ECONOMIC OVERVIEW - DEA · Review & Outlook of Indian Economy Executive Summary World eonomy is at...

ECONOMIC OVERVIEW Review & Outlook of Indian Economy

Executive Summary

World economy is at crossroads and 2016 in all probability it will not be the most pleasant year.

All indicators are pointing towards a correction in asset markets. The contraction in China’s GDP

due to its rebalancing will accentuate this trend. Rebalancing will impact the GDP of many econo-

mies who relied on exporting raw materials to China.

The Indian economy continued to exhibit resilience and strength of its domestic absorption to

register a growth of 7.2% during H1 FY16. Global deflation need not lead to depression in the

Indian context because causes of deflation are not debt induced as is the case in Europe and US.

In particular, economy, especially industrial activity should see an upswing in 2016, pulling up

the services sector alongside. If the US remains strong, capital flows to emerging economies par-

ticularly India, will increase. Liberalisation of key sectors, should increase fund flows for financing

infrastructure investment.

The outlook for inflation is conditional on international prices and the state of domestic demand.

Oil prices are likely to remain depressed. Commodity prices too will remain quiescent. In

particular, the speed with which alternative energy technologies are developing and combining

with technological improvements in shale oil extraction will ensure that there is almost minimal

chance of oil prices breaking through the $50 barrier.

India’s public debt remains sustainable given manageable interest rate costs and expected

recovery in the economy’s growth rate. The captive domestic investor base is likely to mitigate

the impact of any real interest rate shocks.

India’s financial system remains stable and the relatively stronger macroeconomic fundamentals

lend resilience to face the still prevailing uncertainty and emerging risks in the global economy

and financial markets.

The effects of some of the major steps taken by Government like activation of some of the

auction allocated coal blocks and some other mines, road contracts awarded through EPC and

hybrid annuity schemes, power transmission contracts, urban infrastructure projects, etc. will

start showing visible results over the next few months.

Economic Research Department, State Bank of India, Mumbai February 2016

Prepared By Economic Research Department, State Bank of India, Corporate Centre, Mumbai 2

GLOBAL ECONOMY

Global Growth

“The financial history of the last century shows a

steady increase in the amount of public indebtedness.

Nobody believes that the states will eternally drag the

burden of these interest payments. It is obvious that

sooner or later all these debts will be liquidated in

some way or other, but certainly not by payment of

interest and principal according to the terms of the

contract.”

Ludwig Von Mises (Human Action)

Global economic growth for the calendar year

2016 and 2017 is expected to see only a gradual

pick up. As per the latest World Bank forecast, the

global growth for 2016 is projected at 2.9%.

The developing countries may see a contraction

as prices of commodities are unlikely to recover

due to appreciation in dollar post Fed hike. Devel-

oped countries are reeling under unresolved post

crisis problems namely continued build up of pub-

lic debt, debt induced deflation and unemploy-

ment and social unrest. Labour market slack is

perhaps more extensive than suggested by claim-

ant-based unemployment rates alone. Broader

measures of unemployment, incorporating part-

time workers and inactive persons wanting to

work, remain well above pre-crisis norms in many

economies.

The global debt levels over the last seven years

have magnified. The expansion in central bank

balance sheet has not entirely met the desired

outcome namely inflation and credit expansion.

Many countries—US, EU and China—are witness-

ing across the board fall in prices. This trend may

continue in future as easy money that was the

cause of debt build up cannot cure the malice it

has created.

China deserves a special focus not only due to its

sheer size and connectivity but also due to its

conscious strategy to rebalance the economy to-

wards consumption—the New Normal.

Graph 1: Growth of international bank credit

Source: Bank of International Settlement

Table 2: Global debt issuances by issuers ($ trillion)

General Govern-

ment

Financial Corpora-

tions

Non-financial Corpora-

tions

House-hold

Interna-tional

Organiza-tions

Total

Mar-10 35.2 41.1 8.4 0.3 0.8 85.8

Mar-11 41.5 42.3 9.3 0.3 1.0 94.3

Mar-12 44.2 41.4 10.0 0.3 1.3 97.1

Mar-13 45.0 40.1 11.1 0.2 1.3 97.8

Mar-14 46.8 40.6 12.0 0.2 1.6 101.2

Jun-14 47.6 41.1 12.4 0.2 1.6 102.9

Sep-14 46.0 39.8 12.3 0.2 1.5 99.9

Dec-14 45.1 39.3 12.3 0.2 1.5 98.5

Mar-15 44.2 38.2 12.3 0.2 1.4 96.4

Com-pounded annual growth

4.34% -1.40% 7.45% -3.23% 10.49% 2.22%

Percent in total (Mar 15)

45.9 39.6 12.8 0.2 1.5 100.0

Source: Bank of International Settlement

2013 2014 2015 2016 (F) 2017 (F)

World 2.4 2.60 2.40 2.90 3.10

High income 1.2 1.70 1.60 2.10 2.10

United States 1.5 2.40 2.50 2.70 2.40

EU -0.2 0.90 1.50 1.70 1.70

Japan 1.6 -0.10 0.80 1.30 0.90

Russ ia 1.3 0.60 -3.80 -0.70 1.30

Developing countries 5.3 4.90 4.30 4.80 5.30

China 7.7 7.30 6.90 6.70 6.50

India 6.9 7.30 7.30 7.80 7.90

Table 1: Global Growth Forecast (%)

Source: World Bank


GLOBAL ECONOMY

The ongoing structural slowdown in China has de-

pressed the demand for oil, iron ore and oth-

er commodities, thereby dragging down growth in

Brazil, Australia and other commodity suppliers.

Recent correction in Chinese stocks may have no

direct impact on consumption as China’s house-

hold exposure to stock is around 16%. However, it

is the drop in collateral value of stocks that may

indirectly impact its banking system thus creating a

broader systemic risk. With over 60% of the house-

hold savings parked in bank deposits the impact on

real economy (viz. consumption) through the

banking channel far outweighs the loss in con-

sumption due to negative wealth effects of declin-

ing equity prices.

Three major conflicts hogged most of the lime light

in 2015 and will decide the course in 2016 and

2017. These include the Ukraine crisis, the South

China Sea Crisis and the Middle East Crisis. If the

trends continue the ongoing cost of maintaining

peace will escalate in lackluster growth environ-

ment.

After rising by around 150% between Jun’14 and

Jun’15, China's Shanghai Composite index plunged

sharply but it is still above the level it had reached

in Jul’14.

With the Chinese economy undergoing structural

adjustment, the devaluation of the Yuan was natu-

ral. Though this has caused financial turbulence,

this might prove to be a blessing in disguise for

India in the context of overvalued exchange rate of

China. Such nominal effective appreciation of the

Yuan over the years may have reduced China’s

growth, that in turn has translated into a drop of

GDP growth in poor countries. The weaker Yuan

would help make China’s exports more competi-

tive, boosting the nation’s economy and eventually

prompt a recovery in economies from where China

imports. Interestingly, Chinese exports defied ex-

pectations in Dec’15 to rise 2.3% from a year ago

in yuan-denominated terms. The jump in exports

was the first since Jun’14 .

Graph 2: Thomson Reuters CRB Index & Crude Prices

Source: Bloomberg

Graph 3: Trends in GDP of China

Source: National Bureau of Statistics of China

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Graph 4: Inflation and industrial production China


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Industrial Production Inflation (RHS)

Graph 5: Shanghai Composite Index


1800

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Domestic Growth

The Indian economy has continued to exhibit resil-

ience and the strength of its domestic absorption

to register a growth of 7.2% during H1 FY16. That

this has been attained, despite the highly tentative

global economic environment that has not shown

credible signs of improvement and despite sub-par

monsoon rains that for the second year in succes-

sion resulted in low growth in agriculture sector, is

indeed an encouraging development.

In addition to robust growth, the year thus far has

witnessed macro-economic stability aided by fa-

vourable factors such as comforting inflation indi-

cators, benign fiscal situation and improving exter-

nal current account balance. All these factors have

resulted in India emerging as the fastest growing

economy among the large economies, and, most

international organisations predict that it will con-

tinue to remain so in the medium term. Further,

India’s growth will surpass China in 2016.

Expenditure Side

Growth in consumption expenditure, particularly

in private final consumption expenditure (PFCE)

has been the major driver of the overall real GDP

growth in the last few quarters. However, the

most visible change on the demand side is the pick

-up in the growth of the gross fixed capital for-

mation (GFCF) at constant prices. This indicates

that the ensuing growth is likely to be more invest-

ment-driven and that the reliance of economic

growth on purely a consumption buoyancy may

gradually diminish.

INDIAN ECONOMY: OUTPUT

Outlook

It would suffice to say that global deflation need not lead to depression in general in Indian context because

causes are not debt induced as is the case in Europe and US. In particular, economy, especially industrial

activity should see an upswing in 2016, pulling up the services sector alongside. If the US remains strong,

capital flows to emerging economies particularly India, will increase significantly. Liberalisation of key

sectors, should increase fund flows for financing infrastructure investment. Inflation should be largely under

control.

Graph 7: GDP growth projection for India & China

Source: Various Reports; SBI Research

Graph 8: Growth in PFCE & GFCF (%)-constant prices

Source: CSO; SBI Research

7.9

2.4

6.8

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

13.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2012-13 2013-14 2014-15 2015-16

Private final consumption expenditure (%) Gross fixed capital formation (%)

7.5 6.3

7.8 6.7

7.8 6.7

7.3 6.5

7.5 6.5


GLOBAL ECONOMY

Graph 6: US Unemployment Rate (%)

Source: BLS; SBI Research

Trade forecast

World merchandise trade volume is expected to

rise 2.8% in 2015, down from the previous

estimate of 3.3%, as slowing import demand in

China, Brazil and other emerging economies

will reduce exports of trading partners.

Trade growth in 2016 should pick up to 3.9%,

down slightly from the last estimate of 4.0% but

still below the average for the last 20 years (1995

- 2015) of 5%.

Risks to the forecast are firmly on the downside,

the most prominent being a further slowing of

economic activity in developing economies and

financial instability stemming from eventual

interest rate raises in the United States.

US Unemployment Rate (%)

The US introduced the smallest dose of austerity,

and it has enjoyed the best economic perfor-

mance. But even in the US, there are roughly

434,000 fewer public-sector employees than

there were before the crisis.

The number of persons working part-time invol-

untarily also remains unusually high suggesting

still not so strong labor market conditions. When

the involuntary part-time workers are added to

the unemployed pool the level exceeds 8%.

Table 3: Merchandise trade volume and real GDP,

2014-2016* (%)

2014 2015P 2016P

Volume of world

merchandise trade 2.5 2.8 3.9

EX IM EX IM EX IM

Developed econo-

mies 2.0 2.9 3.0 3.1 3.9 3.2

Developing econo-

mies 3.1 1.8 2.4 2.5 3.8 5.2

North America 4.2 4.6 4.4 6.4 3.9 5.2

South and Central

America -1.3 -2.4 0.5 -5.6 3.1 5.7

Europe 1.6 2.3 2.8 3.2 3.7 3.4

Asia 4.7 3.4 3.1 2.6 5.4 4.3

Other regions** -0.4 -1.4 0.5 -1.5 0.5 0.5

* Figures for 2015 and 2016 are projections

** Other regions comprise the Africa, CIS and Middle East

Source: SBI Research, WTO

Global Outlook for 2016 and implications for India

World economy is at crossroads and 2016 in all probability will not be the most pleasant year. All indicators

are pointing towards a correction in asset markets. The contraction in China’s GDP due to its rebalancing will

accentuate this trend. Rebalancing will impact the GDP of many economies who relied on exporting raw ma-

terial to China.

There will be trends towards decoupling in many economies. The build up of dollar denominated external

debt originating from non-financial corporations has been the fastest growing. The servicing of this debt after

a hike in Federal Funds rate will be the focus for banks in 2016.

The good news is that rate of growth of MSCI Emerging Markets Index capturing trends in large and mid-cap

companies across 23 emerging markets, has increased over the years, exhibiting better prospects. However,

this has been accompanied by increased dispersion in emerging market returns indicating higher uncertainty

in the global financial system. India with its much better macros stands to gain significantly from such positive

market volatility in the coming days.

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5Unemployment rate (%) Unemployment rate excluding part-time workers (%)


Inflation under control

On retail inflation side, CPI rose by 5.61% on yoy

basis in Dec’15 compared to 5.41% in the previous

month. Overall in H2 2015, the average CPI stood

at 4.64% vis-à-vis 5.18% in H1 2015.

