Table 3: Progress of Area under Crops - 2007-08
(Million hectares)
		Area Coverage (As on October 26, 2008)			Crop	Normal Area	Area Coverage (As reported on April 4, 2008)
Crop	Normal Area	2006	2007	Variation			2007	2008	Variation
1	2	3	4	5	1	2	3	4	5
	Kharif	Crops				Rabi	Crops
Rice	38.2	37.1	37.3	0.2	Rice	3.7	4.1	4.3	0.2
Coarse Cereals	22.9	22.1	22.0	-0.1	Wheat	26.2	28.2	27.7	-0.5
of which:					Coarse Cereals	6.4	7.1	6.8	-0.2
Bajra	9.4	9.3	8.7	-0.6
					of which:
Jowar	4.4	3.8	3.6	-0.2
					Jowar	5.0	4.9	4.7	-0.3
Maize	6.2	6.8	7.5	0.6
					Maize	0.7	1.0	1.1	0.0
Total Pulses	10.9	11.4	12.6	1.2
					Total Pulses	11.4	14.2	13.5	-0.7
Total Oilseeds	15.4	16.8	17.7	0.9
					Total Oilseeds	8.8	10.2	9.6	-0.6
of which:
					of which:
Groundnut	5.5	4.8	5.4	0.6
Soyabean	6.6	8.1	8.8	0.6	Groundnut	0.8	1.1	1.3	0.2
Sugarcane	4.2	4.8	5.1	0.3	Rapeseed/Mustard	5.9	6.6	6.0	-0.6
Cotton	8.3	9.0	9.3	0.4	Sunflower	1.2	1.3	1.1	-0.1
All Crops	100.8	102.1	104.9	2.8	All Crops	56.5	63.8	61.9	-1.8
Source : Ministry of Agriculture, Government of India.

Table 7: Performance of Manufacturing Groups
(Per cent)
Industry Group		Weight in IIP	Growth Rate			Weighted Contribution #
			2006-07	2006-07	2007-08 P	2006-07	2006-07	2007-08 P
			April-March	April-February		April-March	April-February
1		2	3	4	5	6	7	8
1.	Wood and wood products,
	furniture and fixtures	2.7	29.1	21.6	45.8	2.4	1.9	5.6
2.	Jute and other vegetable
	fibre textiles (except cotton)	0.6	-15.8	-13.5	30.8	-0.4	-0.4	0.9
3.	Other manufacturing industries	2.6	7.7	10.4	18.7	2.4	3.2	7.5
4.	Basic metal and alloy industries	7.5	22.8	22.8	12.9	16.6	17.0	14.0
5.	Beverages, tobacco and related
	products	2.4	11.1	11.8	11.8	4.5	5.0	6.6
6.	Leather and leather and fur products	1.1	0.6	1.4	11.8	0.0	0.1	1.1
7.	Chemicals and chemical products
	except products of petroleum and coal	14.0	9.6	9.0	11.3	15.0	14.7	23.6
8.	Machinery and equipment
	other than transport equipment	9.6	14.2	14.2	9.5	18.2	18.6	16.8
9.	Rubber, plastic, petroleum
	and coal products	5.7	12.9	12.4	9.4	6.4	6.3	6.4
10.	Food products	9.1	8.5	6.3	6.7	5.7	4.3	5.7
11.	Non-metallic mineral products	4.4	12.8	13.1	6.3	6.6	6.9	4.4
12.	Cotton textiles	5.5	14.8	14.3	4.5	4.8	4.8	2.1
13.	Textile products
	(including wearing apparel)	2.5	11.5	11.2	4.0	3.2	3.2	1.5
14.	Wool, silk and man-made
	fibre textiles	2.3	7.8	7.4	3.5	1.9	1.9	1.1
15.	Transport equipment and parts	4.0	15.0	15.2	3.3	8.2	8.5	2.5
16.	Paper and paper products
	and printing, publishing and
	allied activities	2.7	8.7	8.6	2.5	2.3	2.3	0.9
17.	Metal products and parts
	(except machinery and equipment)	2.8	11.4	7.7	-3.1	2.3	1.6	-0.8
	Manufacturing - Total	79.4	12.5	12.2	9.1	100.0	100.0	100.0
P : Provisional. # : Figures may not add up to 100 due to rounding off. Source: Central Statistical Organisation.

