Indian Economic Development and Policies- An Update

8/14/2019 Indian Economic Development and Policies- An Update

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UPDATE: 28 February 200 7

COUNTRY REPORT ON INDIA: PART-A

ECONOMIC PERFORMANCE IN 2004-2006

AND OUTLOOK FOR 2007-2009

For

THE ECONOMIC AND SOCIAL SURVEY

OF ASIA AND THE PACIFIC 2007

______________________________________________________________________

Dr. Tarun Das*, Professor (Public Policy)

Institute for Integrated Learning in Management3 Lodhi Institutional Area, New Delhi-110003.

Update 28 February 2007______________________________________________________________________

* The paper expresses personal views of the author and should not be attributed to theviews of the organizations he is associated with. The author would like to express his

gratitude to the Poverty and Development Division, UN-ESCAP, Bangkok for providingan opportunity to prepare this paper.

** For any clarification and additional information, EMAIL [email protected]/

[email protected]/[email protected]

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mailto:[email protected]/mailto:[email protected]/mailto:[email protected]:[email protected]/mailto:[email protected]/mailto:[email protected]


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UPDATED COUNTRY REPORT ON INDIA:

ECONOMIC PERFORMANCE IN 2004-2006

AND OUTLOOK FOR 2007-2009

DR. TARUN DAS, Professor (Public Policy), IILM, New Delhi-110003.

Part-I: Recent Economic and Social Developments

A. Macroeconomic Performance, Issues and Policies

1 Overview

(a) General Observations

Indian economy is presently in a rebounding mood with a broad-based economicexpansion supported by a strong performance of the private sector, buoyant capitalmarkets and favourable foreign exchange reserves. Real GDP registered a growth rate of9.2 percent in 2006 as a result of gradual deregulation and liberalization over the pastdecade and sound macro-economic management by the government.

Robust exports and large private capital inflows alleviated the balance of paymentsconstraint. Expenditure restraint and rising tax revenues from improved compliance andnew initiatives lessened the strains on the fiscal imbalance. However, emerging demandpressures and some signs of overheating raised CPI inflation above 6 percent promptingthe central bank to continue its policy of monetary tightening.

There is considerable momentum in the economy to sustain strong growth. Risingcapacity utilization, strong corporate balance sheets, bright business prospects and amplebank credits underpin a robust investment boom. Double-digit wage gains and access tohousing and retail loans also energized consumer spending, while the heightened focus ofIndian companies on overseas markets propelled exports. While an erratic summerrainfall limited output growth rate in agriculture to just 2.7 percent, the continuingbuoyancy in industry and services helped to achieve GDP growth rate of 9.2 percent in2006 on top of 9 percent achieved in 2005. With these growth rates, the growth rate targetat 8 percent for the Tenth Five Year Plan (2002-2007) will be nearly achieved.

Per capita income in 2005-06, in real terms, increased by 7.4%,savings rate estimated at 32.4% and the investment rate at 33.8%.Gross domestic capital formation in 2005-06 grew by 23.7 per cent.

Eleventh Tenth Five Year Plan (2007-2012) desires to acheive afaster and more Inclusive Growth and sets a target of 10% foroverall growth and 4% for agriculture growth of by the end of plan;faster employment creation and reduction of regional disparities, and

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better access to basic infrastructure, health and education services toall.

(b) Sustained High Growth

Despite continued pressures from international crude oil prices, India achieved anaverage growth rate of 8.5 percent aided by strong performance by industry and servicesduring four years 2003-2006. An investment boom, rising incomes, ample bank creditsand robust exports sustained the vibrancy in industry and services.

Table-1A: GDP growth rates (percent)

I T E MS 2003 2004 2005 2006 2007 2008 2009

Actual Actual Actual Proj. Proj. Proj. Proj.

GDP GR at const.fc 8.5 7.5 9.0 9.2 8.7 8.8 8.8

GR agriculture 10.0 0.0 6.0 2.7 3.0 3.0 3.0

GR industry 6.0 8.4 8.0 10.2 9.9 10.0 10.0-- Manufacturing 6.6 8.7 9.1 11.3 11.0 11.0 11.0

-- Non-Manufact. 5.5 7.5 4.4 6.1 6.0 6.0 6.0

GR services 8.2 10.0 10.3 10.5 10.0 10.0 10.0

CPI- Inflation 3.9 3.8 4.4 6.0 5.0 5.0 5.0Source: National Accounts Statistics 2006, Central Statistical Organisation (CSO) for 2003-2005 and

authors estimates/ projections for 2006-2009.

GDP growth rate improved from 7.5 percent in 2004 to 9 percent in 2005 due to thereturn of a near normal harvest, the strong responsiveness of the private sector toemerging opportunities sustained robust growth in industry and services. Both capitalgoods and consumer goods performed well indicating a pick up in both consumer andinvestment demands. The economy also benefited from substantial inflows of foreigninvestment and governments efforts to contain fiscal deficit despite step up publicexpenditure for employment generation programs.

Overall GDP growth in 2006 is expected to be 9.2 percent aided by a growth of 2.7percent in agriculture, 10.2 percent in industry and 10.5 percent in services. This growthforecast is consistent with forecasts made by the Fund-Bank, Ministry of Finance,Reserve Bank of India, industry and trade associations and other research institutes,although the underlying assumptions and sectoral compositions may be different.

The valuation of the capital markets reached all time high with the domestic stock indices

BSE Sensex (Base 1978-79=100) and NSE Fifty (Base November 3, 1995=100) reachingall time peaks at 12612 and 3754 respectively in May 2006. Indices became bearish inJune 2006 amid panic selling triggered by concerns of global slowdown and fears thatIndian stocks were overpriced. Markets turned bullish very soon supported by moderateinflation, high exports, and acceleration in industrial and overall economic growth. TheSensex reached all time high at 14355 on 15 February 2007 registering an increase by33.1 percent over one year period, buoyed by better corporate earnings, declining crudeprices, and the rally on Wall Street and Asian markets.

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(c) Savings and Investment

The rates of investment and saving in India are high as judged by its level of economicdevelopment. Gross domestic savings as percent of GDP improved from 31.1percent in

2004 to 32.4 percent in 2005 and 33.5percent in 2006 due to improvement in savings byall the sectors- households, public sector and private corporate sector. Gross domesticinvestment as percentage of GDP also improved from 31.5 percent in 2004 to 33.8percent in 2005 and 34.8percent in 2006 due to improvement in both private and publicinvestme.There are signs that both public and private investment have started to reviveand the new investment is more productive. Gross domestic investment as percent ofGDP is expected to improve steadily from 34.8 percent in 2006 to 37.4 percent in 2009and gross domestic savings as percent of GDP is also expected to improve from 33.5percent in 2006 to 35.0percent in 2009 as a result of better performance by both publicand private sectors.

