___ A WORLD SANK COUMTU*Y SIlSr India 1998 Macroeconomic Update A WORLD BANK COUNTRY STUDY India 1998 Macroeconomic Update Reformingfor Growth and Poverty Reduction The World Bank Washington, D. C. Copyright i 1998 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing October 1998 World Bank Country Studies are among the many reports originally prepared for internal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the governments. Some of the reports are published in this series with the least possible delay for the use of governments and the academic, business and financial, and development communities. 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Contents iii CONTENTS Abstract ..............................................v Acknowledgments ..................................... vi Abbreviations and Acronyms ..................................... vii Currency ......................................viii Economic Development Data ..................................... ix India Social Indicators ..................................... xi Executive Summary ..................................... xiii Chapter 1 Recent Macroeconomic Developments ......................................1 GDP Growth ....................................1 Inflation ....................................2 The Balance of Payments .................................2 Chapter 2 Policy Developments and Issues .................................5 Overview ...............................5 Large Public Sector Deficits Remain an Issue ...............................................................5 The Growing Unsustainability of State Finances ...............................................................9 Public Finance Issues .............................................................. 10 Recent Monetary Policy .............................................................. 13 Financial Sector Liberalization and Strengthening .............................................................. 14 Slowing Trade Reform, Slowing Exports .............................................................. 15 Chapter 3 Policies to Reduce Poverty, Raise Growth ............................................................... 18 Introduction ............................................................. 18 Reducing the Deficit, Realigning Government ............................................................. 18 Developments in Private Participation in Infrastructure ............................................................. 20 Increasing Growth and Reducing Poverty Through External and Internal Deregulation ........................ 24 Reforming the Financial Sector ............................................................. 28 Chapter 4 Development and Financing Prospects ............................................................... 33 Endnote ............................................................... 35 References ............................................................... 39 Annex Tables ............................................................... 43 Statistical Appendix ............................................................... 61 List of Tables Table 1 GDP Growth, 1981-98 .1 Table 2 Balance of Payments, 1991-2000 .3 Table 3 Change in Economic & Social Infrastructure and Interest Spending 1990-91 and 1996-97 .10 Table 4 Trends in Commercial Bank Asset to Deposit Ratios .13 iv Contents List of Boxes Box 1 India's Progress in Privatization 1991 to 1997 ................................................... 12 Box 2 Haryana Power Sector Reforms-Pioneering the Bank's Adaptable Program Lending ................................................. 21 Box 3 Legal and Procedural Reform is Lagging ................................................. 23 Box 4 Getting Agriculture Going ................................................. 25 Box 5 Impact of Small Industry Reservation ................................................. 27 Box 6 The Narasimham II, Khan and Gupta Reports on the Financial Sector ........................... 29 Box 7 Lessons from the Southeast Asian Crisis ................................................. 30 List of Text Figures Figure 1 Public Sector Deficits ..................................................6 Figure 2 Central Government Surpluses/Deficits ..................................................8 Figure 3 Gross Capital Formation by Pvt. Corp. Sector & Consolidated Deficit of Gen. Govt ....................................................9 Figure 4 India's Share in World Trade Rose When Tariffs Fell ................................................... 15 Figure 5 Exports Grew Rapidly in Countries Where Imports Also Grew Rapidly ......................... 16 Figure 6 Percentage of Products Covered by Non-Tariff Barriers and Average Tariff Rates, 1997 ............................................... 17 List of Annex Tables Table 1 Domestic Demand, 1981-96 ............................................... 45 Table 2 Evolution of the Public Deficit, 1990-98 ............................................... 46 Table 3 Central Government Finances, 1990-98 ............................................... 47 Table 4 State Government Finances ............................................... 48 Table 5 Year-wiselPSU-wise Details of Shares Disinvested Since 1991-92 ................................. 49 Table 6 Key Interest Rates, 1994-98 ............................................... 50 Table 7 India's Share in World Trade Rose When Tariffs Fell ............................................... 51 Table 8 Coverage Ratio for Non-Tariff Barriers on Indian Imports ............................................. 52 Table 9 Real Exchange Rate of India's Main Trading Partners and Competitors, 1981-98 ........... 53 Table 10 India-Tariff Structure, 1990-98 ......................................................... 54 Table 11 Current Trends in Direction of Trade: 1997-98 ......................................................... 55 Table 12 Composition of Gross Product (Manufacturing): Average Shares .................................. 56 Table 13 External Environment for India ......................................................... 57 Table 14 Foreign Direct and Portfolio Investment ......................................................... 58 Table 15 Details of Mobilization in the Primary Market ......................................................... 59 Table 16 Selected Monetary Indicators, 1990-97 ......................................................... 60 Abstract v ABSTRACT In spite of the East Asian turmoil and a Second, the report highlights the 2% decline in agricultural production, the importance of external and internal Indian economy grew at 5% in 1997-98, deregulation to enhance efficiency and exhibiting considerable underlying strengths. improve resource allocation. This includes The external position remained comfortable, liberalization of external markets (non-tariff with the current account deficit at 1.6% of as well as tariff barriers) and deepening and GDP and reserves rising to cover over six broadening of internal market reform, such as months of imports. However, there was a easing of constraints on resource deployment deterioration in the first quarter of 1998-99, and corporate restructuring, amending land reflecting international market turmoil as well and labor laws, removing restrictions on as domestic developments like the nuclear internal trade, and embarking on a tests in May and a Budget that disappointed comprehensive package to increase the market. Sustaining a high growth path agricultural growth. that will reduce poverty rapidly will depend on a return to a faster pace of reform. Third, a strengthening of the financial sector is necessary. This will depend Central to the reform is fiscal crucially on increasing the private sector's adjustment and Government realignment. role in banking, improving incentives for Fiscal adjustments have been limited after sound banking, and enhancing the quality of 1991-93. Deficit reduction, which will regulation and supervision, as envisaged in release resources for the private sector and the recent Narasimham Committee report. In improve macroeconomic stability, will be order to generate long-term funds for most productive when combined with a infrastructure, the insurance sector could be realignment of the public sector to focus on liberalized, and a move toward a fully-funded human development and public infrastructure. pension system could be initiated. Elsewhere, a greater reliance on the private sector, including more privatization, will add Finally, in the light of the current to efficiency and growth. Deficit reduction is external environment, it is advisable to especially critical at the state level, where continue close monitoring of external debt, fiscal adjustment has been lacking and where particularly short-term debt, and to reduce the much of the responsibility lies for human fiscal deficit and strengthen the financial development and infrastructure. system before further major opening of the capital account. vi Acknowledgements ACKNOWLEDGMENTS This report was prepared by a team led by comments by John Williamson (Chief Economist, Sanjay Kathuria. It draws on contributions from South Asia region), Roberto Zagha (Sector Alok Bansal (surface transport), Benoit Blarel Manager, PREM) and Garry Pursell. Useful (agriculture), William McCarten (recent fiscal comments were also provided by Vivek Bharati, developments and tax reform), James Hanson Peter Wogart, Bhaskar Naidu and Miria Pigato. (fiscal issues and financial sector), Clive Harris (infrastructure and disinvestment), VJ Data analysis and management were done Ravishankar (fiscal issues), and Djamal Mostefai by Anjali Bhardwaj, Bhaskar Naidu, Farah Zahir and Sameer Shukla (Haryana power reforms). and Harpinder Oberai. Bita Hadjimichael did the analysis of the customs tariff data. It was Background papers for the report were desktopped by Shahnaz Rana and Rita Soni. Lata prepared by CRISIL Information Services Ganesh, Jillian Badami and Lin Chin provided (banking, performance of Indian industry), logistical support. NCAER (effective protection), Bibek Debroy (legal reform), Sanjaya Lall (export strategy), The report was discussed with Indian Garry Pursell (lessons from local sourcing Government officials in June 1998. The help programs in automobiles), Uday Sekhar (recent rendered by various Government agencies export performance), and Nisha Taneja (small- including RBI, SEBI and the Ministry of Finance scale industry), is gratefully acknowledged. The report benefited from comments by its peer reviewers (Suresh Tendulkar, Delhi School The report was prepared under the guidance of Economics; Rakesh Mohan, NCAER; and of James Hanson (Economics Advisor). Martin Muhleisen, IMF), and from detailed Abbreviations and Acronyms vii ABBREVIATIONS AND ACRONYMS AP Andhra Pradesh MODVAT Modified Value Added Tax APL Adaptable Programs Loan MOU Memorandum of Understanding ASEAN Association of South-East Asian Nations MTNL Mahanagar Telephone Nigam Limited ASI Annual Survey of Industries MW Megawatt ATM Automatic Teller Machine NAS National Accounts Statistics BE Budget Estimates NBFCs Non Bank Financial Companies BOP Balance of Payments NCAER National Council of Applied Economic Research BOT Build-Operate-Transfer NIPFP National Institute of Public Finance and Policy CAD Current Account Deficit NFS Non-Factor Services CIDA Canadian International Development Agency NRI Non-Resident Indian CMIE Center for Monitoring Indian Economy NPA Non-Performing Assets CONCOR Container Corporation of India NTB Non-Tariff Barriers CRR Cash Reserve Requirement O&M Overheads and Maintenance CSO Central Statistical Organization OCC Oil Coordination Committee DECPG Development Economic Policy Group OECF Overseas Economic Cooperation Fund of Japan DGCIS Directorate General of Commercial Intelligence OGL Open General License and Statistics PDS Public Distribution System DOT Department of Telecommunications PSU Public Sector Unit DRS Debt Reporting System QR Quantitative Restrictions ERP Effective Rate of Protection RB Resource based FDI Foreign Direct Investment RBI Reserve Bank of India FII Foreign Institutional Investor RE Revised Estimates FSU Former Soviet Union REER Real Effective Exchange Rate GAIL Gas Authority of India Limited SDR Special Drawing Rights GCF Gross Capital Formation SIL Special Import License GDP Gross Domestic Product SLR Statutory Liquidity Requirements GDR Global Depository Receipts SSI Small Scale Industry GNFS Goods and Non-factor Services TAMP Tariff Authority for Major Ports GNP Gross National Product TOR Terms of Reference GOI Government of India TPDS Targeted Public Distribution System HSEB Haryana State Electricity Board TRAI Telecom Regulatory Authority of India IBRD International Bank for Reconstruction and UK-DFID UK-Department for Intemational Development Development UNCTAD United Nations Conference on Trade and ICICI Industrial Credit and Investment Corporation of Development India USAID US Agency for International Development IDA International Development Association UTI Unit Trust of India IFS International Financial Statistics V.A. Value Added IDBI Industrial Development Bank of India VAT Value Added Tax IMF International Monetary Fund VDIS Voluntary Disclosure Income Scheme IPP Independent Power Producers VSNL Videsh Sanchar Nigam Ltd. KFW Kredit Anstalt Frier Wiederaufrau WB World Bank Kwh Kilowatt-hour WDI World Development Indicators LNG Liquified Natural Gas WPI Wholesale Price Index LPG Liquified Petroleum Gas WTO World Trade Organization viii Currency CURRENCY Rs/ US$ Currency Official Unified Market a Prior to June 1966 4.76 June 6, 1966 to mid-December 1971 7.50 Mid-December 1971 to end-June 1972 7.28 1971-72 7.44 1972-73 7.71 1973-74 7.79 1974.75 7.98 1975-76 8.65 1976-77 8.94 1977-78 8.56 1978-79 8.21 1979-80 8.08 1980-81 7.89 1981-82 8.93 1982-83 9.63 1983-84 10.31 1984-85 11.89 1985-86 12.24 1986-87 12.79 1987-88 12.97 1988-89 14.48 1989-90 16.66 1990-91 17.95 1991-92 24.52 1992-93 26A1 30.65 1993-94 31.36 1994-95 31.40 1995-96 33.46 1996-97 35.50 1997-98 37.16 Jan 1998 39.36 Feb 1998 38.91 Mar 1998 39.50 Note: The Indian fiscal year runs from April 1 through March 31. Source: IMF, International Finance Statistics (IFS), line "ri'I; Reserve Bank of India. a A dual exchange rate system was created in March 1992, with a free market for about 60% of foreign exchange transactions. The exchange rate was reunified at the beginning of March 1993 at the free market rate. Economic Development Data ix ECONOMIC DEVELOPMENT DATA GNP Per Capita (US$, 1996-97): 380 a Gross Domestic Product (1996-97) Annual Growth Rate (% p.a., constant prices) % of 70-71- 75-76- 80-81- 85-86- 92-93 93-94- US$ Bln GDP 75-76 80-81 85-86 91-92 96-97 GDPatFactorCost 323.7 90.0 3.4 4.2 5.4 5.2 5.3 7.1 GDP at Market Prices 359.7 100.0 3.3 4.2 5.6 5.4 5.3 7.0 Gross Domestic Investment 90.7 25.2 5.3 3.7 5.7 6.6 12.3 11.4 Gross Domestic Saving 78.8 21.9 4.4 2.6 4.6 7.9 9.7 12.5 Current Account Balance -4.4 -1.2 -- -- -- -- -- -- Output, Employment and Productivity (1990-91) Value Added Labor Force b V. A. per Worker US$ Bln. % of Tot Mill. % of Tot. US$ % of Avg. Agriculture 82.5 31.0 186.2 66.8 443 46.4 Industry 78.0 29.3 35.5 12.7 2198 230.2 Services 105.7 39.7 57.2 20.5 1848 193.7 Total/ Average 266.2 100.0 278.9 100.0 954 100.0 Government Finance General Government c Central Govemment Rs. Bln. % of GDP Rs. Bln. % of GDP 96-97 96-97 90-91-96-97 96-97 96-97 90-91-96-97 Revenuc: Receipts 2424.1 19.0 19.3 1531.4 12.0 11.5 Revenue Expenditures 2936.8 23.0 23.1 1834.1 14.4 14.9 Revenue Surplus! Deficit (-) -512.7 -4.0 -3.8 -302.7 -2.4 -3.4 Capital Expenditures d 436.6 3.4 4.4 399.9 3.1 3.7 Extemal Assistance (net) e 29.9 0.2 0.6 344.3 2.7 2.3 Money, Credit, and Prices 90-91 91-92 92-93 93-94 94-95 95-96 96-97 (Rs. billion outstanding, end of period) Money and Quasi Money 2658.3 3170.5 3668.3 4344.1 5314.3 6040.1 7001.8 Bank Credit to Govemment (net) 1401.9 1582.6 1762.4 2039.2 2224.2 2577.8 2888.2 Bank Credit to Commercial Sector 1717.7 1879.9 2201.4 2377.7 2927.2 3446.5 3753.6 (percentage or index numbers) Money and Quasi Money as % of GDP 49.6 51.4 52.0 53.6 55.2 54.0 54.8 Wholesale Price Index (1981-82 = 100) 182.7 207.8 228.7 247.8 274.7 294.8 314.6 Annual Percentage Changes in: Wholesale Price Index 10.3 13.7 10.1 8.4 10.9 7.3 6.7 BankCredit to Govemment (net) 19.7 12.9 11.4 15.7 9.1 15.9 12.0 Bank Credit to Commercial Sector 13.2 9.4 17.1 8.0 23.1 17.7 8.9 a. The per capita GNP estimate is at market prices, using World Bank Atlas methodology. Other conversions to dollars in this table are at the prevailing average exchange rate for the period covered. b. Total Labor Force from 1991 Census. Excludes data for Assam and Jammu & Kashmir. c. Transfers between Centre and States have been netted out. d. All loans and advances to third parties have been netted out. e. As recorded in the govemment budget. x Economic Development Data Balance of Payments (US$ Millions) Merchandise Exports (Average 1990-91-1996-97) 1994-95 1995-96 1996-97 US$ Mil % of Tot. Exports of Goods & NFS 32,990 39,668 42,379 Tea 386 1.6 Merchandise, fob 26,855 32,311 33,764 Iron Ore 486 2.1 ImportsofGoods&NFS 41,437 51,213 54,271 Chemicals 1,919 8.1 Merchandise, cif 35,904 43,670 48,063 Leather & Leather products 1,457 6.2 of which Crude Petroleum 3,285 3,442 4,797 Textiles 3,000 12.7 of which Petroleum Products 2,396 3,759 5,239 Garments 2,875 12.2 Trade Balance -9,049 -11,359 -14,299 Gems and Jewelry 3,894 16.5 Non Factor Service (net) 602 -186 2,407 Engineering Goods 3,229 13.7 Others 6,363 26.9 Resource Balance -8,447 -11,545 -11,892 Total 23,610 100.0 Net factor Income' -3,711 -3,497 -3,584 External Debt, March 31, 1997 Net Transfersb 8,093 8,506 11,071 US$ Mil. Balance on Cuirent Account -4,065 -6,536 -4,405 Public & Publicly Guaranteed 74,406 Private Non-Guaranteed 7,382 Foreign Investment 4,922 4,794 5,834 Total (Including IMF and Short Term) 89,827 Official Grants and Aid 416 345 410 Net Medium & Long Term Capital 2,357 562 -758 Debt Service Ratio for 1996-97 Gross Disbursements 7,533 7,585 6,483 Principal Repayments 5,175 7,023 7,240 % curr receipts Public & Publicly Guaranteed 20.6 Other Capital Flowse 2,410 -2,113 1,582 Private Non-Guaranteed 1.3 Non-Resident Deposits 818 944 3,536 Total (Including IMF and Short Term) 24.5 Net Transactions with IMF -1,174 -1,719 -972 IBRD/ IDA Lending, March 31, 1997 (US$ Mil) Overall Balance 6,858 -2,004 6,199 IBRD IDA Change in Net Reserves -5,684 3,723 -5,227 Outstanding and Disbursed 8,768 17,616 Gross Reserves (end of year)' 21,160 17,436 22,664 Undisbursed 3,097 4,368 Outstanding inl. Undisb. 11,865 21,984 Rate of Exchange End-Mar 1998e US$ 1.00 = Rs. 39.50 -- Not available. a. Figures given cover all investment income (net). Major payments are interest on foreign loans and charges paid to IMF, and major receipts is interest earned on foreign assets. b. Figures given include workers' remittances but exclude official grant assistance which is included within official loans and grants, and non-resident deposits which are shown separately. c. Includes short-term net capital inflow, changes in reserve valuation and other items. d. Excluding gold. e. The exchange rate was reunified at the market rate in March 1993. f. Total exports (commerce); net of crude petroleum exports. Economic Development Data xi India Social Indicators Latest single year Same regionrincome group South Low- 1970-75 1980-85 1990-96 Asia Income POPULATION Total population, mid-year (millions) 613.5 765.1 945.1 1,265.8 3,236.2 Growth rate (% annual average) 2.3 2.1 1.8 1.9 1.8 Urban population (% of population) 21.3 24.3 27.1 26.6 29.1 Total fertility rate (births per woman) 5.6 4.4 3.1 3.4 3.2 POVERTY (% of population) National headcount index .. .. 35.0 Urban headcount index .. ,. 30.5 Rural hetadcount index .. .. 36.7 INCOME GNP per capita (US$) 180 280 380 380 490 Consumer price index (1987=100) 45 85 227 233 275 Food price index (1987=100) .. 83 238 INCOME/CONSUMPTION DISTRIBUTION t% of income or consumption) Lowest quintile 5.9 .. 9.2 Highest quintile 49.4 .. 39.3 SOCIAL INDICATORS Public expenditure Health (% of GDP) .. .. 0.7 0.8 1.5 Education (% of GNP) .. 3.4 3.8 3.0 3.6 Social security and welfare (% of GDP) .. .. Net primary school enrollment rate f% of age group) Total Male Female Access to safe water (% of population) Total 31 54 81 78 76 Urban 80 80 85 83 80 Rural 18 47 79 74 72 Immunizaition rate (% under 12 months) Measles .. 1 84 82 80 DPT .. 41 86 83 81 Child malnutrition (% under 5 years) .. .. 66 Life expectancy at birth (years) Total 50 52 63 62 63 Male 51 52 62 61 62 Female 49 51 63 63 64 Mortality Infant (per thousand live births) 132 101 65 73 68 Under 5 (per thousand live births) 202 173 85 93 94 Adult (15-59) Male (per 1,000 population) 324 261 229 239 231 Female (per 1,000 population) 353 279 219 230 206 Maternal (per 100,000 live births) .. 460 437 World Development Indicators 1998 CD-ROM, World Bank EXECUTIVE SUMMARY The Indian economy exhibited considerable Government equity to 26% in most cases), underlying strength in 1997-98, but the environment deregulation measures for insurance, urban land, is weakening in response to external and internal agricultural exports, and foreign exchange, and cuts developments, intensifying the need for further in red tape for foreign investors, did little to reduce reforms. Sustaining a high growth rate that will the deficit or subsidies, and raised average import reduce poverty rapidly will depend on three factors: tariffs by about 5 percentage points, on top of the 3 (i) substantial reduction of the government deficit, percentage point rise effected by the previous through subsidy reduction and tax base broadening, government in September 1997. In light of these in order to reduce the risk of macroeconomic developments, foreign institutional investors instability, increase resources for rapid, private withdrew more than $400 million from the stock sector-led growth and improve equity; (ii) markets in May and June 1998, and Moody's realignment of government toward basic human downgraded India's sovereign rating to speculative. development and truly public infrastructure, with greater reliance on the private sector in other areas; A key concern remains the still-high public and (iii) broader, deeper, faster deregulation of sector deficit. Fiscal imbalances remain a majorrisk external and internal markets to encourage efficiency to macroeconomic stability and absorb resources that improvements and higher private investment. would otherwise go to the private sector. Since the major adjustment in 1991-93, further adjustments India has underlying strengths. In 1997-98, have been limited, leaving the Central Government's GDP grew at 5%, notwithstanding a 2% decline in deficit at about 6% of GDP, one of the world's agricultural production and the East Asian turmoil. largest. The States' lack of deficit reduction has Inflation declined to the 5% range. The external put them in an increasingly unsustainable position remained comfortable: the current account position. Moreover, they have cut back on deficit remained a low 1.6% of GDP, foreign direct education, health, infrastructure and operations and investment remained strong, the debt service ratio maintenance expenditures that are critical to fell below 20%, and reserves increased by $3.6 development. Although the States received a one- billion to more than $26 billion, raising reserve cover time windfall from last year's VDIS revenues, they to over 6 months of imports or 1.2 times potential will face even greater fiscal pressures as last year's short-term obligations. On the policy front, excessive Central wage settlement filters down. petroleumi and gas prices were increased and linked Some states such as Andbra Pradesh, Haryana, and more closely to world prices, contributing to a 0.5 Orissa have begun to address these problems. Major percentage point of GDP reduction in the reasons for the continued large Central and State consolidated public sector deficit (to 9.1% of GDP) deficits are the still narrow tax base and the large and improved efficiency and equity. The central explicit and implicit subsidies, which often government tax net was expanded. However, an encourage inefficiencies (such as groundwater excessive wage settlement put upward pressure on depletion), have adverse effects on agricultural the deficit. growth because of low service quality and have adverse equity implications. Also, public sector More recent developments point to a production remains large in areas where private deterioration. In the first quarter of 1998-99, the production would be more efficient, reflecting exchange rate came under pressure, falling about limited progress on privatization and the 7.5% from March 31, with a reserve loss of over infrastructure regulatory framework (related to the $1.6 billion. The pressure reflected both the turmoil subsidy issue). in international markets, which affected the yen and developing country markets, and developments India's producers remain among the specific to India. Following the nuclear tests in May, world's most protected, and protection has the G7 imposed sanctions on India and Pakistan. increased over the last year, raising concerns about The Budget, while proposing a pickup in efficiency, technological progress, product privatization (including a willingness to cut upgrading and export competitiveness. With the xiv Executive Summary recent appreciation of the real exchange rate and liberalization have slowed, these growth factors slowdown in cuts in protection, India's export seem to have slowed too. In particular, the slowing growth in 1997-98 fell below world export growth of private investment partly reflects the current for the first time in 6 years. Intemational evidence unprofitability of expansion into the world market, suggests that an important factor in sustained rapid the consequent increased probability that capacity growth in GDP and labor demand is sustained rapid will need to satisfy a slower growth in demand, growth in exports and imports. This generates uncertainty regarding future policy changes and the benefits from improved resource allocation, cuts in risks from the still-large public sector deficit. In this costs and improvements in products in response to context, an expansionary fiscal policy would risk international competition. crowding-out private investment, raise risks of macroeconomic instability and at best have a Although domestic liberalization has taken temporary effect. Sustainable higher growth will place, the domestic economy remains subject to a depend on fiscal consolidation rather than complex web of regulations, taxation, and explicit stimulation, on public sector realignment, and a and implicit subsidies that limit competition and broadening and deepening of reformns that increases internal trade and restrain deployment of resources incentives to invest efficiently and take advantage of into productive areas. In particular, although the world market. agricultural deregulation has started, the main crops (rice, wheat, sugar, oilseeds) remain subject to many The centrality of fiscal adjustment and barriers to internal and external trade, procurement Government realignment. High fiscal deficits policies and irnplicit and explicit subsidies. absorb funding from the private sector, threaten macro-stability and hinder financial sector reform. The financial sector has improved Reductions in the large existing subsidies (implicit substantially but its ability to finance private and explicit) on power, water, higher education, sector-led growth remains an issue. Post-1991 fertilizer, etc. would help, as well as benefit equity reforms in the financial sector have seen interest and efficiency and crowd-in private investment. rates