Indian economy has been witnessing a phenomenal growth since the last decade. The country is still
holding its ground in the midst of the current global financial crisis.
Quarterly gross domestic product (GDP) at factor cost at constant (1999-2000) prices for Q3 of 2008-09 is
estimated at US$ 171.24 billion, as against US$ 162.57 billion in Q3 of 2007-08, showing a growth rate of
5.3 per cent over the corresponding quarter of previous year.
Despite the global slowdown, the Indian economy is estimated to have grown at close to 6.7 per cent in
2008-09. The Confederation of Indian Industry (CII) pegs the GDP growth at 6.1 per cent in 2009-10. This
scenario factors in sectoral growth rates of 2.8-3 per cent, 5-5.5 per cent and 7.5-8 per cent, respectively, for
agriculture, industry and services.
A number of leading indicators, such as increase in hiring, freight movement at major ports and encouraging
data from a number of key manufacturing segments, such as steel and cement, indicate that the downturn
has bottomed out and highlight the Indian economy's resilience. Recent indicators from leading indices,
such as Nomura's Composite Leading Index (CLI), UBS' Lead Economic Indicator (LEI) and ABN Amro'
Purchasing Managers' Index (PMI), too bear out this optimism in the Indian economy.
Meanwhile, foreign institutional investors (FIIs) turned net buyers in the Indian market in 2009. Direct
investment inflows also remain strong, prompting official expectations that foreign direct investment (FDI)
inflows in 2009 would better the realised inflows of US$ 33 billion in 2008 and touch US$ 40 billion.
According to the Asian Development Bank's (ADB) 'Asia Capital Markets Monitor' report, the Indian equity
market has emerged as the third biggest after China and Hong Kong in the emerging Asian region, with a
market capitalisation of nearly US$ 600 billion.
The Economic scenario
Investor sentiment in India has improved significantly in the first quarter of 2009, according to a survey
conducted by Dutch financial services firm ING. With foreign assets growing by more than 100 per cent
annually in recent years, Indian multinational enterprises (MNEs) have become significant investors in global
business markets and India is rapidly staking a claim to being a true global business power, according to a
survey by the Indian School of Business and the Vale Columbia Center on Sustainable International
Despite the global financial crisis, inflow of foreign capital to the country has increased sharply in 2008-09.
India's foreign exchange reserves increased by US$ 4.2 billion to US$ 255.9 billion for the week
ended May 8, 2009, according to figures released in the Reserve Bank of India's (RBI) weekly
Net inflows through various non-resident Indians (NRIs) deposits surged from US$ 179 million in