Table
5 shows the distribution of non-agricultural enterprises together with
employment therein by size class of employment.
It
has been observed that those employing less than 6 people constituted the
bulk of the total non-agricultural enterprises in all the census years. In
percentage terms it forms above 90 per cent in all the census years as well
as in rural and urban areas. The CAGR for this class works out to be 3.2 per
cent between 1990 and 2005. Same growth trends have also been witnessed both
in rural and urban enterprises. Employment
has risen from 35.2 million in 1990 to 55.2 million in 2005 with CAGR of 3.0
pre cent. But the rate of employment has decreased from 1.7 to 1.6 during
the period.
The number of
large sized enterprises i.e., enterprises employing more than 11 persons,
declined from 7,66,900 to 6,10,400 enterprises and their share has came down
to 1.7 per cent in 2005 from 3.4 per cent in 1990. Employment in this
enterprises has also declined from 26.4 million persons in 1990 to 25.0
persons in 2005. Still the rate of employment has increased from 34.5 in
1990 to 40.9 in 2005.
|
Table
5: Distribution of Non-Agricultural Enterprises and Persons
Usually Working therein by Size Class of Employment
|
|
|
Size
Class of Employment
|
|
|
1-5
|
6-9
|
=>10
|
All
Size
|
1-5
|
6-9
|
=>10
|
All
Size
|
|
|
Number
of
Enterprise
( ' 00)
|
|
Number
of Persons Usually Working ( ' 00)
|
|
Rural
|
|
|
|
|
|
|
|
|
|
1990
|
120389
|
3074
|
2789
|
126252
|
188409
|
21675
|
80541
|
290625
|
|
1998
|
138210
|
3669
|
3190
|
145069
|
221215
|
25707
|
90755
|
337677
|
|
2005
|
189985
|
5712
|
2574
|
198271
|
289660
|
41466
|
87817
|
418943
|
|
Urban
|
|
|
|
|
|
|
|
|
|
1990
|
90592
|
4976
|
4880
|
100448
|
163490
|
35081
|
183717
|
382288
|
|
1998
|
113014
|
5651
|
5007
|
123672
|
207281
|
39551
|
180997
|
427829
|
|
2005
|
147799
|
7870
|
3530
|
159199
|
262226
|
56828
|
161912
|
480966
|
|
Rural+Urban
|
|
|
|
|
|
|
|
|
|
1990
|
210981
|
8050
|
7669
|
226700
|
351899
|
56756
|
264258
|
672913
|
|
1998
|
251224
|
9320
|
8197
|
268741
|
428496
|
65258
|
271752
|
765506
|
|
2005
|
337784
|
13582
|
6104
|
357470
|
551886
|
98294
|
249729
|
899909
|
|
CAGR
in %
|
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
|
|
|
|
|
1990-98
|
(1.7)
|
(2.2)
|
(1.7)
|
(1.8)
|
(2.0)
|
(2.2)
|
(1.5)
|
(1.9)
|
|
1998-05
|
(4.7)
|
(6.5)
|
(-3.0)
|
(4.6)
|
(3.9)
|
(7.1)
|
(-0.5)
|
(3.1)
|
|
1990-05
|
(3.1)
|
(4.2)
|
(-0.5)
|
(3.1)
|
(2.9)
|
(4.4)
|
(0.6)
|
(2.5)
|
|
Urban
|
|
|
|
|
|
|
|
|
|
1990-98
|
(2.8)
|
(1.6)
|
(0.3)
|
(2.6)
|
(3.0)
|
(1.5)
|
(-0.2)
|
(1.4)
|
|
1998-05
|
(3.9)
|
(4.8)
|
(-4.9)
|
(3.7)
|
(3.4)
|
(5.3)
|
(-1.6)
|
(1.7)
|
|
1990-05
|
(3.3)
|
(3.1)
|
(-2.1)
|
(3.1)
|
(3.2)
|
(3.3)
|
(-0.8)
|
(1.5)
|
|
Rural+Urban
|
|
|
|
|
|
|
|
|
|
1990-98
|
(2.2)
|
(1.8)
|
(0.8)
|
(2.1)
|
(2.5)
|
(1.8)
|
(0.4)
|
(1.6)
|
|
1998-05
|
(4.3)
|
(5.5)
|
(-4.1)
|
(4.2)
|
(3.7)
|
(6.0)
|
(-1.2)
|
(2.3)
|
|
1990-05
|
(3.2)
|
(3.5)
|
(-1.5)
|
(3.1)
|
(3.0)
|
(3.7)
|
(-0.4)
|
(2.0)
|
|
Share
in %
|
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
|
|
|
|
|
1990
|
95.4
|
2.4
|
2.2
|
100.0
|
64.8
|
7.5
|
27.7
|
100.0
|
|
1998
|
95.3
|
2.5
|
2.2
|
100.0
|
65.5
|
7.6
|
26.9
|
100.0
|
|
2005
|
95.8
|
2.9
|
1.3
|
100.0
|
69.1
|
9.9
|
21.0
|
100.0
|
|
Urban
|
|
|
|
|
|
|
|
|
|
1990
|
90.2
|
5.0
|
4.9
|
100.0
|
42.8
|
9.2
|
48.1
|
100.0
|
|
1998
|
91.4
|
4.6
|
4.0
|
100.0
|
48.4
|
9.2
|
42.3
|
100.0
|
|
2005
|
92.8
|
4.9
|
2.2
|
100.0
|
54.5
|
11.8
|
33.7
|
100.0
|
|
Rural+Urban
|
|
|
|
|
|
|
|
|
|
1990
|
93.1
|
3.6
|
3.4
|
100.0
|
52.3
|
8.4
|
39.3
|
100.0
|
|
1998
|
93.5
|
3.5
|
3.1
|
100.0
|
56.0
|
8.5
|
35.5
|
100.0
|
|
2005
|
94.5
|
3.8
|
1.7
|
100.0
|
61.3
|
10.9
|
27.8
|
100.0
|
|
Rate
of Employment
|
|
|
|
|
|
|
|
|
Rural
|
|
|
|
|
|
|
|
|
|
1990
|
|
|
|
|
1.6
|
7.1
|
28.9
|
2.3
|
|
1998
|
|
|
|
|
1.6
|
7.0
|
28.4
|
2.3
|
|
2005
|
|
|
|
|
1.5
|
7.3
|
34.1
|
2.1
|
|
Urban
|
|
|
|
|
|
|
|
|
|
1990
|
|
|
|
|
1.8
|
7.1
|
37.6
|
3.8
|
|
1998
|
|
|
|
|
1.8
|
7.0
|
36.1
|
3.5
|
|
2005
|
|
|
|
|
1.8
|
7.2
|
45.9
|
3.0
|
|
Rural+Urban
|
|
|
|
|
|
|
|
|
|
1990
|
|
|
|
|
1.7
|
7.1
|
34.5
|
3.0
|
|
1998
|
|
|
|
|
1.7
|
7.0
|
33.2
|
2.8
|
|
2005
|
|
|
|
|
1.6
|
7.2
|
40.9
|
2.5
|
|
Source:
CSO (2008), Economic Census 2005, All India Report, and earlier
issues
|
6.
