Role of Pharmaceutical Industry in India GDP

The Role of Pharmaceutical Industry in India GDP is immense. For the past few years the Indian Pharmaceutical Industry is performing very well. The varied functions such as contract research and manufacturing, clinical research, research and development pertaining to vaccines are the strengths of the Pharma Industry in India. Multinational pharmaceutical corporations outsource these activities and help the growth of the sector. The Indian Pharmaceutical Industry has a bright future.

Role of Pharmaceutical Industry in India GDP -Facts y y y y y y y y y y y y y

The Pharmaceutical Industry in India is one of the largest in the world It ranks 4th in the world, pertaining to the volume of sales The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billion The growth rate of the industry is 13% per year Almost most 70% of the domestic demand for bulk drugs is catered by the Indian Pharma Industry The Pharma Industry in India produces around 20% to 24% of the global generic drugs The Indian Pharmaceutical Industry is one of the biggest producers of the active pharmaceutical ingredients (API) in the international arena The Indian Pharma sector leads the science-based industries in the country The pharmaceutical sector has the capacity and technology pertaining to complex drug manufacturing Around 40% of the total pharmaceutical produce is exported 55% of the total exports constitute of formulations and the other 45% comprises of bulk drugs The Indian Pharma Industry includes small scaled, medium scaled, large scaled players, which totals nearly 300 different companies There are several other small units operating in the domestic sector

Pharmaceutical Industry in India-Growth y y y y y y y

As per the present growth rate, the Indian Pharma Industry is expected to be a US$ 20 billion industry by the year 2015 The Indian Pharmaceutical sector is also expected to be among the top ten Pharma based markets in the world in the next ten years The national Pharma market would experience the rise in the sales of the patent drugs The sales of the Indian Pharma Industry would worth US$ 43 billion within the next decade With the increase in the medical infrastructure, the health services would be transformed and it would help the growth of the Pharma industry further With the large concentration of multi national pharmaceutical companies in India, it becomes easier to attract foreign direct investments The Pharma industry in India is one of the major foreign direct investments encouraging sectors

Role of Pharmaceutical Industry in India GDP -CRAMS y y y y

The Indian Pharmaceutical Industry is one of fastest emerging international center for contract research and manufacturing services or CRAMS The main factors for the growth of the CRAMS is due to the international standard quality and low cost The estimated value of the CRAMS market in 2006 was US$ 895 million Indian already has the biggest number of US Food and Drug Administration (USFDA)

y y y y y

standardized manufacturing units outside the territory of United States Around 50 more new manufacturing units are to be set up in accordance to the USFDA and UK Medicines and Healthcare Regulatory Agency (MHRA) standards With all these development India is posed to become the biggest producer of drugs in the world Some of the major domestic players in this sector are Paras Pharma, Bal Pharma, Unijules Life Sciences, Flamingo Pharma, Venus Remedies, Surya Organics and Chemicals, Centaur Pharma, Kemwell, Coral Labs The contract manufacturing market in India pertaining to the multinational companies is expected to worth US$ 900 million by the year 2010

Role of Pharmaceutical Industry in India GD-India Advantage y y y y y y

India has the advantage of the cost, as the cost of labor, the cost of inventory is much lower than other places The multinational companies, investing in research and development in India may save upto 30% to 50% of the expenses incurred The cost of hiring a research chemist in the US is five times higher than its Indian counterpart The manufacturing cost of pharmaceutical products in India is nearly half of the cost incurred in US The cost of performing clinical trials in India is one tenth of the cost incurred in US The cost of performing research in India is one eighth of the cost incurred in US

Role of Aviation Industry in India GDP

The Role of Aviation Industry in India GDP in the past few years has been phenomenal in all respects. The Aviation Industry in India is the most rapidly growing aviation sector of the world. With the rise in the economy of the country and followed by the liberalization in the aviation sector, the Aviation Industry in India went through a complete transformation in the recent period.