Increase in food prices, however, has outliers. For

example, excluding pulses, CPI inflation was at

4.64% in Dec’15, much lower than the RBI inflation

target of 5% as on March 2017.

Core CPI stood at 4.73%. WPI, though still in nega-

tive territory (-0.73% in Dec’15) is also on rising

trend. Core WPI inflation printed at negative

1.99%.

Divergence between Headline & Core

Interestingly, trend inflation indicates that head-

line and core inflation are moving in opposite di-

rection.

Since Aug’15, WPI is showing a rising trend but

core WPI is indicating a declining trend. This is pri-

marily due to rise in food prices inflation.

In CPI and Core CPI, the divergence is also mainly

due to rise in food inflation.

Further, Core CPI remained flat in 2015. CPI has

also remained flat in 2015.

Stability of Core CPI

The distribution of core CPI over the last 14

months indicates a nicely shaped Bell curve, with

mean CPI at 4.4%. Interestingly, if we look at 95%

confidence interval, all the CPI numbers are within

that range, indicating that core CPI has nicely

settled in the sub 4.5% range, with little or no neg-

ative surprises.

This also substantiates that RBI has done a com-

mendable job in delinking inflationary expecta-

tions spilling over from food to becoming broad-

based over the last one year. Thus, even as food

prices rose, core CPI has largely been under con-

trol.

INDIAN ECONOMY: INFLATION

Graph 9: Divergence between WPI & Core WPI (%)

Source: Office of EA; SBI Research

Graph 10: CPI Weighted Contribution

Source: MOSPI; SBI Research

Table 4: Retail & Wholesale Inflation

Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

CPI Inflation

CPI Inflation 3.74 4.41 5.00 5.41 5.61

Core CPI 4.15 4.32 4.42 4.62 4.73

CPI Ex Pulses 3.23 3.82 4.12 4.45 4.64

CPI Food 2.92 4.29 5.34 6.08 6.31

WPI Inflation

WPI Inflation -5.06 -4.59 -3.7 -1.99 -0.73

Core WPI -1.92 -1.93 -2.10 -1.95 -1.99

WPI Food -1.02 0.84 3.33 5.20 8.17 Source: MOSPI, Office of the Economic Adviser & SBI Research

Graph 11: Distribution Curve of Core CPI

Source: MOSPI, SBI Research

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µ + 2* δ = 4.9

µ = 4.4

µ - 2*δ = 4.0


CPI and PPI Difference: Challenge for Monetary Policy

Worldwide

Country-wise recent data indicates that in most of

the countries, both CPI and PPI (Producer Price

Index) are showing a diverging trend. While CPI is

in positive territory, PPI is in negative territory in

most of the countries under review.

This will continue to pose challenge for monetary

policy worldwide, though we believe there is still

enough room for accommodative domestic mone-

tary policy, at least in India.

Crude Oil Dynamics in 2016

Global petroleum and other liquid production

(supply) continues to outpace consumption

(demand), leading to inventory builds throughout

the 2016.

Global oil inventory builds in the Q3 2015 aver-

aged 1.8 million barrels per day (mbd), down from

2.0 mbd in the Q2, which had the largest inventory

builds since the Q4 2008.

The pace of inventory builds has slowed in the

fourth quarter to roughly 1.4 mbd. In 2016, inven-

tory builds are expected to slow further to an aver-

age of 0.6 mbd, but still enough to hit oil prices on

the downside.

INDIAN ECONOMY: INFLATION

Outlook

The outlook for inflation would of course depend on international prices and the state of domestic demand.

Oil prices are likely to remain depressed. Commodity prices too will remain quiescent.

In particular, the speed with which alternative energy technologies are developing and combining with tech-

nological improvements in shale oil extraction will ensure that there is almost minimal chance of oil prices

breaking through the $50 barrier. It is more likely that prices will remain at $30 levels or so, especially in view

of the Chinese economy showing significant strain and India pursuing an alternate energy policy with much

rigor. Additionally, Iran’s supply of oil to India is good news as the sour oil from Iran is better suited for our

refineries thus increasing the life of those assets.

Further, the outlook for prices will also depend on the output gap or the slack in the economy that will act as

a buffer against price increases. Declining nominal GDP growth as well as capacity under- utilization in im-

portant sectors suggest that the output gap has not narrowed significantly. This should serve to moderate

future price increases.

Graph 12: Crude Oil Demand & Supply (million barrels per day)

Source: EIA; SBI Research

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2016

Excess Demand (-)/Supply (+) Supply_RHS Demand_RHS

Table 5: Cross Country Analysis of CPI & PPI

Country Month CPI (%) PPI (%) Difference

US Nov-15 0.5 -0.9 1.4

Euro Area Dec-15 0.2 -2.2 2.4

China Dec-15 1.6 -5.9 7.5

Japan Nov-15 0.3 -3.2 3.5

Germany Dec-15 0.3 -2.5 2.8

UK Nov-15 0.1 -1.5 1.6

France Dec-15 0.2 -2.4 2.6

Brazil Dec-15 10.7 11.3 -0.6

Italy Dec-15 0.1 -3.3 3.4

India* Dec-15 5.6 -1.4 7.0

Russia Dec-15 12.9 13.9 -1.0

Canada Nov-15 1.4 -0.2 1.6

South Korea Dec-15 1.3 -4.6 5.9

Spain Dec-15 0 -2.6 2.6

Mexico Dec-15 2.1 1.3 0.8

Indonesia Dec-15 3.4 9.1 -5.8

Source: SBI Research * Manufacturing WPI


INDIAN ECONOMY: PUBLIC FINANCE

Target Vs. Utilisation

The budget estimate of the fiscal deficit and

revenue deficit for FY16 are 3.9% and 2.8%

respectively.

Already 74% of the budgeted fiscal deficit has

been utilised. Revenue deficit as a percentage of

gross fiscal deficit stands at 70%.

Debt Management

Internal debt of the Central Government

constituted 92.9 % of public debt for FY15 (RE).

93% of the Government’s public debt is internal,

reflecting stable and adequate domestic sources of

financing. The share of Center and State liabilities

as percentage of GDP has declined to 67% in FY15

from its peak of 83% in FY04.

Weighted average coupon rate of outstanding

stocks has remained broadly stable and has grown

to 8.09% in FY15 from 7.81% in FY11.

RBI is also following a strategy of elongating the

maturity profile of outstanding debt to limit

rollover risk . Average time to maturity increased

to 10.23 years on end-March 2015 indicating low /

very modest rollover risk.

With the entry of co-operative banks, regional

rural banks, pension funds, mutual funds and

non-banking finance companies, the institutional

investor base for public debt has been reasonably

diversified and the markets have deepened.

7th Pay Commission Impact

The recommendations of Pay Commission in the

past have led to significant increase in steel and

cement production. Post 5th Pay Commission,

steel and cement production spiked during 1999-

2000 and increased by 15.0% and 14.6%, respec-

tively.

Post 6th Pay Commission the impact was more

prolonged and both steel and cement production

increased for next 2-3 years.

Going by this trend, the current set of recommen-

dations may act as an enabler for steel and ce-

ment sectors and construction sector which is

highly employment elastic.

Graph 13: Maturity Profile of Outstanding Central G-Sec as on Mar 15

Source: RBI, SBI Research

Graph 14: Redemption profile of the Central Government’s market debt

(Rs Cr)


0

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13% Less than 1 year

1-5 Years

5-10 Years

10-20 Years

20 years and above

Graph 15: Central and State Government Securities Holding Pattern


8%

60%

21%

2% 1% 5% 3%

March-09 RBI

Schedule CommercialBanks

Insurance Cos

Financial Institutions

Mutual Funds

Provident Funds

Others

10%

43%

3%

24%

2%

2%9%

1%

3%

3%

March-15 RBI

Schedule Commercial Banks

Co-operative Banks

Insurance Cos

Financial Institutions

Mutual Funds

Provident Funds

Corporates

FIIs

Others



Fiscal Deficit: Budgeted vis-à-vis Actual

During the global financial crisis fiscal policy

responded with counter-cyclical measures

including tax cuts and increases in expenditures.

The post-crisis recovery of the Indian economy is

witnessing a correction of the fiscal policy path

towards a regime of prudence.

However, India has an extremely good track rec-

ord of undershooting the budgeted fiscal deficit in

the past decade on a consistent basis.

Except the two years with exceptional

circumstances, the actual budget deficit as % of

GDP has always stayed well within the budgeted

deficit.

IT e-filing

E-filing of returns, refund banker scheme and the

newly introduced e-verification of income-tax re-

turns for the assessment year 2015-16 are some of

the key initiatives undertaken by the Department

for making filing of returns simple and easy for the

common taxpayer.

The e-filing of income tax returns has already

crossed the 3 crore mark this fiscal (till Dec’15),

with a growth of 27% compared to same period

last year. During FY15, a total of 3.41 crore returns

were e-filed, 15% more than the FY14 level.

As per income range-wise, most of the returns

filed were income upto 5 lakh range, with a

growth of 31% during Apr-Dec’15. A noticeable

growth is also visible in the income range of more

than 1 crore, where 1-lakh mark crossed in Apr-

Dec period, with a growth of 19%.

IT Refunds

Direct tax refunds have increased by 6.3% to Rs

89,060 crore during FY14. As on 07.09.2015 Cen-

tral Processing Centre issued refunds to 22.14 lakh

taxpayers for the A.Y.2015-16 (FY14) compared to

a total of 25.7 lakh in entire FY14.

Through a special drive, 18.3 lakh refunds involv-

ing a sum of Rs 1,793 crore have been issued be-

tween 01 Dec’15 and 10 Jan’16 for claims below Rs

50,000.

Graph 17: e-filing of IT Returns

Source: incometaxindiaefiling.gov.in; SBI Research

21.7

48.3 50.7

90.5

164.3

214.7

296.8

341.7

243.3

309.5

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY15(till Dec)

FY16(till Dec)

15%

27%

% yoy growth

Graph 18: Income range wise e-filing of IT Returns


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-20

09

20

09

-20

10

20

10

-20

11

20

11

-20

12

20

12

-20

13

20

13

-20

14

20

14

-20

15

20

15

-20

16

Bugeted Deficit as % of GDP Actual Deficit as % of GDP

Ove

rsh

ot

Ove

rsh

ot

Ove

rsh

ot

Ove

rsh

ot

Ove

rsh

ot

Ove

rsh

ot

Ove

rsh

ot

Ove

rsh

ot

Un

der

sho

t

Ove

rsh

ot

Un

der

sho

t

Graph 16: Budgeted and Actual


Graph 19: Direct Tax Refund (Number in Lakh)

Source: CAG; SBI Research

180.0

55.8

5.4 1.2 0.9

235.3

65.4

6.2 1.4 1.10

50

100

150

200

250

300

upto 5 Lakh 5-20 Lakh 20-50 Lakh 50 Lakh to 1Crore

More than 1Crore

FY15 (Apr-Dec)

FY16 (Apr-Dec)

31%

17%

15% 17% 19%

28.6

40.4 40.3

27.625.7

22.1

FY10 FY11 FY12 FY13 FY14 FY15 (upto 7Sep15)



Fiscal Deficit: Composition and Quality

The capital expenditure is growing at a steady

pace and grabbing a higher pie in the fiscal deficit

share, after declining from a high of 42% in FY11.

As per FY16 budget estimates the capital

expenditure is expected to breach the FY11 mark.

As compared to Apr-Nov 14, when the capital

expenditure as a % of fiscal deficit stood at 23%,

the ratio for Apr-Nov 15 stands at 33% showing a

change in favour of capital expenditure in the

quality of fiscal consolidation.

In broad terms, public investment is complemen-

tary to private investment if it is related to infra-

structure, as historical evidence in several coun-

tries, including developed ones like US suggests.

Public investment of this type can enhance the

possibility for private investment and raise the

productivity of capital, increase the demand for

private output and augment overall resources

through an increase in aggregate output and sav-

ings. Interestingly, even in years prior to crisis, a

large part of India’s investment boom was also led

by public sector.

Goods and Services Tax (GST)

GST has been commonly accepted in the world

and around 166 countries have acknowledged the

same. In India, the GST aims at smoothing tax

structure and increasing inter-state trade.

Implementing the GST will be an important

milestone in the streamlining and simplifying the

application, management and governance of

indirect taxes going forward .

