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Current Economic Statistics and Review For the
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Brief on Economic Censuses – 13Employment in Non-Agricultural Enterprises By Economic Activities *1. IntroductionEconomic Census has been conducted periodically by the Central Statistical Organization to gather information regarding various aspects of enterprises and persons employed in them, the latest being the fifth census conducted in 2005. The first census conducted in 1977 was a modest one, which collected information only on non-agricultural establishments with at least one-hired worker leaving out agricultural enterprises as well as own-account enterprises. However, from the second census these lacunae were removed and information was collected on agricultural as well as non-agricultural enterprises along with data on own-account enterprises and establishments with at least one hired worker. Though our earlier notes have given detailed accounts of persons employed by agricultural and non-agricultural enterprises and their different characteristics, this note- the twelfth in the series of notes prepared from the results of the Economic Censuses- gives an account of the employment in non-agricultural enterprises by their economic activities together with the growth in employment during the last twenty five years, i.e., from 1980 to 2005. 2.
Definitions An institutional unit in its capacity as a producer of goods and services is known as an enterprise. An enterprise is an economic transactor with autonomy in respect of financial and investment decision-making, as well as authority and responsibility for allocating resources for production of goods and services. It may be engaged in one or more economic activities at one or more locations. An enterprise may be a sole legal unit. Establishment The establishment is defined as an enterprise or part of an enterprise that is situated in a single location in which one or predominantly one kind of economic activity is carried out. It is an economic unit under a single legal entity. Own-Account
Establishments (OAE) An establishment without any hired worker on a fairly regular basis is termed as an own-account establishment. Members of the household normally run it. Directory
Establishment (DE) An establishment with hired worker employing six or more persons daily on a fairly regular basis is termed as directory establishment. Non
–Directory Establishment (NDE) An establishment with hired worker employing less than six persons daily on a fairly regular basis is termed as directory establishment. Agricultural
Establishment Agricultural Establishment is defined as one engaged in livestock production, agricultural services, hunting, trapping and game propagation, forestry and logging, fishing (corresponding to groups 012,013,014,015,020 and 050 of NIC 2004). Establishments engaged in activities pertaining to crop production and plantation (group 011 of NIC 2004) is excluded from the coverage of economic census. Non-Agricultural
Establishment Establishment engaged in economic activities other than those carried out by agricultural establishments are termed as non-agricultural establishment. Number
of Persons usually working daily Number of persons working daily in an establishment will include all persons whether hired or not. Workers with age less than 15 are categorized as children. Household members whether paid or not if engaged in any of the activities carried out by the establishment are included. The data of persons is a position in the last year for perennial establishment and last working season for seasonal establishment. This also includes supervisors and primary workers. A worker need not mean the same person is continued but refers to a position. Part time workers are also treated as employees as long as they are engaged on a regular basis. 3.
Limitations The Central Statistical Organisation has followed different National Industrial Classification (NIC) systems for grouping economic activities collected under different Economic Censuses over years. Thus, there can be some differences in the classification method used for grouping different economic activities of enterprises. However, these differences do not make any difference at the major group level. Each
Economic Census has to be conducted
in all states and UTs, but due to
some unavoidable circumstances, EC
1980 did not cover 4.
Overall Employment Growth According to EC 2005, there were 41.83 million enterprises in the country engaged in different economic activities other than crop production and plantation employing 100.9 million persons in 2005; as against this there were 18.4 million enterprises employing 53.7 million persons in 1980. The compounded annual average growth rate in employment between 1980 and 2005 works out to be 2.6 per cent. While the CAGR between 1998 and 2005 was the fastest at 5.9 per cent in case of increase in the number of enterprises , the employment during the period was only 2.8 per cent. Nevertheless some interesting facts have been revealed by the Economic Censuses. Firstly, the growth rate in employment was faster in rural areas as compared to urban areas. Thus there was a change in the share of employment between the period 1980 and 2005 with rural area surprisingly gaining and the urban areas loosing ground to that extent. In a sense, this should not be surprising, for rural areas have been characterised by a growing incidence of non-farm activities. Secondly, the rate of employment that is workers per enterprise, was only 2.4 persons in 2005 and there was a steady declining trend in the overall rate of employment between different censuses during the period (Table 1). The declining trend was quite distinct in urban areas where as in rural areas, the rate of employment was more or less static, hovering around 2.0 to 2.3 during the three and half decades. In urban areas, the employees per enterprises, fell from 4.0 in 1980 to 3.8 in 1990 then to 3.4 in 1998 and finally to 3.0 in 2005.
5.
