INFRASTRUCTURE PROJECTS & MODE OF EXECUTION

i) Build-and-Transfer (BT) – A contractual arrangement whereby the Developer undertakes the financing and construction of a given infrastructure or development facility and after its completion hands it over to the Government, Government Agency or the Local Authority. The Government, Government Agency or the Local Authority would reimburse the total Project investment, on the basis of an agreed schedule. This arrangement may be employed in the construction of any infrastructure or development Projects, including critical facilities, which for security or strategic reasons, must be operated directly by the Government or Government Agency or the Local Authority.

(ii) Build-Lease-and-Transfer (BLT) – A contractual arrangement whereby a Developer undertakes to finance and construct Infrastructure Project and upon its completion hands it over to the Government or Government Agency or the Local Authority concerned on a lease arrangement for a fixed period, after which ownership of the facility is automatically transferred to the Government or Government Agency or the Local Authority concerned.

(iii) Build-Operate-and-Transfer (BOT)–A contractual arrangement whereby the Developer undertakes the construction, including financing, of a given infrastructure facility, and the operation and maintenance thereof. The Developer operates the facility over a fixed term during which he is allowed to a charge facility users appropriate tolls, fees, rentals and charges not exceeding those proposed in the bid or as negotiated and incorporated in the Contract to enable the recovery of investment in the Project. The Developer transfers the facility to the Government or Government Agency or the Local Authority concerned at the end of the fixed term that shall be specified in the Concession Agreement. This shall include a supply-and-operate situation which is a Contractual arrangement whereby the supplier of equipment and machinery for a given infrastructure facility, if the interest of the Government, Government Agency or the Local Authority so requires, operates the facility providing in the process technology transfer and training to Government, Government Agency or the Local Authority nominated individuals.

(iv) Build-Own-and-Operate (BOO) – A contractual arrangement whereby a Developer is authorized to finance, construct, own, operate and maintain an Infrastructure or Development facility from which the Developer is allowed to recover this total investment by collecting user levies from facility users. Under his Project, the Developer owns the assets of the facility and may choose to assign its operation and maintenance to a facility operator. The Transfer of the facility to the Government, Government Agency or the Local Authority is not envisaged in this structure; however, the Government, Government Agency or Local Authority may terminate its obligations after specified time period..

(v) Build-Own-Operate-Transfer (BOOT) – A contractual arrangement whereby a Developer is authorized to finance, construct, maintain and operate a Project and whereby such Project is to vest in the Developer for a specified period. During the operation period, the Developer will be permitted to charge user levies specified in the Concession Agreement, to recover the investment made in the Project. The Developer is liable to transfer the Project to the Government, Government Agency or the Local Authority after the expiry of the specified period of operation.

(vi) Build-Transfer-and-Operate (BTO ) – A contractual arrangement whereby the Government or Government Agency or the Local Authority contracts out an infrastructure facility to a Developer to construct the facility on a turn-key basis, assuming cost overruns, delays and specified performance risks. Once the facility is commissioned satisfactorily, the Developer is given the right to operate the facility and collect user levies under a Concession Agreement. The title of the facilities always vests with the Government, Government Agency or the Local Authority in this arrangement.

(vii) Contract-Add-and-Operate ( CAO ) – A contractual arrangement whereby the Developer adds to an existing infrastructure facility which it rents from the Government, Government Agency or the Local Authority and operates the expanded Project and collects user levies, to recover the investment over an agreed franchise period. There may or may not be a transfer arrangement with regard to the added facility provided by the Developer.

(viii) Develop-Operate-and-Transfer (DOT) – A contractual arrangement whereby favorable conditions external to a new Infrastructure Project, which is to be built by a Developer, are integrated into the BOT arrangement by giving that entity the right to develop adjoining property and thus, enjoy some of the benefits the investment creates such as higher

INDIAN ECONOMY SEPTEMBER 2010

The overall mood of the industry looks promising with growth at 10.6 per cent for the five month period , April- to August 2010. However, growth slipped to 5.6 per cent for the month of August 2010 from 10 percent plus in the previous year.

Capital goods production remained volatile as growth dipped into the negative zone on two occasions during the present fiscal after a steep rise. However, the average growth stood at 29 per cent during the period April- August as against 3.4 percent increase in the corresponding period of previous year. Output in the basic and intermediate goods rose but not as much as seen in the previous year. Consumer goods segment went up by 8.6 percent during the period from April to August in 2010-11, as against 3.6 percent increase in output in the previous year and the rise was seen on account of consumer durables segment.

8 of the 17 industry segments were seen to surpass the growth rate during the first five months of FY11 as compared to the growth observed in the previous year.

The six core infrastructure industries continues to remain positive cumulatively up to August 2010, however the pace of growth is slightly lower as compared to the growth posted in the previous year. Growth in the overall infrastructure industries mainly came from crude petroleum, petroleum refinery and steel.

Government’s efforts in taming inflation brought positive results. In September 2010 the rate of inflation was brought under 10 per cent. Currently the rate of inflation averaged for the month of September 2010 was 8.62 percent, this has come down from 9.55 percent in August and 10.3 in July 2010.

During the month of September the confidence of the foreign investors in the Indian stock market was seen to go up. The index Sensex was observed to swing between 19-20 K and Nifty was seen move between 5- 6 K points.

In August FY 11, M3 decelerated to 15 percent calculated on a Y-o-Y basis as compared to 19 percent in the previous year. The percentage changed in the net bank credit to the government halved as compared to the increase observed in the previous year. However, borrowings by the commercial sector were seen to increase by 18.3 per cent vis-a-vis the increase of 13.8 percent in the previous year.

Highlights – September 2010

2 : PageInvestments in the government securities slowed compared to the previous year and so were the aggregate deposits. The total credit off-take increased which was on account non-food segment.

Fiscal deficit up to August this year was lower at Rs 151425 crores compared to the fiscal deficit recorded in the previous year which was at Rs 182290 crores . The reasons for low fiscal deficits were increase in the revenue receipts ( non tax source ) on account of disinvestments in the PSUs and auction of 3G and BWA spectrum.

