Atanu,Neena,Priyabadan G5

8/8/2019 Atanu,Neena,Priyabadan G5

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ECONOMY ANALYSISECONOMY ANALYSIS

Presented by-

Atanu Goswami

Neena Lakhmani

Priyabadan kr. Jha


2/36

AGENDAAGENDA

International macro-economicdevelopment

Macroeconomic Factors

Economic Industry Linkages

Financial and Capital Markets

Outlook


3/36

International macroInternational macro--economiceconomicdevelopmentdevelopment

GROWTH RATE OF GDP OF DEVELOPED

COUNTRIES

-7

-6

-5-4

-3

-2

-1

0

1

2

3

4

2007 2008 2009 2010(

)%

US

UK

apan

BRIC's GDP

-10

-5

0

5

10

15

2007 2008 2009 2010(P)

%

Russia

India

China

Brazil

World GDP dips from . in to- .

World Growth Rate is . in April

BRIC nations take the lead to achievethe level

ource:-IMF


4/36

Macro economic IndicatorsMacro economic Indicators

o GDP, IIP & External Trade

o Inflation & Monetary Policy

o Fiscal Policies


5/36

GDPGDP DECLINEDECLINE

INDIAN GDP

0

2

4

6

8

10

12

2005 2006 2007 2008 2009

%O

FGRO

THRA

TE

o GDPis 6. % in 2008-09 comparedto 9% in 2007-08

o Decreasein GDPdueto GlobalEconomyandDomesticslowdowninIndustryand Service Sector

Source:-mospi


6/36

Components of GDP

Agariculture

, 18%

Services,

55%Industry,

27%

The growth in agriculture & alliedactivity decelerated from .9 in2007-08 to .6 in 2008-09

Decrease due to fall in productionof non food crop including oil seed,

sugarcane & jute, and high baseeffects

Industrial Growth has declined

to 6.8 in 2008-09 from 0.6 in 2007-08

Service sector has reached a

growth of9.7 in 2008-09 from .22007-08

Source:-RBI

COMPOSITION OF GDPCOMPOSITION OF GDP

Compoent Of

-2

0

2

4

68

10

12

14

AMJ07 JAS07 OND07 JFM08 AMJ08 JAS08 OND08 JFM09

Agr

r

r

Ser

es


7/36

AGRIC LTUREAGRICULTURE Agriculture accounted for

7.8 of GDP in 08-09 incomparison to 21.7 in2007-08

It accounts for 2 employment in 2008-09

8.8 is produced forexports in 2008-09

DGRAI PR DUC TI

180

185

190

195

200

205

210

215

220

225

230

2003-04

2004-05

2005-0

200

-07

2007-08

2008-09

M

nTone

Source:-fciweb.nic.in


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Rainfall

Cumulative rainfall during june2009 was- 52.8mm

Having a negative deviation of5 from normal rainfall in

2008-09

It effects food grain production,inflation, water reserves andtemperature

R!

I " #!

$ $

0

50

% 00

%50

200

250

JULY'08

&U

'

'08

(

)

P0'08

1CT'08

N

1V'08

D

)

C'08

J&N'09

2

)

B'09

3

&R'09

&PR'09

mont 4

mm

ource:-agicoop.nic.in

tock of food grain Total food grain production during

2008-09 is placed at 227.9mm tonnesas compare to 2 0.8mm tonnes in2007-08

stock o oodgrain( illion ton)