Role of Aviation Industry in India GDP -Facts y y

With the entry of the private operators in this sector and the huge cut in air prices, air travel in India were popularized On February 18, 1911, the first commercial flight was made from Allahabad to Naini by a French pilot named Monseigneur Piguet

Role of Aviation Industry in India GDP-Growth Factors y y y y y y y

The growth in the Indian economy has increased the Gross Domestic Product above 8% and this high growth rate will be sustained for a good number of years Air traffic has grown enormously and expected to have a growth which would be above 25% in the travel segment In the present scenario around 12 domestic airlines and above 60 international airlines are operating in India With the growth in the economy and stability of the country India has become one of the preferred locations for the trade and commerce activities The growth of airlines traffic in Aviation Industry in India is almost four times above international average Aviation Industry in India have placed the biggest order for aircrafts globally Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia

Role of Aviation Industry in India GDP -Future Challenges y y y y

Initializing privatization in the airport activities Modernization of the airlines fleet to handle the pressure of competition in the aviation industry Rapid expansion plans for the major airports for the increased flow of air traffic Immense development for the growing Regional Airports

Role of Aviation Industry in India GDP -FDI Policy

The Reserve Bank of India (RBI) announced that foreign institutional investors might have shareholdings more than the limited 49% in the domestic sector.

Airports   
Foreign equity up to 100% is allowed by the means of automatic approvals pertaining to establishment of Greenfield airports Foreign equity up to 74% is allowed by the means of automatic approvals pertaining to the existing airports Foreign equity up to 100% is allowed by the means of special permission from Foreign Investment Promotion Board, Ministry of Finance, pertaining to the existing airports

Air Transport Services  

Up to 49% of foreign equity is allowed by the means of automatic approvals pertaining to the domestic air transport services Up to 100% of NRI investment is allowed by the means of automatic approvals pertaining to the domestic air transport services

Role of Automobile Industry in India GDP

The Role of Automobile Industry in India GDP has been phenomenon. The Automobile Industry is one of the fastest growing sectors in India. The increase in the demand for cars, and other vehicles, powered by the increase in the income is the primary growth driver of the automobile industry in India. The introduction of tailor made finance schemes, easy repayment schemes has also helped the growth of the automobile sector.

Role of Automobile Industry in India GDP -Facts y y y y y y y y y

India has become one of the international players in the automobile market In the year 2006-07, the Indian Automobile Industry produced 2.06 million four wheelers and 9 million two and three wheelers The four wheelers include passenger cars, multi-utility vehicles, sports utility vehicles, light, medium and heavy commercial vehicles, etc The three wheelers include mopeds, motor-cycles, scooters, and three wheelers India ranks 2nd in the global two-wheeler market India is the 4th biggest commercial vehicle market in the world India ranks 11th in the international passenger car market India ranks 5th pertaining to the number of bus and truck sold in the world It is expected that the Automobile Industry in India would be the 7th largest automobile market within the year 2016

Role of Automobile Industry in India GDP -Sales Trends y y y y y y

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

Role of Automobile Industry in India GDP -Growth y y y y y y y y y y y y y

The growth rate of the Passenger Cars in the year 2007 is 13.50% The growth rate of the Utility Vehicles in the year 2007 is 10.10% The growth rate of the Multi Purpose Vehicles in the year 2007 is 24.40% The growth rate of the Light Commercial Vehicles in the year 2007 is 16.05% The growth rate of the Commercial Vehicles in the year 2007 is 3.43% The Maruti Udyog Ltd is the largest car manufacturer in the country and the rate of growth in the year 2007 was 20.7% The Mahindra & Mahindra Ltd's cumulative sales for the year 2007 was 1,06,094 units and the rate of growth was 35.8% The Honda Siel Cars India Ltd, the leaders in India pertaining to the manufacturing of premium cars, registered a growth of 16.1 % during the year 2007 and sold 41,638 units The Daimler Chrysler sales for the year 2007 was 1,681 units in India and the growth rate was more than 22% The General Motors India, registered a 114% increase in the national sales in the August of 2007 The Hero Honda sold more than 2 million units in the Jan-Aug period of the year 2007 The export pertaining to the motorbikes was 3,21,321 units in the year 2007 It is estimated that in the year 2007-08 the motorcycle sales would be 7 million, the car sales would be 1.55 million, and the two-wheelers sales would be 8.3 million

Automobile Industry in India-New Models y y y y y y y y y

Maruti sedan SX4 and Zen Estilo Mahindra Renault Logan, General Motors Chevrolet Spark, Aveo, and Aveo UV-A Hyundai Verna Fiat Palio 1.1 litre version, Volvo Car S80 sedan and XC90 SUV, Tata Motors Magic and Winger, Volkswagen Passat Mitsubishi Cedia

