 33.33 22,829 14.70Nov 2006 1,12,373 28.41 63,780 20.76 22,503 10.08

Dec 2006 1,19,493 35.00 67,263 20.69 23,452 9.00

Jan 2007 1,19,152 27.34 65,286 20.42 23,270 5.12Feb 2007 1,04,269 24.21 57,092 22.37 20,912 5.07

Mar 2007 1,15,077 18.45 71,122 32.14 23,591 4.54

Apr 2007 1,11,386 15.29 71,735 11.11 22,574 5.01May 2007 1,13,765 9.23 73,883 3.20 23,409 62.28

Jun 2007 1,12,480 12.24 71,416 2.91 22,571 143.46

Jul 2007 1,16,624 13.32 65,081 1.06 23,463 16.83

Aug 2007 1,21,189 27.55 85,197 45.52 23,375 3.18

Sep 2007 1,16,190 14.08 82,580 22.97 22,840 2.22

Apr–Sep Apr–Sep Apr–Sep Apr–Sep Apr–Sep Apr–Sep

2006–07 6,00,758 11.24 3,95,654 26.99 1,10,276 7.57

2007–08 6,91,634 15.13 4,49,892 13.71 1,38,232 25.35

Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar

2006–07 12,72,484 18.34 7,91,160 25.98 2,46,833 7.80






46 Industry: Fertilisers

Fertiliser production declines in Novem-ber

Production of fertilisers declined by 7.8 per cent in

November 2007 to 13.2 lakh tonnes. This comesafter a modest 3.4 per cent growth reported dur-ing the corresponding month last year. Produc-tion of phosphatic fertiliser continued its double–digit fall for the fourth consecutive month. It de-clined by 16.8 per cent as against a miniscule 1.2per cent growth reported during the correspondingmonth year–ago. Nitrogenous fertiliser productiondeclined by 4.2 per cent in November 2007 as com-pared to the modest 4.3 per cent growth witnessedin the year–ago month.

Cumulative production during April–November2007 declined by 5.7 per cent to 99.7 lakh tonnes.This fall was on account of a 10.8 per cent fall inphosphatic fertiliser production and a 3.7 per centfall in nitrogenous fertiliser production.

In December 2007, the GOI announced its plans of releasing subsidies to the working capital starvedindustry. It plans to issue fertiliser bonds to 22different companies along the same lines as that of the oil bonds. These bonds would carry a coupon

rate of 8.3 per cent, have a face value of Rs.3,890crore and mature in 16 years.

Figure 13.8 Production of Fertilisers (’000 tonnes)

2006-07 2007-08


1000

1100

1200

1300

1400

1500

Table 13.10 Fertiliser Statistics: Production and Imports

Fertilisers Fertilisers Fertilisers Fertilisers Phos-phatic

Fertilisers

Phos-phatic

Fertilisers

Nitroge-nous

Fertilisers

Nitroge-nous

FertilisersProdn. Prodn. Import* Import* Prodn. Prodn. Prodn. Prodn.

(’000 tns) (% chg.) (’000 tns) (% chg.) (’000 tns) (% chg.) (’000 tns) (% chg.)Nov 2006 1,434.40 3.40 1,611.28 58.57 411.20 1.18 1,023.20 4.31

Dec 2006 1,490.80 7.15 1,045.07 60.65 418.90 1.13 1,071.90 9.70

Jan 2007 1,393.90 2.11 600.22 -3.88 381.10 -5.67 1,012.80 5.38Feb 2007 1,368.70 14.81 646.54 29.84 390.50 9.02 978.20 17.30

Mar 2007 1,282.30 11.35 375.41 -2.33 358.60 -4.22 923.70 18.85

Apr 2007 1,005.40 -9.72 457.72 54.57 329.80 5.50 675.60 -15.66May 2007 1,162.40 -8.21 631.12 7.62 318.60 -2.63 843.80 -10.16

Jun 2007 1,235.70 964.82 55.32 308.60 -0.13 927.10 0.04

Jul 2007 1,350.10 -1.45 1,428.38 72.69 375.90 4.24 974.20 -3.48Aug 2007 1,262.70 0.97 1,411.41 28.70 300.70 -24.62 962.00 12.95

