Indian Economy Overview

India's economy is on the fulcrum of an ever increasing growth curve. With positive indicators such as a stable 8-9 per cent annual growth, rising foreign exchange reserves of over US$ 222 billion, a booming capital market with the popular "Sensex" index topping the majestic 15,000 mark, the Government estimating FDI flow of US$ 15.5 billion in this fiscal, and a more than 20 per cent surge in exports, it is easy to understand why India is a leading destination for foreign investment.

The economy has grown at an impressive growth rate of 9.4 per cent during 2006-07 as against 9 per cent in 2005-06.
The growth rate has been spurred by the industrial and services sectors, which have logged a 10.9 and 11 per cent rise in 2006-07 respectively, against 9.6 per and 9.8 cent in 2005-06.

Economic Survey 2006-07 says:

The advance estimates of gross domestic product (GDP) for 2006-07, released by the Central Statistical Organisation, places the growth of GDP at factor cost at constant (1999-2000) prices in the current year at 9.2 per cent. While services maintained its vigorous growth performance, there were distinct signs of sustained improvements on the industrial front. The overall macroeconomic fundamentals are robust, particularly with tangible progress towards fiscal consolidation and a strong balance of payments position. With an upsurge in investment, the outlook is distinctly upbeat.

Some of the propellers of GDP growth for 2006-07 have been manufacturing, which grew by 12.3 per cent (against 9.1 per cent in 2005-06), trade, hotels, transport and communications sector, which grew by 13 per cent (against 10.4 per cent in 2005-06), and construction, which grew by 10.7 per cent.
Electricity, gas and water supply also grew by 7.4 per cent in 2006-07 against 5.4 per cent in 2005-06.
There has been an exceptional growth rate in some specific industries, like commercial vehicles at 17.9 per cent, telephone equipment sector by 43.5 per cent, passenger growth in civil aviation by 32.2 per cent and information technology by 31 per cent (in revenue terms).
Overall balance of payments recorded a surplus of US$ 36.6 billion during 2006-07, as against US$ 15.1 billion in 2005-06. The India growth story continues apace in the current fiscal year with many sectors showing a higher growth rate than the previous year.
The overall industrial growth was 11.7 per cent during April-May, 2006-07 as compared with 10.8 per cent in April-May, 2005-06.
The growth rate achieved by the manufacturing and electricity sectors during April-May, 2007 was 12.7 per cent and 9.0 per cent respectively as compared to 12.2 percent and 5.5 per cent during corresponding period last year.
Core infrastructure sectors achieved an average growth rate of 8.1 per cent during April-May, 2006-07, as compared with 7.2 per cent in April-May, 2005-06.
The annual inflation rate in terms of WPI was 4.27 per cent for the week ended June 30, 2007 as compared with 5.21 per cent a year ago.
The cumulative value of merchandise exports for the period April-May 2007 increased by an impressive rate of 20.37 per cent over the corresponding period in last year to touch US$ 22.4 billion.
Aggregate deposits of banks increased by 22.8 per cent (US$ 134.2 billion) on July 6, 2007, as compared with 19.6 per cent (US$ 96.5 billion) a year ago.

•During 2007-08 (up to July 13, 2007), FIIs registered net inflows of US$ 8.4 billion as compared with outflows of US$ 2 billion in the corresponding period of 2006-07.

•Reserve money expanded by 29.1 per cent (21.7 per cent adjusted for the first round impact of the increase in the cash reserve ratio), as on July 20, 2007, as compared with 17.2 per cent a year ago.

Some highlights:

• India has the highest number of billionaires in Asia and fourth highest in the world. There are 36 billionaires in India, which makes it next only to US, Russia and Germany.

• India has emerged as the world's fastest growing wealth creator, thanks to a buoyant stock market and higher earnings.
• Forty-four per cent of the Top 100 Fortune 500 companies are present in India.

• The number of Indian millionaires rose by 20.5 per cent from 83,000 in 2005 to 1,00,015 in 2006 -- making India the world's second fastest growing nation after Singapore.

• India has joined the elite club of 12 countries with a trillion dollar economy, thanks to the continuing rally in rupee against the US dollar.

• According to a study by the McKinsey Global Institute (MGI), India’s consumer market will be the world’s fifth largest (from twelfth) in the world by 2025.

• Mumbai has been ranked tenth among the world's biggest centres of commerce in terms of the financial flow volumes by a survey compiled by MasterCard Worldwide.

• India has emerged as one of the most attractive investment destinations in the world with an annual return of 38.36 per cent, which is the second highest in BRIC economies.

• India ranks second in the Asia-Pacific region in terms of the value of private equity deals (US$ 2,433 million) done in the first half of 2007.

• India emerged as the fastest growing market in the data centre-structured cabling market in the Asia Pacific region

• India has been ranked second in outbound mergers and acquisition (M&A) deals during the first half of 2007 in the Asia-Pacific region, with outbound deals totalling US$ 13.5 billion.

• India Inc reported its highest net profit in the last three years in 2006-07 (1,700 companies that declared their results till June reported a 47 per cent increase in net profit).

•With its manufacturing and services sector on a searing growth path, India’s economy may soon touch the coveted 10 per cent growth figure.

Source - ibef

© 2003 Consulate General of India ,Sydney