Employment in Non-Agricultural
Enterprises Enterprises engaged in various economic activities are termed as non-agricultural enterprises which include own-account enterprises and establishments with at least one-hired worker. Such non-agricultural enterprises numbered 35.8 million according to EC 2005 and they employed 90.0 million workers. Of them, non-agricultural enterprises in rural areas employed 41.9 million persons and urban non-agricultural enterprises employed 48.1 million workers. As against this as per EC-1980, there were 50.8 million workers employed by 9.9 million non-agricultural enterprises, out of which 22.0 million were employed by rural non-agricultural enterprises and 28.8 million employees were engaged by urban non-agricultural enterprises.
At this level, the CARG between 1980 and 2005 works out to be 2.3 per cent with the growth in rural non-agricultural employment working out to 2.6 per cent and the urban non-agricultural employment growth registering 2.1 per cent. The rate of employment (workers per enterprises) in 2005 at 2.5 was less than that of 3.0 in 1980. This deteriorating trend was mainly due to the steady decline in the rate of employment in the urban non-agricultural enterprises from 4.1 in 1980 to 3.8 in 1990, then to 3.5 in 1998 and finally to 3.0 in 2005. Contrary to this trend the rate of employment in rural non-agricultural enterprises slightly rose from 2.2 in 1980 to 2.3 by 1998 but thereafter the employment rate has registered a decline to 2.1 in 2005 (Table 2).
Hired Workers The
number of hired workers employed by
non-agricultural enterprises has
risen from 29.0 million to 52.2
million during the 25-year period
ending 2005. However, the share of
hired workers to total employed
persons witnessed only a marginal
rise from 57.1 percent in 1980 to
58.0 per cent in 2005 (Table 2).
Addition of 11.5 million persons
between 1980 and 2005 in rural
enterprises has resulted in bulging
up of the total hired worker force
to 21.1 million in rural areas
in2005. The increment in the number
of hired workers in urban areas was
11.7 million; as a result the total
number of hired workers in urban
area rose from 19.4 million to 31.3
million during the period 1980-2005.
Persons working in non-agricultural own-account enterprises rose from 18.1 millions in 1980 to 27.9 million in 2005 with a CAGR of 1.7 per cent. While there was an increase of 6million persons working in rural enterprises during the same period, that in urban areas witnessed only an increase of 3.8 million persons (Appendix 1). Persons engaged by non-agricultural establishments with at least one hired worker rose from 32.7 million in 1980 to 62.1 million in 2005, a huge addition of 29.4 million during the 25-year period, with a CAGR of 2.6 per cent. Still the rate of employment during the period saw a decline from 6.9 to 4.5 persons. Rural non-agricultural establishments with at least one-hired worker additionally engaged 13.9 million persons during the 25-year period ending 2005,but the addition in urban non-agricultural establishment were more at 15.5 million persons (Appendix 1). While the share of rural non-agricultural establishment with at least one hired worker rose from 33% to 40% that of urban employees went down from 67% to 60% during the 25-year period ending 2005. Another interesting fact is that both in rural and urban areas, the rate of employment witnessed declines. While rate of rural employment came down to 3.8 in 2005 from 4.7 in 1980, that among urban enterprises registered a steep decline to 5.1 in 2005 from 9.0 in 1980 (Appendix 4). As a result, the CAGR in rural non-agricultural employment during the 25-year period has worked out to be 3.4%, clearly 1.2 per cent more than that seen in employment among urban enterprise employment (Appendix 3). Directory
and Non-Directory Establishment The establishments with at least one hired worker employing less than 6 persons daily on a fairly regular basis are non-directory establishments;. The employment in non-directory establishment registered an increase of 10.5 million employees during the 7-year period ending 2005 (Appendix 5). Both,in rural and urban areas employment increased by about 5 million and 5.5 million persons, respectively, during 1998-2005. The CAGR worked out to be 6.9 per cent during the period. But rate of employment, however, came down from 2.5 in 1998 to 2.3 in 2005
Male and Female Employments Table
4 depicts gender wise employment in
non-agricultural enterprises along
with child employment.
Share of Female Employment In 2005, out of 90.0 million persons engaged by non-agricultural enterprises, 16.2 million workers were females forming 18.0 per cent, as against this in 1990 there were 10.7 million female employees forming 15.6 per cent out of a total 67.3 million employees. CAGR of female employees works out to be 1.6 per cent during the 15-year period. Female employment in rural non-agricultural enterprises grew from 6.0 million in 1990 to 9.2 million in 2005. Amongst urban non-agricultural enterprises, female participation grew from 4.7 million in 1990 to 7.0 million in 2005. Thus, CAGR of female employment in urban areas was slower at 1.2 per cent than that of 2.1 per cent in rural areas. Female participation in own-account enterprises rose from 3.9 million in 1990 to 4.4 million in 2005 with a CAGR of 1.5 during the period. Non-agricultural establishments with hired workers has 3.6 million females in the roaster in 1990, which rose to 11.8 million in 2005 with CAGR of 1.8 per cent and the share of female workers increased from 15.1 per cent in 1990 to 19.0 per cent in 2005. Child Employment In spite of child employment ban etc., child employment in 2005 was still 1.9 million. However, overall there has been no increase in child employment; in fact actually there was a fall in child employment from 1.92 million in 1998 to 1.89 million in 2005. 6.
