Indian Economic Development And Policies- An Update

UPDATE: 28 February 2007

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 Management 3 Lodhi Institutional Area, New Delhi-110003.

Update 28 February 2007 ______________________________________________________________________ * The paper expresses personal views of the author and should not be attributed to the views 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 providing an opportunity to prepare this paper. ** For any clarification and additional information, EMAIL [email protected]/ [email protected]/ [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 economic expansion supported by a strong performance of the private sector, buoyant capital markets and favourable foreign exchange reserves. Real GDP registered a growth rate of 9.2 percent in 2006 as a result of gradual deregulation and liberalization over the past decade and sound macro-economic management by the government. Robust exports and large private capital inflows alleviated the balance of payments constraint. Expenditure restraint and rising tax revenues from improved compliance and new initiatives lessened the strains on the fiscal imbalance. However, emerging demand pressures and some signs of overheating raised CPI inflation above 6 percent prompting the central bank to continue its policy of monetary tightening. There is considerable momentum in the economy to sustain strong growth. Rising capacity utilization, strong corporate balance sheets, bright business prospects and ample bank credits underpin a robust investment boom. Double-digit wage gains and access to housing and retail loans also energized consumer spending, while the heightened focus of Indian companies on overseas markets propelled exports. While an erratic summer rainfall limited output growth rate in agriculture to just 2.7 percent, the continuing buoyancy in industry and services helped to achieve GDP growth rate of 9.2 percent in 2006 on top of 9 percent achieved in 2005. With these growth rates, the growth rate target at 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 a faster and more Inclusive Growth and sets a target of 10% for overall growth and 4% for agriculture growth of by the end of plan; faster employment creation and reduction of regional disparities, and 2

better access to basic infrastructure, health and education services to all. (b) Sustained High Growth Despite continued pressures from international crude oil prices, India achieved an average growth rate of 8.5 percent aided by strong performance by industry and services during four years 2003-2006. An investment boom, rising incomes, ample bank credits and robust exports sustained the vibrancy in industry and services. Table-1A: GDP growth rates (percent) I T E MS GDP GR at const.fc GR agriculture GR industry -- Manufacturing -- Non-Manufact. GR services CPI- Inflation

2003 Actual 8.5 10.0 6.0 6.6 5.5 8.2 3.9

2004 Actual 7.5 0.0 8.4 8.7 7.5 10.0 3.8

2005 Actual 9.0 6.0 8.0 9.1 4.4 10.3 4.4

2006 Proj. 9.2 2.7 10.2 11.3 6.1 10.5 6.0

2007 Proj. 8.7 3.0 9.9 11.0 6.0 10.0 5.0

2008 Proj. 8.8 3.0 10.0 11.0 6.0 10.0 5.0

2009 Proj. 8.8 3.0 10.0 11.0 6.0 10.0 5.0

Source: National Accounts Statistics 2006, Central Statistical Organisation (CSO) for 2003-2005 and author’s estimates/ projections for 2006-2009.

GDP growth rate improved from 7.5 percent in 2004 to 9 percent in 2005 due to the return of a near normal harvest, the strong responsiveness of the private sector to emerging opportunities sustained robust growth in industry and services. Both capital goods and consumer goods performed well indicating a pick up in both consumer and investment demands. The economy also benefited from substantial inflows of foreign investment and government’s efforts to contain fiscal deficit despite step up public expenditure for employment generation programs. Overall GDP growth in 2006 is expected to be 9.2 percent aided by a growth of 2.7 percent in agriculture, 10.2 percent in industry and 10.5 percent in services. This growth forecast 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) reaching all time peaks at 12612 and 3754 respectively in May 2006. Indices became bearish in June 2006 amid panic selling triggered by concerns of global slowdown and fears that Indian stocks were overpriced. Markets turned bullish very soon supported by moderate inflation, high exports, and acceleration in industrial and overall economic growth. The Sensex reached all time high at 14355 on 15 February 2007 registering an increase by 33.1 percent over one year period, buoyed by better corporate earnings, declining crude prices, and the rally on Wall Street and Asian markets. 3

(c) Savings and Investment The rates of investment and saving in India are high as judged by its level of economic development. Gross domestic savings as percent of GDP improved from 31.1 percent in 2004 to 32.4 percent in 2005 and 33.5 percent in 2006 due to improvement in savings by all the sectors- households, public sector and private corporate sector. Gross domestic investment as percentage of GDP also improved from 31.5 percent in 2004 to 33.8 percent in 2005 and 34.8 percent in 2006 due to improvement in both private and public investme. There are signs that both public and private investment have started to revive and the new investment is more productive. Gross domestic investment as percent of GDP is expected to improve steadily from 34.8 percent in 2006 to 37.4 percent in 2009 and gross domestic savings as percent of GDP is also expected to improve from 33.5 percent in 2006 to 35.0 percent in 2009 as a result of better performance by both public and private sectors. Table-1B: Gross Domestic Savings and Investment (in Percent of GDP at current mp

GDI as percent of GDP -- Public sector -- Private corporate -- Household sector -- Valuables and errors GDS as percent of GDP -- Household sector -- Private corporate -- Public sector Resource gap (GDS-GDI)

2003 2004 Actual Actual 28.0 31.5 6.3 7.1 6.9 9.9 12.5 11.4 2.3 3.1 29.7 31.1 23.8 21.6 4.8 7.1 1.2 2.4 1.7 -0.4

