Transcript State of Indian Economy

Indian Economy
An overview
April 2010
Strong growth in the last few years
GDP growth (%)
12
9.5
10
8
9.7
9.2
7.5
6.7
7.2
6
4
2
0
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10 AE
India set to grow faster than other regions
Annual Percentage change
Economies
2008
2009
World
3.0
-0.8
3.9
4.3
Advanced Economies
0.5
-3.2
2.1
2.4
United States
0.4
-2.5
2.7
2.4
Euro Area
0.6
-3.9
1.0
1.6
Japan
-1.2
-5.3
1.7
2.2
Developing Asia
7.9
6.5
8.4
8.4
China
9.6
8.7
10.0
9.7
India
7.3
5.6
7.7
7.8
Brazil
5.1
-0.4
4.7
3.7
Source: IMF, January 2010
Projections
2010
2011
India's trade performance….
US$ billion
500
450.5
414.3
400
Over the six year period 2002-032007-08, average annual growth
in
312
300
252.3
195
200
141.9
95.1
100
95.2
114.1
Exports – 25%
Imports – 31%
Trade – 28%
68.5
42.2
0
1990-911995-962000-012001-022002-032003-042004-052005-062006-072007-08 2008-09
-100
Exports
Imports
Total
However total trade grew only by
10% in 2008-09 due to the global
slowdown
Linear (Total )
Source: Reserve Bank of India
Government envisages to double the share of India in global trade
by 2020. India’s total share in goods and services trade was 1.6% in
2008
India’s forex reserves…..fifth largest in world
US$ billion
350.0
Largest holders of forex reserves
309.7
300.0
252.0
250.0
199.2
200.0
141.5
150.0
151.6
113.0
100.0
50.0
76.1
42.3
54.1
0.0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
1.People’s Republic of China
2.Japan & Euro zone
3.Russia
4.Taiwan
5.India
6.South Korea
7.Brazil
8.Hong Kong
9.Singapore
10.Germany
Source: Wikipedia
Source: Reserve Bank of India
Forex reserves touched an all time high of US$ 314.6 billion in May 2008
Forex reserves for the week ending March 26, 2010 stood at US$ 277.0
billion
Inflation level….
Wholesale Price Index
(in percent)
9.0
8.0
8.4
7.9
7.1
7.0
6.4
6.0
5.4
5.4
5.0
4.7
4.4
3.7
4.0
3.4
3.0
2.0
1.0
0.0
Average
1991-92 to
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Source: Reserve Bank of India
Inflation touched a peak of 12.8% in August 2008 due to increased
pressure on global commodity prices
Wholesale price index for the month of February 2010 was 9.9% (y-o-y)
Index of Industrial Production
(in percent)
14.0
12.5
11.6
12.0
10.0
9.2
8.4
6.26.1
4.0
9.0
8.5
7.4
7.0
8.0
6.0
9.1
8.2
6.05.7
5.35.0
2.92.7
2.52.6
2.0
0.0
Avg 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
growth
1990s
Manufacturing
General
Source: Central Statistical Organization
Manufacturing sector has
witnessed a perceptible slowdown
due to
(i) Global meltdown and
(ii) Contractionary monetary
policy stance of RBI
IIP Growth in
April’09
May’09
June’09
July’09
Aug’09
Sept’09
Oct’09
Nov’09
Dec’09
Jan’10
-
1.2%
2.2%
7.8%
7.2%
10.2%
9.1%
10.3%
11.7%
16.8%
16.7%
For the economy to clock 8-10% growth, manufacturing sector
needs to grow by at least 12%
GDP composition is undergoing change
GDP Composition: 1990-91 versus 2007-08
2009-10
1990-91
41%
32%
15%
57%
28%
27%
Agriculture
Industry
Services
Growing middle class…..
 Given the demography & rapidly growing middle class, India has huge untapped
market potential…..
Share of Average Household Consumption
100%
7
5
2
90%
80%
70%
Discretionary
Expenditure
(52%)
60%
50%
30%
20%
13
9
6
17
8
3
12
20
Necessities
(48%)
Discretionary
Expenditure
(70%)
11
3
10
5
6
40%
 India’s
42
25
10%
Necessities
(30%)
0%
2005
2025
Food, Beverages, and Tobacco
Apparel
Housing Utilities
Household Products
Personal Products & Services
Transportation
Communication
Education & Recreation
Health Care
Source : McKinsey Global Institute
middle
class
constitutes
50
million
people at present. Likely to
go up to 583 million people
by 2025
 Households
that
can
afford
discretionary
spending likely to go up
from 8 million at present to
94 million by 2025
What sets India apart…..
 India has the advantage of being one of the youngest country…..
United States
Japan
Germany
United Kingdom
France
China
Size of 15-59 age group
in 2007 (in million)
Size of 15-59 age group
in 2050 (in million)
Growth of 15-59 age
696
1020
225
45
36
36
35
755
324
34
-31
-14
0
-2
-140
1
9
1
76
50
36
37
895
Source: United Nations
India
 In the year 2006, about 52% of India’s population was below 25 years
 Median age would be 30 years even as late as 2025
 India’s work force (15-59 years) would go up by around 324 million by 2050.
Sectors to look out for

Infrastructure

Information Technology

Pharmaceuticals

Entertainment

Auto and auto ancillary

Telecommunications

Agriculture

Healthcare

Education

Real Estate
Thank you
FICCI
Federation House, 1, Tansen Marg, New Delhi 110001
[email protected]
www.ficci.com