various sectors and the gdp

8/6/2019 Various Sectors and the GDP

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Role of Pharmaceutical Industry

in India GDP

The Role of Pharmaceutical Industry in India GDP is immense. For the past few years the

Indian Pharmaceutical Industry is performing very well.

The varied functions such as contract research and manufacturing, clinical research, research and

development pertaining to vaccines are the strengths of the Pharma Industry in India. Multinational

pharmaceutical corporations outsource these activities and help the growth of the sector. The Indian

Pharmaceutical Industry has a bright future.

Role of Pharmaceutical Industry in India GDP-Facts

y The Pharmaceutical Industry in India is one of the largest in the worldy It ranks 4th in the world, pertaining to the volume of salesy The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billiony The growth rate of the industry is 13% per yeary Almost most 70% of the domestic demand for bulk drugs is catered by the Indian Pharma

Industry

y The Pharma Industry in India produces around 20% to 24% of the global generic drugsy The Indian Pharmaceutical Industry is one of the biggest producers of the active

pharmaceutical ingredients (API) in the international arena

y The Indian Pharma sector leads the science-based industries in the countryy The pharmaceutical sector has the capacity and technology pertaining to complex drug

manufacturing

y Around 40% of the total pharmaceutical produce is exportedy 55% of the total exports constitute of formulations and the other 45% comprises of bulk

drugs

y The Indian Pharma Industry includes small scaled, medium scaled, large scaled players,which totals nearly 300 different companies

y There are several other small units operating in the domestic sectorPharmaceutical Industry in India-Growth

y As per the present growth rate, the Indian Pharma Industry is expected to be a US$ 20billion industry by the year 2015

y The Indian Pharmaceutical sector is also expected to be among the top ten Pharma basedmarkets in the world in the next ten years

y The national Pharma market would experience the rise in the sales of the patent drugsy The sales of the Indian Pharma Industry would worth US$ 43 billion within the next decadey With the increase in the medical infrastructure, the health services would be transformed

and it would help the growth of the Pharma industry further

y With the large concentration of multi national pharmaceutical companies in India, it becomeseasier to attract foreign direct investments

yThe Pharma industry in India is one of the major foreign direct investments encouragingsectors

Role of Pharmaceutical Industry in India GDP-CRAMS

y The Indian Pharmaceutical Industry is one of fastest emerging international center forcontract research and manufacturing services or CRAMS

y The main factors for the growth of the CRAMS is due to the international standard qualityand low cost

y The estimated value of the CRAMS market in 2006 was US$ 895 milliony Indian already has the biggest number of US Food and Drug Administration (USFDA)


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y standardized manufacturing units outside the territory of United Statesy Around 50 more new manufacturing units are to be set up in accordance to the USFDA and

UK Medicines and Healthcare Regulatory Agency (MHRA) standards

y With all these development India is posed to become the biggest producer of drugs in theworld

y Some of the major domestic players in this sector are Paras Pharma, Bal Pharma, UnijulesLife Sciences, Flamingo Pharma, Venus Remedies, Surya Organics and Chemicals, Centaur

Pharma, Kemwell, Coral Labs

y The contract manufacturing market in India pertaining to the multinational companies isexpected to worth US$ 900 million by the year 2010

Role of Pharmaceutical Industry in India GD-India Advantage

y India has the advantage of the cost, as the cost of labor, the cost of inventory is much lowerthan other places

y The multinational companies, investing in research and development in India may save upto30% to 50% of the expenses incurred

y The cost of hiring a research chemist in the US is five times higher than its Indiancounterpart

y The manufacturing cost of pharmaceutical products in India is nearly half of the cost incurredin US

y The cost of performing clinical trials in India is one tenth of the cost incurred in USy The cost of performing research in India is one eighth of the cost incurred in US

Role of Aviation Industry in

India GDP

The Role of Aviation Industry in India GDP in the past few years has been phenomenal in all

respects. The Aviation Industry in India is the most rapidly growing aviation sector of the world. With

the rise in the economy of the country and followed by the liberalization in the aviation sector, theAviation Industry in India went through a complete transformation in the recent period.