2005 Est. 33.8 7.4 12.9 10.7 2.8 32.4 22.3 8.1 2.0 -1.4

2006 Proj. 34.8 8.0 12.5 11.5 2.8 33.5 23.0 8.0 2.5 -1.3

2007 Proj. 35.7 8.0 12.5 12.5 2.7 34.0 23.5 8.0 2.5 -1.7

2008 Proj. 36.5 8.5 13.0 12.5 2.5 34.5 24.0 8.0 2.5 -2.0

2009 Proj. 37.4 8.5 13.5 13.0 2.4 35.0 24.5 8.0 2.5 -2.4

(d) Balance of Payments The inflows of Foreign Direct Investment (FDI) have maintained upward trend and is expected 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 total FII stock at $52 billion with current market value of over $100 billion at the end of February 2007. Given these trends, the net FII inflow is expected to be $14 billion in 2006. 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 high international prices of crude petroleum. Despite pressures from crude prices, inflation was 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 deficit since 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 3 consecutive 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 further to $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 in 2005, imports increased more rapidly by 31.6 percent from $119 billion in 2004 to $156 billion in 2005 and resulted in a widening of the trade deficit from $36.6 billion to $51.6 billion over the same period. Although net invisibles at $40.9 billion in 2005 increased by more than $10 billion over previous year, the increase was not sufficient to compensate for 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 in merchandise trade and buoyant inflows of invisibles as in earlier years, the year 2006 is likely to register a current account deficit of $14.4 billion amounting to 1.6 percent of GDP, up from 1.3 percent of GDP in 2005. Management of the current account deficit does not pose difficulties because of the comfortable foreign exchange reserves at $190 billion as on 28 February 2007 (equivalent to more than 11 months of import cover). Nevertheless, the financing of the current account deficit through non-debt creating capital flows underscores the need for active encouragement of foreign direct investment and portfolio routes. The exchange rate of the Rupee remained fairly stable during the year. However, in recent months, rupee has depreciated in nominal terms against all major currencies except for US$. At the end of February 2007, rupee appreciated by 0.5 percent against US dollar while 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 creating capital being sufficient to finance the net current account outflows in the balance of payments, it should be possible for the RBI to manage the exchange rate of rupee without any undue volatility in the exchange rate of the rupee. However, there is some limited risk 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/service ratios indicate a marked improvement in India’s external indebtedness. India’s external debt consisting of short-term and long-term liabilities on Government and nonGovernment accounts increased from $123.2 billion at the end-March 2005 to $125.2 billion at end-March 2006, and is expected to increase to $139.4 billion at the end-March 2007. Multilateral and bilateral debt constituted 40 percent of total debt stock and the share of concessionary debt was 32 percent of the total debt stock at end-March 2006. The 5

share of short-term debt showed some increasing trend in recent years, and stood at 6.7 percent of total external debt in 2006. External debt indicators showed steady improvement over the years. In terms of stock of external debt, India’s 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 38 percent in 1991 to 16 percent in 2005 and further to 15 percent in 2006. The debt-service ratio declined continuously from 35 percent in 1990 to 9.7 percent in 2005 and to 3.2 percent 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 percent exceeded the target rate of 15 percent. While net credit to government has grown by only 2.7 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 in some moderation of the soft interest regime. Commercial banks increased their primelending rate (PLR) by 0.5 percentage points in 2006. PLR of banks is currently in the range of 10.25 to 10.75 percent, which translates into average lending rates of 8.75 to 9.25 percent. Yields on government securities market hardened in 2005. The increase in yields for longer-term maturities was, however, less than that for shorter securities indicating stable inflation expectations. Yield on 10-year government security increased from 7.52 percent 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 tightening aimed at controlling inflation and a sharp pickup in private sector credit demand. Since July 2005 RBI has started publishing assessment of policy on a quarterly basis, paving the way for more frequent policy adjustment. On a review of annual monetary policy and macroeconomic development in April 2006 the RBI hiked the reverse repo rate and the repo rate by 25 basis points each to 5.75 percent and 6.75 percent respectively effective June 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 that continued demand pressures resulting from high credit growth rates could put pressures on domestic inflation. The global growth outlook is positive but subject to downside risks due to high oil prices and re-pricing of risks in financial markets. These pressures may lead to instability in growth rates and rising inflation expectations. Accordingly, RBI raised the reverse repo rate and the repo rate by 25 basis points each to 6 percent and 7 percent respectively effective July 25, 2006 while keeping the bank rate unchanged at 6 percent. The cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) of the commercial 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 real sector growth and various anti-inflationary measures taken by the government. However, average inflation based on the Consumer Price Index (CPI) for industrial workers increased from 3.8 percent in 2004 to 4.4 percent in 2005, that for CPI for urban nonmanual employees increased from 3.6 to 4.7 percent, and that for CPI for agricultural laborers 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 predominant shares in consumer price indices. In spite of buoyant performance of the real economy, both the wholesale prices and consumer 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-push inflation due to the impact of high energy prices. Several anti-inflationary measures taken by the government such as reductions of customs and excise duties on petroleum products, providing subsidies on kerosene and domestic LPG, strict monetary discipline and fiscal prudence, continual monitoring of prices and effective supply-demand management of essential consumer items etc. helped to control inflation in 2006. The annual inflation rate in terms of CPI for industrial workers stood at 7.3 percent in October 2006 and the inflation rate in terms of WPI also crossed 7 percent in February 2007 due to high prices of vegetables, cement, steel and edible oils. Government reduced import duties on edible oil and advised RBI to tighten monetary supply to control inflation. Given these trends, the year-end inflation in terms of the WPI is expected to be 5.5 percent while that in terms of CPI is expected to be 6 percent in 2006, significantly higher 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 3.7 percent of GDP from 4.1 percent in 2005, with revenue deficit targeted at 2.1 percent of GDP compared to 2.6 percent in 2005, and primary deficit targeted at 0.2 percent of GDP compared to 0.5 percent in 2005. The Union budget 2006 increased expenditure on social services (specially rural employment, water supply, education and health) and on improving both rural and urban infrastructure to make development and growth more inclusive. On the revenue side, the gross tax to GDP ratio was budgeted to reach 11.2 percent in 2006 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 in 2005 viz. fringe benefits tax (FBT) on companies and cash transactions tax on excessive cash withdrawals from banks, continued with rationalisation of scope and rates. The scope of service taxes was widened and the rate was increased from 10 to 12 percent keeping in view the objective of introducing national level Goods and Services Tax (GST) with effect from April 2010. Other measures included reduction of peak customs duty on non-agricultural products from 15 to 12.5 percent, and reductions of customs duties on inorganic chemicals, plastics, alloy steel, non- ferrous metals, minerals used for steel 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 India Infrastructure Finance Company Limited, which was incorporated in January 2006, started operating during the year with the development of three road projects in the Gujarat state. Progress was achieved in highways construction and Delhi metro rail and public-private partnership was extended for development of seaports and airports. Special emphasis 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 percent of GDP (comprising outstanding Central government debt at 66 percent and State government 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 government debt at 31 percent) at the end of March 2006. Including the public sector enterprises, the consolidated public sector deficit is estimated to have exceeded 9 percent of GDP and public 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 the Parliament on the 28th February 2007 against the backdrop of sustained high growth but a rising inflationary trends. The targets of fiscal deficit and revenue deficit in 2006 were on track. Revenue deficit as percentage of GDP decreased from 2.6 percent in 2005 to 2 percent in 2006 and is budgeted at 1.5 percent in 2007. Fiscal deficit as percentage of GDP declined from 4.1 percent in 2005 to 3.7 percent in 2006 and is budgeted at 3.3 percent in 2007. Primary deficit as percentage of GDP declined from 0.4 percent in 2005 to 0.1 percent in 2006 and the primary balance is budgeted to be in surplus amounting to 0.2 percent of GDP in 2007. The budget for 2007 has put emphasis on the development of agriculture and both physical and human capital formation. Major budget proposals to achieve higher growth and 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, rural habitations, rural roads, rural electrification and rural telphones,