Total merchandise trade from April – August FY11 stood at USD 227 billion compared to the total trade of USD 171.9 billion in the corresponding period of previous year.

The trade deficit widened by 56 billion ( upto August) as the merchandise exports cumulatively from April to August 2010-11 rose to USD 85 billion as compared to USD 66 billion in the 2009-10. Imports were also seen to increase by 33 per cent to USD 141 billion.

FDI is an area which requires special attention because of its inherent long term investment intentions. Presently the FDI investments received up to August this year is running behind the investments received in the previous year.

Current state of Indian Economy August 2010

Highlights – August 2010
July 2010 overall industrial growth numbers continued on the path of buoyancy. The high growth in the overall industrial output was solely on account of the heavyweight manufacturing sector. The other two sectors also remained in the positive zone in

July and during the period from April – July 2010. However, the growth in output was lower than the growth seen in the corresponding period of previous year (FY10). Going by the use-based classification we see a huge rise in the production of capital goods which rose by 63 percent in July 2010 as compared to the rise of 1.7 percent in the same month of previous year. The growth in the consumer goods output swelled only on account the durables segment.

The industry segments that registered a sizable increase in output were food products, cotton textiles, jute products, paper products , rubber and plastic products, petroleum , coal and tar, metal products and among the capital goods were the machinery and equipment , transport equipment and parts.
The growth momentum of the six core infrastructure industries was maintained with the increase in petroleum products ( crude petroleum and petroleum refinery). Production in coal and power remained positive, however, the growth numbers were not higher than the previous year. The two segments that were found in the negative territory were cement and finished steel.

The moderation in overall inflation could be observed in July 2010, 10 percent in July from 11 percent in the previous month. However, inflation was found to be much higher when compared with the inflation recorded in July last year and may require more time and steps by the government to cool down to targeted levels. The prices of items / article groups that fueled the overall price to rise to such levels were the food and non-food articles (primary goods), fuel products, beverages, textiles, wood, rubber, chemicals , basic metals , machinery and transport equipments.

The broad money supply rose by 3.4 percent over the period from April to July 2010-11, this was lower than the M3 recorded in same period of previous year. The aggregate deposits was also seen to expand slowly by 3.3 percent during the period from April to July of the current fiscal as compared to the expansion of 6.2 percent during the same period of 2009-10. The bank credit rose by 3.5 percent calculated in July over April 2010.
The total revenue of the government stepped up sharply this year with more than twofold increase, from the Rs 105378 crores up to July 2009-10 to Rs 238524 crores up to the month of
2:Page
July of current fiscal . Consequently, the magnitude of fiscal deficit has contracted by almost 43 percent during this period of 2010-11 over the previous year.
According to RBI, government acquired higher than anticipated revenue in July from the auction of 3G and BWG and revenue from taxes helped the holding back of fiscal deficit within the targeted level of 5.5 %.

The buoyancy in tax collection in July has been on account of impressive collection in the direct and indirect taxes. However, in growth terms the indirect tax was observed to be much higher as compared to the growth in direct taxes.

The indices continue to swing between 16 K to 17K points. In July 2010 it rose to the level of 17.5 K points and currently in September 2010 we saw the Indian stock market rise to the level of 20 K points again.
The overall merchandise exports slowed to 13 percent in the fourth month ( July) of the present fiscal as compared to the 30 plus percent growth registered in the previous month of this year. It is early for any comment on the trend without the trade numbers of August and September.

The total foreign investment swelled to 10.8 billion up to July on the back of inflows in the portfolio investment category. High investment activity by the FIIs was witnessed during the month, this high inflows is what has led to increased portfolio investments ( USD 9.1 billion). FDI received during the month was only USD 1.7 billion .
Further increase in the forex reserves has been witnessed; this has been observed to rise from USD 275 billion to USD 284 billion and enough to cover 11 months of imports.

ADB hikes GDP forecast to 8.5% but warns about inflation

The Asian Development Bank (ADB) raised India’s growth forecast for the current fiscal to 8.5 per cent from 8.2 per cent but expressed concern over persistent high inflation and rising value of rupee which could undermine future economic expansion.

“Growth is being supported by robust investment, increased capital inflows, and stronger industrial output, buoyed by rising consumer demand,” said ADB Outlook Update.

The multilateral lending agency had projected a growth rate of 8.2 per cent for 2010-11 in April. For the next financial year (2011-12), ADB has retained its earlier projection of 8.7 per cent.

ADB’s growth projection for current fiscal is the same as had been forecast by the Finance Ministry, the Reserve Bank of India and the Prime Minister’s Economic Advisory Council.

The multilateral lending agency, however, expects the average inflation to be 7.5 per cent during the current fiscal as against its earlier projection of 5.5 per cent. “High food prices (will) remain a near-term concern”, it added.

The rate of price rise, according to ADB, is likely to be at the same level during the next fiscal. The inflation, according to the new Wholesale Price Index with base year 2004-05 was 8.5 per cent in August and food inflation was 15.10 per cent for week ended September 4.

ADB also warned that the raising value of rupee does not augur well for the Indian economy in the coming years. Rupee appreciated more than 11 per cent in real terms between August 2009 and August 2010, it added, stating that this “poses an additional challenge for policy makers as they seek to maintain high growth while winding back the monetary and fiscal stimulus measures used to help the economy recover from the global economic crisis“.

High inflation and rupee’s sharp appreciation, it added, could erode India’s export competitiveness and its plans to further expand economic growth to 9-10 per cent in coming years.

Pointing out that RBI was projecting overall inflation to moderate to 6 per cent by March-end, the report said, “if price pressures do not abate as expected, the central bank will be hard pressed to intervene in the foreign exchange market to dampen rupee appreciation.”

