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Welcome, Friday, Sep 24, 2021

Indian Economy

Global headwinds and challenges in the domestic financial sector moderated the growth of Indian economy in 2019-20. The real GDP growth moderated to 4.2 percent in 2019-20 as compared to 6.8 percent in 2018-19.

Fiscal situation remained close to the consolidation path and consumer price inflation was within the targeted limits set by the monetary policy committee of Reserve Bank of India (RBI). Despite continuing sluggishness in global demand, the Current Account Deficit (CAD) narrowed to 1.5 percent of GDP in first half of 2019-20 from 2.1 percent in 2018-19. Global confidence in the Indian economy improved as reflected in growing inflows of net Foreign Direct Investment (FDI) and an all-time high accumulation of foreign exchange reserves of US$ 457.5 billion as in end December, 2019. India moving up by 14 positions to 63rd rank in 2019 World Bank's Ease of Doing Business 2020 Report, has among others, contributed to the increase in global confidence in Indian economy. India has emerged as an important player in the world on the back of high GDP growth and announcement/implementation of critical measures in the current year and last few years.

In an attempt to boost investment, consumption and exports, the government in 2019-20 has taken important reforms towards speeding up the insolvency resolution process under Insolvency and Bankruptcy Code (IBC), easing of credit, particularly for the stressed real estate and NBFC sectors, and announcing the National Infrastructure Pipeline 2019-2025 amongst other measures.

Consumer Price Index (Combined) (CPI-C) inflation averaged 3.7 percent in 2019-20 in comparison to 3.4 percent in 2018-19. Food inflation based on Consumer Food Price Index (CFPI) averaged 6.7 percent in 2019-20 in comparison to 0.1 percent in 2018-19.

The Index of Industrial Production (IIP) grew at 0.6 percent during 2019-20 as compared to 3.8 percent in 2018-19. Mining, manufacturing and electricity sectors in IIP grew at (-) 0.1 percent, 0.9 percent and 0.8 percent respectively during 2019-20, in comparison to 2.9 percent, 3.9 percent and 5.2 percent respectively in 2018-19.

The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity that have a total weight of nearly 40 percent in the Index of Industrial Production (IIP) remained stagnant during 2019-20 as compared to a growth of 4.4 percent in 2018-19. The production of fertilizers, steel, electricity and refinery products increased by 2.7 percent, 3.4 percent, 1.0 percent and 0.2 percent respectively during 2019-20 while the production of coal, crude oil, natural gas and cement contracted by 0.4 percent, 5.9 percent, 5.6 percent, and 0.1 percent respectively during the same period.

In 2019-20, value of India’s exports was US$ 313.21 billion as against US$ 330.08 billion in 2018-19, registering a negative growth of 5.11 percent over the previous year. Non-petroleum and Non Gems & Jewellery exports during 2019-20 were valued at US$ 236.07 billion as compared to US$ 243.28 billion in 2018-19, a decrease of 2.96 percent.  Imports for 2019-20 were US$ 473.99 billion as against US$ 514.08 billion, registering a negative growth of 7.80 percent over the previous year.

Oil imports during 2019-20 were valued at US$ 130.55 billion, which was 7.36 per cent lower than the oil imports of US$ 140.92 billion in the previous year. Non-oil and Non-gold imports during 2019-20 were valued at US$ 315.21 billion, which was 7.36 per cent lower than the level of such imports (US$ 340.25 billion) in 2018-19.

The trade deficit for 2019-20 is estimated at US$ 160.78 billion, as compared to US$ 184.00 Billion in 2018-19.

According to the estimates released by Department of Industrial Policy and Promotion (DIPP), the total FDI investments in India during 2019-20 stood at US$ 73.46 billion, as against US$ 62.00 billion in the previous year indicating that government's effort to improve ease of doing business and relaxation in FDI norms is yielding results. Data for 2019-20 indicates that the service sector attracted the highest FDI equity inflow of US$ 7.85 billion, followed by computer software and hardware - US$ 6.67 billion, trading US$ 4.57 billion and telecommunications US$ 4.45 billion. During 2019-20, India received the maximum FDI equity inflows from Singapore (US$ 14.67 billion), followed by Mauritius (US$ 8.24 billion), Netherlands (US$ 6.50 billion), USA (US$ 4.33 billion) and Japan (US$ 3.231 billion)

Foreign exchange reserves stood at US$ 477.81 billion as on 31st March 2020, as compared to US$ 412.87 billion at end-March 2019.