ASSOCHAM Economic Weekly 31 st March, 2013

ASSOCHAM Economic Weekly 31 st March, 2013 Assocham Economic Research Bureau THE ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY OF INDIA

Contents 1. Macroeconomy 1.1 India s Balance of Payment 1.2 Central Government Fiscal situation 1.3 India s External Debt Situation 1.4 International Investment Position 1.5 Consumer Price Index Numbers for Industrial Workers 2. Corporate Sector 2.1 Caution on proposed EU-India FTA 2.2 World Bank report on food price 3. Market Trends 4. Global Developments 4.1 UK Index of Services, January 2013 4.2 US Gross Domestic Product, Q4 5. Data Appendix 2

1. Macroeconomy 1.1 India s Balance of Payment India s current account deficit (CAD) widened from 5.4 per cent in Q2 to a record high of 6.7 per cent of GDP in Q3, driven mainly by larger trade deficit. Merchandise exports did not show any significant growth in Q3 of -13 as compared with a 7.6 per cent growth in Q3 of 2011-12. Merchandise imports on the contrary registered a growth of 9.4 per cent, spurred largely by oil and gold imports. As a result, trade deficit widened to US$ 59.6 billion in Q3 of -13 from US$ 48.6 billion in Q3 of 2011-12. Net services receipt recorded a rise of 9.2 per cent in Q3 of -13 mainly on account of travel, transport, software services and financial services. As net invisibles moderated, CAD rose by over 61 per cent to US$ 32.6 billion (6.7 per cent of GDP) in Q3 of -13 from US$ 20.2 billion (4.4 per cent of GDP) in the corresponding quarter, 2011-12. However, with the surge in capital inflows, CAD during the quarter could be fully financed. The pickup in capital flows was mainly due to foreign portfolio investment which rose to US$ 8.6 billion during Q3 of -13 from US$ 1.8 billion in Q3 of previous year. While loans availed by banks and corporate sector amounted to US$ 7.1 billion, net Foreign Direct Investment (FDI) declined to US$ 2.5 billion in Q3 of - 13 from US$ 5 billion in the corresponding quarter of 2011-12. 3

During April-December, CAD stood at US$ 71.7 billion accounting for 5.4 per cent of GDP as against US$ 56.5 billion (4.1 per cent of GDP) in the same period of 2011. Net inflows under financial account increased to US$ 70.7 billion during April- December as compared with US$ 58.3 billion during the same period in the preceding year. The surge was mainly on account of higher inflows on account of FII, non-resident deposits and short term credits. Reflecting an increase in net inflows in Financial Account, there was an accretion to foreign exchange reserves by US $ 1.1 billion during April-December,. Table 1 Major Items of India's Balance of Payments (US $ Billion) Oct-Dec (P) Oct-Dec 2011 (PR) Apr-Dec (P) Apr-Dec 2011 (PR) Credit Debit Net Credit Debit Net Credit Debit Net Credit Debit Net A. Current Account 127.5 160.1-32.6 127.7 147.8-20.2 382.7 454.4-71.7 389.3 445.8-56.5 1. Goods 71.8 131.4-59.6 71.5 120.1-48.6 218.4 368.7-150.3 229.8 367.8-138.0 2.Services 36.5 18.9 17.6 37.3 21.1 16.1 105.8 59.0 46.9 103.3 56.9 46.4 3. Primary Income 2.7 8.9-6.3 2.3 6.1-3.8 7.6 24.4-16.8 7.9 19.3-11.4 4.Secondary Income 16.5 0.8 15.7 16.7 0.5 16.2 50.9 2.3 48.6 48.4 1.8 46.6 B. Capital Account 0.7 0.7 0.0 0.4 0.2 0.1 1.1 1.7-0.5 0.8 0.7 0.1 C. Financial Account 120.8 89.8 31.1 119.4 98.9 20.6 341.1 270.3 70.7 365.5 307.3 58.3 D. Errors & Omissions 1.6 1.6 0.5-0.5 1.5 1.5 1.9-1.9 Source: RBI Note: P: Preliminary; PR: Partially Revised 1.2 Central Government Fiscal situation Centre s fiscal deficit upto February 2013 stood at Rs. 5.07 lakh crore which is 97.4 per cent of budget estimates of -13. In the corresponding period of 2011-12, the fiscal deficit stood at 94.6 per cent of the Budget Estimate. Fiscal deficit as percent of GDP at current market price for the three quarter of -13 stood at 5.6 percent. 4