Outlook

India’s public debt remains sustainable given manageable interest rate costs and expected recovery in the

economy’s growth rate. The captive domestic investor base is likely to mitigate the impact of any real

interest rate shocks.

India has a good track record of undershooting the budgeted fiscal deficit in the past decade on a consistent

basis and thus fiscal consolidation is not a cause for worry. India has also made rapid strides in associated

fiscal infrastructure for the convenience of tax payers and this is likely to continue.

Graph 21: Peak Rate of GST in Select Economies (%)

Source: EY; SBI Research: India: Under Discussion

27

25

25

24

24

23

23

23

23

22

21

21

21

21

20

20

20

20

19

18

15

10

Hu

ng

ary

De

nm

ark

Swe

de

n

Fin

lan

d

Ro

ma

nia

Ire

lan

d

Po

rtu

ga

l

Gre

ece

Po

lan

d

Ita

ly

Ne

the

rla

nd

s

Be

lgiu

m

Spa

in

Cze

ch R

ep

ub

lic

Fra

nce

Au

stri

a

Un

ite

d K

ing

do

m

Bu

lga

ria

Ge

rma

ny

Ind

ia

Ne

w Z

ea

lan

d

Au

stra

lia

-15.0

-5.0

5.0

15.0

25.0

35.0

45.0

55.0

65.0

75.0

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5 (

RE)

FY1

6 (

BE)

Recoveries of loans + other receipts (disinvestment) as % of FD

Capital Expenditure as % FD

Revenue Deficit as % of FD

Graph 20: Quality of fiscal consolidation (FD)

Source: MOSPI; SBI Research

Year Private Sector Public sector

2005-06 45.0 17.2

2006-07 19.1 14.9

2007-08 32.8 18.0

2008-09 -29.5 12.3

2009-10 19.0 4.8

2010-11 21.1 3.9

2011-12 -12.5 -0.4

2012-13 -3.2 9.4

Table 6: Growth Rate of Gross Capital Formation

(Constant Prices)

Source: SBI Research, MOSPI


INDIAN ECONOMY: MONEY , BANKING & FINANCIAL MARKETS

Monetary Policy Stance

RBI shifted its monetary policy stance on 15 Jan’15

to accommodative in view of significant waning of

inflationary pressures.

Repo rate has been cut by 125 bps in 2015 (25 bps

each on 15 Jan’15, 04 Mar’15 and 02 Jun’15 and

another 50 bps to 6.75% on 29 Sep’15).

Consequent to that almost all the banks have rea-

ligned their interest rates to pass the benefits to

the customers. On an average, there has been a

decline in median base lending rate of banks by 63

basis points.

RBI has moved to marginal cost of funding for de-

termining bank base rates from Apr’16. The new

methodology will be dynamic in nature.

Banking Businesses

The business growth of the All Scheduled

Commercial Banks (ASCB) remained muted in the

period Apr-Sep’15. Post Oct’15, banking business

has picked up. Aggregate deposits of the ASCB

grew by 11.5% for the fortnight ended 11 Dec’15,

compared to last year (12 Dec’14) growth of 9.9%.

Meanwhile, credit off-take (YoY) has shown smart

improvement and is at 11.5%, compared to last

year growth of 10.4%.

The smart pick up in credit growth after Sep’15,

has been mostly due to the personal loan seg-

ment, especially housing, reflecting resilience of

consumer demand.

Though, the banking system has remained resili-

ent, asset quality of the banks remains under pres-

sure. The banks have been tackling this problem

aggressively and the resolution rate will pick up

more pace as expectations of sellers of assets be-

come more realistic and valuations given by buy-

ers also are better, sensing an imminent recovery.

With Government striving to bring in enabling

laws, a proper bankruptcy law and digitization of

the DRT process with ensuring time bound resolu-

tions will also provide succor to the banks.

Graph 22: Transmission of Policy Rate

Source: RBI

Graph 23: Movement of Deposits & Advances Growth

Source: RBI

6.5

7

7.5

8

8.5

9

9.5

10

10.5

Jan.

2, 2

015

Jan.

16,

201

5

Jan.

30,

201

5

Feb.

13,

201

5

Feb.

27,

201

5

Mar

. 13,

201

5

Mar

. 27,

201

5

Apr

. 17,

201

5

May

1, 2

015

May

15,

201

5

May

29,

201

5

Jun.

12,

201

5

Jun.

26,

201

5

Jul.

10, 2

015

Jul.

24, 2

015

Aug

. 7, 2

015

Au

g. 2

1, 2

015

Sep.

4, 2

015

Sep.

18,

201

5

Oct

. 2, 2

015

Oct

. 16,

201

5

Oct

. 30,

201

5

Nov

. 13,

201

5

Nov

. 27,

201

5

Dec

. 11,

201

5

Dec

. 25,

201

5

RBI Repo Rate Base Rate (Major Banks) Term Deposit Rate >1 Yr

Call Rate (Weighted Average) 10-Yr Gsec Yield

PeriodRBI Repo

RateBase Rate

Incrementa

l Credit (Rs

Crore)

Credit

Demand

Index

Jan-Dec-2014 8.00% 10%-10.25% 605360 100

Jan-Sep-2015 7.25% 9.35%-10.0% 359351 77

Oct-Nov-2015 6.75% 9.30%-9.70% 161869 145

Interest Rate vs Incremental Credit Growth of ASCB

Graph 24: Sectoral Deployment of Credit Growth (Apr-Nov)

Source: RBI

Note: Credit Index is calculated based on the incremental credit and refinance percentage

11.0

1.0 0.8

9.5

7.9

0.4

1.9

11.9

Agriculture &Allied

Industry Services Personal Loans

FY 14 FY 15



Recapitalization of Banks

Although Indian banks are reasonably capitalized to

meet the Basel III norms, still more capital is re-

quired on account of stress in corporate assets.

Empirical evidence suggests that there are scale

economies in banking when recapitalization is in-

troduced. Banks that receive sufficiently large re-

capitalization increase lending, raise additional

funding and clean up their balance sheets. In con-

trast, banks that receive small recapitalization rela-

tive to their capital shortfall reduce lending, shrink

their risk weighted assets and suffer a drop in de-

posits and interbank borrowing.

As per the limited information in public domain,

China had injected $127 billion into the banking

system during 2004-07, while the US Fed injected

$2.27 trillion following the 2008 crisis.

Government has estimated capital requirement

(excluding internal generated profit) for the next

four years (till FY19) at about Rs 1,80,000 crore.

Out of the total requirement, the Government pro-

poses to infuse Rs 70,000 crores out of budgetary

allocations during the current and next three finan-

cial years.

Table 8: Capital Infusion in Banks: Cross Country

Country Period Amount

($ Bn)

India 2011-2016 13

China 2004-2007 127

US After 2008 2,270

Ireland 2010 11

Russia 2015 15

Portugal 2013 7

Greece 2013 63

Spain 2012-2014 51

Source: SBI Research

Table 9: Basel III Capital Norms: Selected Countries (%)

Jurisdiction Minimum Common

Equity Ratio Minimum Tier 1 Capital

Ratio Minimum Total Capital

Ratio

Basel III (BCBS) 4.5 6.0 8.0

India 5.5 7.0 9.0

Singapore 6.5 8.0 10.0

South Africa 6.0 8.3 11.5

China 5.0 6.0 8.5

China (D-SIBs) 6.0 7.0 9.0

Russia 5.0 6.0 10.0

Brazil - - 11.5 till 2019

Switzerland 4.5-10 6.0-13.0 8.0-19.0

Source: BCBS

Graph 25: Recapitalisation of Banks

Source: India Budget

5 0

100

19 12

201

120 125140

69.979.4

12.3

14.5

12.7

11

12

13

14

15

0

50

100

150

200

250

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16BE

(Sep)Recapitalisation of PSBs (Rs bn) CRAR (%) RHS


Equity Risk Premium

Indian markets are a relatively attractive place to

invest, despite the recent decline in Sensex. The

equity risk premium (ERP) may be viewed as ‘risk

compensation’ for investing in equity markets as

against assets that are relatively risk-free. Though

ERP is showing a declining trend in India, it is still

much above the level it had reached in Jan’12.

Private Equity and FII Inflows

Private equity investors poured about $4.2 billion

between May to December 2015, despite the fact

that during the same period FII outflows worth $4.5

billion occurred. This indicates their confidence in

India’s potential.

Domestic Investors are Bullish

The fall in Sensex would have been much more, if it

was not supported by huge inflows by Domestic

institutional investors (DIIs). This indicates that do-

mestic investors are confident about the state of

Indian economy. In Aug’15 when Sensex crashed by

around 1900 points, DIIs poured a net of Rs 15,770

crore into stocks, their highest monthly investment

in more than six years.

Even in Jan’15, when Sensex plunged by around

1700 points (between 15 Dec to 01 Jan), DIIs

infused a net of `6741 crore. During the same peri-

od ,FII outflows were `7604 crore.

Resource Flow to Commercial Sector

Total resource flow to commercial sector in the

current fiscal has been significantly higher than like

period in the previous year.


Graph 26: Equity Risk Premium

Source: SBI Research, estimated as the excess over risk free rate

Graph 27: Private equity and FII ($ Million)


-3000

-2000

-1000

0

1000

2000

3000

4000

May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

Private Equity ($ Mn) FII ($ Mn)

Graph 28: DII vs BSE Sensex


20000

21000

22000

23000

24000

25000

26000

27000

28000

29000

30000

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

01-A

pr-1

5

16-A

pr-1

5

28-A

pr-1

5

12-M

ay-1

5

26-M

ay-1

5

05-J

un-1

5

17-J

un-1

5

29-J

un-1

5

10-J

ul-1

5

22-J

ul-1

5

06-A

ug-1

5

18-A

ug-1

5

28-A

ug-1

5

09-S

ep-1

5

22-S

ep-1

5

06-O

ct-1

5

19-O

ct-1

5

30-O

ct-1

5

11-N

ov-1

5

24-N

ov-1

5

08-D

ec-1

5

18-D

ec-1

5

31-D

ec-1

5

12-J

an-1

6

DII_Net Purchase/Sales (Rs Crore) Sensex

Table 10: Funds Flow to Corporate Sector (Rs Lakh Crore)

Source Period 2015 2014

Debt Raised By Companies Apr-Nov 2.55 2.47

Equity Apr-Nov 0.82 0.38

ECBs Apr-Nov 0.89 1.01

FDI Apr-Nov 1.07 0.88

Incremental NF Credit Apr-Dec 3.79 1.68

Incremental CPs Apr-Dec 1.15 1.02

Total 10.27 7.44 Source: RBI, CMIE, SBI Research

-80

-60

-40

-20

0

20

40

60

80

Jan-

09

Apr-

09

Jul-0

9

Oct

-09

Jan-

10

Apr-

10

Jul-1

0

Oct

-10

Jan-

11

Apr-

11

Jul-1

1

Oct

-11

Jan-

12

Apr-

12

Jul-1

2

Oct

-12

Jan-

13

Apr-

13

Jul-1

3

Oct

-13

Jan-

14

Apr-

14

Jul-1

4

Oct

-14

Jan-

15

Apr-

15

Jul-1

5

Oct

-15



Jan Dhan to Jan Suraksha

Pradhan Mantri Jan Dhan Yojana (PMJDY)

The biggest financial inclusion initiative in the

world was announced by the Hon’ble Prime Minis-

ter on 15th Aug’14 and Mega launch was done on

28th Aug’14 across the country. The programme

aims to open at least one account per household

with an objective to bring all the unbanked house-

holds into the banking ambit.

The success of the PMJDY had shown the potential

of the enormous role that the financial inclusion

program can play in the rise of the economy. At

present more than 20 crore bank accounts have

been opened under PMJDY and the people have

deposited more than Rs.29,809 crore in these ac-

counts.

The trend of ‘zero balance a/cs’ share in total is

declining, implying people have started doing trans-

actions in their a/cs. Interestingly, the share of Ru-

ral A/cs in total is at 64.5%.

Additionally, deposits in the Jan Dhan a/cs is

around 4.0% of the ‘Demand Deposits’ of ASCB,

which is a positive signs for banks to boost their

CASA.

Jan Suraksha

Consequent to the Union Budget 2015-16 an-

nouncement, the Prime Minister launched three

new social security schemes under Jan Suraksha

initiative on 09 May 2015.