Ranking of Economic Activities as
per Employment It
can be seen from Table 5 that trade,
manufacturing and community, social
and personal services have been the
three most important activity groups
where more than 80 per cent of the
persons are employed as per the
Economic Census 2005. A brief
description
of the profiles of these
individual activities is in order at
this stage.
1.
Trade,
which includes both wholesale and
retail trade, is the most prominent
economic activity group, employing
maximum number of persons as per
EC-2005. With 44.2 per cent of all
non-agricultural activities and
numbering around 15.8 million
enterprises in 2005, the trade
sector has employed about 27.3
million persons (Appendix 1) or
30.3% of the total non-agricultural
employment
in 2005 (Appendix 2) at an
average employment of 1.7 per
enterprises (Appendix 3). Between
EC-1980 and EC-2005 there has been
an addition of 17.1 million persons
with an addition of 6.8 million
persons in own-account trading
enterprises and 10.3 million persons
in 3.8 million trading
establishments engaging hired
workers (Appendix 1). The annual
growth rate (CAGR) in employment in
trading enterprises between 1980 and
2005 has been 4.0 %, with that in
trading establishments with hired
workers registering a growth of 5.5
% per annum - almost double to that
in own-account trading enterprises
at 2.9 % (Appendix 3). In rural
areas, there has been an addition of
7.9 million persons in trading
and that in urban areas were
9.2 million persons. Out of the 14.0
million persons in trading
establishments with hired workers,
10.2 million persons were in
non-directory establishments with
less than six hired workers and that
in; directory establishments with
six hired workers or more was only
3.9 million in 2005 (Appendix 5).
However, average employment
obviously is higher in directory
establishments since, as per
definition, it has six or more hired
persons as compared to less than six
persons in case of non-directory
establishments (Appendix 5). It can
also be seen from Appendix 5 that
while there has been a decline in
the average employment in trading
non-directory establishments
contrary to a rise in the average
employment in directory
establishments especially among
those trading establishments in
rural areas. 2.
Manufacturing
is the second important economic
activity employing about 25.5
million persons (Appendix 1) in 2005
forming about 28.3 % of the total
non-agricultural employment
(Appendix 2) with an average
employment of 3.1 persons per
enterprise (Appendix 4). According
to EC-2005, there were 8.3 million
manufacturing enterprises employing
25.5 million
persons
as against 6.0 million
enterprises employing 20.1 million
persons in 1980. At this level, the
annual growth rate (CAGR) works out
to be only 1.0 %, - second lowest
among all groups – between 1980
and 2005. Among
3.2 million manufacturing
establishments with hired workers in
2005 employing 17.9 million persons,
there were 6.6 million employees in
non-directory establishments and
11.4 million persons in directory
establishments. 3.
Community,
Social and Personal Services
- as an economic activity among
different non-agricultural
activities, came third in terms of
the number of enterprises as well as
in terms of employment. The
enterprises engaged in these
activities increased from 3.0
million in 1980 to 5.4 million in
2005
and the employment in these
enterprises increased from 13.1
million in 1980 to 21.0 million in
2005 with an annual growth rate (CAGR)
of 1.9 per cent (Appendix 3). 4.
Finance,
Real Estate and Business Services
ranks fourth among all activities in
terms of employment. With 4.4
million employees engaged in such
activities in 2005, almost 3-fold
increase in employment i.e., from
1.6 million employees in 1980 to 4.4
million in 2005, has been reported
among these enterprises. Their share
in all non-agricultural activities
has witnessed a steady increase from
3.1% in 1980 to 3.7% in 1990, to
3.9% in 1998 and then to 4.9% in
2005. 5.
Hotels
and restaurants
is the fifth dominant sought after
economic activity according to
EC-2005, with 1.5 million
enterprises engaged in these
activities employing 3.8 million
workers in 2005. The employment in
these enterprises increased from 2.1
million in 1980 to 3.8 million in
2005 with an annual growth rate (CAGR)
of 2.4%. The share of employment in
enterprises pursuing activities
related to hotels and restaurants in
all non-agricultural activities has
been more or less steady around 4.0
%. 6.
Transport
and storage
activity ranked sixth among the 12
economic activities as far as
employment is concerned. About 3%
growth rate in employment between
any two censuses among enterprises
engaged in transport and storage
activities has been witnessed. 7.