051015202530

3540

JFM'08

AMJ'08

JAS'08

OND'08

JFM'09

illionton

Source:fci


9/36

MONTHLY GROWTH RATE OF IIP

COMPONENTS

-5

0

5

10

15

20

MAY'08

JUNE'08

JULY'08

AUG'08

SEPT'08

OCT'08

NOV'08

DEC'08

JAN'09

FEB'09

MAR'09

APRIL'09

%

MINING MANUFACTURING ELECTRICITY

M ont 5 6 7 t 8 9 nd in IIP

-4

-2

0

2

4

6

8

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

% growt@

o I IP declines to 2 .7% level in t eYr 2 0 0 8 -0 9 from previous year 4.8 %

o M ainly due to deceleration in t eM anufacturing sector

o M ining-1 0 .47% ,manufacturing-79 . 6% &electricity-10 .1 7%

IIP and Core Sector G rowtIIP and Core Sector G rowt

S ource:mospi

Ri in x i duty

0

5000

10000

15000

20000

month

may

june

july

aug

sep

oct

nov

dec

jan

feb

march

april

ex

AiBe

duty


10/36

Cumulative Growth rate in Production-Sector

wise

-4

-2

0

2

4

6

8

10

CRUDE

OIL

PETROLEUM

COAL

ELECTRICITY

CEMENT

FINISH

STEEL

OVERALL

%

2007-08 2008-09

Core Industries registered a growthof3.9% in May 2009 against 2.7% ofthecorrespondingyear.

Accelerated growth due to positive growthin Coal, Steel and Cementproduction

Electricitygeneration also contributes

Core Industries

Source:-mospi.nic.in


11/36

Declining inDeclining in Manufacturing DivisionManufacturing Division

Basic goods declined 3.8 ,capital goods declined 3.6 while intermediate goodswere up by 6.1 in Yr 2008-09

Consumer durables recorded

growth of12. while nondurables were at 2.3 in 2008-09

Economy is recovering slowly &demand is going to high

Manufacturing, Electricity &Construction sector deceleratedto 2. ,3. ,7.2 respectivelyduring 2008-09from8.2 ,5.3 ,&10.1 respectiv

ely in 2007-08.

Source:-mospi.nic.in

monthly tr nd of manufactring compon nts

-20

-10

0

10

20

30

June,0

8

July,0

8

Aug,0

8

Sep,0

8

Oct,08

Nov,0

8

Dec,0

8

Jan,0

9

Feb,0

9

Mar,09

%

Basic Goods Capital Goods

Intermediate Goods consumers good


12/36

Key Service SectorsKey Service SectorsIndicatorsIndicators

Service sector contributes5

of GDP

It is growing at 10 approximately in 2008-09,despite the economic

slowdown in the currentscenario

Source:mospi

GROWTH RATE OF OVERALL SERVICE SECTOR

0

2

4

6

8

JAS'07 OND'07 JFM'08 AMJ'08 JAS'08 OND'08 JFM'09 AMJ'09

%

trade,hotels transport&presentation financing, insurance

community,social&personal services total services


13/36

Slowdown in Aviation IndustrySlowdown in Aviation Industry

128

130

132

134

136

138

140

142

144

146

mntonnes

Mar-08

C

pr-08

M

ay-08

Jun-08

Ju

D

-08

C

ug-08

E

ep-08

Oc

F

-08

Nov-08

D

ec-08

FreGg

H

I

DomesI

Gc

Fre G g HI

DomesI

Gc

0

100

200

300

Mar-08 Jun-08 Sep-08 Dec-08

Aircraft Movement

Aircraft movement international

Aircraft movement domestic

o Volume of air traffic increasedtwo fold during 2004-2007

o Slowdown seen from Sep 2008 till now

oDomestic cargo shows growth of 14.55

in 2008-09 compared to 2007-08

o No. of Domestic Passenger decline by5 in 2008-09

Source-AAI

0

5

10

15

20

25

lakh

MP

r-

08

Q

pr-

08

MP

R

-

08

Jun-

08

Jul-

08

Q

ug-

08

S

ep-

08

Oct-

08

T

U

v-

08

V ec-

08

PP

ssenger DomestW

c

PP

ssenger DomestW

c


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BankingBanking--Slowdown in lending toSlowdown in lending toindustryindustry

CD & ID Ratio

27.5

28

28.5

29

29.5

30

30.5

31

31.5

32

32.5

33

Jul'08

Aug'08

Se

X

'08

Y

ct'08

`

oa

'08

Dec'08

Jan'09

b

ec

'09

d

ar'09

AX

r'09

d

ay'09

June'09

%

65

66

6768

69

70

71

72

73

74

75

76

%

Investmentef

eposit Ratio Credit ef

eposit Ratio

o Credit demand sluggish, CD ratio fellbelow 70 in 2008-09

o ID ratio in an increasing trend

o Banks park huge funds in reverserepo and SLR

o Bank lending money to industry at a

growth only 2.1 in MAM09 compareto 5.31 in DJF09

SOURCE: RBI

TOTAL BANK FINANCE TO INDUSTRY

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

NOV,07

FEB,08

MAY

,08

AUG

,08

NOV,08

FEB,09

MAY

,09

%

TOTAL BANK FINANCE TO INDUSTRY


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Slowdown in ConstructionSlowdown in Construction

