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1 India Economic Overview
India ranks as the tenth largest economy by market exchange rates and the third largest economy when adjusted for
purchasing power parity
1
. India witnessed an average annual Gross Domestic Product (“GDP”) growth of 8% during the
period of FY03/04 and FY11/12. However GDP growth touched a decadal low of 4.5%
2
in FY12/13, due to a combination of
international and domestic factors including the slowdown in US and European economies, high inflation and local structural
and policy woes. The GDP growth rate recovered marginally to 4.7% in FY13/14 with the improvement in agricultural output.
The chart below highlights India’s GDP and the GDP growth rate since FY03/04.
A
I n d i a : E c o n om i c & C omm e r c i a l R e a l E s t a t e
O v e r v i e w
1
World Bank, 2013
2
Ministry of Statistics and Programme Implementation
3
Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India
4
Ministry of Statistics and Programme Implementation
With an improved outlook, Consumer Price Index (“CPI”) came down to 4.4%
2
in November 2014 from 11.2% in November 2013.
The CPI has remained stable at 5.0% from December 2014 to February 2015. Wholesale Price Index came down to nearly 0.0%
3
in November 2014 and remained at that level from December 2014 to February 2015. Currency volatility also moderated and
stabilised at current trading range of 60-62 and 46-49 against the US Dollar and Singapore dollar respectively in the last one
year after touching an all-time low of 68.4 against USD in August 2013. The Reserve Bank of India (“RBI”) has forecast that the
Current Account Deficit for FY14/15 is estimated to be 1.3% of GDP as compared to 1.7% in FY13/14, due to net capital inflows
supported by foreign direct inflows and external commercial borrowings. India’s Forex reserves also touched an all-time high of
US$330 billion in February 2015, surpassing the previous high of US$320 billion in October 2011.
As per RBI estimates, the Indian GDP is forecast to grow 5.4% in FY14/15 and 6.4% in FY15/16 (GDP figures are at calculated
at a factor cost of 2004-05 prices). However on 30
th
January 2015, the Indian Government has revised the calculation of
the GDP numbers using 2011-12 as the base year, in place of 2004-05. As per the revised GDP calculation, GDP is estimated
to grow by 7.4%
4
in FY14/15 and 8.0% in FY15/16. Using the revised GDP calculations, the International Monetary Fund
(“IMF”) has forecasted India’s GDP to grow at 7.2% in FY14/15 and 7.5% in FY15/16. This is based on the view of declining
inflation, improved fiscal management and improved business climate.
New Indian Government
In May 2014, India elected a new Central Government that won a clear majority in the lower house of Parliament, the first
time in 30 years. Led by Prime Minister Narendra Modi, the National Democratic Alliance has enthused investors and business
confidence in the Indian economy, both nationally as well as internationally. The new Government has announced various
measures and started implementing various reforms that focus on improving business sentiments, streamlining the administrative
process, easing restrictions on Foreign Direct Investments (“FDI”) and enhancing the country’s infrastructure.
Gross Domestic Product ( trillion)
GDP Growth Rate (%)
GDP ( trillion)
* GDP figures are at factor cost at 2004-05 prices
Source: Reserve Bank of India
70
60
50
40
30
20
10
0
FY03/04
FY05/06 FY06/07
FY04/05
FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
FY15/16
(F)
FY14/15
(E)
FY13/14
8.0%
7.1%
9.5% 9.6% 9.3%
6.7%
8.6% 8.9% 6.7% 4.5% 4.7% 5.4% 6.4%
