presentation on economy analysis

8/2/2019 Presentation on Economy Analysis

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Presented By :

Economy Analysis

Neha Gupta : 6010020816084

Chetan Bansal : 6010020740337

Anurag Kumar : 6010010832293

Pramod Yadav : 6010020715601


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Global Scenario

Considering Indian ScenarioEconomy Outlook


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It is effected by world GDP .

And by world Inflation Trends.


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-4

-2

0

2

4

6

8

2008 2009 2010 (E)

%

Global GDP Scenario

World GDP Advanced Emerging Economies

Due to high flow of FDI &FII in emerging economy.Emerging economy are attractedby advanced economy as vast

opportunity are available inemerging market. i.e.a. Recruiting talent.b. Developing Joint Ventures.c. Deploying talent to the

emerging market.d. Abundance of natural

resources.e. Demand has increased.

Source: CYGNUSRESEARCH


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-2

0

2

4

6

8

10

2008m1

2008m3

2008m5

2008m7

2008m9

2008m11

2009m1

2009m3

2009m5

2009m7

2009m9

2009m11

2010m1

2010m3

2010m5

%

World inflation trend

World Advanced economies Emerging economies

Inflation infuses liquidityin the market & will help ingrowth.Emerging economies

taking precaution.Speculation is not playedin the economies. Sustainable development.

Protecting businessdownfall.

Source: CYGNUS RESEARCH


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I. GDP ( Gross Domestic Product )II. IIP ( Index of Industrial Product )III. TradeIV. InflationV. Monetary & Fiscal Policy

VI. Economy Industry Linkage


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0

1

2

3

4

5

6

7

8

9

10

AMJ08 JAS08 OND08 JFM09 AMJ09 JAS09 OND09 JFM10

%

GDP Growth RateUptrend's in GDP due toimprove in production of

Agriculture, Fishing, mining& manufacturing than as

anticipated.Growth in Infrastructure.Gross Income rose to 7.4%from 6.8%.

Stability in governmentpolicies.Increase in laborproductivity.



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-4-202468

1012

1416

AMJ08 JAS08 OND08 JFM09 AMJ09 JAS09 OND09 JFM10

%

Components of GDPgrowth

Agriculture Industry Services

Service sector contributionto GDP is major. i.e. 57%.

Service sector was affectedby the global recession.

Drastic growth inIndustries as compared toprevious year due toimprove in production.

Contribution of agro-

sector has declined due toconversion of agro landinto real estate , and Sez .

Cost of Labor.

Agriculture14%

Industry29%

Services57%

Components of GDPJFM2010



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0

1

2

3

4

5

6

7

8

9

10

%

Core Industries performance Low base effect. Low interest rate. Reduction in taxes.

High growth inproduction of mineral &iron ore.

Growth in textile ,Gems

& Jewel , Engineeringgoods.

WCL disbursed by bank.



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0

5

10

15

20

25

2007-08 2008-09 2009-10 AMJ 10

%

LOGISTICS SEGMENT GROWTH

Cargo handled at major ports##

Railway revenue earning freight traffic

-10

0

10

20

30

40

50

2007-08 2008-09 2009-10 AMJ 10

%

Logistics- Airlines

Export cargo handled## Int Psr Dom Psr

Increased in duty has slackedgrowth in logistics.Fluctuating in exchange rate. Freight handling by railway hasincreased.

Revenue from tourism hasincreased.

Increase in inter-stategrowth.

Reduction in fares. New players haveentered. New route has beenlaunched. Morning & Evening

flights Source: CYGNUS RESEARCH


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0

1020

30

40

50

60

70

80

90

2007-08 2008-09 2009-10 AMJ 10

%

TELEPHONE SUBSCRIBERS

-30-20-10

01020304050

6070

2007-08 2008-09 2009-10 AMJ 10

%

SALE OF CV

SALE OF CV

Gap between urban & rural area& Sale of CV increase

Cut & Throat competition existdue to a large number of player.Lack of network-depth in ruralregion.