Construction companycontributes 6 of GDP

It is the 2nd largest employerafter agriculture

Government decreases itsinvestment by Rs3306cr at adecreasing growth rate of

8.65 on may09 compared

with Feb09

C g h Si

RUCi

I g h C g p PA h q 'S GRg Wi

r RA

i

s

0

5

t0

t5

20

200u-05 2005-06 2006-0

v200

v-08 2008-09

w

x A y K CR DI

S

WARDS C y S

RUC

I y

C PA y I S

0

0000

20000

30000

0000

50000

AUG

0

,0

F

,08

A

,08

AUG,08

,08

F

,09

A

,09

Rs.cr

Source: R I


16/36

Financial servicesFinancial services-- Mutual fundsMutual funds

Asset Under anagement

0

100000

200000

300000

400000

500000

600000

700000

800000

ep-09 e

-09 Mar-09 un-09

Rs.cr

-5.00

0.00

5.00

10.00

15.00

20.00

UM%

hange

Total size of this industryRs670937cr

The industry is growing at

approximately 19 in 2008-09

Total 35 players engaged inthis sector including-

Bank sponsor-4 Institution-1

Private players-30

Source:amfi

G OWTH ATE OF FINANCIAL SECTO

0

5

10

15

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

GROWTH RATE

SOURCE:FINMIN


17/36

Insurance companies divided into

two parts- Life insurance and Non-Life insurance

LIC and 17 private players presentthis industry

Its premium collection is growingabove 15 in 2007-08 but dips in2008-09

In Non-Life segment, 4 governmentplayers and 10 private players are

operating

Its premium collection is growingabove 10 annually but it also dipsin 2008-09

Source:-IRDA

I sur ce rowthtur s to e tive

growth rate of insurance company

-8.00%-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

JAS08 OND08 JFM09 AM09

%

growth rate of insurance company


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Increasing the Logistics sectorIncreasing the Logistics sector

Indian Logistic industry isexpected to reach a market sizeof $125bn in the year 2010

This industry is growing 15 to20 annually

It includes cargo handling,railways, air cargos and roadtransport

110 logistic parks spread 3500acres at an estimated cost of$1bn and are expected to be

operational within 2012

CARGOHANDLED BYAIRLINES

0

200

400

600

800

1000

12001400

1600

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

('000TONS)

('000TONS)

ARGO HAN BY IN IAN ORTS

0

100000

200000

300000

400000

500000

600000

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

('000tons)

('000TONS)

SOURCE:MINISTRY OF SHIPPINGGrowth rate of railway freight

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Growth rate of

railway freight

Ministry of shipping

Source:finmin

Source: Indian railway


19/36

Its the fastest growing industryat a growth rate of21 in theYr May 2009

Telephone

subscriber w&L 452.91mn in2008-09

Cell phone subscribers-415.25mn in 2008-09

Land line subscribers-37.75mn

in 2008-09

Currently, Teledensity reached

38.88 , in May 2009

ARPU VS New Subscribers

450

500

550

600

650

700

JFM 08 AMJ 08 JAS 08 OND 08 JFM 09

Revenue/User

0

100

200

300

400

500

600

subscribersMn

ARPU(Rs/sub/month No of subscriber added (monthly)