Table-1B: Gross Domestic Savings and Investment (in Percent of GDP at current mp

2003 2004 2005 2006 2007 2008 2009

Actual Actual Est. Proj. Proj. Proj. Proj.

GDI as percent of GDP 28.0 31.5 33.8 34.8 35.7 36.5 37.4

-- Public sector 6.3 7.1 7.4 8.0 8.0 8.5 8.5

-- Private corporate 6.9 9.9 12.9 12.5 12.5 13.0 13.5

-- Household sector 12.5 11.4 10.7 11.5 12.5 12.5 13.0

-- Valuables and errors 2.3 3.1 2.8 2.8 2.7 2.5 2.4

GDS as percent of GDP 29.7 31.1 32.4 33.5 34.0 34.5 35.0



-- Public sector 1.2 2.4 2.0 2.5 2.5 2.5 2.5Resource gap (GDS-GDI) 1.7 -0.4 -1.4 -1.3 -1.7 -2.0 -2.4

(d) Balance of Payments

The inflows of Foreign Direct Investment (FDI) have maintained upward trend and isexpected to be $10 billion in 2006. Net inflows of foreign institutional investment (FII)amounted to $11.5 billion with number of registered companies standing at 979 and totalFII stock at $52 billion with current market value of over $100 billion at the end ofFebruary 2007. Given these trends, the net FII inflow is expected to be $14 billion in2006. The total foreign exchange reserves (including gold and SDR) were up by $44

billion over one year period, and stood at $190 billion on 28 February 2007.

One source of disquiet in the balance of payments in recent years had been highinternational prices of crude petroleum. Despite pressures from crude prices, inflationwas kept under control due to partial upward adjustment of domestic fuel prices.

The current account of the balance of payments, which had traditionally been in deficitsince 1956-57 (with exceptions of having surplus only in three years 1973-74, 1976-77

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and 1977-78), turned into a surplus in 2001-02. After remaining in surplus for 3consecutive years reflecting the pick up in economic activity, it turned into a deficit of$5.4 billion (amounting to 0.8 percent of GDP) in 2004 and the deficit increased furtherto $10.6 billion (amounting to 1.3 percent of GDP) in 2005. As per the latest information,current account deficit amounted to $13 billion in April-September 2006 compared with

$7.2 billion in April-September 2005.

While exports increased by 27.9 percent from $82.1 billion in 2004 to $104.8 billion in2005, imports increased more rapidly by 31.6 percent from $119 billion in 2004 to $156billion in 2005 and resulted in a widening of the trade deficit from $36.6 billion to $51.6billion over the same period. Although net invisibles at $40.9 billion in 2005 increased bymore than $10 billion over previous year, the increase was not sufficient to compensatefor the substantial increase in trade deficit.

As per the latest data, merchandise exports in dollar terms and on customs account,increased by 35 percent and imports by 33 percent during April-October, 2006. Oil imports

increased by 38.5 percent and Non-oil imports by 13.5 percent. Given these trends inmerchandise trade and buoyant inflows of invisibles as in earlier years, the year 2006 islikely to register a current account deficit of $14.4 billion amounting to 1.6 percent ofGDP, up from 1.3 percent of GDP in 2005.

Management of the current account deficit does not pose difficulties because of thecomfortable foreign exchange reserves at $190 billion as on 28 February 2007(equivalent to more than 11 months of import cover). Nevertheless, the financing of thecurrent account deficit through non-debt creating capital flows underscores the need foractive encouragement of foreign direct investment and portfolio routes.

The exchange rate of the Rupee remained fairly stable during the year. However, in

recent months, rupee has depreciated in nominal terms against all major currencies exceptfor US$. At the end of February 2007, rupee appreciated by 0.5 percent against US dollarwhile it depreciated by 9 percent against Euro as compared to a year ago.

The valuation in capital markets being favourable, and the inflows of non-debt creatingcapital being sufficient to finance the net current account outflows in the balance ofpayments, it should be possible for the RBI to manage the exchange rate of rupee withoutany undue volatility in the exchange rate of the rupee. However, there is some limitedrisk of a disorderly unraveling of the global macro-economic balances.

(e) External debt and debt-service

Trends of various external debt indicators such as external debt/GDP and debt/serviceratios indicate a marked improvement in Indias external indebtedness. Indias externaldebt consisting of short-term and long-term liabilities on Government and non-Government accounts increased from $123.2 billion at the end-March 2005 to $125.2billion at end-March 2006, and is expected to increase to $139.4 billion at the end-March2007. Multilateral and bilateral debt constituted 40 percent of total debt stock and theshare of concessionary debt was 32 percent of the total debt stock at end-March 2006. The

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share of short-term debt showed some increasing trend in recent years, and stood at 6.7percent of total external debt in 2006.

External debt indicators showed steady improvement over the years. In terms of stock ofexternal debt, Indias position improved from the third rank after Brazil and Mexico in

1990 to the eighth rank after China, Brazil, Russian Federation, Argentina, Turkey,Indonesia and Mexico in 2004. The debt-to-GDP ratio declined continuously from 38percent in 1991 to 16 percent in 2005 and further to 15 percent in 2006. The debt-serviceratio declined continuously from 35 percent in 1990 to 9.7 percent in 2005 and to 3.2percent in 2006. The World Bank now classifies India as a low indebted country.

(f) Money Supply

Broad money supply (M3) growth in the middle of February 2007 at 21.3 percentexceeded the target rate of 15 percent. While net credit to government has grown by only2.7 percent over one year, there has been a rapid growth of the bank credit to the private

sector by 26.9 percent and foreign exchange reserves by 28.1 percent.

A pick up in credit growth and a hardening of the international rates of interest resulted insome moderation of the soft interest regime. Commercial banks increased their prime-lending rate (PLR) by 0.5 percentage points in 2006. PLR of banks is currently in therange of 10.25 to 10.75 percent, which translates into average lending rates of 8.75 to9.25 percent.

Yields on government securities market hardened in 2005. The increase in yields forlonger-term maturities was, however, less than that for shorter securities indicating stableinflation expectations. Yield on 10-year government security increased from 7.52percent at end-March 2006 to 8.02 percent at end-August 2006.

The Reserve Bank of India (RBI) adhered to the gradual policy of monetary tighteningaimed at controlling inflation and a sharp pickup in private sector credit demand. SinceJuly 2005 RBI has started publishing assessment of policy on a quarterly basis, pavingthe way for more frequent policy adjustment. On a review of annual monetary policy andmacroeconomic development in April 2006 the RBI hiked the reverse repo rate and therepo rate by 25 basis points each to 5.75 percent and 6.75 percent respectively effectiveJune 9, 2006 while keeping the bank rate unchanged at 6 percent.

