Indian Economy Overview

Last Updated: May 2013

India's economic confidence grew by 8 points to 68 per cent in the month of January 2013 as compared to December 2012, making it the second most economically confident country in the world, according to a survey titled 'Ipsos Economic Pulse of the World'.

India's services sector has emerged as a prominent sector in terms of its contribution to national and state incomes, a comparison of the services performance done across the top 15 countries over the 11 year period from 2001 to 2011. India stood first in terms of increase in share of services in the gross domestic product (GDP) with 8.1 per cent, among top 15 countries during 2001-2011.

Moreover, India was among the top 20 real estate investment markets globally with investment volume of Rs 190 billion (US$ 3.46 billion) recorded in 2012, according to Cushman & Wakefield's report ‘International Investment Atlas’.

India is also expected to be the second largest manufacturing country globally in the next five years, followed by Brazil as the third ranked country, according to Deloitte.

The Economic Scenario

India is expected to record 6.1 per cent gross domestic product (GDP) growth in the current fiscal. The growth is expected to increase further to 6.7 per cent in 2014-15, according to the World Bank's latest India Development Update, a bi-annual report on the Indian economy. While, the Prime Minister's Economic Advisory Panel expects the economic growth rate to increase to 6.4 per cent in 2013-14 from 5 per cent during 2012-13, on back of improvement in performance of agriculture and manufacturing sectors.

Indian manufacturing and services sectors expanded more than China in February 2013, according to a survey by HSBC. The HSBC composite index for India for manufacturing and services stood at 54.8 in February 2013, whereas it was 51.4 for China.

Some of the other important economic developments in the country are as follows:

• Indian companies have invested US$ 1.65 billion abroad in February 2013, according to data released by Reserve Bank of India (RBI)
• Non-resident Indians (NRIs) placed deposits aggregating to US$ 14.18 billion in the financial year ended March 2013, registering an increase of 19 per cent over the previous year. Non-resident (external) rupee account or NRE deposits with the banking system jumped 85 per cent (rising by US$ 15.81 billion in FY13 compared to US$ 8.53 billion in FY12), according to Reserve Bank of India data
• The cumulative amount of foreign direct investment (FDI) equity inflows into India were worth US$ 191,757 million between April 2000 to February 2013, while FDI equity inflow during April 2012 to February 2013 was recorded as US$ 20,899 million, according to the latest data published by Department of Industrial Policy and Promotion (DIPP)
• Foreign institutional investors (FIIs) made a net investment (including equity and debt) worth Rs 168,367 crore (US$ 30.72 billion) in 2012-13, according to data published by Securities and Exchange Board of India (SEBI). Moreover, US$ 310.47 million in the equity and US$ 41.32 million in the debt market were invested by FIIs, as on May 16, 2013, as per the SEBI data
• Foreign exchange earnings (FEE) from tourism in India registered a growth of 19 per cent to touch Rs 10,186 crore (US$ 1.86 billion) in February 2013 as compared to Rs 8,502 crore (US$ 1.55 billion) during the same period last year
• Resident Indians remitted almost US$ 930 million abroad in the first 10 months of 2012-13, according to RBI data