Sales,
maintenance, and repair of vehicles
is the new economic activity group
for which data has been collected
for the first tine during EC-2005.
The employment in these enterprises
in 2005 amounted to 1.9 million. 8.
Posts
and telecommunication
ranking eighth in hiring of persons
among all non-agricultural
activities, registered a 3-fold
increase during the 25-year period
with a CAGR of 4.2 per cent between
EC-1980 and EC-2005. It registered
the highest growth rate of 8.0 per
cent per annum between EC-1998 and
EC-2005. 9.
Employment
in mining and quarrying (0.6%),
electricity etc. (0.5 %),
construction (0.8%) and unspecified
activities (0.0%) together accounted
for only 1.9% of total
non-agricultural employment. *
This note has been prepared by
R.Krishnaswamy Highlights of Current Economic Scene Growth
Scenario The Central Statistical Organisation (CSO), Ministry of Statistics and Programme Implementation has released the advance estimates of national income at constant (1999-2000) and current prices, for the financial year 2008-09. The growth rate of 7.1% in GDP is been estimated for the financial year 2008-09 as compared to the growth rate of 9.0% registered last financial year. Gross capital formation is estimated to show a growth rate of 41.1% or Rs 21,78,031 crore for the year 2008-09 as against a growth of Rs 18,29,346 crore or by 38.7% posted for the financial year 2007-08 at current prices. Within it gross fixed capital formation is projected to show a rise of Rs 18,75,953 crore as against a rise of Rs 16,05,440 crore placed last fiscal year 2007-08. Valuables and changes in stock will show a growth rate of 0.9% and 4.6% respectively as compared to a growth of 1.1% and 3.6% registered last financial year. Whereas at constant prices gross capital formation is estimated to show a rise by Rs 13,50,671 crore as compared to rise of Rs 12,20,412 crore posted for the year 2007-08. After
Prime
Minister’s Economic Advisory
Council commented that, Statistical agency, estimated growth rate of 7.8 % in the first half of the current fiscal year, signifying a sharp fall of in the second half of the prevailing fiscal year. Sustaining the investment and still optimistic services has stimulated growth. Manufacturing growth rate halved from 8.2% in 2007-08 to 4.1% in the current fiscal year. All sectors growth rate are expected to decline except for two sectors mining and quarrying and community, social and personal services. The latter sectors are expected to benefit from the highest government expenditure on social schemes, as well as the Sixth Pay Commission award. Non- government analysts are sceptical about the 7.1% growth, however government is positive that growth rate will grow more than whatever is estimated by the agencies. Saumitra Choudhuri, expects economic momentum to pick up in the coming months and the growth rate to improve in 2009-10. Citi, still uphold that growth in 2009-10 will be just 5.5%. Pronab Sen, chief statistician of the country, put in the picture that growth rate in the last quarter will decide the growth rate for the current financial year, as it has a weight of more than 35% in the total GDP. DK.Joshi, principal economist at CRISIL, commented that the 7.1% growth means that the economy is expected to grow at 6.3% in the second-half of the fiscal. Increase in the government expenditure in consumption is expected to partly make up for the decline in the rate of growth in private consumption which at present is projected to fall to 6.7% in the current fiscal year as against a rise of 8.5% registered last fiscal year. With the increase in expenditure by government, the growth rate in government consumption is expected to increase by 16.7% against 7.4%. Agriculture According to a recent survey conducted by the Solvent Extractors’ Association (SEA), the output of the largest rabi oilseed crop, rapeseed / mustard seed, is likely to rise by 39.43% to 64 lakh tonnes in the current rabi season (November -February) 2008-09 as compared to 45.9 lakh tonnes in the same season last year on account of favourable climatic condition and record high sowings, which has been pegged at around 65.88 lakh hectare 10% higher compared to 59.82 lakh hectares registered a year ago. The increase in the output assumes significance, as the country is facing huge supply deficit of edible oils. The survey has revealed that Rajasthan has continued to be the top-producer of mustardseed with an estimated output of 29 lakh tonnes this season (19.5 lakh tonnes during the last season) in a projected sowing area of 28.03 lakh hectares (24.78 lakh hectare), followed by Uttar Pradesh with an output of 11 lakh tonnes (6.5 lakh tonnes) in a covered area of 8.77 lakh hectare (7.90 lakh hectare). According
to data published by Cashew Export
Promotion Council (CEPC), cashew
kernel exports from the country
have recorded a 25 % growth in
terms of value during January to
over Rs 223 crore due to increase
in value realisation amid global
economic slowdown. The unit value
realisation saw an increase of Rs
53 at Rs 263.64 a kg as compared
to Rs 210.73 a kg during the
review period. In terms of volume,
however, the exports have declined
marginally to 8,460 tonnes as
compared to 8,483 tonnes. Exports
have moved upwards during April -
January 2008 -09, reporting over
35 % increase in at Rs 2,507.02
crore as against Rs 1,850.71 crore
during the same period last year.