Role of Automobile Industry in India GDP-Foreign Investments y y y y y y y y y

The Indian Automobile industry is at present engaged in mergers and acquisitions on the international scale The Indian automobile industry's foreign sector worth US$ 515 million The Mahindra and Mahindra company will be establishing a utility assembly plant in collaboration with Bramont, a local company at Manuas, in North Brazil In Egypt, the Mahindra and Mahindra company has set up assembly plants in collaboration with the Bavarian Motors The Tata Motors have entered the passenger car market in Saudi Arabia with the launch of Tata Indigo, Tata Indica, and Tata Indigo Marina The TVS Motor Company has established a two-wheeler manufacturing unit at Karawang, in Indonesia The Maruti Udyog Ltd has captured nearly 60% of the small car market in Indonesia The Nissan Motor facility in South Africa was acquired by the Tata Motors to manufacture

Tata vehicle for European and South African market The Jaguar and Land Rover companies owned by the Ford Motor Company was acquired by the Tata Motors Ltd for estimated price of US$ 1.5 billion

Business Expectations Index Surveys on India GDP

Business Expectations Index Surveys on India GDP is deeply focused upon evaluating the recent and predominant conditions of the industrial sectors in India along with the various problems faced by the same. Thus, the business surveys on India GDP play the role of a measuring instrument or barometer in the economic life of the country.

Business Expectations Index Surveys on India GDP at a glance The government of India has incorporated the facility of Business Expectations Index Surveys on India GDP and it has surfaced out as one of the widely popular feature in the Indian economy. NCAER and the Council of Applied Economic did few surveys on the industrial sectors in India GDP. These are known as Business Expectations Surveys [BES], which came into force since 1991 and occurs on a quarterly basis. The variations in the surveys presented by the Business Confidence Index (BCI) depicts that the similarities highlighted in different industrial sectors in Indian economy while doing the survey are the basic consequence of the different macro-level conditions.

Motive of the Business Expectations Index Surveys on India GDP The chief aim of the business expectations surveys on India GDP is to assess the prevalent conditions in the industrial sectors in Indian economy. It also focuses on various issues faced by these industrial sectors. The main motive of these business surveys is to bring out the merits and demerits of the economic life of India mainly so that efficient steps can be taken by the respective governments to ameliorate the conditions. The surveys basically act as a barometer in determining various aspects of the business conditions. NCAER and Council of Applied Economic, which was later known as Business Confidence Index (BCI), were the two organizations that largely deal with the business expectation surveys.

Points covered in business expectation surveys BCI calculates the programme on the basis of the number of positive responses given by each organization. This apparently portrays the contribution as well as impact of the business sectors on India GDP. The questions included in the Business Expectations Index Surveys on India GDP usually focuses upon:

y y y y

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

Areas captured by BCI in it's surveysBCI does its surveys with a concentration on the integrated macro environment that includes the infrastructural issues, social and political conditions of the industrial sectors, and the regional level policies that are faced by the respondents. Therefore the surveys done by the BCI are more elaborate as it covers the entire business environment as a whole.

Role of Iron and Steel Industry

in India GDP
The Role of Iron and Steel Industry in India GDP is very important for the development of the country. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel manufacturing unit called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron and steel are among the most important components required for the infrastructure development in the country.

Role of Iron and Steel Industry in India GDP -Facts y y y y y y y y y

The Iron and Steel Industry in India is one of the fastest growing sectors The demand drivers for the Indian Iron and Steel industry are increase in the activities of the automobiles industry, real estates industry, transportation system, aircraft industry, ship building industry, etc. India ranks 5th in the world in terms of production of steel The amount of crude steel produced in 2006-07 was 50.71 million tonnes The amount of finished steel produced in 2006-07 was 51.9 million tonnes The production of finished steel was increased by 16.52% The production of finished carbon steel was 24.8 million tonnes in the year 2006-07 It is expected that India would become the second biggest producer of steel within the year 2016 and the production per year would be 137 million tonnes The exports pertaining to the steel industry was 6.26 % during the period 2006-07

Role of Iron and Steel Industry in India GDP -Consumption y y y y y y

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

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

The Arcelor Mittal, which is the largest steelmaker in the world, has plans of establishing two Greenfield steel projects with capacity of 12 million tonnes annually, in India Acerinox SA, one of the important stainless steel manufacturers in collaboration with Nisshin Steel, Japan is setting up a steel plant in India The Tata Steel ranks 5th in the world steel production and the company have plans of expanding its capacity by the year 2015 SAIL, India's biggest producer of steel has plans of increasing the production to 24.98 million tonnes annually Sinosteel Corp, China are planning to invest US$ 4 billion to set up a 5 million tonnes capacity Greenfield steel plant The acquisition of the Corus, the Anglo-Dutch steel manufacturer by the Tata Steel The Algoma Steel, Canada was acquired by Essar Global for US$ 1.63 billion

