Current state of Indian Economy

April 2010

Federation of Indian Chambers of Commerce and Industry

New Delhi
Indian Economy: Highlights –May 2010

• India’s GDP growth for 2009-10 is estimated at 7.2 per cent, up from 6.7 per cent recorded in 2008-
09. In the latest estimates for third quarter of 2009-10, country’s GDP stood at 6 percent
corresponding to the growth of 6.2 percent during same period of previous year. With an
assumption of a normal monsoon and sustainable good performance of the industry and services
sectors, the latest RBI projection placed the real GDP growth at 8.0 per cent for the year 2010-11.
According to the latest IMF projection, India will grow at 8.8 percent during the year 2010.

• Indian industry recovered substantially in the later half of 2009-10. The IIP figures availbale for the
entire fiscal shows industrial production register growth of 10.4 percent as against 2.8 percent
during the same period of 2008-09.

• At the dissaggregated level, all three sectors, i.e. mining, electricity and manufactuirng witnessed a
perceptible growth during the year 2009-10. The manufacturing sector, in particular, contributed
significantly to this overall strong performance with a comprehensive growth of 10.9 percent during
the period. As per used based classification, capital goods industry led the frontier attaining growth
of 19.2 percent during 2009-10. The consumer goods sector secured a robust growth of 7.4
percenton account of consumer durables segment.

• In 2009-10, fourteen (14) out of seventeen industries achieved higher growth than in the previous
year 2008-09. Only three sectors namely the food products, beverages, tobacco & related products
and jute textlies have still continued to suffer from discernibly low growth in output.

• Core sectors grew at a satisfactory rate of 5.5 percent in 2009-10 as compared to 3.3 percent growth
in the previous fiscal. The growth was mainly on account of the cement industry sector followed by
coal and power sectors.

• The rise in inflation continued even in March 2010; the overall inflation headed 9.9 percent during
the month whereas the rate of inflation was only 1.3 percent in March 2009. The upward pressure
on prices of food articles and fuel commodities pushed up the aggregate price level of the economy.

• The Reserve Bank raised the repo and reverse repo rates by 25 basis points each on March 19, 2010
to anchor inflation expectations.

• (M3) Broad money supply increased by 17 percent during the year 2009-10. This growth was slightly
lower than the growth of 18.4 percent posted during last year.

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 Over the year 2009-10 the expansion of aggregate deposits was around 17 percent corresponding to
the expansion by 19.9 percent seen during the same period last year

The increase in bank credit was marginally lower at around 16.7 percent while it was 17.5 percent
during the same period of the preceding year. After a phase of deceleration, there has been a
restoration in the flow of bank credit observed since November 2009. As a consequence the
indicative target of 16.0 per cent credit growth as set by RBI for the year was exceeded up to mid-
March 2010.

• In response to the large capital flight in portfolio investments throughout the year, Indian stock
market portrayed an optimistic picture in the financial year 2009-10. As a result the BSE sensex
rose from 9 k points in April 2009 to 16 k points in March 2010. Nevertheless, during the third and
fourth quarter of 2009-10 the BSE sensex remained between 16 k to 17 k points.

• Fiscal deficit has been found to be reticent with a modest increase of 24 percent during the period
from April to February 2010 while the growth was 33 percent during the same period of 2008-09.
During this period of 2009-10, the level of fiscal deficit stepped up from Rs 307133 crores in 2008-
09 to Rs 380901 crores in 2009-10.

Growth in the gross tax revenue decelerated in Feburary 2009-10. The slide in overall tax collection
was mainly on account of the weak collections in indirect taxes.

• Indian merchandise trade managed to recover from the severe impact of global turmoil. India’s
export seems to gather momentum as it saw a tremendous growth of 54.1 percent during March
2010 compared to negative growth of (-)33.1 percent in March 2009. However, taking the entire
year 2009-10, Indian exports contracted by ( -) 4.7 percent while the growth figure was positive 3.4
percent during 2008-09.

• Capital flows continued to remain buoyant throughout the year 2009-10. During the year 2009-10
total foreign investment amounted to be USD 66.5 billion as against USD 21.3 billion recorded
during the same period last year. This confirms more than a three- fold increase in capital flows over
the preceding year 2008-09.

• India’s foreign exchange reserves increased by US$ 27.1 billion during 2009-10 to reach US$ 279.1
billion at the end of March 2010. This is mainly ascribed to higher capital inflows in the form of
portfolio investments during the year 2009-10.