CURRENT AFFAIRS 2010

IMD unveils high-tech weather forecasting system A state-of-the-art Integrated Forecasting and Communication System was unveiled at the India Meteorology Department (IMD) today that is expected to provide more accurate weather data. Dynamic weather prediction models using super computers and very highly sophisticated software will start giving us more and more accurate data. Agriculture, like so many sectors of Indian economy, is highly dependent on weather and climate and it was good that the IMD was moving away from he conventional forms of weather forecast to an advanced one. "Increasing socio-economic benefits of meteorology in all fields, saving lives and protecting goods in a changing climate is the permanent mission of the India Meteorological Department." The governments took it as one of its priorities and a Rs 1,000 crore programme was sanctioned by Planning Commission in 2007 and crucial components including setting up of automatic weather stations, Doppler Radars, connecting them with most high speed digital inter-connecting systems and network as well as buying super computers for numerical weather prediction were completed.

INDIAN ECONOMY-OVERVIEW2010

Farm sector may achieve 3-3.5 pc growth in 11th plan

India's farm sector is likely to grow by 3-3.5 per cent annually during the 11th Five-Year Plan ending 2011-12, lower than the target of four per cent, the Planning Commission said.

"The rate of growth in agriculture in the Eleventh Plan is likely to be better than in the Tenth Plan. However, it may not reach the target of four per cent per year and instead range between 3 to 3.5 per cent per year," according to a Commission's note for discussion in the National Development Council meeting on July 24.

The Plan Panel, however, noted that agriculture production in 2010-11 would be better compared to last year, when the crop was severely hit by the worst drought in 32 years.

The agriculture sector, which contributes 17 per cent to GDP and employs 60 per cent of the population, grew by 0.2 per cent in 2009-10 fiscal. In the first three year of the current plan period, the average growth was 2.2 per cent.

The Planning Commission emphasised on undertaking steps to increase production so that the four per cent growth target is "at least achieved in the Twelfth Plan period".

"Food Security will continue to be an important concern and we need to plan for growth in foodgrain production of around 2 to 2.5 per cent per year," the note said.

The allied sectors (including dairy and fisheries) will have to grow at 6-7 per cent, it added. Highlighting important steps taken in the last few years, Plan Panel said that greater efforts were needed to achieve the targeted growth. The Commission noted that bio-technology holds great potential for expanding agri-productivity, but it also "raises concerns about safety in connection with the introduction of GM technology in foods".

The panel suggested that it was essential to establish a regulatory system that will ensure that safety is not compromised.

"The central government should expedite the establishment of statutory Bio-technology Regulatory Board, with appropriate scientific expertise as quickly as possible," the note said. The panel asked states to pay more attention to agriculture development by strengthening research, extension system, state agri-universities and encouraging private sector in seed development.

Describing extension service as the "weakest link", the panel said states should strengthen the extension system. "It is not an exaggeration to say that the extension service has collapsed in most states with large unfilled vacancies and also poor accountability of personnel where they exist," the note said.

INDIAN ECONOMY-OVERVIEW2010

Agri panel suggests steps to raise grain output

A task force, set up by the Agriculture Ministry, has recommended a slew of measures to increase India’s stagnating grain production.

The panel has advised adoption of new technologies, water conservation and more efficient water management, especially in Punjab, Haryana and western Uttar Pradesh—known as ‘the food bowl of India’. The task force also suggests taking green revolution to the eastern region. It is hopeful that the measures would check the slowdown in the growth of grain production since the mid-nineties and help in increasing net sown area.

The task force, which was set up towards the end of last year, was headed by the agriculture secretary, and its members included representatives of ICAR, ministries of power and water resources, departments of animal husbandry, rural development and land resources, National Rainfed Area Authority and the Planning Commission. Its mandate was to “suggest short-term and medium-term recommendations on efficient management of water, power and other inputs to maximise agricultural production on a sustainable basis”.

The panel submitted its report in June this year while the action-taken report on its recommendations was finalised only late last month.

The report, after taking into account the food production graph over the years, displayed its disappointment over the declining trend in its growth rate. The mean food production during the last decade revolves around 209.68 million tonnes with a coefficient variation of 8%. After factoring in considerations such as changes in preferences, tastes, life-styles, occupational structure and growing urbanisation, it calculated that the demand for grain (including cereals and pulses) was expected to grow to 236 million tonnes by 2011 and 276 million tonnes by 2020-21.

“To meet the projected demand, production needs to increase each year by about 1.01% for rice, 1.10% for wheat, 2.55% for coarse cereals and 2.48% for pulses,” the report pointed out, adding: “These required growth rates are higher than the growth rates experienced during the last decade in case of pulses and coarse cereals.”

It was felt that the projected demand could be met only by raising production of grains, oilseeds and sugarcane. But this was easier said than done. Over the last 30 years, the panel noted that the net sown area had remained static at about 140 million hectares, and the prospects of raising it were extremely difficult because of the growing pressure on land for other purposes.

Moreover, the food bowl of India, it was felt, had reached its saturation point in terms of grain production. Also, there was a large gap between the productivity of rice and wheat in the eastern and western states. The ability of states such as Punjab, Haryana and western UP to contribute more to the food stocks had become suspect because of the “over-exploitation” of water resources and diminishing soil fertility. The practice of supplying electricity to farmers at subsidised rates in Punjab and Haryana had increased the debts, and the losses, of their state electricity boards.

Besides advocating extension of the green revolution to the eastern states, the task force listed a string of recommendations for a better, more efficient management of water, power and other inputs to optimise food production in the northwestern states.

“Sustainable groundwater development and management in the over-exploited northwest region needs to be taken up by incorporating artificial recharge of groundwater and rainwater harvesting, conjuctive use of surface water and ground water, management of poor and marginal quality groundwater, water conservation by increasing water use efficiency and regulation of groundwater development,” the task force suggested.