The schemes include: (i) Pradhan Mantri Suraksha

Bima Yojana (PMSBY) covering accidental death risk

of Rs 2 lakh at a premium of Rs 12 per year i.e. Re 1

per month; (ii) Pradhan Mantri Jeevan Jyoti Bima

Yojana (PMJJBY) covering both natural and acci-

dental death risk of Rs 2 lakh. The premium will be

Rs 330 per year, or less than Re 1 per day, for the

age group of 18-50 Year; and (iii) Atal Pension Yoja-

na (APY).

The Jan Suraksha scheme has till now enrolled

around 12.4 crore people. The aim of the scheme

was to increase insurance and pension penetration

in the country.

Table 11: Progress of PMJDY Scheme*

Total No of Accounts (in crore) 20.02

No Of Rupay Debit Cards (in crore) 16.91

Balance in A/c (Rs crore) 29809

No of Zero Balance A/Cs (in crore) 6.3

Balance Per A/C (Rs) 2175

Source: PMJDY Website * as on 06 Jan'16

Graph 29: Trend and Progress of PMJDY Accounts

Source: PMJDY

Graph 30: Monthly Trend of Avg A/C Balance (in Rs) of

PMJDY A/Cs

Source: RBI

Table 12: Progress of Jan Suraksha Schemes*

PMJJBY PMSBY APY Total

Total Number of

Policies (in lakh) 293.00 930.55 18.60 1,242

Per Policy Premium

(Rs) 330.0 12.0 577.0 -

Total Premium Col-

lected (Rs lakh) 96688.7 11166.6 10732.1 118587.4

Claim Paid (Rs lakh) 18251 2550.00 - -

Source: Jan Suraksha *07 Jan'16


Insurance Penetration

The Indian insurance sector has developed in many

aspects of insurance, compared to the developed

countries like US, UK and France but lags in terms

of Insurance Penetration (ratio of premium volume

to GDP ) and Density (ratio of gross premium vol-

ume to total population in a country ).

As on 2014, the insurance penetration in India is

only at 3.3% and density at USD 55 only, compared

with the world average of 6.2% and USD 662 re-

spectively. With the increase in distribution of Jan

Suraksha schemes, we expect that insurance pene-

tration will increase to 3.5% in 2015 (SBI Research).

Life Insurance Industry

The Life Insurance Sector First Year Premium regis-

tered a YoY growth of 17.03% to Rs 74,550.96 crore

as on 30th November 2015. LIC mobilized Rs

52291.75 crore with a growth of 14.15% whereas

Private Sector procured Rs 22259.21 crore posting

a growth of 24.38%.

Private sector experienced a growth in both Indi-

vidual New Business (NB) and Group NB whereas

LIC shown a growth in Group NB and decline in In-

dividual NB. It is indeed good news that ULIP busi-

ness growth is picking up, which was declining in

the last 2-3 years.


Outlook

India’s financial system remains stable and the relatively stronger macroeconomic fundamentals lend resili-

ence to face the still prevailing uncertainty and emerging risks in the global economy and financial markets.

However, policy makers and stakeholders will need to remain watchful about the potential adverse impact of

developments in the global scenario, particularly increased volatility in financial markets and further slow-

down in global trade.

Going forward, banking sector will have an improved outlook with risk tilting towards lower side. There are

many factors responsible for this outlook. Firstly, the uncertainty with regard to direction of growth may clear

off helping banks in extending credit. Secondly, the enabling legislation for asset recovery will accrue benefits.

As the investment cycle gathers momentum, we do believe that credit demand will pick-up further. It is diffi-

cult to ascertain the direction of credit flows at this time. Some sectors like personal loans, housing may re-

main buoyant. There may be increased credit flow to sectors like Renewable Energy, Roads, Aviation, Power

and so on.

The future of insurance industry looks promising with several changes in regulatory framework which will

lead to further change in the way the industry conducts its business and engages with its customers.

Graph 31: Insurance Penetration in India

Source: IRDA, SBI Research

Graph 32: First Yr Premium Growth: LIC Vs Private Insurers

Source: Life Council, SBI Research

24.38

14.15

17.03

10

12

14

16

18

20

22

24

0

10000

20000

30000

40000

50000

60000

70000

80000

Private LIC Industry

Apr-Nov'15 Apr-Nov'14 YoY %_RHS2

.2

2.6

2.3 2

.5

2.5

4.1

4.0

4.0

4.6

4.4

3.4

3.2

3.1

2.6 2.7

0.6 0.7

0.6 0.6

0.6

0.6

0.6

0.6

0.6 0.7

0.7 0.8

0.8

0.7 0.8

2.7

3.32.9

3.2 3.1

4.8 4.7 4.6

5.25.1

4.1

4.0 3.9

3.33.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015(P)

Life Non-Life Industry


Foodgrain Production

India’s foodgrain production is estimated (4th ad-

vance estimate) to have declined 4.7% to 252.68

million tonnes in FY15 crop year due to poor mon-

soon and unseasonal rains in Feb-Mar’15.

MGNREGA

MGNREGA for the past five months (Aug-Dec’15)

shows that 5.78 crore households were provided

work ,compared to 3.56 crore households provid-

ed work in corresponding period last year, an in-

crease of 62%. This increase is despite the fact that

in Jun-Dec every year, the demand for work is low,

as most of the workers are busy in agricultural

field work.

Crop Insurance

Government has cleared new crop insurance

scheme, Pradhan Mantri Fasal Bima Yojana which

is to be rolled out from the kharif season this year

aiming to reduce the premium burden on farmers

and ensuring early settlement of claim for the full

sum insured. There will be a uniform premium of

only 2% to be paid by farmers for all Kharif crops

and 1.5% for all Rabi crops. In case of annual

commercial and horticultural crops, the premium

to be paid by farmers will be only 5%. The

premium rates to be paid by farmers are very low

and balance premium will be paid by the

Government to provide full insured amount to the

farmers against crop loss on account of natural

calamities.

Besides lower premium, the Ministry has proposed

there will not be a cap on the premium and

reduction of the sum insured, 25% of the likely

claim will be settled directly on farmers account,

there will be one insurance company for the entire

state, and farm level assessment of loss for

localised risks and post harvest loss.

INDIAN ECONOMY: AGRICULTURE & RURAL DEMAND

Outlook

The monsoon season 2015 ended with a 14.3% deficit, making it the weakest monsoon since 2009. Howev-

er, better food management by the Government will ensure that food prices remain largely under control.

Going forward, the new crop insurance scheme will act as a buffer as against any adverse monsoon. The

increased payouts under MGNREGA will also act as an enabler for rural demand.

Graph 33: Foodgrain Production (Million Tonnes)

Source: Ministry of Agriculture; SBI Research

200210220230240250260270

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

Graph 34: Household Provided Work (% YoY growth)

Source: CMIE; SBI Research

-1 -1

1623

-10

-27

-41 -43-51

-57

-44-32

-27-17 -17

-1

40

63

82

68 64

-80

-60

-40

-20

0

20

40

60

80

100

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug

-15

Sep-

15

Oct

-15

Nov

-15

Dec

-15

Features NAIS MNAIS PM Crop Insurance Scheme

Premium rateLow (3.5%

kharif crops)High (2-15%)

Lower than even NAIS (2% kharif

crops, 1.5% rabi crops, 5% fruits

and horiculture crops)

one season - one premium Yes No Yes

Insurance Amount cover Full Capped Full

On account Payment No Yes Yes

Localised Risk coverage NoHail storm, Land

Slide

Hail storm, Land Slide,

Inundation

Post Harvest Losses coverage NoCoastal areas- for

cyclonic rain

All India- for cyclonic and

unseasonal rain

Prevented Sowing Coverage No Yes Yes

Use of Technology No Intended Mandatory

States covererd 14 6 All India

Awareness No NoYes (target to double coverage to

50% in 3 years up from 23%)

Table 13: Insurance Schemes- Comparison

Source: SBI Research, PIB


Industrial Growth

The contraction in November Index of Industrial

Production (IIP), at a four-year low of negative

3.2%, compared with 9.9% jump in the previous

month, is on account of seasonal factors and base

effect.

On a moving average basis, average growth during

Sep–Nov’ 15 was at 3.5%, compared to 1.7% for

the 3 months in FY15 (and 0.1% in FY14).

At a disaggregated basis, only 7 out of 22 industry

groups in the manufacturing segment showed

negative growth compared to 10 industry groups

in the corresponding period of the previous year.

However, there is visible threat to core sectors like

steel and aluminum in the face of dumping from

China. We need to carefully watch the emerging

trends for such sectors.

INDIAN ECONOMY: INDUSTRY

Graph 36: SBI Index and IIP Manufacturing

Source: MOSPI; SBI Research; DOC: Date of Commencement

Graph 35: IIP - 3-month Moving Average (%)


-10

-5

0

5

10

15

20

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Jul-

15

Oct

-15

SBI Composite Index (YoY %) IIP Manufacturing (YoY %)

-5

-3

-1

1

3

5

7

9

11

13

15

No

v-13

Jan-

14

Mar

-14

May

-14

Jul-

14

Sep-

14

No

v-14

Jan-

15

Mar

-15

May

-15

Jul-

15

Sep-

15

No

v-15

Mining Manufacturing Electricity General

Wt in

IIP FY09 FY10 FY11 FY12 FY13 FY14 FY15 Apr-Oct FY15 Apr-Oct FY16

Food products and beverages 7.3 -8.2 -1.4 7.0 15.4 2.9 -1.1 4.5 7.1 -6.2

Tobacco products 1.6 4.4 -0.6 2.0 5.4 -0.4 0.8 1.0 3.4 -3.1

Texti les 6.2 -3.6 6.1 6.7 -1.3 5.9 4.4 2.7 2.0 2.9

Wearing apparel ; dress ing and dyeing of fur 2.8 -10.2 1.9 3.7 -8.5 10.4 19.5 5.4 -4.9 11.6

Leather and leather products 0.6 -5.1 1.3 8.1 3.7 7.3 5.2 9.6 8.2 5.4

Wood and wood products 1.1 4.9 3.1 -2.2 1.8 -7.1 -2.2 4.5 0.0 10.2

Paper and paper products 1.0 4.8 2.6 8.6 5.0 0.5 -0.1 2.7 2.1 2.5

Publ ishing, printing 1.1 1.6 -6.0 11.2 29.6 -5.1 0.3 -4.2 -5.8 -8.2

Coke, refined petroleum products & nuclear fuel 6.7 3.2 -1.3 -0.2 3.5 8.5 5.2 0.7 -1.1 4.8

Chemicals and chemical products 10.1 -2.9 5.0 2.0 -0.4 3.8 8.9 -0.2 -1.9 6.1

Rubber and plastics products 2.0 5.1 17.4 10.6 -0.3 0.2 -2.1 4.6 2.6 1.7

Other non-metal l ic minera l products 4.3 3.3 7.8 4.1 4.8 1.9 1.1 2.6 5.2 -0.8

Bas ic metals 11.3 1.7 2.1 8.8 8.7 1.9 0.3 12.7 14.1 4.1

Fabricated metal products 3.1 0.1 10.2 15.3 11.2 -4.7 -7.0 -0.8 -0.9 3.0

Machinery and equipment 3.8 -7.6 15.8 29.4 -5.8 -4.7 -4.7 3.6 3.0 4.3

Accounting & computing machinery 0.3 -9.7 3.8 -5.3 1.6 -13.9 -15.7 -38.0 -39.2 -3.1

Electrica l machinery & apparatus 2.0 42.3 -13.5 2.8 -22.2 0.6 14.5 21.0 21.9 14.7

Radio, TV and communication equipment & apparatus 1.0 20.3 11.3 12.7 4.3 5.6 -27.3 -54.3 -52.6 -7.2Medica l , precis ion & optica l instruments , watches and

clocks0.6 7.5 -15.8 6.8 10.9 -2.0 -5.1 -2.2 -1.7 -6.9

Motor vehicles 4.1 -8.7 29.8 30.2 10.8 -5.3 -9.6 2.4 -2.9 9.2

Other transport equipment 1.8 3.8 27.7 23.2 11.9 -0.1 5.9 6.4 10.5 1.6

Furniture; manufacturing 3.0 7.4 7.1 -7.5 -1.8 -5.1 -13.9 7.4 -2.8 59.1

Overall Manufacturing 75.5 2.5 4.8 9.0 3.0 1.3 -0.8 2.3 1.0 5.1

Table 14: Manufacturing Growth by Sub-Sector

Source: CSO'< 0% Red; 0-4% Yel low; >4% Green


Status of Projects (Rs 150 crore & above)

As of Sep’15, out of 783 projects (Rs 150 crore and

above), 7 projects are ahead of schedule, 146 pro-

jects are on schedule and 220 projects are de-

layed. 410 projects do not have fixed dates of

commissioning.