FOR third successive year, the Indian economy has registered a highly impressive
growth during fiscal 2005-06. Sustained manufacturing activity and impressive performance of the services sector with reasonable support from the recovery in agricultural activity have added greater momentum to this growth process. After recording some slowdown in the third quarter (October-December) of 2005-06, real gross domestic product (GDP) registered a sharp increase in the fourth quarter (January-March) of 2005-06 benefiting from a pick-up in almost all segments of agriculture, industry and services. According to the revised estimates released by the Central Statistical Organization (CSO) in May 2006, real GDP accelerated from 7.5 per cent in 2004-05 to 8.4 per cent during 2005 -06. The Indian economy has, thus, recorded an average growth of over 8 per cent in the latest three years (2003 -04 to 2005-06). Growth Rates of Real GDP
(Base Year : 1999-2000)

(Per cent) 2000-01 to 2003- 2004- 20052002-03 04 05 06 Q1 (Averag e -0.2 10.0 0.7 3.9 (23.5) (22.2 (20.8 (19.9 ) ) ) -0.5 5.2 10.7 6.6 0.7 7.4 7.6 6.6 8.2 6.6 4.9 2004-05 Q2 Q3 Q4 1.5 6.8 3.7 8.1 1.4 Q1 3.4 9.5 2005-06 Q2 Q3 4.0 6.3 2.9 7.0 0.0 8.3 5.0 Q4 5.5 7.9 3.0 8.9 6.1

Sector

Agriculture Allied Activities 1.1 Agriculture Industry

3.5 -0.2 -1.2 8.0 6.0 8.3 7.9 8.1 5.7 9.2 3.1

(19.7) (19.5 (19.5 (19.3 ) ) ) 2.1 Mining and Quarrying 2.2 Manufacturing 2.3 Electricity, Gas and Water Supply Services 4.4 5.7 2.8 5.3 7.1 4.8 5.8 8.1 4.3 0.9 9.0 5.3

3.1 -2.6 10. 7 7.4 8.1 2.6

6.6

8.5

10.2

10.3

10. 0 10. 2

8.2 12. 9

10. 6 10. 6

11. 6 11. 5

10. 1 10. 6

10. 3 11. 2

9.7 11. 7

11. 0 11. 0

(56.8) (58.3 (59.7 (60.7 ) ) ) 3.1 Trade, Hotels, Restaurants, Transport, Storage and Communicatio n 3.2 Financing, 8.5 12.0 9.7 11.0

6.5

4.5

9.2

9.7

8.8

7.5

9.7

10.

8.8

10.

8.9

10.

Insurance, Real Estate and Business Services 3.3 Community, Social and Personal Services 3.4 Construction Real GDP at Factor Cost 4.1 5.4 9.2 7.8 10. 7 4.8 8.5

12. 7

7.3

8.0

8.4

7.6

5.9 4.6

10.9 8.5

12.5 7.5

12.1 8.4

8.9 7.9

6.8 6.7

20. 8 7.0

13. 5 8.6

12. 4 8.5

12. 3 8.4

11. 5 7.5

12. 0 9.3

Agriculture The kharif crops coverage up to July 10, 2006 increased by around 11.9 per cent over a year ago. For all crops taken together, around 27 per cent of the normal area has been sown so far. Total foodgrains production during 2005 -06 was placed at around 208 million tonne, an increase of 5 per cent over the previous year, mainly on the back of higher output of rice. The increase in the production of non -foodgrains crops was led mainly by sugarcane and cotton. Progress of Area under Khariff Crops - 2006-07
(Million Hectares)