Detailed Classification of Establishment with Hired Workers and Persons
working therein for Employment Size Class
=> 10
In the earlier paragraph classification of enterprises employing 10
or more workers has been discussed in detail. In this paragraph further
classificatory distribution of enterprises of size class 10 or more has been
briefly discussed.
|
Table
6: Detailed Classification of Enterprises by Size Class of
Employment
|
|
|
1980
|
1990
|
1998
|
2005
|
1980
|
1990
|
1998
|
2005
|
1980-90
|
1990-98
|
1998-05
|
1980-05
|
|
All
Enterprises (' 00 numbers)
|
Share
in percent
|
CAGR
in per cent
|
|
All
Size
|
49824
|
73193
|
89731
|
148870
|
100.00
|
100.00
|
100.00
|
100.00
|
(3.9)
|
(2.6)
|
(7.5)
|
(4.5)
|
|
=>
10
|
5486
|
7573
|
7892
|
6108
|
11.01
|
10.35
|
8.80
|
4.10
|
(3.3)
|
(0.5)
|
(-3.6)
|
(0.4)
|
|
10-19
|
3333
|
4610
|
4987
|
3289
|
6.69
|
6.30
|
5.56
|
2.21
|
(3.3)
|
(1.0)
|
(-5.8)
|
(-0.1)
|
|
20-99
|
1903
|
2642
|
2572
|
2315
|
3.82
|
3.61
|
2.87
|
1.56
|
(3.3)
|
(-0.3)
|
(-1.5)
|
(0.8)
|
|
=>100
|
250
|
323
|
333
|
505
|
0.50
|
0.44
|
0.37
|
0.34
|
(2.6)
|
(0.4)
|
(6.1)
|
(2.9)
|
|
100-199
|
0
|
186
|
195
|
322
|
0.00
|
0.25
|
0.22
|
0.22
|
|
(0.6)
|
(7.4)
|
|
|
200-499
|
0
|
93
|
98
|
148
|
0.00
|
0.13
|
0.11
|
0.10
|
|
(0.6)
|
(6.1)
|
|
|
=>500
|
0
|
42
|
40
|
35
|
0.00
|
0.06
|
0.04
|
0.02
|
|
(-0.7)
|
(-1.9)
|
|
|
Agricultural
Enterprise
(' 00 numbers)
|
|
All
Size
|
2277
|
3019
|
3719
|
9478
|
100.00
|
100.00
|
100.00
|
100.00
|
(2.9)
|
(2.6)
|
(14.3)
|
(5.9)
|
|
=>
10
|
88
|
132
|
155
|
181
|
3.86
|
4.37
|
4.17
|
1.91
|
(4.1)
|
(2.0)
|
(2.2)
|
(2.9)
|
|
10-19
|
68
|
101
|
120
|
111
|
2.99
|
3.35
|
3.23
|
1.17
|
(4.0)
|
(2.2)
|
(-1.1)
|
(2.0)
|
|
20-99
|
19
|
29
|
32
|
44
|
0.83
|
0.96
|
0.86
|
0.46
|
(4.3)
|
(1.2)
|
(4.7)
|
(3.4)
|
|
=>100
|
1
|
2
|
3
|
26
|
0.04
|
0.07
|
0.08
|
0.27
|
(7.2)
|
(5.2)
|
(36.2)
|
(13.9)
|
|
100-199
|
|
1
|
2
|
19
|
0.00
|
0.03
|
0.05
|
0.20
|
|
(9.1)
|
(37.9)
|
|
|
200-499
|
|
0.4
|
1
|
6
|
0.00
|
0.01
|
0.03
|
0.06
|
|
(12.1)
|
(29.2)
|
|
|
=>500
|
|
0.4
|
0
|
1
|
0.00
|
0.01
|
0.00
|
0.01
|
|
|
|
|
|
Non-Agricultural
Enterprises (' 00 numbers)
|
|
All
Size
|
47547
|
70174
|
86012
|
139392
|
100.00
|
100.00
|
100.00
|
100.00
|
(4.0)
|
(2.6)
|
(7.1)
|
(4.4)
|
|
=>
10
|
5398
|
7441
|
7737
|
5927
|
11.35
|
10.60
|
9.00
|
4.25
|
(3.3)
|
(0.5)
|
(-3.7)
|
(0.4)
|
|
10-19
|
3265
|
4509
|
4867
|
3178
|
6.87
|
6.43
|
5.66
|
2.28
|
(3.3)
|
(1.0)
|
(-5.9)
|
(-0.1)
|
|
20-99
|
1884
|
2613
|
2540
|
2271
|
3.96
|
3.72
|
2.95
|
1.63
|
(3.3)
|
(-0.4)
|
(-1.6)
|
(0.8)
|
|
=>100
|
249
|
321
|
330
|
479
|
0.52
|
0.46
|
0.38
|
0.34
|
(2.6)
|
(0.3)
|
(5.5)
|
(2.7)
|
|
100-199
|
|
185
|
193
|
303
|
0.00
|
0.26
|
0.22
|
0.22
|
|
(0.5)
|
(6.7)
|
|
|
200-499
|
|
93
|
97
|
142
|
0.00
|
0.13
|
0.11
|
0.10
|
|
(0.5)
|
(5.6)
|
|
|
=>500
|
|
42
|
40
|
34
|
0.00
|
0.06
|
0.05
|
0.02
|
|
(-0.6)
|
(-2.3)
|
|
|
Source
: CSO (2008), Economic Census 2005 , All India Report and
earlier issues
|
Data
for rural and urban distribution and employment were not available. Hence,
only the distributions of number of enterprises were discussed. The
available data for the year 1980 also included here.