In its first quarterly review of the Annual Policy Statement (July 2006) RBI noted thatcontinued demand pressures resulting from high credit growth rates could put pressureson domestic inflation. The global growth outlook is positive but subject to downside risksdue to high oil prices and re-pricing of risks in financial markets. These pressures maylead to instability in growth rates and rising inflation expectations. Accordingly, RBIraised the reverse repo rate and the repo rate by 25 basis points each to 6 percent and 7percent respectively effective July 25, 2006 while keeping the bank rate unchanged at 6percent. The cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) of thecommercial banks also remained unchanged at 5 percent and 25 percent respectively

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since September 2004..

(g) Inflation

The average annual rate of inflation in terms of the Wholesale Price Index (WPI)

decelerated significantly from 6.4 percent in 2004 to 4.4 percent in 2005 due to high realsector growth and various anti-inflationary measures taken by the government. However,average inflation based on the Consumer Price Index (CPI) for industrial workersincreased from 3.8 percent in 2004 to 4.4 percent in 2005, that for CPI for urban non-manual employees increased from 3.6 to 4.7 percent, and that for CPI for agriculturallaborers and rural laborers also increased from 2.6 to 3.9 percent over the same period,reflecting higher prices of food items and other agro-based items, which have pre-dominant shares in consumer price indices.

In spite of buoyant performance of the real economy, both the wholesale prices andconsumer prices inflation rates ruled high in 2006-2007 due to a higher growth rate of

money supply, short supply of some basic consumer and capital goods, and cost-pushinflation due to the impact of high energy prices.

Several anti-inflationary measures taken by the government such as reductions ofcustoms and excise duties on petroleum products, providing subsidies on kerosene anddomestic LPG, strict monetary discipline and fiscal prudence, continual monitoring ofprices and effective supply-demand management of essential consumer items etc. helpedto control inflation in 2006.

The annual inflation rate in terms of CPI for industrial workers stood at 7.3 percent inOctober 2006 and the inflation rate in terms of WPI also crossed 7 percent in February2007 due to high prices of vegetables, cement, steel and edible oils. Government reducedimport duties on edible oil and advised RBI to tighten monetary supply to controlinflation. Given these trends, the year-end inflation in terms of the WPI is expected to be5.5 percent while that in terms of CPI is expected to be 6 percent in 2006, significantlyhigher than 4.4 percent in 2005.

(h) Union Budget for 2006

The Union budget for 2006 aimed at reducing the central government fiscal deficit to 3.7percent of GDP from 4.1 percent in 2005, with revenue deficit targeted at 2.1 percent ofGDP compared to 2.6 percent in 2005, and primary deficit targeted at 0.2 percent of GDPcompared to 0.5 percent in 2005.

The Union budget 2006 increased expenditure on social services (specially ruralemployment, water supply, education and health) and on improving both rural and urbaninfrastructure to make development and growth more inclusive.

On the revenue side, the gross tax to GDP ratio was budgeted to reach 11.2 percent in2006 compared to 10.6 percent in 2005. No new taxes were introduced and the rates of

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personal and corporate income tax remained unchanged. Two new taxes introduced in2005 viz. fringe benefits tax (FBT) on companies and cash transactions tax on excessivecash withdrawals from banks, continued with rationalisation of scope and rates. Thescope of service taxes was widened and the rate was increased from 10 to 12 percentkeeping in view the objective of introducing national level Goods and Services Tax

(GST) with effect from April 2010. Other measures included reduction of peak customsduty on non-agricultural products from 15 to 12.5 percent, and reductions of customsduties on inorganic chemicals, plastics, alloy steel, non- ferrous metals, minerals used forsteel and all man-made fiber yarn and filament yarn to contain inflationary pressures.

In the area of infrastructure, the special purpose vehicle (CPV) viz. the IndiaInfrastructure Finance Company Limited, which was incorporated in January 2006,started operating during the year with the development of three road projects in theGujarat state. Progress was achieved in highways construction and Delhi metro rail andpublic-private partnership was extended for development of seaports and airports. Specialemphasis was laid in augmenting project implementation in telecom, power, coal mines,

road transport, exploration of oil fields, shipping, inland water and sea ports.

Outstanding debt (including both domestic and external debt) of the general government,excluding guarantees and other contingent liabilities, is likely to decline from 99 percentof GDP (comprising outstanding Central government debt at 66 percent and Stategovernment debt at 33 percent) at the end of March 2006 to 94 percent of GDP(comprising outstanding Central government debt at 63 percent and State governmentdebt at 31 percent) at the end of March 2006. Including the public sector enterprises, theconsolidated public sector deficit is estimated to have exceeded 9 percent of GDP andpublic sector debt over 100 percent of GDP.

(i) Union Budgets for 2007

Finance Minister presented the financial accounts for 2006 and budgets for 2006 to theParliament on the 28th February 2007 against the backdrop of sustained high growth but arising inflationary trends. The targets of fiscal deficit and revenue deficit in 2006 were ontrack. Revenue deficit as percentage of GDP decreased from 2.6 percent in 2005 to 2percent in 2006 and is budgeted at 1.5 percent in 2007. Fiscal deficit as percentage ofGDP declined from 4.1 percent in 2005 to 3.7 percent in 2006 and is budgeted at 3.3percent in 2007. Primary deficit as percentage of GDP declined from 0.4 percent in 2005to 0.1 percent in 2006 and the primary balance is budgeted to be in surplus amounting to0.2 percent of GDP in 2007.

The budget for 2007 has put emphasis on the development of agriculture and bothphysical and human capital formation. Major budget proposals to achieve higher growthand to control inflation include the following:

Salient Features of Budget 2007

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There is substantial increase in outlays for irrigation, drinking water, ruralhabitations, rural roads, rural electrification and rural telphones,

Increase in provision for Bharat Nirman by 31.6%, education by 34.2% and healthand family welfare by 21.9%.

Allocation for National Rural Employment Guarantee Scheme increased to Rs.12,000crore for NREGS; coverage to expand from 200 districts to 330 districts;

Outlays on schemes for development of vulnerable and weaker sections such asminorities, backward classes, backward states and women are also increasedsubstantially.

.

Agricultural Insurance: Under the National Agricultural Insurance Scheme, a newweather-based crop insurance scheme is initiated.

National Bank for Agriculture and Rural Developmentwill augment its resources forrefinancing rural credit cooperatives and will issue Government guaranteed ruralbonds with suitable tax exemption.