Area Coverage (As on July 10) Crop Normal 2005 Rice Coarse Cereals Of which Bajra Jowar Maize Total Pulses Total Kharif Oilseeds Of which Groundnut Soyabean Sesamum Sunflower Sugarcane Cotton All Crops 5.5 6.3 1.6 0.5 4.3 8.3 101.1 1.2 1.3 0.3 0.2 4.3 2.5 24.3 1.6 1.1 0.3 0.4 4.5 3.3 27.2 0.4 -0.2 0.0 0.2 0.2 0.8 2.9 9.3 4.6 6.0 10.6 15.1 2.4 1.1 2.7 2.0 3.3 2.1 1.2 3.5 2.7 3.4 -0.3 0.1 0.8 0.7 0.1 39.9 22.9 5.4 6.8 2006 6.1 7.3 Variation 2006 over 2005 0.7 0.5

Source: Ministry of Agriculture, Government of India

Agricultural Production (Million Tonne) 2003-04 Target Rice Wheat Coarse Cereals Pulses Total Foodgrains Kharif Rabi Total Oilseeds Kharif Rabi Sugarcane Cotton # Jute and Mesta ## 87.0 72.1 37.8 15.2 212.1 112.0 100.0 25.1 17.0 8.1 236.2 13.8 11.2 Achievement 88.5 72.2 37.6 14.9 213.2 117.0 96.2 25.2 16.7 8.5 233.9 13.7 11.2 2004-05 Target 93.5 79.5 36.8 15.3 225.1 113.8 111.3 26.2 16.3 9.9 270.0 15.0 11.8 Achievement 83.1 68.6 33.5 13.1 198.4 103.3 95.1 24.4 14.2 10.2 237.1 16.4 10.3 2005-06$ Target 87.8 75.5 36.5 15.2 215.0 109.9 105.1 26.6 16.2 10.4 237.5 16.5 11.3 Achievement 91.0 69.5 34.7 13.1 208.3 109.7 98.6 27.7 16.8 10.9 278.4 19.6 10.7

Crop

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

Industry Industrial production continued to grow at 9.8 per cent during Q1 in 2006 -07 The manufacturing sector with double digit growth (10.9 per cent) continued to be the key driver of industrial activity, contributing almost 92.5 per cent of the growth in industry. Electricity and mining sectors, however, continued to exhibit subdued growth. The robust performance of the manufacturing sector was largely led by chemical and chemical products, machinery and equipments, basic metal and alloy industries, transport equipment and parts, and non -metallic mineral products. The manufacturing sector growth at 10.9 per cent during Q1 of 2006 -07 was the highest for this period in the last ten years. According to the use-based classification, the capital goods sector registered an impressive growth of 21.1 per cent during Q! of fiscal 2006 -07 even on a high base, reflecting strong investment demand. This is the highest growth for April -May period under the new base (1993-94=100). Higher production of laboratory and scientific instruments, broad gauge passenger carriage, boilers, complete tractors, industrial machinery and textile machinery boosted capital goods production. Basic goods sector was buoyed up by growth in cement sector, carbon steel and other minerals. Intermediate goods sector, after recording subdued growth during most of 2005 -06, witnessed moderate improvement, facilitated by higher production of viscose staple fibre, filament yarn, cotton yarn, paints, enamels and varnishes, and PVC pipes and tubes. Consumer goods, both durable and non -durable segments, on the other hand, recorded some deceleration, partly on account of base effect.

Infrastructure The infrastructure sector recorded growth of 5.9 per cent in Q1 of 2006 -07 against 7.1 per cent in comparable period in fiscal 2005-06 on account of deceleration in all industries except petroleum refinery products Double -digit growth in the petroleum refinery products and moderation in growth of the cement and steel sectors could be attributed largely to base effect. The decline in crude oil production resulted from fall in production in plants of ONGC at Mumbai High.

Growth Rate of Manufacturing Groups (Per Cent) Index of Industry Group Weight in the Industrial Production Chemicals and chemical products except products of petroleum & coal Machinery and equipment other than transport equipment Basic metal and alloy industries Transport equipment and parts Other manufacturing industries Non-metallic mineral products Beverages, tobacco and related products Rubber, plastic, petroleum and coal products Paper and paper products and printing, publishing and allied activities Wool, silk and man-made fibre textiles Textile products (including wearing apparel) Cotton textiles Jute and other vegetable fibre textiles (except cotton) Metal products and parts (except machinery and equipment) Leather and leather & fur products Wood and wood products, furniture & fixtures Food products 14.0 Weighted Contribution April-May 2005 25.7 2006 23.4