•

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

•

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

•

Outlays on schemes for development of vulnerable and weaker sections such as minorities, backward classes, backward states and women are also increased substantially. .

•

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

•

National Bank for Agriculture and Rural Development will augment its resources for refinancing rural credit cooperatives and will issue Government guaranteed rural bonds with suitable tax exemption.

•

Rural Infrastructure Development Fund is augmented by 20 percent.

•

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

. •

Innovative Financing for Infrastructure: Funds from National Small Savings Fund may also now be borrowed by India Infrastructure Finance Company Limited (IIFCL). Government is exploring possibilities to establish two wholly-owned overseas subsidiaries of IIFCL with objectives to (i) borrow funds from RBI and lend to Indian companies implementing infrastructure projects in India, or to co-finance their 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 and provide 'credit wrap' insurance to infrastructure projects in India for raising resources in 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; a roadmap for introducing a national level Goods and Services Tax (GST) with effect from April 1, 2010 to be prepared.

Customs duties: •

Reduction in peak rate of customs duty for non-agricultural products from 12.5% to 10%. 9

•

• •

Reduction in customs duties on most chemicals and plastics, seconds and defectives of steel, coking coal, polyester fibres and yarns and raw-materials, polished diamonds, 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% to 6%.

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 or gas; renting of immovable property for use in commerce or business; asset management 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.1 crore 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 convention centres with a seating capacity of not less than 3,000;

•

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

•

An additional cess of 1% on all taxes to be levied to fund secondary education and higher education and the expansion of capacity by 54% for reservation for socially and educationally backward classes. (j) Economic Reforms

Government made significant progress in second-generation economic reforms, including the 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 multiparty coalition hampers much needed reforms of the cumbersome public sectors. The narrow tax base, excessive subsidies on food, fertilers, kerosene, domestic LPG, loss making state electricity boards and the reluctance to move aggressively with privatisation limit fiscal adjustment and constrain the provision of basic public services. Opposition from the leftist parties blocked the proposals to allow FDI in retail trade (except for single brand show rooms) and higher education, further opening of the banking and insurance to foreign investors, further movement towards full capital account convertibility, and complete decontrol of domestic oil prices. Administrative hurdles and inflexible land and labour laws also constrained much needed foreign investment and public-private partnership in manufacturing and infrastructure.

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Annex- Selected Economic Indicators Table-1A: GDP growth rates (percent) I T E MS GDP GR at const.fc GR agriculture GR industry -- Manufacturing -- Non-Manufact. GR services CPI- Inflation

2003 Actual 8.5 10.0 6.0 6.6 5.5 8.2 3.9

2004 Actual 7.5 0.0 8.4 8.7 7.5 10.0 3.8

2005 Actual 9.0 6.0 8.0 9.1 4.4 10.3 4.4

2006 Proj. 9.2 2.7 10.2 11.3 6.1 10.5 6.0

2007 Proj. 8.7 3.0 9.9 11.0 6.0 10.0 5.0

2008 Proj. 8.8 3.0 10.0 11.0 6.0 10.0 5.0

2009 Proj. 8.8 3.0 10.0 11.0 6.0 10.0 5.0

Source: National Accounts Statistics 2006, Central Statistical Organisation (CSO) for 2003-2005 and author’s estimates/ projections for 2006-2009.

