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Macro Economy Analysis & Monetary Development

The document analyzes macroeconomic indicators and monetary developments in India. It discusses: 1) International economic indicators like declining GDP growth rates in advanced economies due to the global recession while emerging markets fared better. Global inflation peaked in 2008 and fell thereafter. 2) Indian economic indicators with GDP growth rate bottoming out in Q4 2008-2009 and then increasing, led by a recovery in industrial growth. The trade deficit widened due to growing oil imports and rising prices. 3) Monetary policy developments in India including interest rate cuts by the RBI to stimulate the economy and capital inflows supporting the rupee. Key sectors attracting foreign investment were electrical equipment, transportation, telecom, food processing and

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253 views

Macro Economy Analysis & Monetary Development

The document analyzes macroeconomic indicators and monetary developments in India. It discusses: 1) International economic indicators like declining GDP growth rates in advanced economies due to the global recession while emerging markets fared better. Global inflation peaked in 2008 and fell thereafter. 2) Indian economic indicators with GDP growth rate bottoming out in Q4 2008-2009 and then increasing, led by a recovery in industrial growth. The trade deficit widened due to growing oil imports and rising prices. 3) Monetary policy developments in India including interest rate cuts by the RBI to stimulate the economy and capital inflows supporting the rupee. Key sectors attracting foreign investment were electrical equipment, transportation, telecom, food processing and

Uploaded by

luckybhumkar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Macro Economy Analysis &

Monetary Development
AGENDA

1. Scanning Macro-economic indicators

1. Economy Industry Linkage

1. Economy & Capital Markets


Scanning Macro-economic
Indicators

International Economic indicators

Indian Economic Indicators


International Indicators

GDP growth rate

Growth rate of inflation

Current Account Balance as a


percentage of GDP
Advanced Economies
recorded higher fall in
GDP
From 2007-09 high commodity prices,
high interest rates and sub prime crisis
led to credit freeze and loss of wealth and
jobs in advanced nations.
Emerging nations affected due to fall in
international trade but registered
relatively lower fall in GDP.
Increase in Toxic assets with
International Banks lend to credit freeze
and tightening of money supply across
nations.
Inflation peaked in 2008, falling thereafter
due to fall in commodity prices & decline
in interest rates by several Central banks
to overcome the recession.
Source :http://www.imf.org
Global Balance of Payment Situation
improves..

Fall in demand of
goods led to lower
imports by advanced
economies.
This led to lower
exports of goods and
services from emerging
economies.
Source :www.imf.org
Fall in global
commodity prices
favoured emerging
economies, helping to
setoff some portion of
fall in their exports.
Indian Economy

Growth rate of real GDP

Rate of growth of IIP

Trade deficit and growth rate


Indian GDP growth rate was
falling before Q3 2008-09
Indian GDP Showing Signs
reflecting global recession
of
Recoveryscenario.
It bottomed out during Q4
2008-09 thereafter started
increasing slightly.
GDP rises in 2009-10 owing to a
sharp increase in industrial growth
rate.
Growth of industrial sector in India
is attributed to the Government of
India’s liberal economic policy.
Weak monsoon hits Indian
agriculture and agricultural growth
rate is expected to continue falling
in near future.

Source :www.rbi.org.in
Services form the largest part
of Indian GDP

Service sector grows at 7.7 %


, highest among the three
sectors in Q1 2009-10.
Agricultural growth rate dips
2.4% while industry growth
rate recovers sharply to reach
4.2%.
As per global experience it’s Source :www.mospi.nic.in
seen that the share of
agriculture declines as the
economy grows with an
increase in the service sector.
Indian IIP continues to Grow
The impressive IIP figures are due to
the trickle-down effect of the
government stimulus packages, though
the strength of the private sector
demand remains uncertain.

The figures are clearly reflecting that the


recovery is becoming much more
pronounced and visible to enable India
embark on the growth path it intends to
achieve in the current fiscal.

Thanks to the Government and RBI for


maintaining a friendly tax and interest
rate environment respectively

Most impressive was the performance


of mining, which returned a growth of
15.43 per cent.
Source :www.mospi.nic.in
Analysis of Components of
IIP
Manufacturing goods showed fall in
growth rates from March to July
due to falling demand in the
market.
Consumer non-durables declined in
Aug 2009-10 due to surging food
prices
Consumer durables recorded
increases in same period due to
government stimulus packages and
pay hike.

Source :www.mospi.nic.in
Balance of Trade Situation worsens

Q1 data 2009-10 exports shows that


engineering goods captures the
higher share like Q1 2008-09.
Unlike last year, gems & jewelry
have taken second highest share
this year after growing almost 40%.
It discusses possible reasons for an
enlarged trade deficit and identifies
the growth of oil imports as well as
the quickly rising oil prices as the
main causes.

Source :www.commerce.nic.in
The growth performance of
exports has been an outcome of a
conscious and concerted effort on
the part of the Government to
bring down transaction costs and
facilitate trade.
Talking in terms of rupee, exports
grew by 15.4per cent year-on-year
to Rs. 44,572.18 crore in the
month of April, while imports grew
Source :www.commerce.nic.in
by 31.9 %
The bankruptcy, sale, restructuring
and merger of some of the world's
largest financial institutions has
caused cataclysmic disruptions in the
international stocks and money
markets.

The Indian rupee appreciated


against the US dollar due to
increased capital inflows by foreign
funds in the domestic market
Or.
Fresh capital inflows in the domestic
markets and the dollar weakening
against other currencies, supported
the rise in the rupee

Source :www.commerce.nic.in
Huge amounts of foreign direct
investment came into India
through non- resident Indians,
international companies, and
various other foreign investors in
Q4.
Indian Sectors Attracting Highest
FDI Inflows are many such as,
electrical equipments,
transportation industries,
telecommunication, fuels, food
processing industries, and
services.

Source :www.commerce.nic.in
B. Monetary Policy
Source :www.source.nic.in
Source :www.source.nic.in

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