In
the size class 100-199 the number of enterprises has increased from 18,600
in 1990 to 32,200 enterprises in 2005, an addition of 13,600 enterprises in
15-year period. As against this a decline of 700 enterprises has been
noticed in the size class of 500 or more.
Number of
Agricultural enterprises in the employment size class of 100-199 increased
from 100 to 1,900 enterprises, which in non-agricultural sector added
another 11,800 enterprises during the 15-year period ending 2005.
Agricultural
enterprises in the large group of enterprises employing 500 or more
employees have grown from 40 enterprises to 100 enterprises between 1990 and
2005. But during this period the number of non-agricultural enterprises in
this employment class came down from 4,200 in 1990 to 3,400 in 2005.
_____________
*
This note has been prepared by R.Krishnaswamy
Highlights
of Curre
nt Economic Scene
Agriculture
Food
Corporation of India (FCI) and various state agencies have procured 78.37
lakh tonnes of rice upto October 30, 2008 as against 72.42 lakh tonnes
bought during the corresponding period 2007-08. This increase in procurement
has been registered due to the center’s announcement of a bonus of Rs 50
per quintal over and above the minimum support price
(MSP) of Rs 850 for common paddy and Rs 880 for grade A variety for
the current 2008-09 marketing season (October-September). Of the total
procurement Punjab has accounted for 65.62 lakh tonnes as against 60.95 lakh
tonnes last year, while Haryana and Tamil Nadu have contributed 11.05 lakh
tonnes and 11.12 lakh tonnes, respectively, so far during this season.
Wheat
sowings have started from third-week of October in Haryana, Maharashtra,
Gujarat
and some parts of Uttar Pradesh due to favourable temperature and sufficient
moisture for planting. Normally, wheat sowing commences between October 30
and November 15 in most parts of the country. Wheat growing states such as
Uttar Pradesh,
Punjab
and Haryana had received above-average rainfall this year, which has
increased moisture level in the soil and is helpful for wheat sowing. Owing
to which sowings of wheat this year would cover 29 million hectares and
yields would increase by two million tonnes depending upon the area planted
and weather conditions throughout the season. The central government has
targeted to raise wheat production by 1,00,000 tonnes to 78.5 million tonnes
in 2008-09 as against 78.4 million tonnes last year.
Union
ministry of textiles has allowed the state government of
Punjab
an exemption from purchase of 80,000 bales of jute bags, for packing of
paddy procured on or before November 30, 2008. The ministry further has
reiterated that if gunny bags cannot be procured, than HDPE/PP bags would be
procured through open tenders as a special case, so that the procurement
process of paddy would not be adversely affected.
Global
rice market is likely to remain tight in 2008-09, with higher overall
consumption pushing up prices for the commodity despite an estimated record
production of 432 million tonnes (milled rice), 1 per cent higher than last
year. Export restrictions imposed by most of the countries would also
constrain supply and push up prices. International Rice Research Institute
has reiterated that demand for rice would increase worldwide keeping prices
firm, since the economic slowdown would force poor people to eat more rice
in place of meat. Global consumption of rice is pegged to be at 426 million
tonnes, displaying an increase of one per cent over the previous year.
Current global rice stocks have declined from 135-day supply to a 70-day
supply in the last seven years, showing a whopping 40 per cent drop from 147
million tonnes in 2001 to only 82 million tonnes in 2008. The
US
would further contribute to the problem as it has already depleted its rice
stocks. However, it is expected that price would soften evidently, with the
new crop entering in to the market in October 2008. It is projected that
India
would contribute positively to the projected increase in global rice output,
but productivity or projected yield per acre is likely to remain unchanged
from last year.
As
per the trade officials, sugar output in the states of
Maharashtra
and Uttar Pradesh together is likely to fall to 12 million tonnes ending to
September 2009 from 16.4 million tonnes last year. Output in
Maharashtra
is likely to fall to 6 million tonnes from 9.1 million tonnes in the
previous year and in Uttar Pradesh it is expected to produce 6 million
tonnes, down from 7.3 million tonnes in the previous year. Crushing of
sugarcane in Uttar Pradesh would begin by November 15, 2008, but this year
yield is expected to drop to 75 kg of sugar from one tonne of cane as
against an average of 100 kg sugar from one tonne of cane. Overall sugar
output in the country is expected to fall to 20 million tonnes from 26.5
million tonnes last year, although government has projected that sugar
output would be around 22 million tonnes. International sugar prices have
declined due to delay in cane crushing in
Thailand
, Asia’s top producer, while unseasonal rains have delayed crushing in
India.
Union
minister of textiles has requested farmers to hoard cotton till January
2009, as Cotton Corporation of India Ltd (CCI) would buy cotton from farmers
at an all-time high minimum support prices (MSP). Amid the economic slowdown
globally, western imports of fabric, garments and apparels have been
declining. Cotton production in the country this year is expected to be at
330 lakh bales as against 315 lakh bales in 2007-08. Cotton productivity
this year is expected to be around 600 kg per hectare as compared with
300-400 kg per hectare last year, while cotton productivity in
Gujarat
’s is projected to be nearly 750 kg per hectare.