Growth Rate April-May 2005 13.3 2006 (P) 12.5

9.6 7.5 4.0 2.6 4.4 2.4 5.7 2.7

11.3 16.2 13.6 9.4 7.7 10.4 2.5 12.5

13.4 21.0 21.4 31.6 12.2 11.4 8.0 12.1

16.6 13.1 8.4 3.0 5.1 5.4 1.7 3.9

18.7 16.9 12.8 9.3 7.4 5.6 4.8 3.7

2.3 2.5 5.5 0.6 2.8 1.1 2.7 9.1

-8.4 25.3 9.2 -3.6 6.7 11.4 -1.3 7.4

11.9 9.6 2.9 -2.8 -4.1 -12.1 -21.3 -7.6

-3.0 7.8 3.9 -0.1 1.7 1.2 -0.2 5.8

3.3 3.2 1.2 -0.1 -0.9 -1.2 -2.4 -5.5

Manufacturing Total

79.4

10.3

10.9

100.0

100.0

Source : Central Statistical Organization.

Services Services sector with double-digit growth during the past two fiscal (2004 -05 & 200506) has further strengthened its place as the leading sector of the Indian economy. Services sector now accounts for more than 60 per cent of overall GDP. Lead indicators of services sector performance for April-May 2006 suggest continued buoyancy. Revenue earning freight of the railways continued to record strong growth. Substantial activity was witnessed in cargo handled by civil aviation and passengers handled at domestic and international airports. There was a sharp rise in new cell phone connections. Healthy growth in bank deposits and non -food credit, and, increased business process outsourcing-information technology enabled services exports are expected to buoy up the sub-sector financing, insurance, real estate and business services. Indicators of Service Sector Activity (Growth rates in per cent) Sub-sector Tourist arrivals Commercial vehicles production Railway revenue earning freight traffic New cell phone connections Cargo handled at major ports Civil aviation a) Export cargo handled b) Import cargo handled c) Passengers handled at international terminals d) Passengers handled at domestic terminals Roads: Upgradation of Highways Cement Steel Aggregate deposits Non-food credit Central Government expenditure 12.4 24.2 14.0 23.6 16.1 8.2 7.6 11.9 31.6 5.6 7.3 15.8 12.8 27.1 -23.4 10.7 6.0 12.0 14.6 9.9 19.2 12.6 $ 13.9 $ 10.1 19.9 16.2 54.0 8.9 $ 7.5 $ 2004-05 2005-06 23.7 28.6 8.1 10.4 11.3 11.7 10.6 10.7 89.4 10.3 April 2005 19.7 $ -5.3 14.9 7.6 15.8 2006 20.0 $ 49.7 11.0 167.0 -2.0

22.3 14.9 @ 20.7 @ 38.4 31.0 @ 32.9 @ 2.2 -1.0 $ 53.9 $

$ : April-May. @ : Year-on-year as on July 7. Business Expectations Surveys Various business confidence surveys suggest that economic activity is likely to remain buoyant in the near term. The National Council of Applied Economic Research (NCAER) business confidence index (BCI) increased by 1.7 per cent during April -September 2006 to 154 - the highest level since November 1994. According to the NCAER survey, overall economic conditions and investment climate increased by 2.5 percentage points and 2.2 percentage points, respectively. The CIIs business confidence index for

April-September 2006 increased by 2.1 per cent. The BCI was significantly higher for non-manufacturing firms compared to the manufacturing firms. The survey revealed that 88 per cent of the respondents planned to increase investments while 75 per cent of the respondents expected capacity utilization will be up to 100 per cent. The FICCIs quarterly Business Confidence Survey conducted during January-March 2006 indicated that the industrial sector was optimistic about sales, selling price, profits, investments, employment and exports. Although the BCI registered a marginal fall from the preceding round partly reflecting the base effect - the BCI had reached an all time high in the previous round - almost 80 per cent of the respondents expected overall economic conditions to be moderate ly to substantially better in the first half of fiscal 2006 -7. The corporates appear to be comfortably placed in terms of availability and cost of credit. For 89 per cent of the companies, availability of credit was not a constraining factor, while 78 per cent found cost of credit within their affordable limits. The services sector continued to be the most upbeat among the three industry sectors covered in the survey. At the same time, the survey showed that companies are finding rising cost of raw materials as the key challenge to maintain and improve their growth performance. According to the Reserve Banks latest Industrial Outlook Survey, the Business Expectations Index for Q2 of 2006-07 increased by 5.0 per cent over the previous quarters level. The assessment about the overall business situation for April -June 2006 showed an improvement in the level of confidence over the previous quarter. Responses to the survey suggest an improvement in expectations for the overall business situation, production, capacity utilization, order books, employment, exports, imports, selling prices and profit margins during the Q2 quarter July -September 200607 vis--vis Q1. The financial situation is expected to show an improvement during JQ2 of financial year 2006-07. While working capital finance requirement is expected to increase, the availability of finance is also expected to improve . Business Expectations Surveys Growth Growth over over previous a year ago round (per cent) 7.5 7.6 5.4 .. 5.8 (per cent) 5.8 1.7 -1.4 2.1 5.0