TELECOM IND STRY INCREASING

Source: trai


20/36

Slowdown in TourismSlowdown in Tourism

It is contributing 6.8 ofGDP

Currently, it employedmore than 41mn people

100 FDI is allowed in thissegment

Due to terrorist & politicalcrisis this industry isshowing negative trend

growth rate of tourist

-20-15-10

-505

1015

july'08

s

ep'08

n

ov'08

jan'09

m

ar'09

m

ay'09

%

growth rate of touris t

Source:aai


21/36

INDIAN BOP INCREASESINDIAN BOP INCREASESI

I

XP

jRT & IMP

jRT

0

5000

10000

15000

20000

25000

30000

35000

JUNE'08

JULY'08

AUG'08

SEPT'O8

OCT'08

NOV'08

k

EC'08

JAN'09

l

EB'09

MAR'09

APRIL'09

MAY'09

$mn

IMPORT EXPORT

TRADE DEFICIT

0

2000

4000

6000

8000

10000

12000

14000

JUNE'08

JULY'08

AUG'08

SEPT'O8

OCT'08

NOV'08

DEC'08

JAN'09

FEB'09

MAR'09

APRIL'09

MAY'09

$mn

Reported lower growth rate of

6.4% in 2008-09from 28.4% in2007-08 last year

Merchandise trade deficit increaseto $113.8 billion in 2008-09 from

$82

.2billion in

2007-08

Source:- Department of commerce

indian balanceofpay ents

-50000

0

50000

100000

150000

200000

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

m$

million)

net current a/c capital account

SOURCE:FINMIN


22/36

Crude Oil Increase POL ImportsCrude Oil Increase POL Imports

Imports- POL & NON_POL

n o o o

o o o

o o o

o o o

o o o

n o o o

o o o

o o o

'

z

L{'

z

|

}

'

z

~

P'O

z

OC

'

z

OV'

z

C'

z

|

'

'

|

'

|

PIL'

|

{

'

$mn

n o o o

o o o

o o o

o o o

o o o

n o o o

o o o

o o o

$mn

I PO

POL O POL

rowth rate declines for POLas oil prices gradually falls

on POL increases asexchange rate made importsmore expensive

Import growth was subdued at4.4% with growth in both POL

& O POL imports moderatingto 6. %& . % in

O C : I I

O CO C


23/36

INDIAN SOCIAL SERVICE SECTORINDIAN SOCIAL SERVICE SECTORGROWINGGROWING

growth rate of social services

0

5

10

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

growth rate

o Indian social sectorCompromises withFour sectors Pension

fund, Provident fund,Defense & NGO

o It is growing 9.3%in 2008-09 comparedwith 6.8% in 2007-08

Source:mospi


24/36

Indian forex reserveIndian forex reservedecreasesdecreases

INDIAN FOREX RESERVE

-

-

o Indian forex reserve hasdeclined to bn on une

fro bn in 7-

o II pulled out a huge a ountof oney fro capital arket

: I


25/36


26/36


27/36

Reserve ratios and interest ratesReserve ratios and interest rates

R

RS T U

OV

W T U W A

T

XRR

4.75

5

5.25

5.5

5.75

Jan

Y

09

Jan

Y

09

Jan

Y

09

`ea

Y

09

`ea

Y

09

Mar

Y

09

Mar

Y

09

Ab

rY

09

Ab

rY

09

May

Y

09

May

Y

09

Jun

Y

09

Jun

Y

09

2009

%

CRR

c dR

e e . fe e

. 4e e . 5e e

.g

e e. 7

e e . he e

.i

e 2

e 2 . ee

2 . 2e

2 .f

2

p

Jan

2

q

p

Jan

r

q

p

s

e

t

u

p

M

ar

27

p

Mar

r

7

p

A

v

r

w

pM

ay

29

p

May

r

x

p

Jun

2 0 0 9

%

PLR

CRR currently is 5% in 200 09

RB decreased CRR from its %level to increase liquidity in thesystem

Current PLR rate is .25%

Current SLR is 24%

Source: y ccilindia.com

Monetary olicy

LAF

-60000

-40000

-20000

0

20000

40000

60000

Apr-

08

May-

08

Jun-

08

Jul-

08

Aug-

08

Sep-

08

Oct-

08

Nov-

08

Dec-

08

Jan-

09

Feb-

09

Mar-

09Rsincrores

Source:Rbi


28/36

Trend of money market rateTrend of money market rate

Trend of money market rate

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

17

Jun

20

Jun

23

Jun

26

Jun

29

Jun

2

Jul

5

Jul

8

Jul

11

Jul

14

Jul

2009

epo

td Avg

all

td Avg

td Avg

Govt. borrow more from themarket

Fiscal deficit is going to widen

Interest rates are goingup

apital market not performingwell

Money market is in anuptrend

Sources:rbi


29/36

MSS issued by RBI and exchange ratesMSS issued by RBI and exchange ratesB S ISSUE UNDER MSS

0

50000

100000

150000

200000

250000

300000

Apr

0

8

un

0

8

Aug

0

8

ct

0

8

Dec

0

8

Feb

0

9

Rs.Cr.