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 Contents

Title Page

1 Industrial Growth 6

2 Core Infrastructure Industries 8

3 Trends in Inflation 9

4 Monetary Indicators 11

5 Stock Market Trends 12

6 Fiscal Management 13

7 Foreign Trade 15

8 Capital Inflows 16

9 Foreign Exchange Reserves 17

10 Trends in Exchange Rates 18

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List of Tables and Graphs

Table- 1.1: Growth of Industry: Recent Trends (in percentage) 6

Table -1.2: Growth in 17 Industry sectors 7
Table-1.3: Growth in six-core infrastructure industries (% change) 8
Table-1.4: Growth in six-core infrastructure industries (% change) 8
Table-1.5. Monthly trends in Wholesale price index- monthly average (% change) 9
Table-1.6: Monthly trends in consumer prices (% change) 10
Table-1.7: Monetary sector indicators 11
Table-1.8: Monthly trends in stock market indices 12
Table-1.9: Trends in cumulative tax collections of central government (%) 13
Table-1.10: Service Tax 14
Table-1.11: Trends in central government finances: 14
Table-1.12: Monthly trends in growth of merchandize trade (% change) 15
Table-1.13: Monthly trends in foreign investments ($ million) 16
Table-1.14: Monthly trends in foreign exchange reserves ($ billion) 17
Graph 1.1: Exchange rate of Rupee (per unit of other currencies). 18

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 1. Industrial growth

Latest data on industrial production for 2009-10 shows growth of at 10.4 percent as against 2.8 percent
during the same period of last year. Mining sector recorded a growth of 9.7 percent as against 2.6
percent in previous year , electricity generation sector was seen to register growth of 6.0 percent
compared to 2.8 percent in 2008-09. The manufacturing sector accounting for about 80 percent in IIP
had contributed significantly to this overall strong growth performance. The manufacturing sector grew
by 10.9 percent during the year 2009-10. The real revival of Indian manufacturing has become
prominent once we look back to the low growth of 2.8 percent registered during the previous fiscal.

As per use based classification it has been observed that capital goods industry is leading the frontier as
it posted a growth of 19.2 percent during 2009-10. This sector has seen a significant rise in growth from
7.3 percent during the same period of last year. However, the other sectors like basic and intermediate
goods sectors recorded a strong growth of 7.1 percent and 13.6 percent corresponding the their growth
of 2.6 and (-) 1.9 percent respectively in 2008-09. It is clear that investments and demands once again
picked after a long dampening period of sluggish growth. The monthly trends of use based classification
show that, capital goods since September 2009 and intermediate goods since August 2009 have
registered double digit growth, which would buttress the growth momentum in several downstream
industries. However, the growth in basic goods remained relatively moderate during 2009-10.

The overall consumer goods sector registered a growth of 7.4 percent 2009-10 mainly fueled by the pick
up in the growth of consumer durables sector While the non durable consumer sector was found to be
sluggish during the fiscal compared to the previous year.

The disaggregated growth figures across the seventeen major industrial sectors illustrate the situation in
more detail. During the year 2009-10, fourteen out of seventeen industry sectors accounting for 67 per
cent of the weight in IIP recorded higher growth than the growth posted in the previous year. Only three
sectors namely the food products, beverages and tobacco, Jute textiles were found to suffer badly in
industrial output. The top five manufacturing industry sectors with a combined weight of 36 per cent in
the IIP contributed significantly to the overall growth 2009-10. These top five manufacturing industries
include (i) rubber, plastic petroleum and coal products, (ii) metal products except machinery
equipments, (iii) machinery equipments, (iv) transport equipments and (v) basic chemicals and chemical
products. It is interesting to note that the growth of ‘transport, equipment and parts’ during 2009-10
has been tremendous at around 24.4 percent compared to 2.2 percent growth in 2008-09.

