3. 3
GDP Growth
Projected
Projected
Source: The Economic Survey 2010–2011 Source: IMF data 2010
COUNTRY WORLD SHARE GROWTH PROJECTIONS (IMF)
1. US 19.3% 2010 2011 2012
2. China 13.6%
GDP (PPP)
World 5% 4.5% 4.5%
3. Japan 5.8% India 8.6% 8.4% 8.0%
4. INDIA 5.4%
5. Germany 4.0% GDP* PPP 4,060,392
6. Russia 3.0% (in $US million) Nominal 1,537,966
Growth rate revised to 8% by RBI and 8.2% by IMF owing to mounting inflation in current fiscal
*Source: IMF data 2010 and Projections
4. 4
Per capita income
Per Capita - WORLD(PPP)
Above world GDP (PPP) per capita
Below world GDP (PPP) per capita
Source: The Economic Survey 2010–2011 Source: IMF data 2010
STATE PER CAPITA RANK NATION PER CAPITA RANK ^
INCOME * INCOME
Goa $2,802 1st Qatar $88,559 1st
Haryana $1,663 2nd World $10,886 -
Maharashtra $1,563 3rd China $7,519 95th
Gujarat $1350 4th India $3,319 129th
The combined wealth of India's 55 wealthiest is $246.5 billion in 2011, ~ 1/5th of India’s GDP
37 % of India still lives below the poverty line, WB estimates 80% of India earns below $2 a day
* Source: VMW Analytics services from data provided by State governments, converted to USD at `47.3617/USD for FY 10
^ Ranking based on PPP for a list of 184 nations including Hong Kong
5. 5
Industrial Growth
Growth in IIP (major components)
Apr-Dec 2009-10
Apr-Dec 2010-11
Source: The Economic Survey 2010–2011
*
Manufacturing sector led the growth at 12.6% & 9.9% in Q1 & Q2 2010-11
Growth largely driven by automotive, cotton textiles, leather, food
products and metal products
13 fold increase in FDI inflows from $2.23 bn in 03-04 to $27.31 bn in 08-09
WIR 2010 ranks India as 2nd most attractive location for FDI for 2010-2012
• Basic goods and consumer non-durables which
KEY constitute 59% of IIP have performed poorly
ISSUES • FDI impacted by high inflation & political instability
• Apr-Oct 2010 FDI equity inflows lower at $12.62 bn
*Source : Office of the Economic Adviser, DIPP
6. 6
Agricultural Growth
Growth of Food grain production
The total irrigation potential in the country increased from 81.1 million hectares in 1991
Transformation
-1992 to 108.2 million hectares in March 2010
from agriculture
In 2008, India was ranked 2nd in terms of people involved in agriculture and allied activities
to agri-business
with (~583 million) people involved in agriculture
India is 2nd in the world, after the US in terms of tractor usage; FAO statistics estimate less $US 85.4 million
than 50% of the total agricultural area is under mechanized land preparation acquisition of
10 States account for approximately 80% of the total food grain production Agro Dutch Ind.
Edible oils constituted 44.6% of the imports in 09-10, mainly from Malaysia & Indonesia by Penta Home
& Vishwa Calibre
• 2009-10 witnessed the worst South-west monsoon since 1972 with Builders forms
KEY severe impact on kharif crops the largest deal
ISSUES • Farmers pay 25 to 40 per cent of the actual cost on Fertilizers with a in the year 2010
significant subsidy burden on the Government
Source: The Economic Survey 2010–2011
7. 7
Services & IT-ITES Growth
76.1 Growth
63.7 19.5%
Source: The Economic Survey 2010–2011 Source: Nasscom.
SERVICES SECTOR • IT-ITES contribute to 6.1% of GDP, 26% of exports
Services sector • 240,000 jobs were added in FY2011
contributes to 55.2% of • 133 Patents granted to Top-5 IT Companies
the GDP (63.4% including
IT-ITES
• 126 Cross border and Domestic M&A deals
construction); for the United
States it was 76.5% in 2009 • IT Services exhibited fastest growth at 22.7%
Recorded 27.4% export
• BPO export revenues at US $ 12.4 billion in 2010
growth in Apr-Dec 2010
It contributes to 1/4th of • Domestic BPO grew 16.9%; revenues estimated
total Indian employment BPO at `127 billion for 2010-11
IT-BPO export revenues • Currency fluctuations, wage inflation & attrition
grew at 18.7% in 2010 are major challenges
Source: Nasscom Strategic Review 2011
8. 8
Infrastructure Growth
Road development
Source: Economic Survey 2011 Source: NHAI, SBICAP Securities Research
Investment on Infrastructure was 7.18% of GDP in 2008-09 in the 11th Five-year plan
Crude Oil production in the FY 2010-11 was at 37.96 MMT (million metric tonne) against 33.69 MMT in 09-10
an increase of 12.67%
Teledensity , a factor of telecom penetration, rose to 64.34% in Nov 2010 from a meagre 7% in March 2004
Domestic air-passenger traffic increased by 19% from 43.3million in Jan-Dec 09 to 51.53million in Jan-Dec
2010; 413 aircrafts are being operated by 12 scheduled airlines currently
Nuclear power capacity is planned to be increased to 25% at 63 GW by 2032 from the present 3%
US $ 4.1 billion proposed for road transport in the budget 2010-11, an increase of 13.4% over the previous FY
• Capacity addition less than target in power, roads, new railway lines & doubling of railway lines
ISSUES • Upward trend in cost overruns in `150crore+ infra projects partly due to rise in steel & cement
prices; overruns increased by 20.7% in Oct 2010 & 14.7% in Mar 2010 against 12.06% in Mar 2009
9. 9
Inflation – our biggest worry