Sep 2007 1,267.60 -13.23 329.60 -25.40 938.00 -7.96

Oct 2007 1,347.90 -7.77 342.60 -20.18 1,005.30 -2.62Nov 2007 1,322.30 -7.82 342.30 -16.76 980.00 -4.22

Apr–Nov Apr–Nov Apr–Aug Apr–Aug Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 10,570.40 5.52 3,427.71 41.62 2,976.40 11.48 7,594.00 3.352007–08 9,965.90 -5.72 4,894.19 42.78 2,653.80 -10.84 7,312.10 -3.71


2006–07 16,093.70 6.46 10,603.62 45.40 4,516.60 7.01 11,577.10 6.24

*Imports of Manufactured fertiliser












Industry: Consumer Durables 51

Consumer durables index reverses declin-ing trend in October

After declining for the past five months, produc-

tion index of consumer durables turned around ona small base in October 2007. Index increased by9.3 per cent as compared to a rise of 23 basis pointsin the year-ago month. Production of passengercars, scooters & mopeds, two wheeler tyres, refrig-erators, washing machines, television receivers andwrist watches registered growth in excess of 15 percent during the month. Even output of utensils(excluding pressure cookers) and giant tyres grewby over 10 per cent in October.

On account of production downfall in the initial

months, the consumer durables production indexwas lower by 1.3 per cent for the period April–October 2007. The index had registered a 12.7per cent growth in the corresponding period last

year. During the period April–October 2007, onlya few segments namely passenger cars, scooters &mopeds, bicycles, refrigerators, washing machineshave clocked decent growth of over 10 per cent intheir cumulative production.

Figure 13.13 Production Index of ConsumerDurable Goods (% change over previous year)

2006-07 2007-08


-5

0

5

10

15

20

Table 13.15 Production Statistics of Selected Consumer Durable GoodsPressure

cookersWashing

machinesAir condi-

tionersRefrigera-

torsElectric

fansTV

receiversWrist

watchesBicycles

Prodn. Prodn. Prodn. Prodn. Prodn. Prodn. Prodn. Prodn.(Nos.) (Nos.) (Nos.) (’000 nos) (Lakh nos) (’000 nos) (’000 nos) (’000 nos)

Oct 2006 304168 188571 26851 559.6 8.2 533.1 959.0 855.5

Nov 2006 293910 192302 21528 444.9 8.8 301.8 1144.0 802.2Dec 2006 268300 135459 20377 396.8 9.4 265.5 1111.0 857.0

Jan 2007 250945 175939 41418 581.5 10.5 431.7 1093.0 1035.0Feb 2007 243173 130191 54634 644.8 10.9 399.8 1088.0 994.1

Mar 2007 263726 112221 68904 762.0 11.1 440.5 1362.0 1044.2

Apr 2007 344884 121076 103317 767.2 10.1 421.2 721.0 841.1May 2007 350323 168734 92582 808.3 11.4 445.9 1184.0 998.6

Jun 2007 318964 176117 55249 593.1 10.8 456.9 1188.0 951.0

Jul 2007 346613 214365 41352 442.8 9.7 448.8 947.0 913.1Aug 2007 305971 216896 30367 508.3 8.8 537.5 1119.0 835.7

Sep 2007 323567 201491 35005 650.8 8.4 543.1 1125.0 963.4Oct 2007 311891 233950 44373 721.0 8.2 636.7 1152.0 818.0

Apr–Oct Apr–Oct Apr–Oct Apr–Oct Apr–Oct Apr–Oct Apr–Oct Apr–Oct

2006–07 2165800 1198609 285185 3660.0 64.5 4014.0 8174.0 5866.52007–08 2302213 1332629 402245 4491.5 67.3 3490.1 7436.0 6321.0


2006–07 3485854 1944721 492046 6490.0 115.2 5853.2 13972.0 10598.8

Official statistics underestimate the production of pressure cookers, washing machines, refrigerators and TV receivers.












56 Capital Markets: Primary Capital Market

Increase in resource mobilisation

The robust performance of the secondary marketalong with a rise in valuations prompted many In-dian companies to raise resources from the pri-

mary market. Indian companies mobilised a to-tal of Rs.21,112.3 crore from the primary marketsin December 2007. Domestic resource mobilisationamounted to Rs.19,490.1 crore and the balance wasfrom the overseas market. From the domestic mar-ket companies raised around Rs.15,635.1 crore byissuing shares and around Rs.3,855 crore throughdebts.