Interestingly between Mar’15 and Sep’15, number

of projects that are delayed declined significantly

from 328 to 220.

Total original cost of implementation of the 783

projects was Rs 10.3 lakh crore and their anticipat-

ed completion cost is likely to be Rs 12.5 lakh

crore, which reflects overall cost overruns of Rs

2.1 lakh crore (20.3% of original cost).

Status of Mega Projects (Rs 1,000 crore & above)

As of Sep’15, out of 269 projects, 2 projects were

ahead of schedule, 59 projects were on schedule,

114 projects were delayed with respect to the

original schedule of completion. However, the

number of delayed projects decreases to 96 if de-

lay is calculated on the basis of the latest sched-

ules of completion. Further, for 94 projects antici-

pated date of completion is not available.

The original cost of these 269 projects was report-

ed to be Rs 8.9 lakh crore and the anticipated cost

of these projects was Rs 10.8 lakh crore implying a

cost overrun of 22.0%. Out of 114 delayed pro-

jects, three sectors viz. Power (45), Petroleum (22)

and Railways (21) comprise of 88 projects.

Factors responsible for time overruns: delay in

clearances, lack of supporting infrastructure facili-

ties, change in scope, delay in municipal permis-

sion, delay in shifting of utilities, delay in prepar-

edness of the pre-project activities, delay in supply

of equipment/services, funds constraint, etc.

INDIAN ECONOMY: INVESTMENT

Outlook

The effects of some of the major steps taken by Government like activation of some of the auction allocated

coal blocks and some other mines, road contracts awarded through EPC and hybrid annuity schemes, power

transmission contracts, urban infrastructure projects, etc, will start showing visible results over the next few

months.

Graph 37: Projects Status (Rs 150 crore & above)


123 146

328 220

297 410

Mar-15 Sep-15

On schedule Delayed Ahead of schedule Without DoC

751 783

Delayed projects declined

significantly

Graph 38: Projects Status (Rs 1,000 crore & above)


50 59

144 114

67 94

Mar-15 Sep-15

On schedule Delayed Ahead of schedule Without DoC

262 269

Delayed projects declined

significantly

No. of

Projects

Cost

Overrun (%)

No. of

Projects

Time Overrun

(months)

Atomic Energy 4 28.4 4 17-84 100%

Civi l Aviation 6 5.9 3 6-80 50%

Coal 81 1.2 44 8-104 54%

Ferti l i sers 1 0.0 0 - 0%

Mines 1 0.0 0 - 0%

Steel 24 6.3 9 6-36 38%

Petrochemica ls 1 80.1 1 44-44 100%

Petroleum 64 8.2 37 1-71 58%

Power 106 14.7 59 4-123 56%

Heavy Industry 1 122.8 1 75-75 100%

Rai lways 296 72.8 31 3-261 10%

Road Transport &

Highways160 2.1 16 6-105 10%

Shipping & Ports 6 9.6 3 61-117 50%

Telecommunications 2 0.0 1 61-61 50%

Urban Development 30 3.8 11 2-34 37%

Total 783 20.3 220 - 28%Source: MOSPI; SBI Research

Table 15: Sector-wise Cost and Time Overrun of Projects (Rs 150 crore &

above)Projects On time Projects Delayed % of

delayed

projects

Sectors


Infrastructure: Demand & Supply

The total investment in infrastructure sector in the

Twelfth Plan is estimated to be at Rs 56.3 lakh

crore (136% more than 11th plan), which is rough-

ly one trillion dollars at prevailing exchange rates.

The share of private investment in the total invest-

ment in infrastructure rose from 22% in the Tenth

Plan to 38% in the Eleventh Plan. It will have to

increase to about 48% during the Twelfth Plan if

the infrastructure investment target is to be met.

Funding Gap: The total requirement of debt by

the public and private sectors is likely to be Rs 27.7

lakh crore. However, the availability of debt fi-

nancing for infrastructure during the Twelfth Plan

is estimated at Rs 22.6 lakh crore. There is a likely

funding gap of about Rs 5.1 lakh crore for the debt

component. Measures would have to be taken for

addressing this gap.

INDIAN ECONOMY: INFRASTRUCTURE

Table 16: Infrastructure Investment & Financing during the 12th Five Year Plan

Items Amount (Rs Cr)

% of Total

Total Infrastructure Investment (C+F) 55,74,663 100%

Govt (Central/State) Budget and Inter-nal generation (A)

19,73,732 35%

Private -Internal Accruals / Equity (B) 8,25,291 15%

Sub-Total / C =(A+B) 27,99,023 50%

Borrowing

Govt PSU (D) 9,17,092 16%

Private (E) 18,58,549 33%

Sub-Total (F=D+E)) 27,75,641 50%

Availability of Borrowing

Domestic Bank Credit 11,64,646 21%

NBFCs 6,18,462 11%

Pension/Insurance funds 1,50,248 3%

External Commercial Borrowings 3,31,834 6%

Likely Total Borrowing (G) 22,65,171 41%

Gap between Estimates and Likely Requirement (G-F)

5,10,470 9%

Source: Planning Commission 2013; SBI Research

Table 17: FDI Easing in Sectors

Sectors Revised Policy Earlier Policy

Broadcasting

Teleports, DTH, Big Cable Networks, Mobile TV & HITS

100% (Automatic: ≤49% and Govt Approval: Beyond 49%)

74% (Automatic: ≤49% and Govt Approval: 49-74%)

Small Cable Networks 100% 49%

Broadcasting Content Services

FM Radio 49% (Govt Route) 26% (Govt Route)

Uplinking of News Channels

Uplinking of Non-News Channels 100% (Automatic) 100% (Govt Route)

Downloading TV Channels 100% (Automatic) 100% (Govt Route)

Other Sectors

Private Banks 74% (all sub-limits removed) 74% with sub-limits

Civil Aviation 100% (for non-scheduled air transport); 49% (for

regional air transport) 74% New Category of Aviation

Defence Automatic: ≤49% and FIPB Approval: Beyond 49%;

Portfolio & Venture capital up to 49% Govt Approved: ≤49%; Portfolio Invest-ment and Foreign Venture Capital: 24%

Plantations 100% in Coffee, Rubber, Cardamom, Palm Oil Planta-

tions 100% in Tea Only

Retail -Single Branded 30% Local Sourcing Rule Relaxed Local Sourcing Rule Applied

Source: PIB; SBI Research

FDI Easing to Send positive signal for Make in India

The relaxation in FDI norms by Government would give crucial fillip to its ‘Make in India’ campaign at least

in four major sectors viz. Construction, Aviation, Defence and Broadcasting. In all these sectors there are

ample opportunities and currently a lot of foreign investors are planning to invest in these sectors. In par-

ticular, the relaxation in construction would help in realizing dream of 100 smart cities while increase in FDI

to 100% in aviation will lead to building of strong air-network in India.


Corporates Credit Rating performance

After a lull in H113, there is a positive trend in up-

grades to downgrades ratio. As expected, firms

with low leverage have traditionally enjoyed a

better upgrade to downgrade ratio.

Credit quality has improved for firms that are

largely dependent on consumption and exports.

Such firms invariably, are generally found to be

low leveraged.

Critical performance parameters such as operating

profit, EBITDA, net profit and interest coverage

ratio for corporates showed improvement in the

Q2FY16.

Industry Outlook

The Government is promoting start-up funds and

also encouraging brick & mortar companies. Gen-

eration of thermal & renewable power, waterways

and railways are some of the key sectors that will

see action in the road ahead. These sectors are

vital cog in the progress in the economy and im-

proving this is expected to lend impetus to sup-

porting sectors that are likely to benefit the pri-

vate sector too.

In railways, the World Bank would be the anchor

investor in the new formed Railway Development

Fund, which would be used to fund modernisation.

In power generation, NTPC has been undertaking a

good amount of capacity utilization.

It is expected to add 16,330 mw generation capac-

ity by March 2018. Nearly 95% of this capacity is in

the thermal power segment. NTPC is also foraying

into hydel power generation by setting up plants

at Uttarakhand and Himachal Pradesh.

In railway infrastructure, most segments in subur-

ban rail, metro rail, locomotive and rolling stock,

manufacturing and maintenance, signaling and

electric works and dedicated freight lines have

been allowed 100% investment. The Ministry en-

visages US$142 billion in this space to boost Indian

transportation and lend fillip to Make in India initi-

ative.

INDIAN ECONOMY: CORPORATE SECTOR

Graph 39: Ratio of Upgrade to Downgrade

Source: Crisil; SBI Research

0.66 0.62

0.87

0.73

1.64

1.75

2.13

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

H1 FY13 H2 FY13 H1 FY14 H2 FY14 H1 FY15 H2 FY15 H1 FY16

Table 18: Ratio of Upgrade to Downgrade on Size and Leverage

Firm Size/ Leverage

Low Medium High

H1 FY16

Small 6.3 2.4 1.0

Medium 3.9 3.1 0.9

Large 6.8 0.2 0.1

FY15

Small 3.1 2.8 0.7

Medium 4.8 5.7 1.1

Large 4.4 2.6 0.3

Source: CRISIL; SBI Research; Small - Revenue up to Rs.100 cr, Medium - above Rs. 100-500 cr and Large - above Rs. 500 cr

Table 19: State-wise break-up of generation capacity to be added by NTPC during 2015-18

State Capacity (MW)

Madhya Pradesh 4,740

Maharashtra 2.64

Karnataka 2,400

Bihar 1,980

Chhattisgarh 1,600

Odisha 800

Assam 750

Uttarakhand 520

Uttar Pradesh 500

Himachal Pradesh 400



INDIAN ECONOMY: EXTERNAL SECTOR

Merchandise Trade

Amidst weaker global economy, exports have

been on a declining trend with negative growth

rate since Dec’14. After declining around 1.7% in

FY15, exports have performed poorly this fiscal

with around 18.1% contraction so far.

The decline in Indian exports is also on account of

fall in commodity prices and consequent weak de-

mand in commodity exporting countries. Also de-

pressed commodity prices is hurting exports of

primary items such as cotton and iron ore from

India .

Interestingly, a look at the value and volume index

of exports reveals decline in the value index only

in 2015 but accompanied by continuous increase

in volume index, indicating price effect is higher

than volume effect.

Meanwhile, soft commodity prices have

enabled a reduction in imports with 17.2%

decline during Apr-Nov’15. Oil imports which

account for greater reduction in import bill

witnessed 42.4% decline. Crude oil prices have

declined substantially in H22014 (around 50%) and

continued to slide thereafter.

Trade Diversification

India has diversified its export destinations, in-

creasing exports to the developing countries, sug-

gesting strengthening South-South relations.

If we look at the direction of Indian exports, there

was a clear discerning trend as Indian exports to

Asia and Africa during FY 15 touched US$ 183.8

billion, accounting for around 60% of our total

export basket.

Production networks have been the significant

feature of Asian regional trade and commerce

with goods being processed and value being added

in multiple countries that are part of the chain.

Value added exports including pharmaceuticals,

textiles (excluding readymade garments) and

engineering goods accounted for around 33% of

the total export basket in FY15.

Graph 40: Latest Month Exports Growth of Select

Economies (yoy %)


Graph 41: Exports: Value and Volume Index

(1999-2000 = 100)

Source: SBI Research, CEIC

196

223

268

284

312300

264

304

331

357

378397

20

10

20

11

20

12

20

13

20

14

20

15

Value Index Volume Index

Table 20: India's Exports ($ million)

Destination

Countries 1991-92 2014-15

No of times

increase

China 48.7 11964.7 246X

Saudi

Arabia 353.8 11119.6 31X

Sri Lanka 175.5 6711.8 38X

Vietnam 13.0 6240.8 480X

Bangladesh 326.3 6236.4 19X

Brazil 17.4 5943.0 342X

Malaysia 203.9 5824.2 29X

Turkey 53.5 5356.5 100X

South Africa 1.0 5290.0 5290X

South Korea 246.2 4593.8 19X

Nepal 77.7 4456.3 57X

Iran 123.4 4175.0 34X

Kenya 42.1 4112.5 98X

Indonesia 149.5 4035.0 27X

Thailand 200.1 3458.3 17X

Source: SBI Research, CEIC

-44.0

-17.6-14.8

-11.5 -10.8 -10.4 -10.2

-6.8-4.1 -3.3

-1.6 -0.9

Ru

ssia

Ind

on

esia

Ind

ia

Bra

zil

Ph

ilip

pin

es

Ch

ile

Turk

ey

Ch

ina

Mex

ico

Jap

an UK

US


INDIAN ECONOMY: EXTERNAL SECTOR

Balance of Payment

After peaking to 4.8% of GDP in FY13, Current ac-

count deficit has narrowed down significantly

thereafter. Restriction on imports, especially gold

and low crude oil prices, enabled India to post a

comfortable CAD in FY14 and FY15.