Agency

Business Expectations Period Index Business Optimism Index Business Confidence Index Business Confidence Index Business Confidence Index Business Expectation Index

Dun & Bradstreet NCAER FICCI CII RBI

2006 (April-June) 2006 (AprilSeptember) 2006 (AprilSeptember) 2006 (AprilSeptember) 2006 (JulySeptember)

Net Response on A Quarter Ahead Expectations About the Industrial Performanc e (Per cent) Parameter Response JulyOct-Dec JanAprJune-

Sept 2005 (816) Overall business situation Financial situation Working capital finance requirement Availability of finance Production Order books Cost of raw material Inventory of raw material Inventory of finished goods Level of capacity utilization Assessment of production capacity Employment in company Exports, if applicable Imports, if any Better Better Increase 45.5 36.7 28.8 51.3 42.3 32.7

2005 (961)

March 2006 (934) 46.3 40.4 30.6

June 2006 (1086) 53.1 43.4 32.7

Sept 2006 (1073)

49.8 40.7 31.9

Improve Increase Increase Decrease Below average Below average Above normal More than adequate Increase Increase Increase

30.7 40.7 39.6 -43.6 -4.2 -4.2 25.4 7.6

34.1 46.9 43.7 -30.0 -6.9 -3.3 31.1 10.9

34.1 46.3 41.0 -35.9 -6.8 -4.7 29.6 11.4

33.8 42.5 39.1 -37.3 -5.0 -4.5 24.8 9.4

35.0 49.4 45.2 -45.8 -6.3 -2.6 32.1 11.8

Capacity utilization Increase

5.3

5.0

4.9

4.1

3.6

7.8 32.5 23.7

12.7 33.3 19.2

13.3 31.8 20.8

14.5 31.0 22.7

16.4 38.3 23.8

Selling prices are Increase expected to If increase expected in selling prices Profit margin Increase at lower rate

13.3

7.8

10.8

12.4

16.6

14.0

16.6

16.3

12.0

10.5

Increase

7.1

9.6

12.6

9.3

11.1

Note : Figures in parentheses represent number of companies included in the 1 results. 2 Net response is measured as the per cent share differential between the companies reporting optimistic (positive) and pessimistic (negative) responses; responses indicating status quo (no change)are not reckoned.Higher net response indicates higher level of confidence and vice versa.

Projections of Real Gross Domestic Product for India By Various Agencies: 2006 -07 Agency Growth Projections for 2006 -07 (per cent) Overall Growth ADB CDE-DSE CII CMIE ESCAP ICRA IMF Planning Commission* Reserve Bank of India * ADB CDEDSE CII CMIE ESCAP ICRA IMF : : : : : : : : : 7.6 7.7 Around 8.0 7.9 7.9 7.4-8.2 7.3 7.7 7.5-8.0 Agriculture 2.4 2.5 2.0 3.2 Industry 9.5 8.5 8.2-9.7 8.9 Services 9.2 9.6 9.1-9.7 8.8 April, 2006 May, 2006 June, 2006 June, 2006 March, 2006 January, 2006 April, 2006 December, 2005 April, 2006 Month of Projections

Not Available. Base year 2001-02, Mid-Year Review of the Tenth Five-Year Plan Asian Development Bank; Centre for Development Economics - Delhi School of Economics; Confederation of Indian Industry; Centre for Monitoring Indian Economy; Economic and Social Commission for Asia and the Pacific; Investment Information and Credit Rating Agency of India; International Monetary Fund.

Country's central banking authorities feel that the buoyancy in manufacturing and services sector activities and the positive business confidence and expectations suggest that the recent growth momentum in the Indian economy is likely to be maintained in 2006-07, as has also been projected by different agencies.
SOURCE: Reserve Bank of India Report Macroeconomic and Monetary Developments: First Quarter Review 2006-07