1.1: Growth of Industry: Recent Trends (in percentage)

Weights March March

2009 2010
Industry 100 0.3 13.5
Mining 10.2 1.9 11.0

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 Manufacturing 79.4 -0.3 14.3
Electricity 10.5 6.3 7.7
Use Based Classification
Basic 35.6 1.9 10.1
Intermediate 26.5 1.9 12.7
Capital 9.3 -6.3 27.4
Consumer Goods 28.7 1.3 10.6
Consumer non Durables 23.3 -1.0 3.3
Consumer Durables 5.4 8.4 32.0

Table- 1.2: Growth in 17 Industry sectors

17 industry sectors
Food Products 9.1 -36.0 26.2
Beverages, Tobacco and Related Products 2.4 16.1 4.0
Cotton Textiles 5.5 -0.7 7.3
Wool, Silk and man-made fiber textiles 2.3 -4.4 -3.9
Jute and other vegetable fiber Textiles (except 0.6 -1.9 -9.6
cotton)
Textile Products (including Wearing Apparel) 2.5 16.7 -5.4
Wood and Wood Products; Furniture and Fixtures 2.7 -17.7 21.6
Paper & Paper Products and Printing, Publishing & 2.6 4.0 6.1
Allied Industries
Leather and Leather & Fur Products 1.1 -18.2 11.7
Basic Chemicals & Chemical Products (except products of 14.0 14.7 4.8
Petroleum & Coal)
Rubber, Plastic, Petroleum and Coal Products 5.7 6.7 14.6
Non-Metallic Mineral Products 4.4 5.5 5.8
Basic Metal and Alloy Industries 7.5 -4.5 15.8
Metal Products and Parts, except Machinery 2.8 -12.7 42.8
and Equipment
Machinery and Equipment other than Transport 9.6 0.5 22.1
Equipment
Transport Equipment and Parts 4.0 11.3 23.0
Other Manufacturing Industries 2.5 -20.3 40.1
Source: Central Statistical Organization

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2 Core Infrastructure Industries

Core industries turned with a strong performance during 2009-10. As against a modest growth of 3.0
percent in 2008-09, the core sector grew by a satisfactory rate of 5.5 percent in 2009-10. The growth was
led by cement industry that grew at 10.5 percent the year 09-10 compared to the growth of 7.2 percent
during the same period of previous year.

This was followed by coal and power sector that registered a growth of 7.9 percent and 6.5 percent
during 2009-10 . While the crude petroleum sector was observed to have a low growth (0.5%) during the
period. The growth in petroleum refinery sector has actually decelerated from 3 % percent in the same
period of last year to (-) 0.4 percent in 2009-10.
Table-1.3: Growth in six-core infrastructure industries (% change) March 2010

All Finished steel Cement Crude

infrastructure petroleum
industries
08-09 09-10 08-09 09-10 08-09 09-10 08-09 09-10
April 4.6 3.7 7.5 -1.3 6.9 11.8 1.0 -3.1
May 4.4 3.2 8.3 2.8 3.8 11.8 3.2 -4.3
June 4.4 6.3 8.1 3.6 6.6 12.8 -4.7 4.0
July 5.2 3.3 6.3 4.0 5.5 14.0 -3.0 -0.4
August 2.0 6.5 3.3 0.3 1.9 17.6 -1.0 -2.6
September 4.1 4.5 2.3 0.8 8.1 6.5 -0.4 -0.5
October 2.4 3.8 -3.8 2.5 6.2 5.2 -0.2 -2.2
November 0.8 6.0 -6.3 11.7 8.7 9.0 0.5 -1.5
December 0.7 6.4 -8.0 9.6 11.6 11.0 -0.3 1.1
January 2.2 9.4 3.2 16.2 8.3 12.4 -8.1 9.7
February 1.9 4.5 2.4 0.9 8.3 5.8 -6.2 4.0
March 3.3 7.2 -1.8 9.2 10.1 7.8 -2.3 3.5

Source: Ministry of Industry

Table-1.4: Growth in six-core infrastructure industries (% change)

Petroleum Coal Power

refinery
08-09 09-10 08-09 09-10 08-09 09-10
April 4.3 -4.5 10.4 13.2 1.4 7.1
May 0.1 -4.3 8.8 10.2 2.0 3.3
June 5.6 -3.8 6.1 14.7 2.6 8.0
July 11.8 -14.4 5.5 9.7 4.5 4.2
August 2.5 3.1 5.9 12.9 0.8 10.6
September 2.8 3.4 11.2 6.5 4.4 7.9
October 5.0 7.2 10.6 5.0 4.4 4.7
November -1.1 4.9 9.7 4.6 2.6 3.3
December 3.0 0.8 11.2 2.5 1.5 6.7
January -1.3 3.8 6.7 6.0 1.8 5.6
February 0.5 0.8 6.0 6.8 0.6 7.3
March 3.3 -0.4 5.2 7.8 6.3 7.8

Source: Ministry of Industry

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 3 Trends in Inflation

The WPI numbers continue to rise. The latest data available for month of March 2010 is no exception as
the wholesale price index based inflation stood at 9.9 percent. The inflation rate for the food articles
segment continued the upward trend and was 16.7 percent in the month of March 2010. The fuel, light
and lubricants and manufacturing segment recorded an inflation of 12.7 percent and 7.1 percent
respectively during the same month.