During April- February 2013 revenue deficit is Rs. 3.96 lakh crore that is 101.2 per cent of the Budget Estimate, against 96.6 per cent in the same period of last financial year. Revenue deficit as percent of GDP at current market price for the three quarter of the -13 stood at 4.1 percent. Plan expenditure upto February 2013 is estimated Rs. 3.53 lakh crore which is 82.3 per cent of the budgeted against 77.0 per cent recorded in last year. Non- Plan expenditure for the same period is Rs. 8.67 lakh crore which is 86.5 per cent of the Budgeted and year- ago same period it was 87.3 per cent. Government s revenue collection stood at Rs. 6.79 lakh crore which is 77.9 per cent of the Budgeted against 77.3 percent in same period of previous year. Table 2 The State of Finances of Union Government at the end of February 2013 Budget Estimates -2013* Actual @ upto February 2013 (Rs. crores) % of Actual to Budget Estimates Rs. Rs. Current COPPY** 1 Revenue Receipts 871828 678828 77.9 ( 77.3) 2 Tax Revenue (Net) 742115 571932 77.1 (76.9) 3 Non-Tax Revenue 129713 106896 82.4 (79.6) 4 Non-Debt Capital Receipts 38073 33352 87.6 (68.8) 5 Recovery of Loans 14073 10555 75.0 (124.3) 6 Other Receipts 24000 22797 95.0 (17.7) 7 Total Receipts (1+4) 909901 712180 78.3 (77.0) 8 Non-Plan Expenditure http://www.cga.nic.in/html/non-plan Exp. September.pdf 9 On Revenue Account 1001638 866518 86.5 (87.3) 919699 787149 85.6 (85.4) 10 (i) of which Interest Payments On Capital Account 316674 81939 263852 79369 83.3 96.9 (85.6) (107.0) 11 (i) of which Loans disbursed 4415 10426 236.1 (2270.4) Plan Expenditure 429187 353021 82.3 (77.0) http://www.cga.nic.in/ht ml/plan Exp. September.pdf 12 On Revenue Account 343373 287791 83.8 (80.1) 5

13 On Capital Account 85814 65230 76.0 (63.2) 14 (i) of which Loans disbursed 16922 14060 83.1 (67.5) Total Expenditure (8+11) 1430825 1219539 85.2 (83.9) 15 Fiscal Deficit (14-7) 520925 507359 97.4 (94.6) 16 Revenue Deficit (9+12-1) 391245 396112 101.2 (96.6) 17 Primary Deficit {15-9(i)} 204251 243507 119.2 (104.5) **COPPY: Corresponding Period of the Previous Year Source: http://www.cga.nic.in/ Table 3 Financing the Deficit at the end of February 2013 Budget Estimates -2013* Actual @ upto February 2013 (Rs. crores) % of Actual to Budget Estimates Rs. Rs. Current COPPY** 1 External Financing 2214.40 792.39 36 (70) 2 Domestic Financing 518710.36 506566.28 98 (95) (a) Market Borrowings 513129.65 508226.92 99 (100) (b) (c) Securities against Small Savings Deposit Scheme for Retiring Employees 8625.52-1156.58-13 (11) 0.00-0.65 0 (0) (d) State Provident Funds 10000.00 2232.55 22 (44) (e) Special Deposits of Non- Govt. Provident Funds, Insurance Corporation etc. 0.00 77.24 (f) National Small Saving Fund -7906.58 16508.20-209 (100) - i- Savings Deposit and Certificates -9374.54-8798.82 94 (80) - ii- Public Provident Funds 25139.94 10928.93 43 (40) -iii- Investment In Securities -8383.76 9074.57-108 (42) - iv- Income/Expenditure of NSSF -15288.22 5303.52-35 (-178) (g) Others 12.02 13160.37 109487 (215) 6