Role of Aviation Industry in India GDP-Facts

y With the entry of the private operators in this sector and the huge cut in air prices, airtravel in India were popularized

y On February 18, 1911, the first commercial flight was made from Allahabad to Naini by aFrench pilot named Monseigneur Piguet

Role of Aviation Industry in India GDP-Growth Factors

y The growth in the Indian economy has increased the Gross Domestic Product above 8% andthis high growth rate will be sustained for a good number of years

y Air traffic has grown enormously and expected to have a growth which would be above 25%in the travel segment

y In the present scenario around 12 domestic airlines and above 60 international airlines areoperating in India

y With the growth in the economy and stability of the country India has become one of thepreferred locations for the trade and commerce activities

y The growth of airlines traffic in Aviation Industry in India is almost four times aboveinternational average

y Aviation Industry in India have placed the biggest order for aircrafts globallyy Aviation Industry in India holds around 69% of the total share of the airlines traffic in the

region of South Asia


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Role of Aviation Industry in India GDP-Future Challenges

y Initializing privatization in the airport activitiesy Modernization of the airlines fleet to handle the pressure of competition in the aviation

industry

y Rapid expansion plans for the major airports for the increased flow of air trafficy Immense development for the growing Regional Airports

Role of Aviation Industry in India GDP-FDI Policy

The Reserve Bank of India (RBI) announced that foreign institutional investors might have

shareholdings more than the limited 49% in the domestic sector.

y Airports Foreign equity up to 100% is allowed by the means of automatic approvals

pertaining to establishment of Greenfield airports

Foreign equity up to 74% is allowed by the means of automatic approvals pertainingto the existing airports

Foreign equity up to 100% is allowed by the means of special permission fromForeign Investment Promotion Board, Ministry of Finance, pertaining to the existing

airports

y Air Transport Services Up to 49% of foreign equity is allowed by the means of automatic approvals

pertaining to the domestic air transport services

Up to 100% of NRI investment is allowed by the means of automatic approvalspertaining to the domestic air transport services

Role of Automobile Industry in

India GDP

The Role of Automobile Industry in India GDP has been phenomenon. The Automobile Industry

is one of the fastest growing sectors in India.

The increase in the demand for cars, and other vehicles, powered by the increase in the income is

the primary growth driver of the automobile industry in India. The introduction of tailor made finance

schemes, easy repayment schemes has also helped the growth of the automobile sector.

Role of Automobile Industry in India GDP-Facts

y India has become one of the international players in the automobile markety In the year 2006-07, the Indian Automobile Industry produced 2.06 million four wheelers

and 9 million two and three wheelersy The four wheelers include passenger cars, multi-utility vehicles, sports utility vehicles, light,

medium and heavy commercial vehicles, etc

y The three wheelers include mopeds, motor-cycles, scooters, and three wheelersy India ranks 2nd in the global two-wheeler markety India is the 4th biggest commercial vehicle market in the worldy India ranks 11th in the international passenger car markety India ranks 5th pertaining to the number of bus and truck sold in the worldy It is expected that the Automobile Industry in India would be the 7th largest automobile

market within the year 2016


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Role of Automobile Industry in India GDP-Sales Trends

y In the year 2006-07 the number of Passenger Car sold were 10,76,408y In the year 2006-07 the number of Passenger Vehicles sold were 13,79,698y In the year 2006-07 the number of Commercial Vehicles sold were 4,67,882y In the year 2006-07 the number of Three Wheelers sold were 4,03,909y In the year 2006-07 the number of Two Wheelers sold were 78,57,548y In the year 2006-07 the number of automobile sold were 1,01,09,037

