India’s economic growth is expected to remain at around 7.5 per cent despite domestic and external pressures that have taken a toll of the equities market. Its GDP (market prices) that increased from US $20 billion in 1950-51 to US $912 billion in 2006-07 and has crossed a trillion dollars in terms of US dollar exchange rate at $1.089 trillion.
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The average growth has been around 8.6 per cent over the past five fiscal years. However, the Indian commerce ministry’s industrial growth numbers based on CSO figures for May 2008 was 3.8% (lowest in 6 years) compared to 11.6% growth recorded in the previous fiscal. The downturn was mainly due to the manufacturing sector growth of 3.9% (May 2008) against 11.3 % in May 2007. The industrial growth for April 2008 was revised from 7% to 6.2%
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Sectoral growth (Constant prices 2007–08): Industry – 10.8%; Services – 8.5%; Agriculture – 4.5% with Indian GDP showing the second highest growth rate for the period after China.
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India's per capita income (nominal) is $977. Its per capita PPP is $2,700.
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In terms of purchasing power parity India has the world's fourth largest GDP at $4.726 trillion.
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For fiscal year ended March 2008 India's savings rate was 34.8 per cent of GDP with improved corporate, government and stable household saving.
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Provisional accounts for the last fiscal show total expenditure a little more than targets, mainly due to the non-plan expenses but total receipts exceeded targets for 2007-08, keeping fiscal deficit at 90.4 % of the targets and showing improved fiscal management in 2007-08 over the previous year.
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The rate of inflation, at around 12 per cent in late July 2008 courtesy higher commodity costs, record crude prices and higher demand, is expected to get moderated over the next six to nine months by when the monetary measures taken by the government would have their impact. By August 2009, Arvind Virmani, Chief Economic Adviser, Ministry of Finance, inflation will be between five to six per cent.
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India’s foreign exchange reserves increased from $5.8 billion in March 1991 to $308 billion on July 4, 2008
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Despite a slowdown in foreign capital inflows. FDI inflow in 2007-08 was up 56 per cent over the previous year, at $ 25 billion dollars. India has set a target of $ 35 billion in FDI for 2008-09.
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The Indian Rupee (partly convertible) is projected to hold at around 40 to 42 per dollar.
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Following the global stock meltdown the Bombay Stock Exchange has lost about 26 per cent this year with foreign funds having sold nearly $7 billion worth of Indian shares. (Net buying $17.4 billion last year).
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Nevertheless the fundamentals remain strong with the M&A sector showing vibrancy. More than 90 deals valued at around $6 billion were concluded in the first two months of 2008. This follows an impressive 676 M&A deals and 405 private equity deals in 2007. The trends indicate a larger number of cross border than domestic deals with private equity houses funding projects and making acquisitions in India.
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The government has allowed foreign operators to bid for third-generation (3G) spectrum allocation for which 10 players will be allowed. It also announced guidelines for Mobile Number Portability, proposing two zones in the country for its implementation. The 3G spectrum guidelines provide for a reserve price for availing radio frequency. The guidelines fixed the price for a 2x5 Mhz block of spectrum for Mumbai and Delhi, and Category-A locations at Rs 1,600 million, and for Kolkata and Category-B at Rs 800 million and for Category-C at Rs 300 million. Telecom operators can bid for the 3G spectrum in 450 Mhz band, 800 Mhz and 1,900. Operators will be exempted from paying any annual fee in the first year of operations but will have to pay one per cent of Adjusted Gross Revenue as annual spectrum charge after a period of one year.
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The signing of the Indo-US Nuclear deal indicates a possible market for 40,000 mw of nuclear capacity addition in the next 20 years. The World Nuclear Association forecasts investments of Rs 2,400,000 million by 2020.
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The outsourced ITO sector continues to be promising for India with increased demand for IT & BPO services to help reduce cost and enhance access to skills not available in home countries. This is despite the wage inflation in India taking a toll. Big ticket deals are on the wane however and are getting replaced by more complex ADM function outsourcing as in solution design or architecture; remote infrastructure management outsourcing and large captive units are not on the cards. Competition is expected from other low-cost countries like China, Philippines and Russia.
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Three Indian cities – Mumbai, New Delhi and Bangalore – are ranked among the 75 top centres of global commerce.
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| Top 7 Nations : The Shift towards middle income countries |
| 2007 |
GDP Rank |
Income Rank |
US |
1 |
9 |
Japan |
2 |
56 |
Germany |
3 |
16 |
China |
4 |
22 |
UK |
5 |
10 |
France |
6 |
17 |
Italy |
7 |
20 |
Average |
|
21 |
|
2025 |
GDP Rank |
Income Rank |
China |
1 |
49 |
US |
2 |
12 |
India |
3 |
63 |
Japan |
4 |
29 |
Brazil |
5 |
47 |
Russia |
6 |
35 |
Germany |
7 |
22 |
Average |
|
37 |
|
| 2050 |
GDP Rank |
Income Rank |
| China |
1 |
45 |
| US |
2 |
15 |
| India |
3 |
61 |
| Brazil |
4 |
46 |
| Russia |
5 |
28 |
| Indonesia |
6 |
60 |
| Mexico |
7 |
44 |
| Average |
|
43 |
|
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