There is a possibility of a downtrend in food inflation later during the current fiscal as normal monsoon
is expected, which may have a positive impact on kharif crops. However, a major concern in the coming
weeks would be the added inflationary pressure on account of hike in the prices of non-food articles
following the Cabinet decision to increase prices of natural gas.

The WPI based inflation did not breach the double digit mark, inflation based on consumer price index
(Industrial Workers) witnessed double digit growth for the nine consecutive months. The latest available
data for March 2010 shows growth in consumer price indices for industrial workers, agricultural labour
and rural labour at 14.9 percent, 15.8 percent and 15.5 percent respectively corresponding to the
growth CPI – inflation numbers of 8 percent, 9.5 percent and 9.7 percent during the same month of
2009. The percentage change in CPI for Urban Non-Manual Employees(UNME) was 14.9 percent during
March 2010 as compared to 9.3 percent rise in same month of last year.

Table-1.5. Monthly trends in Wholesale price index- monthly average (% change)

2008-09 2009-10

Feb March Feb March

All Commodities 3.5 1.2 9.9 9.9
I Primary Article 6.9 5.2 15.5 14.1
(A) Food Articles 9.4 7.5 17.8 16.7
(B) Non-Food Articles 2.2 -0.9 13.3 12.8
II Fuel Power Light & Lubricants -3.4 -6.0 10.2 12.7
III Manufactured Products 4.8 2.3 7.4 7.1
(A) Food Products 9.3 8.9 20.4 17.0
(B) Beverages, Tobacco & Tobacco Products 10.1 9.3 3.6 6.0
(C) Textiles 9.4 8.6 10.6 11.4
(D) Wood & Wood Products 7.7 7.7 2.2 2.1
(E) Paper & Paper Products 4.6 4.8 0.0 0.3
(F) Leather & Leather Products 1.8 1.6 -1.8 -1.6
(G) Rubber & Plastic Products 2.3 2.4 4.5 4.7
(H) Chemicals & Chemical Products 2.6 2.2 7.8 8.1
(I) Non-Metallic Mineral Products 2.4 2.2 -1.0 0.5
(J) Basic Metals Alloys & Metals Products 2.2 -9.4 2.6 1.1
(K) Machinery & Machine Tools 2.7 2.6 0.3 3.2
(L) Transport Equipment & Parts 2.7 2.8 0.1 0.5
Source: Reserve Bank of India

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Table-1.6: Monthly trends in consumer prices (% change)

CPI-IW CPI-UNME CPI-AL CPI-RL

08-09 09-10 08-09 09-10 08-09 09-10 08-09 09-10
April 7.8 8.7 7.0 8.8 8.9 9.1 8.6 9.1
May 7.8 8.6 6.8 9.7 9.1 10.2 8.8 10.2
June 7.7 9.3 7.3 9.6 8.8 11.5 8.8 11.3
July 8.3 11.9 7.4 13.0 9.4 12.9 9.4 12.7
August 9.0 11.7 8.5 12.9 10.3 12.9 10.3 12.7
September 9.8 11.6 9.5 12.4 11.0 13.2 11.0 13.0
October 10.4 11.5 10.4 12.0 11.1 13.7 11.1 13.5
November 10.4 13.5 10.8 13.9 11.1 15.7 11.1 15.7
December 9.7 15.0 9.8 15.5 11.1 17.2 11.1 17.0
January 10.4 16.2 10.4 16.9 11.4 17.6 11.1 17.4
February 9.6 14.9 9.9 15.8 10.8 16.5 10.8 16.5
March 8.0 14.9 9.3 14.9 9.5 15.8 9.7 15.5
Source: Ministry of Labor, CMIE

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4 Monetary Indicators

With an increase of almost 17 percent, broad money supply of Indian economy amounted to be Rs
806190 crores by the end of 2009-10. However, the growth in money supply is a bit lower than the
growth of 18.4 percent posted in the month of March, last year. The net bank credit to the Government
grew by percent. This was significantly lower than the growth of 38.9 percent in the previous year to
2009-10. The sluggish behaviour of bank credit to commercial sector is also evident in 2009-10 was the
growth posted was around 15.4 percent in comparison to an increase of 16.7 percent registered in 2009.