The improving momentum persisted in FY16 with

CAD declining to -1.2% in Q1.

FY15 recorded a huge surge in net foreign

investment (178% yoy hike) with both direct and

portfolio investment rising. While net FDI reached

an all time high $32.6 billion, net portfolio

investment also peaked to $40.9 billion.

Rising foreign investment has enabled accretion of

comfortable level of forex reserves amounting to

10.3 months of imports in Q2 FY16.

Interest rate differential between Repo and Fed

Funds rate has attracted portfolio inflows in India.

Though the interest rate differential has declined

with increase in US Fed funds rate, it still remains

favorable for India.

External Debt

India’s external debt is at $483.2 billion as on 30

Sep’15, recording an increase of $8.0 billion (1.7%)

over the level at end-March 2015. The rise in ex-

ternal debt during the period was due to long-

term external debt particularly commercial bor-

rowings and NRI deposits.

Meanwhile, the share of short-term debt to total

external debt also continues to slide to 17.8% in

Q2 FY16 from 20.4% in FY11.

However, External Debt to GDP has increased

from 18.2% in FY11 to 23.7% in FY15, but it re-

mains at a comfortable level.

Graph 42: CAD to GDP (%)


-4.9

-1.2-0.9

-0.3

-1.7-2.0

-1.6

-0.2

-1.2-1.6

-3.0

-4.5-4.8

-1.7-1.3

Q1

FY1

4

Q2

FY1

4

Q3

FY1

4

Q4

FY1

4

Q1

FY1

5

Q2

FY1

5

Q3

FY1

5

Q4

FY1

5

Q1

FY1

6

Q2

FY1

6

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

Graph 43: Import Cover (in month) & Forex Reserves


6.7

8.0

10.010.4 10.3

FY1

3

FY1

4

FY1

5

Q1

Q2

FY16

293 304 342 355 351FX Reserves ($ Bn)

Graph 44: Interest Rate Differential & Portfolio Inflows

Source: SBI Research, Bloomberg

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

-7000

-2000

3000

8000

13000

18000

20

08

:Q1

20

08

:Q3

20

09

:Q1

20

09

:Q3

20

10

:Q1

20

10

:Q3

20

11

:Q1

20

11

:Q3

20

12

:Q1

20

12

:Q3

20

13

:Q1

20

13

:Q3

20

14

:Q1

20

14

:Q3

20

15

:Q1

20

15

:Q3

20

16

:Q1

20

16

:Q3

Portfolio Inflows India-US Interest Rate Differential

Outlook

Given weak global economic prospects, exports are expected to remain benign. Furthermore, trade balance will

continue to improve on the back of weak oil prices leading to further reduction in imports in value terms. But

fall in oil prices may impact our exports to Middle-East, especially construction project exports.

Current account deficit will continue to moderate against the backdrop of low commodity prices. Meanwhile,

India will continue to be attractive destination for foreign investment.


ANNEXURE

Startup India, Standup India

The Prime Minister, Shri Narendra Modi, recently launched the ‘Startup India, Standup India’ movement to

boost start-up businesses, offering them a corpus of Rs 10,000 crore.

Profits earned by start-ups will be exempt from payment of income tax during the first three years of busi-

ness. To boost financing, a 20% tax on capital gains made on investments by entrepreneurs after selling own

assets as well as government-recognised venture capitalists will also be exempt.

Further, an unencumbered easy exit option will be provided under the bankruptcy Act so that start-ups can

exit within 90 days.

PM has also announced a self-certification scheme in respect of nine labour and environment laws and said

there will be no inspection during the first three years of launch of the venture. Also, a liberalised patent re-

gime is being brought to help start-up businesses register patents, for which the fee will be slashed by 80%.

India, which has the third-largest number of start-ups globally, will also support the ventures by removing

the criteria of experience and turnover for bagging government procurement contracts.

Make in India

Government 'Make in India' campaign aims at transforming the country into a global manufacturing hub and

has already made a "tremendous" impact on the investment climate. The initiative was launched in

September 2014 to invigorate the country's manufacturing sector. India received $33.09 billion FDI during

October 2014 to September 2015, a growth of 21% compared to the corresponding period last year.

The notable sectors that received huge inflows are Computer Software & Hardware ($4.9 billion, growth of

285%), Construction Activities ($1.7 billion, growth of 316%) and Automobile Industry ($3.1 billion, growth

of 71%).

Table 21: Impact of Make in India: FDI Inflows in various Sectors (Rs Crore)

Sectors Oct'13 to Sep'14 Oct'14 to Sep'15 % Growth

Fertilizers 1.2 224.4 18445

Sugar 4.1 124.9 2962

Boilers & Steam Generating Plants 1.3 26.1 1861

Paper & Pulp (Including Paper Products) 21.0 144.4 587

Ports 0.3 1.9 494

Construction (Infrastructure) Activities 415.0 1725.4 316

Computer Software & Hardware 1280.6 4931.7 285

Glass 13.9 52.3 276

Information & Broadcasting (Including Print Media) 140.5 514.5 266

Sea Transport 150.4 477.5 218

Earth-Moving Machinery 32.4 86.2 166

Agricultural Machinery 28.2 57.2 102

Miscellaneous Industries 388.9 698.4 80

Miscellaneous Mechanical & Engineering Industries 160.0 283.0 77

Automobile Industry 1842.8 3155.3 71

Hospital & Diagnostic Centres 437.7 711.9 63

Mining 466.2 744.2 60

Leather, Leather Goods & Pickers 17.2 26.2 53

Total 27395.3 33089.7 21

Source: DIPP; SBI Research


INDIA’S REFORM PROCESS

Sector Reform

Banking, Finance &

Insurance

Plan to Revamp Public Sector Banks (PSB) under ‘Indradhanush’

Allowed PSBs to raise capital from public markets through FPO or QIP by diluting Government holding upto 52% in a phased manner

Payment and Settlement Systems (Amendment) Bill 2014 for establishing a legal framework for regulation of trade repositories and legal entity identifier issuer

FDI limit in Insurance increased to 49%

Social Security Schemes; Jan Dhan to Jan Suraksha

MUDRA Bank to bring finance to 5.7 crore small entrepreneurs

Payment Banks for better financial inclusion through digital technology

Small Finance Banks for sustainable credit flow to priority sectors, small and medium enterprises

Gold monetization schemes to reduce government borrowing cost and use latent sav-ings in gold

Creation of Infrastructure Debt Fund and National Investment and Infrastructure Fund to kick start investment cycle

Notification of Investment Pattern for Non-Government Provident Funds, Superannu-ation Funds and Gratuity Funds to create additional demand for equity funds

Ease of Doing Business Amendment in Companies Act 2013

New de-licensing and de-regulation measures in reducing complexity and significantly

increasing speed and transparency

Major components of Defence products’ list excluded from industrial licensing

Process of obtaining environmental clearances made online

Withdrawing excise and customs duty exemptions presently available to goods

manufactured and supplied to Ministry of Defence by Ordinance Factory Board and

Defence PSUs

FDI in New Sectors India’s high-value industrial sectors - Defence, Construction and Railways - are now

open to global participation

FDI in Defence cap raised from 26% to 49%. Portfolio investment in Defence

permitted upto 24%

100% FDI under automatic route permitted in construction, operation and

maintenance in specified Rail Infrastructure

Upto 100% FDI under the automatic route allowed for port development projects

Manufacturing Make in India programme

Scheme on "Enhancement of Competitiveness in the Indian Capital Goods Sector

launched

National Portal for Online Registration of MSMEs (Udyog Aadhaar) launched

Funds to create additional demand for equity funds

Foreign Trade Policy 2015-

2020

FTP for 2015-20 based on principles such as encouraging the export of labour inten-

sive products, agricultural products, high tech products with high export earning po-

tential and eco-friendly and green products

FTP for 2015-20 has introduced two new schemes: (i) Merchandise Exports from India

Scheme (MEIS) and (ii) Services Exports from India Scheme (SEIS)



Sector Reform

Industrial Corridor GOI is building a pentagon of corridors across the country to boost manufacturing as a

Global Manufacturing destination of the world

Delhi-Mumbai Industrial Corridor (DMIC)

24 manufacturing cities envisaged in the DMIC project

Bengaluru-Mumbai Economic Corridor (BMEC), Amritsar-Kolkata Industrial

Development Corridor (AKIC), Chennai-Bengaluru Industrial Corridor (CBIC), East

Coast Economic Corridor (ECEC) with Chennai Vizag Industrial Corridor (CVIC)

Coal Renovation, Modernization and Life Extension of old thermal power generating units

in phased manner is being undertaken

Policy on automatic transfer of linkage in case of scrapping of old units and replacing

them with new supercritical plants

Doubling coal cess from Rs.100 per tonne to Rs.200 per tonne for funding projects

under National Clean Energy Fund

Policy for swapping of coal between State Utilities and Central Power Utilities

1 Billion Tonnes production program of CIL by 2019-20 has been finalized

Coal block auction and allotment under the Coal Mines (Special Provisions) Act, 2015

Online Coal Project Monitoring Portal (CPMP)

Agriculture Pradhan Mantri Fasal Bima Yojana

Initiated process to establish two new Agricultural Universities in Andhra Pradesh and

Rajasthan and two new Horticultural Universities in Telangana and Haryana

Mera Gaon, Mera Gaurav, Krishi Dak

Input subsidy for farmers if 33% or more of their crop is damaged

National Dairy Development Board (NDDB)

Launch of a farmer centric TV channel DD Kisan

Soil Health Card

Adoption of a four-year “Peace Clause” at WTO sanctions to protect India’s agriculture

as India transitions to a new system of food security

Communications & Infor-

mation Technology

Digital India programme—BharatNet in 11 states and Next Generation Network (NGN)

MyGov.in implemented as a platform for citizen engagement in Governance

Swachh Bharat Mission (SBM) Mobile app

e-Sign framework

Online Registration System (ORS)

National Scholarships Portal

Digitize India Platform (DIP)

Electronics Development Fund (EDF) Policy

National Centre for Flexible Electronics (NCFlexE)

Jeevan Pramaan portal for pensioners to submit life certificate

Government of India cloud (GI Cloud) services

Trading in spectrum permitted



Sector Reform

Labour Shram Suvidha Portal

Random inspection Scheme

Universal Account number

Apprentice Protsahan Yojana

Revamped Rashtriya Swasthya Bima Yojana

The Labour Law (exemption from furnishing Returns and Maintaining Registers by

Certain Establishments) Act, 2014

The Small Factories (Regulation of Employment & Condition of Service) Bill 2014

Urban Development National Declaration on Housing for All by 2022

100 Smart Cities

Atal Mission for Rejuvenation and Urban Transformation

Swachh Bharat

Deen Dayal Antyodaya Yojana

Tax Reforms Tax rebates given to tax payers by raising the income tax limit

Incentives on both savings and housing investments

MSME A scheme for Promoting Innovation, Entrepreneurship and Agro Industry (ASPIRE)

Introduction of Micro, Small and Medium Enterprises Development (Amendment) Bill,

2015

Export Credit The Government has announced the Interest Equalisation Scheme on Pre and Post

Shipment Rupee Export Credit to eligible exporters, w.e.f. Apr 01, 2015 for five years.

The scheme is available to all exports of MSME and 416 tariff lines. However, the

scheme is not available to merchant exporters.