(h) Cash Balance {Decrease(+)/ Increase(-)} -5150.25-32481.77 631 (-8) (i) Investment (-) / Disinvestment(+) of Surplus Cash 0.00 (j) Ways & Means Advances 0.00 3 TOTAL FINANCING 520924.76 507358.67 97 (95) **COPPY: Corresponding Period of the Previous Year Source: http://www.cga.nic.in/ 1.3 India s External Debt Situation India s external debt stock at end-december stood at US$ 376.3 billion, recording an increase of US$ 30.8 billion (8.9 per cent) over the level of US$ 345.5 billion at end-march. In rupee terms, it increased from Rs. 17.7 lakh crore at end-march to Rs. 20.6 lakh crore at end-december, reflecting an increase of 16.7 per cent. The difference in the growth rates owe to the depreciation of the rupee. The rise in external debt during the period was due to both long-term as well as short-term components. Increase in long-term debt was led mainly by NRI deposits and commercial borrowings, while short-term debt stood higher on account of trade related credits. The long term debt accounted for 55.5 per cent of the rise in total external debt at end-december over the level at end-march, while short-term debt accounted for 44.5 per cent of the rise in debt during the period. The valuation gain (appreciation of US dollar vis-à-vis most major international currencies) accounted for a decline of US$ 11.6 billion in the debt stock at end-december. This implies that the increase in debt would have been US$ 42.4 billion at end-december had there been no valuation gain. Short-term debt (original maturity) accounted for 24.4 per cent of India s external debt while the remaining (75.6 per cent) was long-term debt. Within long term, components such as commercial borrowings accounted for 30.0 per cent of the total external debt, followed by NRI deposits (18.0 per cent) and multilateral debt (13.7 per cent). 7

The share of Government (Sovereign) and non-government debt in the total external debt were 21.7 per cent and 78.3 per cent respectively, at end-december. The share of US dollar denominated debt was the highest in external debt stock and stood at 56.8 per cent at end-december, followed by debt denominated in terms of the Indian rupee (23.1 per cent), SDR (7.9 per cent), Japanese yen (7.6 per cent) and euro (3.2 per cent). India s external debt to GDP ratio stood at 20.6 per cent at end-december vis-à-vis 19.7 per cent at end-march. The ratio of concessional debt to total external debt declined to 12.5 per cent at end-december from 13.9 per cent at end-march. Sl. No. Components Table 4 Composition of India's External Debt External Debt Outstanding at end of (US$ million) Absolute Variation (US$ million) Percentage Variation March PR Jun PR Sept. PR Dec. QE Dec. over March Dec. over Sept. Dec. over March 1 50,453 49,726 50,697 51,619 1,166 922 2.3 1.8 Multilateral (14.60) (14.30) (13.90) (13.70) 2 26,889 27,397 27,855 26,340-549 -1,515-2 -5.4 Bilateral (7.80) (7.90) (7.60) (7.00) 3 6,163 6,037 6,135 6,114-49 -21-0.8-0.3 IMF (1.80) (1.70) (1.70) (1.60) 4 19,003 19,071 19,059 18,517-486 -542-2.6-2.8 Export credit (5.50) (5.50) (5.20) (4.90) 5 Commercial 104,835 104,285 108,815 112,974 8,139 4,159 7.8 3.8 Borrowings (30.30) (29.90) (29.80) (30.00) 6 58,608 60,874 67,019 67,593 8,985 574 15.3 0.9 NRI Deposits (17.00) (17.40) (18.30) (18.00) Dec. over Sept. 8

7 1,354 1,219 1,302 1,254-100 -48-7.4-3.7 Rupee Debt (0.40) (0.40) (0.30) (0.30) 8 267,305 268,609 280,882 284,411 17,106 3,529 6.4 1.3 Long-term debt (77.40) (77.00) (76.80) (75.60) 9 Short-term 78,179 80,451 84,663 91,881 13,702 7,218 17.5 8.5 debt (22.60) (23.00) (23.20) (24.40) 10 Total External Debt 345,484 349,060 365,545 376,292 30,808 10,747 8.9 2.9 Source: Ministry of finance, Govt. of India Note: PR: Partially Revised, QE: Quick Estimates Figures in parenthesis indicate their respective percentages to total external debt. 1.4 International Investment Position Net claims of non-residents on India (as reflected by the Net IIP, i.e. International financial assets abroad less International financial liabilities) increased by US$ 10.4 billion over the previous quarter to US$ 282.0 billion as at end-december, mainly on account of US$ 10.5 billion increase in liabilities. The changes in IIP also reflect the valuation changes emanating from exchange rate movements. The Indian residents financial assets abroad stood at US$ 441.9 billion as at end- December and remained unchanged from the previous quarter. Reserve assets, which remained the major component of international financial assets, rose by US$ 0.8 billion to US$ 295.6 billion at end-december. Direct investment abroad moved up by US$ 2.3 billion during the quarter to US$ 118.2 billion as at end-december whereas Other Investment abroad (mainly trade credit, currency and deposits and loans) reduced by US$ 3.1 billion. The International financial liabilities increased by US$ 10.5 billion over the previous quarter to US$ 723.9 billion as at end-december. While direct investments in India declined by US$ 3.5 billion, portfolio investments in India increased by US$ 4.9 billion. Among other investments liabilities, trade credit, loan and currency and deposits (mainly NRI deposits) increased by US$ 6.2 billion, US$ 0.7 billion and US$ 0.6 billion respectively. 9