Rural Infrastructure Development Fundis augmented by 20 percent.

A new Social Security scheme for death and disability insurance cover through LICto rural landless households is introduced.

.

Innovative Financing for Infrastructure: Funds from National Small Savings Fundmay also now be borrowed by India Infrastructure Finance Company Limited

(IIFCL). Government is exploring possibilities to establish two wholly-ownedoverseas subsidiaries of IIFCL with objectives to (i) borrow funds from RBI and lendto Indian companies implementing infrastructure projects in India, or to co-financetheir ECBs for such projects, solely for capital expenditure outside India; and (ii)borrow funds from the RBI, invest such funds in highly rated collateral securities andprovide 'credit wrap' insurance to infrastructure projects in India for raising resourcesin international markets.

PUBLIC FINANCE

VAT, CST and a Roadmap towards GST: Agreement reached with State Governments

to phase out CST; rate to be reduced from 4% to 3% with effect from April 1, 2007; aroadmap for introducing a national level Goods and Services Tax (GST) with effectfrom April 1, 2010 to be prepared.

Customs duties:

Reduction in peak rate of customs duty for non-agricultural products from 12.5% to10%.

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Reduction in customs duties on most chemicals and plastics, seconds and defectivesof steel, coking coal, polyester fibres and yarns and raw-materials, polisheddiamonds, rough synthetic stones, unworked corals, drip irrigation systems,agricultural sprinklers and food processing machinery, medical equipment, edible oils

Imposition of of imports duty of 3% (WTO bound rate) on all private import of

aircraft including helicopters; Imposition of expots duty on iron ores and concentrates.

Excise duties

Reduction in ad valorem component of excise duty on petrol and diesel from 8% to6%.

Service tax :

Exemption limit for small service providers is raised from Rs.400,000 to Rs.800,000

Extension of service tax extended to services outsourced for mining of mineral, oil orgas; renting of immovable property for use in commerce or business; assetmanagement services; design services;

Direct Taxes

Threshold limit of tax exemption is raised by Rs.10,000 for all assessees;

Surcharge on income tax on all firms and companies with a taxable income of Rs.1crore or less is removed.

Urban local bodies are allowed to issue tax-free bonds for infrastructure development.

A five year income tax holiday for two, three or four star hotels and for conventioncentres with a seating capacity of not less than 3,000;

Rate of dividend distribution tax is raised from 12.5% to 15% on dividendsdistributed by companies; and to 25% on dividends paid by money market mutualfunds and liquid mutual funds to all investors.

An additional cess of 1% on all taxes to be levied to fund secondary education andhigher education and the expansion of capacity by 54% for reservation for sociallyand educationally backward classes.

(j) Economic Reforms

Government made significant progress in second-generation economic reforms, includingthe implementation of the Value Added Tax at the state levels from April 1, 2005,preparing road map for introduction of general goods and services tax by 2010; reduction

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of peak customs duty to 10 percent, and establishment of Special Economic Zone (EPZs)for advancing industrial development. However, the diverse and unwieldy multipartycoalition hampers much needed reforms of the cumbersome public sectors. The narrowtax base, excessive subsidies on food, fertilers, kerosene, domestic LPG, loss makingstate electricity boards and the reluctance to move aggressively with privatisation limit

fiscal adjustment and constrain the provision of basic public services. Opposition fromthe leftist parties blocked the proposals to allow FDI in retail trade (except for singlebrand show rooms) and higher education, further opening of the banking and insurance toforeign investors, further movement towards full capital account convertibility, andcomplete decontrol of domestic oil prices. Administrative hurdles and inflexible land andlabour laws also constrained much needed foreign investment and public-privatepartnership in manufacturing and infrastructure.

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Annex- Selected Economic Indicators

Table-1A: GDP growth rates (percent)

I T E MS 2003 2004 2005 2006 2007 2008 2009Actual Actual Actual Proj. Proj. Proj. Proj.

GDP GR at const.fc 8.5 7.5 9.0 9.2 8.7 8.8 8.8

GR agriculture 10.0 0.0 6.0 2.7 3.0 3.0 3.0

GR industry 6.0 8.4 8.0 10.2 9.9 10.0 10.0

-- Manufacturing 6.6 8.7 9.1 11.3 11.0 11.0 11.0

-- Non-Manufact. 5.5 7.5 4.4 6.1 6.0 6.0 6.0

GR services 8.2 10.0 10.3 10.5 10.0 10.0 10.0

CPI- Inflation 3.9 3.8 4.4 6.0 5.0 5.0 5.0Source: National Accounts Statistics 2006, Central Statistical Organisation (CSO) for 2003-2005 and

authors estimates/ projections for 2006-2009.

Table-1B: Gross Domestic Savings and Investment (in Percent of GDP at current mp

2003 2004 2005 2006 2007 2008 2009


GDI as percent of GDP 28.0 31.5 33.8 34.8 35.7 36.5 37.4

-- Public sector 6.3 7.1 7.4 8.0 8.0 8.5 8.5



-- Valuables and errors 2.3 3.1 2.8 2.8 2.7 2.5 2.4

GDS as percent of GDP 29.7 31.1 32.4 33.5 34.0 34.5 35.0


-- Private corporate 4.8 7.1 8.1 8.0 8.0 8.0 8.0-- Public sector 1.2 2.4 2.0 2.5 2.5 2.5 2.5

Resource gap (GDS-GDI) 1.7 -0.4 -1.4 -1.3 -1.7 -2.0 -2.4Source: As for Table 1-A.

Table-2A: Fiscal Situation of the Central Government (as percent of GDP)

2003 2004 2005 2006 2007

Actual Actual Actual RE BE

Tax revenue 6.8 7.2 7.6 8.4 8.6

Total non-debt revenue 12.6 11.9 10.1 10.4 11.2

Current expenditure 13.1 12.3 12.3 12.3 11.8

Total expenditure & net lending 17.0 15.9 14.2 14.1 14.4Gross fiscal balance -4.5 -4.0 -4.1 -3.7 -3.2

Revenue balance -3.6 -2.5 -2.6 -2.0 -1.5

Primary balance 0.0 0.1 -0.4 -0.1 0.2

Budget deficit 0.0 0.0 0.0 0.0 0.0Source: Central Government Budget 2007-2008, Ministry of Finance.Note: RE stands for Revised Estimate and BE for Budget Estimate.

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Table-2B: Finances of Centre and States combined (as percentage of GDP)

Items 2003 2004 RE 2005 2006 BE

Fiscal deficit (-) -8.9 -7.5 -7.4 -6.3

Primary deficit (-) -5.8 -3.7 -3.1 -2.1

Budget deficit (-) -1.4 -0.6 -1.2 -0.4Revenue deficit (-) 0.0 0.0 0.0 -0.1

Source: As for Table-2A.

