Indian industry grew by 9.6% during the April- July period of 2007-08, a rate slightly lower as compared to the growth clocked in the same period a year ago. However, the sequential monthly growth numbers for 2007-08 show a gradual slide, observed since April 2007. This was an expected turnout that came as a result of measures exercised (tightening of credit flow) to anchor the rising inflation. Industrial growth slipped from 13.6% in April 2007 to 7.1% in July 2007 and remains dim compared to the growth in industrial output during the corresponding months of previous year.

In April- July period of 2007-08, only six of the 16 industry sectors outpaced the growth posted in the same period a year ago. In the remaining 10 sectors, 9 industry sectors were laggards while one turned negative. Growth of machinery & equipment, leather, food products, rubber, plastic petrol and coal, jute and wood products overshot the growth seen in the corresponding period of last year.

Six core Infrastructure industries

The infrastructure industries too could not escape the spells of monetary tightening. The six core infrastructure industries grew at 6.1% during April- July period of 2007-08 as against the 8.7% rise in the corresponding period of last year. Power sector grew at 8.1% in April- July period of 2007-08 as against 6.2% in the corresponding period of 2005-06.

Telecommunications

The most promising sector, telecommunication continues its northward trend. Total number of telephone subscription is on its way to attain the landmark 250 million connections.

Mobile revolution’s gaining popularity pushed up the subscription to such high levels, much ahead of the use of landline. In August 2007 mobile phone connection had the highest addition of 8.31 million breaching 200 million mark to date. Teledensity has reached 21.20%.

Inflation Trends

In August 2007 inflation averaged at 3.9% for the month compared to that of 5.1% recorded in the same month a year ago. Lower inflation was mainly due to softening of prices in the manufactured items and fuel prices. Despite moderation the inflation, concern over the prices of primary products still remains high.

Stock Market Trends

The upswing in the indices continues, mainly supported by the recent global developments. These developments include rate cut by the US Federal reserve, strong macro economic fundamentals, better corporate earnings all of which has been adding fuel to investment-sentiments.

The Sensex crossed the 15000 points in August 2007, further witnessing rallies in quick successions that distinguished from the earlier ones. The BSE index rose from 16000 to 17000 points, covering 1000 points in just 6 trading sessions. On October 9 2007 the 30-stock index sensex had the largest gain by 788 points, zooming past the 18000 mark. The market may see some correction, with temporary pull out, but the long-term investment mood of investors will remain unaffected. As on 5^th November, it was 19590 and few days back crossed the 20K too.

Fiscal Trends

Indirect tax accounted for more than 60% to the total tax collected in August 2007, with collections from excise and customs together contributed little above 40 % .

During the five-month period (April-August) 2007–08 revenue receipts recorded a growth higher than the growth posted in the previous year. Revenue from tax sources accounted about 60% of the total revenue. Fiscal deficit increased from Rs 90678 crores during the five-month period of the last fiscal to Rs 103338 crores in the corresponding months of the current fiscal year, showing a rise of 14%.

Exchange rate

For five months, upto September 2007, the monthly average rate of exchange of Indian Rupee against the USD was contained between Rs 41/40. For September 2007 it was Rs 40.3, however the Indian Rupee began to slide from Rs 40.88 to a rate below Rs 40.00 without any pause in the last trading sessions, touching Rs 39.74. The appreciation has been more due to weakening of US $ in the international market. The central bank had to intervene in the forex market to check any sharp Rupee appreciation.

In September 2007 the monthly trend of Indian Rupee against the Euro was in contrast to that of the Re/ USD trend. Rupee showed weakness in the concluding trading sessions against the Euro, before steadily sliding to Rs 56.3 from Rs 55.79.

Foreign Trade

The impact of the appreciating Indian Rupee against the US $ dampened the growth momentum of the Indian exports. During the April–August period of 2007-08 Indian exports recorded growth of 18.3 % and this was slightly lower than the growth registered a year before. Imports grew at 31% during the period widening trade deficit to USD 32.5 billion in April – August period of 2007-08 as compared to that of USD 19.9 billion recorded in the previous year.

Exports in the coming months will continue to post moderate growth in the wake of pressures, of, much unfavorable rate of exchange and slowdown in some of the major economies.

source: FICCI

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