The expansion in aggregate deposits in 2009-10 was about 17 percent corresponding to the growth of
19.9 percent during the same period last year. Banks’ investment in government securities and other
approved securities was intensified by 18.5 percent which was slightly lower than the growth of 20
percent registered last year. The increase in bank credit was found marginally lower at 16.7 percent
while it was 17.5 percent during the same period in the preceding year. After a phase of deceleration,
there has been a revival in the flow of bank credit since November 2009. As a consequence the
indicative target of 16.0 per cent credit growth as set by RBI for the year exceeded by the middle of
March 2010.

It is seen that, following the tightening of monetary policy by RBI, many commercial banks (both the
Public and Private sector) have not raised their lending rates for corporates because of comfortable
liquidity conditions and healthy credit off take. But there are some indications from banking sector that,
the interest rate may rise in a couple of months from now. With the new base rate regime coming into
effect from July 1, 2010, and which will replace the present Benchmark Prime Lending Rate (BPLR)
regime, the lending rates for corporates are expected to go up.

Table-1.7: Monetary sector indicators – up to April (March 2009-10 over March 2008-09)

Variation in M3 (Rs Variation in M3 (%)

crore)
08-09 09-10 08-09 09-10
April 22235 123424 0.6 2.6
May 73398 172709 1.9 3.6
June 89283 172702 2.2 3.6
July 169734 259720 4.2 5.5
August 208571 280313 5.2 5.9
September 264364 331793 6.6 7.0
October 331450 391310 8.3 8.2
November 374193 431266 9.3 9.1
December 423509 521426 10.6 10.9
January 508078 575387 12.7 12.1
February 635810 652944 15.9 13.7
March 740332 806190 18.4 16.9

Source: Reserve Bank of India

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5 Stock market Trends

The latest available data on the monthly indices of stock market delivered an optimistic scenario of
Indian stock market. As revealed in the following table, the BSE sensex rose marginally from 16356
points in February to 16773 points in March 2010. Similarly the NSE nifty swelled to 5017 points in
March 2010 with an increase of 2.4 percent over the previous month.

Table-1.8: Monthly trends in stock market indices

Date BSE % Change S&P CNX %

Sensex NIFTY Change
1.01.08 20300 4.8 6144 6.6
1.02.08 18242 -10.1 5317 -13.5
3.03.08 16677 -8.5 4953 -6.8
1.04.08 15626 -6.3 4739 -4.3
2.05.08 17600 12.6 5228 10.3
2.06.08 16063 -8.7 4739 -9.3
1.07.08 12961 -19.3 3896 -17.8
1.08.08 14656 13.1 4413 13.3
1.09.08 14498 -1.1 4447 0.8
1.10.08 13055 -9.9 3950 -11.1
3.11.08 10337 -20.8 3043 -23.0
1.12.08 8839 -14.5 2682 -11.9
26.12.08 9328 5.5 2857 6.5
30.01.09 9424 1.0 2874 0.5
02.03.09 8607 -8.7 2674 -7.0
31.03.09 9708 12.8 3020 12.9
29.04.09 11403 17.5 3473 15.0
01.06.09 14840 30.1 4529 30.4
01.07.09 14645 -1.31 4340 -4.1
03.08.09 15924 8.7 4711 8.5
01.09.09 15551 -2.3 4625 -1.8
01.10.09 17134 10.2 5083 9.9
03.11.09 15405 -10.1 4564 -10.2
01.12.09 17198 11.6 5122 12.2
04.01.10 17558 2.1 5232 2.1
01.02.10 16356 -6.8 4900 -6.4
02.03.10 16773 2.5 5017 2.4
Source: Reserve Bank of India

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 6 Fiscal Management

During the year 2009-10, the total government expenditure has been robust at Rs 858305 crores
securing an increase of almost 14.7 percent from Rs 748324 crores during the same month of last fiscal
year. On the revenue receipt side, the total receipt has gone up by of Rs 21335 crores in 2010 from Rs
437397 crore in February 2009 to Rs 458732 crores during February 2010. While the growth in
expenditure was 14.7 percent while the revenue receipt witnessed a modest growth by 4.9 percent
during the month. Despite the slow pace of revenue generation the fiscal deficit has been found to be
reticent.

