What is Indian Economic Service

Indian economy is recovering quickly

Overall, the Indian economy recovered relatively quickly after the economic crisis. In the fiscal year 2009-101, GDP growth of 7.2% is expected, for the calendar year 2009 growth of 6.5% results. In 2009, the Indian economy reacted positively to government policies following the economic crisis. The recovery will be supported in particular by the disproportionate growth in industrial output and the service sector.

In the fourth quarter of 2009, most sectors showed positive real growth rates; industrial production grew by 14.3% and that of the construction sector by 8.7%. The industrial production index also rose strongly again towards the end of the year. A stable and broad-based recovery can therefore be assumed here. However, due to the exceptionally weak monsoons, agricultural production fell by 2.8% in the last quarter compared to the previous year. The great importance of the agricultural sector, which is declining proportionally, but currently still accounts for more than 15% of the gross domestic product, had an impact on the growth rates of the gross domestic product in the fourth quarter: GDP at factor costs rose by only 6.0% in the fourth quarter. compared to the previous year and thus less than had been expected after the strong third quarter (7.9%).

 20082009
 Q1Q2Q3Q4Q1Q2Q3Q4
Agriculture etc.2,13,22,4-1,43,32,40,9-2,8
Mining5,12,61,62,8-0,37,99,59,6
Industry8,35,95,51,30,63,49,214,3
Energy-and water supply7,83,34,344,16,27,44,9
construction7,17,1835,67,16,58,7
Commerce and Telecommunications10,910,8104,45,78,18,510
banks and insurance companies11,99,18,510,212,38,17,77,8
Public services9,88,710,428,78,86,812,7-2,2

Source: Central Statistical Organization India.

Inflation rose continuously in the course of 2009 and was 10.9% for the calendar year and over 16% for January 2010. This development is mainly due to the rise in food prices as a result of lower agricultural production due to the weather. In the past two quarters in particular, the double-digit price trend for food has given rise to uncertainty. In December 2009, for example, almost 67% of inflation in the wholesale price index was attributable to food, only 12% to fuels and energy, and the remaining 21% to other goods. The consumer price index rose faster because of the even greater weight of food prices. Much of the inflation can be attributed to supply-side shortages of some essential goods, which occurred as a result of the weak monsoons, according to the government. This development is expected to normalize in the course of the year.

GDP growth rates1

1 Quarterly compared to the previous year (at 2004-05 prices, GDP at factor costs).

Sources: Central Statistical Organization India; own representation.

Fiscal expansion, which can be seen as part of the response to the economic crisis, has led to an increase in the budget deficit from a pre-crisis level of 2.6% of GDP (2007/08) to 5.9% (2008/09) to now 6 .5% in fiscal year 2009/10. The increase was mainly due to tax breaks, with the aim of stimulating demand. Increased spending on public projects with the aim of creating jobs and building public wealth also had an expansionary effect.

In the first half of the fiscal year 2009/10, the decline in exports slowed down sharply, and then rose again in November 2009, after a 13-month decline, for the first time compared to the previous year. The high dynamic of the turnaround (18.2% compared to the previous year) is, however, due in part to the weakness of exports in the previous year. The development remained positive in December 2009, both year-on-year (9.3%) and compared to the previous month (10.7%).

The trade deficit fell by 28.2% between April and December 2009 compared to the same period last year. In addition, both the composition and the direction of both exports and imports have changed significantly. Since the spring, the rupee has also risen sharply in value.

For 2010, positive impulses can be expected from a growing global economic environment and, in addition, from a normalization of agricultural production. Due to this catching-up trend, growth of a good 8% is expected for Indian GDP in 2010. In this light, the Indian government's goal of returning to a growth path of 9% in the near future also seems quite realistic.

Jana Stöver
[email protected]

  • 1 The fiscal year in India starts on April 1st.

HWWI index of world market prices for raw materials

2000 = 100, on a US dollar basis.

HWWI index with subgroupsa2009Aug. 09Sep 09Oct. 09Nov. 09Dec. 09Jan. 10Feb. 10
Overall index209,7235,9226,9242,3253,1250,0259,4250,1
 (-33,6)(-35,0)(-29,5)(1,2)(32,6)(56,6)(58,8)(58,7)
Overall index, excluding energy184,0197,0195,4201,7207,6215,3218,6210,6
 (-22,1)(-20,7)(-15,3)(5,9)(19,7)(30,8)(35,3)(33,6)
Food and beverage202,2205,9196,5206,3212,1219,3217,9207,9
 (-13,2)(-15,3)(-14,5)(10,2)(19,0)(25,2)(13,3)(11,2)
Industrial raw materials176,0193,1194,9199,7205,6213,6218,9211,8
 (-25,9)(-23,0)(-15,7)(4,0)(19,9)(33,4)(47,8)(46,2)
Agricultural raw materials125,4131,5138,4145,8152,8156,9158,7157,7
 (-16,8)(-16,0)(-8,7)(11,0)(30,2)(42,2)(44,5)(50,7)
Non-ferrous metals171,9203,7199,8205,1212,3225,6237,0219,7
 (-29,0)(-20,0)(-14,8)(16,0)(43,4)(83,9)(89,7)(80,6)
Iron ore, steel scrap337,6348,3349,8345,8344,5350,0350,1351,5
 (-30,0)(-33,2)(-23,8)(-16,3)(-12,6)(-14,2)(8,1)(7,7)
Energy resources222,2254,7242,1262,0275,1266,7279,1269,2
 (-37,3)(-39,1)(-33,8)(-0,4)(38,0)(69,6)(69,9)(70,8)

a 2000 = 100, on a US dollar basis, period averages; in brackets: percentage change compared to previous year.

Further information: http://hwwi-rohindex.org/