‘Machinery and equipment’, ‘basic metal and alloy industries’, ‘non-metallic mineral products’, ‘cotton textiles’, ‘textile products’ and ‘transport equipment and parts’ were amongst the major groups which registered deceleration in growth largely due to base effect. ‘Metal products and parts’ recorded negative growth due to decline in the production of tin metal containers, welded link chains and razor blades. ‘Chemicals and chemical products except products of petroleum and coal’ with the highest weight in the IIP, however, registered a double-digit growth mainly due to strong growth in filament yarn, viscose staple fibre, hair oil and clinical drugs. ‘Jute and other vegetable fibre textiles’ registered a turnaround with a positive growth during the period.

In terms of use-based classification, the capital goods sector recorded double-digit growth during April-February 2007-08 (see Table 6). The continued capacity addition by manufacturing firms helped the robust growth of capital goods. The growth in the intermediate goods sector decelerated on account of slowdown in production of newsprint bleached, cotton yarn, polished granite/ stone chips, and ball and roller bearings. The growth in consumer goods sector decelerated to 6.3 per cent during April-February 2007-08 from 9.5 per cent during April-February 2006-07 largely due to negative growth in the consumer durables segment, particularly in telephone instruments, motor cycles and wrist watches. The basic goods sector growth decelerated to 7.4 per cent during April-February 2007-08 from 10.1 per cent during April-February 2006-07 due to decline in production in respect of soda ash, fertilisers, carbon steel and steel castings.

Infrastructure

During April-February 2007-08, growth of the infrastructure sector decelerated to 5.6 per cent from 8.7 per cent during the corresponding period of the previous year, reflecting deceleration in all the sectors, except coal (Chart 3). The deceleration in the electricity sector was mainly on account of moderation

in thermal power generation and decline in nuclear power generation. High base as well as decline in refinery output in certain public sector refineries contributed to decelerated growth in petroleum refinery products. The slowdown in the cement sector was mainly on account of high base and capacity constraints. The sharp deceleration in crude oil production was attributable to the decline in production in Oil India Limited (OIL) and Oil and Natural Gas Corporation (ONGC) plants by 1.3 per cent and 0.2 per cent, respectively, during April-February 2007-08. In six out of eleven months of 2007-08, the crude oil sector recorded decline in production, which led to decelerated growth at 0.4 per cent for April-February 2007-08. The coal sector recorded a growth of 5.6 per cent during April-February 2007-08 as compared with 5.3 per cent during the corresponding period of last year. High base as also capacity constraints faced by major steel producers led to decelerated growth in the steel sector during the same period.

Services Sector

The services sector maintained its double-digit growth at 10.6 per cent during 2007-08 despite some moderation in pace.  It continued to be the major contributor to GDP growth. During April-December 2007, the services sector recorded a growth of 10.4 per cent, somewhat lower than 11.4 per cent during April-December 2006 (see Table 1). The growth in services sector continued to be broad based. ‘Trade, hotels, transport and communication’, ‘financing, insurance, real estate and business services’ and ‘construction’ sub-sectors registered lower but double digit growth rates, while ‘community, social and personnel services’ recorded a higher but single digit growth during April-December 2007 than during April-December 2006. The sub-sector ‘trade, hotel, transport and communication’ contributed almost one third (34.5 per cent) to overall real GDP growth during April-December 2007 (Table 8).

Leading indicators of service sector activity for April-February 2007-08 show that the growth rates in tourist arrivals, revenue earning freight traffic of the railways, commercial vehicles production, new cell phone connections, passengers handled by civil aviation at domestic terminals, cement and steel moderated over the previous year (Table 9).

Aggregate Demand

The growth of the Indian economy during 2007-08 was driven by investment demand.  The estimated share of gross fixed capital formation (GFCF) in real GDP increased to 32.6 per cent in 2007-08 from 30.6 per cent in 2006-07, while that of private final consumption expenditure (PFCE) declined to 67.1 per cent from 68.4 per cent over the same period (Table 10).