being liberalized, the CRR and SLR reduced, Further efforts to broaden the tax base would help domestic and foreign competition increased and both revenues and equity. Deficit reduction will be regulation and supervision improved. However, the most productive in the context of public sector still-large fiscal deficit absorbs funds that otherwise realignment, focussing public sector activities on would go to the private sector. Although non- basic human, development; truly public infrastructure performiing assets (net of provisions) are less than where private interest is low; civil service reform and 4% of total assets, this is largely because commercial improved govemance. Elsewhere, greater reliance lending is only about 40% of bank assets. The on the private sector, both new investment and dominance of the public sector in the financial privatization, would add to efficiency and growth sector, such as in ownership of banks and financial and reduce public borrowing and deficits. The institutions, as well as in new bond issues, limits the private sector's contribution in infrastructure could financial sector's ability to allocate resources to the be increased by an improved regulatory framework most productive sectors. and independent and empowered regulatory authorities, as well as increased user charges (in the Generating Sustained Higher Growlth and absence of which the service provider will have to be Poverty Reduction. The rapid, private sector-led subsidized, which is unrealistic given State growth of 1994 to 1996 reflected a reduced public Governments' finances). Stabilization and reform sector role, and an increasingly deregulated are particularly needed in the States, where fiscal economy. This increased resources for the private adjustment is lacking and much of the responsibility sector and led to higher investment and savmg, lies for human development and infrastructure. increased efficiency in resource use, and, seemingly, more rapid technological progress and product External and internal reform will enhance upgrading. However, as stabilization and efficiency and improve resource allocation. Executive Summary xv Liberalization of external markets would mean and in India. Hence, improving performance eliminaling the coverage of non-tariff barriers by means an increasing role for the private sector in 2003, as already announced. Increased benefits banking, under much stronger incentives for would flow from an easing of these barriers through prudent behavior and better regulation and greater use of special import licenses in the interim. supervision, along the lines recommended by the A pre-announced program of further tariff cuts with Narasimham Committee. Regarding infrastructure the goal of low and uniform tariffs would generate funding, public guarantees should be carefully increased efficiency, provide investors with greater monitored to limit the large potential off-budget security, and increase the benefits from foreign direct liabilities and to ensure that incentives to private investment. Internal market reform needs to be project assessment and performance are deepened and broadened. Substantial easing of the maintained. To improve long-term funding for constraints on resource deployment and corporate infrastructure, the country could liberalize restructuring, such as those embodied in the current insurance, beginning with the Government's labor, land and company laws, would improve proposals to increase competition, and move efficiency and growth. Implementation of proposals toward a fully-funded pension system, beginning to ease land use restrictions would help reduce urban with the public sector where again deficit reduction sprawl and cut the high prices of urban land. Eliminating restrictions on internal trade would create a truly large national market that would Prudent policies are necessary to limit improve efficiency of resource use. Easing of small- external risks, especially in the light of the scale reservation would contribute to the dynamism current environment. Although the challenges to of the small scale sector and help efficient Indian poverty reduction in India are largely internal, as the firms compete more equally with imports and foregoing makes clear, the external sector also is increase exports. Finally, increasing agricultural important. However, the recent East Asian crisis, the growth would require a comprehensive program that likelihood that exports may face increasing combines elimination of interstate and export/import competition from East Asian economies and the restrictions with public expenditure reform, sanctions mean that the short-run situation is riskier involving the phasing out of power and irrigation tha in the recent past. Since many controls on subsidies while simultaneously improving quality of capital account transactions remain, extenal supply, and the phasing out the fertilizer subsidy as r recopmened b theHanmanta P.o comitte. nressures are likely to be felt mainly through the recomrriended by the Hanumnh a cmite current account. Limiting the risk of external Effectiveness of growth-enhancing agricultural curren acon. i.miingthe rs lo externa expenditures needs improvement, which Willl entail dsubne ilivle anann o urn expariiptioesnebyd users, local goven, ments ant account deficit through prudent fiscal and monetary prtiate or in the pseann lan operation of th policy, strengthening the financial system, limiting pinastructur an focusing the pu sectio ro onral short term external obligations to prudent levels, and essential public good activities. maintaining a high level of reserves for emergencies. In terms of the capital account liberalization, Financial sector reform is necessary for experience suggests that a substantial reduction in improved allocation of scarce financial the fiscal deficit and strengthening of the domestic resources. The financial sector's capacity to lend financial system are preconditions, as more to activities with high returns will depend on recommended by the Committee on Capital reductions in the public sector deficit and changes Account Convertibility. In addition, reserve in incentives and institutions, including requirements and taxation on domestic and foreign improvements in regulation and supervision, to funding should be equalized, and capital limit growth of non-performing assets and enhance requirements on short term funding increased, to service. Public sector banling has generally done avoid excessive incentives to foreign funding. The poorly in lending to the private sector worldwide Government should continue to monitor external borrowing closely and, as owner of the public banks, xvi Executive Summary limit their external borrowing to prudent levels, such as primary health and education, urban especially short-term borrowing. infrastructure, rural and state roads, etc., in many cases "crowding-in" private investment. External External concessional capital flows will assistance also will help in institution building. continue to be important for India, although Finally, concessional external assistance will foreign direct investment will play an increasing provide stable inflows, long maturities and low role. Despite its progress, India still has more poor interest charges that support a continued low debt people than in all of Sub-Saharan Africa. External service ratio and a stable capital account. For these assistance will help to reduce poverty by meeting reasons, continued high levels of support by the critical needs in areas outside the private ambit, donor community are needed by India. Chapter I | RECENTMACROECONOMICDEVELOPMENTS GD)P rowth slowed to 5% in 1997-98, after slowed again in 1997-98. The silver lining in the averaging 7% in the previous three years. slowdown in formal construction, to some extent Agricullture growth fell sharply from a 1990s' related to the problems in Non Bank Financial record of 7.9% in 1996-97 to -2.0% (advance Corporations (NBFCs, see p. 14), was that it estimate) in 1997-98. This fall seems to be a return, reversed the potential inflation of property prices at after a good monsoon in 1996-97, to agriculture's an early stage (p. 2). Rapid growth in cement output underlying growth path. The fall accounts, suggests informal construction remained strong. numerically, for all of the slowdown in GDP. If Finally, GDP growth rose in services, mining and agricultural growth had been spread evenly over the electricity, gas & water in 1997-98. past two years (which would have implied growth in each year was roughly equal to the recent trend of On the aggregate demand side, export growth agricultural growth), then overall GDP growth in slowed sharply in 1997-98. Imports grew at about both 1996-97 and 1997-98 would have been about the same rate as GDP; oil imports actually declined 6.2% p.a. but non-oil imports rose much faster than GDP. In some areas, such as electrical machinery and steel, Non-agricultural GDP growth began to slow imot hav inrae ewe 0 n 2 in 1996-97, but the impact of this slowdown on imports have increased between 10/o and 12% inv1996-97, but dathe impactsofethis slowdownio while domestic production is stagnant. Private overall GDP data was masked by the high inetetflsiglyn1967asaprnae agricultural growth. Manufacturing growth fell by oDvestment fell slaghtly in 1996-97ies a percentage nearly half in 1996-97 and slowed an additional 1.3 of GDP, because of a fall in inventories, and appears percentage points in 1997-98 (Table 1). However to have slowed further in 1997-98, as evidenced in the slowdown was not across the board-some the decline in capital goods production and imports. sectors did well, such as textiles, chemicals and The General Government deficit (including OCC) products, fertilizers and consumer durables other declined only slightly as a percentage of GDP than autos; while other sectors, such as steel, (Annex Table 2), suggesting Government was not a commercial vehicles, scooters and capital goods did major factor in any decline in aggregate demand. poorly. Various explanations have been given for the Formal construction remained a low slowdown in GDP growth. Moving beyond sector- percentage of GDP by international standards and it specific slowdowns, like agriculture and Table 1: GDP Growth 1981-98 (percent per year) 1981-90 Ave. '90-91 '91-92 '92-93 '93-94 '94-95 '95-96 '96-97 a '97-98b GDP at Factor Cost 5.7 5.4 0.8 5.3 6.2 7.8 7.2 7.5 5.0 Agriculture and allied 3.6 3.8 -2.3 6.1 3.7 5.1 -3.0 7.9 -2.0 Industry 7.2 7.2 -1.3 4.2 6.6 10.4 12.5 6.4 5.7 Mining & Quarrying 8.5 10.7 3.7 1.1 1.7 5.9 8.4 -0.3 6.3 Manulacturing 7.6 6.1 -3.7 4.2 8.4 11.9 14.0 7.4 6.1 Electrcity, Gas, & Water 8.8 6.5 9.6 8.4 6.3 9.4 7.3 5.0 6.4 Construction 4.9 11.6 2.2 3.4 0.9 6.2 9.7 5.2 3.2 Services 6.5 5.2 4.9 5.4 7.7 7.7 10.4 8.1 8.9 a. Quick estimates, b. Advance estmates Source: CSO, National Accounts Statistics 1997-98 Advance Estmates. 2 Chapter 1. Recent Macroeconomic Developments construction, to more general concerns, various The variations in inflation largely reflect the explanations have been advanced. Some analysts variations in agricultural supply (food articles' have suggested that a slowdown in government inflation was only 3.5% in 1997-98 versus 9.6% in contracts is to blame, but this is belied by the 1996-97), although monetary growth also increased constancy of the deficit and government direct slightly in 1997-98 (see Chapter 2). Regarding the investment for some time. A second possible other main commodity groups, the inflation in fuel explanation is the saturation of the upper end of the and power prices in 1997-98 was less than in 1996- consumer goods market, but this seems belied by 97, even taking into account the September 1997 continued strong foreign direct investment. Other increase in petroleum product prices. Inflation in analysts have pointed to the slowdown in manufactured goods' prices, which might be investment as a lagged impact of the tight money in considered a rough measure of core inflation, also 1995-96. In addition, in 1997-98, construction was down somewhat in 1997-98. Finally, property finance became difficult. And real interest rates prices, which are not part of the wholesale index, were kept higher than they might otherwise have continue to decline. This decline may reflect some been in the first quarter by the concentrated previous over-building, but also a slowdown in financing of the still-large fiscal deficit and, in the demand related to high real interest rates and the last quarter, by tightening of money (although for reduction in lending by the NBFCs, which were an the year as a whole monetary policy seems to have important source of housing finance. loosened somewhat, see p. 13). Fourth, the export slowdown has also reduced demand growth. The Balance of Payments was comfortable in Analysts point to a slowdown in world markets. 1997-98 but pressures have developed since then. Perhaps more worrying is that India's share of trade In 1997-98, reserves rose 16% and the Current also declined (Annex Table 7). If India had Account Deficit increased to 1.6% of GDP (from maintained its share of world trade, export growth in 1.2% in 1996-97). India largely escaped the first 1997-98 (in dollars) would have been nearly 5%, round of contagion from the East Asian crisis, as did about the same as imports, rather than 2.7%. other South Asian and Latin American countries. This leads to perhaps the most plausible Merchandise Export growth of 2.7% in dollars explanation of the slowdown, the slowdown in was somewhat below 1996-97's 4.6%. This decline India's adjustment. Because the fiscal deficit reflected the decline in Indian exports' share of remains high, the Government still absorbs a world trade, as well as the slower growth of world substantial part of loanable funds and the risks of trade (growth of world trade (in dollars) slowed macroeconomic instability remain. At the same sharply because of dollar appreciation, even as trade time, the profitability of both exports and import- volumes continued to grow rapidly). Maintenance substitution have stagnated, if not fallen. In this of India's share of world trade would have nearly context, and given the uncertainties about the speed, doubled the growth rate of exports. India's loss of if not direction, of policy change, investors may be market share was the first in 6 years playing it safe by cutting back investment growth. Thus far the impact of the East Asian crisis on Associated with this explanation is the possibility India's trade has been small. East Asia (including that the improvements in resource allocation and Japan) accounts for less than 20% of Indian exports. reductions in costs from liberalization that Competition in third country markets has also been contributed to the recent rapid growth are becoming limited so far. Although the East Asian countries exhausted (see Chapter 2 for further discussion). have devalued massively in real terms, their export supply has been limited by lack of trade credits. Inflation fell to 5.0% in 1997-98, compared However, once trade credits resume, or if China with 6.9% in 1996-97 (Economic Survey). Inflation attempts to increase its exports substantially, India began to slow in April and fell as low as 3.7% (year- may find export competition much more difficult. on-year) in September 1997. Since then, inflation has risen, reaching the 6-6.5% range after May Import growth in 1997-98 was a low 4.6%. 1998. Oil imports, which represent about 15% of imports Chapter 1. Recent Macroeconomic Developments 3 Table 2: Balance of Payments, 1991-2000 (USS billion) A_tua_ Esffmate- -----Projections-------- 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Total exports of GNFS 23.0 23.3 23.6 27.9 33.0 39.7 42.4 43.6 45.7 49.4 55.3 Merchandise (FOB) 18.5 18.3 18.9 22.7 26.9 32.3 33.8 34.7 35.6 38.2 42.3 Non-factor services 4.6 5.0 4.7 5.3 6.1 7.4 8.6 8.9 10.0 11.2 13.0 Total imports of GNFS 31.5 24.9 26.8 31.5 41.4 51.2 54.3 58.0 62.2 68.7 75.5 Merchandise(CIF) 27.9 21.1 23.2 26.7 35.9 43.7 48.1 50.3 54.0 59.8 66.5 Non-factor services 3.6 3.8 3.6 4.7 5.5 7.5 6.2 7.7 8.2 8.9 8.9 Resource balance -8.5 -1.6 -3.2 -3.5 -8.4 -11.5 -11.9 -14.4 -16.6 -19.3 -20.2 Net factor income -4.0 -4.0 -3.7 -3.6 -3.7 -3.5 -3.6 -3.1 -3.3 -3.1 -3.5 Factor receipts 1.1 0.8 0.7 0.4 0.9 1.4 1.1 1.1 1.2 1.7 1.9 Factor payments 5.1 4.8 4.4 4.0 4.6 4.9 4.7 4.2 4.6 4.8 5.4 Interest (scheduled)' 5.0 4.7 4.1 4.2 4.4 4.6 4.5 3.8 4.2 4.4 4.7 Other faetor Davmentsb 0.1 0.1 0.3 -0.2 0.2 0.3 0.2 0.4 0.4 0.4 0.6 Netprivate.currenttransfers 2.1 3.8 2.8 5.3 8.1 8.5 11.1 11.3 11.5 12.9 13.2 Curreritreceipts 2.1 3.8 2.8 5.3 8.1 8.5 11.1 11.4 11.6 13.0 13.3 Curreit payments 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 Current account balance' -10.3 -1.8 -4.2 -1.9 -4.1 -6.5 -4.4 -6.2 -8.4 -9.5 -10.5 Official capital grants 0.5 0.5 0.4 0.4 0.4 0.3 0.4 0.3 0.2 0.3 0.3 Foreign investments 0.1 0.1 0.6 4.2 4.9 4.8 5.8 4.7 2.0 6.5 8.5 Direct foreign investments 0.1 0.1 0.3 0.6 1.3 2.1 2.5 3.1 3.0 3.5 4.5 Portfollio investments 0.0 0.0 0.2 3.6 3.6 2.7 3.3 1.6 -1.0 3.0 4.0 Net long-term borrowing 5.9 4.8 6.2 5.7 3.2 1.5 2.8 5.3 3.6 6.6 5.9 Disbursements 7.1 7.5 7.4 8.6 7.5 7.6 6.5 9.6 9.0 11.6 11.9 Reoavments (scheduled)' 2.7 2.9 3.3 4.0 5.2 7.0 . 7.2 4.2 5.4 5.0 6.0 Other capital flows 1.0 -1.0 -3.2 0.1 2.4 -2.1 1.6 0.9 -0.7 -0.7 -0.6 Net short-term capital 1.0 -1.5 -0.7 -2.7 0.6 0.8 1.7 n.a. n.a n.a. n.a. Bilateral Balance with Russia -1.2 -1.2 -0.9 -1.1 -1.0 -1.0 -0.7 -0.8 -0.7 -0.7 -0.6 Errors and omissions' 1.1 1.7 -1.6 3.9 2.8 -1.9 0.6 1.7 0.0 0.0 0.0 Chanzes in net intemational reservesf 2.9 -2.6 0.3 -8.5 -6.9 2.0 -6.2 -4.2 3.2 -2.2 -3.7 IMF (net) 1.1 0.8 1.3 0.2 -1.2 -1.7 -1.0 -0.6 -0.4 -0.3 0.0 Change in Gross Reserves 1.8 -3.4 -1.0 -8.7 -5.7 3.7 -5.2 -3.6 3.6 -2.0 -3.7 Memorandum items: Current Account Balance / GDP -3.5 -0.7 -1.7 -0.7 -1.3 -2.0 -1.2 -1.6 -2.3 -2.5 -2.5 GrossForeieznReserves' 2.3 5.7 6.7 15.5 21.2 17.4 22.7 26.3 22.6 24.6 28.3 in months of imports (goods) 1.0 3.3 3.5 6.9 7.1 4.8 5.7 6.3 5.0 4.9 5.1 External Debt (percent of GDP) 30.5 34.0 37.0 36.6 33.4 28.4 25.0 24.7 26.5 26.6 26.2 DebtService(%oftotal currentreceipts) 32.4 29.0 28.4 24.8 25.6 21.6 23.2 18.8 17.8 16.9 15.2 NRI inflows (net)h 1.5 0.3 2.1 1.1 0.8 0.9 3.5 1.1 0.0 1.0 1.0 InterestpaymentsonNRldeposits 1.3 1.0 0.9 0.9 1.0 1.2 1.6 1.2 1.3 1.1 1.2 a. World Bank Debt Reporting System (DRS). these numbers differ from RBI. b. Retuins on foreign investments. c. Current account balance differs from GOI, on account of interest payments (DRS) and official capital grants (treated as a fuiancing item). d. Servicing of the Russia rupee debt e. Residual item includine reserve valuation chances. ruoee trade imbalance. etc. f. (-)= indicates increase in assets, g. From IMF Intemational Financial Statistics, includes Foreign exchange assets, SDRs and Reserve position in the Fund. h. Net flows in NRI deposit schemes, plus India Resurgent Bonds in 1998-99, except the non-repatriable NR(NR)D Scheme Source: Govemment of India RBI: Ministrv of Commerce: IMF: World Bank Debt Renortine Svstem: World Bank Staff estimates. 4 Chapter 1. Recent Macroeconomic Developments (21% in 1996-97), declined 24.3%, reflecting low measure of "volatility" cover, gross foreign prices. Non-oil import growth, 12.3%, was much exchange reserves were more than twice the total of higher than the 4.3% growth in 1996-97. trade credit and short-term debt (including short- term non-resident deposits).2 They were about 120% Thus, the merchandise trade deficit was held to of short term debt, trade credit and (the stock of) 4% of GDP largely by declining oil prices. In the foreign portfolio investment. This is far higher than current account, the merchandise trade deficit was the East Asian economies had at end-1996, largely offset by the continued large surplus on particularly since much more of the potential short- invisibles, mainly continued high worker term withdrawals3 in India would be subject to remittances. The current account deficit for 1997- penalties for withdrawal than they were in East 98, an estimated US$6.2 billion (1.6% of GDP), was Asia. Nonetheless, the ratio is somewhat less than about $1.8 billion larger than in 1996-97. recommended by the Committee on Capital Account Convertibility. It will continue to be prudent to The Capital Account ran a substantial surplus. monitor volatility cover and respond promptly to Direct investment accounted for the largest share of exchange market pressures with reserve sales, net capital inflows, rising to an estimated $3.1 exchange rate adjustments, and tighter money to billion, a healthy increase of more than 24% over achieve balance of payments and reserve targets. 1996-97 (Table 2). Inflows from Foreign Institutional Investors (FIIs) and Global Depository In the first quarter of 1998-99, the rupee came Rights (GDRs), on the other hand, were down by under pressure. The rupee was allowed to slide half. Net monthly FII investments turned negative 7.5% between March 31 and June 26. The RBI's in November 1997, for the first time, and fluctuated foreign currency assets declined by $670 million in through March 1998. Part of these developments May and $1.2 billion in the first two weeks of June, may have reflected a spillover from East Asia. reducing total reserves including gold to about $27.6 Gross external commercial borrowings were down billion on June 12. A large part of the pressure slightly, to $5.7 billion in 1997-98. Toward the end probably came from increased liquidations of of the year, spreads increased internationally and the foreign institutional investors, who reduced holdings costs of forward cover rose as short-term interest of equity and debt in Indian markets by $218 rates increased. The net rise in NRI deposits slowed million in May and more than $200 million in the sharply, from $3.5 billion in 1996-97 to $1.1 billion first three weeks of June. More broadly, the in 1997-98. The debt service ratio continued to fall, prssuree ref inestore about to about 19% in 1997-98, as a result of a decline in pressures probably reflect investors concerns about amortization payments after the "bunching" of the nuclear tests of May 1998, the G8 sanctions on 1996-97, falling interest payments, the reduced aid and lending that followed the tests, investors' importance of debt inflows in the capital account, concerns following the budget, and the general and a low current account. turmoil in international markets that affected the yen and developing country borrowers. On June 20, Gross Foreign Exchange Reserves rose $3.6 Moody's announced that it was downgrading India's billion, reaching a comfortable $26.3 billion (IMF, sovereign rating by two notches, to Ba2 International Financial Statistics; reserves including (speculative), from Baa3 (lowest investment grade); gold and SDRs reached $29.4 billion) at the end of Standard & Poor's has rated India speculative March 1998.1 This was equivalent to more than 6 (BB+) since May 1991. However, the stock and months of goods imports (including gold, over 7 foreign exchange markets stabilized at the end of months of goods imports). In terms of the standard June. a P I POLICYDEVELOPMENTS AND IsSUES Overview: After a period of strong, private financial sector. However, broadly speaking, sector-led growth, India experienced a slowdown, external and internal deregulation also seems to particularly in some industrial sectors, and, in 1997- have slowed and protection of domestic inefficiency 98, in agriculture. Nonetheless, in 1997-98, GDP from external competition remains among the growth was 5%, inflation down, the external highest in the world. On the external side, one position comfortable, and contagion from East Asia indicator of the slowing adjustment is that India's minimal. However, India now faces a more difficult share in world markets fell in 1997, after rising in environrnent and a possible further slowdown in the previous 5 years. Internal tax and trade barriers, investment. The Government's concern focuses on regulations on deployment of resources, and returning to sustainable 7-8% p.a. growth within a complicated subsidies, tax and financial sector stable macro economy, which will reduce poverty regulations hinder efficiency of resource use, while rapidly. having at best unclear distributional implications and at worst contributing to inequity. Reflecting the The recent, rapid growth reflected an reduced profitability of increased sales in world adjustment that reduced the public sector's role in markets, the lower capacity growth that would be the economy and increased the economy's outward- needed in an economy that is not increasingly orientation. This approach led to more resources for outward-looking, the uncertainty of trade policy the private sector, higher private investment and and the general regulatory regime, and the overhang savings, increased efficiency in resource use and of a still-large public sector deficit, private quicker technology adoption and product upgrading. investment slowed in 1997-98. However, the adjustment process seems to have slowed over the last few years, negatively affecting In this context, looser fiscal policy is likely to these growth factors. have little sustained impact on growth, because of its potential crowding out effect and the increased In particular, the public sector deficit has not risk of macroeconomic instability it raises in declined much since 1992-93 and remains among investors' minds. Sustained rapid growth will the largest in the world. This limits substantially the depend on fiscal consolidation, coupled with a financing for the private sector and the efficiency of broadening, deepening and acceleration of internal resource use, while creating a risk of and external deregulation to encourage cost cutting macroeconomic instability in investors' minds. In and output growth. The 1998-99 Budget projects a addition to the Central Government's deficit, the slight reduction in the deficit, did not reduce States' lack of fiscal adjustment, largely linked to subsidies, and raised external duties by almost 5 large subsidies that often encourage inefficiency and percentage points while complicating their have uncertain impacts on equity, increasingly administration. However, the Budget Speech threatens the provision of the social and physical proposes a speed up of privatization, greater infrastructure that is needed for development. The competition in insurance, an easing of the States' problems are likely to be compounded by restrictions that hobble urban land use, and the filtering down of last year's excessive Central reduction of regulations and red tape that limit Government wage settlement. The disinvestment agricultural exports and foreign investment. process slowed after 1995-96, and no transfer of majority ownership has occurred yet. Laree Public Sector Deficits Remain an Some deregulation occurred in 1997-98, Issue. The Central Government Deficit in 1997- notably the closer linking of oil prices to world 98 (including net revenues from the Oil Pool markets and the changes in and proposals for the Account (OCC), excluding disinvestment (capital) 6 Chapter 2. Policy Developments and Issues Figure 1: Public Sector Deficits (% GDP) %GP%GDP 14 14 12.3 12 t, Consolidated Nonfinancial Public Sector 12 10 9.5 OIL 9.6 9.1 -10 8 Central Government (incl. OCC, excl. Disinvestment) 8 6 6~~~~~~~~~~~~~~~~~~~~~ . 