Besides, it stressed on the urgent need to take up schemes of artificial recharge of groundwater in the states of Haryana, Punjab, UP, Rajasthan and Gujarat. A case in the point was the Central Ground Water Board’s estimate that about 700 million cubic metre of surface runoff flows out of Haryana every year. “The states will have to be sensitised that surplus run-off could be channelled to micro-storages which can be developed using MGNREGA funds,” the report said.

In states such as Haryana and Punjab, which have been staring at declining water levels, the report said that there must be regular and accurate assessment of actual groundwater use in both rural and urban areas. A close scrutiny of further expansion programmes and separation of feeders for domestic and agricultural power and its timely, but well-controlled, supply is necessary, it said.

The task force also built a case for diversification of crops in these areas.

INDIAN ECONOMY-OVERVIEW2010

Indian economy grows by 8.8% in Q1(2010-11)

Indian Economy grew by an impressive 8.8 per cent during this quarter (April-June) on the back of robust manufacturing growth.

However, certain sectors like financial services restrained the growth in economy, which had recorded 6 per cent growth rate in April-June 2009-10.

Agriculture and allied activities grew by 2.8 per cent, higher than 1.9 per cent in the year-ago period, but it is nowhere between the target of four per cent pegged by the government in the medium term.

Manufacturing expanded by strong 12.4 per cent in April-June, 2010 against a mere 3.8 per cent growth rate in the same period last year.

Construction too grew by 7.5 per cent compared to 4.6 per cent.

Among services, financial, insurance and real estate services expanded by just 8 per cent, against a growth rate of 11.8 per cent in the year-ago quarter, while community social and personal services growth slowed down to 6.7 per cent, against 7.6 per cent a year ago.

However, trade, hotels and communication services rose by 12.2 per cent, against 5.5 per cent during April-June 2009.

The government expects economy to grow by 8.5 per cent this fiscal. Though the GDP numbers for the April-June quarter are higher than that of 8.6 per cent in the previous quarter, they lag expectations of 8.9-9.4 per cent forecast by various experts.

The last time the economy grew at a faster clip was in the last three months of 2007 when it expanded 9.7 percent.

Deputy chairman of the Planning Commission, Montek Singh Ahluwalia said that India's economy could grow better than 8.5 percent in the fiscal year that ends in March 2011.

Agri export to double in 5 yrs: APEDA

India’s agri-export turnover is expected to double in the next 5 years. Agri-export turnover is set to rise from $9 billion to nearly $18 billion by 2014.

The country’s agri-exports have registered a 25% growth in 2008-09. Unlike the software and handicraft industry, agricultural products are not US dependent, hence, the country’s agri-export has been not affected. Experts in this field believe the worst of recession is already over. Infact, major economies such as the EU and the US are reporting significant growth and so going by global scenario, the agri-exports will not suffer.

On ‘farming for export’, a concept where farmers shift gear from livelihood farming to Market-oriented Agriculture and international trade. Agricultural and Processed Food Products Export Development Authority (Apeda) supports ‘farming for export’ concept since it is the best option to ensure better quality of food across the globe. Food safety is a major cause of concern in Europe, Japan and the US market and this method will boost export.

As part of the farming for export programme, Apeda is working on horticulture. It is also financing R&D for pomegranate and working on it in clusters. For pomegranate, Apeda is tapping Maharashtra, Andhra Pradesh and Karnataka, for mango Tamil Nadu and Andhra Pradesh, banana in Julgoan and Surat and ginger in the Northeast.

On centre for perishable cargo, the Apeda has more than 15 centres across the country, the latest to start at Guwahati. When asked about taping the untouched market. Apeda plans to tap Russia for exporting grapes and the Middle East for pomegranate. In the financial year 2009-10, Apeda is betting high on export of dehydrated onions, mango pulp, egg powder and honey.

Seven payloads firmed up for Chandrayaan-2

CHANDRAYAAN-2 IN THE YEAR 2013

ISRO has finalised seven payloads that will go on the second lunar mission, Chandrayaan-2, sometime in 2013. At least two key instruments will probe further to confirm presence of water ice - which was indicated by the first lunar mission of 2008-09,

Chandrayaan-2 will have an Orbiter (satellite), a Lunar lander to be built by Russia, and an ISRO-built Rover that will explore the lunar landscape. Five payloads or scientific experiments will be placed on the orbiter and two on the rover. The Chandrayaan-2 spacecraft will weigh 2,650 kg when it is launched; the orbiter alone will weigh 1,400 kg and lander about 1,250 kg. The subsystems of the orbiter and the rover are being developed at the Bangalore, Thiruvananthapuram and Ahmedabad centres.

Three of the orbiter payloads are new while two are improved versions of the payloads that went on the successful Chandrayaan-1 orbiter of 2008-09. On the Chandrayaan-1, a MIP or Moon Impact Probe was included close towards the launch. Nearly half of its 11 payloads were guest experiments from other countries.

The former ISRO Chairman, Dr U.R.Rao, heads the national committee of experts drawn from ISRO centres, academic institutions and R&D labs. Dr Rao also chairs the Advisory Committee on Space Sciences (ADCOS). Chandrayaan-2 is to be launched on the Indian rocket, the GSLV, from the Satish Dhawan Space Centre, Sriharikota.

The orbiter is to carry a Large Area Soft X-ray Spectrometer (CLASS) from ISRO Satellite Centre (ISAC), Bangalore and Solar X-ray Monitor (XSM) from Physical Research Laboratory (PRL), Ahmedabad for mapping the major lunar elements.

An L- and S-band Synthetic Aperture Radar (SAR) from SAC will probe the first few meters for the presence of water ice among others. The first lunar mission had indicated presence of water in the shadowed regions.

An Imaging IR Spectrometer (IIRS) from SAC will map the lunar surface and look for minerals, water molecules and hydroxyl.

A Neutral Mass Spectrometer (ChACE–2) from Space Physics Laboratory (SPL), Thiruvananthapuram, will make a detailed study of the lunar exosphere.

A Terrain Mapping Camera–2 (TMC–2) from SAC will be deployed to prepare a 3D map of Moon's minerals and geology.