Shipments
of Cumin seeds from
India
during April-September 2008 have increased by 97 per cent to 23,500 tonnes
valued at Rs 241.73 crore form 11,920 tonnes valued at Rs 125.33 crore in
the corresponding period a year ago. Exports of cumin seed increased due to
severe shortage in the international market following by crop failure in
other cumin seed producing countries like
Syria
,
Turkey
and
Iran
. The unit value realised during the first half of this fiscal is Rs 102.86
as against Rs 105.14 per kg in the same period a year ago.
Exports are mostly done to countries like US,
Singapore
,
Japan
,
UK
and west Asian and Gulf countries.
Exports
of cardamom (small) have increased to 215 tonnes during the first half of
this fiscal year valued at Rs 13.59 crore at a unit value of Rs 631.86 per
kg as against 195 tonnes valued at Rs 7.83 crore at a unit value of Rs
402.13 per kg. The average unit value realisation of cardamom exports during
April-September 2008 has increased by Rs 229.73 per kg. Sales of cardamom
during this fiscal have increased significantly to 2,224 tonnes from 1,288
tonnes last year. Arrivals of cardamom up to October 21, 2008 have gone up
by 1,038 tonnes to 2,403 tonnes. While the weighted average price of
cardamom has stood at Rs 598.5 per kg as against Rs 409.23 per kg in the
same period last year.
According
to the latest data available with the Rubber Board, synthetic rubber output
during April-July period has declined marginally to 33,439 tonnes as
compared with 32,748 tonnes in the year-ago period. However, synthetic
rubber output in the month of July touched to 8,186 tonnes as against to
8,256 tonnes a year ago. Consumption of synthetic rubber has increased
marginally to 25,490 tonnes in the month of July from 24,175 tonnes in the
same month last year. Similarly, domestic demand from April to July has
risen to 1,00,045 tonnes as against 93,715 tonnes in the same period last
year. Imports of synthetic variety, too, have gone up to 17,455 tonnes from
14,825 tonnes in July last year, taking the total arrivals from overseas
during April-July to 76,890 from 59,960 tonnes in the year-ago period.
The
central government is expected to rope in foreign companies for the revival
of eight closed fertiliser units namely Barauni, Haldia, Talcher, Ramagundam,
Durgapur
,
Gorakhpur
, Korba and Sindri, which require investments worth Rs 36,000 crore. Even
cabinet has set up a committee known as Empowered Committee of Secretaries
to come up with possible financial models for the revival of the closed
plants. Sources have stated that the Finance Ministry is not inclined to
give money for the revival of these eight closed plants and both public
sector undertakings and cooperative majors like Iffco and Kribhco have their
limitations to generate financial resources.
Industrial
Production
The
General Index stands at 273.0, which is 1.3% higher as compared to the level
in the month of Aug 2007. The cumulative growth for the period April-Aug
2008-09 stands at 4.9% over the corresponding period of the pervious year.
Mining,
Manufacturing and Electricity sectors for the month of Aug 2008 stand at
162.2, 282.4, and 221.6 respectively, with the corresponding growth rates of
4.0%, 1.1% and 0.8 % as compared to Aug 2007. The
cumulative growth during April-Aug, 2008-09 over the corresponding period of
2007-08 in the three sectors have been 4.1%, 5.2% and 2.3% respectively,
which moved the overall growth in the General Index to 4.9%.
Seven
out of the seventeen industry groups (as per 2-digit NIC-1987) have shown
positive growth during the month of Aug 2008 as compared to the
corresponding month of the previous year. The industry group ‘Transport
and Equipments and Parts’ have shown the highest growth of 11.2%, followed
by 8.9% in ‘food products’ and 8.0% in ‘Basic Metals and Alloys’.
On the other hand, the industry group ‘Wool, Silk and Man-made
Fibre Textiles’ have shown a negative growth of 14.9% followed by12.3% in
‘Metal Products and Parts’.
Sect
oral growth rates in Aug 2008 over Aug 2007 are 3.9% in Basic goods, 2.3% in
Capital goods and (-)6.2% in Intermediate goods. The Consumer durables and
Consumer non-durables have recorded growth of 5.1% and 5.0% respectively,
with the overall growth in Consumer goods being 5.1%.
Infrastructure
Core
industries logged a sluggish growth 0f 2.3 per cent in August 2008 compared
to 9.5 per cent in the corresponding month of the previous year. During the
current fiscal so far the core industries slowed down to a growth of 3.4 per
cent as against 7.1 in the corresponding period of the financial year.
Electricity
generation growth during august 2008 was abysmal at 0.8 per cent compared to
9.2 per cent in August 2007.
Crude
oil was other poor performer with 1 per cent growth in August 2008 against
6.5 per cent in August 2007.
Petroleum
products growth slowed down to 2.5 per cent from 8.2 per cent in Against
2007.
Coal
production growth at 5.9 per cent in August 2008 was though better than
other core industries was still lower than that of 8 per cent in August
2007.
Cement
production growth at 1.9 per cent and steel production with a growth of 4.4
per cent during August 2008 , were sluggish.
Inflation
The
official Wholesale Price Index for 'All Commodities' (Base: 1993-94 = 100)
for the week ended 18th October 2008 declined by 0.2 per cent to
238.3 from 238.8 (Provisional) for the previous week.
The
annual rate of inflation, on point to point basis, stood at 10.7 percent for
the week ended Oct 18, 2008 as compared to 3.1 percent during the
corresponding period a year ago.
Index
of Primary Articles, major group, declined by 0.3 percent due to decline in
the prices of raw cotton, some oil seeds and raw rubber. The annual rate of
inflation, calculated on point-to-point basis, for ‘Primary Articles’
stood at 10.9 percent as compared to 5.1 percent a year ago.
The
index for fuel power, light and lubricants declined marginally due to lower
prices of furnace oil.