Table 8 : Growth in Services Sectors
(Contribution to real GDP growth; percentage points)
Year/Quarter	Construction	Trade, Hotels, Transport and Communication	Financing, Insurance, Real Estate and Business Services	Community, Social and Personal Services	Total Services
1	2	3	4	5	6
2000-01	0.4	1.6	0.5	0.7	3.2
2001-02	0.2	2.0	0.9	0.6	3.8
2002-03	0.5	2.2	1.1	0.6	4.3
2003-04	0.7	2.9	0.8	0.8	5.2
2004-05	1.0	2.7	1.2	1.0	5.8
2005-06	1.1	3.0	1.5	1.0	6.6
2006-07	0.8	3.1	1.9	1.0	6.8
2007-08	0.7	3.2	1.7	0.9	6.6
2006-07 : Q1	0.9	2.8	1.9	1.4	7.0
: Q2	0.9	3.3	2.0	1.1	7.3
: Q3	0.7	3.1	1.9	0.7	6.5
: Q4	0.8	3.4	1.3	0.8	6.2
2007-08 : Q1	0.8	3.1	1.6	1.0	6.5
: Q2	0.8	3.1	1.6	1.1	6.7
: Q3	0.6	3.0	1.6	1.0	6.1

Saving and Investment

Gross Domestic Saving (GDS), as a percentage of GDP at current market prices, increased to 34.8 per cent in 2006-07 from 34.3 per cent in 2005-06 mainly due to improvement in the saving performance by the private corporate and public sectors. On the other hand, the household saving rate declined marginally in 2006-07 from the previous year on account of a decline in the financial saving rate. During the Tenth Five-Year Plan period, however, the household saving rate has remained stable, averaging 23.7 per cent (Table 11). The rate of Gross Domestic Capital Formation (GDCF) is estimated to be higher at 35.9 per cent of GDP in 2006-07 than 35.5 per cent in 2005-06. In terms of GDP, while the overall saving rate increased by 0.5 percentage points in 2006-07, the overall investment rate increased by 0.4 percentage points, reflecting a marginal narrowing down of current account deficit.

Corporate Performance

The performance of non-government non-financial companies moderated during 2007-08 (up to December 2007) relative to the previous year, but still remained healthy (Table 12).  Sales growth, which slowed down in the first two quarters of the year, accelerated somewhat in the third quarter of 2007-08.  On the whole, however, sales growth during the first nine months of 2007-08 at 17.4 per cent was lower than 29.1 per cent in the corresponding period of the previous year. While growth in gross profits and net profits also decelerated during April-December 2007 as compared with the corresponding period of the previous year, gross profits to sales ratio improved marginally over the same period.

Table 11: Rates of Gross Domestic Saving and Investment
(Per cent of GDP at current market prices)
Item		2001-02	2002-03	2003-04	2004-05	2005-06 PE	2006-07 QE 10th Plan Average
	1	2	3	4	5	6	7	8
1	Household Saving	22.1	23.2	24.4	23.0	24.2	23.8	23.7
	of which :
	a) Financial assets	10.9	10.3	11.4	10.1	11.8	11.3	11.0
	b) Physical assets	11.3	12.9	13.0	12.9	12.5	12.5	12.7
2	Private Corporate Saving	3.4	3.9	4.4	6.6	7.5	7.8	6.0
3	Public Sector Saving	-2.0	-0.6	1.1	2.2	2.6	3.2	1.7
4	Gross Domestic Saving	23.5	26.4	29.8	31.8	34.3	34.8	31.4
5	Net capital inflow	-0.6	-1.2	-1.6	0.4	1.2	1.1	0.0
6	Gross Domestic Capital Formation #	22.8	25.2	28.2	32.2	35.5	35.9	31.4
7	Gross Capital Formation	24.2	25.2	26.8	31.6	34.5	36.0	30.8
	of which :
	a) Public sector	6.9	6.1	6.3	6.9	7.6	7.8	6.9
	b) Private corporate sector	5.4	5.7	6.6	10.5	13.3	14.5	10.1
	c) Household sector	11.3	12.9	13.0	12.9	12.5	12.5	12.8
	d) Valuables	0.6	0.6	0.9	1.3	1.2	1.2	1.0
8	Total Consumption
	Expenditure (a+b)	76.9	75.1	73.1	69.4	68.0	66.4	70.4
	a) Private Final Consumption
	Expenditure	64.5	63.3	61.8	58.7	57.6	56.1	59.5
	b) Government Final Consumption
	Expenditure	12.4	11.9	11.3	10.7	10.4	10.3	10.9
Memo
Saving-Investment Balance (4-6)		0.7	1.2	1.6	-0.4	-1.2	-1.1	0.0
Public Sector Balance		-8.9	-6.7	-5.3	-4.7	-5.0	-4.5	-5.3
Private Sector Balance		8.8	8.5	9.2	6.1	5.9	4.5	6.8
	a) Private Corporate Sector	-2.1	-1.9	-2.2	-4.0	-5.8	-6.8	-4.1
	b) Household Sector	10.9	10.3	11.4	10.1	11.8	11.3	10.9
PE : Provisional Estimates. QE : Quick Estimates. # : Adjusted for errors and omissions Note : Figures may not add up to the totals due to rounding off. Source : Central Statistical Organisation.