4 3.3 3.0 3.5 3.1 4 2 t State Government 2 Source Annex Table 2 0 -1--- I I 0 0) ax a) 0) a) 0o 0) a) o 1 r LO co N. 0 aM 0D 0) 0) 0) 0) LO c) 0) a) mc 0) 0) 0) 0) X o 0 ) 0) revenues) was about 6% of GDP, the same as 1996- 0.2% of GDP), reflecting the economic slowdown 97.4 Fiscal performance improved in some and the lower income tax rates.6 (iii) Central important areas. The Government cut subsidies on Government pay was raised much more than the Pay petroleum products, saving 0.9% of GDP compared Commission recommended (0.6% of GDP more to 1996-97, by linking average domestic prices more than budgeted, including arrears; moreover, the closely to international prices and raising gas prices award was not accompanied by any measures to in September 1997. This policy will eliminate the increase efficiency and the Pay Commission's Oil Pool's annual deficit and improve efficiency, proposals to reduce staff by 30% over 10 years and equity, and prospects for private investment in oil eliminate unfilled positions were rejected as part of and gas.5 Corporate taxes almost attained the 15% the final wage settlement). (iv) Net lending to the budgeted increase, despite a rate cut (from 43% to States (a Central Government expenditure) also 35%) and slower growth. The Voluntary Disclosure rose, reflecting a large rise in small savings deposits of Income Scheme (VDIS) raised about 0.7% of that were attracted by high interest rates. GDP on a one-time basis, through tax payments on income that had previously escaped the tax net (the The Consolidated Public Sector Deficit was States received 77.5% of these revenues in 1997- down 0.5% of GDP in 1997-98, reflecting the 98). Finally, current spending was held to budgeted improvement on the Oil Pool and the VDIS. levels, while direct capital spending rose by 0.3% of Although estimates suggest that the States' higher GDP. interest payments and (net) lending and transfers to state public enterprises tended to push up their These gains were offset by four factors (Annex deficit, this was more than offset by their share of Table 3): (i) Customs revenues were down by about the VDIS. The Central Public Enterprises' position 0.5% of GDP and about 22% less than budgeted. improved slightly. This shortfall reflected the drop in oil imports that account for about 25% of tariff revenues and, The Fiscal Deficit for 1998-99 is projected to perhaps, the beginning of the impact of lower be about 5.8% of GDP (excluding disinvestment average tariff rates. (ii) Income taxes (excluding revenues and including the Oil Pool revenues), VDIS) and excise taxes also were down (a total of down slightly from last year's 6%. On the Chapter 2: Policy Developments and Issues 7 Government basis (including disinvestment, market. The Government also proposes to allow excluding the Oil Pool), the deficit also is about reductions to 26% of Government equity in non- 5.8%. The budget was originally projected to yield strategic industries. a 5.6% deficit, but following the Budget Speech, the government made adjustments that will reduce Total expenditures are projected to rise about projected revenues by about 0.2% of GDP (lowering 0.1% of GDP, with some shift toward spending on the special import duty, withdrawing the urea price Plan investments and the social sectors, including an hike and transferring the additional excise duty on increase to cover increased wage costs of university petrol from consumers to the Oil Pool). In addition teachers. Capital expenditures are projected to rise to the spending and revenue programs, the Finance by about 0.1% of GDP. For the states, grants are Minister's Budget Speech laid out a number of flat at 1.7% of GDP, but net lending is down by economic reform proposals (p. 12; Box 3, p. 23). 0.3%, reflecting a lower mobilization in small savings as a result of closer linkage of the rates on Three classes of measures account for most of small saving to market rates. Other expenditures, the projected increase in revenues: overall, are projected to rise slightly as a percentage of GDP. Subsidies are up about 0.1 % of GDP (after * an increase in excise taxes notably on motor factoring in the backtracking on the urea price hike), fuel, multi-use vehicles, and some food with food subsidies up about 20%, because of the products, and some adjustments of other higher support prices for wheat, and higher fertilizer excises. Regarding the motor fuel excise, the 12 subsidies. Ministry of Defense spending, at 2.5% of percentage point rise will be paid from the Oil GDP, is down slightly, while the allocation to the Pool surplus; in addition a specific 1 Rupee per Department of Atomic Research was increased from liter tax, paid by consumers, will be earmarked 0.1% to 0.2% of GDP. to the National Highways Authority. Holding the deficit to projected levels depends - an across-the-board rise in India's already high upon a number of factors: a) a higher nominal GDP tariffs of 4 percentage (major exemptions growth than last year, despite the weakening world include crude oil, newsprint, trading companies economy and the higher domestic taxes and tariffs, and project capital goods) (see pages 26 and to support the projected revenue growth; b) 27). Some individual tariffs also were adjusted, continued improvements in administration to notably a 5 percentage point cut on crude oil. mobilize corporate and individual tax revenues and collect the higher excises and tariffs; c) continued * an increase in Oil Pool revenues, net of the low world oil prices so the Oil Pool surplus remains payment of the motor fuel excise. high, and, if world oil prices rise or the exchange rate depreciates, domestic price rises as envisaged in Also on the revenue side, the tax net for high the 1997 oil decontrol measures; d) discipline on income taxpayers will be widened further by using expenditures, with a reduction in spending if additional presumptive indicators to increase the revenues grow less than projected, and e) number of filers. At the same time, the level of tax privatizations despite what looks like a weak equity exemption is increased from Rs. 40,000 to Rs. market. Major risks are the potential increase in 50,000. These changes are projected to leave (non- interest costs, as a result of the more difficult VDIS) income taxes slightly lower as a percentage environment for Indian debt, and the pressure to of GDP. Better administration of corporate taxes is increase Central loans and transfers to the States projected to generate an offsetting increase. The because of worsening state fiscal problems, in changed composition of the increased revenues particular the rising wage bill (p. 6). means that the states' share of revenue rises only about 0.1% of GDP, relative to (non-VDIS) A Longer Term Perspective suggests that revenues in 1997-98. Finally, disinvestment since the major fiscal adjustment of 1991-92 and revenues are projected to increase substantially, 1992-93, the Consolidated Public Sector Deficit has largely from sales of shares in GAIL, IOC, VSNL, remained roughly constant, at 9-9.5% of GDP and CONCOR that were programmed for last year (Annex Table 2). The Central Government's deficit but then postponed because of a weak equity reduction of 2.2% of GDP between 1990-91 and 8 Chapter 2. Policy Developments and Issues Figure 2: Central Government Surpluses I Deficits % of GDP Developing Countries Over 20 million, (1995 unless otherwise stated) 3 - J1 0 j r < z i > z @ -2 .3 .4 .5 Source: IFS, IMF 1997-98 accounts for most of the fiscal adjustment policy is being offset by tight money. Crowding-out that has occurred, again with most of that cut shows up in India, where roughly a one-to-one coming in 1991-92 and 1992-93. Despite the negative relation exists between the deficit of the reduction, India's Central Government deficit General Government and Oil Pool and private remains one of the biggest of the large developing corporate investment over the last 10 years (Figure countries.78 3, see also RBI Annual Report 1996-97, pp.76, 85). Over the same period, the Oil Pool deficit first In addition, public sector deficits tend to slow rose, but then was curtailed in September 1997 by growth because they often finance either public the adoption of the new pricing policy. The Central consumption by the private, or public activities that Public Enterprises cut their deficit by about 1% of could be done by the private sector more effectively GDP over the last seven years, again with most of (Easterly et al.) Again these observations are the cut occurring in 1991-92. They could face relevant to India (RBI, Annual Report 1996-97, p. increased wage costs in 1998-99, as a result of the 76). Indian Governments' current (revenue) deficit excessive Central Government wage settlement. remains about 3.1% of GDP. This means Indian The States have done little adjustment, as discussed Governments' borrow to finance interest and other below. consumption expenditures, apart from investment. And, India's large public sector engages in many Generally speaking, large public sector deficits activities that could be done effectively by the seem to reduce growth within individual countries private sector within a competitive market (Easterly, et al., and IMF 1996, 1997) and are framework implying public sector crowding-out associated with slower growth among the larger through public sector supply in goods markets as countries during the period 1985-95. "Crowding- well as through borrowing in financial markets. out" of private investment by public sector borrowing is a major explanation of this negative Large public sector deficits also raise the risk relationship (Easterly, et al.) Larger public sector of macroeconomic instability. One such risk is the borrowing raises interest rates above what they so-called "domestic debt trap" 9 a steadily rising otherwise would be, particularly if loose fiscal ratio of public debt to GDP about which RBI has Chapter 2: Policy Developments and Issues 9 Figure 3: Gross Capital Formation by Pvt. Corp. Sector and Consolidated Deficit of Gen. Govt. (incl. OCC, excl. disinvt.) 8 95/96 7 1 92/93 t 94195 6~~~~ 93/94 91/92\ \ + ~~~~86/87 - GCF= 15.2 -1.1 DEF R2 0.52\ t 2.93\ 4 88/89 89/90 * 87/88 7 8 9 10 11 Consolidated Deficit wamed (Annual Report '93-94, p. 41; '95-96, pp. worried about such possibilities in countries with 45-46, 4'9; '96-97, pp. 76, 85). In the past, financial high fiscal deficits. In turn, such concerns tend to repression prevented such a possibility, by increase the risk premia that India faces, and administratively crowding-out private borrowers translate into higher financing costs for private and imposing a distortionary implicit tax on them investors. through higher spreads between lending and deposit interest rates. Financial liberalization reduced this The Growing Unsustainability of State distortionary implicit tax and made the true cost of Finances. The States' lack of fiscal adjustment not the deficit clearer. However, correspondingly, the only worsens the consolidated deficit; it also interest costs of the State and Central Government worsens the States' ability to provide economic have risen more than 1% of GDP since 1990-91, infrastructure (irrigation, power, roads) and social even though the deficit has fallen by about 25%.1o infrastructure (education, health) that will be critical While the ratio of domestic public debt to GDP has to growth (Annex Table 4). Although the States' declined slightly since 1991, and India is not in a deficit of 3.1% of GDP in 1997-98 is less than in debt trap, an increased deficit could lead to one. 1990-91, this reflects their windfall from VDIS (0.5 % of GDP). Without VDIS, their deficit would Macroeconomic instability could also occur in actually be worse than in 1990-91. the unlikely event that the Government suddenly resorted to inflationary finance or increased offshore The States' weak fiscal position reflects their borrowing to fund its deficit. Such a policy would continued large subsidies to users of power, water, avoid a domestic debt trap but would create its own, transport and secondary and tertiary education, well-known distortions and risks. Since the 1980s directly or through support for State public debt crises, investors and rating agencies have enterprises that also suffer from overstaffing. State 10 Chapter 2. Policy Developments and Issues electricity boards' average revenue has fallen from goods'4 (Ministry of Finance, Discussion Paper, 82% to 80% of costs since 1992-93, reflecting NIPFP). Although the Central Government reduced subsidies, particularly of agriculture, and large explicit subsidies as part of its fiscal adjustment in losses in transmission and distribution (Ahluwalia, the early 1990s, and again in 1997 with the removal pp. 96, 97). Irrigation charges have declined of the average subsidy on petroleum products, dramatically relative to state income" (however, subsidies remain a major element of Indian public some states are initiating reforms in both these areas finance, especially in the States. The major (Box 3)). The States also have not widened their tax remaining subsidies are in fertilizer, irrigation, net, for example by imposing taxes on agricultural power, and secondary and higher education, and income and land that are reserved to them under the represent more than 4% of GDP. The last three constitution. At the same time, the interest costs of mostly reflect policy in individual states. the States' borrowing has risen. Table3: Change in Social & Economic Infrastructure Given the States' relatively hard budget and Interest Spending (1990191 & 1996197) constraint,'2 with no fiscal reforms, and with rising Change in percentage points of GSDP; Bold indicates deterioration interest bills, the States have been forced to reduce States Social 1 Economic 2 Interest their spending in important areas: investment in Payment irrigation, power, and transport and recurrent Andhra Pradesh -0.8 0.7 0.6 spending in education and health. Few states have Bihar 0.1 .2.2 1.3 been able to maintain their spending levels in both Gujarat -0.3 -1.2 0.5 these areas. Indeed, many have suffered on both Haryana -0.3 -0.6 0.4 counts, as shown in Table 3. Karnataka 0.0 -1.4 0.3 Kerala -0.1 -0.2 1.0 In addition, maintenance allocations have been Maharashtra -0.2 -0.5 0.1 inadequate, a problem repeatedly cited by Finance Madhya Pradesh -0.1 -0.1 0.6 Commissions. This problem has been exacerbated Orissa 0.1 -1.7 0.8 by the division between plan and non-plan Punjab -0.4 -0.9 2.0 expenditures. Recurrent maintenance, which may Rajasthan 0.7 0.0 1.0 have a high retum, can only be financed by the Tamilnadu -0.7 0.1 0.6 states' own revenue, while repairs necessitated by Uttar Pradesh -0.4 -0.5 1.2 deferred maintenance can be financed as part of the West Bengal -0.6 0.8 1.1 Plan. The Finance Minister proposed a re- 14 States Average -0.2 -0.6 0.8 examination of this issue in his 1998-99 Budget All States 3 -0.4 -0.4 0.5 Speech. Note: 1996-97 is Revised Estimate 1. Refers to total expenditure on health and education These problems will be exacerbated over the 2. Refers to power,irrigation,& transport - capital outlay and loans 3. All States as a proportion of GDP at factor cost next few years. The States' potential deficit will Source: RBI Bulletin varous issues increase, as the excessive Central wage settlement filters down to the States in a possible 2-4% of GDP Subsidies not only tend to increase the deficit; increase in their own salary costs,'3 and higher they often have hindered the Governments' ability salaries in State public enterprises. Dealing with to provide infrastructure and social services to the this large potential increase, while reversing the poor, often have had negative effects on efficiency deterioration in economic and social investment, and growth, and often have had unclear will depend on major fiscal adjustments by State distributional effects. For example, subsidized governments. agricultural electricity prices encourage overpumping of aquifers, reduce the possibility of Public Finance Issues. Government using aquifers for drinking water and require subsidies, explicit and implicit, are a major factor in deepening of wells and investment in larger pumps the Central and State deficits as well as resource to bring water from the lower water table. Low allocation in the economy and the public budgets. electricity and irrigation charges encourage water- Subsidies, explicit and implicit, were estimated at intensive crops in a country where water is scarce. 14.4% of GDP in 1994-95, with 10.7% on non-merit Failure to differentiate peak and non-peak tariffs Chapter 2: Policy Developments and Issues 11 increases pressures to over-build capacity that will representing nearly 40% of the cut in its deficit. In be underutilized. Since part of the subsidy typically the States, direct capital spending also fell. These comes from not charging fully for operations, cuts occurred while explicit and implicit subsidies, maintenance and capital costs, service quality has as a percentage of GDP, seem to be increasing. deteriorated in areas like power and irrigation and, Private infrastructure provision may eventually perhaps, education. To limit losses, supply has been offset some of these investment cutbacks and raise rationed by limiting sales, rather than by raising efficiency. However, in many other areas, such as price, with negative impacts on efficiency. To roads, power transmission, urban infrastructure, mitigate such problems, individuals and firms may primary school buildings, and health infrastructure, make investments in power generators, water a strong case exists for more public investment. For pumps, tanks, etc., investments that would be example, it is widely estimated that private toll unnecessary if service provision were better. roads could only meet 20% of the expansion needs of the national highway system and 5% of state Distributional implications of the subsidies are highways' needs; not to speak of the need for more unclear, not only because the beneficiaries may or rural roads to provide better market access for the may not have lower average incomes than the poor. Of course, Government investment need not taxpayers, but also because the "subsidy" partly mean that it carries out the investment. For reflects large "non-technical" losses, for example, in example, substantial savings and efficiency gains power and water, and partly the ability of firms and would probably result from private construction and individuals to define themselves as part of the maintenance of roads under competitively let subsidized group. In addition, the subsidy to one contracts. group of users is often partly covered by a cross- subsidy by other users in the same sector, such as A third issue is the Unfinished Tax Reform power, water, airlines, or telecommunications, Agenda. Tax cuts have brought rates to more which is a. politically easy way to fund a subsidy. In reasonable levels over the last few years. The some areas where market power exists, such as number of individual assessees has been increased telephones, this approach has allowed public from about 8 million in 1993-94 to about 12 million enterprises to increase spending without improving currently, through expansion of withholding and efficiency much. However, such use of cross- greater reliance on presumptive indicators, but this subsidies and market power has little support on is still only about 1.2% of the population. Despite efficiency or equity grounds in tax theory. the reforms, Central Government tax revenues are still excessively dependent on customs receipts, Finally, because of low tariffs, large non- which have low buoyancy and generate a large bias technical losses, uncertainty about future tariff against exports, competitiveness, and efficiency. policies, and the poor financial condition of the Even in 1997-98 customs revenues represented 32% public companies, private provision of services has of (non-VDIS) taxes, despite their slow growth. been limited in areas like power generation, water This compares to 10-15% in most large, developing and roads. In these circumstances, Government countries, and much less in the East Asian, export- guarantees have often been required to attract oriented economies. At the State level, the failure to private investors. However, such guarantees use up tax agricultural incomes and land contributes to the public borrowing capacity on contingent liabilities fiscal crisis, as noted. It also foregoes the equity that is often not fully recognized in public accounts. gains that would result from taxing large Guarantees also reduce the benefit of private sector agricultural incomes and large landholdings, and project assessment and risk taking, unless carefully generates inefficiency to the extent other types of specified., taxes are used. The States' reliance on Central taxes and transfers also sets up a potential gap between A second major public finance issue is the tax payment and delivery of public services that can Decline in Governments' Direct Capital reduce the quality of public sector spending Spending. As part of the fiscal adjustment, direct (Bagchi). State sales taxes cascade to deter capital spending by the Central Government interstate and international trade, and sometimes (excluding defense capital) fell from about 1.4% of even tax interstate trade directly, with corresponding GDP in 1990-91 to 0.7% of GDP in 1997-98, reductions in national efficiency and export 12 Chapter 2. Policy Developments and Issues potential. Finally, the complexity of the current, Box 1: India's Progress in Privatization 1991 to 1997 parallel indirect tax systems of the Center and the States imposes substantial administrative and Through 1997-98, equity in 40 enterprises of the compliance burdens. 240 non-departmental Central public enterprises had been divested (Annex Table 5). However, in 16 cases, A fourth major issue is the still-large role of the divestrnent was less than 10%. In no case did public enterprises. Long protected from market disinvestment exceed 51%, although it is almost 49% competition, but subject to various objectives and in two cases. The process of sale seems to have political demands, many ended up as a major burden slowed since 1995-96, with only seven sales exceeding on public finances and on the economy because of 2% occurring. Last year, the Government had planned their low productivity, and, in some cases, exercise to increase its divestment of the Gas Authority of of market power. The removal of reservations that India, Videsh Sanchar Nigam Ltd., Container limited competition and some increase in autonomy Corporation of India, and Mahanagar Telephone have improved performance in some sectors. Nigam Ltd. (MTNL), but, after scaling back the Hawever, another factor in the improvedent may be MTNL GDR offering because of a weak market, it However, another factor in the improvement may be deie todfrteohr ae. Sm tt decided to defer the other sales. Some state the regulations that still protect or give advantages governments such as A.P. and Gujarat have also made to the public enterprises (e.g., telecoms and progress in privatization. petroleum). The Disinvestment Commission's establishment (1996) implicitly recognized the need India's Disinvestment Commission was set up to reduce the burden of the public enterprises and in 1996. It has so far considered 41 companies the possibility of capital revenues from sales. Once (overlapping slightly with the 40 in which shares have disinvestment occurs, the government deficit will been sold), and reconmnended strategic sale in 18 fall as firms require less transfers, debt relief and cases, and trade sales/partial equity sales in 11. Action capital injections and increase their tax payments. has been taken on 7 of these recornmendations. The caperit injectons andwinealosegthe tha paymen. Commnission also recommended setting up a Experience world-wide also suggests that a shift disinvestment fund out of the proceeds from the share from public to private ownership raises efficiency sales, to restructure public enterprises and fund (see for example, Galal et al., Megginson et al., voluntary retirements, in order to make divestment World Bank 1995b). This is particularly true where easier. competitive market conditions protect consumers and stimulate innovation, such as tradable goods. It The Commission has also made a number of is also true in many sectors once thought to be recommendations on corporate governance, notably natural monopolies, such as power generation. graded increases in autonomy for the remaining public enterprises, depending on their performance. MTNL However, privatization has lagged in the has been given substantially more autonomy (navratna reform process so far, and slowed in the last two status). The Government has also begun to follow up on the Commission's reconmmendations to include non- years (Box 1). Only partial disinvestments have official, part time directors, to alter MOUs to allow occurred. As the Disinvestment Commission has easier evaluation of performance, and grant more noted, these have been aimed mainly at raising autonomy in investments. However, the Government revenues and have reaped few benefits from has not acted on the Commission's recommendations efficiency gains. to improve stability and quality of management, introduce performance-based incentives for The 1998-99 Budget Speech announced a management, and provide for election of directors to number of proposals to speed up privatization, represent minority shareholders. And, as long as the including moving forward on the disinvestment Government retains over 50% of the capital, the public postponed last year, divestment of 51% of Indian enterprise and its employees remain subject to the Airlines over 3 years, an improvement in the scrutiny and legal framework as Govermment employees. Thus, in some sectors, the public voluntary retirement schemes to reduce surplus enterprises face increased competition, but not much labor and a willingness to reduce the Government's reduction in constraints on their activities. shareholding to 26% of capital in the "generality of cases". The Government has also decided to move ahead on strategic sales of five companies. Chapter 2: Policy Developments and Issues 13 Table 4: Trends in Commercial Bank Asset to Deposit Ratios (%) Mar. '90 Mar. '91 Sept. '96 Mar. '96 Mar. 97 Sept. '97 Mar'98 Investment -deposit ratio 37.2 37.7 38.3 38.0 37.7 40.4 36.2 Cash-depositratio 16.3 17.6 12.1 12.4 10.5 11.1 10.2 Credit - deposit ratio 60.8 60.6 54.3 58.6 55.1 51.4 53.5 Effective SLR 28.0 26.5 25.0 Note: Data pertains to last reporting Friday of the month 1tnvestment is in government and approved secunties. Source : Trends & Progress of Banking in India(RBI); RBI Weekly Bulletin Implementation of these proposals will provide a of 1997-98, high Government market borrowing strong impetus to privatization. kept interest rates higher than they otherwise would have been. Recenit Monetary Policy. Reserve money grew at 13.1% in 1997-98 (Annex Table 16), versus Between November 1997 and January 1998 2.9% in 1996-97. RBI credit to the banks, the RBI's measures to defend the rupee tightened the commercial sector and Government rose in 1997-98, monetary stance temporarily. The rupee depreciated while in 1996-97 these credits declined, or rose only 6% vis-a-vis the dollar between October 24 and slightly. November 28, 1997 (from 36.2 to 38.5 to the dollar), and again to Rs. 40.4 in January 1998. On Broad money (M3) grew at 17.0% in 1997-98, January 16, the RBI increased the Bank Rate from 9 faster than the 16.0% of 1996-97, the same as the to 11%; increased the cash reserve ratio from 10 to long-run average growth rate of 17.2% p.a. since 10.5%, and increased the costs of trade finance 1980-81. The long-run growth rate has been (thereby creating disincentives for leads in import remarkably stable. The asset counterparts of M3 payments and lags in repatriating of export growth in 1997-98 were: (i) a pick-up in bank proceeds). These unanticipated measures left banks, lending to the commercial sector (14.3% increase particularly the new private banks and foreign versus 9.1% in 1996-97), particularly after banks, short of resources to meet their December 1997; (ii) a 13.8% increase in bank credit commitments, and led to a sharp hike in short-term to the Government (reflecting both RBI interest rates as well as call money rates (Annex accommodation and increased investments by Table 6) and a one percentage point increase in commercial banks); (iii) an increase in net foreign lending rates of many banks. The measures had the exchange assets of the RBI of 22.2% in rupees desired effect, appreciating the rupee back to Rs. (which reflects some revaluations; gross 39.5 to the dollar as on April 7, 1998, a depreciation international reserves rose about 11% in dollars). of less than 10% since July 1997. With the pressures receding, the RBI partially rolled back its measures Thus, several indicators point to an easing of on March 18, 1998. State Bank of India immediately monetary policy in 1997-98 compared with 1996- reduced its lending rate by half a point. In the busy 97. M3 growth was slightly higher, even as real season credit policy announcement on April 29, GDP growth has slowed down. Bank lending has 1998, the Bank Rate was rolled back to 9%. also gone up substantially (p. 14). Nominal interest rates (except call money rates, see below) declined Commercial banks continue to hold more than by one to four percentage points compared with required in Government securities, reflecting, at corresponding months in 1996-97 (Annex Table 6). least in part, their risk aversion. In March 1997 (see Real interest rates, with average annual inflation table 4), the ratio of commercial banks' investment down 1.9 percentage points, declined somewhat in Government and approved securities to deposits less. The Bank Rate, which was reactivated in April ratio was 38% as opposed to the statutory 1997 as aL policy instrument, was reduced from requirement of 26.5% (reduced to 25% in October 11% in April 1997 to 9% in October. However, the 1997). The Government carried out much of its easing was uneven during the year. In the first half borrowing requirements for 1997-98 in the first half 14 Chapter 2. Policy Developments and Issues of the fiscal year, pushing this ratio up to over 40%. 