Due to rupee depreciation during end-september to end-december equity liabilities in US$ term revised downwards by US$ 13.2 billion (US$ 8.4 billion in direct investment and US$ 4.8 billion in portfolio investment). The ratio of India s international financial assets to international financial liabilities decreased to 61.0 per cent in December (61.9 per cent in September ). International financial assets abroad increased by US$ 9.9 billion on a year-on-year basis. Among the external financial assets, direct investment abroad moved up by US$ 8.7 billion. In contrast, reserve assets declined by US$ 1.1 billion. International financial liabilities increased by US$ 83.1 billion to US$ 723.9 billion as at end-december. Both direct investment and portfolio investment in India increased by US$ 19.9 billion and US$ 22.9 billion respectively. The other investment liabilities in the form of trade credit, loan and currency and deposits increased by US$ 40.3 billion. As a result of the above changes in external assets and liabilities, net claims of nonresidents on India increased by US$ 73.2 billion as at end-december, on a year-onyear basis. Table 5 International Investment Position of India (US $ Billion) Dec-11(PR) Mar-12(PR) Jun-12 (PR) Sep-12 (PR) Dec-12(P) Net IIP -208.8-248.6-224.1-271.6-282.0 A. Assets 432.0 437.8 433.8 441.9 441.9 1. Direct Investment 109.5 112.4 114.4 115.9 118.2 2. Portfolio Investment 1.5 1.5 1.5 1.5 1.5 2.1 Equity Securities 1.5 1.5 1.4 1.5 1.5 2.2 Debt Securities 0.0 0.0 0.0 0.1 0.1 3. Other Investment 24.3 29.5 28.2 29.7 26.6 3.1 Trade Credits 1.4 0.0 4.9 5.6 3.0 3.2 Loans 5.0 6.1 3.8 3.8 3.6 3.3 Currency & Deposits 7.5 11.8 7.5 8.4 7.5 3.4 Other Assets 10.5 11.7 12.0 11.9 12.4 4. Reserve Assets 296.7 294.4 289.7 294.8 295.6 B. Liabilities 640.8 686.3 657.9 713.4 723.9 1. Direct Investment 206.5 222.3 205.6 229.9 226.4 2. Portfolio Investment 146.6 165.8 148.3 164.6 169.5 2.1 Equity Securities 109.7 125.3 110.5 125.7 129.1 10

2.2 Debt securities 36.9 40.5 37.7 39.0 40.5 3. Other Investment 287.7 298.3 304.0 318.9 328.0 3.1 Trade Credits 67.2 67.3 72.7 76.9 83.1 3.2 Loans 157.7 160.2 160.7 164.8 165.5 3.3 Currency & Deposits 52.6 58.8 61.1 67.2 67.8 3.4 Other Liabilities 10.2 12.0 9.6 10.0 11.7 Source: RBI Note: PR: Partially revised, P: Provisional 1.5 Consumer Price Index Numbers for Industrial Workers All-India CPI-IW for February, 2013 rose by 2 points and pegged at 223 (two hundred and twenty three). On 1-month percentage change, it increased by 0.90 per cent between January and February compared with 0.51 per cent between the same two months a year ago. The largest upward contribution to the change in current index came from Food group which increased by 1.28 per cent, contributing 1.40 percentage points to the total change. This was followed by Miscellaneous and Fuel & Light groups with 0.62 and 0.80 per cent increase respectively contributing 0.27 and 0.11 percentage points to the change. At item level, largest upward pressure came from Rice, Wheat & Wheat Atta, Fish Fresh, Goat Meat, Poultry (Chicken), Milk, Onion, Tea (Readymade), Electricity Charges, Rail Fare, Petrol, etc. However, this was compensated by Root Vegetables and Sugar, putting downward pressure on the index. The year-on-year inflation measured by monthly CPI-IW stood at 12.06 per cent for February, 2013 as compared to 11.62 per cent for the previous month and 7.57 per cent during the corresponding month of the previous year. Similarly, the Food inflation stood at 14.98 per cent against 14.08 per cent of the previous month and 5.08 per cent during the corresponding month of the previous year. At centre level, Belgaum and Munger-Jamalpur centres recorded the largest increase of 7 points each followed by Vijaywada, Tiruchirapally and Jharia (6 points each). Among others, 5 points rise was registered in 5 centres, 4 points in 6 centre, 3 points in 9 centres, 2 points in 14 centres and 1 point in 15 centres. On the contrary, 4 points decline was reported in Coimbatore, followed by Tirpura and Guwahati (3 points each) and 1 point in 7 centres. Rest of the 14 centres indices remained stationary. 11