The rover will carry a Laser Induced Breakdown Spectroscope (LIBS) from Laboratory for Electro Optic Systems (LEOS), Bangalore; and an Alpha Particle Induced X-ray Spectroscope (APIXS) from Physical Research Labs, Ahmedabad. Both the instruments will analyse the elements at the lunar landing site.

INDIAN ECONOMY-2010

ECONOMIC HIGHLIGHTS

Advance Estimates of National Income - 2009-10

(a) Estimates at constant (2004-05) prices

Gross Domestic Product (GDP)

GDP at factor cost at constant (2004-05) prices in the year 2009-10 is estimated at US$ 961.89 billion (Rs. 44,64,081 crore) showing a growth rate of 7.4 percent over the Quick Estimates of GDP for the year 2008-09 of US$ 889.91 billion (Rs. 41,54,973 crore).The upward revision in the GDP growth rate is mainly on account of higher performance in ‘agriculture, forestry and fishing’, ‘mining and quarrying’ and ‘manufacturing’, than anticipated.

In the case of ‘mining and quarrying’, the Index of Industrial Production of Mining (IIPMining) registered a growth rate of 9.7 per cent during 2009-10, as against the growth rate of 8.3 percent during April-November, 2009, which was used in the Advance Estimates. Due to this increase in the IIP-Mining, the growth rate in GDP is now estimated at 10.6 percent, as
against the advance estimate growth rate of 8.7 percent.

Similarly, the IIP of manufacturing registered a growth rate of 10.9 percent during 2009-10, as against the growth rate of 7.7 percent during April-November,2009. Due to this increase in the IIP, the GDP of ‘manufacturing’ sector is now estimated at 10.8 percent,as against the Advance estimate growth rate of 8.9 percent.

The sectors which showed growth rates of 5 percent or more, are ‘mining and quarrying’ (10.6 percent), ‘manufacturing’(10.8 percent), ‘electricity, gas and water supply’(6.5 per cent)'construction’(6.5 percent),'trade, hotels,transport and communication'(9.3 per cent),'financing, insurance, real estate and business services' (9.7 percent), and 'community,
social and personal services' (5.6 percent). The ‘agriculture, forestry and fishing’ sector, however registered a growth rate of 0.2 percent.

Gross National Income

The gross national income (GNI) at factor cost at 2004-05 prices is now estimated at US$ 890.29 billion (Rs. 44,39,072 crore) during 2009-10, as against the previous year’s Quick Estimate of US$ 886.69 billion (Rs. 41,38,174 crore). In terms of growth rates, the gross national income is estimated to rise by 7.3 percent during 2009-10, in comparison to the growth rate of 6.8 percent in 2008-09.

Per Capita Net National Income

The per capita net national income in real terms (at 2004-05 prices) during 2009-10 is estimated to attain a level of US$ 720.23 (Rs. 33,588) as compared to the Quick Estimates for the year 2008-09 of US$ 682.40 (Rs. 31,821).The growth rate in per capita income is estimated at 5.6 percent during 2009-10.

(b) Estimates at current prices

Gross Domestic Product

GDP at factor cost at current prices in the year 2009-10 is estimated at US$ 1,257.41 billion (Rs. 58,68,331 crore),showing a growth rate of 12.2 percent over the Quick Estimates of GDP for the year 2008-09 of US$ 1,120.46 billion (Rs. 52,28,650 crore).

Gross National Income

The GNI at factor cost at current prices is now estimated at US$ 1,250.40 billion (Rs. 58,35,493 crore) during 2009-10, as compared to US$ 1,115.84 billion (Rs. 52,07,534 crore) during 2008-09, showing a rise of 12.1 percent.

Per Capita Net National Income

The per capita income at current prices during 2009-10 is estimated to attain a level of US$ 950.87 (Rs. 44,345) as compared to the Quick Estimates for the year 2008-09 of US$ 860.73 ( Rs. 40,141), showing a rise of 10.5 percent.

Quarterly Estimates of GDP For Q4 (January-March), 2009-10

(a) Estimates at constant (2004-05) prices

GDP at factor cost at constant (2004-05) prices in Q4 of 2009-10 is estimated at US$ 259.69 billion (Rs. 12,05,119 crore), as against US$ 238.01 billion (Rs. 11,10,041 crore) in Q4 of 2008-09, showing a growth rate of 8.6 per cent.

The sectors which registered significant growth rates in Q4 of 2009-10 over Q4 of 2008-09 are ‘mining and quarrying’ at 14.0 per cent, ‘manufacturing’ at 16.3 per cent, ‘electricity, gas and water supply’ at 7.1 per cent, ‘construction’ at 8.7 per cent, 'trade, hotels, transport and communication' at 12.4 per cent, and 'financing, insurance, real estate and business services' at 7.9 per cent.

(b) Estimates at current prices

GDP at factor cost at current prices in Q4 of 2009-10 is estimated at US$ 349.43 billion ( Rs. 16,21,812 crore), as against US$ 292.02 billion (Rs. 13,61,871 crore) in Q4 of 2008-09, showing a rise of 19.1 per cent.

Monthly Economic Report

• Food grains (rice and wheat) stocks held by FCI and State agencies were 42.84 milliontonnes as on April 1, 2010.
  
  
• Overall growth in the Index of Industrial Production was 17.6 per cent during April 2010 as compared to 1.1 per cent in April 2009. During 2009-10, IIP growth was 10.4 per cent compared to 2.8 per cent during 2008-09.
  
  
• Core infrastructure-supportive sectors grew by 5.1 per cent in April 2010 compared to a growth of 3.7 per cent in April 2009. During 2009-10, these sectors grew at 5.5 per cent as compared to 3.0 per cent during 2008-09.
  
  
• During the financial year 2010-11 (up to May 21, 2010), broad money (M3) increased by 1.7 per cent, compared to 3.7 per cent during the corresponding period of the last year.
  
