Indian Economy Overview

Last Updated: July 2010

The services sector comprising financial and non-financial services attracted 21 per cent of the
total FDI equity inflow into India, with FDI worth US$ 4,392 million during April-March 2009-
10, while construction activities including roadways and highways attracted second largest
amount of FDI worth US$ 2,868 million during the same period. Housing and real estate was the
third highest sector attracting FDI worth US$ 2,844 million followed by telecommunications
which garnered US$ 2,554 million during the financial year 2009-10.

• Exports from India were worth US$ 16,887 million in April 2010, 36.2 per cent higher
than the level in April 2009, which touched US$ 12,397 million, according to the
Ministry of Commerce and Industry. India's imports during April 2010 were valued at
US$ 27,307 million representing a growth of 43.3 per cent over April 2009.
• India's logistics sector is witnessing increased activity—the country's major ports handled
560,968 metric tonnes (MT) of cargo during April-March 2009-10, an increase of 5.74
per cent over previous year traffic, according to revised estimates released by the
Ministry of Shipping.
• Foreign tourist arrivals in India during the month of May 2010 were 345,000, an increase
of 15.5 per cent over May 2009. Foreign tourist arrivals during January-May 2010 were
2.263 million, an increase of 11.3 per cent over the corresponding period last year.
Foreign exchange earnings during May 2010 were US$ 951 million, an increase of 42.2
per cent over May 2009. Foreign exchange earnings during January-May 2010 were US$
5822 million, an increase of 38.3 per cent over the corresponding period last year,
according to data released by the Ministry of Tourism.
• The total telephone subscriber base in the country reached 638.05 million in April 2010,
taking the overall tele-density to 54.10, according to the figures released by the Telecom
Regulatory Authority of India (TRAI). Also the wireless subscriber base increased to
601.22 million.
• According to the latest statistics from the Association of Mutual Funds in India (AMFI),
the assets under management (AUM) of mutual funds were worth US$ 170.46 billion in
May 2010 as compared to US$ 135.58 billion in May 2009.
• As per NASSCOM’s Strategic Review 2010, the BPO sector continues to be the fastest
growing segment of the industry and is expected to reach US$ 12.4 billion in 2009-10,
growing at 6 per cent.
• According to data released by Society of Indian Automobile Manufacturers (SIAM), the
total number of vehicles including passenger cars, commercial vehicles, two wheelers
and three wheelers produced in 2009-10 was 14,049,830, as compared to 11,172,275
produced in 2008-09.
• According to the Gem and Jewellery Export Promotion Council, the exports of gems and
jewellery from India including rough diamonds, rose by 57.08 per cent during April-May
2010 to touch US$ 5551.24 million.
 • According to the Ministry of Civil Aviation, domestic airlines carried 211,380 passengers
between January-May 2010, an increase of 21.95 per cent over 173,340 passengers
carried in the same period last year.
• The number of corporate merger & acquisitions (M&As) and private equity (PE)
transactions, have more than doubled during January-May 2010. 439 M&A and PE deals
valuing over US$ 30 billion took place between January-May 2010 as compared to 179
deals worth US$ 8.1 billion in the corresponding period in 2009.
• The HSBC Markit Business Activity Index, which measures business activity among
Indian services companies, based on a survey of 400 firms, rose to 62.1 in April 2010, its
highest since July 2008, and compared with 58.1 in March 2010.

Agriculture

Agriculture is one of the strongholds of the Indian economy and accounted for 15.7 per cent of
the country's gross domestic product (GDP) in 2008-09, and 10.23 per cent of the total exports.
Moreover, it provided employment to 58.2 per cent of the work force.

Production of foodgrains during 2009-10 is estimated at 216.85 million as per second Advance
Estimates.

In the Union Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee made the following
announcements for the agriculture sector.

• US$ 86.89 million is provided to increase the Green Revolution to the eastern region of
the country comprising Bihar, Chattisgarh, Jharkhand, Eastern up, West Bengal and
Orissa.
• US$ 65.17 million has been provided to organise 60,000 pulses and oil-seed villages in
rain-fed areas in 2010-11 and provide an integrated intervention for water harvesting,
watershed management and soil health to improve productivitiy of the dry land farming
areas.
• Banks have been consistently meeting the targets set for agricultural credit flow in the
past few years. For the year 2010-11, the target has been set at US$ 81.47 billion.
• In addition to the 10 mega food park projects already being set up, the government has
decided to set up five more such parks.
• External commercial borrowings are available for cold storage for preservation or storage
of agricultural and allied products, marine products and meat.

Growth potential story

• The data centre services market in the country is forecast to grow at a compound annual
growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to US$ 2.2
billion by the end of 2011, according to research firm IDC India’s report published in
March 2010. The report further stated that the overall India data centre services market in
2009 was estimated at US$ 1.39 billion.
• According to a report by research and advisory firm Gartner published in March 2010,
the domestic BPO market is expected to grow at 25 per cent in 2010 to touch US$ 1.2
 billion by 2011. Further, the BPO market in India is estimated to grow 19 per cent
through 2013 and grow to US$ 1.8 billion by 2013. According to the report, the domestic
India BPO services market grew by 7.3 per cent year-on-year in 2009.
• The BMI India Retail Report Quarter 3, 2010 released in May 2010, forecasts that total
retail sales will grow from US$ 353.0 billion in 2010 to US$ 543.2 billion by 2014.
• According to a report titled 'India 2020: Seeing, Beyond', published by domestic broking
major, Edelweiss Capital in March 2010, stated that India's GDP is set to quadruple over
the next ten years and the country is likely to become an over US$ 4 trillion economy by
2020.
• India will overtake China to become the world's fastest growing economy by 2018,
according to the Economist Intelligence Unit (EIU), the research arm of London-based
Economist magazine.

Exchange rate used: 1 USD = 47.14 INR (as on June 2010)