In December 2007, eight new companies raised atotal of Rs.1,746.2 crore through public issue of eq-uity shares. The biggest IPO was of Brigade Enter-

prises which raised a total of Rs.648.4 crore throughits initial public offer. BGR Energy Systems raisedRs.438.5 crore from its issue in the primary market.Other companies that came out with their publicoffers were Eclerx Services, Transformers & Recti-fiers (India), Aries Agro, Manaksia, Porwal AutoComponents and Precision Pipes & Profiles Co..

A total of Rs.2,948.8 crore will be mobilised fromsix rights issue that opened in December 2007. Fed-eral Bank’s rights issue is the biggest aggregating

to Rs.2,137.6 crore. Hindustan Oil Exploration Co.will be raising around Rs.610.9 crore from its rightsissue. Other major rights issues were Exide Indus-tries, Khaitan Weaving Mills, Nandan Exim andIndfrag.

In December 2007, Indian corporates favouredthe private placement route for raising resourcerequirements. During the month, a total of Rs.14,795.1 crore, debt as well as equity, wereraised through private placements. A total of Rs.10,940.1 crore was raised through private place-ment of equity shares. GMR Infrastructure mo-bilised a total of Rs.3965.7 crore through privateplacement of its equity. Suzlon Energy raisedRs.2,182.7 crore through private equity placement.

A total of Rs.3,855 crore was raised through privateplacement of domestic debt in December 2007.

During the period April–December 2007, total re-sources raised amounted to Rs.1,44,104.4 crore, arise of 30 per cent over the corresponding year–ago period. Domestic market accounted for 79.3per cent of the total resource mobilised. Re-sources raised through equity shares increased toRs.82,483.7 crore, a rise of 35.8 per cent over thecorresponding year–ago period.

Table 15.1 Resources raised from capital markets: By issue types (Rs.crore)

Total Domestic Domestic Domestic Public* Rights PPL OverseasFloatations Floatations Shares Debt Floatations

Dec 2006 28,238.02 28,238.02 27,288.02 950.00 6,046.76 553.05 21,638.21 0.00

Jan 2007 5,196.38 5,196.38 4,476.38 720.00 2,673.78 395.50 2,127.10 0.00

Feb 2007 6,984.15 6,926.62 5,426.62 1 ,500.00 4 ,262.64 24.93 2,639.05 57.53

Mar 2007 3,602.73 3,318.94 1 ,883.94 1,435.00 480.76 164.87 2 ,673.32 283.79

Apr 2007 3,461.39 3,288.59 2,488.59 800.00 682.58 0.00 2,606.01 172.80May 2007 7,094.32 5,868.23 2,775.23 3,093.00 494.11 144.28 5,229.84 1,226.09

Jun 2007 48,642.92 29,125.81 26,300.81 2,825.00 22,418.40 199.76 6,507.65 19,517.10

Jul 2007 23,719.38 18,711.22 13,813.22 4,898.00 3,547.98 0.48 15,162.76 5,008.15Aug 2007 3,659.71 3,659.71 2,839.71 820.00 652.63 350.79 2,656.29 0.00

Sep 2007 9,504.75 9,435.37 5,475.17 3,965.00 3,891.03 225.26 5,319.09 69.37

Oct 2007 14,358.79 13,811.15 3,705.15 10,106.00 268.85 106.33 13,435.96 547.64Nov 2007 12,550.86 10,925.74 9,450.74 1,475.00 3,393.20 3,958.99 3,573.55 1,625.13

Dec 2007 21,112.26 19,490.06 15,635.06 3,855.00 1,746.16 2,948.80 14,795.10 1,622.21

Apr 06–Dec 06 1,10,861.35 1,00,633.84 60,722.96 39,910.89 21,828.72 2,030.87 76,774.25 10,227.51

Apr 07–Dec 07 1,44,104.37 1,14,315.87 82,483.67 31,837.00 37,094.94 7,934.68 69,286.25 29,788.50

Apr 06–Mar 07 1,26,644.61 1,16,075.78 72,509.89 43,565.89 29,245.90 2,616.17 84,213.71 10,568.83








Capital Markets: Mutual Funds 59

Mutual funds raise Rs.3.6 lakh crore

In November 2007, mutual fund industry collecteda total of Rs.3.55 lakh crore. Of this, Rs.3.37 lakhcrore has been raised through existing schemes.