  
• Exports, in US dollar terms increased by 36.2 per cent and imports increased by 43.3 per cent, during April 2010.
  
  
• Foreign exchange reserves (excluding gold, SDRs and reserve tranche position in the IMF) stood at US $ 248.2 billion at end-May 2010, compared to US $ 251.7 billion at end-May 2009.
  
  
• Rupee appreciated against Pound Sterling, and Euro and depreciated against US dollar and Japanese Yen in the month of May 2010 over April 2010.
  
  
• Year-on-year inflation in terms of Wholesale Price Index was 10.16 per cent for the month of May 2010 as compared to 1.38 per cent in May 2009.
  
  
• Tax revenue (net to Centre) during April-March, 2009-10 recorded a growth of 3.6 per cent compared with corresponding period of 2008-09.
  

Agriculture

• The third advance estimates of crop production released by the Ministry of Agriculture showed an upward revision as compared to their second advance estimates in the production of rice (89.31 million tonnes from 87.56 million tones), wheat (80.98 million tones from 79.06 million tones), cotton (228.34 from 223.18 lakh bales of 170 kg. each) and sugarcane (274.66 million tones from 251.27 million tones) during 2009-10. Due to this upward revision in the production, the growth rate in ‘agriculture, forestry and fishing’sector in 2009-10 has shown a growth rate of 0.2 percent,as against the growth rate of (-) 0.2 percent in the Advance estimates.
  
  
• The Centre increased the minimum support price of jute by over 14 percent to US$ 33.77 (Rs 1575) per quintal for 2010-11. The decision to hike the minimum support price (MSP) for the TD-5 grade (ex-Assam) variety of jute was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA). "The increase in the MSP of raw jute is expected to encourage the farmers to step up investment in jute cultivation and thereby production and productivity of Jute in the country," the official statement said.Jute MSP was at US$ 29.48 (Rs 1,375) per quintal last year. The government also said that the Jute Corporation of India (JCI) would continue to act as the Nodal Agency to buy jute at the MSP level. Jute production is estimated to be 96.98 lakh bales during 2009-10 season, compared with 96.34 lakh bales in a year-ago period. One bale is 180 kgs. Major jute producing states in the country are West Bengal, Bihar, Assam, Orissa, Andhra Pradesh and Tripura.
  
  
• The Cabinet Committee on Economic Affairs (CCEA) approved US$ 0.13 billion (Rs 632 crore) for the National Horticulture Board to implement its existing schemes and promote 25,000 integrated commercial horticulture projects in the 11th plan period ending 2012."It is expected that with the budgetary support during the 11th Five Year Plan, additional infrastructure for post-harvest, cold-chain and primary processing would be created to handle about 25 lakh tonnes of horticultural produce," said an official statement.An investment of US$ 0.11 billion (Rs 495.61 crore) by the board through back-ended subsidy for hi-tech commercial horticulture and cold chain infrastructure is expected to attract US$ 0.53 billion (Rs 2,500 crore)-US$ 0.64 billion (Rs 3,000 crore) investment in the sector, it said.
  
  
• India's cotton production may increase by over six per cent to a record 25 million bales in 2010-11 season if the country receives normal monsoon this year, the US Department of Agriculture has forecast. Cotton output is pegged at 23.5 million bales (one bale equals 170 kg) in 2009-10 marketing season (August-July)."Assuming normal 2010 monsoon, cotton production in India's marketing year 2010-11 is forecast to increase to a record 25 million bales on expected record planting and improved yields," the USDA said in a report.The Department noted that the area under cotton is forecast to increase marginally to a record 10.3 million hectares from 10.26 million hectares provided there is "timely and well distributed monsoon at the time of planting".
  
  
• Agricultural cooperative major National Agricultural Cooperative Marketing Federation of India (NAFED) is eyeing the markets in the Gulf and Europe with food products aimed primarily at the Indian diaspora."There have been demands in the last several years from Indians in the Gulf and Europe to make our products available for them. We have now decided to source India-specific products, process and package them and export them to the Gulf and Europe. The prices will be competitive," NAFED managing director C.V. Ananda Bose said.The NAFED move will be a boon for the huge Indian population in the Gulf and European cities like London. For the Gulf market, NAFED, the largest farmers' cooperative in the country, will ship Kerala-specific products because of the large presence of workers from the state.
  
  
• The first of the genetically modified seed varieties developed in India will make it to the market soon as the government has registered two such wheat varieties developed by Mahyco, an Indian seeds company. This will create competition in the market dominated by multinational companies and thereby help lower seed prices. The Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FR Authority) has registered two hybrid wheat varieties.Mahyco is engaged in the research, production, processing and marketing of 115 products in 30 crop species including cereals, oilseeds, fibre and vegetables.
  
  
• The Government is contemplating to enhance milk production to 180 million tonnes by 2021-22 through the National Dairy Plan which is a strategic plan prepared by the National Dairy Development Board (NDDB). The Plan has three major components, namely, enhancing milk production through increased productivity, substantially strengthening and expanding the infrastructure for procurement, processing, marketing and quality assurance through existing institutional structures and by promoting new ones, and human resource development.According to the Basic Animal Husbandry Statistics 2008, the average daily milk production was 2.09 Kgs per indigenous cow and 6.52 Kgs per crossbred cow in 2007-08.

Capital Market

• According to The Centre for Monitoring Indian Economy (CMIE), total floatations stood at US$ 7.74 billion (Rs.36,096.3 crore) in March 2010, the highest collected since July 2009. While domestic floatations stood at US$ 7.64 billion ( Rs.35,637.9 crore) in March 2010, overseas floatations stood at US$ 0.09 billion (Rs. 458.4 crore). The private placement of debt and equity was the most sought after route to raising funds in March 2010. More than US$ 4.29 billion (Rs. 20,000 crore) was raised via this route.
  