Urban market has saturated.Reduction in tariffs.

Lower interest rate. Due to third party logistics / hub &

spoke model.Due to demand for bulk

transportation.Better Infrastructure.



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0

2

4

6

8

10

12

14

16

18

20

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

Monthly YOY Growthrate IIP

Increase in IIP has theconsequent effect on GDP as itis rising.

Strong growth of mineral, iron-ore, mining.Infrastructure has developed. Production of steel , Power &

cement has increased. Growth in production oftextile , & engineering goods .



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0

5

10

15

20

25

Apr-09

May

-09

Jun

-09

Ju

l-09

Aug

-09

Sep

-09

Oct-09

Nov

-09

Dec

-09

Jan

-10

Feb

-10

Mar-10

Apr-10

%

Components of IIP

Electricity mfg Mining

-10.00

0.00

10.00

20.00

30.0040.00

50.00

60.00

70.00

80.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

%

%

Components of IIP on goods

Consumer goods(LHS) Basics(LHS)

Intermediate(LHS) Capital(RHS)

-10

0

10

20

3040

50

60

70

80

-10

-5

0

5

10

15

20

25

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

%

%

IIP Goods wise index

Basic goods(LHS) intermediate goods(LHS)

Rise in the production due to increasein the capital investment.IIP of mining & quarrying witnessedhigher growth.Withdrawal of stimulus package.

Increase in production of capitalgoods.



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-12000

-10000

-8000

-6000

-4000

-2000

0

US$mn

Monthly trend of Trade balance Low base effect.Due to sustainable increase in therequirement of importable items, toexpand industry product.

Production & export of goodshas not increased in subsequentperiod. Increase in oil price.

Depreciation of rupee. Import of defense equipments &machineries.



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-30

-20

-10

0

10

20

30

40

50

60

0

5000

10000

15000

20000

25000

%

US$mn

Export trend and Its growth

EXPORTS(LHS)

-40

-20

0

20

40

60

80

0

5000

10000

15000

20000

25000

30000

%

US$m

n

Import trend and its growth

IMPORTS(LHS) Growth rate (RHS)

Low base effect.Low cost of Production.

Increase in productive

capacity.

Decreased in the Excise duty.

Foreign economies are

recovering.

Price of oil has risen

significantly. Depreciation in rupee. Unplanned expenditure. Production capacity hasincreased.



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Rising globalcommodity prices.

Demand side effect

on the inflation is alsoposing a strong threat.

Lack of dams ,Storage.

Unplannedexpenditure.

Increase in oil prices. Supply side effect.

-2

0

2

4

6

8

10

12

%

MONTHS

WPI INFLATION



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0

1

2

3

4

5

6

7

8

9

10

26-Apr-08

10-May-08

24-May-08

12-Jun-08

25-Jun-08

5-Jul-08

19-Jul-08

30-Jul-08

30-Aug-08

11-Oct-08

20-Oct-08

25-Oct-08

3-Nov-08

8-Nov-08

8-Dec-08

5-Jan-09

17-Jan-09

4-Mar-09

21-Apr-09

13-Feb-10

27-Feb-10

19-Mar-10

20-Apr-10

24-Apr-10

Trend of CRR , Repo and ReverseRepo

Reverse Repo Rate Repo Rate Cash Reserve Ratio

Excessive flow ofmoney. Balance growth.

Protect economyfrom sudden downfall.To attract moreglobal & local investor.

Rise in the rate i.e.CRR , Repo , ReverseRepo



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0

500

1,000

1,500

2,000

2,500

3,000

3,5004,000

Apr-

May

Jun-

Jul-09

Aug

Sep

Oct-

Nov

Dec

Jan-

Feb

Mar

Apr-

May

US$Mn

Monthly FDI Trends

0

500

1000

1500

2000

2500

3000

3500

4000

4500

US

$mn

Trend of FII - Equity and Debt

Equity Debt

Shows increase because of strongeconomic growth . Untapped Market.Strong natural resources.There is lack of export opportunities in

other part of world.

