Indian Economy: Highlights – May 2010

Indian Economy: Highlights – May 2010

India’s GDP growth released for the last quarter of 2009-10 turned out to be robust, it showed a record growth of 8.6 percent as compared to the growth of 5.8 percent in the same quarter of previous year. For the fiscal 2009-10 India's economy grew by 7.4 percent which is an upward revision from earlier estimates of 7.2 percent due to higher-than-anticipated growth in agriculture, mining and manufacturing sectors.

The IIP numbers in April 2010 continue to rise, it grew by 17.6 percent which was higher than the rate of 13.5 percent increase recorded a month ago. This is mainly led by the notable growth seen across all sectors. The industrial growth was just 1.1 percent a year ago, i.e. in April 2009.

In the opening month of 2010-11, growth came from the three sectors, mining, manufacturing and electricity. As per the use-based classification, growth numbers were also found to be remarkable; especially, the capital goods sector, this achieved a growth of 72.8 percent indicating a rise in investment sentiments in the economy. The consumer goods sector appeared to have performed well as it posted growth of 14.4 percent in April 2010. This growth is mainly fuelled by high growth in consumer durables, registering an increase of 37 percent in April 2010. Fifteen (15) out of the seventeen (17) industry sectors witnessed positive growth in the first month of the present fiscal (2010-11) as compared to the growth numbers in the same month of previous year.

Growth in six core infrastructure industries accelerated by 5.1 percent in April 2010 as compared to 3.7 percent in April 2009. This growth is attributed to high performance in the sectors such as finished steel, crude petroleum, and petroleum refinery.

The overall inflation averaged for the month of April 2010 stood at 9.6 percent as compared to the inflation of 1.3 percent seen in the same month of previous year. This rise in price index is on account of dearer food articles and fuel products.

The broad money supply increased by 0.8 percent in April 2010 compared to growth of 2.6 percent in the same month of 2009. The growth in bank credit to commercial sector was seen to decelerate by (-) 0.8 percent.

The aggregate deposits expanded by 1.6 percent in April 2010 , calculated over March 2009 numbers . This expansion in aggregate deposits, was however, marginally higher in the same month of previous year.

The rising indices show that strong sentiments among the investors. Investment sentiments in the Indian stock market BSE Sensex was maintained above 17K in April 2010, whereas NSE index NIFTY rose to stay above 5K points.

There has been a decline by 0.3 percent in the fiscal deficit in the opening month of the current financial year 2010-11 as the deficit has stepped down from Rs 54158 crore in April 2009 to Rs 53993 crores in April 2010.

The growth in gross tax revenue was observed to enter the positive quadrant during the month of April 2010. This is mainly on account of strong revival in the collection of indirect taxes and partly on account of collection in direct taxes.

India’s merchandise trade growth numbers show improvement since November 2009. The role of low base in the high growth cannot be denied, but one cannot also ignore the rise in demand in the international market. Latest figure available for April 2010 showed growth in exports by 36.2 percent as against the negative 33.2 percent observed in same month of last year.

The total foreign investments attracted in 2009-10 amounted to USD 66.5 billion compared to USD 21.3 billion during 2008-09. However, the numbers were almost same when foreign direct investment for both the years were being compared.

Foreign exchange reserves stood at USD 279.6 billion in April 2010 from USD 251.7 billion April 2009. This increase is subject to the recent surge in the foreign investments inflows.