1990s India has gradually liberalized its financial Then, with commercial lending picking up, this ratio system to support more rapid, private sector-led fell to 36.2% by the end of March 1998. development. Bank interest rates have been gradually freed on term deposits (Annex Table 6), Despite the easier money picture in 1997-98, loans greater than about Rs. 200,000 (US$5000), the pattern of the flow of funds to the commercial and debentures and public sector bonds. Rates sector was mixed. The stock of bank credit to the remain controlled on savings deposits, small commercial sector grew about 14.3%. Bank savings, NRI deposits, and loans under Rs. 200,000. accommodation to the commercial sector grew by Directed credit to the public sector has been 17.6%. However, about one-third of this increase reduced: the cash reserve requirement has been was in commercial paper, bonds, debentures, etc., reduced from 15% in 1990-91 to the 10% range issued by the public and private corporate sectors currently and the statutory liquidity requirement, (which have grown at 70%). These instruments do which requires banks to invest in public sector not carry any priority sector obligations since they paper, has been reduced from 38.5% of deposits in are not classified as lending. Also, these 1990-91 to 25% in 1997-98. The April 1998 credit instruments are relatively highly rated, and thus are policy continued these reforms by permitting banks another avenue for banks to reduce the overall risk to freely set rates on loans under Rs. 200,000 up to a in their portfolios. This means lending/investing maximum equal to the prime lending rate, by moved towards the most highly rated corporates, reducing the minimum maturity of term deposits to and away from the medium and small-scale firms. 15 days, and by allowing banks to set different rates Regarding non-bank sources of finance, financial for the same type of deposit and appropriate penalty institutions' disbursements are up substantially, over rates on premature withdrawal of term deposits. 28%. Mutual funds, capital markets, and foreign The announcement also raised the maximum rate on investment also increased. However, lending by NRI foreign currency deposits over one year by 0.5 NBFCs declined, and disbursements of external percentage points and lowered the rate on shorter commercial borrowings were roughly the same, deposits by 0.25 percentage points. although precise data are not available. Thus, the aggregate picture is increased funding to prime New entrants (quasi-private, private, and corporate borrowers, a slower increase, if any, for foreign) have been allowed into the banking system other borrowers, and an increasing concentration of and capital market. This entry, along with eased funding of prime corporate/public sector paper, restrictions on borrowers' switching banks, has except from the external sector. increased competition in lending and tended to reduce spreads (mostly in the private banks; public Prior to 1997-98, mismatches between receipts banks spreads remained roughly constant, see RBI, and expenditure of the Central Government were Report on Trend and Progress of Banking in India, met mainly by issue of ad hoc treasury bills. This 1996-97). Private banks account for about 17% of was replaced by the system of agreed upon Ways bank assets, up from 11.5% in 1991-92. Finally and Means Advances that began on April 1, 1997, capital account restrictions have been eased, and has continued into 1998-99. As the RBI notes, allowing Indian public and private firms to raise this system helps prevent unplanned creation of funds offshore and foreigners to invest in the capital money and gives a truer picture of the market, including government debt since October Government's credit requirement from the market. 1997. It therefore gives more autonomy to the RBI. However, if fiscal policy is loose, and the agreed- The growth of NBFCs in the mid-1990s upon ceilings for Ways and Means Advances are provided types of lending outside the normal adhered to, then the upward pressure on interest purview of banks, although their expansion also rates will increase. reflected easier reserve and prudential requirements than applied to the banks. In 1997-98, the NBFCs' Financial Sector Liberalization and over-expansion was slowed by a few well- Strengthening. India has a large deposit base and publicized failures. As a result, the RBI large equity and bond markets for a country of its appropriately tightened prudential and capital per capita income (WB 1995a, IFC). Since the early adequacy regulations for NBFCs, enhanced its Chapter 2: Policy Developments and Issues 15 Figure 4: India's Share in World Trade Rose when Tariffs Fell 0.65 120 0.6 100 Share in world merchandise exports (%) 0.55 (Left axis) 80 0.5 Average tariff(%) . 0.45 (Right axis) 40 0.4 . .20 Source: IFS, 1997 figures from W TO regulatory powers over NBFCs and, appropriately, 19 in 1995-96. However, this reflects substantial refused to, provide ex-post deposit insurance for the injections of government funds: Rs. 27 billion in bankrupt NBFCs' depositors. The slowdown in 1997-98 (0.2% of GDP), following Rs. 23.6 billion NBFCs reduced growth of finance for consumer in 1995-96 and 1996-97 and Rs. 11O billion between durables and construction, two of their main areas of 1993-94 and 1994-95.'7 lending. Since the early 1990s, the capital market has The financial system has also been also been strengthened. A regulatory agency, SEBI, strengthened. In 1992 banking regulations were has been set up and has been taking an increasingly tightened on income recognition, definition of non- active role. A share depository system has been set performing assets, provisioning and capital market up to improve the efficiency and security of to confonn more closely with international norms.)5 transactions. Transactions costs are now about the Initially this led to a large percentage of many same as in developed country markets. However, public banks' loans being recorded as non- new issues have languished after an initial burst of performing assets. By 1995-96, public banks had activity, reflecting weak information on them and reduced gross non-performing assets to about 7% of inefficient approaches to their initial pricing (Shah total assets, where it remained in 1996-97. Net of and Thomas). Much of the post-1993 activity in the provisions, non-performing assets are about 4% of stock market reflected foreign investors. total assets.'6 However, these low figures reflect the banks' still-large holdings of public debt; gross non- Slowing Trade Reform, Slowing Exports. In performing assets are 17.8% of total advances, a 1997-98, India's export growth continued to slow, figure that has remained roughly constant over the as noted above. Moreover, for the first time since last two years. As in all countries, these figures do 1991, India's dollar export growth in 1997 was not reflect banks' reschedulings, which often reduce lower than world trade. The 1997 decline in market the cash flow as well as the present value of the share was in contrast to 1992-1996 when India's debt. Moreover, the non-transparent accounting of exports grew faster than world trade every year and many Indian companies makes it difficult for the slightly faster than Southeast Asia's-averaging banks and the public to get an accurate pictures of 13.5% p.a. compared with 12.5% p.a. for Southeast their status. In March 1998, the RBI relaxed the Asia. Despite the slow growth of world markets for classification norms for agriculture loans made by the products that India exports and the intense banks in 1997-98, which will impart an artificial competition in these markets, India was able to improvement to the figures for non-performing increase its share of world trade from 1992-96 assets. In 1996-97, 25 of 27 public banks had (Annex Table 7).8 reached the 8% capital adequacy standard, up from 16 Chapter 2. Policy Developments and Issues Figure 5: Exports Grew Rapidly in Countries Where Imports Also Grew Rapidly (1965-94) (Countries over 20 million) 25 * Korea X=-0.97+1.07M FR=0.83 (t = 9.2*) 20 *(hjglhy significant) . 15 hdonesiaThailand I 15 ixico China,82-'94 Turkey o * Brazil 0. E Bangladesh,73294* Paki RlAippines 0 10 hi**Cln4 -~ Ngeri/ *lbMrocco Venezuela,70-'94 / Arentina 3n ~~~~Kenlyt PeFru iL 5- {Tanzania 0l 0 5 10 15 20 25 Imports (M), compound growth (0/4 p.a Source: lNTADTRAl\S Database Important factors in this export performance prices, in exporting industries than in import- were the reductions in protection and the real competing industries, such a shift raises national exchange rate. Figure 4 shows that rapid growth of output). This close relation between export and exports was accompanied by a sharp fall in average import growth shows up across countries (Figure 5), tariffs from 128% in 1990-91 to about 34% in 1997- as well as in India recently. 98 (Annex Table 10).'9 Also, there has been a significant decline in non-tariff barriers to imports, The real effective exchange rate (REER) whose coverage of imports declined by 30-35 depreciated between 1991 and 1995 (35% percentage points since the economic reforms began depreciation between 1991 and 1995, IMF data, (Annex Table 8).20 As is well known, high Annex Table 9). However, it has appreciated protection of imports in effect taxes exports, by thereafter. The appreciation would be even higher if raising the cost of scarce resources and the price of competing country weights, rather than trade imported inputs to exporters (relative to the prices weights, were used in the calculation of the REER, they receive). Reduction of protection raises as implied by the bilateral exchange rates with exports and imports, given prudent management of India's competitors. Thus, while exchange rate demand and the exchange rate. To put it another movements (including possible lagged effects) way, rapid export growth requires low protection reinforced the effects of the tariff cuts on exports and rapid import growth as well, so that more of the until 1995, the REER appreciation meant that it scarce factors of production will shift out of import worked against exports thereafter. competing industries and into exporting (since these factors can produce more output, valued at world Chapter 2: Policy Developments and Issues 17 Figure 6 Percentage of products covered by non-tariff barriers Average Tariff Rates, 1997 00a Average 1990-93 (Countries over 20 million) (Countries over 20 million) 00 Ss - S }, -SjfR,$j 70 25 so so H20- 40 ~ f*ias I Source: UNC rAD TRAINS Database from WDI 1997. Source: UNCTAD TRAINS Database. However, the pace of tariff reduction slowed points since duty is levied on c.i.f. cost plus existing after 1995-96 and reversed beginning in September duties, see p. 27). Even before the recent reversal, 1997 (An-nex Table 10). In September 1997, tariffs Indian tariffs were among the highest in the world. on all products but oil were increased 3 percentage Similarly, despite the reforms, about 63% of import points. lThen, the 1998 budget imposed a special lines were covered by non-tariff barriers of one kcind additional duty of 4 percentage points on most or another, according to UNCTAD, higher than imports except crude oil, newsprint, trading goods, almost all comparable countries. etc. (the average increase is about 6 percentage Chapter 3 ~ POLICIES TO REDUCE POVERTY, RAISE GROWTH Introduction. Poverty reduction depends on reducing demands for funds and creating room and rapid growth and basic human development, incentives for faster private sector growth. Deficit according to a wide range of international and reduction also would reduce the risks of inflation national studies (see for example WB 1993, 1997b). and increased external borrowing, with their In turn, rapid growth and poverty reduction seem to associated risk of macroeconomic instability, and depend on macroeconomic stability, investment in reduce pressures for reversing financial reforms. infrastructure, and an incentive framework that supports rapid, efficient and internationally A simultaneous realignment of India's public competitive growth, especially in agriculture. sector would increase the benefits of deficit Reducing the Government deficit is a key reduction. Such a realignment would entail macroeconomic element in improving India's concentrating scarce public financial and growth and reducing poverty. Apart from deficit administrative resources on core public sector reduction, another important factor will be activities, such as mass primary education and Government realignment-leaving more to the health, rural roads, urban infrastructure, and private sector, especially where external and internal regulation. It would require improving service competition in effect provide a sound regulatory delivery in those areas by acting more as a business, framework, and focusing on areas where private responsive to users and charging user fees that interest is low and the public sector has a clear role, reflect costs. Such a realignment would for example basic human development, correspondingly entail devolution to the private Infrastructure improvement is another major sector of mnany of the public sector's current element in growth, and will also help reduce poverty activities that the private setor can do more (WB 1997b). Here, realignment of government and effectively-in particular, areas where competition reduction of (non-merit) subsidy will play a mensures that the private sector will perform reductionl Of (non1-merit) subsidy Will play a major efctvl,shasmtdiclypouie role. In addition, regulatory reforms are needed to effectively, such ternal or external competition encourage more private sector investment. More existis and inf tuem ac chapower generally, a more deregulated, competitive, gexneaion. rsomufthe poiies that pwol incentive framework will be needed to encouImprove both the deficit and the efficiency and more efficient use of resources (notably greater demand for unskilled labor), more investment, and equity of government activity, as well as make demandpfopriate technolabor), improvemvments and better use of the private sector for development are appropriate technology improvements. External and highlighted in this section. internal deregulation hold the key here. One way of judging the success of deregulation is whether A reduction in non-merit subsidies, explicit exports again begin to grow faster than world trade. and implicit, would cut the deficit of the Central and Finally, financial sector improvement will support State Governments (including state public growth and poverty reduction by encouraging the enterprises), encourage efficiency, and, in many allocation of funds to activities with the highest cases, benefit equity. It would also stimulate greater national productivity, developing domestic sources private investment, particularly in infrastructure, by of long-term funds, and avoiding financial improving the regulatory framework. For example: instability that will hurt the real sector. Specific elements of these policies are discussed below. * Raising the currently subsidized power tariffs at the state level (and adjusting tariff schedules to price Reducine the Deficit, Realigning by the kilowatt hour rather than a flat rate, and to Government. Deficit reduction would accelerate vary by peak load), along with establishment of growth by crowding-in private sector investment, independent regulatory commissions (see p. 22) Chapter 3. Policies to Reduce Poverty, Raise Growth 19 and privatizing distribution, would improve unsolicited bids, and non-competitive sales should collections as well as power delivery, raise capital be eschewed, since these create non-transparency utilization and reduce over-pumping from aquifers. and reduce the benefits to the country. These Solvent power distributors and more politically problems are avoided in competitive sales of shares independent tariff setting will stimulate private through equity markets-the main issue is securing investment in power generation. Improved effective underwriting services through competitive distribution and availability of power supplies in bidding. However, widespread dispersion of equity rural areas would have significant positive effects shares may provide management improvement only on agricultural growth and rural employment slowly. Divestiture to a strategic partner may yield opportunities, to the benefit of farmers and the rural greater benefits over the long run. But such poor. divestiture still needs to be done under well- specified, competitive conditions in order to ensure * Turning canal irrigation over to water user transparency and maximum benefits to the country. associations, to collect fees for O&M and water use, In addition, a sound sectoral regulatory framework, would reduce the drain on State governments, which at least "mimics competition", is needed to improve the quality of water delivery and improve ensure low prices and technological upgradation by equity, since subsidized irrigation benefits mainly private producers. In this context, implementation the better-off farmers. Water use would eventually of the June 1998 Budget Speech announcement that need to be managed and priced by water basin "in the generality of cases, the government authorities. shareholding will be brought down to 26%" and its proposal for more generous severance packages * Raising fees on secondary and higher education would have a positive impact on privatization (see and providing a system of scholarships for low also Box 1 and p. 12). income students would cut the deficit and improve the equity of education spending. Further tax reforms would help cut the deficit, while adding to the efficiency and equity of * Increasing road taxes on gasoline and diesel to the revenue system. Income tax collections could fund maintenance and new construction of public be raised by as much as 0.5 percentage points of roads, as has been widely recommended, would GDP, while improving the equity of the system, fund the road construction that India needs without a through continuation of the efforts to double the drain on the budget. number of contributors on the basis of outward signs of wealth, tougher treatment of perquisites and * Phasing out the fertilizer subsidy and fringe benefits, better collection of taxes on interest eliminating the Retention Price Scheme and moving (either through use of banks' computer records or a toward market-based gas pricing would cut the minimum withholding rate), continued improvement deficit and reduce the distortions in fertilizer in administration based on better use of penalties, consumption while helping the environment further computerization, and strengthening of the (Box 4). contributor identification numbering system. Corporate tax collections could also be increased by A speed-up in privatization would increase limiting business expense deductions, freezing new efficiency and raise revenues, reduce the public tax concessions and, where possible, removing the sector deficits and help realign Government to numerous existing incentives that have complicated contribute to faster growth. But these benefits are tax compliance and administration and created an not autotnatic. They will depend on Government's impenetrable maze of effective tax rates. Since careful attention to divestiture procedures, the previous concessions may not disappear for many market structure facing the privatized entities and years, the use of the minimum alternative tax will competition and regulatory policies. remain important. One option, used in Mexico where it raised substantial revenues, would be to The benefits from the divestiture are switch the base of such a tax from book profits to maximized by a competitive, transparent sale. This assets (at replacement cost values). MODVAT maximizes the price for the asset. Lengthy could be further strengthened by extending the tax negotiations and changes in the terms of the deal, base to services. In addition to raising revenue, 20 Chapter 3. Policies to Reduce Poverty, Raise Growth these tax measures would improve equity, help level and achieve a high degree of acceptance from the playing field across tax-payers, and perhaps taxpayers despite many obstacles. A second lesson even permit cuts in rates. is that state level VAT is more likely to be successful with a simplified rate structure of no Customs revenues could well increase from more than two to three non-zero rates. their current level as quantitative restrictions are removed. India already depends heavily on customs Developments in Private Participation in revenues, and attempts to raise still more customs Infrastructure. Improving basic infrastructure revenue by raising tariffs would have negative services through private sector participation in efficiency and equity consequences (see below). telecommunications, electricity, transport and water Indeed, it would be desirable to move from tariffs to supply, would make a major contribution to growth excise taxes on many luxury items to improve and has been a major focus of Indian economic productive efficiency. This switch would be policy since 1991. However, although many facilitated from the Central Budgetary standpoint by contracts have been awarded, relatively few deals the agreement (not yet approved in Parliament) to have reached financial closure. As a result the devolve to the states a constant percentage of all private sector has not thus far made a substantial centrally collected taxes. contribution to expanding service coverage and quality. Improved sectoral regulatory frameworks At the state and municipal level, fiscal and independent and empowered regulatory sustainability, efficiency and equity suggest a need authorities would stimulate efficient private sector to tax agricultural income and property. Taxation of participation. agricultural income consistently with non- agricultural income might be facilitated by states Telecommunications has seen the most ceding taxation rights back to the Central private sector participation. Private cellular Government. A national property tax system, again operators in the four major urban centers now have for reasons of consistency, is one option. (Chile around 500,000 consumers. In addition, one basic uses such a national wealth tax with redistributive service operator has commenced operations in features favoring poor areas.) However, keeping Madhya Pradesh, in competition with the property taxes with sub-national government has Department of Telecommunications (DoT). some advantages, notably linking them more Financial closure has been harder to achieve for the closely to services provided (Bagchi). The other other basic service license holders, partly because of sub-national tax issues are to remove the slow progress on issues such as the assignability of disincentives to international and interstate trade and licenses so that lenders have more security in the to reduce the administrative and compliance burden event of a default by borrowers, and in some cases, associated with operating state sales taxes and can shift back and forth, before and after boxes, the MODVAT separately. Over the medium term, the high level of license payments that these operators reform agenda would involve convergence to a bid to win the license auction. A more fundamental system of dual VATs with harmonization of problem is the delay in transforming DoT into a commodity classification and uniform rules for tax policy maker rather than a service provider and a treatment of interstate trade. Experience in Canada regulator. DoT and the sector regulator, TRAI, are suggests such a system is feasible. Many Indian embroiled in court disputes relating to who decides states have experimented with VAT-like additions what. The service provision function of DoT itself to the manufacturer's sales tax. But only in needs to be corporatized to remove DoT's conflict Maharashtra have the reforms been comprehensive of interest. A by-product of this conflict is that enough to approach a full-fledged VAT and to private operators complain that the rules of the capture the potential benefits of VAT. Despite a game-entry of the public operators MTNL and drop in revenue growth in the VAT implementation VSNL into their markets, less onerous license year (1995-96), Maharashtra has persevered and conditions for these two companies and the lack of plans to bring its VAT into conformity with a full- an efficient interconnection regime-are hampering fledged VAT through the retail stage within a few their progress. years. The chief lesson of the Maharashtra experience is that VAT can take root on Indian soil Chapter 3. Policies to Reduce Poverty, Raise Growth 21 Box 2: Haryana Power Sector Reforms - Pioneering the Bank's Adaptable Program Lending Haryana was plagued by increasing system losses, power shortages and operational inefficiencies, and represented a huge drain on the state treasury (World Bank, 1996). To resolve these problems, Haryana decided to reform its power sector comprehensively (World Bank, 1997a). The state assembly, in July 1997, approved the Haryana Electricity Reform Bill, which lays down the legal basis to establish an independent regulatory commission and to unbundle HSEB to a generating company, a transmission company and a number of distribution companies before end-1998. Distribution is expected to be fully privatized by 2002. These measures will also be accompanied by tariff adjustments, comprehensive financial restructuring, and the implementation of a large investment program (about US$1.8 billion spread over 10 years) that includes transmission and distribution rehabilitation and expansion, generation plant modernization, demand side management and end-use energy efficiency improvement. The World Bank has agreed to support Haryana's efforts to the extent of US$600 million over a period of 8 to 10 years, through a series of Adaptable Program Loans (APL), a new lending instrument approved in September 1997. The new instrument involves a series of loans through which the Bank provides phased and sustained support for a borrower's long- term reform program. On January 15, 1998, an initial APL of US$60 million was approved to finance critically needed investments, enhance the credibility of Haryana's reform agenda and demonstrate that "something is happening in the power sector". Subsequent APLs will be processed as Haryana meets the milestones in its refomi agenda, based on progress in implementing the investment program and the financing requirements. The APL approach has allowed the Bank to start its support to Haryana at an early stage of the reform process and to express a long-term commnitment to support reforms. The Haryana Program approach will provide much more flexibility to adapt the Bank's assistance to evolving conditions. UK- DFID and USAID have decided to provide technical assistance for the reform program, and several other aid agencies such as OECF, KfW and CIDA (Canada) also have expressed interest. A financially sound distribution system is expected to attract more private generation. Impact of the Power Sector on State Finances Flow of Funds from Power Sector to State Government (Rs. nillion) (With and Without Reforms) 7000 With Reformn 2000 -- -3000 0 0 0 0 0 0 0 -8000 -1I 3000 Without Reformn -18000 The fiscal gains will be large. Haryana has provided more than Rs. 40 billion (US$1 billion) through direct and indirect subsidies to the power sector over the past eight years. In the absence of reforms, the power sector would continue to be a drain on the state, and subsidies, which in the past represented about 2.4% of GSDP and about 70% of the state's fiscal deficit, which would increase to much higher levels. Upon successful implementation of the first phases of the reform program, by FY 2002-03, the sector will no longer need any subsidies from the state government and instead will contribute, on average, US$50-60 million annually to the state treasury. 