Increased rise in No. of IPOsInvestments in Mutual funds .Easy registration form of FII.

Favorable regulatory norms.Widening Fiscal deficit attracts more FIIs incountry.



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-25.00-20.00-15.00-10.00-5.00

0.005.0010.0015.0020.00

0

50000

100000150000

200000

250000

300000

%

Rs

cr

Components of Tax and growth

Amount (LHS) Growth(RHS)

-250-200

-150

-100

-50

050

100

150

200

250

0

10000

20000

3000040000

50000

60000

70000

April

May

June

July

August

September

October

November

December

January

February

March

%

RsCr

Fiscal Deficit and growth

Fiscal Deficit(LHS) Growth(RHS)

Strong Growth is seen on revenue side in Corporateand income tax.

Corporate tax increased because of the base effect. Income tax shows growth because of rise in

salaries, increase in no. of people under tax net.

Excise duty and Custom duty grows because of cutin duties as a part of stimulus package.

Corp Tax39%

IT20%

Customs13%

ED17%

Service9%

Others2%

Components of Taxes 2009-10


Fiscal deficit falls due tounplanned expenditures.a. Subsidy

b. Social Serviceemployments .

c. Defensed. Elections


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Types of Linkage These can be

a) Stock Pricesb) Unemploymentc) Personal Income

Linkage IndicatorsI. Repo , Reverse Repo , Bank RateII. CRR (Cash Reserve Ratio)III. SLR ( Statutory liquidity Ratio)

IV. Bank RateV. Business ConfidenceVI. Employment RateVII. Inflation Rate


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7.8

7.9

8

8.1

8.2

8.3

8.4

8.5

8.6

8.7

8.8

Q1 Q2 Q3 Q4

E L

Real GDP Growth


Presentation give depth idea overeconomic condition of India.Higher growth signifies thesectoral improvement but tradebalance is still negative as we have

not improved our export .Industrial & Corporate sector is

reviewed along with theinvestment climate. Fiscal Policy is eased but tight

monetary policy is executed tocontrol inflation or help to achieve

sustainable growth

Cont


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Domestic economy witnessed growth & GDP hasincreased.

Infrastructure continue to be among the performing sectors.

Increase in operational efficiencies and decrease in inputcosts. Market have experienced a strong rebound. Inflation based on WPI focused on Growth , Fiscal

Deficit,& Capital Outflow. Market slowdown with political instability has led most

players in the market to be cautious and conservative intheir investments.

Economy Outlook

Cont


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Economy is doing well and FIIs , FDI arepromoting growth.

A lot of IPO with vast opportunity are expandingthe market.

Despite of different policy Inflation is risingcontinuously & so price .

Government is liberalizing its policy. Growth of agriculture is falling continuously as

fertile land are used for expansion of industry. Revenue has increased continuously as income

has increased & so tax slab.

Economy Outlook

Cont


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Unplanned expenditure i.e. subsidy , election , sixth paycommission , waiving of loan has adverse impact ongrowth .

Investment opportunity has increased as cut down ofentry loan in mutual fund & more favorable regulatorynorms.

SEZ has increased output of industry .

Economy Outlook


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The exchange rate of Indian Rupee/ US dollar appreciates whenthere is large capital inflows and depreciates when capital inflowsdecreases.

Due to the volatility in Exchange rates of two currenciesspeculation rises and economy gets affected.

RBI should consider controlling the volatility of the currenciesbecause it effects every sector in Indian economy.

India can prove sustainable growth only if the exchange rates

fluctuate minimal .

Cont


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Depreciation of rupee increases the export & vice-versa. To protect domestic industry government depreciate rupees. Volatility effect economic growth and development of the

economy through its effect on investor's confidence and risk

taking ability.

Should RBI control RS/USD volatility ?


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