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Indian economic indicators
India's economy is booming after China and as of 30th May 2008, the Indian economy is now worth $1 thrillion. Examining some of Indian economic indicators will provide a glimpse of what's in store for foreign exchange investors.
GDP
The Indian Gross Domestic Product (GDP) has come a long way since its balance of payment downturn in the 80's. This can be largely attributed to its open policies under prime minister Atal Bihari Vajpayee in 2003, attracting high influx of foreign investors.
India's BPO sector and service industry has also benefited from its rapid growth of information technology, further strengthening its impressive growth and thus providing promising outlook for future growth. The most recent GDP records are as follows:
- GDP growth in 2002 - 3.8%
- GDP growth in 2003 - 8.5%
- GDP growth in 2004 - 7.5%
- GDP growth in 2005 - 9.0%
- GDP growth in 2006 - 9.4%
- GDP growth in 2007 - 9.0%
- GDP growth in 2008 - 8.5% (Projected)
- GDP growth in 2009 - 8.81% (Projected)
According to the CIA, India's GDP composition by sector can be broken down into 17.8% for agriculture, 29.4% for industries and a massive 52.8% for services as of 2007.
Inflation
India's projected a lower inflation rate in 2008 from the 5.77% reported in 2007. However, the rising price of global fuel, food and commodity rendered this impossible.
Its inflation rate stand at 8.75% in May according to the wholesale-price index.
By July, the Key Indian Inflation Rate has surpassed the 11% mark to become the highest rate recorded in 13 years, and almost three times as high as the 4.1% targeted by Reserve Bank of India (RBI) in 2007. The IMF estimates India's consumer price inflation to be 6.7% in 2009 but this do not seem realistic in view of the U.S economy recession looming in October 2008 that will easily spill over to 2009.
Currency Exchange Rate
Rupee weakened against the dollar in Oct 2008 along with it's stock market crash while bond yield dropped to seven month lows, despite RBI's intervention. However, India is not alone in this as there is an apparent sign of the world economy slowing down, led by the U.S.
India's substantial forex reserve does not seem to be working its charm this time around although the RBI's intervention in its managed float currency policy is common practice. In 2003, the Indian government with its $73 billion forex reserve was praised by the IMF citing that India does not need IMF's assistance.
Unemployment Rate
- 2003 - 8.80%
- 2004 - 9.50%
- 2005 - 9.20%
- 2006 - 8.90%
- 2007 - 7.80%
- 2008 - 7.20%
India is doing a good job at keeping unemployment rate down. The actual unemployment rate is lower because its labor force is outgrowing its employment rate (2.5% compared to 2.3% per annum).
Industrial Production
India's index of Industrial Production (IIP), publishes monthly composite of the value of industrial production in various sectors of industrial sectors of the economy. Currently, the IIP includes the mining, manufacturing and electricity industry. The mining and utility industries in India are especially worth noting.
Although only a fragment of India's economic indicators are highlighted here, it is enough to see that its economy hold a lot of promise and will continue to prosper under good policies. While developed countries will be likely to experience recession, India will be better off by seeing less growth in the coming quarters.