During the month, 51 new schemes were launchedwith a total collection of Rs.18,303 crore. Of thetotal 51 new schemes, 17 schemes were open endedcollecting a total of Rs.5,290 crore and the balancewere close ended which raised Rs.13,013 crore.

At the end of November 2007, there were a totalof 813 schemes of which 546 were open ended. Of the total mobilised amount of Rs.3.55 lakh crore inNovember 2007, 96 per cent was raised from openended schemes.

Total assets under management (AUM) at the endof November 2007 stood at Rs.5.37 lakh crore, lowerthan Rs.5.56 lakh crore at the end of October 2007.The decline was on account of higher redemptionof Rs.3.77 lakh crore as against a sale of Rs.3.55lakh crore. Redemption in open ended schemes ac-counted for almost 97 per cent of the total redemp-tion.

Mutual fund sales more than doubled betweenApril–November 2007 to Rs.26.06 lakh crore asagainst Rs.10.91 lakh crore in the correspondingyear–ago period. The number of new schemeslaunched almost doubled to 373 over the corre-

sponding year–ago period. Redemption during themonth doubled to Rs.24.71 lakh crore. Net invest-ment for the period grew by 35 per cent to Rs.1.35lakh crore over the year–ago period.

Figure 15.2 New schemes launched during April–November (Number)

24

5573

176

373

2003 2004 2005 2006 2007

Table 15.6 Mutual fund mobilisationSchemes New Existing Total Total Total Net Assets

Launched Schemes Schemes Sales Redemption investments under

Sales Sales Management(in Nos.) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore) (Rs.crore)

Nov 2006 35 11,277 1,75,890 1,87,167 1,61,666 25,501 3,29,162

Dec 2006 36 15,179 1,55,907 1,71,086 1,92,203 -21,117 3,37,310Jan 2007 34 10,745 1,48,497 1,59,242 1,46,124 13,118 3,39,734

Feb 2007 55 15,856 1,82,772 1,98,628 1,72,953 25,675 3,58,233

Mar 2007 112 34,880 2,19,578 2,54,458 2,78,879 -24,421 3,26,388Apr 2007 45 11,896 2,14,928 2,26,824 2,11,904 14,920 3,50,467

May 2007 61 15,473 2,74,073 2,89,546 2,34,418 55,128 3,86,383

Jun 2007 56 11,284 2,62,200 2,73,484 2,92,082 -18,598 4,00,842Jul 2007 28 7,762 3,78,462 3,86,224 3,06,910 79,314 4,64,755

Aug 2007 42 10,865 3,15,073 3,25,938 3,43,875 -17,937 4,67,623

Sep 2007 59 13,326 3,10,011 3,23,337 3,30,550 -7,213 4,76,989Oct 2007 31 6,496 4,19,144 4,25,640 3,73,832 51,808 5,56,730

Nov 2007 51 18,303 3,37,097 3,55,400 3,77,698 -22,298 5,37,943

Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 176 63,638 10,91,540 11,55,178 10,54,353 1,00,825

2007–08 373 95,405 25,10,988 26,06,393 24,71,269 1,35,124

Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar

2006–07 413 1,40,298 17,98,294 19,38,592 18,44,512 94,080






Money & Banking: Money Supply 61

Within components of money supply, deposits con-tinue to grow robustly. Deposit money of the publicreported a growth of 21 per cent while term de-

posits registered a growth of 24.6 per cent as on 21December 2007.

Table 16.2 Sources of Money Supply (% change over previous year)RBI Comm. Net RBI Comm. Bank Foreign Govt NNML* Net

credit banks bank credit banks credit exch. currency of NNML*to govt. credit credit to credit to assets liab. to RBI

to govt. to govt. comm. to comm. of publicsector comm. sector banks

sector

24 Nov 06 0.00 3.26 4.75 -0.22 25.89 25.87 20.43 -5.94 37.51 16.18

22 Dec 06 0.00 3.03 4.72 -0.46 26.85 26.83 23.27 -5.65 44.29 25.75

19 Jan 07 -55.20 5.55 3.43 -18.47 26.98 26.91 29.86 -5.47 41.31 22.4716 Feb 07 0.00 7.75 4.33 -17.23 26.60 26.55 34.55 -5.37 41.30 26.02