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

GDI as percent of GDP -- Public sector -- Private corporate -- Household sector -- Valuables and errors GDS as percent of GDP -- Household sector -- Private corporate -- Public sector Resource gap (GDS-GDI)

2003 2004 Actual Actual 28.0 31.5 6.3 7.1 6.9 9.9 12.5 11.4 2.3 3.1 29.7 31.1 23.8 21.6 4.8 7.1 1.2 2.4 1.7 -0.4

2005 Est. 33.8 7.4 12.9 10.7 2.8 32.4 22.3 8.1 2.0 -1.4

2006 Proj. 34.8 8.0 12.5 11.5 2.8 33.5 23.0 8.0 2.5 -1.3

2007 Proj. 35.7 8.0 12.5 12.5 2.7 34.0 23.5 8.0 2.5 -1.7

2008 Proj. 36.5 8.5 13.0 12.5 2.5 34.5 24.0 8.0 2.5 -2.0

2009 Proj. 37.4 8.5 13.5 13.0 2.4 35.0 24.5 8.0 2.5 -2.4

Source: As for Table 1-A.

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

2003 Actual

2004 Actual

Tax revenue Total non-debt revenue Current expenditure Total expenditure & net lending Gross fiscal balance Revenue balance Primary balance Budget deficit

2005 Actual

6.8 7.2 7.6 12.6 11.9 10.1 13.1 12.3 12.3 17.0 15.9 14.2 -4.5 -4.0 -4.1 -3.6 -2.5 -2.6 0.0 0.1 -0.4 0.0 0.0 0.0 Source: Central Government Budget 2007-2008, Ministry of Finance. Note: RE stands for Revised Estimate and BE for Budget Estimate.

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2006 RE

2007 BE

8.4 10.4 12.3 14.1 -3.7 -2.0 -0.1 0.0

8.6 11.2 11.8 14.4 -3.2 -1.5 0.2 0.0

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

Items Fiscal deficit (-) Primary deficit (-) Budget deficit (-) Revenue deficit (-) Source: As for Table-2A.

2003 -8.9 -5.8 -1.4 0.0

2004 RE -7.5 -3.7 -0.6 0.0

2005 -7.4 -3.1 -1.2 0.0

2006 BE -6.3 -2.1 -0.4 -0.1

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 30.0 53774 66285 82150 104780 136214 23.3 23.9 27.5 Merch.imports 31.5 64464 80003 118779 156334 205579 24.1 48.5 31.6 Service exports 25.7 41925 53508 71854 91481 115000 27.6 34.3 27.3 Service imports 18.7 24890 25707 40625 50539 60000 32.8 58.0 24.4 Source: RBI Annual Report 2005-2006 for the years 2002-2005, and author’s estimate for 2006.

Table-3B: Growth rate projections for trade 2006-2008 Annual growth rate (percent) 2006 2007 2008 Merch.exports Merch.imports Service exports Service imports Net Invisibles

30.0 31.5 25.7 18.7 34.3

30.0 30.0 17.4 16.7 18.2

27.5 25.0 18.5 14.3 23.1

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

Merch. Trade bal. Net invisible bal. Current acc. Bal. Net capital inflows Overall BOP

2003 US$ Percent Million Of GDP -13718 -2.3 27801 4.6 14083 2.3 17338 4.2 31421 6.6

2004 US$ Percent Million Of GDP -36629 -5.3 31229 4.5 -5400 -0.8 31559 5.8 26159 5.0

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2005 US$ Percent Million Of GDP -51554 -6.5 40942 5.1 -10612 -1.3 25684 3.6 15072 2.2

2006 Proj. US$ Percent Million Of GDP -69365 55000 -14365 58500 44135

-7.6 6.1 -1.6 6.4 4.9

Table-3D: Net Capital inflows (in US$ million) External assistance, net Ext. commercial borrowings, net Direct foreign investment Portfolio investment Other capital inflows Total Capital inflows ($ million) Change of reserves [increase (-)] Foreign exch. reserves (end fy) Reserves (in months of imports) Foreign investment (US$ million)

2002 -2460 -2344 3611 944 13092 12843 -19188 73294 14 4555

2003 -2858 -2925 2388 11356 9377 17338 -31421 104715 15.7 14776

2004 1923 5040 3240 8907 12449 31559 -26159 130874 13.2 12147

2005 1438 1591 5753 12489 4413 25684 -15072 145946 11.2 18242

2006 2500 6500 10000 14000 25500

58500 -44135 190081 11.1 24000

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

2006 Proj. Mar2007

2007 Proj. Mar2008

2008 Proj. Mar2009

2009 Proj. Mar2010

139393 130393 47742 82651 9000

136393 127393 47742 79651 9000

152893 143393 50742 92651 9500

152893 142893 51242 91651 10000

7949 8594 6127 6583 1822 2011 251214 312078 55 44 3.2 2.8 0.9 0.8 15.4 13.3 102 77 6.5 6.6 34.2 35.0 Source: Status Report on India’s External Debt, August 2006, Ministry of Finance.

