~ The Quarterly Estimate of Gross Domestic Product for the First Quarter (April-June) of the current financial year (2001-02) recently released by the Central Statistical Organization shows a growth rate of 4.4 per cent in GDP over the corresponding Quarter of 2000-01 at constant (1993-94) prices. This growth rate is marginally higher than that (3.8 per cent) for the Fourth Quarter (January-March) of 2000-01, though it is still amongst very low point-to-point quarterly growth rates recorded since 1997-98 - the year from which quarter-wise growth rates in GDP are available. While three sectors, viz., 'Trade, hotels, transport and communication' (5.2 per cent), 'Financing, insurance, real estate and business services' (9.9 per cent), and 'Community, social and personal services' (6.2 per cent) recorded good growth rates, the remaining five sectors returned markedly depressed growth rates- 'Agriculture, forestry & fishing' (2.3 per cent), 'Mining and quarrying (zero per cent), 'Manufacturing' (2.3 per cent), 'Electricity, gas & water supply' (3.3 per cent) and 'Construction' (2.5 per cent). The performance of the latter set of sectors is especially relevant for Railways' freight business. In the services sector, according to the CSO's Press Release, net tonne kilometer and passenger kilometer of Railways recorded zero growth and 12.6 per cent growth, respectively, during the first quarter of the current financial year as compared to their 7.0 per cent and 5.9 per cent growth rates, respectively, in the corresponding quarter of 2000-01. Production of commercial vehicles and cargo handled at major ports registered negative growth rates during the quarter under reference.
~ The provisional foreign trade data, which has become available up to August 2001, indicates a decline of 2.30 per cent in the value of exports in dollar terms during the first five months (April-August 2001) of the current financial year over the corresponding period of last year. The value of exports during this period amounted to US $ 17133.85 million as against US $ 17537.57 million during April-August 2000. The decline in the value of exports is being ascribed to the slowdown in the US economy -India's single largest export destination -as well as depressed demand in European countries and Japan. The imports valued at US $ 21742.66 million were, however, higher by 2.46 per cent over their level (US $ 21221.21 million) during April-August 2000. Oil imports during April-August 2001 valued at US $ 6482.74 million were lower by 6.03 per cent than their value (US $ 6898.57 million) during the corresponding period of last year. Non-oil imports valued at US $ 15259.92 million were correspondingly higher by 6.54 per cent than their value (US $ 14322.64 million) during April-August 2000. The trade deficit estimated at US $ 4608.81 million was higher than the deficit of US $ 3683.64 million during April-August 2000.
Considering the month of August 2001 separately, the decline in the value of exports (US $ 3630.52 million) by 1.06 per cent was lower than that (2.63 per cent) for the 4-month period April-July 2001 indicating a marginal improvement. Imports during August 2000 valued at US $ 4370.28 million were higher by 9.62 per cent over the level of US $ 3986.76 million in August 2000. A slight pick up in non-oil imports is discernible.
~ The Centre for Monitoring Indian Economy (CMIE), Mumbai, an autonomous think tank, recently scaled down its projection of growth in country's GDP (in real terms) for the current year (2001-02) to 6.0 per cent, from 6.3 per cent forecast earlier. The CMIE's projection compares with 5.5- 6.0 per cent growth in GDP for 2001-02 now being assumed by Reserve Bank, 5.6 per cent projected by the National Council of Applied Economic Research (NCAER), New Delhi, and 5.2 per cent by the CII. The revision takes into account poor monsoon in South India in the recently concluded South-West monsoon season, expected shortfall in growth in the agriculture sector (from 7.0 to 6.5 per cent) although higher food grain and oilseed outputs are estimated, poor performance in the industrial sector, and lowering in the projection of growth in the tertiary sector (7.0 per cent to 6.6 per cent) due to the developments following the terrorist attack on USA on September 11. The CMIE, however, expects an early manifestation of recovery in the industrial sector - some early signals received from the consumer durable sector (e.g., pick up in sales of colour television and two wheelers).