Role of Automobile Industry in India GDP-Growth

y The growth rate of the Passenger Cars in the year 2007 is 13.50%y The growth rate of the Utility Vehicles in the year 2007 is 10.10%y The growth rate of the Multi Purpose Vehicles in the year 2007 is 24.40%y The growth rate of the Light Commercial Vehicles in the year 2007 is 16.05%y The growth rate of the Commercial Vehicles in the year 2007 is 3.43%y The Maruti Udyog Ltd is the largest car manufacturer in the country and the rate of growth

in the year 2007 was 20.7%

y The Mahindra & Mahindra Ltd's cumulative sales for the year 2007 was 1,06,094 units andthe rate of growth was 35.8%

yThe Honda Siel Cars India Ltd, the leaders in India pertaining to the manufacturing ofpremium cars, registered a growth of 16.1 % during the year 2007 and sold 41,638 units

y The Daimler Chrysler sales for the year 2007 was 1,681 units in India and the growth ratewas more than 22%

y The General Motors India, registered a 114% increase in the national sales in the August of2007

y The Hero Honda sold more than 2 million units in the Jan-Aug period of the year 2007y The export pertaining to the motorbikes was 3,21,321 units in the year 2007y It is estimated that in the year 2007-08 the motorcycle sales would be 7 million, the car

sales would be 1.55 million, and the two-wheelers sales would be 8.3 million

Automobile Industry in India-New Models

y Maruti sedan SX4 and Zen Estiloy Mahindra Renault Logan,y General Motors Chevrolet Spark, Aveo, and Aveo UV-Ay Hyundai Vernay Fiat Palio 1.1 litre version,y Volvo Car S80 sedan and XC90 SUV,y Tata Motors Magic and Winger,y Volkswagen Passaty Mitsubishi Cedia

Role of Automobile Industry in India GDP-Foreign Investments

y The Indian Automobile industry is at present engaged in mergers and acquisitions on theinternational scale

y The Indian automobile industry's foreign sector worth US$ 515 milliony The Mahindra and Mahindra company will be establishing a utility assembly plant in

collaboration with Bramont, a local company at Manuas, in North Brazil

y In Egypt, the Mahindra and Mahindra company has set up assembly plants in collaborationwith the Bavarian Motors

y The Tata Motors have entered the passenger car market in Saudi Arabia with the launch ofy Tata Indigo, Tata Indica, and Tata Indigo Marinay The TVS Motor Company has established a two-wheeler manufacturing unit at Karawang, in

Indonesia

y The Maruti Udyog Ltd has captured nearly 60% of the small car market in Indonesiay The Nissan Motor facility in South Africa was acquired by the Tata Motors to manufacture


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Tata vehicle for European and South African market

y The Jaguar and Land Rover companies owned by the Ford Motor Company was acquired bythe Tata Motors Ltd for estimated price of US$ 1.5 billion

Business Expectations Index

Surveys on India GDP

Business Expectations Index Surveys on India GDP is deeply focused upon evaluating the

recent and predominant conditions of the industrial sectors in India along with the various problems

faced by the same. Thus, the business surveys on India GDP play the role of a measuring instrument

or barometer in the economic life of the country.

Business Expectations Index Surveys on India GDP at a glance-

The government of India has incorporated the facility of Business Expectations Index Surveys on

India GDP and it has surfaced out as one of the widely popular feature in the Indian economy.NCAER and the Council ofApplied Economic did few surveys on the industrial sectors in India GDP.

These are known as Business Expectations Surveys [BES], which came into force since 1991 and

occurs on a quarterly basis. The variations in the surveys presented by the Business Confidence

Index (BCI) depicts that the similarities highlighted in different industrial sectors in Indian economy

while doing the survey are the basic consequence of the different macro-level conditions.

Motive of the Business Expectations Index Surveys on India GDP-

The chief aim of the business expectations surveys on India GDP is to assess the prevalent conditions

in the industrial sectors in Indian economy. It also focuses on various issues faced by these industrial

sectors. The main motive of these business surveys is to bring out the merits and demerits of the

economic life of India mainly so that efficient steps can be taken by the respective governments to

ameliorate the conditions. The surveys basically act as a barometer in determining various aspects of

the business conditions. NCAER and Council ofApplied Economic, which was later known as Business

Confidence Index (BCI), were the two organizations that largely deal with the business expectation

surveys.