MSS i it

Rs.

44

45

46

47

48

49

50

51

52

53

2-Jan

16-Jan

30-Jan

13-Feb

27-Feb

13-Mar

27-Mar

10-Apr

24-Apr

8-May

22-May

5-Jun

19-Jun

2009

Rs.

Rs./$

Outstanding MSS Bonds as on2008-09 is Rs148889cr

MSS is issued due to excessiveinflow of foreign currency

Currently Rs/$ rate is 48.43

Net FII Investment

-4000

-3000

-2000

-1000

0

10002000

3000

4000

J '08 A '08 S '08 O '08 N '08 D '08 J '09 F '09 M

'09

A '09 M

'09

J '09

Net FII Investment

Source:rbi


30/36

Strong Rise in Fiscal DeficitStrong Rise in Fiscal Deficit

Revenue deficits stands at4.4% of GDP in 2008-09which is 3.4% higher thanof budgeted estimate

Fiscal deficit stands at6.5% of GDP in 2008-09from budgeted deficit of2.5% in 2007-08

I

DI

FISC

D

FICI

- 50000

- 00000-50000

0

50000

00000

50000

200000

250000

300000

j

k

l07k

Sl07

m

n

Dl07

k

Fj

l07

j

k

l08k

Sl08

m

n

Dl08

k

Fj

l09

RSCR

m

Ro

FISC

DFICI

R

DFICI

PRI

R

DFICI

TAX REVENUE

0

20000

40000

60000

80000

100000

120000140000

160000

AMJ'07

JAS'07

OND'07

JFM08

AMJ'08

JAS'08

OND'08

JFM'09

RS

INC

RO

Source:cga


31/36

EE--II--C LinkageC Linkage

Lead Indicator- Cement, Steel and AutomobileProduction

Lag Indicator- Interest rate, Inflation

Concurrent indicator- GDP, Capacity Utilization,Unemployment rate


32/36

Financial marketsFinancial marketsIPOsIssued

0

200

400

600

800

1000

1200

1400

May

-08

un

-08

u

l-08

Aug

-08

Sep

-08

Oct-08

ov-08

ec

-08

an

-09

Feb

-09

Mar-09

Rsi

nc

r

MC/GDP

0

20

40

60

80

100

120

2006-07 2007-08 2008-09

MC/GDP

P/E

0

5

10

15

20

25

2005-06 2006-07 2007-08 2008-09

P/E

IPO issues falls due to poor conditionof the capital market

Earning decreases, due to which PEratio decrease, and the marketcapitalization falls by 45% approximately

Currently companies are raising moneythrough QIPs and private placement route Source:sebi

Source:rbi and mos i


33/36

Business Confidence, Political OutlookBusiness Confidence, Political Outlook& Future Outlook& Future Outlook

Organizati n Per i d Index Growt er

yearago

Growt er

peri dNCEAR Nov08- an08 BCI -40.60% -23.8%

CII Oct08-Mar08 BCI -15.10% -7.7%

D&B Apr08- n08 BCI -39% -2%

BCI lost 28.5 in Jan 2009 overits October 2008 level

Impact of Global downturn is the

main driver of the growthprocess in the Indian economy

Business Confidence Index

Source: rbi

BCI

0

20

40

60

80

100

120

140

Expectations Assesment


34/36


35/36

Economic OutlookEconomic Outlook

Economy is now in the last phase of recession

The US economy is recovering

The expected world GDP has been forecasted2.4% from 1.9%

BRIC countries are moving at a higher growth

rate

Gradually demand is increasing in the economy


36/36

Thank you

Atanu,Neena,Priyabadan G5

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