Business Expectation Surveys

According to the survey by the National Council of Applied Economic Research (NCAER) conducted in December 2007, the overall business confidence index (BCI) for the next six months improved over the previous round of the survey but declined on a year-on-year basis (Table 13). A component-wise analysis shows that all four components, viz., overall economic conditions, financial position of the firms, investment climate and present capacity utilisation (being close to or above optimal level) recorded an increase over the previous round; the sharpest improvement was in the investment climate. The BCI in respect of all the main industry groups defined in terms of use-based classification also improved. Amongst the various industry sectors, the largest gain in business confidence was in the services sector, while the smallest gain was in the consumer non-durable sector.

According to the Reserve Bank’s latest Industrial Outlook Survey of manufacturing companies in the private sector conducted in February 2008, the business expectations indices based on assessment for January-March 2008 and on expectations for April-June 2008 increased by 6.0 per cent and 3.9 per cent, respectively, over the previous quarters. The indices, however, declined by 3.8 per cent and 3.4 per cent, respectively, over the corresponding quarter of the previous year (Chart 4).

Table 13: Business Expectations Surveys
(Per cent)
	Business Expectations
Agency	Period	Index	Growth over a year ago	Growth over previous round
1	2	3	4	5
NCAER	January-June 2008	Business Confidence Index	-2.1	5.6
RBI	April-June 2008	Business Expectation Index	-3.4	3.9
Dun & Bradstreet	April-June 2008	Business Optimism Index	-23.6	-9.0

The improvement in expectations index for April-June 2008 over the previous quarter emanated from higher net responses for major parameters of the survey such as working capital requirement, availability of finance, production, order books, capacity utilisation, employment, exports, imports, selling prices and profit margins than in the previous quarter (Table 14). However, even with this improvement, the performance of the manufacturing sector in the first quarter of 2008-09 was expected to be considerably lower than that of the corresponding quarter of the previous year. A significantly higher proportion of respondents expected a decline in the overall business and financial situation and exports, and an increase in the prices of raw material than in the first quarter of 2007-08.

Purchasing Managers’ Index

The ABN-AMRO Purchasing Manager’s Index (PMI)1 declined to 57.5 in March 2008 from 59.5 in the previous month. While the index posted the lowest reading in the past eight months, it nevertheless indicated a considerable improvement in operating conditions. At a disaggregated level, the seasonally adjusted output index remained markedly high as Indian manufacturers were reported to continue expanding production at their plants in line with strong sales growth and efficiency gains during the month. Despite a weakening in input price index in March 2008, input costs remained strong due to higher prices for a range of raw materials, including aluminum and oil.