Points covered in business expectation surveys-

BCI calculates the programme on the basis of the number of positive responses given by each

organization. This apparently portrays the contribution as well as impact of the business sectors on

India GDP. The questions included in the Business Expectations Index Surveys on India GDP usually

focuses upon:

y The aggregate economic conditions of the firm for the coming six monthsy Financial position of the organization in the coming six monthsy A comparative analysis of the investment ratio in the last six monthsy Current capacity range with respect to the optimal level

Areas captured by BCI in it's surveys-BCI does its surveys with a concentration on the integrated macro environment that includes the

infrastructural issues, social and political conditions of the industrial sectors, and the regional level

policies that are faced by the respondents. Therefore the surveys done by the BCI are more

elaborate as it covers the entire business environment as a whole.

Role of Iron and Steel Industry


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in India GDP

The Role of Iron and Steel Industry in India GDP is very important for the development of thecountry. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel manufacturing unit

called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron and steel are among the

most important components required for the infrastructure development in the country.

Role of Iron and Steel Industry in India GDP-Facts

y The Iron and Steel Industry in India is one of the fastest growing sectorsy The demand drivers for the Indian Iron and Steel industry are increase in the activities of

the automobiles industry, real estates industry, transportation system, aircraft industry, ship

building industry, etc.

y India ranks 5th in the world in terms of production of steely The amount of crude steel produced in 2006-07 was 50.71 million tonnesy The amount of finished steel produced in 2006-07 was 51.9 million tonnesy The production of finished steel was increased by 16.52%y The production of finished carbon steel was 24.8 million tonnes in the year 2006-07y It is expected that India would become the second biggest producer of steel within the year

2016 and the production per year would be 137 million tonnes

y The exports pertaining to the steel industry was 6.26 % during the period 2006-07Role of Iron and Steel Industry in India GDP-Consumption

y The domestic consumption of steel has grown by12.5% in the past three yearsy The domestic steel consumption in the year 2006-07 was 41.14 million tonnesy The average growth rate of the Indian Iron and Steel Industry is 11.36%y The construction projects all over India are major consumer of steely The per capita consumption of steel in India is 35kgsy As the per capita consumption of steel is lower than other countries, so the steel industry

has huge opportunities in the future

Role of Iron and Steel Industry in India GDP-Growth in Future

y The Arcelor Mittal, which is the largest steelmaker in the world, has plans of establishing twoGreenfield steel projects with capacity of 12 million tonnes annually, in India

y Acerinox SA, one of the important stainless steel manufacturers in collaboration with NisshinSteel, Japan is setting up a steel plant in India

y The Tata Steel ranks 5th in the world steel production and the company have plans ofexpanding its capacity by the year 2015

y SAIL, India's biggest producer of steel has plans of increasing the production to 24.98 milliontonnes annually

y Sinosteel Corp, China are planning to invest US$ 4 billion to set up a 5 million tonnescapacity Greenfield steel plant

y The acquisition of the Corus, the Anglo-Dutch steel manufacturer by the Tata Steely The Algoma Steel, Canada was acquired by Essar Global for US$ 1.63 billion


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FORthird successive year, the Indian economy has registered a highly impressivegrowth during fiscal 2005-06. Sustained manufacturing activity and impressive

performance of the services sector with reasonable support from the recovery in

agricultural activity have added greater momentum to this growth process. After

recording some slowdown in the third quarter (October-December) of 2005-06, realgross domestic product (GDP) registered a sharp increase in the fourth quarter

(January-March) of 2005-06 benefiting from a pick-up in almost all segments ofagriculture, industry and services. According to the revised estimates released by the

Central Statistical Organization (CSO) in May 2006, real GDP accelerated from 7.5 per

cent in 2004-05 to 8.4 per cent during 2005-06. The Indian economy has, thus,recorded an average growth of over 8 per cent in the latest three years (2003-04 to

2005-06).

Growth Rates of Real GDP(Base Year : 1999-2000)

(Per cent)

Sector

2000-01

to

2002-03(Averag

e

2003-

042004-

052005-

06

2004-05 2005-06

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Agriculture -0.2 10.0 0.7 3.9 3.5 -0.2 -1.2 1.5 3.4 4.0 2.9 5.5

Allied Activities(23.5) (22.2

)(20.8

)(19.9

)- - - - - - - -

1.1 Agriculture -0.5 10.7 0.7 - - - - - - - - -

Industry 5.2 6.6 7.4 7.6 6.6 8.0 8.1 6.8 9.5 6.3 7.0 7.9

(19.7) (19.5

)(19.5

)(19.3

)- - - - - - - -

2.1 Mining andQuarrying

4.4 5.3 5.8 0.9 8.2 6.0 5.7 3.7 3.1 -2.6 0.0 3.0

2.2

Manufacturing

5.7 7.1 8.1 9.0 6.6 8.3 9.2 8.1 10.