2. Corporate Sector 2.1 Caution on proposed EU-India FTA As regards the India s proposed Free Trade Agreement (FTA) with the European Union (EU), the Gujarat Cooperative Milk Marketing Federation (GCMMF), the country s largest dairy cooperative, has aired apprehensions and requested the Commerce Ministry to have a re-look at the proposed EU-India FTA. First, it has strongly opposed providing any kind of advantage in import duty on certain dairy products. In a statement here, it is important to note that EU does not permit import of dairy products from India in the name of SPS (Sanitary and Phyto Sanitary) measures, saying that Indian milch animals are not maintained in accordance with EU standards and hence Indian dairy products are not safe for consumption. Interestingly, the EU also subsidises its milk farmers by giving incentives on export of their dairy products, which makes their products cheaper than the cost. So, while the EU wants to export such subsidised dairy products to India viewing it as a large and growing market, it does not want to give Indian dairy products access to its own market, which has a large NRI population. 12

The EU demands also reveal that it wants protection for cheeses such as Gouda, Feta and Emmenthal under Geographical Indication (GI) protection, meaning that Indian cheese producers cannot give such names to their cheese. At the same time, the EU wants to sell Indian ethnic products such as Paneer and Lassi in their own market without giving any similar protection to India. It is also noteworthy that in areas where India is richer, for example in traditional knowledge, such as Ayurvedic medicine, and genetic resources, such as neem, the EU is refusing to take measures to stop biopiracy (i.e. protect biological resources by patenting them without paying royalties). Essentially, the EU is asking India to give more monopoly protection in areas (GIs) where it has more intellectual property. This will cost Indian consumers (who will have to pay higher prices) and Indian producers (who will no longer be able to clearly identify their products and so are highly likely to lose sales) who are already in a nascent stage of the agro food processing industry. The EU is anticipating a huge market opportunity in India once the comprehensive FTA is ratified. India needs to be extremely cautious at this approach of the EU to ensure that the country s interests are not compromised. 2.2 World Bank report on food price According to the World Bank, the prices of internationally traded food commodities continued to fall from Oct to Feb 2013 indicating higher levels of international food prices despite sustained decline. Prices of all the three main food categories declined, Prices of grains dropped by 5%, fats & oils by 4%, and other foods by 3%. In the same period, the price of internationally traded wheat declined by 11%, sugar by 10%, and maize by 6%. The price of soybean oil did not change, while Thai 5% rice prices increased by 1%. International fertilizer prices declined by 5%, while crude oil prices rose by 4% 13

The international prices of grains in February 2013 remained well above those of a year ago. Wheat prices in February 2013 were 15% higher than in February. Maize prices stood 8% higher than a year ago, and rice prices 5% higher than in February. Because of declines in the prices of internationally traded sugar (24%) and soybean oil (6%), other components of the Bank s Food Price Index, the year-on-year international food price change increased by only 1%. Lower demand in tight international cereal markets and improved conditions of current winter crops explain falling international food prices. Table 6 Price Change of Key Food Commodities Indices Feb 2013 over Oct (%) Feb 2013 over Feb (%) Food -4 1 Grains -5 9 Fats and oils -4 1 Other -3-10 Fertilizer -5-7 Prices Maize -6 8 Rice (Thai, 5%) 1 5 Wheat (U.S. HRW) -11 15 Sugar (world) -10-24 Soybean oil 0-6 Crude oil, average 4-4 Source: World Bank Prices of staples in West and East Africa remained stable or decreased because of improved food availability. Prices continue to rise in southern Africa during its lean season. In Central America and the Caribbean, prices also follow seasonal trends. In wheat-importing countries in Central Asia, prices have stabilized at very high levels, reflecting high export prices within the region. Domestic factors such as the depreciation or appreciation of the domestic currency; removal of fuel subsidies; implementation of public input support programs; public stockpiling or, contrarily, release of strategic reserves of food; trade disruption from 14