9686 7872 1814 385775 40 2.5 0.8 13.2 68 6.2 33.2

11337 9602 1735 472863 32 2.4 0.9 11.7 53 6.5 33.5

Ext.Debt (US$ Mn. End of fin. year) Total outstanding and disbursed Long-term, of which Government debt non-government debt Short-term (all on non-govt A/C) Total debt servicing principal repayments interest payments (LT, ST) Exports & gross invisibles (XGS) ExtDebt/ current receipt ratio (%) Debt-service ratio (to XGS in (%) Debt-service to GDP ratio (per cent) Debt/GDP ratio (in per cent) Debt/exports ratio (in per cent) Short term debt/Total Debt ratio %) Govt external debt/ Total Debt ratio %)

2003 Actual Mar2004 111645 107214 44673 62541 4431 19015 14614 4401 119793 93 15.9 3.2 18.6 168 4.0 40.0

2004 Actual Mar2005 123204 115680 46604 69076 7524 9155 6117 3038 154004 80 5.9 1.3 17.7 150 6.1 37.8

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2005 Est. Mar2006 125181 116393 45242 71151 8788 18970 13886 5084 196261 64 9.7 2.4 15.7 119 7.0 36.1

Table-4A: Bank deposit and lending rates (in percent) Items Bank term deposit rates * Nominal Real Bank lending rates* Nominal Real Bank rate (latest) (RBI Refinance rate)

2003

2004

2005

2006

4 to 6

4 to 6.25

4 to 6

4 to 6.25

10.25 to 11

10.50 to 11.50

10.25 to 11

10.50 to 11.50

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 Q3

Bombay Stock Exchange (BSE) Sensitive Index (Base: 1978-79 = 100) Average 4492 5741 8280 10165 11098 12500 High 6194 6915 11307 11307 12612 14355 Low 2924 4505 6135 9238 8929 10007 S&P CNX Nifty* (Base: 03-11-1995= 1000) Average 1428 1805 2513 3050 3304 3592 High 1982 2169 3419 3419 3754 4166 Low 924 1389 1903 2809 2633 2933 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)

15

INDIA- Macro-economic Trends: 2003-2009 I T E MS

Update: 28 February 2007 2003 Actual 1073 1.71

2004 Actual 1090 1.58

2005 Est. 1107 1.56

2006 Proj. 1124 1.54

2007 Proj. 1141 1.52

2008 Proj. 1158 1.50

2009 Proj. 1176 1.50

GDP by industry (at const.1999/00 fc) Agriculture Industry Manufacturing Non-manufacturing Services GDP (const.fc) sectoral shares Agriculture Industry Services

22226 4833 4317 3324 994 13076 100 21.7 19.4 58.8

23897 4831 4679 3611 1068 14387 100 20.2 19.6 60.2

26045 5121 5055 3940 1115 15869 100 19.7 19.4 60.9

28440 5261 5568 4384 1184 17611 100 18.5 19.6 61.9

30912 5419 6121 4867 1255 19372 100 17.5 19.8 62.7

33623 5582 6732 5402 1330 21309 100 16.6 20.0 63.4

36595 5749 7406 5996 1410 23440 100 15.7 20.2 64.1

GDP growth rate at constant fc GR agriculture GR industry GR manufacturing GR non-manufacturing GR services GDP at current mp (Rupees Bn;fy) GDP at current mp (mn US$)

8.5 7.5 9.0 9.2 8.7 8.8 8.8 10.0 0.0 6.0 2.7 3.0 3.0 3.0 6.0 8.4 8.0 10.2 9.9 10.0 10.0 6.6 8.7 9.1 11.3 11.0 11.0 11.0 5.5 7.5 4.4 6.1 6.0 6.0 6.0 8.2 10.0 10.3 10.5 10.0 10.0 10.0 27655 31266 35672 41289 47122 53816 61503 601828 695882 805778 907449 1025394 1159470 1311951

POPULATION (Mn; as on Oct 1) GR Population % NATIONAL ACCOUNTS (Rs.Bn;fy)

Average Exchange Rate (Rupees/US$) 45.95 REER (1993-94=100, 6 currency) 98.85 NEER (1993-94=100, 6 currency) 69.75 Implicit GDP deflator (1999/00=100) 124 GR GDP deflator 3.9 CPI :Ind.Workers 1982=100 Average) 500 GR : Consumer Price Index 3.9 WPI :1993/94=100 (52-week average) 175.9 GR : Wholesale Price Index 5.4 Expend. on GDP;Current mp;Rs.Bn 27602 Investment: curr.mp;Rs.Bn gross domestic capital formation 7751 -- public sector 1746 -- private corporate sector 1914 -- household sector 3441 -- valuables and errors 246

44.93 101.35 69.26 131 5.2 520 3.8 187.3 6.4 31266

44.27 106.66 71.41 137 4.7 542 4.4 195.5 4.4 35672

45.50 102.50 70.70 145 6.0 575 6.0 207.3 6.0 41289

45.96 101.00 69.99 152 5.0 604 5.0 217.6 5.0 47122

46.41 100.00 69.29 160 5.0 634 5.0 228.5 5.0 53816

46.88 100.00 68.60 168 5.0 666 5.0 239.9 5.0 61503

9864 2204 3100 3560 411

12045 2644 4597 3807 425

14485 3303 5161 4748 1273

17178 3770 5890 5890 1628

19880 4574 6996 6727 1582

23154 5228 8303 7995 1628

16

INDIA- Macro-economic Trends: 2003-2009 I T E MS gross domestic saving -- Household sector -- Private corporate sector -- Public sector GDI as % of GDP -- public sector -- private corporate sector -- household sector -- valuables and errors GDS as % of GDP -- Household sector -- Private corporate sector -- Public sector Resource gap (GDS-GDI) Per Capita GDP ( Rupees ): Current market prices constant 1993/94 factor cost GR per capita GDP at constant fc Balance of Payments (US$ Mn; fy) Merchandise exports, fob Merchandise imports, cif Trade balance Gross invisible receipts Gross invisible payments Net invisibles Current account balance & off. transfer growth rates : Fiscal Year merchandise exports merchandise imports invisibles receipts invisibles payments net invisibles capital inflows (US$ million; fy) External assistance,net External commercial borrowings,net Direct foreign investment Portfolio investment