7

8.1 8.3 8.9

2.3 Electricity,

Gas and Water

Supply

2.8 4.8 4.3 5.3 4.9 7.9 3.1 1.4 7.4 2.6 5.0 6.1

Services6.6 8.5 10.2 10.3 10.

0

8.2 10.

6

11.

6

10.

1

10.

3

9.7 11.

0

(56.8) (58.3

)

(59.7

)

(60.7

)

- - - - - - - -

3.1 Trade,

Hotels,Restaurants,

Transport,

Storage andCommunicatio

n

8.5 12.0 9.7 11.0 10.

2

12.

9

10.

6

11.

5

10.

6

11.

2

11.

7

11.

0

3.2 Financing, 6.5 4.5 9.2 9.7 8.8 7.5 9.7 10. 8.8 10. 8.9 10.


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Insurance,Real Estateand BusinessServices

7 5 5

3.3Community,

Social andPersonalServices

4.1 5.4 9.2 7.8 10.7

4.8 8.5 12.7

7.3 8.0 8.4 7.6

3.4Construction

5.9 10.9 12.5 12.1 8.9 6.8 20.8

13.5

12.4

12.3

11.5

12.0

Real GDP atFactor Cost

4.6 8.5 7.5 8.4 7.9 6.7 7.0 8.6 8.5 8.4 7.5 9.3

Agriculture

The kharif crops coverage up to July 10, 2006 increased by around 11.9 per cent overa year ago. For all crops taken together, around 27 per cent of the normal area has

been sown so far. Total foodgrains production during 2005 -06 was placed at around208 million tonne, an increase of5 per cent over the previous year, mainly on the

back of higher output of rice. The increase in the production of non -foodgrains crops

was led mainly by sugarcane and cotton.

Progress of Area under Khariff Crops - 2006-07(Million Hectares)

Crop Normal

Area Coverage (As on July 10)

2005 2006Variation2006 over

2005

Rice 39.9 5.4 6.1 0.7

Coarse Cereals

22.9

6.8

7.3

0.5

Of which

Bajra 9.3 2.4 2.1 -0.3

Jowar 4.6 1.1 1.2 0.1

Maize 6.0 2.7 3.5 0.8

Total Pulses 10.6 2.0 2.7 0.7

Total Kharif Oilseeds 15.1 3.3 3.4 0.1

Of which

Groundnut 5.5 1.2 1.6 0.4

Soyabean 6.3 1.3 1.1 -0.2

Sesamum 1.6 0.3 0.3 0.0

Sunflower 0.5 0.2 0.4 0.2

Sugarcane 4.3 4.3 4.5 0.2

Cotton 8.3 2.5 3.3 0.8

All Crops 101.1 24.3 27.2 2.9

Source: Ministry ofAgriculture, Government of India


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Agricultural Production

(Million Tonne)

Crop2003-04 2004-05 2005-06$

Target Achievement Target Achievement Target Achievement

Rice 87.0 88.5 93.5 83.1 87.8 91.0Wheat 72.1 72.2 79.5 68.6 75.5 69.5

Coarse Cereals 37.8 37.6 36.8 33.5 36.5 34.7

Pulses 15.2 14.9 15.3 13.1 15.2 13.1

Total Foodgrains 212.1 213.2 225.1 198.4 215.0 208.3

Kharif 112.0 117.0 113.8 103.3 109.9 109.7

Rabi 100.0 96.2 111.3 95.1 105.1 98.6

Total Oilseeds 25.1 25.2 26.2 24.4 26.6 27.7

Kharif 17.0 16.7 16.3 14.2 16.2 16.8

Rabi 8.1 8.5 9.9 10.2 10.4 10.9

Sugarcane 236.2 233.9 270.0 237.1 237.5 278.4

Cotton # 13.8 13.7 15.0 16.4 16.5 19.6

Jute and Mesta ## 11.2 11.2 11.8 10.3 11.3 10.7

$ : Fourth Advance Estimates (July 15,2006)# : Million bales of 170 kgs each; ## : Million bales of 180 kgs each