22 Chapter 3. Policies to Reduce Poverty, Raise Growth In the power sector, progress in reaching of reforms that are now being undertaken in the financial closure for IPPs has been very slow. power sector to attract more private funds. Although the Central Electricity Authority has provided in-principle clearance to 38000 MW, only In the roads sector, private finance is being 5000 MW have reached financial closure. sought for the development of bridges, bypasses, Resolution of some issues, such as the and widening of state and national highways. The establishment of escrow accounts, may bring some Government has announced a package of financial more projects to financial closure. However, incentives and taken some major policy decisions to independent estimates suggest that the country as a encourage private sector participation. These are i) whole only has about 8000 MW of escrowable modification of the National Highway Act of 1956 capacity. More fundamentally, it is hard to see how to charge public and private entities to allow tolls on the sector could financially support many more national highways; ii) amendment of the procedures IPPs, costing upwards of US 5-6 cents per kWh, for land acquisition for national highways; and iii) until higher tariffs and collection rates and a developing a Model Concession agreement for reduction in system losses are implemented in the highway projects. So far, the Government has distribution sector. This will depend on awarded contracts for the development of private fundamental sector reform, which will include investment worth Rs. 6 billion, mainly for bypasses establishing an independent regulator and and bridges on a BOT basis. The Government has privatizing distribution. Orissa is on schedule to recently introduced tolls on a section of National achieve privatization of its distribution sector by Highway 8 after widening it to four lanes. It is March 1999, and other states such as Haryana are considering concessioning four-laning to the private following the same path. Only two of the larger sector, with cost recovery either from tolls or on a states (Haryana and Orissa) have set agricultural design-build-finance-operate (DBFO) option with tariffs close to or at the levels prescribed in the annuity payment, financed by National Highway Common Minimum Action Plan for Power (which Authority of India (NHAI) funds. State is itself far less than the cost of generation). The governments are developing road investments on a incoming Government has announced plans to BOT basis, including two projects for widening to streamline the concession approvals procedure, four lanes in Gujarat and an expressway and several delegating more authority to the States to clear flyovers in Maharashtra. projects. However, decisions on fuel and transmission linkages, which are also serious Even so, limited traffic volumes mean that the obstacles, will clearly still be made at the central bulk of the road network will require public level. A 1998 bill provides some impetus to the funding. This could be financed partly by an ad reform efforts by (i) providing for the formation of a valorem levy on petrol and diesel dedicated to an quasi-judicial Central Electricity Regulation independent Road Fund along with other user Commission; (ii) encouraging states to establish charges. The Government in June 1998 announced State Electricity Regulation Commissions, which a rupee 1/liter levy on petrol, with the estimated would be the nodal agencies for all tariff-related revenue of Rs. 8 billion per year to be deposited matters; and (iii) requiring states to explicitly directly with NHAI for the development of national provide for the losses incurred by SEBs as a result highways. of subsidized tariffs, but not limiting subsidies as originally proposed. In ports, the Government has also announced policy initiatives to attract private finance (in Similar problems affect the water sector. October 1996) and airports (in December 1997). Average tariff levels are low and losses (both Several sections of the Indian Port Act of 1908 and physical and commercial) are high, meaning that Major Port Trust Act of 1963 already permit private utilities will have trouble paying for privately- sector intervention in port operations. However, the financed schemes. Some bulk supply and treatment Government is revising these acts to increase private projects may reach financial closure, driven by interest. A tariff authority for major ports has been revenues from large industrial consumers. established to regulate port tariffs independently However, this sector will need to embark on the sort from the port trust. Because of its limited area of authority, however, it cannot be regarded as a totally Chapter 3. Policies to Reduce Poverty, Raise Growth 23 Box 3: Legal and Procedural Reform is Lagging The legal system must ensure property rights and provide an adequate structure of incentives and deterrents for a market- based economy to function (WB 1997c). India has a vast and highly sophisticated legal system, unique in the developing world, that addresses many of these issues. However, some important constraints remain that need to be addressed to complement deregulation and encourage private investment. Perhaps the most important issue remains the delays in resolution of cases. There are an estimated 25 million cases pending in various courts. On average it can take up to twenty years for a case to be resolved. This does not make the redressal mechanism credible and creates uncertainty about economic rights. The net addition of suits is about 8% per annum. Owing to pervasive Government intervention and micro-level regulation, but within an Anglo-Saxon legal framework of protecting individual choices, the Government became a party to as much as 65% of civil cases (from a sample survey in Karnataka). While economic deregulation should, over time, reduce some of the origins of the litigation, it needs to accompanied by several conscious steps: a) Much of Government litigation is in the form of appeals against lower court judgments (95% of which failed in the Karnataka survey). The decision to appeal is taken at the lowest level of Government decision making, but a dlecision not to appeal has to be taken at the top. Reversal of this procedure would reduce the number of appeals. b) Disputes between different arms of the Government including public sector units could be settled outside the courts. c) Improvement in other dispute resolution mechanisms such as conciliation, mediation and arbitration would reduce the demand for adjudication. d) Wide-ranging amendments in the Code of Civil Procedure would speed up the disposal of cases (a Bill to amend the Code was pending before the now dissolved Parliament). e) Better training of personnel and computerization of courts would contribute to reducing considerably the backlog in the Supreme Court. The other looming issue is the very slow pace of reform in laws that have a major impact on economic decision making. Some consequences are: One, slowing down of industrial and corporate restructuring, owing to delays, and inefficiencies in relevant company law. Liquidation of corporations can take up to 20 years. Resolution of labor disputes can also take up to 20 years. Ambiguities and uncertainties exist about rights of both employers and employees. In this situation, ex-ante incentives are biased toward less job creation than would otherwise be the case. Two, contrary to Government intentions as demonstrated in SSI reservation and other policies, small business development is constrained by excessive regulatory burdens and disclosure requirements. About 80% therefore operate without incorporating. Three, regulations and procedures often leave room for subjective interpretations and discretion at a low level, and sometimes result in harassment and corruption, such as in the exercise of laws relating to labor, land, real estate, environmental clearances and taxes. Most of these laws apply at the State rather than at the Central level. Some of the above concerns were reflected in the legislation pending in the last session of Parliament. At the time of dissolution of the Lok Sabha, 15 bills were pending (including those relating to sick companies, electricity laws, electricity regulatory comnissions, and essential commodities), 12 before the Rajya Sabha (including laws relating to the Code of Civil Procedlure, and the Companies Bill), and 23 new bills (such as Insurance Regulatory Authority, Biodiversity, Plant Variety Protection, Foreign Exchange Management) were waiting to be introduced. None of this includes the subject of law reform at the State level, which is a vast area in its own right, which is currently lagging behind the Center's reform initiatives, and which will thus need to be stepped up. The new Government has indicated its interest in a new Companies Act and a new Foreign Exchange Management Act, as well as in reducing "red tape". Source: Gopal (1996) and Debroy (1998). independent regulator. One US$200 million project In civil aviation, despite the announcement of at a major port (container berth at JNPT) was a policy to attract investment in airport operation, awarded to an Australian-Malaysian consortium in only one airport project at Cochin (Cochin 1997, and two at minor ports in Gujarat (Pipavav, International Airport Ltd.) has come up and the commissioned in 1997, and Mundra) were proposed Tata-Raytheon project is still struggling. contracted to the private sector (Ahluwalia, p. 114). The Government is allowing foreign investments, In addition, several ports and jetties are under except those with foreign airline equity, in domestic construction or operation by major users for their air services, as part of a policy introduced 5 years own use. back. Private airlines now account for 40% of domestic traffic. In June 1998, the Govemment announced plans to reduce its equity in Indian 24 Chapter 3. Policies to Reduce Poverty, Raise Growth Airlines to 49% over 3 years. Reforms are still that protect import-substituting manufacturing needed that split up the policy, regulatory and continue at high levels (p. 16), a significant part of service provision functions. economic growth will be inefficient, occurring in high-cost manufacturing industries at the expense of Increasing Growth and Reducing Poverty exports and other more efficient sectors of the through External and Internal Deregulation. economy, that are labor-using. For example, Increasing growth and reducing poverty will depend resources are diverted away from agriculture by the on more efficiency in the use of India's resources, combination of barriers to agricultural exports and more and better allocation of investment in both protection of non-agricultural import substitutes, human and physical capital, and appropriate which produces a high degree of anti-export bias improvements in technology. Reduction of the and lower terms of trade for agriculture than would deficit and realignment of government will help. A otherwise be the case. lower deficit, lower subsidies, tax reform, a better infrastructure framework, and greater reliance on Moreover, impediments to imports also hurt the private sector will encourage private investment, exports by raising the cost, and reducing the quality, raise efficiency at the firm level, reduce the of produced inputs that exporters need. For misallocation of resources that is now encouraged example, the competitiveness of Indian software by subsidies, and permit the Govermment to increase might have been enhanced had computer hardware and improve public investment in physical and been available at international prices. In addition, social infrastructure where private interest is low. impediments to imports allow producers of import But additional gains could be realized by improving substitutes to avoid competition and thereby reduce the efficiency of the private sector. the incentives to adopt new technology and upgrade product quality. This is particularly true for NTBs, Reduction of the still-high barriers to trade, which place no limit on the inefficiency of the internal and external, would encourage more producer or product quality, relative to the world efficient use of the nation's resources and market. Also, since neighboring countries such as appropriate technology improvements-cuts in costs Bangladesh, Sri Lanka and Nepal allow imports of and prices and improvements in products. The most goods subject to NTBs in India, Indian NTBs current impediments to trade, international and encourage smuggling and impede more effective domestic, reduce output. They divert scarce capital, economic integration with South Asian neighbors labor, land and management away from efficient (Acharya). Finally, impediments to imports uses, such as exports. For example, because of encourage management to spend time lobbying for tariffs, on average, land, labor and capital (value- protection, rather than cutting costs, and reward added) in secondary industry can be about 43% less efficient than in export production (on exports, good lobyts, effective protection is zero because "border" prices Prduct ovats. of exports are the same as world prices, or even Clearly India's first phase of reduction in negative, if inputs cost more than world prices. protection has yielded substantial benefits, as While there is considerable tariff redundancy for a discussed in chapter 2. Ways to reap further benefits whole range of products, the pervasive presence of from the world economy would involve: non-tariff barriers (NTBs, see Annex Table 8) means there is potentially unlimited protection against imports for the products covered. The u impediments to imports and exports divert excessive moving products to Special Import License (SIL) resources to import substitutes, by raising output category. Recent bilateral agreements (applied on a prices and hence demand for resources in import most-favored nation basis) with a few countries substitutes and by reducing output prices and such as the EU, Canada, Australia, and Japan mean demand for resources in exporting industries, that India has begun to phase out all QRs as per a relative to free trade.22 At the same time they six year program finishing by March 2003. 24 This is reduce demand for resources that are used heavily in a welcome development, and a clearer (domestic) India's potential exports, notably unskilled labor?23 public announcement of this policy as soon as For these reasons, as long as the NTBs and tariffs Chapter 3. Policies to Reduce Poverty, Raise Growth 25 Box 4: Getting Agriculture Going Agricultural growth could be increased through gradual implementation of a comprehensive reform program. The program addresses the web of trade distortions and subsidies that have grown up over time so as to increase incentives for efficient and sustainable production, while avoiding a deterioration in the real incomes of the poor. Implementing only part of the program is likely to yield less benefits and create new distortions and new lobbies to maintain them. In broad terms, the program is based on the idea that better infrastructure and support services, together with well-functioning markets, are needed. to encourage growth and quickly reduce poverty. This is in contrast to past approaches that kept agricultural prices low while attempting to promote production growth through pervasive subsidies, public provision of low-cost inputs and support services. The previous approach did not generate rapid rural growth and poverty reduction, however, and it proved unsustainable since the steady rise in subsidies and public provision of most inputs and support services is increasingly beyond the fiscal and administrative capacity of the Government. The main elements of the proposed program are: * Eliminate power subsidies to agricultural users and improve power supply and quality. (In many cases farmers pay a flat rate but power is not delivered, so actual payments per Kwh are high; the correspondingly weak finances of the power companies have limited capacity growth and maintenance, leading to growing and acute power shortages that curtail growth and ermployment in rural areas). To make this program more politically palatable and economically viable, some key investrnents to improve supply and quality should be made first. The gains in productivity will more than compensate for the increase in power tariffs. Regulatory and pricing measures to avoid depletion of the aquifer and improve water delivery should be initiated. * Raise canal water charges to cover operation and maintenance, and improve water service delivery by turning canal irrigation over to users. Water basin management to price and regulate water usage will need to be phased in. Increase canal irrigation where justified economically, taking full account of resettlement and rehabilitation and land costs. * Irnprove technology dissemination services by making them responsive to farmers. * Inprove the access and quality of infrastructure (roads, markets, water supply and sanitation) in rural areas to improve access to output and input markets. * Allow agricultural as well as farmgate prices to increase by linking them more closely with world prices by eliminating controls on international trade including canalization (import restrictions will be phased out by 2003, see para 3.19), and phasing out controls on domestic trade, such as movement and storage controls, and pan-territorial and pan-seasonal pricing for rice and wheat distributed through the TPDS. * A.llow markets to perform better-de-reserve agro-industries (oilseed crushing, garment manufacture) from the small- scale industry reservation list, eliminate the dual sugar market system and liberalize the sugar industry. * Improve the targeting of income support measures to the poor through greater decentralization (TPDS, JRY/EAS). Facilitate development of the non-farm economy by gradually devolving untied resources and functional powers to the lower tier of the Panchayati Raj Institutions. * Reduce public procurement to what is needed for the TPDS, and pay market prices. Let those remaining in the PDS buy at market prices and make the TPDS subsidy a fixed, decreasing portion of the price. * Eliminate the fertilizer retention price scheme (RPS) and phase out the fertilizer subsidy. With rupee depreciation, Indian fertilizer plants have become more competitive and require much less protection; the retention price scheme does not provide fertilizer plants with the necessary incentives and flexibility to adjust to the oil policy changes; the drop in world fertilizer prices is an opportune time to eliminate the RPS and link ex-factory prices to international prices. The relative pricing of different fertilizers should reflect the desirable NPK ratio (Economic Survey, p. 122, summarizing the recommendations of the Hanumantha Rao Committee). * Improve roads and ports so that farmers can benefit from higher prices and price disparities across regions can be reduced by inter-regional competition. * Develop futures market for crops to provide a way of hedging risk. The June 1998 Budget announced the goveniment's intention to introduce futures trading in edible oilseeds, oils and cakes. 26 Chapter 3. Policies to Reduce Poverty, Raise Growth possible would give better signals for investment. In Round tariff bindings, which have been bound at an order to speed up the benefits of this liberalization, average of 42.2%, are just an upper bound.29 India could phase in all or most products into SIL much earlier than 2003 (imports would not explode . Removing non-tariff and procedural because of tariffs as well as the cost of SIL barriers to exports would also improve efficiency. licenses). Switching to tariff-based protection Many of these barriers affect agriculture (Box 4), would limit the degree of inefficiency and force and have kept agricultural prices below world producers to innovate and improve product quality, prices, an effect that has been only partially offset which could feed back into an export stimulus. This by subsidies to inputs. Moreover the canalization of would also allow the Government to capture some exports (and imports) has contributed to an of the benefits of protection that now go to inefficient distribution network. Well-known producers, in terms of increased revenue. problems with bureaucratic procedures and red tape continue to be a serious deterrent to * Reducing the still-high level of tariff by exporters.30 topping down the maximum tariff. This would reduce both the average tariff and the dispersion of * Reduced limitations on foreign direct tariffs, including India's current "cascading" tariffs investment. Limitations such as case-by-case that support "downstream" industries at the cost of approvals and preference for "core" FDI have more efficient producers.25 The eventual aim should reduced the access of India's exports to global be a low, uniform tariff such as Chile's 11%. A production networks. Examples are electronics and low, uniform tariff would reduce the discrimination auto parts, which were a major factor in Asia's against exporters and level the playing field among growth (except the Republic of Korea). FDI brings producers of import substitutes.26 Inefficient not only capital and know-how, but also links to producers would not be protected and their global markets. Even FDI in so-called low priority inefficiencies (higher-than-world prices) would not areas, such as consumer goods, brings benefits to be passed on to other producers or consumers. Even the economy. Even "potato chips" create small differences in tariffs can provide substantial employment, stimulate demand for upgraded benefits to inefficient producers. Other benefits of a agriculture, and benefit the processing and uniform tariff are ease of administration, ease of packaging industry (in its infancy in India). An interpreting the protective content of the tariff environment of low and uniform tariffs and no QRs structure (resource use in all industries would would maxirmize the benefit from FDI and avoid enjoy the same protection against imports),27 and incentives for setting up inefficient operations. reduction of lobbying for protection.28 Moreover, easing of infrastructure constraints is particularly important for export-oriented FDI that is * Pre-announcing a schedule of topping concerned with cost competitiveness (Srinivasan). down tariffs. Preannouncement of tariff cuts, as was done in Chile and Indonesia, gives producers Although the June 1998 budget speech did more certainty in their investment decisions. in promise action to reduce red tape, its tariff India's case, the Chelliah Committee's proposals, along with the previous Government's recommendations signaled the general direction and increase of three percentage points in tariffs in target tariff rates for the first phase of tariff reform September 1997, reversed some of the progress that (not the exact tariff schedules as for Chile and had been made along lines suggested on p. 24. The Indonesia). But there has been no similar budget announced an increase of 8% in special articulation of a strategy for the next phase. additional duties for all imports except crude oil, Uncertainty about the direction of policy, or even goods intended for trading, inputs for exports, the period over which a policy will be implemented, fertilizer, coal and power projects, etc., in order to can lead producers to delay investment and to lobby "level the playing field" for domestic industry for delays in tariff cuts on particular items (see p. (which on average is already very protected by tariff 24). In contrast, a preannounced schedule puts the and non-tariff barriers that are still among the burden on an individual producer to show reasons highest in the world)." This rate was later reduced for preferential treatment. Also, by doing this, India to 4% in response to widespread protests, including will be making a statement that its post-Uruguay by industries which used imported inputs. This Chapter 3. Policies to Reduce Poverty, Raise Growth 27 Box 5: Impact of Small Industry Reservation The Hussain Committee (1997) report states that "...case for reservations is fundamentally flawed and self-contradictory. ...The policy for reservations has crippled the growth of several industrial sectors, restricted exports and has done little for the promotion of small-scale industries" (p.1 30). One imlpact of reduction in import restrictions would be increased imports in areas reserved for exclusive production by the small-scale sector. While large domestic firms would be barred, large foreign firms would enter and compete only with small Indian firms, which is both inefficient and inequitable, and would create political pressure against reforms. This is already a major issue. The Hussain Committee report showed that of the 836 items reserved for exclusive SSI production in 1996, which mapped on as 1045 tariff lines, as many as 563 or 54% were under a free trade regime, which means free competition with all foreign firms. Other arguments for dereservation include: One, many of the reserved products are star export items. In 1996-97, SSI accounted for over one-third of total Indian exports. Of the 1045 reserved tariff lines above, over 25% were in the category of "extreme focus" products for exports.33 With no constraints to growth, industries such as garments, which have been star performers for India, would have done much better. SSI reservation (alongwith labor rigidities) in aments has been found to be a constraint to exports, since