  
• Market regulator SEBI proposed to reduce the time between public issue closure and listing to 12 days from the existing (up to) 22 days. This would be applicable to public issues opening on or after May 1, 2010.The regulator also said that the ASBA (Application Supported by Blocked Amount) process would undergo suitable modification to make it consistent with the new timelines. SEBI said the new rule was aimed at making the existing public issue process more efficient.Market participants said that reducing the listing time to 12 days was a good move.Investors who borrowed funds to invest in IPOs would stand to gain from a reduction in interest costs.
  
  
• The SEBI also extended the ASBA facility to institutional investors in public issues.This would be applicable for issues opening on or after 1 May 2010.Currently,only individuals could apply through ASBA. Last month SEBI made it compulsory for institutional investors to pay 100 pe cent money upfront for public issues as against 10 per cent currently.
  
  
• CMIE Overall Share Price Index (COSPI) rose by 4.2 percent in March 2010 after two consecutive months of decline in January 2010 and February 2010. The rise was seen across all large, mid-and small- sized companies. While the index started off on a positive note, it fell marginally in the first half of March 2010, before notching up gains in the latter half of the month. The NSE Nifty also rose by 6.6 per cent in March 2010 and its average daily trading volumes increased by 11.2 per cent to US$ 2.92 billion (Rs. 13,631 crore) during the month.The largest gainer among the major CMIE sectoral indices in March 2010 was the CMIE castings & forgings index which rose by 14.6 per cent compared to the previous month.
  
  
• As per CMIE,March 2010 Nifty futures expired (on 25 March 2010) on a positive note with strong long roll-overs in Nifty April 2010 futures. A similar trend was witnessed in key stocks like Infosys Technologies, L&T, HDFC Bank, Bharati Airtel and Reliance Industries. Rollovers in derivative contracts require the open interest in the expiring series (near-month) to be transferred to the next month. The long roll-overs in future contracts indicate that the traders are bullish on the underlying index or stocks.
  
  
• Accordig to CMIE,Foreign Institutional Investor (FII) buying on the bourses surged during the month of March in 2010. They brought in US$ 4.03 billion (Rs.18,833.8 crore) after withdrawing US$ 0.24 billion (Rs.1,136.8 crore) in January 2010 and injecting a mere US$ 0.45 billion (Rs. 2,113.8 crore) in February 2010. Net investments in equities remained positive throughout the month.
  
  
• In March 2010, market regulator, the Securities & Exchange Board of India (SEBI) issued a circular to all mutual funds. According to the circular:
  
  
  • The present maximum limit of the new fund offer (NFO) period of 30 days in case of open ended schemes and 45 days of close ended schemes shall be reduced to 15 days (except ELSS schemes).
    
  • Mutual funds shall use the NFO proceeds only on or after the closure of the NFO period.
  • The mutual fund should allot units, refund money and dispatch statement of accounts within five business days from the closure of the NFO.
    
  • All the schemes (except ELSS) shall be available for ongoing repurchase, sale, trading within five business days of allotment.
    
  • Mutual funds have to compulsorily provide ASBA facility to the investors of all NFOs launched on or after 1 July 2010.
    
  • When units of an open-ended scheme are sold, and sale price is higher than the face value of the unit, part of the sale proceeds that represents unrealised gains shall be credited to a separate account (Unit Premium Reserve) and the same shall not be utilised for the determination of distributable surplus. Henceforth, mutual funds will pay dividends only from realise gains. Mutual funds oppose this move as they feel it will turn fund managers into traders. They will be forced to churn their portfolios regularly in order to pay dividends to their investors.
    
  • SEBI barred mutual funds from entering into any revenue sharing agreements with offshore funds for investments made on behalf of fund-of-fund schemes, which invest in other funds as this would create a conflict of interest. Any commission or brokerage received from the underlying fund shall be credited into the concerned scheme's account.
    

Money and Banking

• As per CMIE,the rate of growth in money supply is expected to improve in 2010-11 due to better economic growth, healthy deposit growth and higher capital inflows. The Country's economy is expected to expand by 9.2 per cent in 2010-11 compared to an estimated 7.1 per cent in 2009-10. Foreign exchange reserves are expected to increase by nearly USD 43 billion compared to nearly USD 26 billion in 2009-10. Deposit mobilisation is expected to improve to 20 per cent from around 18 per cent in 2009-10.
  
  
• According to CMIE, Scheduled commercial bank credit is expected to grow by 16 per cent in 2010-11. Banks are expected to disburse Rs. 5.2 lakh crore as credit during the year. This is much higher compared to the Rs 4.6 lakh crore estimated for 2009-10.
  
  
• CMIE expects higher credit offtake in 2010-11 on the back of a sustained growth in industrial production and substantial capacity expansion plans of corporate India. Industrial production is expected to grow by more than nine per cent for the second consecutive year. This will call for higher working capital credit requirements from companies. To enable this high production growth, corporate India will significantly expand capacities in 2010-11. Compared to estimated Rs 4 lakh crore worth of investment projects getting completed in 2009-10, we expect projects worth Rs.6.5 lakh crore to get completed in 2010-11. Credit growth would be even higher had it not been for the recent trend of corporates increasingly resorting to non-banking sources of funds.
  
  
• According to M V Nair, chairman and managing director of Union Bank of India and chairman of the Indian Banks Association, the general expectation is that the GDP will grow by 8.5 per cent and credit and deposit growth will hover in the range of 20-22 percent.
  
  
• Bank of Baroda expects bank credit to grow by 18-19 per cent in 2010-11. It recorded a growth of 25 per cent in its retail portfolio in 2009-10 and it expects the trend to continue. IDBI grew its home loan portfolio by 30 per cent in 2009-10. It expects the same to grow by 25 per cent in 2010-11. State Bank of India is expecting to grow its loan portfolio by 20 per cent in 2010-11.
  
  
• Indian Bank is expecting a credit growth of 20 per cent. ICICI Bank is expecting its advances to grow by 15 per cent in 2010-11. It expects its "home loans, car loans and project and working capital finance businesses" to together grow by 20-22 per cent.
  
