Prominent Notes: - Securities and Exchange Board of India

SECTION IV � INTRODUCTION
SUMMARY
INDUSTRY
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page no. 62 of this Prsopectus.
Global Economy
The multi-speed recovery in the global economy that was observed in the first half of 2010 became
more entrenched in the second half, as the advanced economies faced greater uncertainty while the
emerging market economies (EMEs) experienced consolidation of growth around trend. The advanced
economies which faced the prospect of double dip recession have in fact outperformed GDP growth
forecasts made a year ago.
Growth in world industrial production exhibited signs of deceleration after attaining a peak in May
2010, partly reflecting the base effect (Figure 1). Trade activities, however, have sustained the
momentum of a strong recovery, prompting the WTO in December 2010 to retain its September 2010
estimates for growth in merchandise trade volume at 13.5 per cent for 2010 (Figure 2). This high
growth, however, needs to be seen against the low base that resulted from the sharp 12.2 per cent
contraction experienced in 2009. In value terms, even after expanding by 23 per cent during the first
three quarters of 2010, world merchandise trade remained below the peak level attained before the
financial crisis. At 30 per cent, Asian exports increased at a significantly faster rate during the third
quarter of 2010 on a year-onyear basis than the 18 per cent growth for world merchandise trade. With
deficient domestic demand and high unemployment rate in advanced economies, protectionism remains
a possible response, which could hinder overall global recovery. (Source: RBI publication on External
Economy dated January 24, 2011 from a RBI website publication from www.rbi.gov.in extracted as on
April 13, 2011)
Indian Economy
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in the world.
For the fiscal 2009-10 India's economy grew by 7.4 percent which is an upward revision from earlier
estimates of 7.2 percent due to higher-than-anticipated growth in agriculture, mining and
manufacturing sectors. Despite global downturn, it has grown at an average rate of 7.10% per annum
during the last three years. According to CIA World F�����������������������������������������������
billion people in July 2009. India had an estimated GDP of approximately US$ 3,548.0 billion in 2009,
which makes it the fourth largest economy in the world after the United States of America, China and
Japan, in purchasing power parity terms.
Real GDP in India increased by 8.9 per cent during the first half of 2010-11, reflecting strong domestic
demand, especially private consumption and investment, and improving external demand. Although on
a cumulative basis, the IIP grew by 9.5 per cent during April-November 2010, it has been volatile in
the current financial year with growth rates ranging between 2.7 per cent and 16.6 per cent. Overall,
robust corporate sales, large indirect tax collections, advance tax payments and leading indicators of
service sector activity suggest persistence of the growth momentum
On the other hand, the latest quarterly Industrial Outlook Survey conducted by the Reserve Bank
during October-December 2010 indicates a marginal moderation in overall business expectations
during January-���������������������������������������� ������������������������������ ������� ������
book, inventories and capacity utilisation survey for July-September 2010 showed a marginal
improvement in capacity utilisation in Q2 of 2010-����������������������������������������������
(PMI) showed some moderation in the pace of manufacturing sector expansion in December 2010.
(Source: Third Quarter Review of Monetary Policy 2010-11: Reserve Bank of India from
www.rbi.org.in extracted as on April 08, 2011)
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