Source: Ministry ofAgriculture, Government of India

Industry

Industrial production continued to grow at 9.8 per cent during Q1 in 2006 -07 Themanufacturing sector with double digit growth (10.9 per cent) continued to be the key

driver of industrial activity, contributing almost 92.5 per cent of the growth in industry.Electricity and mining sectors, however, continued to exhibit subdued growth.

The robust performance of the manufacturing sector was largely led by chemical and

chemical products, machinery and equipments, basic metal and alloy industries,transport equipment and parts, and non-metallic mineral products. The

manufacturing sector growth at 10.9 per cent during Q1 of 2006-07 was the highest

for this period in the last ten years.

According to the use-based classification, the capital goods sector registered animpressive growth of 21.1 per cent during Q! of fiscal 2006-07 even on a high base,

reflecting strong investment demand. This is the highest growth for April -May periodunder the new base (1993-94=100). Higher production of laboratory and scientificinstruments, broad gauge passenger carriage, boilers, complete tractors, industrial

machinery and textile machinery boosted capital goods production. Basic goods sector

was buoyed up by growth in cement sector, carbon steel and other minerals.Intermediate goods sector, after recording subdued growth during most of 2005 -06,

witnessed moderate improvement, facilitated by higher production of viscose staplefibre, filament yarn, cotton yarn, paints, enamels and varnishes, and PVC pipes and

tubes. Consumer goods, both durable and non-durable segments, on the other hand,

recorded some deceleration, partly on account of base effect.


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Infrastructure

The infrastructure sector recorded growth of5.9 per cent in Q1 of 2006 -07 against7.1 per cent in comparable period in fiscal 2005-06 on account of deceleration in all

industries except petroleum refinery products Double-digit growth in the petroleum

refinery products and moderation in growth of the cement and steel sectors could beattributed largely to base effect. The decline in crude oil production resulted from fall

in production in plants of ONGC at Mumbai High.

Growth Rate of Manufacturing Groups

(Per Cent)

Index of

IndustryGroup

Weight inthe

Industrial

Production

Growth RateWeighted

Contribution

April-May April-May

2005 2006 (P) 2005 2006

Chemicals and chemical products

except products of petroleum &coal

14.0 13.3 12.5 25.7 23.4

Machinery and equipment otherthan transport equipment

9.6 11.3 13.4 16.6 18.7

Basic metal and alloy industries 7.5 16.2 21.0 13.1 16.9

Transport equipment and parts 4.0 13.6 21.4 8.4 12.8

Other manufacturing industries 2.6 9.4 31.6 3.0 9.3

Non-metallic mineral products 4.4 7.7 12.2 5.1 7.4

Beverages, tobacco and related

products

2.4 10.4 11.4 5.4 5.6

Rubber, plastic, petroleum and

coal products

5.7 2.5 8.0 1.7 4.8

Paper and paper products andprinting, publishing and allied

activities

2.7 12.5 12.1 3.9 3.7

Wool, silk and man-made fibre

textiles

2.3 -8.4 11.9 -3.0 3.3

Textile products (including

wearing apparel)

2.5 25.3 9.6 7.8 3.2

Cotton textiles 5.5 9.2 2.9 3.9 1.2

Jute and other vegetable fibretextiles (except cotton) 0.6

-3.6

-2.8

-0.1

-0.1

Metal products and parts (exceptmachinery and equipment)

2.8 6.7 -4.1 1.7 -0.9

Leather and leather & furproducts

1.1 11.4 -12.1 1.2 -1.2

Wood and wood products,furniture & fixtures

2.7 -1.3 -21.3 -0.2 -2.4

Food products 9.1 7.4 -7.6 5.8 -5.5


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Manufacturing Total 79.4 10.3 10.9 100.0 100.0

Source : Central Statistical Organization.