~ The Quick Estimates of Index of Industrial Production (base: 1993-94 = 100) recently released by the Central Statistical Organisation up to the month of August 2001, indicate deepening of the downturn in the industrial sector. Though distressing, this has not come as a surprise as the production performance of the six core infrastructure industries (that have a combined weight of 26.68 per cent in the IIP), informed by the Ministry of Commerce and Industry on 20th September, had plummeted sharply, viz., 1.2 per cent growth during April-August 2001. In comparison, the Overall Index of Industrial Production for the five-month period (April-August 2001) increased by 2.2 per cent - much lower than even the moderate increase of 5.6 per cent in the corresponding period of 2000-01. Growth rates in all the three major sectors also decelerated -2.5 per cent (against 6.1 per cent last year) in Manufacturing, -0.7 per cent in Mining (3.4 per cent last year), and 2.6 per cent in Electricity (3.8 per cent last year). Considering the month of August 2001 separately, the Overall Index of Industrial Production increased by 1.8 per cent (as against 5.0 per cent increase in August 2000). While growth rates in Manufacturing (2.0 per cent against 5.5 per cent in August 2000) and Mining (0.1 per cent against 4.0 per cent in August 2000) decelerated sharply, that of Electricity even at a low of 1.9 per cent was higher than 1.0 per cent increase recorded in August 2000.
At the two-digit level of industrial classification, eleven out of total seventeen groups of industries returned positive growth rates. 'Leather and Leather & Fur Products' (13.6 per cent), 'Rubber, Plastic, Petroleum and Coal Products' (13.5 per cent) and 'Beverages, Tobacco and Related Products' (11.6 per cent) registered double-digit growth rates. Eight other industry-groups recorded positive growth rates ranging between 9.2 per cent ('Wool, Silk and man-made fibre textiles') and 0.9 per cent ('Machinery and Equipment other than Transport Equipment'). The industry groups that experienced negative growth rates included: 'Metal Products and Parts, except Machinery and Equipment' (-15.2 per cent), 'Wood and Wood Products, Furnitures and Fixtures' (-10.6 per cent), 'Jute and other vegetable fibre Textiles (except Cotton)' (-7.2 per cent), 'Textile Products (including Wearing Apparel' (-4.2 per cent) and 'Paper & Paper Products and Printing, Publishing & Allied Industries' (-0.4 per cent).
An all-round deceleration in the growth of industrial output as per the Use-based classification (except for the 'Consumer Non-durables') is reported for all the major categories during April-August 2001 on a point-to-point basis. Whereas production of Capital Goods declined (by 8.0 per cent; 4.3 per cent increase last year), indices of Basic Goods (1.6 per cent increase against 4.7 per cent growth last year), Intermediate Goods (3.2 per cent increase against 5.3 per cent increase last year) and total Consumer Goods (5.5 per cent increase against 7.6 per cent increase last year) recorded decelerated performance. The Consumer Durables sub-category showed a good growth of 10.7 per cent though lower than that last year (20.8 per cent). The growth rate of Consumer Non-durables at 3.5 per cent was marginally higher than that (3.3 per cent) last year.
Almost displaying a depression-fatigue some analysts perceive signs of an upturn in the economy beginning the third quarter (October-December) of the current year, in the turnaround in the bank credit to the commercial sector and improved prospects for some industries like Cement and Steel. The Non-food credit as in September-end amounted to Rs. 4,88,956 crore, up Rs.10, 471 crore over the last month's level On the other hand, McKinsey and Company bas projected a 10 per cent growth for the steel sector in the wake of the expected higher demand from power, housing and retail sectors. Normally, in the third and fourth quarters of the financial year, after the end of the rainy season and arrival of the Kharif crop as well as in response to the festival-demand, economic activity in the country picks up. Earlier, the Institute of Economic Growth and the CMIE bad also projected some pick up in the economic/industrial activity in the third quarter (October-December).
~ The production performance of the six infrastructure industries (viz., Electricity, Coal, Steel, Crude Petroleum, Petroleum Refinery Products and Cement), now available up to September 2001, indicates that driven by a resounding performance in Cement and Coal sectors, the overall index of the six industries increased by 5.0 per cent in the month of September 2001 on a point-to-point basis. While the overall growth in the combined index has broken away from the past 10 months' sluggish performance, the performance across the industries varies widely. Thus, while the production of Cement and Coal increased by 17.8 per cent and 9.4 per cent, respectively (corresponding to growth rates of 3.5 per cent and 9.5 per cent, respectively, in September last), the growth in the production of Steel (5.6 per cent against 10.0 per cent in September last) and of Petroleum Refinery Products (decline of 2.0 per cent against increase of 25.2 per cent in September 2000) decelerated sharply. Production of Electricity (4.1 per cent) against 2.2 per cent in September 2000) and of Crude Petroleum (0.8 per cent against 0.6 per cent in September 2000) recorded low growth rates though higher than last year's.