The performance of the tax receipt of the central government over the past few months has been
moderate. The negativity in growth of gross tax revenue has become chronic during 2009-10 and
February was no exception. This persistent fall in overall tax collection is mainly due to weak collection
in indirect taxes.

However, in the direct tax category, income tax was seen to rise by 11.4 percent during the month of
February 2010 and corporate tax that grew by 10.9 percent. The increase in income tax collection was
much observed to be much higher compared to the growth of 7. 5 percent during the same month of
previous year. However, the collection from the corporate tax had fallen from 18 percent recorded
previously ( Feb 2009) to 11 percent in February this year .

Table-1.9: Trends in cumulative tax collections of central government (%)

Gross tax revenue Corporation tax Income tax

08-09 09-10 08-09 09-10 08-09 09-10
April 52.2 -16.9 55.0 -8.4 127.7 20.0
May 36.1 -11.8 58.1 10.1 76.0 11.7
June 28.4 -11.4 43.4 1.8 50.0 7.1
July 26.2 -11.1 41.6 4.7 42.0 5.9
August 25.0 -11.5 45.9 2.4 35.7 8.1
September 25.3 -7.6 38.2 7.7 30.7 7.2
October 20.3 -7.5 30.3 6.5 21.9 10.5
November 17.5 -7.8 26.4 6.6 19.0 9.8
December 9.6 -2.5 11.9 16.8 6.8 12.2
January 7.2 -1.2 11.9 16.5 5.4 13.3
February 6.9 -1.6 17.9 10.9 7.5 11.4
March 2.7 10.8 7.1
Customs Excise duties Other taxes
08-09 09-10 08-09 09-10 08-09 09-10
April 25.0 -52..6 -28.3 --114.2 9.04 -5.4
May 24.1 -38.2 1.3 -23.3 26.7 -18.7
June 19.9 -37.3 -0.9 -23.7 26.0 -9.5
July 19.2 -34.7 4.0 -26.6 24.7 -3.87
August 17.0 -34.0 6.5 -24.5 17.4 -1.97
September 16.8 -32.9 6.6 -22.9 30.7 -20.5
October 14.4 -31.7 6.3 -21.7 16.2 -17.2

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 November 13.7 -31.2 5.1 -20.0 6.1 -15.0
December 11.1 -29.2 2.1 -18.2 -2.6 -24.2
January 6.4 -25.2 -2.6 -14.5 -6.4 -21.8
February 1.7 -21.8 -7.1 -10.2 -10.0 -19.8
March -4.1 -12.0 -11.5

Table-1.10: Service Tax

Service Tax 08-09 09-10

April 62.3 -0.04
May 40.7 -2.60
June 34.2 -2.85
July 29.7 -1.46
August 28.6 -2.29
September 31.8 -3.7
October 31.8 -5.3
November 30.2 -6.2
December 25.4 -5.9
January 24.6 -6.2
February 22.2 -5.9
March 18.6
Source: Controller General of Accounts

Table-1.11 Trends in central government finances: February 2010

Actual to budget estimates

( in Rs crores)
08-09 09-10
Revenue receipts 437397 458732
Tax revenue 356390 358641
Non tax revenue 81007 100091
Total receipts 441191 477404
Non plan expenditure 515747 601198
On revenue account 482062 557414
On capital account 33685 43784
Plan expenditure 232577 257107
On revenue account 199848 217191
On capital account 32729 39916
Total expenditure 748324 858305
Fiscal deficit 307133 380901
Source: Controller General of Accounts

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 7 Foreign Trade

At the trade front, India recovered from the impact of global shock. Though, India’s trade had some
contagion effect in terms of its shrinkage in exports till October 2009, but over the last few months the
recovery is visible as merchandise exports saw a tremendous growth. The growth in March 2010 was
54.1 percent , 34.8 percent in February.

However, taking into account the aggregate numbers in 2009-10 Indian exports has actually plummeted
by ( -) 4.7 percent while the export growth was 3.4 percent during the same period of previous year.

Imports too expanded rapidly. This increase in imports reflects strong economic growth as it grew by
67.1 percent in the month of March 2010 compared negative 34 percent in March 2009. However,
considering the year 2009-10, it is observed that imports too posted negative 8.2 percent while the
growth was 14.3 percent during the same period in 2008-09. The appreciating Indian Rupee against the
two major currencies USD and EURO have become concerns for the Indian exporters as impacted their
profit margins.