Services

Services sector with double-digit growth during the past two fiscal (2004-05 & 2005-

06) has further strengthened its place as the leading sector of the Indian economy.Services sector now accounts for more than 60 per cent of overall GDP . Lead

indicators of services sector performance for April-May 2006 suggest continuedbuoyancy. Revenue earning freight of the railways continued to record strong growth.

Substantial activity was witnessed in cargo handled by civil aviation and passengers

handled at domestic and international airports. There was a sharp rise in new cellphone connections. Healthy growth in bank deposits and non-food credit, and,

increased business process outsourcing-information technology enabled services

exports are expected to buoy up the sub-sector financing, insurance, real estate andbusiness services.

Indicators of Service Sector Activity

(Growth rates in per cent)

Sub-sector 2004-05 2005-06 April

2005 2006

Tourist arrivals 23.7 11.7 19.7 $ 20.0 $

Commercial vehicles production 28.6 10.6 -5.3 49.7

Railway revenue earning freight traffic 8.1 10.7 14.9 11.0

New cell phone connections 10.4 89.4 7.6 167.0

Cargo handled at major ports 11.3 10.3 15.8 -2.0

Civil aviation

a) Export cargo handled 12.4 7.3 12.0 10.1

b) Import cargo handled 24.2 15.8 14.6 19.9

c) Passengers handled at international terminals 14.0 12.8 9.9 16.2

d) Passengers handled at domestic terminals 23.6 27.1 19.2 54.0

Roads: Upgradation of Highways 16.1 -23.4

Cement 8.2 10.7 12.6 $ 8.9 $

Steel 7.6 6.0 13.9 $ 7.5 $

Aggregate deposits 11.9 22.3 14.9 @ 20.7 @

Non-food credit 31.6 38.4 31.0 @ 32.9 @

Central Government expenditure 5.6 2.2 -1.0 $ 53.9 $

$ : April-May.@ : Year-on-year as on July 7.

Business Expectations Surveys

Various business confidence surveys suggest that economic activity is likely to remainbuoyant in the near term. The National Council ofApplied Economic Research (NCAER)

business confidence index (BCI) increased by 1.7 per cent during April-September

2006 to 154 - the highest level since November 1994. According to the NCAER survey,overall economic conditions and investment climate increased by 2.5 percentage

points and 2.2 percentage points, respectively. The CIIs business confidence index for


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April-September 2006 increased by 2.1 per cent. The BCI was significantly higher for

non-manufacturing firms compared to the manufacturing firms. The survey revealedthat 88 per cent of the respondents planned to increase investments while 75 per cent

of the respondents expected capacity utilization will be up to 100 per cent. The FICCIs

quarterly Business Confidence Survey conducted during January-March 2006 indicatedthat the industrial sector was optimistic about sales, selling price, profits, investments,

employment and exports.

Although the BCI registered a marginal fall from the preceding round partly reflectingthe base effect - the BCI had reached an all time high in the previous round - almost

80 per cent of the respondents expected overall economic conditions to be moderately

to substantially better in the first half of fiscal 2006-7. The corporates appear to becomfortably placed in terms of availability and cost of credit. For 89 per cent of the

companies, availability of credit was not a constraining factor, while 78 per cent found

cost of credit within their affordable limits. The services sector continued to be themost upbeat among the three industry sectors covered in the survey. At the same

time, the survey showed that companies are finding rising cost of raw materials as the

key challenge to maintain and improve their growth performance.

According to the Reserve Banks latest Industrial Outlook Survey, the Business

Expectations Index for Q2 of 2006-07 increased by 5.0 per cent over the previousquarters level. The assessment about the overall business situation for April-June2006 showed an improvement in the level of confidence over the previous quarter.

Responses to the survey suggest an improvement in expectations for the overall

business situation, production, capacity utilization, order books, employment, exports,imports, selling prices and profit margins during the Q2 quarter July-September 2006-

07 vis--vis Q1. The financial situation is expected to show an improvement duringJQ2 of financial year 2006-07. While working capital finance requirement is expected

to increase, the availability of finance is also expected to improve .