The
index for manufactured products dipped by 0.1 percent due to of fall in food
products prices by 0.5 per cent.
For
the week ended 23/08/2008, the final wholesale price index for 'All
Commodities’ (Base: 1993-94=100) stood at 241.2 as compared to 240.3
(Provisional) and annual rate of inflation based on final index, calculated
on point to point basis, stood at 12.76 percent as compared to 12.34
percent.
Financial
Markets
Capital
Market
Primary
Market
Religare
Enterprises, a financial services arm of Ranbaxy Group, on Monday said that
it will raise over Rs 1,000 crore through rights offering to its existing
shareholders. The board would meet on October 30 to consider raising of
funds in excess of Rs 1,000 crore at around current price level by further
issue of equity shares on rights basis, Religare said in a filing to the
Bombay Stock Exchange (BSE).
Wind
turbine maker Suzlon Energy said on Monday that it was suspending an up to
18 billion rupees ($360 million) rights share issue due to falling markets,
but said its expansion plans remain on track. The world's fourth-biggest
wind turbine maker had planned the rights issue to partly fund its
acquisition of a further stake in
Germany
's REpower from
Portugal
's Martifer and other minority shareholders.
Secondary
Market
The
bears started the week with a bang, forcing the BSE Sensex and NSE Nifty
below the crucial levels of 8,000 and 2,300 points, respectively. However, a
combination of short covering, positive global sentiments on account of rate
cut by various central banks globally and lower inflation (10.68 per cent
compared with 11.07 per cent a week earlier) lifted the sentiment. The
proposal to increase the FDI cap in private sector insurance companies from
26 per cent to 49 per cent also added to the positive reaction. It was a
truncated week with stock markets closed on Tuesday (28 October 2008) and
Thursday (30 October 2008) for the Diwali holidays. A special one-hour
Muhurat trading session was held on Tuesday to mark the beginning of the new
Samvat year 2065. Benchmark indices ended the week positive after five
consecutive weekly losses with BSE Sensex gaining 1,087 points or 12.5 per
cent to close at 9,788 and the NSE Nifty rising 301 points or 11.7 per cent
to 2,885. The BSE Mid-Cap index rose 104.34 points or 3.37 per cent to
3,200.02 and the BSE Small-Cap index rose 103.28 points or 2.82 per cent to
3,765.11. Both the indices underperformed the Sensex.
The
benchmark equity index Sensex of the BSE started Samvat 2065 with a
498.52-point jump, registering one of its biggest gains on Muhurat trading
day. The rally was in line with the rise in other global indices and the
massive short covering of positions by bears. On the Diwali day last year,
the stock market had closed 151 points lower at 18,907. However, on October
28, the BSE Sensex closed the one-hour trading session with 6.17 per cent
rise at 9,034. The NSE Nifty, rose 6.35 per cent or 160 points to end the
session at 2,684.
Among the sectoral
indices of BSE, except FMCG and Healthcare index all other indices
registered smart gains over the week. Beaten down sectors like, auto and
reality staged a good recovery, with fears of high interest rate receding.
The Metal index rose after Hindalco, Tata Steel and Jindal South West (JSW)
posted better than expected quarterly numbers. Metal and Oil & Gas
stocks are the highest gainers during the week with more than 20 per cent.
The
30-scrip BSE Sensex has dropped 55.4 per cent in Samvat 2064. This is the
biggest-ever fall in the Sensex since the Bombay Stock Exchange (BSE)
started compiling this index in January 1986. During Samvat 2064, markets
faced three major crises. First, it was commodities causing inflation.
Second, a rise in interest rates to control excess liquidity and tame
inflation, and finally, the global credit crisis. However, valuation in
terms of price to earnings (P/E) had risen substantially a year ago when 250
stocks were quoted at a P/E multiple of 20 times for their trailing 12-month
earnings for September 2007. Only 43 stocks were available at P/E of around
10 and below, while 106 others traded at P/E between 10 and 20. The
remaining 47 have negative or nil P/E multiples. The 55 per cent decline in
the Sensex has brought a dramatic change in P/E valuations of the most
affected stocks with 301 of 363 such stocks currently available at P/E below
10 for their trailing 12-month earnings for September 2008.
The
Securities & Exchange Board of India (SEBI) has now changed the limit on
creeping acquisitions taking it to 75 per cent from the 55 per cent earlier.
This move comes in at a time when many promoters have complained to the
regulator to probe into incessant and irrational beating down of their share
prices, without any relation to fundamental factors. Now, the promoters can,
if they think that the fundamental valuations are compelling, increase their
stake through the open market till they reach a 75 per cent, subject to a 5
per cent per year limit. Thus far, promoters of top 25 industrial houses
have lost more than Rs 8.72 lakh crore in 2008 alone. According to media
sources, the aggregate market capitalisation of promoters of 25 industrial
houses in October decreased by 66.5 per cent compared to the January levels.
While the market capitalisation of promoters was Rs 13.11 lakh crore as on
January 1, 2008, it plunged to Rs 4.39 lakh crore on October 24, 2008.
SEBI
has increased the tenure for lending and borrowing of stocks from seven days
to 30. The move comes at a time of heavy short selling in the Indian
markets, led by entities who borrow stocks from foreign institutional
investors (FIIs). Stocks worth over $1 billion have been shorted in the
Indian markets through this route so far. Under the stock lending and
borrowing scheme (SLBS), which started in April this year, securities could
so far be borrowed only for seven days, after which the borrower had to
return securities of the same type and class.
Mutual
fund industry witnessed an 18 per cent decline in its assets under
management (AUM) in October, plunging below the Rs 5-trillion mark for the
first time this year. The combined average assets under management (AUM) of
the 35 fund houses in the country saw an erosion of over Rs 97,000 crore and
dropped to Rs 4,31,901.42 crore at the end of October. According to
analysts, plunge in the stock market and huge redemptions in liquid schemes
by corporates and banks has led to the sharp decline in assets of fund
houses.