31 Mar 07 -29.30 9.75 9.34 10.81 25.43 25.42 25.75 -5.35 45.44 23.17

27 Apr 07 3.44 7.54 7.44 -0.07 24.96 24.94 14.62 8.04 -7.89 8.47

25 May 07 -18.49 8.79 8.53 -0.07 23.61 23.59 10.46 8.77 -26.77 -0.0622 Jun 07 0.00 12.91 9.24 -0.07 22.48 22.46 14.15 8.90 -24.76 -6.60

20 Jul 07 0.00 11.04 13.93 -0.07 21.58 21.56 15.67 8.76 -7.85 -0.8931 Aug 07 0.00 17.59 9.90 -0.07 22.72 22.70 20.23 9.62 -26.16 9.36

28 Sep 07 0.00 19.41 8.51 -6.05 20.52 20.50 26.13 8.84 -22.48 7.38

26 Oct 07 0.00 23.87 5.31 -0.07 20.96 20.95 33.17 7.95 -19.43 6.5923 Nov 07 0.00 24.60 6.53 23.12 21.71 21.71 34.92 7.25 -13.40 12.37

21 Dec 07 0.00 23.76 6.30 -2.84 20.77 20.75 30.74 6.62 -21.68 4.50

*NNML: Net non monetary liabilities

Table 16.3 Sources of Money Supply (Rs.crore)

RBI Comm. RBI Comm. Foreign Govt NNML* Net M3credit banks credit banks exch. currency of RBI NNML*

to govt. credit to comm. credit assets liab.to govt. sector to comm. of banks

sector

24 Nov 06 3,426 8,06,862 1,384 18,74,771 8,20,675 8,106 1,74,894 5,21,967 29,93,25822 Dec 06 -1,738 7,92,735 1,515 19,28,722 8,47,637 8,154 1,79,716 5,60,718 30,16,307

19 Jan 07 12,242 7,97,120 1,907 19,61,411 8,51,487 8,190 1,75,649 5,60,626 30,71,731

16 Feb 07 -32 8,13,139 1,441 20,02,862 8,95,051 8,229 1,74,035 5,76,117 31,44,572

31 Mar 07 5,752 8,32,425 1,537 21,21,825 9,13,179 8,286 1,80,348 5,72,727 33,10,278

27 Apr 07 18,546 8,46,392 1,386 20,87,922 8,85,156 8,342 1,41,187 5,25,944 33,21,799

25 May 07 6,304 8,55,768 1,386 20,74,812 8,77,660 8,457 1,25,195 4,96,978 33,27,40922 Jun 07 -19,731 8,82,740 1,386 20,90,103 8,95,234 8,530 1,34,206 4,71,790 33,86,473

20 Jul 07 21,884 8,95,065 1,383 21,10,497 9,25,714 8,576 1,73,693 5,09,251 34,53,868

31 Aug 07 -62,939 9,41,574 1,383 21,61,701 9,67,296 8,694 1,36,372 5,42,130 34,75,58028 Sep 07 -74,426 9,47,104 1,383 22,30,497 10,14,665 8,694 1,37,368 5,53,490 35,74,427

26 Oct 07 -1,37,066 9,89,828 1,383 22,30,916 10,67,124 8,694 1,38,427 5,52,694 36,08,18423 Nov 07 -1,42,122 10,05,359 1,704 22,81,697 11,07,291 8,694 1,51,458 5,86,530 36,76,093

21 Dec 07 -1,40,213 9,81,078 1,472 23,29,377 11,08,164 8,694 1,40,749 5,85,935 37,02,794

*NNML: Net non monetary liabilities








64 Money & Banking: Scheduled Commercial Banks

April–Nov ’07 ID ratio 49.9 per cent from22.1 per cent year ago

During April–November 2007, banks invested much

more in securities than they did in the correspond-ing year ago period. The investment–deposit ratioof banks for the business done by them during theApril–December 2007 period stood at 49.9 per centcompared to 22.1 per cent for the business done by

them in the corresponding year–ago period. Thismeans that of the deposits mobilised by banks dur-ing the first eight months of the current financialyear banks invested about half of these depositsinto SLR and non–SLR investments. This is b e-

cause the slowdown in credit due to higher interestrates forced them to deploy the mobilised depositfunds into investments. Only 47 per cent of thedeposits went towards lending compared to 79 percent in the year–ago period.