Table-3A: Trends of Foreign Trade

Value in US$ million Annual growth rate in US$

2002 2003 2004 2005 2006 2003 2004 2005 2006

Merch.exports 53774 66285 82150 104780 136214 23.3 23.9 27.5 30.0Merch.imports 64464 80003 118779 156334 205579 24.1 48.5 31.6 31.5Service exports 41925 53508 71854 91481 115000 27.6 34.3 27.3 25.7Service imports 24890 25707 40625 50539 60000 32.8 58.0 24.4 18.7

Source: RBI Annual Report 2005-2006 for the years 2002-2005, and authors estimate for 2006.

Table-3B: Growth rate projections for trade 2006-2008

Annual growth rate (percent)

2006 2007 2008

Merch.exports 30.0 30.0 27.5

Merch.imports 31.5 30.0 25.0

Service exports 25.7 17.4 18.5

Service imports 18.7 16.7 14.3

Net Invisibles 34.3 18.2 23.1

Table-3C: Trade, Current Account, And Overall Balance Of Payments

2003 2004 2005 2006 Proj.

Items US$Million

PercentOf

GDP

US$Million

PercentOf

GDP

US$Million

PercentOf

GDP

US$Million

PercentOf GDP

Merch. Trade bal. -13718 -2.3 -36629 -5.3 -51554 -6.5 -69365 -7.6

Net invisible bal. 27801 4.6 31229 4.5 40942 5.1 55000 6.1

Current acc. Bal. 14083 2.3 -5400 -0.8 -10612 -1.3 -14365 -1.6

Net capital inflows 17338 4.2 31559 5.8 25684 3.6 58500 6.4

Overall BOP 31421 6.6 26159 5.0 15072 2.2 44135 4.9

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Table-3D: Net Capital inflows (in US$ million)

2002 2003 2004 2005 2006

External assistance, net -2460 -2858 1923 1438 2500

Ext. commercial borrowings, net -2344 -2925 5040 1591 6500

Direct foreign investment 3611 2388 3240 5753 10000

Portfolio investment 944 11356 8907 12489 14000

Other capital inflows 13092 9377 12449 4413 25500

Total Capital inflows ($ million) 12843 17338 31559 25684 58500Change of reserves [increase (-)] -19188 -31421 -26159 -15072 -44135

Foreign exch. reserves (end fy) 73294 104715 130874 145946 190081

Reserves (in months of imports) 14 15.7 13.2 11.2 11.1

Foreign investment (US$ million) 4555 14776 12147 18242 24000

Table-3E: Outstanding External Debt in millions of US dollar

I T E MS 2003 2004 2005 2006 2007 2008 2009


Ext.Debt (US$ Mn. End of fin. year)

Mar-

2004

Mar-

2005

Mar-

2006

Mar-

2007

Mar-

2008

Mar-

2009

Mar-

2010

Total outstanding and disbursed 111645 123204 125181 139393 136393 152893 152893

Long-term, of which 107214 115680 116393 130393 127393 143393 142893

Government debt 44673 46604 45242 47742 47742 50742 51242

non-government debt 62541 69076 71151 82651 79651 92651 91651

Short-term (all on non-govt A/C) 4431 7524 8788 9000 9000 9500 10000

Total debt servicing 19015 9155 18970 7949 8594 9686 11337

principal repayments 14614 6117 13886 6127 6583 7872 9602

interest payments (LT, ST) 4401 3038 5084 1822 2011 1814 1735

Exports & gross invisibles (XGS) 119793 154004 196261 251214 312078 385775 472863

ExtDebt/ current receipt ratio (%) 93 80 64 55 44 40 32

Debt-service ratio (to XGS in (%) 15.9 5.9 9.7 3.2 2.8 2.5 2.4

Debt-service to GDP ratio (per cent) 3.2 1.3 2.4 0.9 0.8 0.8 0.9

Debt/GDP ratio (in per cent) 18.6 17.7 15.7 15.4 13.3 13.2 11.7

Debt/exports ratio (in per cent) 168 150 119 102 77 68 53

Short term debt/Total Debt ratio %) 4.0 6.1 7.0 6.5 6.6 6.2 6.5

Govt external debt/ Total Debt ratio %) 40.0 37.8 36.1 34.2 35.0 33.2 33.5

Source: Status Report on Indias External Debt, August 2006, Ministry of Finance.

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Table-4A: Bank deposit and lending rates (in percent)

Items 2003 2004 2005 2006

Bank term deposit rates *- Nominal

- Real

4 to 6 4 to 6.25 4 to 6 4 to 6.25

Bank lending rates*- Nominal- Real

10.25 to 11 10.50 to 11.50 10.25 to 11 10.50 to 11.50

Bank rate (latest)(RBI Refinance rate) 6.0 6.25 6.0 6.25

Nominal deposit rate is the interest rate on time deposit of 12 months and above. Nominal lending rate

is the prime lending rate (PLR) on short or medium term borrowings by the private sector.

Table-4B: Stock Exchange Indices

Stock exchange index 2003 2004 2005 2006

Q1

2006

Q2

2006

Q3Bombay Stock Exchange(BSE) Sensitive Index(Base: 1978-79 = 100)AverageHighLow

449261942924

574169154505

8280113076135

10165113079238

11098126128929

125001435510007

S&P CNX Nifty*(Base: 03-11-1995= 1000)AverageHighLow

14281982924

180521691389

251334191903

305034192809

330437542633

359241662933

Note: NSE-50 (Nifty) was rechristened as S&P CNX Nifty with effect from July 28, 1998.Sources: (1) The Stock Exchange, Mumbai (BSE).