Despite
global financial turmoil and rising capital costs, domestic corporates have
increased their overseas borrowing exposure in September. According to data
released by the Reserve Bank of India (RBI), Indian corporates have raised
$2.83 billion through external commercial borrowings (ECB) during the month.
Apparently, in September, they did not borrow through the foreign currency
convertible bonds route at all. They had raised $1.60 bln using the ECB and
FCCB route, in August 2008.
The
SEBI is conducting an inquiry into the stock market crash on October 24 and
27. The equity benchmarks BSE Sensex and NSE Nifty fell nearly 20 per cent
during these two trading sessions. According to sources, short sellers took
extra care of not letting the markets fall by 10 per cent before 1 pm, which
would have triggered the circuit filter and resulted in closure for an hour.
Derivatives
Settlement
week saw a sharp rally with the NSE Nifty climbing 11.9 per cent to close at
2,885.6 points after hitting a low of 2,252 and a high of 2,921. Despite the
sharp intra-week recovery, Nifty future closed at a discount to the spot,
Nifty future closed at about 2882 points as against the spot close of 2885.
The Junior was up 4.6 per cent and the Defty rose 13.05 as the rupee
strengthened slightly, though it remained below 49. Trading volumes were
low. An exceedingly volatile and low-volume settlement week, ended with
strong price gains across the future and options (F&O) segment.
Rollovers across the stock F&O universe were well below the 6-month
average and the Nifty and other indices generated low rollovers. Hedge
ratios remained high with index instruments attracting significantly more
interest than stock futures. The FIIs continued to dominate the F&O
segment, holding around 43 per cent of outstandings.
The
week saw extreme volatility. The Nifty lost over 30 per cent in October and
it moved through a range of almost 700 points during the week. The VIX is at
a level of 69, which is close to a historic high. Index futures provide no
clues. Although there has been loss of volumes, most index futures are
trading very close to their respective underlyings. There are no calendar
arbitrages available in the Nifty and the Bank Nifty and CNXIT are both at
negligible differential to their respective underlyings. The options market
again, the put-call ratio (PCR) has corrected somewhat from extremely low,
bearish levels. In terms of open interest, the Nifty PCR is now at over 1,
while the OIPCR for November is at 0.97.
The
cumulative FII positions as percentage of total gross market position on the
derivative segment as on October18 increased to 42.06 per cent from October
23 level of 38.72 per cent. FIIs have been net buyers almost on all days of
the week. According to latest NSE, they hold index futures worth Rs 7,840.38
crore (Rs 11,847.25 crore) and stock futures worth Rs 8,984.74 crore (Rs
11,909.55 crore). Their holding on index options also declined to Rs
10,004.98 crore (Rs 17,018.53 crore).
Government
Securities Market
Primary
Market
On October 29, 2008, Reserve Bank of India (RBI) auctioned
91-day and 182 day T-bills for the notified amounts of Rs 5,000 crore and Rs
2,000 crore, respectively. The cut off yield for 91 day and 182 day T-bills
has been at 7.44 per cent and 7.38 per cent, respectively.
RBI auctioned 6- year
government stock maturing in 2014, for the notified amount of Rs 6,000 crore
with the cut off yield of 7.56 per cent on October 31, 2008.
RBI re issued 7.95 per
cent 2032, on October 31, 2008 for the notified amount of Rs 4,000 crore
with the cut off yield of 8.08 per cent.
Secondary
Market
Inter-bank
rates accelerated during the week as liquidity remained tight and banks were
wary of any lending activity. Call rates touched a three-week high of 21 per
cent on Friday, as liquidity starved banks rushed to borrow Rs 65,655 crore
from the RBI through its liquidity adjustment window. Bond auctions worth Rs
10,000 crore brought about additional pressure and the demand rose
significantly towards the weekend. The increased bids received at the LAF
repo window were also a pointer to the deficit cash conditions. RBI lent an
average Rs 46,870 crore over the week.
Bonds
rallied during the week on the back of weakening oil prices and mounting
deposit inflows into the banking system. But traders said anticipation of
further Reserve Bank of India (RBI) policy interventions also kept the bonds
on a high. On Saturday, the RBI carried out one more round of intervention
through a 100 basis point reduction in the Cash Reserve Ratio, a reduction
in the Statutory Liquidity Ratio to 24 per cent, a repo rate reduction to
7.5 per cent and a proposal to buy back securities issued under the Market
Stabilisation Scheme. The immediate impact of the CRR reduction is likely to
be Rs 40,000-crore liquidity infusion. Bonds gained despite the tight
liquidity conditions. There was growing speculation over further monetary
easing, given the reduction in annual inflation to 10.68 per cent and
monetary action by other central banks. The 10-year benchmark yield dipped
to the 8-month lows and ended at 7.47 per cent, 34 basis points lower over
the week. Over the month, the yield fell from 8.6 per cent.
The
daily trade volumes averaged about Rs 8,000 crore per day, though down from
the previous week’s level of Rs 9,100 crore.
Bond
Market
The
factors that boosted the government securities market did not help corporate
bonds. Tight liquidity weighed on non-SLR bonds, forcing them to give up
nearly all the gains of the previous week. The AAA 5-year yield rose to
11.68 per cent from 11.40 per cent, while the credit spread was even wider
at nearly 400 bps. Corporate bonds trading could improve provided the rate
cuts that take effect in the next two weeks are accompanied by stable global
market conditions.
The
RBI allowed systemically important non-banking financial companies (NBFCs),
not accepting public deposits to raise short-term foreign currency
borrowings, to refinance short-term liabilities on October 31, 2008. The
maximum borrowings should not exceed the highest of either 50 per cent of
the firm’s net owned funds or $10 million, RBI said in a statement issued
close of markets. The move would open up another channel of liquidity for
NBFCs which are facing a severe cash crunch at present. These borrowings
should be of maximum three years duration and their cost should not exceed a
maximum of 200 basis points above London Inter Bank Offered Rate. Further,
the RBI said that funds raised through foreign borrowings can be used only
for refinancing short-term liabilities and not for booking fresh assets.