* ^
RBI has stepped in to curb inflation through monetary measures by raising
repo rates as many as 10 times in the past 16 months from 5% to 7.5%
Apr-Jul 2010, WPI increased by 3.5 per cent, driven largely by food items
Aug-Nov 2010, WPI increase decelerated to 1.8 per cent, with the major
driver being non-food primary articles
Dec 2010-Mar 2011, WPI increased sharply by 3.4 per cent, driven primarily
by non-food manufactured products
• Crude oil prices at $116+ per barrel (May-11), an all-time high
KEY since Jul-08 is increasing subsidy burden substantially
• Sharp increase in industrial raw materials like rubber,
ISSUES minerals, fibres, coal & crude oil is translating to
increase in output prices
*Source: 1. National Stock Exchange, 2. RBI
^ Simple average of three spot prices; Dated Brent, West Texas Intermediate, & the Dubai Fateh
10. 10
Key financial indicators
Corporate income tax took over from union excise
duties in 2006-07 as the single largest revenue earner
Subsidies grew to 2.3% in 2008-09 against 1.4% in
04-05 mainly due to increase in global crude oil prices
Average cost of borrowings rose to 7.9% (BE) in 2010-
11 against 7.2% in 2004-05
A higher than realization of non-tax revenues
resulted from telecom 3G/BWA auctions
External debt was $US 295.8 billion at the end of
Sept 2010, a 12.8% increase over Mar-2010
Source: The Economic Survey 2010–2011
11. 11
Some realities – WEO report
Source: The Global Competitiveness Report 2010–2011
12. 12
Some realities – WEO report contd.
Source: The Global Competitiveness Report 2010–2011
13. 13
The road ahead
Macroeconomic stability
High oil and commodity prices and the impact of the Reserve Bank’s anti-inflationary
INFLATION monetary stance will moderate growth. Assuming a normal monsoon & crude oil prices
averaging at $110 per barrel over the year 2011-12, growth is expected to moderate to 8%
with a lower bias.
The budgeted fiscal deficit gives some comfort on the demand front. However, the
FISCAL reduction of the subsidy burden on diesel and cooking gas is inevitable due to increasing
DEFICIT international crude oil prices. On the flip side, any adjustment in domestic retail oil prices
adds to inflation in the short run. Disinvestment of ` 40,000 crores is budgeted in 2010-11.
Exports showed remarkable buoyancy in the last quarter of last fiscal. The current account
EXTERNAL
deficit was 3.1 per cent of GDP for April-December 2010. Factoring better performance in
DEBT the last quarter, CAD is now estimated to be around 2.5% of GDP for the full fiscal year.
Macroeconomic conditions
Political instability and high inflation have created an atmosphere of uncertainty. Stock
FDI markets have under-performed, with Nifty down 13% in the last six months. The downturn
is expected to continue in the medium term before the dust settles down.
Sovereign debt problem in the Euro area continues and so does high commodity prices,
GLOBAL especially oil prices. Possible abrupt rise in long-term interest rates expected in advanced
TRADE economies with implications for fiscal adjustment. Accentuation of inflationary pressures
visible in emerging market economies. The US recovery has been slower with growth at
1.8% against the forecast of 3.1% for this year. Global recovery will slacken due to these
factors, impacting our economy through trade, finance & confidence channels.
Growth enhancers Growth sustainers Growth moderators
14. 14
The road ahead
Human capital
Working age population of 672million need to be armed with skills and technical education
EDUCATION to contribute significantly to the India growth story. Work still needs to be done here.
LIFE Life expectancy at birth in India was 64.4 years in 2010 much below the world average of
EXPECTANCY 69.3 years necessitating greater focus on primary health care. Infant mortality rate of 50
per 1000 births (2009 estimates) is a cause for worry. Higher allocation for education and
health care in the Twelth Five Year plan boosts prospects.
Political conditions
Coalition governments by nature have limitations in making bold policy decisions. The
POLITICAL burden of frequent elections have created uncertainty besides putting additional pressure
STABILITY on the exchequer. Also, defragmentation of different political interests in the state and
centre bars uniformity.
The 2G, CWG, Aadarsh scams have dented the political image of the country. This has
CORRUPTION impacted the economy severely leading to low investor confidence.
All sectors of the economy have sustained the changing economic environment and
continue to contribute to the growth story. Slowness in one sector is compensated by
continued momentum in other sectors.
In the short term and over the next two quarters growth may be impacted due to
inflationary trends but the fundamentals are strong to sustain growth in the long term
The International outlook on India is improving and India is poised to grow . As the
fundamentals improve India will grow well beyond 8%.
Growth enhancers Growth sustainers Growth moderators