small firms cannot deliver large volumes of consistent quality.34 Industries such as toys, hand tools, and food processing have also suffered. Two, there is substantial reservation redundancy: in 1987-88 (the date of the last census of SSIs), 22% of the items reserved for SSIs were not being produced at all. Moreover, of the items reserved in 1987-88, only 4% accounted for 72% of total reserved sector output, implying that dereservation of the remaining 96% would do little harm to total reserved sector output. Three, reservation has led to capacity fragmentation, and forced the choice of the scale of production in many cases to sub-optimal levels. Four, there may be some "reservation-jumping" prevalent in Indian joint ventures abroad, which means distorted investment decisions and, to the extent that it would not have happened in the absence of the distortion, negates the purpose of reservation i.e. of increasing employment. A survey of 61 joint ventures in Nepal showed that 27% were producing items reserved in India for SSI.35 Five, in cases where a pre- existing large firm produces a reserved item, the policy is to freeze that firm's capacity at the pre-reservation level. This gives the large firm protection from other large firms, and can lead to premium pricing by the large firm.36 Six, there is no strong evidence to believe that reservation has indeed helped to increase aggregate employment or output. While the steps taken so far are in the right direction (increasing the limit on small-scale investment to Rs. 30 million in December 1997, and generalizing the exemption from SSI reservation if 50% of output is exported), it would be a good idea to implement the Hussain Committee's recommendations for complete dereservation while providing transitional support arrangements to the affected units.37 On the other hand, if the approach of phased dereservation is favored, then the simplest and most compelling approach would be to invoke the level playing field argument. This means first dereserving the 563 items (in the 1997 listing) that are subject to import competition, as well as the redundant items, followed by a matching of the QR phase-out schedule with dereservation of corresponding SSI items. In this context, the 1998 budget announced a dereservation of about 10 items in the farm implements and tools category with a view to helping farmers. However, the reported intention of the Government to reject comprehensive dereservation and reduce the investment limit from Rs. 30 million to Rs 10 million would go against the spirit of liberalization and hamper Indian firms from competing efficiently with foreign firms. special additional duty will be levied on a base that There are several other problems with the includes existing duties and the existing special special additional duty. One, the computation of the duty. This implies an effective actual increase of 5- duty itself is not straightforward. Two, by 7 percentage points on the value of imports. As a introducing many classes of new exemptions, it also result of the budget, the average tariff has increased goes against the avowed objective of reducing from 34.4 in October 1997 to 40.2% in June 1998, exemptions. Three, it creates artificial incentives and the import-weighted tariff from 25.4 to 29.7%32. for manufacturers and others to set up trading This tariff increase reverses the direction of tariff companies to avoid the levy. Four, it creates more reform and reinforces the anti-export bias, will room for corruption by introducing fresh create uncertainty and delay in investments (p. 24), classification issues. Transaction costs for and confer extra rents on existing producers. Its importers and exporters will increase. On the whole, partial reversal also makes the Government more its complexity goes against the spirit of susceptible to pressure by interest groups. simplification and reduction in discretionary 28 Chapter 3. Policies to Reduce Poverty, Raise Growth decision-making, which militates against exports as further through prudent introduction of a fully- much as the increase in duties. Moreover, owing to funded pension system, and improving quality of exemptions and the incentives to avoid the levy, financial services. even the objective of providing a level playing field will be diluted.38 Reducing the consolidated public sector deficit will be critical to reducing the crowding out Increasing the efficiency of resource use also of private sector funding and continued financial involves broadening and deepening domestic reforms (p. 8). Indeed, the public sector's rising reforms. Among the most important are: interest costs could lead to reversal of financial reforms, as the Government seeks to make more * Increasing agricultural growth, which is a room for non-interest spending. Or it could lead to key to combating poverty. The agricultural increased public offshore borrowing or, very economy faces a complex maze of (explicit and unlikely, inflationary finance. The risks of such implicit) taxes and subsidies. The net result is that developments occurring, though small, add to the there is still an anti-agriculture bias in spite of a risk premia on savings and investment, which in decline in this over the years. Increasing agricultural turn adds to the cost of private sector funds in India. growth would require a comprehensive program as outlined in Box 4. Managing links to external capital markets. A much lower public sector deficit and a * Reducing restrictions on interstate strengthening of the domestic financial system (as movements of goods, notably limits on movements discussed below) are preconditions to capital of agricultural goods, differential sales taxes, and account liberalization, as recommended by the the octroi (which could be replaced by taxes on Committee on Capital Account Convertibility. In property and agricultural income). Such limits, like addition, reserve requirements and taxation on limits on international trade, reduce efficiency of domestic and foreign funding should be equalized, resource use. Switching to state VAT taxes, from and capital requirements on short-term funding sales taxes, as recommended above, which would increased to avoid excessive incentives to foreign reduce the cascading of taxes that currently deters funding. The Government should continue to trade between states (and internationally). monitor external borrowing closely and, as owner of the public banks, limit their external borrowing to * Increasing flexibility in resource deployment prudent levels (as done in the past), especially short- and corporate restructuring. Amendments to the term borrovving. If the current account deficit labor and company law (Box 3), and the Sick begins to widen, the Government will need to Industrial Companies (Special Provisions) Act; tighten monetary and fiscal policy. Finally, even the eliminating reservation for small-scale industry current degree of capital account convertibility (Box 5); and easing land-use regulations (the repeal implies that monetary policy will need to take into of the Urban Land Ceiling Regulation Act, as account international developments. Difficulties in proposed in the 1998 budget speech would help these areas were the foundations of the Latin reduce urban sprawl and cut the high prices of urban American debt crises of the 1980s and the East land) would reduce delays, corruption, lobbying, Asian crisis of the 1990s. rent-seeking and inefficiency. * Third, the banking system, which is by far the Reforming the Financial Sector. The biggest intermediary in the financial system, will financial sector's effectiveness in supporting rapid need to improve its credit management in loans growth, providing resources to the private sector and to the private sector, which will probably mean limiting the risk of macroeconomic instability will changes in institutions and incentives. Many of the depend on reforms in six key areas: reducing the necessary changes have been recommended by the dpublic send or deficit,managinglinkstotheextemal Narasimham II Committee (Box 6). Although net public sector deficit, managing links to the external no-efrigastaecuetllsshn4%f capital markets, strengthening the financial system non-performtg assets are currently less than 4% of through incentives and institutions that will improve total assets, this figure reflects the "narrownessi of credit management, dealing with priority sector Indian banks, i.e., the large percentage oftheir over lending, developing the long-term capital market the last two years. Worldwide experience, including Chapter 3. Policies to Reduce Poverty, Raise Growth 29 these Indian figures, suggests that public banks have Best practice suggests that incentives for found it difficult to lend to the private sector without better performance include high levels of capital, so incurring large non-performing assets. Incentives that the private owners have something at stake; are lacking for good risk management because the additional capital linked to risky activities; and managers and staff have little at stake. Political ensuring that bank owners, managers, staff, as well pressures always abound. Hence the banking as lenders and depositors (except the smallest) system will need to move toward privatization with suffer losses from bank failures. Regulation is also regulation providing much stronger incentives to needed to limit exposure to related firms. Good prudent behavior. supervision is needed to enforce the regulations, protect capital and evaluate banks' risk management Box 6: The Narasimham II, Khan and Gupta Reports on the Financial Sector The Narasimham I Committee report, in 1991, along with other reports issued at that time, provided an outline for reform of India's financial system. This year, the Narasimham II Committee report on banking, the Khan Committee on harmonizing banks and development finance institutions, and the Gupta Report on rural credit, along with last year's Tarapore Committee on capital account convertibility, suggest approaches for broadening and deepening reforms in the financial system. Narasimham I's recommendations followed best practices of the period, focusing on reduced controls on interest rate and credit allocation; tougher capital, supervision, and classification of non-performing assets; and increased entry, including entry of foreign banks. The implementation of many of these recommendations and the worldwide problems with public sector banking and bank crises mean there is a new set of challenges. Narasimham II brings to bear the best current practices to these issues. Appropriately, it focuses even more than the last report on improved incentives for prudent behavior rather than relying solely on regulation and on upgrading banks' performance. Among Narasimham II's major recommendations along these lines are: * Reduction of Government's and RBI's share of equity in banks to 33%, by dilution. * Separate RBI from its role in bank boards. * Raise bank capital to 9% of risk weighted assets by 2000 and 10% by 2002; mark to market and give government securities a 5% "risk weight" to begin to deal with their interest rate risk. Give foreign open positions a 100% risk weight (i.e. 8% of the open position would have to be matched by capital, up from the current, separate 5% requirement). * Reduce NPAs sharply; tighten definitions; avoid further recapitalization by the Government; any "hiving off' should involve major operational restructuring to prevent the problem's recurrence; closure of weak banks that cannot be revived, while safeguarding depositors' and employees' interests. * Give banks more autonomy in bank management and pay setting (for banks that have gone to the market), lengthen terns for top managers, restructure and develop voluntary retirement schemes as appropriate, upgrade staff and comnputerize faster; improve risk management; improve disclosure. * Leave deposit insurance coverage as is, but move to risk-based premia. The Khan Committee's principal recommendation, was a move toward universal banking, with a progressive elimination of the boundary between banks and the development finance institutions. The Narasimham Committee also supported this convergence. Both committees noted the need for harmonization of the cash reserve and statutory liquidity requirements over time. The Khan Committee also recommended lowering the CRR (as did the Tarapore Committee) and abolishing the SLR. Both the Khan Committee and the Narasimham Committee called for improvement in the legal framework for loan recovery. The Gupta Report, and the Khan and Narasimham Committees, have recommended further deregulation of priority sector lending. The Gupta Report has recommended allowing banks to set interest rates on agricultural loans and speeding up the credit process by allowing branches to approve most loans. It also recommended replacing the priority lending target with a system of annual targets. 30 Chapter 3. Policies to Reduce Poverty, Raise Growth capacity, along with good auditing. Improvements the numerous bank failures around the world in the legal and judicial system, to speed up suggest that even the most up-to-date bank collection from defaulters and liquidation of capital, supervision and regulation cannot substitute for and better disclosure of information, would also incentives to good credit management and cannot reduce non-performing assets (although such prevent indlividual bank failures. improvements have proved difficult in the Indian context).39 Failures in these areas, in some cases Difficulties in creating incentives for stronger long standing, are generally regarded as contributing performance by public banks are apparent from the to the current East Asian crisis (Box 7). Of course, above discussion. The owner, the Government, has Box 7: Lessons from the Southeast Asian Crisis The Southeast Asian crisis reflects 4 main factors: * Excessive dependence on foreign debt, particularly short term debt, to finance excessive current account deficits (3.5- 8% of GDP) and large amortizations. Thailand, the most overextended with two consecutive current account deficits of 8% of GDP, lost its reserves through failure to adjust (see below) and was unable to defend its fixed exchange rate, in July 1997. Investors in the region, foreign and domestic, lost confidence and reduced their exposure. This triggered crises in Indonesia, Malaysia and the Philippines, which had lower cunent account deficits, but high debt (except Malaysia). In Korea, the crisis began in 1996 with an industrial slowdown masked by unsustainable short-term external borrowing to support over-extended firms. * Channeling of large volumes of external funds through weak financial systems. Local financial intermediaries were often undercapitalized and expanded lending rapidly on the basis of minimal credit analysis and expectations of a continuing boom. Often they were closely linked to borrowers. * Lack of incentives to prudent behavior in the financial system, including heavy government involvement and traditions of ensuring that owners and investors, as well as depositors, would not suffer losses. In Thailand, bailouts of financial institutions and investors in the stock market cost the Central Bank $25 billion between June 1996 and June 1997, a monetary policy totally inconsistent with the fixed exchange rate policy. * Excessive incentives to use foreign funds (less restrictions/costs than domestic funds) including inadequate exchange rate and interest rate variations to limit inflows. In Korea it is likely that the large buildup of short-term debt was tacitly, if not actively, encouraged by the Government, given the close relations between the Government and financial system. In the other countries, Governments did not take adequate measures to offset/slow the inflows. Foreigners were attracted by high interest rates and expectations they would be able to exit without much loss, which in fact seems to have occurred, particularly in Korea and Thailand. The Southeast Asian crisis has many similarities with the 1980s Latin American debt crises, the main difference being that external loans were at least nominally private-to-private, rather than financing public sector deficits. However, Chile in the 1980s is similar to SE Asia in the 1990s in its low fiscal deficit, the private-to-private flows, the channeling of offshore funds through weak, poorly regulated banks to related borrowers, and the Government's eventual bail-out. All the Latin American countries channeled foreign loans through their banking systems, which collapsed when inflows were cut-off. Other similarities are the unwillingness to take fiscal, monetary, or exchange rate action to slow unsustainable current account deficits/booms and the underestimate of short-term debt. The lessons of the Southeast Asian crisis and the earlier Latin American crises seem to be: * Fiscal prudence is a necessary, but not a sufficient condition to avoid an external debt crisis. * Dependence on foreign inflows needs to be limited to sustainable levels, at the macro level by fiscal, monetary and exchange rate policy, at the micro level by at least ensuring that the potential costs of foreign borrowing to the country are fully reflected in private costs, and the Government tightly limits public banks' exposure. * Financial sector strengthening, in terms of higher capital requirements, linked to risky behavior; limits on exposure; and better supervision to enforce these rules and evaluate risk management capabilities. * Quick action to force over-exposed financial firms to increase capital or suffer takeovers or closure, with closure leading to financial losses for owners, depositors, and lenders, foreign and domestic. Chapter 3. Policies to Reduce Poverty, Raise Growth 31 no good way of maintaining the capital. Indeed, expertise in credit management. Most importantly, more capital for public banks may simply give them at the moment the problem in infrastructure is not more low cost resources to lend, not increase funding, but lack of bankable projects. Projects are incentives for prudence. Performance could not bankable because they lack a sound regulatory improve by not equating public bank staff with framework, as discussed above, and suffer from Central Government employees as is now the case poor cost recovery in the sector, which makes the (which means guaranteed employment but being required risk-adjusted rate of return very high. subject to government vigilance)40 and by offering Forced lending to such projects would simply higher pay, linked to performance. Another transfer the cost of project failure to the banks and, involves judging managerial performance on the ultimately, the Government. basis of recoveries and collections. Systemic incentives for good credit management might be The fifth major issue is the development of the improved while reducing long-term losses, by long-term equity and debt markets. India's stock turning weak banks that require multiple capital and bond markets are relatively large for a low injections into "narrow" banks investing only in income country, as noted. They perform well by Government debt, with a corresponding reduction in developing country standards (Shah and Thomas). staff. In this respect, the creation of a bad debt Improvements in technical areas, such as a institution, to clean the balance sheets, may send the depository for shares, movement toward shorter, wrong signals-it would reduce managers' rolling settlement periods, and better new issues incentives to make good loans and to collect, and pricing are on-going and need to be continued. lenders' incentives to pay-while not increasing the Information provision is still weak and could be system's collection capacity. improved by allowing rating by the large A fourth issue is priority sector lending. The international auditing firms as well as local firms. easing of interest rate restrictions has eased the cost Improved bond market efficiency will depend o of such lending to banks. However, performance of resolving similar technical issues. priority sector loans is worse than non-priority loans (pirt ecoacunsfr 40% ofntbnkcei Although these improvements are important to (priority stout 4%ouNPAs), foreoflneti bobanks' preparing the capital market to receive more funds, but about, 47% of NPAs), reflecting both banks' the key to mobilizing large sums of long-term funds difficulty in managing such credit and, in some is improving the pension system and liberalizing cases, po[litical interference. The critical political insurance firms' investmoents. In particular, a issue in reducing priority sector lending is to prudent fimovement toward a fully funded, improve the rural credit system, which again will transferable pension system, starting with the public depend on improved incentives for sound banking, sector, would generate a large volume of long term including a great private sector presence and legal funds, while providing good incomes for retirees. remedies for executing collateral. Subsidies to Such a movement will depend on reducing the fiscal small-scale and rural lending should be made deficit, in order to cover both the existing directly from the Government, not be implicit obligations under the current, pay-as-you-go system, through priority sector lending. Crop insurance, and making payments to a fully-fouded system rather than loans, would be more appropriate for without raising the deficit. In the area of insurance, disaster relief than bank loans, the requirements on investments by the two state Infrastructure lending should not be accorded insurance firms need to be eased prudently, and priority sector status. It would mean a return to the their monopoly power reduced by allowing private use of directed credit, as a substitute for sector entry into the system, as the government Government spending, an approach that has proved proposed in its 1998 budget speech. The resulting unsuccessful worldwide. In general terms, such an competition will improve service provision, reduce approach would reduce the availability of loanable costs, and increase benefits to the insured. funds for other activities and implicitly tax them. In A sixth issue is improvement in bank service this particular case, it would cause a severe term to increase the welfare of Indian firms and transformation problem for the banks and force households and prepare for liberalization of them to lend in an area where they have little financial services. India's 65,000 bank branches 32 Chapter 3. Policies to Reduce Poverty, Raise Growth have spread banking across the country. But inter- Committee). However, without a major upgrade branch and inter-bank linkage is weak, reflecting the to improve service and payments, a reduction in telecommunications system and the lack of a good political control, and a reduction in the costs of payments system, which RBI is now working to unprofitable branches and priority lending, it is upgrade. While public banks' costs, as a percentage hard to see how Indian public banks could of assets, are reasonable by international standards, compete internationally without subsidies or reflecting India's low labor costs (spreads remain protection. So far, deregulation has improved high, owing to the still-high cash, liquidity, and lending services and cut spreads somewhat and priority lending requirements), their service quality widened choices for borrowers. In this context, is poor. Strong unions have imposed stringent work policies should ensure, as far as possible, a level rules and limited computerization, ATMs, etc. playing field between banks and NBFCs (the recent Again, a major upgrade will depend upon moves to stiengthen control over NBFCs are in the substantial change, such as removal of bank staff right direction), while at the same time ensuring that from Government employee status and privatization competition is not reduced except for prudential (as recommended by the Narasimham II reasons. CaPtEfl4 I DEVELOPMENTAND FINANCING PROSPECTS In order to reduce poverty significantly, India the fall in oil prices in 1998-99, import growth is will need sustained rapid growth supported by likely to remain above export growth. With the vigorous human development. This will depend on: increased difficulties in offshore finance, the widening trade deficit is likely to lead to some loss * maintaining macroeconomic stability, to of international reserves. However, the debt service encourage saving and investment and avoid an ratio would coitinue to decline, reflecting increased inflation tax on the poor; reliance on foreign direct investment in the capital * an open and competitive economy, to encourage account efficient allocation of resources and continuous Regarding exports, the East Asian crisis is upgrading of technology and product quality; likely to have mainly an indirect effect. As noted, * higher infrastructure investment; and India's exports to East Asia (including Japan, * a sound financial system that avoids financial excluding China) are less than 20% of its total instability and allocates resources to high return exports. However, there is likely to be substantially activities, increased competition in third country markets once credit to East Asian exporters, including credit to Prospects for such development will depend on finance their imports, recovers, or if China attempts further stabilization, government realignment and to increase its exports substantially. Another reform that reduces the consolidated fiscal deficit, important issue for Indian exports is the potential of especially the high level of subsidies; accelerates the increased protectionism in the industrial countries. reduction of tariff and non-tariff barriers; The growth of anti-dumping actions in industrial consolidates financial sector reform, especially in countries may begin to place impediments to banking; increases public spending on physical and mutually beneficial trade. social infrastructure (mainly at the state level); Despite these exteral developments, the main improves the framework for private participation in challenges to increasing growth, the pace of poverty infrastructure; begins civil service and pension reduction, and exports are interal. Policies that reforms; and improves the quality of governance. increase the profitability of exports enough to increase India's share of world exports will yield a Theorni aiffictualtt paedosch onover,nthe pholc substantial rise in export growth, GDP growth and reform IS difficultto predct. Moreover, mthe short labor demand. The scenario assumes sufficient run the environment for India has become more a l domestic reforms will occur to yield a rise in export difficult. International exchange and capital growth beginning in 1999-2000 that will exceed the markets are volatile and the cost and availability of projected growth of world exports. While oil funds for developing country borrowers is likely to portes are ly to emnow, price of be higher than in the last few years. India also faces key export commodities such as tea (after 1999), G8 sanctions, a lower credit rating, the likelihood of re anpwet aredals frcas to de so9tha increased . coptto inepr.akt rmEs rice and wheat are also forecast to decline, so that increased competition in export markets from East the overall terms of trade would remain constant Asia, and the slowdown of domestic investment, overath term . the currenaccontdft * over the medium-termn. The current account deficit would stabilize at about 2.5% of GDP for 1999- The scenario for the next few years assumes 2001, before falling. Reserves would resume their sufficient reforms to at least maintain export growth increase and the debt service ratio would continue to over the next year (see Table 2 on page 3). fall. However,, the current account deficit is likely to worsen somewhat (to 2.3% of GDP), since, despite 34 Chapter 4. Development and Financing Prospects In the short run, the external vulnerabilities in and a high debt stock to export ratio. Its moderately this scenario are in the current account, and in the indebted rating reflects the large concessional possible repatriation of foreign portfolio investment component of its debt (almost 50%), which lowers and slowdown in capital inflows. In the short run, its debt service to export ratio through reduction of some pressures on the exchange rate and reserves average interest rates and increasing average could develop through leads and lags of current maturity. account payments-increased leads in import payments and increased lags in export receipts of Official development assistance is needed to export-and slowdowns in the remittances on which help reduce the number of India's poor, which is the current account is heavily dependent. Over the greater than all the poor in sub-Saharan Africa. The longer term, carrying out enough reforms to achieve vast needs of India's poor cannot be met solely by the higher projected export growth will be critical, higher inflows of private capital. Official both to increase efficiency but also to avoid a development assistance will also play a major role deterioration in the balance of payments, because of in reducing poverty. It can support improvements in the current excess of imports over exports. critical social and physical infrastructure, such as primary education and health, roads, water supply, The capital account Is sill fairly closed, and etc., areas where the private sector traditionally has reserves are fairly high ($29.4 billion including gold not played a role. There is also a need to build up at end-March), compared with the (controlled) low nstiuoal apaciTy is ars, an tila at level of short-term debt and trade credit. However, thtsitutional capaclty i these areas, particularly at foreign portfolio investment, currently about $9 the sub-national level, which official assistance can billion, can be repatriated, although sharp outflows help provide. Official development assistance also are likely to be deterred by the potential losses that will help to crowd-in both foTeign and domestc would occur from declines in the stock and foreign private investment. Finally, external assistance also exchange markets. Net private capital inflows improves the structure of debt and debt service might slow somewhat in the short run, but official profile because of its long-term and concessional flows are likely to remain fairly constant, as they nature. It thus provides a stable source of external reflect disbursements from already-committed finance, which will be important even as the capital loans. account is gradually liberalized. This report therefore urges a continued high level of official India is classified as a moderately indebted development assistance, with a substantial country, in spite of an external debt of about US$92 concessional component. billion, one of the highest in the developing world, Endnotes 'Net outstanding forward sales against this total were $1.8 billion at end March 1988. 