Rapid fall in the stock market has hit the promoters’ loans portfolio of
NBFCs that are finding it tough to recover their dues by selling stocks held
as collaterals. In addition, a large number of NBFCs have bought debt papers
of real estate companies and small & medium enterprises.
Foreign
Exchange Market
Due
to the RBI measures, the rupee closed at Rs 49.44/6 against the dollar, an
improvement of 23 basis points. The rupee registered solid gains in the
later part of the truncated trading week in line with the improving market
sentiment worldwide. The better global credit market conditions also led to
a semblance of stability. The rupee moved away from the psychological
50-mark as the improved market conditions led to a positive outlook on
flows. The upside on the rupee has been capped at Rs 49.45 per dollar.
Forward premia were volatile but higher, accompanied with a rise in the
money market rates. The six-month premium ended at 2.22 per cent from 2.58
per cent. The rupee is likely to be edgy though the stock market seems to be
on the mend. The performance of the unit will be directly proportional to
the general investor mood.
Non-deliverable
forward markets (NDF) markets frequented mostly by institutional investors
and hedge funds, is mostly for emerging market currencies, where settlement
is in dollar. During the weekend, at the NDF market, the rupee-dollar closed
at Rs 51, as against Rs 52.20, the previous week. The trend was due to
deposits flooding the banks, partly from non-resident Indians under Foreign
Currency Non Resident (FCNR), in addition to domestic deposits.
India
’s foreign exchange reserves for the last fortnight have dropped by more
than $10 billion each week. For the week ended October 24, RBI data shows
that reserves slipped $15.5 billion, or 5.65 per cent—the largest drop
ever—to $258.4 billion. The decline was a result of major intervention by
RBI in forex markets and a fall in the valuation of reserves as the euro
slipped against the dollar.
Currency
Derivatives
The
NSE has pipped rival stock exchanges in terms of attracting the largest
number of members in the recently launched currency futures segment. NSE has
been registering impressive volumes in this segment, with more than one lakh
contracts being traded in a single trading session. According to SEBI, 1,030
entities have registered either as trading members or clearing members to
participate in the nascent currency derivative market in the country. Of
this, NSE has managed to attract 470 entities or close to 46 per cent of the
total number of members. MCX is next with 403 members, being the second
exchange to launch currency derivatives trading on October 6 after NSE
launched it on August 29. BSE has been able to attract only 157 members so
far for its currency segment that has been launched on October 1.
Commodities
Futures derivatives
Amid
fall in exports, jeera futures on October 29, fell by 1.4 per cent on the
National Commodity and Derivatives Exchange (NCDEX). Fall in spot prices
following higher arrivals in the physical markets also put pressure on the
futures prices here. Jeera, for the most-active January contract, fell by Rs
140, or 1.4 per cent at Rs 9,951 per quintal at the NCDEX counter, while
November contract shed Rs 28, or 0.25 per cent at Rs 10,676 per quintal. At
the Unjha spot market in
Gujarat
, jeera traded lower at Rs 10,880 per quintal. Market experts said reports
of fall in export and reduced demand in the spot markets after diwali, and
increased arrivals, mainly led to a fall in the futures prices. Meanwhile,
India
's jeera exports, which had been rising till August, declined by about 40
per cent to 2,250 tonnes in September.
National
Spot Exchange (NSEL), an online electronic spot-trading platform, is set to
launch urad, tur, and guar seed trading this month, said Anjani Sinha,
managing director and chief executive officer of the bourse. NSEL, promoted
by Financial Technologies (
India
) and National Agricultural Cooperative Marketing Federation, commenced
trading on October 15 with the launch of gold, silver and cotton 29mm
contracts.
Copper
fell to the lowest in three years amid sales of industrial metals, oil and
gold as the threat of a recession in the
US
and European economies curbs demand. Copper added to last week’s 22 per
cent drop, the biggest weekly decline since at least 1986. Copper for
three-month delivery fell $130, or 3.5 per cent, to $3,640 a tonne as of
10:51 am on the London Metal Exchange. The contract earlier lost as much as
4.8 per cent to $3,590 a tonne, the lowest intraday price since September
19, 2005. The metal has fallen 45 per cent this year as demand growth
shrinks in
China
, the world’s biggest user.
Banking
The
RBI has announced that all systematically important non-deposit taking
non-banking financial companies (NBFCs) with an asset size of Rs 100 crore
and above, may augment their capital by the issue of perpetual debt
instruments (PDI) up to 16 per cent of Tier I capital. The central bank has
taken this step in a bid to help these NBFCs to garner funds for increasing
business and meeting regulatory requirements.
Punjab
National Bank has recorded a 31.3 per cent rise in net profit for the
quarter ended September 30, 2008 at Rs 708 crore against Rs 538 crore a year
earlier.
UCO
Bank has reported a net profit of Rs 150 crore for the quarter ended
September 30, 2008 against Rs 111 crore for the corresponding period last
fiscal, a rise of almost 36 per cent.
Corporate
Tata
Tea Ltd., the world’s second largest tea company, has reported a net
profit of Rs 44 crore for the quarter ended September 30, 2008 as against Rs
37 crore for the same period last fiscal, an increase of 19 per cent.
Tata
Power’s profit after tax and statutory appropriations for the quarter
ended September 30, 2008, declined by 1.8 per cent to Rs 253 crore from Rs
257 crore in the corresponding period of previous year.
The
global meltdown has taken a toll on Suzlon’s fund raising plans with the
wind turbine major suspending its proposed rights issue of $360 million (Rs
1,800 crore). However, the company has clarified that this move will not
impact its expansion plans.
Era
Infra Engineering through their construction and contracts division has
bagged a contract worth Rs 450 crore by Bharat Heavy Electricals Ltd (BHEL)
for the construction of new power plant at Bawana,
Delhi
.