In terms of quantity, the exports
have stood at 91,381 tonnes during
the same period as against 94,794
tonnes in the corresponding period
in the previous year. As
per the new fertiliser policy,
approved by the Cabinet Committee
on Economic Affairs (CCEA),
National Fertilizers Ltd (NFL) and
Gujarat Narmada Valley Fertilizers
Company (GNFC) are stand to
benefit hugely on account of
provision made for a ‘special
fixed cost’ reimbursement to
enable conversion of their
existing urea plants running on
furnace oil into gas-based units.
The two listed state-owned
companies plan to invest around Rs
4,800 crore over the next three
years to change the feedstock of
their four plants – NFL’s
Bhatinda, Nangal and Panipat and
GNFC’s Bharuch – from furnace
oil to natural gas. Under the new
fertiliser policy, fertiliser
units would be granted an
additional ‘special fixed
cost’ working out to about Rs
3,500 per tonne of urea. Thus,
apart from the energy efficiency
savings mop-up, plants will also
be entitled to a portion of the
feedstock cost savings that was
supposed to accrue solely to the
Centre. As per the experts, inn
the original policy, NFL’s
concession rate on conversion from
furnace oil to gas feedstock would
have fallen from around Rs 22,750
to Rs 14,500 per tonne of urea. In
the new policy, the rate will drop
to only Rs 18,000 per tonne. According
to data collated by Indian Sugar
Mills Association (ISMA), sugar
output in 2008-09 is estimated to
fall to approximately 17 million
tonnes as against the ISMA’s
previous forecast of 18 million
tonnes and last year’s output of
26.3 million tonnes. Sugarcane
output is also projected to
decline by 14.71% to 290 million
tonnes this year from the record
340 million tonnes last year. Area
under sugarcane is estimated to
have fallen by 12 % to 4.4 million
acres from 5 million acres last
year due to farmers shifting to
more remunerative crops especially
to cotton, pulses and edible oils.
Meanwhile, most of the sugar mills
in Maharashtra and Uttar Pradesh,
the two major sugar producing
states, have started winding up
crushing for the current year and
almost all crushing mills are
likely be closed down latest by
March 15. Farmers are realising
better returns on their cane from
jaggery units than sugar mills.
Therefore, they are diverting the
remaining sugarcane for this
season to jaggery units resulting
in huge shortage of cane for sugar
mills. With dwindling cane supplies leading to low capacity utilisation and premature shutdown of plants, sugar mills in Uttar Pradesh (UP) are now offering farmers an extra Rs 15 per quintal, known as ‘cane development subsidy’, to induce them to plant more area under sugarcane. This cane development subsidy has been offered over and above the Rs 145 State Advised Price (SAP) that mills in UP are paying to growers in the current 2008-09 crushing season (October-September). Major sugar mills that have decided to pay this subsidy include Simbhaoli Sugars Ltd, Bajaj Hindusthan, Balrampur Chini and Triveni Engineering among others. Sugarcane growers have preferred to sell their produce to the manufacturers of gur and khandsari (alternate sweeteners), as they have been offering Rs 160-165 to them. Mills in Tamil Nadu, too, have been offering similar kind of sops to cane growers at the rate of Rs 5,000 per acre (for early October-December planting) and Rs 3,000-4,000 per acre for the main planting season (January-April). The
Cotton Advisory Board (CAB) has
lowered both the production and
demand estimate for the crop
season 2008-09. The production
estimate for 2008-09 has been
lowered by 9 % to 340 lakh bales
against 369 lakh bales recorded
last year. Demand is expected to
fall sharply by 16 % to 280 lakh
bales in the year under review
against 326 lakh bales registered
last year. Reeling under the
economic slowdown, mill
consumption is likely to fall 4 %
to 195 lakh bales (from 203 lakh
bales of last year), while that of
small-scale units is expected to
drop by 15 % to 20 lakh bales
(against 23 lakh bales of last
year). As per Mr A.B. Joshi,
Textile Commissioner, National
Bank for Agriculture and Rural
Development (Nabard) has plans to
set up farmer self-help groups (SHGs)
with about four farmer groups in
each state and the pilot project
would be initiated from the next
fiscal year (2009-10). The group
would consist of small and
marginal farmers who would be
nurtured like the SHG members and
would be handheld to open accounts
in the banks. These farmer groups
would form a sort of consortium,
which would help in getting better
returns in cases such as
marketing, storage, material input
when they approach the market as a
group rather than as individuals.