conflict and increasing insecurity; increased transportation costs; increased humanitarian supplies; and erratic weather have also affected local prices. Table 7 Largest Variations in Domestic Prices Wheat % change Maize % change Belarus, Minsk, flour, retail, Belarussian 17 Malawi, Lilongwe, retail, Kwacha/kg 43 ruble/kg India, Mumbai, retail, Indian rupee/kg 14 Zambia, natl. avg., white, retail, US$/kg 32 Pakistan, Karachi, retail, Pakistan rupee/kg 13 Ecuador, Quito, yellow, wholesale, 21 US$/kg Brazil, natl. avg., wholesale, Brazilian 13 Nicaragua, natl. avg., white, wholesale, 20 real/local Cordoba oro/kg Bolivia, La Paz, pelado, wholesale, 11 Uganda, Kampala, wholesale, US$/ton 19 boliviano/local Moldova, Republic of, Chisinau, retail, 10 Honduras, San Pedro Sula, white, 15 Moldovan leu/kg wholesale, US$/kg Ukraine, natl. avg., 3rd class, EXW 9 Ethiopia, Addis Ababa, wholesale, -8 processing, wholesale, hryvnia/ton Ethiopian birr/local South Africa, Randfontein, wholesale, rand/ton -2 South Africa, Randfontein, white, -14 wholesale, rand/ton Ecuador, Quito, flour, wholesale, US$/kg -3 Kenya, Nairobi, wholesale, US$/ton -19 Ethiopia, Addis Ababa, white, wholesale, -7 Somalia, Baidoa, white, retail, Somali -44 Ethiopian birr/local shilling/kg Rice % change Sorghum % change India, Chennai, retail, Indian rupee/kg 10 Sudan, Kadugli, Feterita, wholesale, 32 Sudanese pound/local Myanmar, Yangon, Emata Manawthukha FQ, 9 Niger, Maradi, local, wholesale, CFA 22 wholesale, kyat/kg franc/local Niger, Niamey, imported, wholesale, CFA 8 Burkina Faso, Ouagadougou, local, -9 franc/local wholesale, CFA franc/local Mozambique, Maxixe, retail, metical/kg 7 Ethiopia, Addis Ababa, white, wholesale, -17 Ethiopian birr/local Malawi, Lilongwe, retail, Kwacha/kg 7 Somalia, Baidoa, red, retail, Somali -53 shilling/kg Bangladesh, Dhaka, coarse, retail, taka/kg 7 Somalia, Mogadishu, imported, retail, Somali -6 shilling/kg Peru, Lima, milled superior, retail, nuevo -6 sol/kg Mali, Bamako, local, wholesale, CFA -12 franc/local Rwanda, Kigali, wholesale, US$/ton -16 Source: Food and Agriculture Organization (FAO), and Global Information and Early Warning System (GIEWS). Note: Currencies as originally reported by FAO. Quarterly Price 15

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3. Market Trends BSE: The 30 share BSE Sensex decreased by 0.3 per cent and closed at 18,835.8 NSE: Nifty decreased by 0.4 per cent during the week and closed at 5682.5 Dollar: The value of Rupee depreciated by Rs.0.29 against the US dollar during the week and closed at Rs 54.39 per dollar. Euro: The value of Rupee appreciated by Rs.0.95 against the Euro and closed at Rs. 69.54 per euro. Gold: Prices of gold increased by Rs. 89.4 per 10 grams during the week and closed at Rs. 29607.9 per 10 grams. Silver: Prices of silver decreased by Rs. 73.6 during the week and closed at Rs. 54629.1 Per kg. Crude Oil: The prices of crude oil decreased by USD 1.2 per barrel and closed at USD 106.8 per barrel. Forex Reserves: India s Foreign Exchange reserves increased by USD 1.1 billion to USD 293.4 billion during the week-ended March 22, 2013. 17

4. Global Developments 4.1 UK Index of Services, January 2013 18

According to the US Office of National Statistics, the Index of Services increased by 0.8% in January 2013 compared with January. All of the components of the services sector increased in the most recent month compared with the same month a year ago. The largest contributions came from business services & finance, which increased by 0.8% and government & other services, which increased by 0.9%. Distribution, hotels & restaurants: The index of distribution, hotels & restaurants increased by 1.3% in January 2013 compared with January. The main upward movements were in motor trades, which rose by 9.3% and wholesale, which rose by 3.7%. Transport, storage & communication: The index of transport, storage & communication increased by 0.2% in January 2013 compared with January. The main upward movements were in publishing, audiovisual & broadcasting activities, which rose by 5.9%, warehousing & support activities for transportation, which rose by 4.0% and postal and courier activities, which rose by 7.9%. Business services & finance: The index of business services & finance increased by 0.8% in January 2013 compared with January. The main upward movements were in other professional service activities, which rose by 3.2%, administrative & support service activities, which rose by 2.9% and real estate activities, which rose by 0.9%. Government & other services: The index of government & other services increased by 0.9% in January 2013 compared with January. The main upward movements were in human health & social work activities, which rose by 2.1%, and other service activities, which rose by 4.1%. Total service industries Table 8 Percentage changes of Services Index Distribution hotels and restaurants Transport, storage and communication Business services and finance (Y-o-Y) Government and other services Jan 2.3-2.1 4.0 1.6 Feb 1.0-1.2 0.9 1.8 1.4 Mar 0.7 1.0 1.3-0.2 1.4 Apr 1.8-0.1 2.3 3.0 1.1 19