Table 14: Reserve Bank’s Survey - Net Response on 'A Quarter Ahead'
Expectations About the Industrial Performance
(Per cent)
			Jan-	Apr-	July-	Oct-	Jan-	Apr-
Parameter		Response	March	June	Sept	Dec.	Mar	June
			2007	2007	2007	2007	2008	2008
1		2	3	4	5	6	7	8
1.	Overall business situation	Better	53.7	51.7	49.5	50.2	47.7	46.0
			(40.7)	(43.3)	(41.2)	(42.1)	(42.9)	(42.7)
2.	Financial situation	Better	44.5	43.8	41.3	40.1	40.3	36.6
			( 49.9)	(49.8)	(49.8)	(51.3)	(50.3)	(51.6)
3.	Working capital finance requirement	Increase	36.2	35.3	34.5	32.2	34.7	36.6
			(59.2)	(59.2)	(59.2)	(62.6)	(60.3)	(56.5)
4.	Availability of finance	Improve	36.2	35.2	32.1	33.8	31.1	32.3
			(56.6)	(57.2)	(58.6)	(58.8)	(59.5)	(58.3)
5.	Production	Increase	50.7	47.8	46.6	49.0	43.9	45.2
			(40.1)	(41.6)	(41.1)	(40.9)	(42.3)	(41.0)
6.	Order books	Increase	47.3	45.7	43.6	44.1	37.1	41.5
			(43.1)	(45.4)	(46.1)	(46.0)	(48.6)	(44.3)
7.	Pending orders, if applicable	Below normal	-2.7	-2.2	-2.2	-3.5	0.4	-4.3
			(82.9)	(82.8)	(82.6)	(82.4)	(80.2)	(81.3)
8.	Cost of raw material	Decrease	-41.7	-42.1	-46.0	-42.4	-44.1	-48.2
			(51.0)	(52.0)	(49.7)	(51.0)	(49.2)	(46.0)
9.	Inventory of raw material	Below average	-7.1	-7.3	-5.4	-6.3	-7.3	-7.0
			(83.8)	(85.0)	(85.0)	(85.0)	(84.8)	(83.2)
10.	Inventory of finished goods	Below average	-5.2	-4.4	-2.7	-3.5	-4.5	-5.8
			(84.5)	(85.2)	(87.1)	(86.4)	(86.1)	(84.5)
11.	Capacity utilisation (Main product)	Increase	33.3	29.4	27.0	28.4	24.2	25.6
			(57.7)	(60.4)	(61.4)	(61.5)	(62.3)	(59.9)
12.	Level of capacity utilisation (Compared to the	Above	12.8	11.5	9.4	10.7	6.4	9.4
	average in the preceding four quarters)	normal	(76.4)	(77.1)	(76.5)	(77.2)	(78.3)	(77.0)
13.	Assessment of the production capacity	More than	4.8	4.0	3.0	4.2	4.7	8.0
	(With regard to expected demand in the next six months)	adequate	(81.8)	(82.2)	(82.2)	(83.0)	(83.8)	(81.2)
14.	Employment in the company	Increase	18.1	18.3	17.4	16.7	14.6	20.8
			(73.7)	(73.3)	(73.5)	(74.1)	(75.6)	(68.2)
15.	Exports, if applicable	Increase	32.6	33.4	32.6	31.4	24.3	27.7
			(57.3)	(56.8)	(55.6)	(55.9)	(58.3)	(53.3)
16.	Imports, if any	Increase	20.8	21.6	23.7	20.8	20.1	25.3
			(68.0)	(68.4)	(68.2)	(68.6)	(70.5)	(65.6)
17.	Selling prices are expected to	Increase	14.2	15.5	19.0	13.0	14.9	19.1
			(69.2)	(68.9)	(67.1)	(68.5)	(67.1)	(66.0)
18.	If increase expected in selling prices	Increase at	10.5	12.1	10.4	3.7	13.3	9.0
		lower rate	(68.1)	(66.7)	(65.0)	(58.9)	(66.7)	(64.0)
19.	Profit margin	Increase	11.6	9.9	7.5	9.6	5.4	7.2
			(61.7)	(62.5)	(62.6)	(59.6)	(60.0)	(61.0)
Notes:1. 'Net response' is measured as the percentage share differential between the companies reporting 'optimistic' (positive) and 'pessimistic' (negative) responses; responses indicating status quo (no change) are not reckoned. Higher 'net response' indicates higher level of confidence and vice versa. 2. Figures in parentheses are the percentages of respondents with 'no change over the preceding quarter' as responses.