Because of the poor overall performance of the core infrastructure industries since December last, their combined cumulative rate of growth in the current year (April-September 2001) remains pitifully low (1.8 per cent against 7.0 per cent in the corresponding period of last year). Cumulative growth rate of Cement (4.9 per cent against 3.1 per cent last year) was higher, while those of other industries decelerated. Growth rates of Petroleum Refinery Products (3.7 per cent against 29.1 per cent last year), Electricity (3.1 per cent against 3.4 per cent last year), Coal (1.4 per cent against 8.2 per cent last year) and Steel (0.5 per cent against 11.1 per cent last year) remained low. The output of Crude Petroleum fell(by 3.1 per cent) in absolute terms in relation to its already negative performance of(-)1.1 per cent during April-September 2000.
~ While there is widespread anxiety regarding the prospects of revival of the economy from the ongoing economic slow down, a recent opinion poll of Chief Executive Officers of 72 Corporations conducted by the Confederation of Indian Industry (CII) conveys none-too-happy a situation. Almost three-fourths of the CEOs have expressed that it might take a year or more for the economic recovery to take place. Only about 18 per cent of the CEOs surveyed foresee a recovery within six months. Over 54 per cent of the CEOs foresee a sales growth of below 10 per cent while 45.83 per cent expect a profit growth of below 10 per cent. But close to one-fourth of CEOs expect a 10 to 20 per cent growth in sales and 8.33 per cent anticipate a sales growth of over 30 per cent. A majority of CEOs expect the impact of the international economic developments on the Indian economy as moderate to significant; capital inflows, both FII and FDI, might also be significantly impacted. The CEOs have opined that the focus on implementation of infrastructure projects would be the best short-term route towards economic revival. The respondents to the poll have identified lack of investor confidence as the main reason for the lack of liquidity in the secondary capital market Most of them have cited prospects of a strong rural demand in the post-monsoon season and expected lowering of interest rates as desirable features that could contribute to the economic recovery.
~ At the international plane, a survey of Chief Executive Officers (CEOs) of largest firms conducted by AT Kearney, a leading management consulting firm, has brought out a positive outlook towards foreign investment notwithstanding an increasing number of them having perceived worsening of the global economic situation in the months to come. The CEOs' attitude is guided more by the medium to long run prospects in an environment of intensified competition and strong economic fundamentals of host countries rather than transient cyclical considerations. Three-fourths of the CEOs expressed continuing preference for investment in the developing countries.
~ Volatility and uncertainty remain the buzzwords for the international oil prices which softened perceptibly towards the end-September and in the first week of October. The OPEC basket price came down to below $ 20 a barrel on a weak demand persisting due to global slowdown, prompting the Organization to contemplate a production cut in the range of 700,000 and 1,000,000 barrels per day. The expression of the intention 'to restore price stability' made the price scurry up to the preferred band of US $ 22-28 a barrel. Although the shock value of international oil prices is seen to have been much reduced in terms of the impact on the global economy in contrast to the 1970s, the same has not become insignificant particularly for the substantial POL importing countries like India.
~ The rate of inflation measured in terms of annual point-to-point increase in the Wholesale Price Index, came down to a one-year low of 3.18 per cent during the week ended October 6,2001. This marked a further decline of 0.14 percentage point after a steep decline of 1.54 percentage points in the weekly inflation rate in the week previous to it. The fall in the Index is ascribed to a fall in the prices of food and non-food items while that of electricity recorded a steep hike. Substantial lowering of the rate of inflation in the past two weeks under reference is more due to the sudden jump in the last year's Wholesale Price Indices in the weeks corresponding to September 29 and October 5 last vear due to a hefty increase in the prices of petroleum-based fuels and lubricants (their Index rising by about 9.0 per cent in the single week ended September 29). Thus it is the impact of changes in the previous year and not so much in the WPI under reference this year, that have brought down the inflation rate. The absolute Wholesale Price Index even moved up marginally from 161.9 in the week ended September 22 to 162.0 in the week ended September 29 and further to 162.4 in the week ended October 6. The rate of inflation in the week corresponding to October 6 last year stood at 7 .37 per cent. The Consumer Price Index for Industrial Workers for the month of August 2001 rose by 5.19 per cent on a point-to-point basis.
~ The aggregate monetary stock as on October 5,2001 was Rs.14,19,685 crore. At this level, it was higher by 8.2 per cent than that at the beginning of the current financial year and by 16.6 per cent than that a year ago.
~ The foreign currency assets of the country, viz., foreign exchange reserves (excluding gold and SDRs) stood at US $ 42,199 million as on October 12,2001. At this level, the foreign currency assets were higher by US $ 2,645 million as compared to the level at the close of the last financial year and by US $ 9,993 million than that a year ago.