ANNEXURE TABLES: GLOBAL ECONOMY

Overview of Global Economy

Real GDP (% Growth) 2016

P 2015

P 2014 2013 2012 2011 2010 2009 2008 2007

World GDP 3.5 3.1 3.4 3.3 3.4 4.2 5.4 0.0 3.1 5.7

Advanced Economies 2.2 2.0 1.8 1.1 1.2 1.7 3.1 -3.4 0.2 2.8

United States 2.8 2.6 2.4 1.5 2.3 1.6 2.5 -2.8 -0.3 1.8

Euro 1.6 1.5 0.9 -0.3 -0.8 1.6 2.0 -4.5 0.5 3.0

Japan 1.0 0.6 -0.1 1.6 1.8 -0.5 4.7 -5.5 -1.0 2.2

United Kingdom 2.2 2.5 3.0 1.7 0.7 1.6 1.9 -4.3 -0.3 2.6

Emerging & Developing Economies 4.5 4.0 4.6 5.0 5.2 6.2 7.4 3.1 5.8 8.7

Russia -0.6 -3.8 0.6 1.3 3.4 4.3 4.5 -7.8 5.2 8.5

China 6.3 6.8 7.3 7.7 7.8 9.3 10.4 9.2 9.6 14.2

India 7.5 7.3 7.3 6.9 5.1 6.6 10.3 8.5 3.9 9.8

Brazil -1.0 -3.0 0.1 2.7 1.8 3.9 7.6 -0.2 5.0 6.0

South Africa 1.3 1.4 1.5 2.2 2.2 3.2 3.0 -1.5 3.2 5.4

Average Consumer Prices (% Growth)

World 3.4 3.3 3.5 3.9 4.2 5.2 3.8 2.8 6.4 4.4

Advanced Economies 1.2 0.3 1.4 1.4 2.0 2.7 1.5 0.1 3.4 2.2

United States 1.1 0.1 1.6 1.5 2.1 3.1 1.6 -0.3 3.8 2.9

Euro 1.0 0.2 0.4 1.3 2.5 2.7 1.6 0.3 3.3 2.2

Japan 0.4 0.7 2.7 0.4 0.0 -0.3 -0.7 -1.3 1.4 0.1

United Kingdom 1.5 0.1 1.5 2.6 2.8 4.5 3.3 2.2 3.6 2.3


Russia 8.6 15.8 7.8 6.8 5.1 8.4 6.9 11.7 14.1 9.0

China 1.8 1.5 2.0 2.6 2.6 5.4 3.3 -0.7 5.9 4.8

India 5.5 5.4 5.9 10.0 10.2 9.4 9.5 10.6 9.2 5.9

Brazil 6.3 8.9 6.3 6.2 5.4 6.6 5.0 4.9 5.7 3.6

South Africa 5.9 4.8 6.1 5.8 5.7 5.0 4.3 7.1 11.5 7.1

Current Account Balance (% of GDP)

Advanced Economies 0.3 0.5 0.4 0.4 0.0 -0.1 0.0 -0.2 -1.3 -0.9

United States -3.0 -2.6 -2.2 -2.3 -2.8 -3.0 -3.0 -2.6 -4.7 -5.0

Euro 3.0 3.2 2.0 1.8 1.2 0.1 0.1 -0.2 -1.6 0.1

Japan 3.0 3.0 0.5 0.8 1.0 2.2 4.0 2.9 2.9 4.9

United Kingdom -4.3 -4.7 -5.9 -4.5 -3.7 -1.7 -2.6 -2.8 -3.7 -2.7

Emerging & Developing Economies -0.2 -0.1 0.5 0.6 1.3 1.5 1.2 1.3 3.5 3.8

Russia 5.4 5.0 3.2 1.6 3.5 5.1 4.4 4.1 6.3 5.5

China 2.8 3.1 2.1 1.6 2.5 1.8 3.9 4.8 9.2 10.1

India -1.6 -1.4 -1.3 -1.7 -4.8 -4.2 -2.8 -2.8 -2.3 -1.3

Brazil -3.8 -4.0 -4.4 -3.8 -3.5 -2.8 -3.5 -1.5 -1.7 0.1

South Africa -4.5 -4.3 -5.4 -5.8 -5.0 -2.2 -1.5 -2.7 -5.5 -5.4

Gross National Savings (% of GDP)

Advanced Economies 21.2 21.5 21.7 21.4 21.2 20.8 20.3 19.2 21.1 22.5

United States 17.7 18.2 18.8 18.2 17.7 15.7 15.0 14.3 15.4 17.3

Euro 23.0 22.9 22.7 22.3 22.2 22.3 21.5 20.8 22.9 24.3

Japan 24.3 24.8 22.4 22.0 21.9 22.4 23.8 22.6 25.9 27.8

United Kingdom 13.4 12.8 11.9 12.5 12.6 14.6 13.7 12.3 14.3 16.3


Russia 23.5 23.7 23.1 23.3 27.2 29.5 26.1 21.3 30.3 30.9

China 45.9 47.4 48.5 48.2 49.1 48.8 50.9 50.6 51.9 50.9

India 29.0 29.3 30.2 30.8 31.5 34.7 33.7 33.7 32.0 36.8

Brazil 12.9 14.0 15.6 17.2 16.8 19.0 18.3 17.5 20.1 20.1

South Africa 15.3 15.6 14.9 14.4 15.1 17.0 18.0 18.0 17.6 15.6

Source: IMF WEO Oct'15, SBI Research


ANNEXURE TABLES: INDIAN ECONOMY

Macro-Economic Indicators FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05

I. National Income (Growth %)

GDP 7.3@ 6.9@ 5.1@ 6.7 8.9 8.6 6.7 9.3 9.6 9.5 7.0

Agriculture 1.1$ 3.8$ 1.7$ 5.0 8.6 0.8 0.1 5.8 4.2 5.1 0.2

Food grains (Million Tonnes) 257.1 264.4 257.1 259.3 244.8 218.1 234.5 230.8 217.3 208.6 198.4

Industry# 6.0$ 5.1$ 5.0$ 6.7 8.3 10.2 4.1 9.2 12.9 8.5 7.5

Services# 10.0$ 8.1$ 5.9$ 7.1 9.2 10.0 9.4 10.3 10.1 11.1 9.1

Saving (% of GDP) … 30.0* 31.1* 33.0* 33.7 33.7 32.0 36.8 34.6 33.4 32.4

Investment (% of GDP) … 32.3 36.6 38.2 36.5 36.5 34.3 38.1 35.7 34.7 32.8

II. Inflation (%YoY)

All commodities 2.0 5.9 7.4 8.9 9.6 3.8 8.1 4.7 6.6 4.4 6.5

Primary articles 3.0 9.9 9.8 9.8 17.7 12.7 11.0 8.3 9.6 4.3 3.6

Fuel & Power -1.0 10.1 10.3 14.0 12.3 -2.1 11.6 0.0 6.5 13.5 10.1

Manufactured products 2.4 2.9 5.4 7.3 5.7 2.2 6.2 4.8 5.7 2.4 6.3

CPI-IW 6.3 9.7 10.4 8.4 10.5 12.2 9.1 6.2 6.7 4.4 3.8

CPI All India 5.9 9.4 9.9 … … … … … … … …

III. Fiscal Situation (as % of GDP)

Total receipts 13.3 14.0 13.9 14.5 15.3 15.8 14.9 14.8 13.5 14.3 15.6

Direct tax 5.5 5.6 5.5 5.4 5.8 5.8 5.9 6.3 5.4 4.5 4.1

Indirect tax 4.3 4.6 4.7 4.3 4.5 3.8 4.8 5.6 5.7 5.5 5.3

Total expenditure 13.3 13.8 13.9 14.5 15.6 15.9 15.7 14.3 13.6 13.7 15.4

Subsidies 2.1 2.3 2.5 2.4 2.3 2.2 2.3 1.4 1.3 1.3 1.4

Fiscal deficit 4.0 4.6 4.8 5.8 4.9 6.5 6.0 2.5 3.3 4.0 3.9

Revenue deficit 2.9 3.2 3.6 4.4 3.3 5.2 4.5 1.1 1.9 2.5 2.4

IV. Money and Banking (%YoY)

Reserve Money (M0) 11.3 14.4 6.2 3.6 19.1 17.0 6.4 31.0 23.9 16.9 12.1

Money Supply (M3) 11.1 13.3 13.9 13.2 16.1 16.9 19.3 21.4 21.7 21.1 12.0

Aggregate Deposits 10.7 14.1 14.2 13.5 15.9 17.2 19.9 22.4 23.8 24.0 13.0

Demand Deposits 12.5 7.8 5.9 -2.6 -0.6 23.4 -0.2 22.0 17.9 47.0 10.2

Time Deposits 11.3 15.3 15.2 15.7 18.7 16.2 23.9 22.5 25.1 20.1 13.5

Bank credit 9.0 13.9 14.1 17.0 21.5 16.9 17.5 22.3 28.1 37.0 30.9

V. External Sector (in $ billion)

Exports 316.7 318.6 306.6 309.8 250.5 182.4 189.0 166.2 128.9 105.2 85.2

% YoY -0.6 3.9 -1.0 23.7 37.3 -3.5 13.7 28.9 22.5 23.5 28.5

Imports 460.9 466.2 502.2 499.5 381.1 300.6 308.5 257.6 190.7 157.1 118.9

% YoY -1.1 -7.2 0.5 31.1 26.8 -2.6 19.8 35.1 21.4 32.1 48.6

Trade Balance -144.2 -147.6 -195.7 -189.8 -130.6 -118.2 -119.5 -91.5 -61.8 -51.9 -33.7

Invisibles 116.4 115.2 107.5 111.6 84.6 80.0 91.6 75.7 52.2 42.0 31.2

Current Account Balance -27.5 -32.4 -87.8 -78.2 -45.9 -38.2 -27.9 -15.7 -9.6 -9.9 -2.5

Net FDI 32.6 21.6 19.8 22.1 9.4 18.0 22.4 15.9 7.7 3.0 3.7

Forex Reserves 341.4 304.2 292.0 294.4 304.8 279.1 252.0 309.7 199.2 151.6 141.5

External Debt 475.8 446.3 409.4 360.8 317.9 260.9 224.5 224.4 172.4 139.1 134.0

(As % of GDP)

Exports 15.4 17.0 16.8 16.8 14.9 13.4 15.4 13.4 13.6 13.0 12.1

Imports 22.5 24.8 27.5 27.0 22.6 22.1 25.2 20.8 20.1 19.4 16.9

Trade Balance -6.6 -7.8 -10.7 -10.2 -7.7 -8.7 -9.8 -7.4 -6.5 -6.4 -4.8

Invisibles 5.7 6.1 5.9 6.0 5.0 5.9 7.5 6.1 5.5 5.2 4.4

Current Account Balance -1.3 -1.7 -4.8 -4.2 -2.7 -2.8 -2.3 -1.3 -1.0 -1.2 -0.4

VI. Financial Markets (Avg %)

Call rate 7.7 8.1 8.0 8.0 5.8 3.2 7.1 6.1 7.2 5.6 4.7

1-yr AAA corporate bond 8.6 9.4 9.2 9.6 8.1 6.1 9.8 9.3 8.5 6.7 5.5

Yield on 10-yr G-sec (%) 8.3 8.3 8.2 8.4 7.9 7.3 7.6 7.9 7.8 7.2 6.3

Exchange Rate (INR/USD) 61.2 57.5 54.4 47.9 45.6 47.4 45.9 40.2 45.3 44.3 44.9

BSE Sensex return 24.9 18.4 8.2 -10.5 10.9 80.5 -37.9 19.7 15.9 73.7 16.1

Oil price (Indian Basket, US$/bbl.) 84.0 105.5 107.7 111.6 84.6 69.1 83.1 78.8 62.1 55.5 38.6

Source: RBI, MOSPI, SBI Research, #RBI Classification, *Gross Saving to GNDI,$ GVA at Basic Prices & @ GDP at 2011-12 Prices



Macro-Economic Indicators

Quarterly Sep-15 Jun-15 Mar-15 Dec-14 Sep-14 Jun-14 Mar-14 Dec-13 Sep-13 Jun-13

I. National Income (Growth %)

GVA at Basic Prices 7.4 7.1 6.1 6.8 8.4 7.4 5.3 6.6 7.5 7.2

Agriculture 2.2 1.9 -1.4 -1.1 2.1 2.6 4.4 3.8 3.6 2.7

Industry* 8.3 6.4 7.2 3.8 7.2 8.1 5.5 5.5 4.2 5.9

Services * 8.0 8.6 8.0 11.1 10.2 8.4 5.6 8.3 9.7 8.9

II. External Sector ($ billion)

Exports 67.6 68.0 70.8 79.0 85.3 81.7 83.7 79.8 81.2 73.9

Imports 105.0 102.2 102.5 118.2 123.8 116.4 114.3 112.9 114.5 124.4

Trade Balance -37.4 -34.2 -31.7 -39.2 -38.6 -34.6 -30.7 -33.2 -33.3 -50.5

Invisibles 29.2 28.0 30.2 30.9 28.5 26.8 29.3 29.1 28.1 28.7

Net FDI 6.6 10.2 9.6 7.4 8.5 8.3 0.9 6.1 6.9 6.5

Forex Reserves 350 355 341 320 314 316 299 296 276 285

CAD -8.2 -6.2 -1.5 -8.4 -10.1 -7.9 -1.3 -4.1 -5.2 -21.8

Source: RBI, SBI Research, *As per RBI Classification, GDP at 2011-12 Base Year


Monthly Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14

I. Industry and inflation (%YoY)

SBI Composite Index 52.0 54.5 53.5 53.9 53.4 49.7 53.2 56.5 58.5 54.6 53.4 51.8 52.9