CMIE Projections

The recent projections for growth rate of industrial production in 2008-09 by the Centre for Monitoring Indian Economy (CMIE) present an optimistic view in the light of the large investments being made in the economy. The CMIE expects the industrial growth to accelerate from the estimated 8.5 per cent in 2007-08 to 10 per cent in 2008-09. Growth rates in manufacturing, mining and electricity sectors are projected at 10.8 per cent, 8.0 per cent and 6.3 per cent, respectively. On the whole, the industrial rebound is expected to be well-spread across all the sectors and would be fuelled by robust growth in capital goods in the wake of large capital goods imports, investments and healthy order-book position as also a pick-up in growth of consumer goods.

Survey of Professional Forecasters

Several central banks conduct ‘Survey of Professional Forecasters’ on major macroeconomic indicators of short to medium term economic developments so as to gain from the professional expertise and experience of these forecasters. The Reserve Bank has also introduced such a survey from the quarter ended September 2007. The results of the fourth quarter (ended March 2008) survey are presented for select macroeconomic indicators in Table 15.

Forecasts by various agencies for the real GDP growth in 2008-09 are set out in Table 16.

Table 15: Median Forecasts of Select Macroeconomic Indicators by
Professional Forecasters : 2008-09
		2008-09
Indicators		Annual	Q1	Q2	Q3
1		2	3	4	5
1.	Real GDP growth rate at factor cost (in per cent)	8.1	8.1	8.3	8.1
	a. Agriculture & Allied Activities	3.0	3.0	3.0	2.9
	b. Industry	8.1	8.4	8.5	8.6
	c. Services	9.7	10.0	9.6	9.8
2.	Gross Domestic Saving
	(per cent of GDP at current market prices)	35.0	-	-	-
3.	Gross Domestic Capital Formation
	(per cent of GDP at current market prices)	36.0	36.2	36.0	36.0
4.	Corporate profit after tax (growth rate in per cent)	24.7	21.3	22.6	23.1
5.	91-day Treasury Bills Yield (per cent-end period)	6.8	-	-	-
6.	10-year Government Securities Yield (per cent-end period)	7.8	-	-	-
7.	Export (growth rate in per cent)	15.8	-	-	-
8.	Import (growth rate in per cent)	20.0	-	-	-
9.	Trade Balance (US $ billion)	-115.5	-28.4	-27.5	-28.1
- : Not Available. Source : Survey of Professional Forecasters, Fourth Quarter 2007-08.

Table : 16 : Projections of Real GDP for India by various Agencies - 2007-08
(per cent)
Agency	Overall Growth	Agriculture	Industry	Services	Month of Projection
1	2	3	4	5	6
ASSOCHAM	7.9	2.6	7.6	9.7	April 2008
Confederation of Indian Industry (CII)	8.0-8.5	-	-	-	March 2008
Citigroup	8.3	-	-	-	February 2008
	7.7	3.0	7.5	9.2	March 2008
Merrill Lynch	8.4	-	-	-	December 2007
	8.2	3.0	7.6	9.9	March 2008
JP Morgan	7.5	-	-	-	December 2007
	7.0	-	-	-	March 2008
Goldman Sachs	7.8	-	-	-	January 2008
CRISIL	8.5	3.0	8.3	10.3	February 2008
	8.1	-	-	-	April 2008
Centre for Monitoring the Indian Economy (CMIE)	9.1	3.3	10.4	10.3	February 2008
	9.5	2.6	11.4	10.6	April 2008
Asian Development Bank	8.5	-	-	-	September 2007
	8.0	-	-	-	April 2008
International Monetary Fund	8.4 *	-	-	-	October 2007
	7.9 *	-	-	-	April 2008
United Nations Organisation	8.2	-	-	-	January 2008
Economic Advisory Council to Prime Minister	8.5	-	-	-	January 2008
- : Not Available. * : Calendar year.

---

¹ The PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector.A PMI of 50.0 indicates no change while values above or below this level indicate an expansion or a contraction of manufacturing activity.