2 The figures for short-term NRIs reflect the original maturities of the deposits. Maturing long-term NRIs also represent a potential claim on reserves, which would be increased at a point in time to the extent the maturities are "bunched". 3Penalties include fall in stock market prices, which are likely to be large in a market where foreign investors have provided much of the impetus for price movements, and penalties on early liquidation of NRI deposits and term deposits in Rupees. In the April 29, 1998, monetary policy statement, banks were allowed to set their own penalties for early withdrawals; previously, the penalty set by RBI had been low and had led to some problems for foreign banks. 4As in previous years, the deficit does not include the capital cost of recapitalization of public banks, which was 0.2% of GDP in 1997-98, see endnote 14. 5 Petroleum prices were gradually deregulated, beginning with 6 products on April 1, 1998. The original program also entailed a reduction, over four years, of the cross subsidies on kerosene and LPG from surcharges on petrol, aviation fuel, etc., with the final, negligible subsidy eventually to become part of the budget. However, the Govemment has since decided to maintain the subsidies, which would either lead to a large budget cost or continuation of the cross-subsidy. 6Tax revenues are recorded on a cash basis, and hence may be overstated or understated to the extent that tax refunds and rebates are varied from year-to-year. 7 Allocating India's Consolidated Public Deficit between the Central Govemment and the States is complex. Under the Federal Constitution, a large share of taxes collected at the Center is retumed to the States-77.5% of income taxes and 47.5% of Central excise taxes, which amounted to 6.1% of GDP in 1997-98. The Tenth Finance Commission proposed an alternative, 29% of all taxes, which would avoid any possible emphasis on one tax or another. The proposal, which requires a constitutional amendment for enactment, would increase the State's share of revenues by over I percentage point of GDP, compared with past results. The Center also makes substantial transfers to the States (1.6% of GDP) and net borrowing on behalf of the States, which in total represent almost 40% of central expenditure. In part they fund Central schemes that are implemented by the States, which in many other countries are the full responsibility of the States. 8 Cross country differences in the Central Govemment deficit may partly reflect differences in Federal transfers to states. Comparable intemational data on consolidated public sector deficits is limited. Differences in consolidated deficits across countries would partly reflect differences in the role of public enterprises. 9 A public sector debt trap arises when the average interest rate paid exceeds the nominal GDP growth rate, at which point any sustained new public borrowing causes an explosive growth in the ratio of public interest payments to GDP. 10 The rise in interest costs reflects both the higher interest cost of financing a given deficit, and the higher cost of rolling over outstanding debts. As the average interest cost of the debt stock thus rises, the sustainable deficit, i.e., the deficit consistent with avoiding a debt trap, declines as a percentage of GDP. The rise in interest costs, as the Govemment shifted from implicit taxes in the financial sector to market borrowing, partly explains the limited reduction in the revenue deficit. " A recent exception is Andhra Pradesh, which has set water and land revenue charges to cover 70% of O&M. 12 The hard budget constraint for States is judicious; in some Latin American countries, large state deficits financed through access to the central bank were a major factor in hyperinflation. The ability of Indian states to run larger deficits is limited by limits on their borrowing capacity, which is determined by loans from the Center, access to borrowing from RBI, and the allocated share of statutory holding of state paper by the banking system. Many states have tried to get around their hard budget constraints with the use of guarantees on borrowing by state-owned enterprises. Of course this increased their contingent liabilities, which were not as closely monitoredl as their borrowings. Some states also had used borrowings from their public enterprises to ease the limits on their direct borrowings. However, the removal of the State public enterprises from qualifying for the Statutory Liquidity Requirement in 1994-95 and the deterioration in the State public enterprises' finances has now limited the enterprises' access to borrowing without State guarantees. Relying on the market to limit States' and State Public Enterprises' borrowing to prudent levels is complicated by whether there is an implicit guarantee by the Central Government. 36 Endnotes 13 States employ about 7.5 million workers directly (about twice as many as the Central Government) and 8.8 million more individuals work in quasi-public positions at state-funded private schools and hospitals. Hence the cost of the wage settlement could be two to four times as much as in the Center. 14 The Govemment defined non-merit goods as goods and services that neither involved significant externalities nor obviously aimed at improving equity. The split between explicit and implicit subsidies is difficult to make. Explicit subsidies in the Central Budget were 1.3% of GDP in 1994-95. The Central Statistical Office estimates that the States provided subsidies of 1.2% of GDP through their budgets. However, these figures exclude debt relief, recapitalizations, and net payments for education. Moreover, as explained in end note 1, the recapitalization of public banks is not included, this averaged about 0.2% of GDP in the last 4 years. 15 In 1992-93, banks were instructed to classify as NPAs loans on which principal ard interest was past due for four quarters, tightened to three in end 1994 and two quarters in end 1995 and thereafter. For financial institutions, the classification is more lenient on principal repayments i.e. one year past due. Although many countries still follow the norm of 180 days, best practice is to a tougher standard of 90 days. 16 Write-offs, even of fully provisioned assets, are difficult in the Indian legal and regulatory framework, so provisions are a relatively large percentage of non-performing assets in a strong bank. 17 The 1997-98 transaction of Rs.27 billion was an injection of equity, in the form of non-negotiable, 12 year, 10% bonds, and thus did not show up as part of government expenditures, although the interest will later. The previous injections also took this form. Such injections increase the share of public debt in total assets of the recipient bank. 18 India's manufactured exports (which constitute over 75% of total exports) are biased towards activities based on natural resources and simple technologies, and this pattern has remained relatively static over the past decade. For India, RB (resource-based) and LT (low-tech) exports accounted for over 86% of total manufactured exports in 1985, and for 84% in 1996; world averages are 43% and 35% respectively. India's HT (high-tech) exports rose only from 3 to 4.4% over 1985-96. India's export structure is far more 'backward' than those of South East Asian economies, China and Mexico. Malaysia and Thailand, by no means technologically more sophisticated than India, have HT exports of over 60 and 36%. India's export "positioning" is also not favorable. The percentage of its manufactured exports that are increasing their market share in products that are "dynamic" (increasing their share in world trade) were 19.3% over 1990-95. Figures for Asian countries were much higher, such as 47.4% for China, 72.7% for Malaysia, 47.4% for Indonesia, 41.6% for Korea etc. On the other hand, India has 65.6% of its manufactured exports with increasing market share in those products whose share in world trade is declining. This is a direct consequence of its products being largely in RB and LT sectors. See Lall (1998) for more details. 19 Of course, the Effective Rate of Protection is a better measure of protection (i.e., the degree of inefficiency in production relative to the world that a country is prepared to live with) than tariffs. This has also moved down consistently over the years (NCAER, 1998). However, since cross-country data for ERPs are not available, the text reports average tariffs. 20 India's import regime has several categories, such as free (OGL), prohibited, canalized through state trading agencies, importable subject to clearances, and a special import license (SIL). The UNCTAD methodology to calculate NTBs, used by NCAER, gives a zero weight to any OGL import, and a weight of one to all other categories. The SIL allows exporters to import 5-10% of their exports from an increasingly large list of products and is transferable. Thus, it provides an additional channel of fairly free imports (with an overall monetary ceiling), albeit at a premium. 21 The effective rate of protection on secondary industry is about 43%. In other words, the average margin available to pay for land, labor and capital in the secondary sector is about 43% more than that available to produce a unit of exports. This calculation ignores the impact of subsidies on both exports and secondary industry production. Generally speaking, subsidies, even to agricultural products, do not offset the impact of high domestic costs of imported inputs and the restrictions on exports that lower their domestic prices below world prices. 22 Restrictions on both exports as well as imports also violate multilateral trade rules. 23 Manufacturing employment was higher after trade liberalization in 11 of 12 countries studied by Papageorgiou et al., 1990. In India, it is interesting to note that the average labor intensity in unregistered manufacturing increased from an average of 59.3% over 1988-89 to 1990-91 (just before reforms) to 62.4% over 1993-94 to 1995-96 (Annex Table A.13, based on ASI and NAS data). However, over the same period, there was little change in the labor-intensity of registered manufacturing, which perhaps reflects the lack of flexibility in the labor market (Box 3 on legal reforms). 24 However, the United States has challenged the continued maintenance of QRs by India (implying that it would like to see a quicker phase-out), and at its request, a dispute settlement panel was established in November 1997. Hearings were continuing at the time of writing. Endnotes 37 25 For example, the average tariff (weighted by value-added weights) on primary goods was 20.6% and on secondary products was 37.7% in 1997-98 (NCAER 1998). Also, many agricultural products report negative ERPs for 1988-89 through 1997-98. In terms of the use-based classification, consumer durables consistently have the highest ERPs of all products, even without the fact that most consumer durables actually have virtually infinite protection on account of QRs. 26 See Joshi and Little, pp.70-77, for an excellent articulation of this issue. 27 A common uniform tariff of say 10% allows each import-competing industry to charge upto 10% more than world prices. At the same time, importable inputs cost 10% more than world prices. For every import-competing industry, there is now a 10% increase in the difference between price of its output and the price of its tariff-inclusive intermediate inputs i.e. there is a 10% "effective protection" of value-added. See also Harberger, p. 160. 28 Such as in the infant industry argument justifying the case for protection. See Subramanian. 29 India's post-Uruguay Round bound tariff rates of 42.2% (simple average) are higher than all but three of 26 developing countries (average bound rate 28.5%) (Pursell). Bound rates serve an important function of establishing credibility that the reform program will not be reversed. Of course, high bound rates leave open the possibility of reversing tariff cuts, which could create uncertainty and lead to deferred investment. 30 For example, exporters can wait 6-8 months for duty drawback or export promotion for capital goods licenses (Nair and Kaul, 1996). Special export promotion zones, set up to avoid many of these problems, so far seem to provide little relief . 31 Manufacturer-Importers do not pay sales tax on imported inputs while they pay sales tax on domestic inputs. This argument ignores the fact that domestic producers are in any case protected by very high tariffs on imports. 32 The figures for 1997 include the 3% special duty imposed in September 1997. 33 In one of the various exercises by the ministry of Commerce, done in 1996-97, for selecting key export product categories. 34 See Kathuria and Bhardwaj, and ICICI-Harvard study. Bhavani and Tendulkar, using 1987-88 census data for 395 garments and apparel units in Delhi, found that scale of operations was directly correlated with export performance. Given the form of business organization, larger firms made a proportionately greater contribution to employment and paid higher wages. 35 See Taneja, quoting from a FNCCI study. 36 The Godrej steel almirah, for example, is priced 200-300% higher than the corresponding item in the small-scale sector. See Guhathakurta. Of course, this kind of product differentiation happens even in the absence of reservation, but the difference there is that the large firm is not in a quasi-monopoly position. 37 While there are firms that would export more than 50% of output, the compulsion to export more than 50% year after year would still be a deterrent to entry by large firms. 38 The case where the domestic producer is most at a disadvantage is where imports are duty free, since importers would not pay any tax on imports whereas they would pay a sales tax on domestic purchase. However, the budget has exempted the zero duty import category from the special additional duty. 39 The Recovery of Debts due to Banks and Financial Institutions Act 1993 established special tribunals for adjudicating debt and speeding recovery, but the tribunals' activities have been tied up in the courts. One way that Mexico used to extend the tribunals' mandate was to require borrowers to agree to adjudication by the tribunals, rather than by the courts. 40 According to a recent Supreme Court ruling, an employee of any institution with greater than 50% holding by the Government will have guaranteed employment but also be subject to vigilance, as is the case with Government servants. This means that privatization may be the only solution to this issue, as recommended by the Narasimham II Committee. REFERENCES Academy of Business Studies, Easy Reference Customs Tariff 1997-98 and 1998-99, New Delhi. Acharya, S. 1995. The Economic Consequences of Economic Reforms. Sir Purshotamdas Thakurdas Memorial Lecture 1995. The Indian Institute of Bankers, Bombay. Ahluwalia, M.S. 1998. Infrastructure Development in India's Reforms, in I. Ahluwalia and I.M.D. Little (ed.), India's Economic Reforms and Development. Oxford University Press, Oxford. Bagchi, A. 1998. Tax Assignment in the Indian Federation: A Critique, in Ahluwalia and I.M.D Little (ed.), India's Economic Reforms and Development. Oxford University Press, Oxford. Bhavani, T.A. and Tendulkar, S.D. 1998. Determinants of Firm-level Export Performance: A Case Study of Indian Textile Garments and Apparel Industry. CRISIL Information Services, 1998. Background papers on Indian Industry and Banking, prepared for the World Bank Economic UJpdate 1998. Debroy, B. 1998. Background paper on Legal Reforms, prepared for the World Bank India Econom._ Update 1998. Disinvestment Commission, 1998 (March). Report VII, New Delhi. Easterly, W. et al., 1994. Public Sector Deficits and Macroeconomic Performance. Oxford University Press for the World Bankc. Galal, A. et al, 1994. Welfare Consequences of Selling Public Enterprises: An Empirical Analysis. Oxford University Press for the World Bank, Washington, D.C. Gopal, M.G. 1996. India: Economic Liberalization and Legal Systems. Paper presented at the International Conference on Law and Economics, 11-13 January 1996, organized by Project LARGE (UNDP) and the National Law School. Government of India, Economic Survey 1997-98, Ministry of Finance, New Delhi. Government of India, 1997. Government Subsidies in India, Ministry of Finance, New Delhi. Guhathakurta, S. 1993. Economic Independence through Protection? Emerging Contradictions in India's Small-scale Sector Policies, World Development, Vol. 21, 12, pp. 2039-54. Gulati, A. 1998. Fertilizer Subsidy: Who Gains at Whose Cost? Background Paper for the World Bank Rural Development Report 1998. Harberger, A. 1993. The Other Side of Tax Reform in Dombusch, R. (ed.), Policymaking in the Open Economy. Oxford Press for the World Bank, Washington, D.C. Hussain Committee, 1997. Report of the Expert Committee on Small Enterprises, Chairman Abid Hussain. New Delhi. Industrial Credit and Investment Corporation of India Ltd. (ICICI) and R. Jaikumar, Harvard University, 1995. Beyond the Multi-Fiber Agreement, Strategies for the Indian Apparel Industry. Intemational Finance Corporation, 1995. Emerging Stock Market Factbook. Washington, D.C. Intemational Monetary Fund, 1996. Goldsbrough, P. et al. Reinvigorating Growth in Developing Countries, Occasional Paper 139, Washington, D.C. 40 References International Monetary Fund, 1997. Mackenzie, G.A. et al. The Composition of Fiscal Adjustment and Growth, Occasional Paper 149, Washington, D.C. Joshi, V. and Little, I.M.D. 1996. India's Economic Reforms 1991-2001. Oxford University Press, Delhi. Kathuria, S. and Bhardwaj, A. 1998. Export Quotas and Policy Constraints in the Indian Textile and Garment Industries. Mimeo, World Bank, New Delhi. Lall, S. 1998. Structural Trends in Indian Manufactured Exports: an International Comparison. Background paper for World Bank India Economic Update. Megginson, W.L. et al., 1995. The Privatization Dividend. Public Policy for the Private Sector Quarterly, No. 5, December, World Bank, Washington D.C. Nair, R. and Kaul P. 1996. Exporting Garments from India: Procedures, Bottlenecks, Transaction Costs. Project LARGE (Legal Adjustments and Reforms for Globalizing the Economy", Policy Paper No. 4, UNDP and Allied Publishers Limnited, New Delhi. National Council for Applied Econonmc Research, 1998. Protection in Indian Industry. Background paper for World Bank India Economic Update. National Institute of Public Finance and Policy, 1997. Government Subsidies in India, New Delhi. Papageorgiou D., Choksi, A. and Michaely, M. 1990. Liberalizing Foreign Trade in Developing Countries: Lessons of Experience. World Bank, Washington, D.C. Pursell, G. 1996. Indian Trade Policies Since the 1991/92 Reforms. World Bank, Washington, D.C. Reserve Bank of India, RBI Annual Reports, various issues, Mumbai. Reserve Bank of India, Report on Trend and Progress in India 1996-97, Mumbai. Sekhar, U. 1998. Background paper on India's Recent Export Performance, prepared for the World Bank Economic Update 1998. Shah, A. and Thomas, S. 1997. Developing the Indian Capital Market. Indira Gandhi Institute for Development Research. Subramanian, A. 1994. The Case for Low Uniform Tariffs. Finance and Development, June 31(2) pp. 33-35. Srinivasan, T.N., 1998. India's Export Performance: a Comparative Analysis, in Ahluwalia and Little (ed.). Taneja, N. 1998. Background paper on Small Scale Industry, prepared for World Bank India Economic Update. World Bank, 1993. The East Asian Miracle, Oxford Press for the World Bank., Washington, D.C. World Bank, l995a. The Emerging Asian Bond Market, Washington, D.C. World Bank, 1995b. Bureaucrats in Business, Oxford Press for the World Bank, Washington, D.C. World Bank, 1996. Five Years of Stabilization and Reform and the Challenges Ahead, Washington, D.C. World Bank, 1997a. India, Sustaining Rapid Economic Growth, Washington, D.C. World Bank, 1997b. India, Achievements and Challenges in Reducing Poverty, Washington, D.C. References 41 World Bank, 1997c. The State in a Changing World, World Development Report, Washington, D.C. World Bank, 1997d. Global Economic Prospects and the Developing Countries, Washington, D.C. World Trade Organization, 1998. Trade Policy Review: India, Geneva. World Trade Organization, 1997. Trade Policy Review: India, Geneva. (A7. z- z4 Annex Tables 45 Annex Table 1: Domestic Demand, 1981-96 (percent of GDP at market prices) 1981-911 1990-91 1991.92 1992-93 1993-94 9495 1995-96 1996.97 Total Consumpbon Expenditure 78.3 (4.8) 73.6 (3.7) 73.7 (1.4) 72.9 (3.9) 72.6 (4.5) 69.6 (4.0) 68.4 (6.4) 67.9 (5.7) Governmentfinal consumption 11.1 (7.2) 11.5 (3.3) 11.3 (4.5) 11.1 (3.3) 11.1 (6.1) 10.4 (1.8) 10.4 (5.0) 10.3 (5.1) Private final consumption 67.2 (4.5) 62.1 (3.8) 62.4 (1.8) 61.7 (4.0) 61.5 (4.2) 59.1 (4.4) 58.0 (6.7) 57.5 (5.8) Gross Capital Formation 23.2 (5.9) 25.2 (12.2) 22.7 (-11.0) 24.0 (12.3) 21.3 (-5.8) 25.1 (19.8) 27.3 (17.2) 25.2 -(0.6) Gross Fixed Capital Formaion 21.1 (6.8) 23.2 (9.9) 22.1 (-4.0) 22.5 (6.9) 21.5 (3.4) 22.5 (14.8) 24.3 (16.7) 24.0 (6.5) Public Sector 10.0 (4.3) 9.4 (4.8) 9.5 (2.0) 8.5 (-7.2) 8.4 (6.5) 9.1 (14.0) 8.0 -7.4) 7.2 -(4.5) Private Corporate Sector 3.8 (7.7) 3.9 (24.2) 5.7 (47.3) 6.0 (9.4) 6.9 (27.7) 6.0 (7.3) 8.0 (43.5) 8.1 (10.9) Household Sector 7.2 (9.3) 9.9 (9.1) 6.9 (-35.2) 8.0 (26.5) 6.2 (-23.8) 7.4 (28.3) 8.3 (21.0) 8.7 (12.4) Change in Stocks 2.1 2.1 0.6 1.5 -0.2 2.6 3.0 1.2 Domestc Demand 101.5 (5.1) 98.8 (5.7) 96.4 (-1.5) 96.9 (5.7) 94.2 (2.1) 94.6 (7.5) 95.6 (9.2) 93.1 (4) Memo Items: Gross Domestic Savings 20.5 23.6 22.8 21.2 22.7 25.6 25.3 26.1 Public Savings 2.7 1.0 1.9 1.5 0.5 1.8 2.3 1.9 Household Financial 7.6 8.7 10.1 8.4 10.8 11.3 8.6 10.7 Private Corporate Sector 2.1 2.8 3.2 2.8 3.5 3.5 4.2 3.9 Note: Real growth rate in parentheses. a. Average of 1981-82 through 1991-92. Source: Central Statistica Organization, National Accounts Statistics ,1996 and QuickEstimates, 1997. 46 Annex Tables Annex Table 2: Evolution of the Public Deficit', 1990.98 (percent of GDP) 1990-91 1992-93 1993.94 1994-95 1995-96 1996-97 1997-98' Central Govemment Fiscal Deficit 8.3 5.7 7.4 6.0 5.5 5.2 6.1 Primary Deficit: 4.3 1.3 2.9 1.5 1.0 0.6 1.5 State Government Fiscal Deficit 3.3 3.0 2.6 2.8 2.8 3.5 3.1 Primary Deficit' 1.7 1.1 0.7 0.8 0.8 1.4 0.9 General Government2 Fiscal Deficit 9.8 7.4 8.8 7.4 7.0 7.4 7.0 Primary Deficit' 5.2 2.3 3.5 2.0 1.7 1.8 1.4 Consolidated Nonfinancial Public Sector3 Fiscal Deficit 12.3 9.5 10.7 £.0 8.9 9.6 9.1 a Govemment of India definition e Estimate 1 Fiscal deficit minus interest payments. 2 Includes central and state govts. and excludes net lending from center to states. 