It is likely to lower the cost of
production for the farmers while
bringing in confidence to the
banking industry. Formation of
SHGs method is being applied, as
about 82 % of the landholdings are
small or marginal and in many
cases even less than two acres. According
to statistics by Coffee In
the backdrop of increased minimum
support price of wheat to Rs 1,080
a quintal from Rs 1,000 last year
and expected increase in
procurement by government
agencies, Food Corporation of
India (FCI) is pose to face a
problem of holding this mounting
stocks of wheat in the coming
months. A senior government
official has stated that the
central and state agencies are
likely to procure at least 20
million tonnes wheat from farmers
in marketing year (March-April)
2009, marginally lower than the
record buys of 22.4 million tonnes
of last year, on a smaller than
anticipated crop.
As
per the latest report by the
United Nation’s Food and
Agricultural Organisation (FAO), Industry
Index
of Industrial Production
registered a decline of 2.0% over
the month resulting in the
cumulative growth for the period
April-December 2008-09 to reach
3.2% much below to that registered
during the corresponding period of
last year. The
Indices of Industrial Production
for the Mining, Manufacturing and
Electricity sectors for the month
of December 2008 stand at 186.0,
298.6, and 223.1 respectively,
with the corresponding growth
rates of 1.0%, (-) 2.5% and 1.6%
as compared to December 2007. The
cumulative growth during
April-December, 2008-09 over the
corresponding period of 2007-08 in
the three sectors have been 3.0%,
3.3% and 2.7% respectively, which
moved the overall growth in the
General Index to 3.2%. In
terms of industries, as many as
seven (7) out of the seventeen
(17) industry groups (as per
2-digit NIC-1987) have shown
positive growth during the month
of December 2008 as compared to
the corresponding month of the
previous year. The industry group
‘Other Manufacturing Industries’
have shown the highest growth of
21.7%, followed by 9.0% in ‘Beverages,
Tobacco and Related Products’
and 7.6% in ‘Metal Products and Parts, except
Machinery and Equipment’.
On the other hand, the
industry group ‘Jute
and Other Vegetable Fibre Textiles
(except cotton)’
have shown a negative growth of
66.4% followed by 20.0% in ‘Wood
and Wood Products; Furniture and
Fixtures’
and 17.9% in ‘Transport
Equipment and Parts’. The Sectoral growth rates in December 2008 over December 2007 are 1.7% in Basic goods, 4.2% in Capital goods and (-) 8.5% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 12.8% and (-) 0.1% respectively, with the overall growth in Consumer goods being (-) 2.7%. Infrastructure
The
Index of Six core industries
having a combined weight of 26.7%
in the Index of Industrial
Production (IIP) with base 1993-94
stood at 247.4 in December 2008
and registered a growth of 2.3%
compared to a growth of 3.2% in
December 2007.
During April-December
2008-09, six core-infrastructure
industries registered a growth of
3.5% as against 5.9% during the
corresponding period of the
previous year. Crude Oil production (weight of 4.17% in the IIP) registered a growth of (–) 0.3% in December 2008 compared to a growth rate of (-) 1.4% in December 2007. The Crude Oil production registered a growth of (-) 0.5% during April-December 2008-09 compared to 0.3% during the same period of 2007-08. Petroleum refinery production (weight of 2.00% in the IIP) registered a growth of 3.0% in December 2008 compared to growth of 1.9% in December 2007. The Petroleum refinery production registered a growth of 3.7% during April-December 2008-09 compared to 7.5% during the same period of 2007-08. Coal production (weight of 3.2% in the IIP) registered a growth of 9.4% in December 2008 compared to growth rate of 8.4% in December 2007. Coal production grew by 10.1% during April-December 2008-09 compared to an increase of 3.5% during the same period of 2007-08. Electricity generation (weight of 10.17% in the IIP) registered a growth of 0.7% in December 2008 compared to a growth rate of 3.9% in December 2007. Electricity generation grew by 2.6% during April-December 2008-09 compared to 6.6% during the same period of 2007-08. Cement production (weight of 1.99% in the IIP) registered a growth of 11.6% in December 2008 compared to 4.4% in December 2007. Cement Production grew by 7.0% during April-December 2008-09 compared to an increase of 7.7% during the same period of 2007-08. Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of (-) 0.8% in December 2008 compared to 1.8% in December 2007. Finished (carbon) Steel production grew by 2.7% during April-December 2008-09 compared to an increase of 6.4% during the same period of 2007-08. Inflation Wholesale Price Index for ‘All Commodities’ (Base: 1993-94 = 100) for the week ended 31st January 2009 fell by 0.7 percent over the week. The annual rate of inflation, calculated on point-to-point basis, stood at 4.4 percent for the week ended January 31, 2009 as compared to 4.7 percent during the corresponding week of the previous year. The index for major group primary articles declined by 0.2 due to decline in prices of condiments and spices, fruits and vegetables, tea and barley The price index of fuel, power, light and lubricants declined by 3.1 per cent was mainly due to substantial reduction in the administered prices of petrol, diesel and LPG. The