Wadia-promoted
Bombay Dyeing & Manufacturing Company has posted a net loss of Rs 104
crore for the second quarter ended September 30, 2008 while it registered a
net profit of Rs 19 crore over the corresponding period a year ago.
Oil
and Natural Gas Corporation ONGC has reported a 5.7 per cent drop in its net
profit at Rs 4,808 crore, following a two-fold rise in its outgo on fuel
subsidies in the July-September quarter. The decline in profit was due to
the outgo on fuel subsidies, which mounted to Rs 12,663 crore from Rs 3,799
crore a year ago.
State-owned
BPCL has posted a net loss at Rs 2,625 crore for the quarter ended September
30, 2008 compared to a net profit of Rs 1,038 crore in the same quarter last
year, owing to high crude oil and product prices.
Despite
global financial turmoil and rising capital costs, Indian corporates have
increased their overseas borrowing exposure in September. According to data
released by the RBI, Indian corporates have raised $2.83 billion through
external commercial borrowings (ECBs) during the month.
The
country’s largest telecom operator, Bharti Airtel, has registered a 27 per
cent increase in net profit at Rs 2,046 crore in the second quarter ended
September 30, 2008, compared to the same period in the last fiscal. The
growth was a shade lower than market expectations.
Information
Technology
The
Indian IT sector, which has been adversely affected by the global economic
slowdown, might lose some of its business from the domestic small and medium
enterprise (SME) segment. The Indian SME segment, which has been growing at
approximately 30 per cent for the past few years, contributes around 40 per
cent of IT vendor’s total revenue. According to industry analysts, the
sector is not insulated from the current economic slump. Its growth in
expected to come down to around 15 per cent.
Hughes
Communications India Ltd., the world’s leading provider of satellite
broadband services has announced that it has bagged an order to deploy 1,800
satellite broadband terminals for leading banks – Bank of India, Canara
Bank and YES Bank – to run the core banking solutions (CBS). As part of
the contract, Hughes will be installing turnkey networks which encompass
system integration, satellite bandwidth and network management to connect
1,200 offsite ATMs and branches for Canara Bank, 500 branches and ATMs for
Bank of India and another 100 bank branches for YES Bank. The networks will
be built on a satellite-based VPN technology.
Telecom
The
government is planning to cap the number of telecom operators in each circle
to meet the twin objectives of tiding over the spectrum crunch and enhancing
the subscriber base through optimal utilisation of spectrum. Though the
current policy regime supports entry of any number of operators, last year,
witnessing a rush of new applications, the Department of Telecommunication (DoT)
has put a temporary cut-off date of October 1, 2007 through an
administrative order, for accepting new applications. This has not been
lifted as yet. Further, only applications submitted till September 25, 2007
have been accorded licences till date, with DoT still undecided on the rest.
If DoT finally caps the number of operators in circles, it would be against
the TRAI’s recommendation last year to the contrary. However, since it is
a policy matter, the government has the powers to tell the regulator to
revisit the recommendations.
The
number of new subscribers added by Direct to Home (DTH) operators in the
past seven months is almost equal to the subscriber base it had acquired
since the first commercial DTH operations began in2003. As of today, the
total subscriber base of DTH (excluding Doordarshan’s non-commercial DTH
venture) has crossed 8.9 million, a sharp escalation over the 4.5 million
connections in March. DTH market leader Dish TV, that launched its service
in 2003, accounts for more than 4 million customers. The second largest
player, Tata Sky, an 80:20 joint venture (JV) between the Tata Group and
Star TV, claimed a subscriber base of 2.7 million in mid-October. Big TV has
announced that by mid-October, it crossed 5-lakh customer milestone.
|
Table
1 : Index Numbers of Industrial Production (1993-94 =100)
|
|
Table
2 : Production in Infrastructure Industries (Physical Output Series)
|
|
Table
3: Procurment, Offtake and Stock of foodgrains
|
|
Table
4: Index Numbers of Wholesale Prices (1993-94 = 100)
|
|
Table
5 : Cost of Living Indices
|
|
Table
6 : Budgetary Position of Government of India
|
|
Table
7 : Government Borrowing Programmes and Performance
|
|
Table
8 : Scheduled Commercial Banks -
Business
in India
|
|
Table
9 : Money Stock : components and Sources
|
|
Table
10 : Reserve Money : Components and Sources
|
|
Table
11 : Average Daily Turnover in Call Money Market
|
|
Table
12 : Assistance Sanctioned and Disbursed by All-India Financial
Institutions
|
|
Table
13 : Capital Market
|
|
Table
14 : Foreign Trade
|
|
Table
15 : India's Overall Balance of Payments
|
|
Table
16 : Foreign Investment Inflows
|
|
Table
17 : Foreign Collaboration Approvals (Route-Wise)
|
|
Table
18 : Year-Wise (Route-Wise) Actual Inflows of Foreign Direct Investment
(FDI/NRI)
|
|
Table
19 : NRI Deposits - Outstandings
|
|
Table
20 : Foreign Exchange Reserves
|
|
Table
21 : Indices REER and NEER of the Indian Rupee
|
|
Table
22 : Turnover in Foreign Exchange Market
|
|
Table
23 : India's Template on International Reserves and Foreign Currency Liquidity [As reported under the IMFs special data dissemination standards
(SDDS)
|
|
Table
24 : Settlement Volume and Netting Factor for Government
Securities Transactions Settled at CCIL - Monthly, Quarterly and
Annual Basis.
|
|
Table
25 : Inter-Catasegory Distribution of All Types of Trade in
Government Securities Settled at CCIL (With Market Share in
Respective Trade Types)
|
|
Table
26 : Settlement Volume and Netting Factor for Total Forex
Transactions Settled at CCIL - Monthly, Quarterly and Annual
Basis.
|
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Table
27 : Inter-Category Distribution of Total Foreign Exchange
Transactions Settled at CCIL (With Market Share in Respective Trade
Types)
|
*These statistics and the
accompanying review are a product arising from the work undertaken under
the joint ICICI research centre.org-EPWRF Data Base Project.