Update: 28 February 2007 2003 Actual 8205 6573 1,314 318 28.0 6.3 6.9 12.5 2.3 29.7 23.8 4.8 1.2 1.7

2004 Actual 9730 6748 2,235 747 31.5 7.1 9.9 11.4 3.1 31.1 21.6 7.1 2.4 -0.4

2005 Est. 11568 7971 2884 713 33.8 7.4 12.9 10.7 2.8 32.4 22.3 8.1 2.0 -1.4

2006 Proj. 13832 9496 3303 1032 35.1 8.0 12.5 11.5 3.1 33.5 23.0 8.0 2.5 -1.6

2007 Proj. 16021 11074 3770 1178 36.5 8.0 12.5 12.5 3.5 34.0 23.5 8.0 2.5 -2.5

2008 Proj. 18567 12916 4305 1345 36.9 8.5 13.0 12.5 2.9 34.5 24.0 8.0 2.5 -2.4

2009 Proj. 21526 15068 4920 1538 37.6 8.5 13.5 13.0 2.6 35.0 24.5 8.0 2.5 -2.6

25724 20746 6.6

28684 21923 5.7

32224 23528 7.3

36732 25302 7.5

41294 27089 7.1

46463 29029 7.2

52315 31128 7.2

225775 334066 -108292 160000 80000 80000 -28292

287863 417583 -129720 185000 90000 95000 -34720

27.5 25.0 18.5 14.3 23.1 46500 3000 5500 8500 16000

27.5 25.0 15.6 12.5 18.8 54000 3500 6500 10000 17500

66285 82150 104780 136214 177078 80003 118779 156334 205579 267253 -13718 -36629 -51554 -69365 -90175 53508 71854 91481 115000 135000 25707 40625 50539 60000 70000 27801 31229 40942 55000 65000 14083 -5400 -10612 -14365 -25175 23.3 24.1 27.6 34.3 52.7 17338 -2858 -2925 2388 11356

23.9 48.5 34.3 58.0 12.3 31559 1923 5040 3240 8907

17

27.5 31.6 27.3 24.4 31.1 25684 1438 1591 5753 12489

30.0 31.5 25.7 18.7 34.3 58500 2500 6500 10000 14000

30.0 30.0 17.4 16.7 18.2 41000 2500 5000 7500 14500

INDIA- Macro-economic Trends I T E MS capital inflows (US$ million; fy) Other capital inflows, of which IMF, net Short-term capital Banking capital Other capital,net Change of reserves [increase (-) ] Foreign exch. reserves ($mn, end fy) Foreign Reserves (months of imports) Foreign investment (US$ milion) Money Supply (Rs.Bn; end fy) Narrow money supply (M1) Currency with the public Demand deposits Other deposits with RBI Time deposits with banks Broad money supply (M3) Foreign assets (net) Domestic credit Claims on govt. sector Claims on private sector Govt's currency liabilities to public less, banking sectr's non-monet.liabl. Broad money supply (M3) GR M1 GR M3 Central govt.finance(Rs.Bln.fy) Current revenue Taxes Non-taxes including external grants Current expenditure, of which Interest payments Current surplus(+)/deficit(-) Capital receipts, of which Recovery of loans Disinvestment of govt.equity in PSUs Govt. borrowings & other liabilities Capital expenditure Capital a/c surplus(+)/deficit(-) Budget deficit (-)/ Surplus (+) Gross Fiscal Deficit(-)/Surplus(+) Primary deficit (-)

Update: 28 February 2007 2003 2004 2005 2006 2007 Actual Actual Est. Proj. Proj. 17338 31559 25684 58500 41000 9377 12449 4413 25500 11500 0 0 0 0 0 1419 3792 1708 10500 3000 6033 3874 1373 5000 3500 1925 4783 1332 10000 5000 -31421 -26159 -15072 -44135 -15825 104715 130874 145946 190081 205906 15.7 13.2 11.2 11.1 9.2 14776 12147 18242 24000 22000

2008 2009 Proj. Proj. 46500 54000 13500 16500 0 0 3000 4000 4500 5500 6000 7000 -18208 -19280 224115 243394 8.1 7.0 24500 27500