index for major group manufactured
products declined by 0.1. The final wholesale price index for ‘All Commodities’ for the week ended December 6, 2008 stood at 230.5 as compared to 231.1 and annual rate of inflation based on final index, calculated on point to point basis, stood at 6.6 percent as compared to 6.8 percent. Financial
Market Developments Capital Markets Primary
Market The uncertainty in the equity markets has taken a toll on the funds raised from public issues, with the mobilisation amount declining by 95% in the first nine months of the current fiscal over the year-ago period. According to Securities and Exchange Board of India (SEBI), during April-December 2008, there were 20 public issues, which mobilised Rs 2,058 crore as compared to Rs 38,153 crore during the same period in the previous year. During 2007, 74 public issues were floated. The initial public offering (IPO) of Edserv, which closed on 09 February 2009, was subscribed by 1.30 times. Though a small ticket issue (Rs 24 crore), it is the first IPO to go ahead with its IPO in the last four months. The Chennai-based e-learning company has issued 39.7 lakh equity shares at the price band of Rs 55-60. The
prevailing global economic
downturn and new guidelines issued
by the central bank have forced
venture capital funds to rework
their Secondary
Market Stock markets rose on expectations of further stimulus measures during the week before vote-on-account. The BSE Sensex increased 333 points or 3.6% to 9,635, while NSE Nifty rose 105 points or 3.7% to 2,948. The CSO pegged GDP growth for FY09 at 7.1%, which would be the slowest in the last six years. The index of industrial production (IIP) too, slipped to a negative 0.2%. All these along with subdued global markets however, were not able to stop the domestic indices from inching up. The sentiment was helped by foreign institutional investors (FIIs) who were net buyers to the tune of Rs 425 crore. Inflation numbers also slipped from 5.07% to 4.39%. The Defty gained 3.8% in a week when the rupee saw very little movement. Among the sectoral indices of BSE, all the indices recorded positive gains over the week except IT and FMCG. Among the gainers, Reality posted double-digit growth of 12.6% during the week. Stocks of capital goods and power sector biggies, such as Larsen & Toubro (L&T) and Bharat Heavy Electricals (Bhel), outperformed the BSE Sensex in the last five trading sessions on the news that the government was all set to clear a mega power generation equipment manufacturing project worth over Rs 40,000 crore. While share prices of Bhel and L&T rose between 8.63% and 10% respectively compared to Sensex’s rise of 5.78% in the last five trading sessions, stocks of some other companies, such as Alstom Projects India, PowerGrid Corporation of India, Siemens and ABB, that have acquired the manufacturing technology and execution skills using supercritical components gained between 5% and 23%. The BSE has widened its lead over the NSE in the block deal segment. In 2008, the volume of block deals on BSE was Rs 16,377 crore, compared with NSE’s Rs 4,754 crore. The corresponding numbers for the previous year were Rs 15,180 crore and Rs 8,509 crore, respectively. According to a SEBI circular, allocation of $8 billion of debt to FIIs will be done by open bidding and not on a first-come first-served basis as it is currently. The Government had recently eased conditions for FII investments in debt, raising the cumulative debt investment limit for them to $15 billion, from $6 billion. The bidding platform shall be provided by the stock exchanges. The first round of bidding shall be conducted on NSE and the next on BSE, and thereon by the two exchanges in turns. The bidding session shall last two hours and existing trading members shall have access to the bidding platform; FIIs and sub-accounts can mandate these trading members to bid. The minimum amount which can be bid for is Rs 250 crore, and the minimum tick size Rs 100 crore. A minimum flat fee of Rs 1,000 per successful bid shall be levied for the allocated amount. No single entity shall be allocated more than Rs 10,000 crore. The time period for utilisation of the limits allocated in this manner shall be 45 days. Allocation of limits up to Rs 249 crore shall take place on a first come first served basis. Companies delaying or not filing full disclosures with stock exchanges and with the SEBI, as mandated will face a penalty of up to Rs 1 crore. As per a SEBI representative, “Under certain categories, companies which acquire shares beyond a certain percentage stipulated under the regulations are required to make disclosures. Under the SEBI Act, offenders are liable to a maximum penalty of up to Rs 1 crore for not filing disclosures,” SEBI relaxed the takeover norms for distressed companies whose board has been superseded by the government on 13 February. Although the regulator did not name a company, market players said the relaxation would help Satyam Computer Services find a buyer. On 13 February, the SEBI barred First Global Director and Chief Global Strategist Shankar Sharma from buying, selling or dealing in securities and from associating in the securities market for one year for fictitious trades during early 2001. The order comes into effect “immediately after four weeks” from the date of communication of the