(2) The National Stock Exchange of India Ltd. (NSE)

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INDIA- Macro-economic Trends:

2003-2009

Update: 28 February 2007

I T E MS 2003 2004 2005 2006 2007 2008 2009


POPULATION (Mn; as on Oct 1) 1073 1090 1107 1124 1141 1158 1176

GR Population % 1.71 1.58 1.56 1.54 1.52 1.50 1.50

NATIONAL ACCOUNTS (Rs.Bn;fy)

GDP by industry (at const.1999/00 fc) 22226 23897 26045 28440 30912 33623 36595

Agriculture 4833 4831 5121 5261 5419 5582 5749

Industry 4317 4679 5055 5568 6121 6732 7406

Manufacturing 3324 3611 3940 4384 4867 5402 5996

Non-manufacturing 994 1068 1115 1184 1255 1330 1410

Services 13076 14387 15869 17611 19372 21309 23440

GDP (const.fc) sectoral shares 100 100 100 100 100 100 100

Agriculture 21.7 20.2 19.7 18.5 17.5 16.6 15.7

Industry 19.4 19.6 19.4 19.6 19.8 20.0 20.2

Services 58.8 60.2 60.9 61.9 62.7 63.4 64.1

GDP growth rate at constant fc 8.5 7.5 9.0 9.2 8.7 8.8 8.8

GR agriculture 10.0 0.0 6.0 2.7 3.0 3.0 3.0

GR industry 6.0 8.4 8.0 10.2 9.9 10.0 10.0

GR manufacturing 6.6 8.7 9.1 11.3 11.0 11.0 11.0

GR non-manufacturing 5.5 7.5 4.4 6.1 6.0 6.0 6.0

GR services 8.2 10.0 10.3 10.5 10.0 10.0 10.0

GDP at current mp (Rupees Bn;fy) 27655 31266 35672 41289 47122 53816 61503

GDP at current mp (mn US$) 601828 695882 805778 907449 1025394 1159470 1311951

Average Exchange Rate (Rupees/US$) 45.95 44.93 44.27 45.50 45.96 46.41 46.88

REER (1993-94=100, 6 currency) 98.85 101.35 106.66 102.50 101.00 100.00 100.00

NEER (1993-94=100, 6 currency) 69.75 69.26 71.41 70.70 69.99 69.29 68.60

Implicit GDP deflator (1999/00=100) 124 131 137 145 152 160 168

GR GDP deflator 3.9 5.2 4.7 6.0 5.0 5.0 5.0

CPI :Ind.Workers 1982=100 Average) 500 520 542 575 604 634 666

GR : Consumer Price Index 3.9 3.8 4.4 6.0 5.0 5.0 5.0

WPI :1993/94=100 (52-week average) 175.9 187.3 195.5 207.3 217.6 228.5 239.9

GR : Wholesale Price Index 5.4 6.4 4.4 6.0 5.0 5.0 5.0

Expend. on GDP;Current mp;Rs.Bn 27602 31266 35672 41289 47122 53816 61503

Investment: curr.mp;Rs.Bn

gross domestic capital formation 7751 9864 12045 14485 17178 19880 23154

-- public sector 1746 2204 2644 3303 3770 4574 5228

-- private corporate sector 1914 3100 4597 5161 5890 6996 8303

-- household sector 3441 3560 3807 4748 5890 6727 7995-- valuables and errors 246 411 425 1273 1628 1582 1628

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2003-2009


I T E MS 2003 2004 2005 2006 2007 2008 2009


gross domestic saving 8205 9730 11568 13832 16021 18567 21526

-- Household sector 6573 6748 7971 9496 11074 12916 15068-- Private corporate sector 1,314 2,235 2884 3303 3770 4305 4920

-- Public sector 318 747 713 1032 1178 1345 1538

GDI as % of GDP 28.0 31.5 33.8 35.1 36.5 36.9 37.6

-- public sector 6.3 7.1 7.4 8.0 8.0 8.5 8.5

-- private corporate sector 6.9 9.9 12.9 12.5 12.5 13.0 13.5

-- household sector 12.5 11.4 10.7 11.5 12.5 12.5 13.0

-- valuables and errors 2.3 3.1 2.8 3.1 3.5 2.9 2.6

GDS as % of GDP 29.7 31.1 32.4 33.5 34.0 34.5 35.0


-- Private corporate sector 4.8 7.1 8.1 8.0 8.0 8.0 8.0

-- Public sector 1.2 2.4 2.0 2.5 2.5 2.5 2.5

Resource gap (GDS-GDI) 1.7 -0.4 -1.4 -1.6 -2.5 -2.4 -2.6Per Capita GDP ( Rupees ):

Current market prices 25724 28684 32224 36732 41294 46463 52315

constant 1993/94 factor cost 20746 21923 23528 25302 27089 29029 31128

GR per capita GDP at constant fc 6.6 5.7 7.3 7.5 7.1 7.2 7.2

Balance of Payments (US$ Mn; fy)

Merchandise exports, fob 66285 82150 104780 136214 177078 225775 287863

Merchandise imports, cif 80003 118779 156334 205579 267253 334066 417583

Trade balance -13718 -36629 -51554 -69365 -90175 -108292 -129720

Gross invisible receipts 53508 71854 91481 115000 135000 160000 185000

Gross invisible payments 25707 40625 50539 60000 70000 80000 90000

Net invisibles 27801 31229 40942 55000 65000 80000 95000Current account balance & off. transfer 14083 -5400 -10612 -14365 -25175 -28292 -34720

growth rates : Fiscal Year

merchandise exports 23.3 23.9 27.5 30.0 30.0 27.5 27.5

merchandise imports 24.1 48.5 31.6 31.5 30.0 25.0 25.0

invisibles receipts 27.6 34.3 27.3 25.7 17.4 18.5 15.6

invisibles payments 34.3 58.0 24.4 18.7 16.7 14.3 12.5

net invisibles 52.7 12.3 31.1 34.3 18.2 23.1 18.8

capital inflows (US$ million; fy) 17338 31559 25684 58500 41000 46500 54000

External assistance,net -2858 1923 1438 2500 2500 3000 3500

External commercial borrowings,net -2925 5040 1591 6500 5000 5500 6500

Direct foreign investment 2388 3240 5753 10000 7500 8500 10000

Portfolio investment 11356 8907 12489 14000 14500 16000 17500

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INDIA- Macro-economic Trends Update: 28 February 2007

I T E MS 2003 2004 2005 2006 2007 2008 2009


capital inflows (US$ million; fy) 17338 31559 25684 58500 41000 46500 54000

Other capital inflows, of which 9377 12449 4413 25500 11500 13500 16500

IMF, net 0 0 0 0 0 0 0

Short-term capital 1419 3792 1708 10500 3000 3000 4000

Banking capital 6033 3874 1373 5000 3500 4500 5500

Other capital,net 1925 4783 1332 10000 5000 6000 7000

Change of reserves [increase (-) ] -31421 -26159 -15072 -44135 -15825 -18208 -19280

Foreign exch. reserves ($mn, end fy) 104715 130874 145946 190081 205906 224115 243394

Foreign Reserves (months of imports) 15.7 13.2 11.2 11.1 9.2 8.1 7.0

Foreign investment (US$ milion) 14776 12147 18242 24000 22000 24500 27500

Money Supply (Rs.Bn; end fy)