6138 3140 2948 50 14731 20870 5252 18020 7348 10672 73 2476 20869 22.2 16.7

6826 3549 3214 63 16501 23327 6479 20800 7487 13313 74 4026 23327 11.2 11.8

8252 4131 4052 69 19043 27295 7262 24601 7691 16910 88 4655 27295 20.9 17.0

9746 4813 4863 70 22566 32312 8533 29597 8460 21137 89 5907 32312 18.1 18.4

11518 5607 5835 75 26741 38258 10026 34670 9306 25364 89 6527 38258 18.2 18.4

13610 6532 7002 75 31688 45297 11781 40674 10237 30437 90 7247 45297 18.2 18.4

16088 7610 8403 75 37550 53638 13842 47785 11260 36525 90 8079 53638 18.2 18.4

2638 1870 768 3621 1241 -983 2075 673 170 1233 1091 983 0 -1233 8

3060 2248 812 3844 1269 -783 1917 620 44 1252 1133 783 0 -1252 17

3475 2703 772 4398 1326 -923 1587 106 16 1464 664 923 0 -1464 -138

4233 3460 774 5068 1462 -834 1583 55 5 1523 749 834 0 -1523 -61

4864 4039 826 5579 1590 -715 1941 15 417 1509 1226 715 0 -1509 80

5746 4846 900 6307 1460 -561 1800 50 250 1500 1239 561 0 -1500 -40

6716 5816 900 7134 1460 -418 1800 50 250 1500 1382 418 0 -1500 -40

18

INDIA- Macro-economic Trends: 2003-2009 I T E MS Financing fiscal deficit (Rs.Bln): Domestic borrowing Foreign borrowing and grants Others (use of cash balances) Note:Borrowing & other liabilities As % of GDP at current mp Tax revenue Total non-debt revenue Current expenditure Total expenditure & net lending Gross fiscal balance Revenue balance Primary balance Budget deficit States finance combined (Rs.Bln) Fiscal deficit (-) Revenue deficit (-) Primary deficit (-) Budget deficit (-) States finance comb. (% of GDP) Fiscal deficit (-) Revenue deficit (-) Primary deficit (-) Budget deficit (-) Centre & States comb. (% of GDP) Fiscal deficit (-) Revenue deficit (-) Primary deficit (-) Budget deficit (-)

Update: 28 February 2007 2003 Actual

2004 Actual

2005 Est.

2006 Proj.

2007 Proj.

2008 Proj.

2009 Proj.

1182 90 -39 1233

1237 97 -81 1252

1214 100 150 1464

1423 100 0 1523

1384 100 25 1509

1375 100 25 1500

1375 100 25 1500

6.8 12.6 13.1 17.0 -4.5 -3.6 0.0 0.0

7.2 11.9 12.3 15.9 -4.0 -2.5 0.1 0.0

7.6 10.1 12.3 14.2 -4.1 -2.6 -0.4 0.0

8.4 10.4 12.3 14.1 -3.7 -2.0 -0.1 0.0

8.6 11.2 11.8 14.4 -3.2 -1.5 0.2 0.0

9.0 11.2 11.7 14.0 -2.8 -1.0 -0.1 0.0

9.5 11.4 11.6 13.8 -2.4 -0.7 -0.1 0.0

-1214 -612 -407 12

-1093 -364 -213 -7

-1140 -173 -250 -3

-1059 -18 -64 -39

-1200 -80 -65 0

-1350 -50 -60 0

-1500 0 -50 0

-4.4 -2.2 -1.5 0.0

-3.5 -1.2 -0.7 0.0

-3.2 -0.5 -0.7 0.0

-2.6 0.0 -0.2 -0.1

-2.5 -0.2 -0.1 0.0

-2.5 -0.1 -0.1 0.0

-2.4 0.0 -0.1 0.0

-8.8 -5.8 -1.4 0.0

-7.5 -3.7 -0.6 0.0

-7.3 -3.1 -1.1 0.0

-6.3 -2.1 -0.3 -0.1

-5.7 -1.7 0.0 0.0

-5.3 -1.1 -0.2 0.0

-4.9 -0.7 -0.1 0.0

19

INDIA- Macro-economic Trends: 2003-2009 I T E MS

Update: 28 February 2007

2003 2004 2005 2006 2007 2008 2009 Actual Actual Est. Proj. Proj. Proj. Proj. MarMarMarMarMarMarMarExt.Debt (US$ Mn. End of fin. year) 2004 2005 2006 2007 2008 2009 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

20

INDIA- Macro-economic Trends: 2003-2009 I T E MS Memo Items: As per cent of GDP at current mp: Merchandise exports, fob Merchandise imports, cif Trade balance Gross invisible receipts Gross invisible payments Net invisibles Current account balance & official transfer Total capital inflows, net External assistance,net External commercial borrowings,net Direct foreign investment Portfolio investment Other capital inflows, of which IMF, net NRI deposits,net Other capital,net Change in reserves [increase (-)] Foreign exchange reserves at end year Total foreign investment As per cent of GDP at current mp: MONEY (As % of GDP at cur. mp): Narrow money supply (M1) Currency in circulation Demand deposits Other deposits with RBI Time deposits with banks Broad money supply (M3) Foreign assets (net) Domestic credit Claims on govt. sector Claims on private sector Govt's currency liabilities to the public less, banking sector's non-monetary liabl. Broad money supply (M3)