Figure 16.4 CD & ID ratios of SCBs (%)

Investment-Deposit ratio Credit deposit ratio

2000.01.28 2001.09.28 2003.05.30 2005.01.28 2006.09.292007.12.21

30

35

40

45

50

55

6065

70

75

Figure 16.5 Growth in deposits (%)

2006-07 2007-08

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar19.0

20.0

21.0

22.0

23.0

24.0

25.0

26.0

27.0

Table 16.6 Liabilities with Scheduled Commercial Banks (% change over previous year)

Demand Time Total Liab. to Other demand Otherdeposits deposits deposits bank & time borrowings

liab.

24 Nov 06 23.59 21.00 21.39 -7.43 18.35 3.83

29 Dec 06 22.07 23.21 23.02 14.18 23.64 3.87

26 Jan 07 18.52 24.39 23.46 3.76 16.85 6.1123 Feb 07 24.93 24.66 24.70 11.91 16.18 4.74

30 Mar 07 17.69 24.92 23.67 17.68 28.19 3.2427 Apr 07 1.62 25.66 21.47 27.29 20.85 9.83

25 May 07 11.08 24.19 22.16 18.70 15.46 7.55

29 Jun 07 15.69 24.95 23.48 12.54 22.73 -0.85

27 Jul 07 28.73 25.32 25.83 15.41 25.07 -2.4831 Aug 07 19.07 25.05 24.17 4.83 27.50 2.65

28 Sep 07 19.97 24.65 23.90 12.14 17.93 4.4626 Oct 07 14.89 27.87 25.85 6.30 22.47 5.81

30 Nov 07 25.80 26.83 26.67 3.49 22.31 28.68

21 Dec 07 22.69 25.99 25.49 3.48 21.30 19.11






66 Foreign Trade

Exports witness robust growth in Novem-ber

For the second month in a row, India’s merchan-dise exports witnessed robust growth. At usd 12.4billion, exports grew by 26.8 per cent in November2007. In the previous month, they had increased by35.7 per cent. Faster rise in exports of commodi-ties with a higher import content, like gems and jewellery and petroleum products appeared to bedriving up overall growth in exports. These com-modities benefitted from the steep rupee apprecia-tion as against those with a lower import content.During the first six months of the 2007–08 fiscal,exports growth had averaged lower at 18.5 per cent.

The slowdown in the first half dragged down cu-mulative growth in exports to 22 per cent duringApril–November 2007. Exports had increased at a

higher rate of 26.2 per cent during the same periodof 2006.

At this pace of growth, it is unlikely that the exporttarget of usd 160 billion would be achieved.

Figure 17.1 Exports (US ° Million)

2006-07 2007-08


8000

9000

10000

11000

12000

13000

Table 17.1 Monthly Foreign Trade Statistics

Exports Imports Trade bal. Exports Imports Exports Imports Trade bal. Exports Imports(

°

mln) (°

mln) (°

mln) (% chg.) (% chg.)(Rs.crore) (Rs.crore) (Rs.crore)

(% chg.) (% chg.)

Nov 2006 9,798 15,343 -5,545 35.2 38.1 43,943 68,812 -24,868 32.6 35.4Dec 2006 10,409 15,013 -4,604 13.3 26.3 46,468 67,018 -20,550 10.8 23.6

Jan 2007 10,713 13,792 -3,079 16.9 10.2 47,493 61,141 -13,648 16.7 10.0

Feb 2007 10,418 14,089 -3,671 15.1 22.4 46,005 62,218 -16,212 14.6 21.9Mar 2007 12,986 17,188 -4,202 12.3 20.1 57,176 75,680 -18,503 11.2 18.9

Apr 2007 11,012 17,733 -6,721 28.1 41.6 46,414 74,743 -28,328 20.2 32.8

May 2007 12,236 19,185 -6,949 21.9 34.3 49,898 78,238 -28,340 9.5 20.6Jun 2007 11,907 19,469 -7,562 14.4 39.0 48,543 79,373 -30,830 1.3 23.0

Jul 2007 12,223 18,044 -5,821 16.1 24.3 49,394 72,917 -23,523 0.9 8.1

Aug 2007 12,433 19,701 -7,268 16.5 33.7 50,752 80,418 -29,666 2.2 17.3Sep 2007 12,797 17,218 -4,421 19.3 2.3 51,622 69,456 -17,834 4.3 -10.5