Business Expectations Surveys

Agency Business ExpectationsGrowth

overa year ago

Growth over

previousround

Period Index (per cent) (per cent)

Dun &Bradstreet

2006 (April-June)Business OptimismIndex

7.5 5.8

NCAER2006 (April-September)

Business ConfidenceIndex

7.6 1.7

FICCI2006 (April-September)


5.4 -1.4

CII2006 (April-September)


.. 2.1

RBI 2006 (July-September)

Business ExpectationIndex

5.8 5.0

Net Response on A Quarter Ahead Expectations

About the Industrial Performance

(Per cent)

ParameterResponse July- Oct-Dec Jan- Apr- June-


13/14

Sept2005(816)

2005(961)

March2006(934)

June2006

(1086)

Sept2006

(1073)

Overall business

situationBetter 45.5 51.3 49.8 46.3 53.1

Financial situation Better 36.7 42.3 40.7 40.4 43.4

Working capitalfinance

requirement

Increase 28.8 32.7 31.9 30.6 32.7

Availability of

financeImprove 30.7 34.1 34.1 33.8 35.0

Production Increase 40.7 46.9 46.3 42.5 49.4

Order books Increase 39.6 43.7 41.0 39.1 45.2

Cost of raw

materialDecrease -43.6 -30.0 -35.9 -37.3 -45.8

Inventory of raw

materialBelow

average-4.2 -6.9 -6.8 -5.0 -6.3

Inventory offinished goods

Belowaverage

-4.2 -3.3 -4.7 -4.5 -2.6

Capacity utilization Increase 25.4 31.1 29.6 24.8 32.1

Level of capacityutilization

Abovenormal

7.6 10.9 11.4 9.4 11.8

Assessment ofproduction

capacity

More than

adequate5.3 5.0 4.9 4.1 3.6

Employment in

companyIncrease 7.8 12.7 13.3 14.5 16.4

Exports, if

applicableIncrease 32.5 33.3 31.8 31.0 38.3

Imports, if any Increase 23.7 19.2 20.8 22.7 23.8

Sellingprices are

expected

to

Increase 13.3 7.8 10.8 12.4 16.6

If

increaseexpected

in sellingprices

Increaseat lower

rate14.0 16.6 16.3 12.0 10.5

Profit

marginIncrease 7.1 9.6 12.6 9.3 11.1

Note :1

Figures in parentheses represent number of companies included in theresults.

2 Net response is measured as the per cent share differential between the

companies reporting optimistic (positive) and pessimistic (negative)

responses; responses indicating status quo (no change)are notreckoned.Higher net response indicates higher level of confidence and vice

versa.


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Projections of Real Gross Domestic Product forIndia By Various Agencies: 2006-07

Agency Growth Projections for 2006-07 (per cent)Month of

Projections

Overall

GrowthAgriculture Industry Services

ADB 7.6 April, 2006

CDE-DSE 7.7 2.4 9.5 9.2 May, 2006

CII Around 8.0 June, 2006

CMIE 7.9 2.5 8.5 9.6 June, 2006

ESCAP 7.9 March, 2006

ICRA 7.4-8.2 2.0 8.2-9.7 9.1-9.7January,

2006

IMF 7.3 April, 2006

PlanningCommission*

7.7 3.2 8.9 8.8December,

2005

Reserve Bankof India

7.5-8.0 April, 2006

: Not Available.

* : Base year 2001-02, Mid-Year Review of the Tenth Five-Year Plan

ADB : Asian Development Bank;

CDE-

DSE: Centre for Development Economics - Delhi School of Economics;

CII : Confederation of Indian Industry;

CMIE : Centre for Monitoring Indian Economy;

ESCAP : Economic and Social Commission for Asia and the Pacific;

ICRA

: Investment Information and Credit RatingAgency of India;

IMF : International Monetary Fund.

Country's central banking authorities feel that the buoyancy in manufacturing and

services sector activities and the positive business confidence and expectationssuggest that the recent growth momentum in the Indian economy is likely to be

maintained in 2006-07, as has also been projected by different agencies.

SOURCE: Reserve Bank of India Report Macroeconomic and Monetary Developments: First Quarter Review

2006-07

various sectors and the gdp

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