Table-1.12: Monthly trends in growth of merchandize trade (% change) up to March 2010

Exports Oil imports Non-oil imports Total imports

08-09 09-10 08-09 09-10 08-09 09-10 08-09 09-10
April 31.5 -33.2 46.2 -58.5 32.3 -24.6 36.6 -36.6
May 12.9 -29.2 50.8 -60.6 17.4 -25.4 27.1 -39.2
June 23.5 -27.7 53.4 -50.6 13.9 -16.5 25.9 -29.3
July 31.2 -28.4 69.3 -55.5 38.7 -24.5 48.1 -37.1
August 26.9 -19.4 76.7 -45.5 39.6 -25.5 51.2 -32.4
September 10.4 -13.8 57.1 -33.5 36.2 -30.4 43.3 -31.3
October -12.1 -6.6 22 -9.3 5.5 -17.2 10.6 -15.0
November -9.9 18.2 11.9 7.3 3.4 -5.9 6.1 -2.6
December -1.1 9.3 -30.9 42.8 31.9 22.4 8.8 27.2
January -15.9 11.5 -47.5 56.0 -0.5 28.8 -18.2 35.5
February -21.7 34.8 -47.5 97.4 -10.2 55.6 -23.3 66.4
March -33.3 54.1 -58.1 85.2 -18.9 61.0 -34.0 67.1

Source: Ministry of Commerce

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8 Capital Inflows

Revival in capital inflows started during the early half of 2009-10 and gathered momentum in the second
half of the year. Total foreign investment was amounted to be USD 66.5 billion as against USD 21.3
billion recorded during 2008-09. Out of this total investment the FDI and portfolio investments stood at
USD 34.1 billion and USD 32.3 billion respectively; while these figures were only USD 35.2 billion and
USD (-) 13.9 billion respectively in 2008-09. Stronger recovery of Indian economy coupled with positive
sentiments of global investors about India’s growth prospects is responsible for the momentum of this
sustained capital inflows during the year.

Table-1.13: Monthly trends in foreign investments ($ millions)

Foreign direct Portfolio Total foreign

investments investments investments
08-09 09-10 08-09 09-10 08-09 09-10
April 3749 2339 -880 2278 2869 4617
May 3932 2095 -288 5639 3644 7734
June 2392 2582 -3010 353 -618 2935
July 2247 3476 -492 2077 1775 6508
August 2328 3268 593 926 2921 4194
September 2562 1512 -1403 4999 1159 6511
October 1497 2332 -5243 2922 -3746 5254
November 1083 1722 -574 1274 509 2996
December 1362 1542 30 1533 1392 3075
January 2733 2042 -614 3139 2119 5181
February 1466 1717 -1085 230 381 1947
March 1956 1209 -889 5306 1067 6515
Apr-March 35180 34167 -13855 32375 21325 66542

Source: Reserve Bank of India

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9 Foreign Exchange Reserves

In 2009-10, India’s foreign exchange reserves increased by $US 27.1 billion over the previous year to
reach $US 279.1 billion. Foreign currency assets (FCAs) increased by $ US 13.3 billion during the year.
The rise in the foreign exchange reserves from $US 250 bn recorded in the previous year to $ US 280 bn
was due to higher capital inflows in the form of portfolio investments during the year.

Table-1.14: Monthly trends in foreign exchange reserves ($ billion)

07-08 % Change 08-09 % Change 09-10 % Change

April 204.1 2.5 314.5 1.5 251.7 0.0
May 208.3 2.0 312.5 -0.6 262.3 4.2
June 213.4 2.4 312.0 -0.1 265.1 1.0
July 229.3 7.4 306.1 -1.8 271.6 2.4
August 228.8 -0.2 295.3 -3.5 276.4 1.8
September 247.7 8.2 286.3 -3.0 281.2 1.7
October 262.4 5.9 252.8 -11.7 284.3 1.1
November 273.5 4.2 247.6 -2.0 288.1 1.3
December 275.9 0.8 255.9 3.3 283.4 -1.6
January 288.3 4.4 248.6 -2.8 280.9 -0.9
February 301.2 4.4 249.2 0.2 278.4 -0.9
March 309.7 2.8 251.7 1.0 279.1 0.3
Source: Reserve Bank of India

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18 : Page