May 1.0 0.8-0.8 1.7 1.1 Jun -0.1-1.4-2.3 0.2 1.3 Jul 0.6 - -0.8 0.3 2.2 Aug 2.0 1.9-0.9 2.1 3.3 Sep 1.1 2.0-2.4 1.4 2.0 Oct 2.0 0.4 2.0 3.0 1.6 Nov 1.1 2.4-0.6 0.9 1.5 Dec 0.6 1.3-0.2 0.4 0.8 2013 Jan 0.8 1.3 0.2 0.8 0.9 Source: UK Office National Statistics 4.2 US Gross Domestic Product, Q4 The output of goods and services produced by labor and property located in the United States increased at an annual rate of 0.4 percent in the fourth quarter of according to the US Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent. The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment that were partly offset by negative contributions from private inventory investment, federal government spending, exports, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased. The deceleration in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending that were partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and acceleration in PCE. Motor vehicle output added 0.18 percentage point to the fourth-quarter change in real GDP after subtracting 0.25 percentage point from the third-quarter change. Final sales of computers added 0.10 percentage point to the fourth-quarter change in real GDP after adding 0.11 percentage point to the third-quarter change. 20

Real personal consumption expenditures increased 1.8 percent in the fourth quarter, compared with an increase of 1.6 percent in the third. Durable goods increased 13.6 percent, compared with an increase of 8.9 percent. Nondurable goods increased 0.1 percent, compared with an increase of 1.2 percent. Services increased 0.6 percent, the same increase as in the third. Real nonresidential fixed investment increased 13.2 percent in the fourth quarter, in contrast to a decrease of 1.8 percent in the third. Nonresidential structures increased 16.7 percent; it was unchanged in the third quarter. Equipment and software increased 11.8 percent, in contrast to a decrease of 2.6 percent. Real residential fixed investment increased 17.6 percent, compared with an increase of 13.5 percent. Real exports of goods and services decreased 2.8 percent in the fourth quarter, in contrast to an increase of 1.9 percent in the third. Real imports of goods and services decreased 4.2 percent, compared with a decrease of 0.6 percent. Real federal government consumption expenditures and gross investment decreased 14.8 percent in the fourth quarter, in contrast to an increase of 9.5 percent in the third. National defense decreased 22.1 percent, in contrast to an increase of 12.9 percent. Nondefense increased 1.7 percent, compared with an increase of 3.0 percent. Real state and local government consumption expenditures and gross investment decreased 1.5 percent, in contrast to an increase of 0.3 percent. The change in real private inventories subtracted 1.52 percentage points from the fourthquarter change in real GDP, after adding 0.73 percentage point to the third-quarter change. Private businesses increased inventories $13.3 billion in the fourth quarter, following increases of $60.3 billion in the third quarter and $41.4 billion in the second. Table 9 Real Gross Domestic Product (Percent Change From Preceding Period) 2010 2011 I II III IV Gross domestic product (GDP) 2.4 1.8 2.2 2 1.3 3.1 0.4 Personal consumption expenditures 1.8 2.5 1.9 2.4 1.5 1.6 1.8 Goods 3.6 3.8 3.1 4.7 0.3 3.6 4.3 Durable goods 6.2 7.2 7.8 11.5 0.2 8.9 13.6 21

