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Management Discussion
& Analysis
OVERVIEW OF ECONOMY
Global Economy
2011 was a challenging year for the global economy. Global
economic output growth, as estimated by International
Monetary Fund (IMF), came down to 3.9 percent in 2011 from
5.3 percent in 2010. The economies faced a diverse set of
challenges ranging from a catastrophic tsunami in Japan to
the Euro Zone crisis compounded by risks of sovereign
defaults. However, improved activity in the United States
during the second half of 2011 and better policies in the
Euro Zone in response to its deepening economic crisis,
mitigated these challenges to a certain extent and aided the
global economy in achieving this growth. Real GDP growth in
emerging and developing economies is estimated at
6.25 percent for the year.
Going forward, we believe that these tough times for global
economy will continue for some more time to come before
the recovery starts. The International Monetary Fund (IMF) in
its World Economic Outlook of April, 2012 has also projected
global GDP growth to marginally drop to 3.5 percent in 2012
before improving to about 4.1 percent again in 2013.
Indian Economy
The Indian economy continued its demographics led growth
story in the current year, however at a slower pace, as the
impact of global challenges tricked down to Indian economy.
India: GDP Growth (%)
16
9.3
6.7
8.4
8.4
6.5
These led to a tough external environment and a testing
domestic scenario marked by high inflation and a
high-interest rate regime.
Further, unforeseen weakening of the Indian rupee against the
US dollar made imports even costlier. The rupee depreciated
by about 15 percent from the levels of `44.7 to the levels of
`51.3 against a dollar in March'12. This has led to massive
increase in fiscal deficit of 5.9 percent of GDP as against a
target of 4.6 percent for this year and a further push to the
inflationary pressures. Rising cost of living casted a negative
spell on the disposable income of households impacting the
consumption story.
Despite recent tough global and domestic economic
situation, outlook for the Indian economy still looks
promising in the medium to long term. Finance budget
2012-13 aims to control fiscal deficit and bring it down to
5.1 percent of the GDP. Favourable demographic factors like a
young working population and a labour force which is
expected to increase by 32 percent in the next 20 years,
compared to a fall of 4 percent in industrialized countries and
5 percent in China, strongly indicate latent growth potential
of second fastest economy amongst the major economies on
the globe.
514
Indian Media & Entertainment Industry (` billion) and
Advertisement Revenue Contribution (%)
580 587
FY 08 FY 09 FY 10 FY 11 FY 12 2007 2008 2009 2010 2011 2012P 2013P 2014P 2015P 2016P
38.1
Source: Central Statistical Office (CSO)
Total M&E Advertisement Revenue Contribution (%)
and Planning Commission of India Source: FICCI - KPMG Indian Media and Entertainment Report 2012
37.9
38.8
652
40.8
726
41.2
823
40.9
932
41.2
1076
40.9
1254
40.4
1457
40.2