  
• According to R Gopalan, secretary, financial services division of the ministry of finance, the Government set public sector banks a target of 20 per cent for credit and deposit growth for fiscal 2010-11. According to him, the government was of the view that the economy would grow at 8.5 per cent next fiscal and it would require a systemic credit growth of 20 per cent.
  
  
• According to CMIE,growth in deposits of scheduled commercial banks is expected to improve from 17 per cent in 2009-10 to at least 20 per cent in 2010-11. This growth will be primarily driven by higher overseas inflows. We expect overseas inflows to improve from an estimated US$ 16.09 billion (Rs. 75,135 crore) in 2009-10 to US$ 39.88 billion (Rs. 1,86,273 crore) in 2010-11 on the back of continuing strong foreign investment inflows and higher external commercial borrowings. On a net basis, foreign exchange reserves of the country are expected to grow by nearly US$ 43 billion in 2010-11.
  
  
• As per CMIE,Improvement in deposit rates, faster growth in money supply and much higher overseas inflows together are expected in an improvement in the rate of growth in deposits to 20 per cent in 2010-11 from 17 per cent in 2009-10.
  
  
• According to CMIE,demand for funds by corporates grew by about 34 per cent during 2009-10, funds supply by banks through non-food credit was higher by only 12 per cent. Non-bank sources of funds, on the other hand, rose by a whopping 72 per cent. As a result, corporates ended up sourcing 47 per cent of their funds or Rs. 4.1 lakh crore through non-bank sources in 2009-10 compared to 37 per cent in the preceding year.
  
  
• Resilient Indian banks have improved their brand value rapidly amidst global recession. There are 20 Indian banks in the Brand Finance® Global Banking 500, an annual international ranking by UK-based Brand Finance Plc, this year. The State Bank of India (SBI) became the first Indian bank to break into the world’s Top 50 list, according to the Brand Finance study that saw HSBC retain its top slot for the third year in a row. The number of Indian banks in the global list had more than tripled last year to 19 from six in 2007. Differentiation through strong brand and customer base value is becoming a key economic lever for Indian banks. This is as true in financial services as in consumer products. The study notes that global banking sector has begun to show tangible signs of recovery, with the world’s 500 most valuable banking groups growing by 62% in terms of market capitalisation and their brand values cumulatively increasing by 49%. “This year’s BrandFinance® Global Banking 500 shows how significant the recovery of global banking brands has been,” said David Haigh, CEO of Brand Finance plc. The total brand value of the Top 500 banks stands at $716 billion, up 49% over 2009 and 4% higher than in 2008, prior to the crisis.
  
  
• There has been a sharp increase in the use of IT in banking services. With the cellular user base expected to touch 600 million by 2010, the volume of pre-paid card recharging alone could exceed the US$ 4 billion mark. Bharti Airtel launched its mobile payment services in June 2008 and has already got one million registered users. “mCommerce will be one of the top three services offered over mobile in the future,” said an Airtel spokesperson. International remittance is another service that operators are piloting in India.“With the Reserve Bank of India’s new mobile payment guidelines, banks and merchants are fast adopting our open-platform to build a thriving eco-system and a compelling suite of services for consumers,” says Mr Sanjay Swamy, CEO of mChek, a mobile payment service provider.So far, 19 banks have obtained permission from the RBI to provide mobile payment facilities to their customers.
  
  
• JP Morgan Chase is set to enter the corporate banking space in India, offering a suite of services such as providing working capital, cash management solutions, foreign exchange and hedging tools. There will also be an element of retail operations, though liability-led, and financial inclusion.“A key initiative for JPMorgan in 2010 in India is the launch of global corporate banking as a part of the global launch of the same in high growth countries like China and Brazil. This initiative is driven by the bank's continuing dialogue with clients around the world who have expressed a desire for expanded global banking operations from us,” says Madhav Kalyan, chief executive officer, JPMorgan Chase Bank, and head of corporate banking operations in India.

Infrastructure

The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 stood at 266.9 (provisional) in May 2010 and registered a growth of 5.0% (provisional) compared to 3.2% registered in May 2009. During April-May 2010-11, six core industries registered a growth of 5.1% (provisional) as against 3.5% during the corresponding period of the previous year.

Crude Oil

Crude Oil production (weight of 4.17% in the IIP) registered a growth of 5.8% (provisional) in May 2010 compared to a growth rate of (-)4.3% in May 2009. The Crude Oil production registered a growth of 5.5 (provisional) during April-May 2010-11 compared to (-)3.7% during the same period of 2009-10.

Petroleum Refinery Products

Petroleum refinery production (weight of 2.00% in the IIP) registered a growth of 7.7% (provisional) in May 2010 compared to growth of (-)4.3% in May 2009. The Petroleum refinery production registered a growth of 6.5% (provisional) during April-May 2010-11 compared to (-)4.4% during the same period of 2009-10.

Coal

Coal production (weight of 3.2% in the IIP) registered a growth of (-)2.3% (provisional) in April 2010 compared to growth rate of 14.2% in April 2009. Coal production grew by 8.2% (provisional) during April-March 2009-10 compared to an increase of 8% during the same period of 2008-09.

Electricity

Electricity generation (weight of 10.17% in the IIP) registered a growth of 6.4 % (provisional) in May 2010 compared to a growth rate of 3.0% in May 2009. Electricity generation grew by 6.6% (provisional) during April-May 2010-11 compared to 4.8% during the same period of 2009-10.

Cement

Cement production (weight of 1.99% in the IIP) registered a growth of 8.6% (provisional) in May 2010 compared to 11.8% in May 2009. Cement Production grew by 8.7% (provisional) during April-May 2010-11 compared to an increase of 11.8% during the same period of 2009-10.

Finished (carbon) steel

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of 2.5% (provisional) in May 2010 compared to 2.8% (estimated) in May 2009. Finished (carbon) Steel production grew by 3.6% (provisional) during April-May 2010-11 compared to an increase of 0.8% during the same period of 2009-10.