IIP … -3.2 9.9 3.8 6.3 4.3 4.2 2.5 3.0 2.5 4.8 2.8 3.6

Core Sector … -1.3 3.2 3.2 2.6 1.1 3.0 4.4 -0.4 -0.1 1.4 1.8 2.4

Markit PMI (Manufacturing) 49.1 50.3 50.7 51.2 52.3 52.7 51.3 52.6 51.3 52.1 51.2 52.9 54.5

Overall WPI -0.7 -2.0 -3.7 -4.6 -5.1 -4.0 -2.1 -2.20 -2.4 -2.3 -2.2 -0.9 -0.5

Primary articles 5.5 2.3 -0.4 -2.3 -4.2 -4.0 -0.5 -1.1 0.5 -0.2 1.0 1.4 0.3

Fuel & power -9.1 -11.1 -16.3 -17.7 -16.2 -11.6 -8.9 -9.4 -13.0 -12.2 -14.8 -11.0 -7.8

Manf. products -1.4 -1.4 -1.7 -1.7 -2.0 -1.5 -0.8 -0.5 -0.5 -0.2 0.3 1.0 1.4

Core WPI -2.0 -1.9 -2.1 -1.9 -1.9 -1.5 -0.8 -0.57 -0.41 -0.4 0.1 0.9 1.4

Imported Inflation -4.1 -5.4 -7.9 -8.9 -8.8 -6.7 -4.8 -5.2 -6.8 -6.7 -7.5 -5.9 -4.5

Corporate Pricing Power Index -0.3 -0.6 -0.9 -1.1 -1.1 -0.7 0.1 0.0 -0.1 -0.1 0.2 1.0 1.5

Pass-through Index -8.4 -11.9 -18.4 -21.3 -20.3 -15.2 -11.4 -12.7 -17.3 -16.8 -19.8 -16.4 -12.5

CPI-IW … 6.7 6.3 5.1 4.4 4.4 6.1 5.7 5.8 6.3 6.3 7.2 5.9

CPI (Combined) 5.6 5.4 5.0 4.4 3.7 3.7 5.4 5.0 4.9 5.3 5.4 5.2 4.3

CPI-Rural 6.3 5.9 5.5 5.0 4.5 4.4 6.1 5.5 5.3 5.7 5.8 5.3 4.2

CPI-Urban 4.7 4.7 4.3 3.6 2.8 2.9 4.6 4.4 4.4 4.7 5.0 5.0 4.5

Vehicle sales (Commercial) 13.6 7.0 12.3 9.8 10.6 10.0 3.5 7.3 8.1 2.3 7.8 6.5 9.9

Car sales (Domestic) 12.9 10.4 21.8 9.5 6.1 17.5 1.5 7.7 18.1 2.6 6.9 3.1 15.3

II. Money and Banking (%)

Repo Rate 6.75 6.75 6.75 6.75 7.25 7.25 7.25 7.50 7.50 7.50 7.75 7.75 8.00

MSF 7.75 7.75 7.75 7.75 8.25 8.25 8.25 8.50 8.50 8.50 8.75 8.75 9.00

CRR 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00

SLR 21.50 21.50 21.50 21.50 21.50 21.50 21.50 21.50 21.50 21.50 21.50 22.00 22.00

Base Rate (Range) 9.30-

9.70

9.30-

9.70

9.30-

9.70

9.70-

10.00

9.70-

10.00

9.70-

10.00

9.70-

10.00

9.75-

10.00

9.75-

10.25

10.00-

10.25

10.00-

10.25

10.00-

10.25

10.00-

10.25

Term deposit rate > 1 Year 7.00-

7.90

7.00-

7.90

7.00-

7.90

7.25-

8.00

7.25-

8.00

7.75-

8.25

8.00-

8.50

8.00-

8.50

8.00-

8.50

8.00-

8.75

8.00-

8.75

8.00-

8.75

8.00-

9.00

Reserve Money (M0) 14.2 13.2 11.2 12.0 8.3 10.2 10.3 11.2 11.9 7.7 10.8 10.3 9.4

(%YoY)

Money Supply (M3) 11.0 10.7 10.9 11.0 11.3 11.5 11.1 11.0 11.0 11.1 11.5 11.2 10.7

(%YoY)

Bank Credit (%YoY) 11.1 9.8 9.0 9.6 9.5 9.4 9.8 9.8 9.8 9.5 10.4 10.7 10.1

Agg. Deposits (%YoY) 10.9 10.4 11.1 11.2 11.9 11.8 11.7 11.5 11.4 11.4 11.9 11.6 10.8

Average LAF (Rs Bn) -194.1 -203.9 -59.4 -11.2 -107.5 -206 -26.0 -251.7 -116.8 -74.0 -239.2 -265.2 -305.4

Source: RBI, CGA, SBI Research

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Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14

III. Financial Markets (Avg %)

Call rate 6.4 6.5 6.7 7.0 7.0 7.0 6.8 7.1 7.1 7.3 7.9 7.2 7.9

91-day T-bill 7.2 7.1 7.1 7.4 7.4 7.5 7.7 7.7 7.9 8.3 8.3 8.3 8.3

Yield on 10-yr G-sec 7.8 7.7 7.6 7.7 7.8 7.8 7.8 7.9 7.8 7.8 7.7 7.8 7.9

SBI Base Rate 9.30 9.30 9.30 9.30 9.70 9.70 9.70 9.85 9.85 10.00 10.0 10.0 10.0

CP-3 month 7.8 7.7 7.6 7.9 7.8 8.0 8.15 8.5 8.5 9.0 9.1 8.8 8.6

CD-1 year 7.4 7.3 7.2 7.5 7.5 8.5 8.7 8.9 8.8 9.0 9.1 9.0 9.0

AAA corporate spread – 10 yr

(in bps) 45.4 30.2 37.1 76.7 53.5 64.5 58.1 69.6 32.2 47.8 51.9 50.0 58.1

BSE Sensex Return -0.1 -1.9 1.9 -0.5 -6.5 1.2 -0.2 3.0 -3.4 -4.8 0.6 6.1 -4.2

IV. External Sector

Exports ($ billion) 22.3 20.0 21.4 21.8 21.3 23.1 22.3 22.3 22.1 24.0 21.5 23.9 26.2

Exports (%YoY) -14.7 -24.4 -17.5 -24.3 -20.7 -10.3 -15.8 -20.2 -14.0 -21.1 -15.0 -11.2 -0.9

Imports ($ billion) 34.0 29.8 31.1 32.2 33.7 35.9 33.1 32.8 33.0 35.7 28.4 32.2 35.3

Imports (%YoY) -3.9 -30.3 -21.2 -25.4 -9.9 -10.3 -13.4 -16.5 -7.5 -13.4 -15.7 -11.4 -3.4

Trade Deficit ($ billion) -11.7 -9.8 -9.8 -10.5 -12.5 -12.8 -10.8 -10.4 -11 -11.8 -6.8 -8.3 -9.2

FDI ($ Million) … 2701 4912 2773 2226 1735 1681 3751 3306 1714 3793 4687 3459

FII ($ Million) -1243 -1641 3444 -874 -2645 842 -250 -2235 2441 3337 3966 5453 1998

Equity -419 -1071 1023 -978 -2549 840 -521 -904 1870 1948 1852 2104 192

Debt -824 -570 2421 105 -96 2 272 -1331 570 1389 2113 3349 1807

NRI Deposits Outstanding

($ billion) … 121.2 122.5 121.8 119.4 120.6 119.9 118.5 116.4 115.2 114.4 113.6 110.0

Forex Reserves ($ billion) 352 351.6 353.6 350 351.9 353.5 355.2 352.5 344.6 341.4 338.1 328 320

REER (Base: 2004-05) 124.7 125.3 124.9 122.2 123.9 125.5 123.7 123.4 125.7 126.0 124.3 123.0 119.7

Exchange Rate (INR/USD) 66.58 66.14 65.04 66.2 65.08 63.65 63.84 63.79 62.76 62.48 62.03 62.24 62.74

Oil (Indian basket, USD / bbl) 35.8 42.7 46.8 46.1 47.2 56.3 61.8 63.6 59.2 55.6 57.5 46.4 61.2

V. Fiscal situation (as % of

budgeted) Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14 Nov-14

Total receipts 53.9 50.0 43.5 21.7 17.7 11.8 4.4 2.2 97.8 73.3 60.9 55.7 43.4

of which tax revenue 50.5 46.6 40.2 19 16.7 11.1 2.2 -0.3 99.3 71.7 60.9 55.8 42.3

Corporation Tax 43.3 42.1 38.8 17.3 14.1 11.1 0.2 -0.9 95.1 66.9 63.8 61.6 41.8

Taxes on Income 48.1 44.4 38.2 26.0 19.3 14.0 9.9 6.2 90.9 70.2 64.1 58.6 49.3

Customs 66.7 58.5 49.7 40.9 31.9 22.6 14.4 6.9 93.2 83.0 75.2 67.2 59.6

Union Excise Duties 63.7 53.7 44.8 34.9 25.3 16.3 5.9 -1.2 91.3 67.8 57.0 49.2 41.5

Total Expenditure 64.3 57.5 51.2 37.5 33.8 24.2 14.8 8.7 97.8 86.8 74.6 68.9 59.8

Non-plan Expenditure 64.3 57.2 50 40.6 33.8 24.1 15.3 9.1 98.2 87.2 79.4 72.4 64.0

Revenue Account 64.9 57.8 50.7 40.9 33.9 23.9 15.0 8.6 98.1 87.1 80.8 73.0 64.7

Capital Account 57.6 50.3 42.7 37.4 32.4 26 18.2 14.3 99.5 88.8 64.1 67.0 56.3

Plan Expenditure 64.1 58.2 54.6 30.9 33.9 24.7 13.4 7.6 96.9 85.8 64.3 61.3 51.1

Revenue Account 60.7 54.8 51.8 30.8 32.2 25.4 13.3 7.3 97.4 87.9 64.8 62.2 51.0

Capital Account 72.3 66.5 61.2 31.4 38.2 23 13.6 8.2 95.1 78.1 62.7 57.9 51.2

Fiscal Deficit 87.0 74.0 68.1 74.9 69.3 51.6 37.5 23 97.9 117.5 107 100.2 98.9

Revenue Deficit 87.5 72.9 68.2 85.8 77.6 58.6 43.8 26.1 98.8 133.3 116.7 106.2 108.6

Source: RBI, CGA, FIMMDA, SBI Research


Contact Details

Economic Research Department

State Bank of India, Corporate Centre

Madam Cama Road, Nariman Point

Mumbai - 400 021

Phone: 022-22742440

Email: [email protected]

Disclaimer: The report is not a priced publication of the Bank. The opinions expressed in the

publication, are that of the Research Team and not necessarily reflect those of the Bank or its

subsidiaries. The contents can be reproduced with proper acknowledgement. The write-up on Economic

& Financial Developments is based on information & data procured from various sources and no

responsibility is accepted for the accuracy of facts and figures. The Bank or the Research Team assumes

no liability if any person or entity relies on views, opinions or facts & figures finding place in this report.

Economic Research Team

Name Designation Email

Dr. Soumya Kanti Ghosh Chief Economic Advisor [email protected]

Disha Kheterpal Economist [email protected]

Saket Hishikar Economist [email protected]

Shambhavi Sharma Economist [email protected]

Sumit Jain Economist [email protected]

Tapas Kumar Parida Economist [email protected]

Poonam Sharma Statistician [email protected]

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ECONOMIC OVERVIEW - DEA · Review & Outlook of Indian Economy Executive Summary World eonomy is at...

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