Narrow money supply (M1) 6138 6826 8252 9746 11518 13610 16088

Currency with the public 3140 3549 4131 4813 5607 6532 7610

Demand deposits 2948 3214 4052 4863 5835 7002 8403

Other deposits with RBI 50 63 69 70 75 75 75

Time deposits with banks 14731 16501 19043 22566 26741 31688 37550

Broad money supply (M3) 20870 23327 27295 32312 38258 45297 53638

Foreign assets (net) 5252 6479 7262 8533 10026 11781 13842

Domestic credit 18020 20800 24601 29597 34670 40674 47785

Claims on govt. sector 7348 7487 7691 8460 9306 10237 11260

Claims on private sector 10672 13313 16910 21137 25364 30437 36525

Govt's currency liabilities to public 73 74 88 89 89 90 90

less, banking sectr's non-monet.liabl. 2476 4026 4655 5907 6527 7247 8079

Broad money supply (M3) 20869 23327 27295 32312 38258 45297 53638

GR M1 22.2 11.2 20.9 18.1 18.2 18.2 18.2

GR M3 16.7 11.8 17.0 18.4 18.4 18.4 18.4

Central govt.finance(Rs.Bln.fy)

Current revenue 2638 3060 3475 4233 4864 5746 6716

Taxes 1870 2248 2703 3460 4039 4846 5816

Non-taxes including external grants 768 812 772 774 826 900 900

Current expenditure, of which 3621 3844 4398 5068 5579 6307 7134

Interest payments 1241 1269 1326 1462 1590 1460 1460

Current surplus(+)/deficit(-) -983 -783 -923 -834 -715 -561 -418

Capital receipts, of which 2075 1917 1587 1583 1941 1800 1800

Recovery of loans 673 620 106 55 15 50 50

Disinvestment of govt.equity in PSUs 170 44 16 5 417 250 250

Govt. borrowings & other liabilities 1233 1252 1464 1523 1509 1500 1500

Capital expenditure 1091 1133 664 749 1226 1239 1382

Capital a/c surplus(+)/deficit(-) 983 783 923 834 715 561 418

Budget deficit (-)/ Surplus (+) 0 0 0 0 0 0 0

Gross Fiscal Deficit(-)/Surplus(+) -1233 -1252 -1464 -1523 -1509 -1500 -1500

Primary deficit (-) 8 17 -138 -61 80 -40 -40

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2003-2009


I T E MS 2003 2004 2005 2006 2007 2008 2009


Financing fiscal deficit (Rs.Bln):

Domestic borrowing 1182 1237 1214 1423 1384 1375 1375

Foreign borrowing and grants 90 97 100 100 100 100 100

Others (use of cash balances) -39 -81 150 0 25 25 25

Note:Borrowing & other liabilities 1233 1252 1464 1523 1509 1500 1500

As % of GDP at current mp

Tax revenue 6.8 7.2 7.6 8.4 8.6 9.0 9.5

Total non-debt revenue 12.6 11.9 10.1 10.4 11.2 11.2 11.4

Current expenditure 13.1 12.3 12.3 12.3 11.8 11.7 11.6

Total expenditure & net lending 17.0 15.9 14.2 14.1 14.4 14.0 13.8

Gross fiscal balance -4.5 -4.0 -4.1 -3.7 -3.2 -2.8 -2.4

Revenue balance -3.6 -2.5 -2.6 -2.0 -1.5 -1.0 -0.7

Primary balance 0.0 0.1 -0.4 -0.1 0.2 -0.1 -0.1

Budget deficit 0.0 0.0 0.0 0.0 0.0 0.0 0.0

States finance combined (Rs.Bln)

Fiscal deficit (-) -1214 -1093 -1140 -1059 -1200 -1350 -1500

Revenue deficit (-) -612 -364 -173 -18 -80 -50 0

Primary deficit (-) -407 -213 -250 -64 -65 -60 -50

Budget deficit (-) 12 -7 -3 -39 0 0 0

States finance comb. (% of GDP)

Fiscal deficit (-) -4.4 -3.5 -3.2 -2.6 -2.5 -2.5 -2.4

Revenue deficit (-) -2.2 -1.2 -0.5 0.0 -0.2 -0.1 0.0

Primary deficit (-) -1.5 -0.7 -0.7 -0.2 -0.1 -0.1 -0.1

Budget deficit (-) 0.0 0.0 0.0 -0.1 0.0 0.0 0.0

Centre & States comb. (% of GDP)

Fiscal deficit (-) -8.8 -7.5 -7.3 -6.3 -5.7 -5.3 -4.9

Revenue deficit (-) -5.8 -3.7 -3.1 -2.1 -1.7 -1.1 -0.7

Primary deficit (-) -1.4 -0.6 -1.1 -0.3 0.0 -0.2 -0.1

Budget deficit (-) 0.0 0.0 0.0 -0.1 0.0 0.0 0.0

19


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2003-2009


I T E MS 2003 2004 2005 2006 2007 2008 2009


Ext.Debt (US$ Mn. End of fin. year)

Mar-

2004

Mar-

2005

Mar-

2006

Mar-

2007

Mar-

2008

Mar-

2009

Mar-

2010

Total outstanding and disbursed 111645 123204 125181 139393 136393 152893 152893

Long-term, of which 107214 115680 116393 130393 127393 143393 142893

Government debt 44673 46604 45242 47742 47742 50742 51242

non-government debt 62541 69076 71151 82651 79651 92651 91651

Short-term (all on non-govt account) 4431 7524 8788 9000 9000 9500 10000

Total debt servicing 19015 9155 18970 7949 8594 9686 11337

principal repayments 14614 6117 13886 6127 6583 7872 9602

interest payments (LT, ST) 4401 3038 5084 1822 2011 1814 1735

Exports & gross invisibles (XGS) 119793 154004 196261 251214 312078 385775 472863

ExtDebt/ current receipt ratio (%) 93 80 64 55 44 40 32

Debt-service ratio (to XGS in per cent) 15.9 5.9 9.7 3.2 2.8 2.5 2.4

Debt-service to GDP ratio (per cent) 3.2 1.3 2.4 0.9 0.8 0.8 0.9

Debt/GDP ratio (in per cent) 18.6 17.7 15.5 15.4 13.3 13.2 11.7

Debt/exports ratio (in per cent) 168 150 119 102 77 68 53

Short term debt/ Total Debt ratio (%) 4.0 6.1 7.0 6.5 6.6 6.2 6.5

Govt external debt/ Total Debt ratio(%) 40.0 37.8 36.1 34.2 35.0 33.2 33.5

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2003-2009


I T E MS 2003 2004 2005 2006 2007 2008 2009


Memo Items:

As per cent of GDP at current mp:

Merchandise exports, fob 11.0 11.8 13.0 15.0 17.3 19.5 21.9

Merchandise imports, cif 13.3 17.1 19.4 22.7 26.1 28.8 31.8

Trade balance -2.3 -5.3 -6.4 -7.6 -8.8 -9.3 -9.9

Gross invisible receipts 8.9 10.3 11.4 12.7 13.2 13.8 14.1

Gross invisible payments 4.3 5.8 6.3 6.6 6.8 6.9 6.9

Net invisibles 4.6 4.5 5.1 6.1 6.3 6.9 7.2

Current account balance & officialtransfer 2.3 -0.8 -1.3 -1.6 -2.5 -2.4 -2.6

Total capital inflows, net 2.9 4.5 3.2 6.4 4.0 4.0 4.1

External assistance,net -0.5 0.3 0.2 0.3 0.2 0.3 0.3

External commercial borrowings,net -0.5 0.7 0.2 0.7 0.5 0.5 0.5

Direct foreign investment 0.4 0.5 0.7 1.1 0.7 0.7 0.8Portfolio investment 1.9 1.3 1.5 1.5 1.4 1.4 1.3

Other capital inflows, of which 1.6 1.8 0.5 2.8 1.1 1.2 1.3

IMF, net 0.0 0.0 0.0 0.0 0.0 0.0 0.0

NRI deposits,net 1.0 0.6 0.2 0.6 0.3 0.4 0.4

Other capital,net 0.3 0.7 0.2 1.1 0.5 0.5 0.5

Change in reserves [increase (-)] -5.2 -3.8 -1.9 -4.9 -1.5 -1.6 -1.5

Foreign exchange reserves at end year 17.4 18.8 18.1 20.9 20.1 19.3 18.6

Total foreign investment 2.5 1.7 2.3 2.6 2.1 2.1 2.1

As per cent of GDP at current mp:

MONEY (As % of GDP at cur. mp):

Narrow money supply (M1) 22.2 21.8 23.1 23.6 24.4 25.3 26.2

Currency in circulation 11.4 11.4 11.6 11.7 11.9 12.1 12.4Demand deposits 10.7 10.3 11.4 11.8 12.4 13.0 13.7

Other deposits with RBI 0.2 0.2 0.2 0.2 0.2 0.1 0.1

Time deposits with banks 53.3 52.8 53.4 54.7 56.7 58.9 61.1

Broad money supply (M3) 75.5 74.6 76.5 78.3 81.2 84.2 87.2

Foreign assets (net) 19.0 20.7 20.4 20.7 21.3 21.9 22.5

Domestic credit 65.2 66.5 69.0 71.7 73.6 75.6 77.7

Claims on govt. sector 26.6 23.9 21.6 20.5 19.7 19.0 18.3

Claims on private sector 38.6 42.6 47.4 51.2 53.8 56.6 59.4

Govt's currency liabilities to the public 0.3 0.2 0.2 0.2 0.2 0.2 0.1

less, banking sector's non-monetary

liabl. 9.0 12.9 13.0 14.3 13.9 13.5 13.1Broad money supply (M3) 75.5 74.6 76.5 78.3 81.2 84.2 87.2

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INDIA- Macro-economic Trends Update: 28 February 2007

I T E MS 2003 2004 2005 2006 2007 2008 2009


Memo Items:

Cent Govt.Fin (% of GDP at cur.mp)

current revenue 9.5 9.8 9.7 10.3 10.3 10.7 10.9

taxes 6.8 7.2 7.6 8.4 8.6 9.0 9.5

non-taxes including external grants 2.8 2.6 2.2 1.9 1.8 1.7 1.5

current expenditure 13.1 12.3 12.3 12.3 11.8 11.7 11.6

current surplus(+)/deficit(-) -3.6 -2.5 -2.6 -2.0 -1.5 -1.0 -0.7

capital receipts 7.5 6.1 4.4 3.8 4.1 3.3 2.9

recovery of loans 2.4 2.0 0.3 0.1 0.0 0.1 0.1

disinvestment of govt.equity in PSUs 0.6 0.1 0.0 0.0 0.9 0.5 0.4

govt. borrowings & other liabilities 4.5 4.0 4.1 3.7 3.2 2.8 2.4

capital expenditure 3.9 3.6 1.9 1.8 2.6 2.3 2.2

capital a/c surplus(+)/deficit(-) 3.6 2.5 2.6 2.0 1.5 1.0 0.7

Total expenditure 17.0 15.9 14.2 14.1 14.4 14.0 13.8

Budget deficit (-)/ Surplus (+) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gross Fiscal Deficit(-)/Surplus(+) -4.5 -4.0 -4.1 -3.7 -3.2 -2.8 -2.4

Finance of Centre & States(Rs.Bln)

Total expenditure 8453 9461 9920

Expenditure on social sector 2450 2580 3025

Education 860 915 990

Health 380 425 495

Others 1210 1240 1540

As percentage of GDP:

Total expenditure 30.6 30.3 27.8

Expenditure on social sector 8.9 8.3 8.5

Education 3.1 2.9 2.8

Health 1.4 1.4 1.4

Others 4.4 4.0 4.3

As % of total expenditure:

Expenditure on social sector 29.0 27.3 30.5

Education 10.2 9.7 10.0

Health 4.5 4.5 5.0

Others 14.3 13.1 15.5

As % of expend. on social sector

Education 35 35 33

Health 16 16 16

Others 49 48 51

Memo item:

GDP at current mp (Rupees billion) 27602 31266 35672

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2003-2009


I T E MS 2003 2004 2005 2006 2007 2008 2009

Actual Est. Proj. Proj. Proj. Proj. Proj.

Domestic debt combined (Rs.billion) 26150 29774 32845 36583

Centre 16906 19335 21270 23968

State 9244 10438 11575 12615

External debt combined (Rs.billion) 2053 2094 2003 2172

Centre 2053 2094 2003 2172

State 0 0 0 0

Total govt. debt combined (Rs.billion) 28203 31867 34848 38755

Centre 18958 21429 23273 26141

State 9244 10438 11575 12615

Domestic debt as % of GDP(combined) 94.6 95.2 92.1 88.6

Centre 61.1 61.8 59.6 58.1

State 33.4 33.4 32.4 30.6External debt as % of GDP(combined) 7.4 6.7 5.6 5.3

Centre 7.4 6.7 5.6 5.3

State 0.0 0.0 0.0 0.0

Total govt.debt as % of GDP (comb) 102.0 101.9 97.7 93.9

Centre 68.6 68.5 65.2 63.3

State 33.4 33.4 32.4 30.6

Documents

Indian Economic Development and Policies- An Update