order. SEBI has, however, disposed the showcause notice against Sharma’s wife Devina Mehra, who is also a director of First Global The SEBI is considering its Primary Market Advisory Committee’s recommendation to introduce a uniform face value system for all listed companies. At present, companies decide their individual face value between Rs 1 and Rs 100. According to the recommendations, the multiple face value system creates confusion among investors. It has been noticed that investors tend to look at the market price of a particular stock without knowing its face value, and the confusion is compounded when companies declare dividend as a percentage of the face value. It was argued that the practice of declaring a percentage dividend based on a low face value was misleading, especially when the company has raised money at a hefty premium or when its stock was trading at a high price in the secondary market. Despite
equities markets falling, more
FIIs are coming to Banks are once again turning to mutual funds for better returns in the face of plunging call money rates. The development also signifies a nascent confidence of the banking sector to invest in the non-government sector. Renewed bank investments had pushed up assets under mutual funds’ management by nearly 10% in January 2009. Of the Rs 27,903 crore rise in assets under management (AUM) of mutual funds last month, almost 70% came from the banking sector. The flow had been into the liquid and money markets funds. AUM of the mutual fund industry in January 2009 increased by Rs 460,949 crore compared to Rs 421,117 crore in December 2008. Derivatives
After weeks of being in the losing streak, the Nifty future managed an impressive turnaround, putting in a neat 3.75 gains on the table. While a bulk of the upsurge may have been helped by the squaring-off of short positions that the week also saw fresh accumulation of Nifty futures suggests a turnaround in market sentiments too. The Nifty future now trails Nifty, which ended at 2,948 points, by about six points only. Trading volumes continued to remain moderate at about Rs 31,000 crore. Another week of narrow range-bound trading saw the market register some gains. Volumes remained low and advances and declines were almost balanced. It was another muted week in the derivatives market as spot prices inched up on light trading volumes. FIIs eased down on their derivatives exposures but local traders increased their commitments. The cumulative FII positions as percentage of the total gross market position on the derivative segment, as on 12 February was 33.43%. The FIIs indulged in alternate bouts of buying and selling in the future and options (F&O) segment. They now hold index futures worth about Rs 7,363 crore (about Rs 6,815 crore) and stock future worth about Rs 12,232 crore (about Rs 11,157 crore). Their index options jumped to about Rs 15,489 crore (about Rs 12,152 crore). The spot and futures prices are at marginal variance with each other so there’s nothing there for a trading view. The Bank Nifty has generated unusually high open interest (OI) in the March series so there is indication the sector will remain in play through the carryover period. The trend appears positive as rate cuts are expected. In the options market, the put-call ratios (PCR) continue to look somewhere between neutral and bullish. The Nifty PCR in terms of OI is about 1.3. India VIX or Volatility Index, which measures the immediate expected volatility, has weakened to 43.31 from the previous week’s close of 50.65. However despite the fall, the volatility index managed to touch the 50-point mark many times over during intra-day trades. Government
Securities Market Primary
Market The Reserve bank of India (RBI) auctioned 91 day T-Bills and 364 day T-Bills for the notified amounts of Rs 5,000 crore and Rs 3,000 crore, respectively on 11 February 2009. The cut-off yield for 91 day and 364 day T- Bills has been set at 4.79% and 4.58%, respectively. On
13 February 2009, RBI auctioned
6.05% 2019 and 6.83% 2039 for the
notified amounts of
Rs 6,000 crore and Rs 2,000
crore, respectively. The cut-off
yield for both the securities has
been set at 5.94% and 7.37%,
respectively. Secondary
Market Inter bank call money rates ruled in a narrow range of 3.85-4% during the week. Bonds yields softened slightly even as Government borrowings intensified ahead of the financial year-end, and banks held back on credit expansion. Liquidity though was not a problem. This was evident from the high response to the weekend liquidity adjustment facility auctions. Almost all the banks, including the foreign banks, took recourse to the reverse repurchase window. As a result, Rs 51,580 crore of liquidity was parked in the reverse repo window. Average trade volumes per day remained high during the week at about Rs 12,000 crore or about Rs 4,500 crore more than equity trade volumes. This trend was also evident from the high bid-to-cover ratios at the Government securities (G-sec) auctions. The G-sec auctions saw the bid-to-cover ratios of 3.5 and 4.28 times. At the T-bill auctions also, the bid-to-cover ratios were 3.2 times. Bond
Market During
the week under review, one bank,
one NBFC and one central
undertaking tapped the market by
issuance of bonds to mobilise an
amounts of Rs 495 crore.
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