Nondurable goods 2.3 2.3 0.9 1.6 0.6 1.2 0.1 Services 1.0 1.9 1.2 1.3 2.1 0.6 0.6 Gross private domestic investment 13.7 5.2 9.8 6.1 0.7 6.6 1.3 Fixed investment 0.2 6.6 8.7 9.8 4.5 0.9 14 Nonresidential 0.7 8.6 8 7.5 3.6 1.8 13.2 Structures 15.6 2.7 10.8 12.9 0.6 0 16.7 Equipment and software 8.9 11 6.9 5.4 4.8 2.6 11.8 Residential 3.7 1.4 12.1 20.5 8.5 13.5 17.6 Net exports of goods and services Exports 11.1 6.7 3.4 4.4 5.3 1.9 2.8 Goods 14.3 7.2 4.2 4 7 1.1 5.0 Services 4.7 5.6 1.5 5.2 1.1 4 2.5 Imports 12.5 4.8 2.4 3.1 2.8 0.6 4.2 Goods 14.9 5.2 2.1 2 2.9 1.2 3.9 Services 2.5 2.8 4.2 9 2.3 2.6 5.6 Government consumption expenditures and gross investment 0.6 3.1 1.7 3.0 0.7 3.9 7.0 Federal 4.5 2.8 2.2 4.2 0.2 9.5 14.8 National defense 3 2.6 3.1 7.1 0.2 12.9 22.1 Nondefense 7.7 3.1 0.3 1.8 0.4 3 1.7 State and local 1.8 3.4 1.4 2.2 1.0 0.3 1.5 Source: US Bureau of Economic Analysis 5. Data Appendix Item Deposits of Scheduled Commercial Banks with RBI (Rs. Billion) Table 10 Latest Available Financial Information Mar. 15, 2013 Mar. 22, 2013 3,107.7 2,822.7 Percentage Change -9.2 22

Foreign Currency Assets of RBI (Rs. Billion) Advances of RBI to the Central Government (Rs. Billion) Advances of RBI to the Scheduled Commercial Banks (Rs. Billion) Source: RBI Index BSE SENSEX S & P CNX NIFTY Table 11 BSE Sensex and NSE Nifty Index 14,098.2 14,201.3 0.7 ----- ----- ------ 174.3 215.9 Mar. 25, 2013 Mar. 28, 2013 Percentage Change 23.8 18,894.1 18,835.8-0.3 5,707.3 5,682.6-0.4 ASSOCHAM Economic Research Bureau ASSOCHAM Economic Research Bureau (AERB) is the research division of the Associated Chambers of Commerce and Industry of India. The Research Bureau undertakes studies on various economic issues, policy matters, financial markets, international trade, social development, sector wise performance and monitoring global economy dynamics. The main banners of the Bureau are: 23

ASSOCHAM Eco Pulse (AEP) studies are based on the data provided by various institutions like Reserve Bank of India, World Bank, IMF, WTO, CSO, Finance Ministry, Commerce Ministry, CMIE etc. ASSOCHAM Business Barometer (ABB) are based on the surveys conducted by the Research Team to take note of the opinion of leading CEOs, MDs, CFOs, economists and experts in various fields. ASSOCHAM Investment Meter (AIM) keeps the track of the investment announcements by the private sector in different sectors and across the various states and cities. ASSOCHAM Placement Pattern (APP) is based on the sample data that is tracked on a daily basis for the vacancies posted by companies via job portals and advertisements in the national and regional dailies, journals and newspaper. Data is tracked for 60 cities and 30 sectors that are offering job opportunities in India. ASSOCHAM Financial Pulse (AFP) as an analytical tool tracks quarterly financial performance of India Inc; forming strong inter-linkages with the real economy and presents sectoral insights and outlook based on financial indicators, demand signals and corporate dividend activity. Email: research@assocham.com THE KNOWLEDGE CHAMBER Evolution of Value Creator ASSOCHAM initiated its endeavor of value creation for Indian industry in 1920. It has witnessed upswings as well as upheaval of Indian Economy and contributed significantly by playing a catalytic role in shaping up the Trade, Commerce and Industrial environment of the country. ASSOCHAM derives its strength from the following Promoter Chambers: Bombay Chamber of 24

Commerce and Industry, Mumbai; Cochin Chamber of Commerce and Industry, Cochin; Indian Merchant's Chamber, Mumbai; The Madras Chamber of Commerce and Industry, Chennai; PHD Chamber of Commerce and Industry, New Delhi. VISION Empower Indian enterprise by inculcating knowledge that will be the catalyst of growth in the barrier less technology driven global market and help them upscale, align and emerge as formidable player in respective business segment MISSION As representative organ of Corporate India, ASSOCHAM articulates the genuine, legitimate needs and interests of its members. Its mission is to impact the policy and legislative environment so as to foster balanced economic industrial and social development. We believe education, health, agriculture and environment to be the critical success factors. GOALS To ensure that the voice and concerns of ASSOCHAM are taken note of by policy makers and legislators. To be proactive on policy initiatives those are in consonance with our mission. To strengthen the network of relationships of national and international levels/forums. To develop learning organization, sensitive to the development needs and concerns of its members. To broad-base membership. Knowledge sets the pace for growth by exceeding the expectation, and blends the wisdom of the old with the needs of the present. 25