Oct 2007 13,303 20,786 -7,483 35.7 24.3 52,561 82,126 -29,565 17.9 8.0

Nov 2007 12,424 19,830 -7,406 26.8 29.2 49,000 78,209 -29,209 11.5 13.7

Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov Apr–Nov

2006–07 80,614 1,19,054 -38,441 26.2 27.4 3,68,807 5,44,674 -1,75,867 31.0 32.32007–08 98,367 1,51,199 -52,832 22.0 27.0 3,98,386 6,12,357 -2,13,971 8.0 12.4

Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar Apr–Mar

2005–06 1,03,075 1,49,144 -46,068 23.4 33.8 4,56,418 6,60,409 - 2,03,991 21.6 31.82006–07 1,26,246 1,90,438 -64,192 22.5 27.7 5,71,642 8,62,302 - 2,90,660 25.2 30.6

Note: Monthly data may not add up tothe cumulative data because of revisions in monthly data.Monthly revisions are not released but are included in the cumulative data.




Foreign Trade 67

The commerce secretary expects exports earningsto be lower at usd 140–145 billion during the 2007–08 fiscal year. This would translate into a modestincrease of 11–15 per cent for 2007–08 whereas inthe past five years exports had increased by more

than 20 per cent.

Growth in rupee realisation from exports came un-der pressure due to the strong rupee. During April–November 2007, it dropped sharply to a mere eightper cent from 31 increase during April–November2006.

Slowdown remains widespread

As per the disaggregated data released by dgci&s,

exports growth during April–August 2007 slowed to18.8 per cent from 27 per cent increase witnessedduring the same period of 2006. The slowdown wasseen in a large number of commodities. Exceptionswere gems and jewellery, iron ore, non–basmati ricewhich bucked the overall trend of a slowdown.

Of the major groups, growth in exports of manu-factured goods slowed to 13.4 per cent as comparedto 16.8 per cent during April–August 2006. Withinmanufacturing, the worst hit was readymade gar-ments whose exports declined by 2.3 per cent. Tex-

tiles exports also grew at a modest rate of three percent. The rupee appreciation had a more severeimpact on the exports of these two groups as theimport content of exports was very negligible.

Engineering goods had witnessed a strong increaseof 34 per cent during 2006–07. However, duringApril–August 2007, growth slowed sharply to 19per cent.

Growth in agricultural and allied products exportsalso dropped to 12.6 per cent from 22.7 per cent

during April–November 2006.

Gems and jewellery exports was one of the fewcommodities that witnessed a an impressive riseof 25 p er cent during April–August 2007. Thoughpetroleum and crude products exports grew at alower rate of 22 per cent, this increase came over a

steep rise of 117 per cent during April–August 2007.Both these items depend heavily on imported rawmaterial, and hence, benefitted due to the rupeeappreciation.

Non–pol imports remain strong

Proving unfounded the fears of a slowdown, im-ports surged by 29 per cent in November 2007 aftergrowing by 24 per cent in the previous month. InSeptember, imports growth had dropped to 2.3 percent. This had raised fears of a possible slacken-ing in domestic demand. In November, growth wasdriven by non–pol imports which grew by 35 percent to usd 14 billion. Growth in pol imports billremained lower at 16.7 per cent.

During April–November 2007, at usd 151 billion,overall imports surged by 27 per cent. Non–pol

imports witnessed a hefty increase of 35 per cent.Growth in pol import bill remained subdued at10 per cent after growing by 41.7 per cent duringApril–November 2006. The pol import bill is ex-pected to shoot up in the coming months, given thesteep rise in international crude oil prices.

The disaggregated data for April–August 2007shows a surge in imports of gold, silver, pearls, pre-

cious and semi-precious stones. Growth in importsof capital goods and chemicals and related productsalso remained strong.

Table 17.2 Imports: April–November 2007

US°

million % change2006 2007 2006 2007

POL 39,339 43,349 41.7 10.2

Non-POL 79,715 1,07,850 21.3 35.3

Total 1,19,054 1,51,199 27.4 27.0

Trade deficit deteriorates

With imports rising faster than exports, tradedeficit widened sharply to usd 52.8 billion duringApril–November 2007 from usd 38.4 billion duringthe same period of 2006.
























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