Update: 28 February 2007 2003 Actual

2004 Actual

2005 Est.

2006 Proj.

2007 Proj.

2008 Proj.

2009 Proj.

11.0 13.3 -2.3 8.9 4.3 4.6

11.8 17.1 -5.3 10.3 5.8 4.5

13.0 19.4 -6.4 11.4 6.3 5.1

15.0 22.7 -7.6 12.7 6.6 6.1

17.3 26.1 -8.8 13.2 6.8 6.3

19.5 28.8 -9.3 13.8 6.9 6.9

21.9 31.8 -9.9 14.1 6.9 7.2

2.3 2.9 -0.5 -0.5 0.4 1.9 1.6 0.0 1.0 0.3 -5.2 17.4 2.5

-0.8 4.5 0.3 0.7 0.5 1.3 1.8 0.0 0.6 0.7 -3.8 18.8 1.7

-1.3 3.2 0.2 0.2 0.7 1.5 0.5 0.0 0.2 0.2 -1.9 18.1 2.3

-1.6 6.4 0.3 0.7 1.1 1.5 2.8 0.0 0.6 1.1 -4.9 20.9 2.6

-2.5 4.0 0.2 0.5 0.7 1.4 1.1 0.0 0.3 0.5 -1.5 20.1 2.1

-2.4 4.0 0.3 0.5 0.7 1.4 1.2 0.0 0.4 0.5 -1.6 19.3 2.1

-2.6 4.1 0.3 0.5 0.8 1.3 1.3 0.0 0.4 0.5 -1.5 18.6 2.1

22.2 11.4 10.7 0.2 53.3 75.5 19.0 65.2 26.6 38.6

21.8 11.4 10.3 0.2 52.8 74.6 20.7 66.5 23.9 42.6

23.1 11.6 11.4 0.2 53.4 76.5 20.4 69.0 21.6 47.4

23.6 11.7 11.8 0.2 54.7 78.3 20.7 71.7 20.5 51.2

24.4 11.9 12.4 0.2 56.7 81.2 21.3 73.6 19.7 53.8

25.3 12.1 13.0 0.1 58.9 84.2 21.9 75.6 19.0 56.6

26.2 12.4 13.7 0.1 61.1 87.2 22.5 77.7 18.3 59.4

0.3

0.2

0.2

0.2

0.2

0.2

0.1

9.0 75.5

12.9 74.6

13.0 76.5

14.3 78.3

13.9 81.2

13.5 84.2

13.1 87.2

21

INDIA- Macro-economic Trends I T E MS Memo Items: Cent Govt.Fin (% of GDP at cur.mp) current revenue taxes non-taxes including external grants current expenditure current surplus(+)/deficit(-) capital receipts recovery of loans disinvestment of govt.equity in PSUs govt. borrowings & other liabilities capital expenditure capital a/c surplus(+)/deficit(-) Total expenditure Budget deficit (-)/ Surplus (+) Gross Fiscal Deficit(-)/Surplus(+) Finance of Centre & States(Rs.Bln) Total expenditure Expenditure on social sector Education Health Others As percentage of GDP: Total expenditure Expenditure on social sector Education Health Others As % of total expenditure: Expenditure on social sector Education Health Others As % of expend. on social sector Education Health Others Memo item: GDP at current mp (Rupees billion)

Update: 28 February 2007 2005 2006 2007 2008 Est. Proj. Proj. Proj.

2003 Actual

2004 Actual

9.5 6.8 2.8 13.1 -3.6 7.5 2.4 0.6 4.5 3.9 3.6 17.0 0.0 -4.5

9.8 7.2 2.6 12.3 -2.5 6.1 2.0 0.1 4.0 3.6 2.5 15.9 0.0 -4.0

9.7 7.6 2.2 12.3 -2.6 4.4 0.3 0.0 4.1 1.9 2.6 14.2 0.0 -4.1

8453 2450 860 380 1210

9461 2580 915 425 1240

9920 3025 990 495 1540

30.6 8.9 3.1 1.4 4.4

30.3 8.3 2.9 1.4 4.0

27.8 8.5 2.8 1.4 4.3

29.0 10.2 4.5 14.3

27.3 9.7 4.5 13.1

30.5 10.0 5.0 15.5

35 16 49

35 16 48

33 16 51

27602

31266

35672

22

10.3 8.4 1.9 12.3 -2.0 3.8 0.1 0.0 3.7 1.8 2.0 14.1 0.0 -3.7

10.3 8.6 1.8 11.8 -1.5 4.1 0.0 0.9 3.2 2.6 1.5 14.4 0.0 -3.2

10.7 9.0 1.7 11.7 -1.0 3.3 0.1 0.5 2.8 2.3 1.0 14.0 0.0 -2.8

2009 Proj.

10.9 9.5 1.5 11.6 -0.7 2.9 0.1 0.4 2.4 2.2 0.7 13.8 0.0 -2.4

INDIA- Macro-economic Trends: 2003-2009 I T E MS

2003 Actual Domestic debt combined (Rs.billion) 26150 Centre 16906 State 9244 External debt combined (Rs.billion) 2053 Centre 2053 State 0 Total govt. debt combined (Rs.billion) 28203 Centre 18958 State 9244 Domestic debt as % of GDP (combined) 94.6 Centre 61.1 State 33.4 External debt as % of GDP (combined) 7.4 Centre 7.4 State 0.0 Total govt.debt as % of GDP (comb) 102.0 Centre 68.6 State 33.4

Update: 28 February 2007 2004 Est. 29774 19335 10438 2094 2094 0 31867 21429 10438

2005 Proj. 32845 21270 11575 2003 2003 0 34848 23273 11575

2006 Proj. 36583 23968 12615 2172 2172 0 38755 26141 12615

95.2 61.8 33.4

92.1 59.6 32.4

88.6 58.1 30.6

6.7 6.7 0.0 101.9 68.5 33.4

5.6 5.6 0.0 97.7 65.2 32.4

5.3 5.3 0.0 93.9 63.3 30.6

23

2007 Proj.

2008 Proj.

2009 Proj.