3 Consolidated non-financial public sector comprises central govt. (incl. the balance of OCC), central public enterprises and state govemments. Excludes intra-govemmental transfers. Source: Budget documents, RBI, IMF, and staff estimates. Annex Tables 47 Annex Table 3: Central Government Finances, 1990-98 (percent of GDP) 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 RE BE A. Revenue 10.3 10.7 10.5 9.3 9.5 9.8 9.9 9.8 10.0 Tax revenue 8.0 8.1 7.7 6.6 7.0 7.3 7.3 7.0 7.2 Corporation tax 1.0 1.3 1.3 1.2 1.4 1.5 1.5 1.5 1.6 Incometax 1.0 1.1 1.1 1.1 1.2 1.4 1.4 2.0 1.3 -VDIS 0.7 Excise duties 4.6 4.6 4.4 3.9 3.9 3.6 3.5 3.4 3.5 Customs 3.9 3.6 3.4 2.7 2.8 3.2 3.4 2.9 3.0 Other 0.3 0.4 0.5 0.3 0.2 0.3 0.3 0.3 0.3 Less: States share 2.7 2.8 2.9 2.7 2.6 2.6 2.7 3.1 2.5 Non-tax Revenue 2.2 2.6 2.8 2.7 2.5 2.5 2.6 2.8 2.8 (Interest receipts) 1.6 1.8 1.8 1.9 1.6 1.6 1.7 1.8 1.7 B. Revenue expenditurea 13.7 13.3 13.1 13.3 12.7 12.5 12.4 12.9 12.9 Interest payments 4.0 4.3 4.4 4.5 4.6 4.5 4.7 4.6 4.6 Subsidies 2.3 2.0 1.7 1.6 1.3 1.2 1.3 1.4 1.4 Food 0.5 0.5 0.4 0.7 0.5 0.5 0.5 0.5 0.6 Fertlizer 0.8 0.8 0.9 0.6 0.6 0.6 0.5 0.5 0.4 Others 1.0 0.7 0.4 0.3 0.2 0.1 0.3 0.3 0.4 Defense 2.0 1.9 1.7 1.8 1.7 1.7 1.6 1.9 1.9 Grants to states 2.5 2.5 2.5 2.6 2.1 1.9 1.8 1.7 1.7 Other 2.9 2.7 2.8 2.7 3.0 3.3 3.1 3.3 3.4 C. Capital expenditure 2.3 1.9 1.9 1.6 1.5 1.2 1.0 1.2 1.3 Defense 0.9 0.8 0.8 0.8 0.7 0.7 0.7 0.7 0.6 Economic Services 1.2 0.9 1.0 0.7 0.7 0.4 0.4 0.7 0.9 Other 0.2 0.2 0.1 0.1 0.1 0.1 -0.1 -0.1 -0.2 D. Gross Loans 3.9 3.0 2.5 2.7 2.5 2.2 2.3 2.5 2.2 to states and UTs 2.7 2.1 1.9 1.9 1.9 2.2 2.3 2.1 1.8 to PEsb 0.7 0.6 0.4 0.6 0.5 0.4 0.5 0.5 0.5 Others 0.5 0.3 0.2 0.2 0.1 0.1 -0.1 -0.1 -0.1 E. Recovery of loans 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.7 0.6 F. Net lending 2.6 1.9 1.4 1.8 1.8 1.6 1.7 1.9 1.6 G. Disinvestment in PEs 0.0 0.5 0.3 0.0 0.5 0.0 0.0 0.1 0.3 Fiscal Decit (GOI Defintion) 8.3 5.9 5.7 7.4 6.1 5.5 5.2 6.1 5.6c Primary defict 4.3 1.6 1.3 2.9 1.5 1.0 0.6 1.5 1.0 OCC Deficit 0.2 0.5 0.1 0.0 -0.1 0.2 0.8 -0.1 -0.3 d Fiscal Deficit(incl. OCC) 8.6 6.4 5.8 7.5 5.9 5.7 6.0 6.0 5.3 Fiscal Defict(incl. OCC + divestment) 8.6 6.9 6.0 7.4 6.5 5.7 6.0 6.0 5.6 Financed by: Reserve Bank of India (net) 3.1 1.0 0.5 0.2 0.1 1.9 0.1 0.3 n.a. Marketable Securities (net) 0.9 1.9 2.6 4.8 1.9 3.1 2.1 1.8 2.1 Other Domestic Borrowing (net) 3.8 2.2 1.9 1.9 3.5 0.4 2.7 3.9 3.3 Extemal Borrowing (net) 0.6 0.9 0.8 0.6 0.5 0.0 0.2 0.1 0.1 Note: BE= budget estimates; RE=revised estmates. a. Revenue expenditure is the budget terminology for current expenditure. b. Revised Estimates unless otherwise mentioned. c Fiscal defict would rise to 5.8% of GDP owing to a loss of revenue (urea, exdse on petrol and import duty) following the post budget announcement d. Staff estimate Source: Govemment of India, Budget documents, IMF 48 Annex Tables Annex Table 4: State Govemment Finances (% GDP) 1980-81 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 R.E. Revenue receipts 12.0 12.6 13.2 12.9 13.0 12.7 12.3 12.1 Tax revenue 7.7 8.4 8.6 8.6 8.5 8.4 8.3 8.4 State own taxes 4.9 5.7 5.8 5.6 5.7 5.8 5.7 5.7 State share in central taxes 2.8 2.7 2.8 2.9 2.7 2.6 2.6 2.7 Non-tax revenue 4.4 4.2 4.6 4.4 4.5 4.3 3.9 3.7 of which: Grants from centre 2.0 2.5 2.5 2.5 2.6 2.1 1.9 1.8 Revenue expenditure [A+B+CI 11.0 13.4 14.0 13.6 13.5 13.3 13.0 13.6 A. Developmental (1+2) 7.7 9.1 9.5 9.0 8.7 8.2 8.0 8.5 1. Social services 4.4 5.2 5.0 4.9 4.8 4.7 4.8 4.9 2. Economic services 3.4 3.9 4.4 4.1 3.9 3.5 3.2 3.6 B. Non-developmental 3.1 4.1 4.3 4.5 4.6 5.0 4.8 4.9 of which: Interest payments 1.1 1.6 1.8 1.9 1.9 2.0 2.0 2.1 To centre 0.7 1.0 1.1 1.1 1.2 1.2 1.2 1.2 To others 0.4 0.6 0.7 0.8 0.8 0.8 0.8 0.9 C. Transfer to local bodies 0.2 0.1 0.2 0.2 0.1 0.1 0.1 0.2 Net current balance 1.1 -0.8 -0.8 -0.7 -0.5 -0.6 -0.7 -1.5 Capital expenditure [A+B+C] 3.8 2.5 2.1 2.2 2.1 2.1 2.1 2.0 A Developmental (1+2) 2.3 1.7 1.6 1.5 1.5 1.8 1.6 1.4 1. Social services 0.3 0.2 0.3 0.2 0.2 0.2 0.2 0.3 2. Economic services 2.0 1.4 1.3 1.2 1.3 1.5 1.4 1.2 B. Non-developmental 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1 C. Loans and advances (net) 1.5 0.8 0.5 0.7 0.5 0.3 0.4 0.5 Gross fiscal deficit 2.8 3.3 2.9 3.0 2.6 2.8 2.8 3.5 Finance by instrument: Market loans 0.2 0.5 0.5 0.5 0.5 0.4 0.6 0.5 Loans from centre (Net) 0.9 1.8 1.5 1.2 1.2 1.4 1.3 1.3 Small savings & Provident funds 0.3 0.6 0.5 0.5 0.5 0.5 0.4 0.5 Other 1.4 0.5 0.4 0.7 0.3 0.4 0.5 1.2 Memo Items: Primary Deficit 1.7 1.7 1.2 1.1 0.7 0.8 0.8 1.4 Total Debt Outstanding 17.6 20.6 20.5 20.2 19.8 19.2 19.0 19.2 % GDP Net Transfer to States as a Percent of GDP 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 + _ X L CD U) N 0 CN tO0 0 0 coO co 0) co 0) co 0) 0) es Soutee RBIButletin .Tax ~iaeTransfers 03Grants to States *Net Loans to States Annex T'ables 49 Annex Table 5: Year-wiselPSU.wise details of shares disinvested since 1991.92 S.No. Name of the PSE Percent of Central Govt. Holding 1991 1992 1993 1994 1995 1996 1997 1 Andrew Yule 71.3 62.8 62.8 62.8 62.8 62.8 62.8 2 Bharat Earthmovers Ltd. 100 80 80 80 60.1 60.1* 60.1* 3 Bharat Electronics Ltd. 100 80 80 80 75.9 75.9 75.9 4 Bharat Heavy Electricals Ltd. 100 80 79.5 79.5 67.7 67.7 67.7 5 Bharat Petroleum Corpn. Ltd. 100 80 70 69.6 66.2 66.2 66.2 6 Bongaigaon Refineries & Petro. Ltd. 100 80 74.6 74.6 74.5 74.5 74.5 7 CMC Ltd. 100 83.3 83.3 83.3 83.3 83.3 83.3 8 Cochin Refineries Ltd. 61.2 55 55 55 55.1 55 55 9 Dredging Corpn. Ltd. 100 98.6 98.6 98.6 98.6 98.6 98.6 10 Fert. & Chem. (Travancore) Ltd. 100 97.5 97.4 97.4 97.4 97.4 97.4 11 HIMT Ltd. 100 95.1 90.3 90.3 90.3 90.3 90.3 12 Hindustan Cables Ltd. 100 96.4 98 98 98 96 96 13 Hindustan Copper Ltd. 100 100 98.9 98.9 98.9 98.9 98.9 14 Hindustan Organic Chemicals Ltd. 100 80 80 80 56.9 56.9* 56.9* 15 Hindustan Petroleum Corpn. Ltd. 100 80 70 69.7 60.3 51.0* 51.0* 16 Hindustan Photofilms Mfg. Co. Ltd. 100 87.5 87.5 87.5 87.5 87.5 87.5 17 Hindustan Zinc Ltd. 100 80 75.9 75.9 75.9 75.1 75.1 18 Indian Petrochemicals Corpn. Ltd. 100 80 81 62.4 62.4 61.4 61.4 19 Indian Railway Const. Co.Ltd. 100 99.7 99.7 99.7 99.7 99.7 99.7 20 Indian Telephone Industries Ltd. 99.7 79.7 77.8 77.7 77 77 77 21 Madras Refineries Ltd. 84.6 67.7 67.7 51.8 51.8 51.8 51.8 22 Mahanagar Telephone Nigam Ltd. 100 80 80 80 67.2 65.7# 56.0# 23 Minerals & Metals Trading Corpn. 100 99.3 99.3 99.3 99.3 99.3 99.3 24 National Aluminium Co. Ltd. 100 97.3 87.2 87.2 87.2 87.2 87.2 25 National Fertilizers Ltd. 100 97.7 97.7 97.7 97.7 97.7 97.7 26 Natonal Minerals Dev. Corpn Ltd. 100 100 98.9 98.4 98.4 98.4 98.4 27 Neyveli Lignite Corporation 100 95.4 93.9 94.2 94.2 93.3 93.3 28 Reshtriya Chemicals & Fertilizers 100 94.4 92.5 92.5 92.5 92.5 92.5 29 Shipping corpn. of India 100 81.5 81.5 81.5 80.1 80.1 80.1 30 State Trading Corpn. 100 92 91 91 91 91 91 31 Steel Authority of India Ltd. 100 95 89.5 89.5 89 88.9# 88.9# 32 Videsh Sanchar Nigam Ltd. 100 85 85 85 85 82 64 33 Container Corporation of India 100 100 100 100 80 76.9# 76.9# 34 Indian Oil Corporation 99.9 99.9 99.9 99.9 96.1 91 91 35 Oil & Natural Gas Corporation 100 100 100 100 98 96.1 96.1 36 Engineers India Ltd. 100 100 100 100 94 94 94 37 Gas Authority of India Ltd. 100 100 100 100 96.6 96.6 96.6 38 Indian Tourism & Dev. Corp. 100 100 100 100 90 90 90 39 Kudermukh Iron & Ore Company Ltd. 100 100 100 100 99 99 99 40 Industrial Dev. Bank of India 100 100 100 100 100 72.1 72.1 * These companies had floated public issues. Percentage of Govt. holding after proposed public issue is not known. # figures are provisional, as the shares sold in Oct. 1995 are yet to be transferred in favour of successful Bidders. Source: Economic Survey, 1997 50 Annex Tables Annex Table 6: Key Interest Rates, 1994-98 Call Money Treasury Bills2 Prime3 MaxiMum IDBI 6 Bank7 Exchange a 6-month Inflation Rate 364-day 91-day Lending Term Deposit Rate Rate Rate Forward (Mumbal) Rate Rate Premia 1994-95 June 6.7 10.0 8.8 15.0 10.0 14.5 12.0 31.4 - 11.8 September 15.3 9.4 9.1 15.0 10.0 14.5 12.0 31.4 - 8.9 December 9.7 9.8 10.3 14.0 10.0 13.5 12.0 31.4 - 11.2 March 13.7 11.9 12.0 15.0 11.0 15.0 12.0 31.7 - 10.6 1995-96 June 14.4 12.6 12.6 15.5 12.0 15.5 12.0 31.4 - 9.2 September 12.1 12.9 12.7 15.5 12.0 15.5 12.0 33.3 - 8.9 December 16.8 13.0 13.0 16.5 12.0 16.5 12.0 35.0 - 6.4 March 16.3 13.1 13.0 16.5 12.05 16.0 12.0 34.4 17.8 5.0 1996-97 June 10.9 13.0 12.4 16.5 12.0 16.0 12.0 35.0 10.7 4.4 September 8.4 12.6 10.2 16.0 12.0 17.0 12.0 35.7 8.7 6.7 December 8.1 10.3 8.2 15.5 11.0 16.5 12.0 35.8 7.6 6.7 March 3.7 10.1 8.0 14.5-15.0 10.05 16.5 12.0 35.9 6.7 6.9 1997-98 June 5.2 9.0 7.0 13.5-14.5 8.0 15.0 10.0 35.8 3.6 5.7 September 8.2 8.5 6.9 13.5 8.0 14.5 10.0 36.4 6.0 3.8 December 9.4 8.0 7.2 12.5-13.0 Free 13.5 9.0 39.2 8.0 5.0 January 50.0 No issue 7.3 14.0 Free 13.5 11.0 39.4 17.1 5.3 (P) February 9.6 8.0 7.3 14.0 Free 14.5 11.0 38.9 14.2 5.1 (P) March 8.8 8.0 7.3 14.0 Free 16.5 12.0 39.5 7.1 5.0 (P) Apra 7.1 8.0 7.3 14.0 Free 14.0 9.0 39.7 7.4 5.0 (P) Note: Unless othervise specified, interest rates/yields are those prevailing at the end of the month. - Not available; (F) - Provisional p e cnt T re n d In C a 11 M o n e y R a te a: D e c .g 7 M a rc h . 98 5 0 40 so 2 0 M o n th h U Call money rate of majorcommercial banks, average for the month. Implicit yield at cut-off pice (for the last auction in the month). 364-day Treasury Bills were introduced in April 1992, and are sold through periodic auctons. Since January1993, 91-day Treasury Bills are being periodically auctioned. Earliertheyweresoldon tap at 4.6%.182 day treasury bills were reintroduced in the credit policyof 29April'98. ' rince October18,1994, lending rates of scheduled commercial banks were freed forcredit limits of over Rs 200,000; at 13.5 percent perannum forcredit limits over Rs 25,000 and upto Rs 200,000; and at 12 percent credit limits upto Rs 25,000. ' Interest rates on domestic term deposits with a maturity of 30 days and upto one year are prescribed at 'not exceeding Bank Rate minus 2 perecentage points per annum'. Eftective October 22, 1997, banks are free to fix theirown interest rates on domestic term deposits of 30 days and over. Minimum period of maturity for term deposits was reduced from 30 days to 15 days in the credit policy of April 29, 1998. 5 The deposit rate for March 1996 is the ceiling rate for maturity of 46 days and up to 2 years. Effective July 2, 1996 banks were free to detemine term deposit rates for maturity period above one year. The rate for March 1997 is the ceiling rate for maturity of 30 days and up to one year. ' Medium term lending rate. 7 The bank rate was reduced to 11 percent in Aprl, 1997 and 10 percent in June'97. The rate was further brought down to 9 percent in the busy season credit policy of Oct.1997. On 16 Jan. 1998, the bank rate was increased by a sharp 200 basis points to 11 percent. The bank rate was reduced to 10.5 percent on 18 March, and to 9 percent on April 29,1998. z Period average rate as given in the Intemational Financial Stastics. 9 Wholesale price index, annual increase, point-to-point. Source: RBI Monthly Bulkein, various issues; RBI Weekly Bulletin; CMIE Annex Tables 51 Annex Table 7: India's Share in World Trade Rose when Tariffs fell Years World Merchandise India's Merchandise Share Tariff Exports, fob Exports, fob (US $ bin.) (US $ bin.) (°) 1980 1921.8 8.6 0.45 1981 1900.8 8.3 0.44 1982 1753.8 9.3 0.53 1983 1712.9 9.1 0.53 1984 1818.7 9.4 0.52 1985 1849.4 9.1 0.49 1986 2035.3 9.4 0.46 1987 2392.7 11.3 0.47 1988 2730.5 13.2 0.48 1989 2966.7 15.9 0.54 1990 3377.6 17.9 0.53 127.7 1991 3477.5 17.6 0.51 127.6 1992 3731.4 19.6 0.53 94.0 1993 3724.9 21.5 0.58 71.0 1994 4238.3 25.0 0.59 55.0 1995 5079.1 30.7 0.60 41.0 1996 5249.6 33.0 0.63 38.6 1997 5455.0 33.9 0.62 34.2 Note: Tariffs before 1990 were in excess of 130% Source: International Financial Statistics, IMF; Annual Report, WTO 52 Annex Tables Annex Table 8: Coverage Ratio for Non-Tariff Barriers on Indian Imports 1988489 1995-96 1997-98 1998-99 Method la Method 2' Method I Method 2 Method I Method 2 Method I Method 2 Average all sectors 92.89 95.21 56.80 65.51 62.20 64.03 60.85 62.16 Activity Based Primary 97.91 99.96 64.12 74.79 76.06 76.22 73.17 74.95 Secondary 82.77 87.43 42.00 46.11 34.19 39.42 32.06 36.30 lndustq Based 1 Food, beverages and tobacco 89.23 100.00 74.47 74.47 65.67 66.92 63.06 63.98 2 Textiles and leather 100 100.00 47.06 56.02 48.33 54.88 47.44 53.37 3 Wood, cork and products 100 100.00 41.99 41.99 24.03 34.48 20.00 26.41 4 Paper and printng 100 100.00 39.01 42.27 25.82 30.90 22.03 26.93 5 Chemicals, petrol and coal 73.09 97.54 32.29 38.09 22.52 30.74 20.77 26.24 6 Non-metallic minerals 98.25 98.25 76.48 76.48 46.32 50.52 40.41 47.04 7 Basicmetal industries 53.37 53.37 13.21 13.76 14.46 15.05 11.87 15.85 8 Metal products and machinery 80.11 80.11 37.93 40.70 29.73 34.55 27.93 31.57 9 Other Manufacturing 78.48 78.48 46.44 53.61 30.56 37.28 27.39 29.76 10 Agriculture 100 100.00 67.10 78.43 80.07 80.23 76.93 78.87 11 Mining 72.29 99.44 27.71 30.19 27.09 27.09 27.09 27.09 Use Based 1 Consumer Non-durables 99.06 100.00 63.98 74.69 74.71 75.65 73.51 74.07 2 Consumer durables 84.34 84.34 52.75 58.20 40.18 46.77 37.26 41.56 3 Intermediate goods 83.47 98.45 44.78 47.24 39.21 42.02 37.89 39.71 4 Basic goods 57.51 70.34 25.17 28.65 19.28 22.72 17.63 23.23 5 Capital goods 74.12 74.12 22.77 23.97 16.93 20.29 15.97 18.26 Source: NCAER a Special Import License (SlLs) have been given a weight of 50 percent and all other non-tariff barriers a weight of 100 percent bAll non-tariff barrers assigned equal weight of 100 percent Annex Tables 53 Annex Table 9: Real Exchange Rate of Inda's Main Trading Partners and Compe6torm 1981-N Export 1997 Share 1981 1990 1991 1992 1993 1994 1995 1996 1997 1998 Jul Oct Dec Mar India in US$ 0.57 1.00 1.05 1.28 1.49 1.38 1.33 1.38 1.38 1.45 1.39 1.39 1.47 1.45 in SDR 0.78 1.00 1.05 1.24 1.42 1.31 1.34 1.27 1.18 1.18 1.15 1.18 1.21 1.18 REERb 0.58 1.00 1.10 1.45 1.50 1.41 1.48 1.49 1.37 1.37 1.37 1.36 1.40 1.37 India's Main Market USA 17.17 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Japan 13.54 1.10 1.00 0.91 0.89 0.80 0.72 0.64 0.77 0.92 0.95 0.85 0.89 0.96 0.95 Gernany 12.84 1.05 1.00 0.96 0.97 0.95 0.97 0.81 0.86 1.00 1.08 1.06 1.04 1.05 1.08 Unfted Kingdom 10.84 0.84 1.00 0.86 0.91 1.08 1.06 0.98 1.03 0.98 0.93 0.94 0.96 0.94 0.93 Belgium 8.27 0.98 1.00 0.95 0.99 0.98 1.01 0.85 0.90 1.05 1.13 1.10 1.08 1.09 1.13 France 6.62 1.00 1.00 0.96 1.00 1.00 1.04 0.91 0.93 1.06 1.15 1.13 1.10 1.11 1.15 Italy 4.62 1.24 1.00 0.94 0.95 1.20 1.24 1.23 1.11 1.21 1.28 1.25 1.23 1.24 1.28 Nethedands 3.27 1.01 1.00 0.96 0.99 0.98 1.01 0.84 0.89 1.04 1.11 1.09 1.07 1.08 1.11 India's Main Competitors China 0.45 1.00 1.15 1.18 1.16 1.50 1.26 1.18 1.19 1.22 1.19 1.20 1.21 1.22 Indonesia 0.47 1.00 1.02 0.99 0.95 0.95 0.93 0.92 0.93 2.85 0.95 1.31 1.72 2.85 Malaysia 0.73 1.00 1.02 0.95 0.95 0.97 0.89 0.89 0.86 1.25 0.89 1.14 1.30 1.25 Philippines 0.75 1.00 1.07 0.94 0.88 0.89 0.81 0.76 0.75 1.04 0.77 0.96 1.02 1.04 Thailand 0.75 1.00 0.98 0.97 0.96 0.93 0.90 0.88 0.88 1.31 1.03 1.23 1.47 1.31 Korea 1.02 1.00 0.98 1.01 1.02 1.00 0.95 0.94 1.06 1.65 1.04 1.07 1.68 1.65 Singapore 0.91 1.00 0.94 0.90 0.90 0.86 0.78 0.78 0.81 0.91 0.81 0.87 0.92 0.91 Hong Kong 0.90 1.00 0.93 0.87 0.83 0.79 0.74 0.71 0.70 0.67 0.68 0.68 0.68 0.67 Notes: 1. Increase = depredation 2. Data pertains to averages of March. a. Index of countys nominal exchange rate vis-a-vis the US$ divided by countrys CPI vis-a-vis US CPI. b. Real effective exchange rate, based on the IMF's Informabon Notice System (INS) methodology. Trade weights are based on trade mows averaged over 1990-92 Source:Intemational Financfal Statistics, IMF; Wodd Bank Staff Estimates. 54 Annex Tables Annex Table 10: India - Tariff Structure, 1990-98 (in percent) < - Mean -- - - <--*- --Import Weighted Average- -> Sector '90-91 '92-93 '93-94 '94-95 '95.96 '96-97 '97.98 '98-99 '90-91 '92-93 '93-94 '94-95 95-96 '9697 '97-98 '98.99 Whole Economy 128 94 71 55 40.8 38.6 34.4 40.2 87 64 47 33 27.2 24.6 25.4 29.7 (41) (34) (30) (25) (19) (19) (14.8) (15.3) Agricultural Products 106 59 39 31 25.1 25.6 24.6 29.6 70 30 25 17 14.9 14.7 14 16.1 (48) (49) (39) (30) (24.9) (21.1) (17.7) (18.8) Mining n.a. n.a. 71 48 30 24.8 24.4 29.4 n.a. n.a. 33 31 27.6 22 21.9 19.5 (24) (25) (15.6) (11.9) (11.9) (12.3) Consumer goods 142 92 76 59 45.4 45.4 39.8 45.9 164 144 33 48 43.1 39 33.8 39.3 (33) (42) (36) (33) (26) (27.1) (20.5) (20.7) Intermediate goods 133 104 77 59 43.7 38.8 34,7 40.7 117 55 40 31 25 21.9 26.1 31.5 (42) (25) (22) (17) (13.5) (13.2) (10.3) (11.1) Capital goods 109 86 58 42 33.1 33.8 29.7 35.3 97 76 50 38 28.7 28.8 24.7 30.1 (32) (26) (24) (20) (12.4) (12.2) (9.4) (10.2) Note: Standard deviabons are in parentheses. In 1990-91 and 1992-93, mining is included in intermediates. Total customs duty is calculated as a sum of the basic customs duty, the special duty of customs, and the special additonal duty. Special additional duty is levied on the value of imports as well as the basic duty value, the special duty value, and the additonal countervailing duty value. Figures for 1997-98 indude the 3%special duty imposed in September 1997. Source: World Bank Staff Estmates, the rates are based on the 1997-98 and 1998-99 editons of the Easy Reference Customs Tariff, Academy of Business Studies. 160; bMean Tariff Rates T 60 140 r 140 120 - 120 80 100 I _ Agricultural Products 60 *{ 80 lC onsumer goods 60 | z | --Q1 60 |-_ W hole Economy 40 40 20 20 0 o (N (' 4 '0 N 00 The Impact of the Four Percent Special Additional Duty, 1998-99 (%) Sector Customs Duty Total Customs Duty Dfference (Basic+Special) (Basic+Special+Special Additional) (Percentage points) Whole Economy 34.5 40.2 5.7 Agricultural Products 25 29.6 4.6 Mining 24.4 29.4 5.0 Consumer goods 39.9 45.9 6.0 Intermediast goods 35.1 40.7 5.6 Capital goods 29.6 35.3 5.7 Annex Tables 55 Annex Table 11: Current Trends in Direction of Trade: 1997-98 Exrports Imports % Change Share % Change Share Africa 17.1 5.6 2.8 7.3 America 5.0 23.1 1.3 11.4 East Europe 9.4 3.6 -0.2 2.7 West Europe 3.3 28.5 8.9 31.9 Middle East 10.0 10.9 -4.5 20.8 Asia & Oceania (excl. ME) -7.3 28.3 8.0 25.9 of which Korea, Republic of -20.6 1.2 1.5 2.2 Malaysia -9.4 1.4 13.8 2.9 Japan -7.3 5.5 -2.7 5.2 Singapore -24.4 2.2 11.7 2.9 Philippines 28.5 0.7 69.1 0.1 Thailand -24.5 1.0 16.8 0.6 Hongkong 3.0 5.7 -8.1 0.7 Indoriesia -26.4 1.3 21.9 1.8 Total of 8 East Asian Countres -9.8 19.1 5.9 16.4 Memo: China P R 10.8 2.0 53.0 2.8 Note: The analysis is based on the revised 1996-97 data (adjusted for late retums). The revised 1997-98 figures would give higher growth rates. Source: Ministry of Commerce & DGCIS Region-wise Share in Indian Exports Percent 35 30 E31990-91 * 1997-98 25 20 15 10 5 0 2 ~~~2 8 w~~~~~~~~L w 0 5 w Source: DGCIS & Ministry of Commerce 56 Annex Tables Annex Table 12: Composition of Gross Product (Manufacturing): Average Shares (% GDP) 1988-90 1993-95 Registered Manufacturing Labour Intensive 40.9 40.6 Capital Intensive 59.1 59.4 Unregistered Manufacturing Labour Intensive 59.3 62.4 Capital Intensive 40.7 37.6 1 Sectors where Fixed capital peremployee < Rs.100,000 on the basis of 1993-94 Annual Survey of Industres figures. Source: National Accounts Statistics Annex Yables 57 Annex Table 13: External Environment for India (average annual growth rates, in percentages, valuations are in US$ terms) 1981-90 1991-97 1998-2000 1997-98 1998-99 1999-00 2000-01 GDP of India export market (real)* 1.8 3.0 3.1 2.5 3.1 3.5 GDP of India (real) 5.7 5.7 5.5 5.0 5.0 5.5 6.0 Imports of India export market (real)' 6.0 5.8 8.4 5.6 5.9 5.9 Exports of India (real) 5.7 12.6 6.7 8.2 6.3 5.9 7.8 Terms of Trade LMICX -2.9 -0.3 -1.6 -0.4 -4.0 -0.2 -0.6 India 1.2 2.3 0.0 9.0 -0.3 0.0 0.2 Key Commodity Prices (real) Oil -7.7 -3.5 -2.5 -0.6 -19.8 11.9 0.4 Non-oil raw materials -5.4 1.3 -5.8 8.1 -11.8 -4.5 -0.9 Rice -7.2 0.6 0.3 -5.2 -1.9 0.4 2.5 Wheat -5.6 1.3 0.7 -18.7 -8.0 7.0 3.2 Tea (London, all) -4.1 0.3 2.0 33.0 10.5 -9.5 -6.9 Cotton 4.4 -1.6 -0.1 4.3 -4.3 5.4 -1.4 Source DECPG; forecasts of January 28, 1998. * GDP of major export markets weighted by India exports to them. ** Imports of major importers from India weighted by India exports to them Commodity prices are for calender years 58 Annex Tables Annex Table 14: Foreign Direct and Portfolio Investment (US$ million) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 Direct Investment Foreign Direct Investment 129 315 586 1314 2133 2696 3197 Portfolio Investment 4 244 3567 3824 2748 3312 1601 Foreign lnstitutonal Investment 0 1 1665 1503 2009 1926 752 Euro-issues/ GDR 0 240 1520 2082 683 1366 645 Others a 4 3 382 239 56 20 204 Total Direct and Portfolio Investment 133 559 4153 5138 4881 6008 4798 Memorandum item: Foreign Currency Convertible Bonds (FCCB) b 0 0 914 34 -- -- -- Floating Rate Notes (FRN) 0 0 0 167 a. Includes NRI portfolio investments, offshore funds, and others. b. FCCBs is treated as commercial borrowing before conversion into equity. Source: Reserve Bank of India; Ministry of Finance, Economic Survey, 1996-97. Annex Tables 59 Annex Table 15: Detals of Moblstlon In the Ptimery Market 1994-95 199596 1996197 199748 No of Amount No of Amount No of Amount No of Amount . Issues (Re. bil.) Issues (Rs. bil.) Issues (Rs. bil.) bsues bl.) Non-government Public Limited Companies 1678 264.2 1673 161.5 842 104.2 102 31A Public Sector undertakings (PSU bonds) 15 30.7 22 22.9 16 33.9 19 29.8 Government Companies (Equities +Bonds) 7 8.9 2 10.0 3 6.5 1 OA Banking/financial Institutions 2 4.3 6 34.7 6 43.5 4 14. Total 1702 308 1703 229.1 867.0 188.1 126.0 76A Memo: EuroIFCCB Issues 31 67A 5 13.0 16 55.9 7 40.1 UTI 18 86.1 34 -63.1 40 -30.4 79 212 OtherMutualFunds 36 26.6 39 5.3 46 11.7 52 8.8 n.a.: not available. Note: 1. Data are provisional. 2. In case of PSU Bonds the cumulatve data are based on the details as and when rnade available to RBI by PSUs. PSU bonds include plasplacpme Source: RBI. 60 Annex Tables Annex Table 16: Selected Monetary Indicators, 1990-97 (Rupees billion) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 Money aggregate Sources of Reserve Money 995 (100) 1108 (100) 1387 (100) 1693 (100) 1945 (100) 2000 (100) 2262 (100) Net RBI credit to Govemment 940 (44) 984 (39) 993 (3) 1015 (7) 1213 (79) 1242 (51) 1342 (38) Net foreign exchange assets (RBI) 188 (93) 226 (34) 514 (103) 747 (/6) 741 (-2) 948 (372) 1159 (80) Other assets (net) -133 (-37) -103 (27) -121 (-6) -69 (17) -10 (24) -190 (-322) -238 (-18) Sources of Broad Money 3170 (100) 3668 (100) 4344 (100) 5314 (100) 6040 (100) 7009 (100) 8203 (100) Net bank credit to Govemment 1583 (35) 1762 (36) 2039 (41) 2224 (19) 2578 (49) 2886 (32) 3285 (33) Credit to commercial sector 1880 (32) 2201 (65) 2378 (26) 2927 (57) 3446 (72) 3760 (32) 4300 (45) Net foreign exchange assets 212 (21) 244 (6) 546 (45) 790 (25) 821 (4) 1055 (22) 1266 (20) Other assets (net) -504 (12) -540 (-7) -619 (-12) -627 (-1) -806 (-25) -692 (14) -647 (2) Memo Items: M3/ Base Money 3.2 3.3 3.1 3.1 3.1 3.5 3.6 M3/ GDP 57.4 58.2 59.3 61.2 60.0 61.0 64.3 Growth rates Reserve money 13.4 11.3 25.2 22.1 14.9 2.8 13.1 M3 19.3 15.7 18.4 22.3 13.7 16.0 17.0 Nominal GDP (factorcost) 15.7 14.1 16.2 18.4 15.9 14.2 11.0 P: Provisional Note: The flow as a percentage of the change in base money or the change in broad money stock is in parentheses. Increases in foreign assets following a devaluaton are offset by dedines in other assets. Source: R81 I Q Statistical Appendix 63 CONTENTS I. National Accounts Al.l(a) National Accounts Summary, (Rs billion at current prices) Al.l(b) National Accounts Summary, (Rs billion at 1980-81 prices) Al.2(a) Gross Domestic Product at Factor Cost - By Industry of Origin, (Rs billion at current prices) Al.2(b) Gross Domestic Product at Factor Cost - By Industry of Origin, (Rs billion at 1980-81 prices) Al.2(c) Implicit Price Deflators for GDP at Factor Cost, (1980-81 = 100) A1.3 Gross Savings and Investment, (Rs billion) Al.4 Disposable Income and Its Use, (Rs billion at current prices) Al.5(a) Gross Domestic Investment by Industry of Origin, (Rs billion at current prices) Al.5(b) Gross Domestic Investment by Industry of Origin, (Rs billion at 1980-81 prices) Al.5(c) Investment Deflators by Industry of Use, (1980-81 = 100) Al.6(a) Gross Domestic Investment in Public Sector, (Rs billion at current prices) Al.6(b) Gross Domestic Investment in Public Sector, (Rs billion at 1980-81 prices) IH. Balance of Payments - Current Accounts A2.1 Balance of Payments, (US$ million at current prices) A2.2(a) Merchandise Exports, (US$ million at current prices) A2.2(b) Merchandise Exports, (US$ million at 1980-81 prices) A2.2(c) Export Unit Value Indices, (US$ terms, 1980-81 = 100) A2.3(a) Merchandise Imports, (US$ million at current prices) A2.3(b) Merchandise Imports, (US$ million at 1980-81 prices) A2.3(c) Import Unit Value Indices, (US$ terms, 1980-81 = 100) A2.4 Invisibles on Current Account, (US$ million) A2.5 Decomposition of Recent Export Growth, (US$ million at current prices - annual averages) m. Balance of Payments - Capital Accounts A3. 1(a) External Debt Summary: Debt Outstanding and Disbursed, (US$ million at current prices) A3. 1(b) External Debt Summary: Disbursements, (US$ million at current prices) A3. 1(c) External Debt Summary: Principal Repayments, (US$ million at current prices) A3. 1(d) External Debt Summary: Net Flows, (US$ million at current prices) A3.1(e) External Debt Summary: Interest Payments, (US$ million at current prices) A3.2 External Reserves (US$ million at current prices) 64 Statistical Appendix IV. Public Finance A4.1 Central Government Finances Summary, (Rs billion at current prices) A4.2 Budgetary Classification of Central Government Finances, (Rs billion at current prices) A4.3 Budgetary Classification of State Government Finances, (Rs billion at current prices) A4.4 Budgetary Classification of General Government Finances, (Rs billion at current prices) A4.5 Tax Revenue - Center and States, (Rs billion at current prices) A4.6 Non-Tax Revenue - Center and States, (Rs billion at current prices) A4.7 Revenue Expenditure of the Central Government, (Rs billion at current prices) A4.8 Revenue Expenditure of State Govermment, (Rs billion at current prices) A4.9 Capital Expenditure - Center and States, (Rs billion at current prices) A4.10 Transfers between Center and States, (Rs billion at current prices) A4.11 Explicit Subsidies in the Central Government Budget, (Rs billion at current prices) A4.12 Outstanding Debt of Central Government, (Rs billion at current prices) A4.13 Outstanding Debt of State Government, (Rs billion at current prices) A4.14 Outstanding Debt of Central and State Governments, (Rs billion at current prices) A4.15(a) Projected and Actual Plan Outlays by Sectors, (Rs billion at current prices) A4. 15(b) Projected and Actual Plan Outlays by Sectors, (Rs billion, annual averages at 1980-81 prices) A4.15(c) Projected and Actual Plan Outlays by Sectors, (percent distribution and achievement rates) V. Money and Credit A5.1 Money Supply and Sources of Change, (Rs billion) A5.2 Base Money Supply and Sources of Change, (Rs billion) A5.3 Selected Monetary Policy Instruments A5.4 Structure of Short-term and Long-term Interest Rates, (percent per annum) A5.5 Sectoral Deployment of Gross Bank Credit, (Rs billion - change during year) VI. Agriculture, Industry, Transport, Energy and Prices A6.1 Production of Major Crops A6.2 Irrigated Area Under Different Crops, (million hectares) A6.3 Yield Per Hectare of Major Crops, (kgs. per hectare) A6.4 Net Availability, Procurement and Public Distribution of Foodgrains, (million tons) A6.5a New Index of Industrial Production, (1993-94 = 100) A6.5b Index of Industrial Production, (1980-81 = 100, Old series) A6.6 Production, Imports and Consumption of Fertilizers, (000' nutrient tons) A6.7 Indian Railways: Freight and Passenger Traffic A6.8 Petroleum Summary: Commodity Balance of Petroleum and Petroleum Products, (million tons) A6.9 Generation, Consumption and Capacity of Electricity, (000' GWH) A6.10 New Index Numbers of Wholesale Prices - by Years, (Base 1981-82 = 100) A6.11 Consumer Price Index Numbers for Industrial Workers, Urban Non-Manual Employees and Agricultural Laborers A6.12 Evolution of the Wholesale Price Index, 1991-97 (index and twelve months point-to- point increase) StatisticalAppendix 65 Table Al.1 (a) National Accounts Summary (Rs. billion at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 GDPfc 2948.51 3527.06 4086.62 4778.14 5527.68 6307.72 7328.74 8680.19 10062.86 11492.15 Agricultureandallied 923.79 1140.73 1270.51 1480.01 1727.71 1930.45 2237.05 2590.64 2768.52 3101.44 Industry 838.29 1000.73 1196.93 1400.25 1540.74 1784.47 2040.42 2502.32 3053.39 3445.92 Mining and Quarrying 70.85 92.08 103.08 117.85 128.03 145.89 168.18 188.79 205.54 205.44 Manufacturing 528.65 628.63 770.76 891.60 963.05 1110.44 1276.46 1597.13 1983.48 2226.09 Construction 176.11 206.77 235.86 286.16 322.46 367.00 406.99 479.78 584.16 685.83 Electricity 62.68 73.25 87.23 104.64 127.20 161.14 188.79 236.62 280.21 328.56 Services 1186.43 1385.60 1619.18 1897.88 2259.23 2592.80 3051.27 3587.23 4240.95 4944.79 NetIndirectTaxes 383.50 430.76 481.59 577.20 640.31 751.46 778.75 954.73 1126.78 1277.59 GDPmp 3332.01 3957.82 4568.21 5355.34 6167.99 7059.18 8107.49 9634.92 11189.64 12769.74 Resource Gap (M-X) 85.93 124.93 112.19 151.79 39.01 93.81 110.46 265.23 386.32 422.17 Imports (g+nfs) 296.23 388.59 465.46 565.11 610.00 776.69 987.25 1301.08 1713.70 1926.66 Exports (g+nfs) 210.31 263.66 353.28 413.32 570.99 682.88 876.78 1035.85 1327.38 1504.49 Total Expenditure 3417.94 4082.75 4680.40 5507.13 6207.00 7152.99 8217.95 9900.15 11575.96 13191.91 Consumption 2669.12 3118.64 3578.45 4155.57 4806.32 5456.43 6492.63 7486.36 8526.16 9973.43 GeneralGov't 408.43 473.31 542.03 617.79 694.59 785.96 899.26 1004.98 1159.57 1321.66 Private 2260.69 2645.33 3036.42 3537.78 4111.73 4670.47 5593.37 6481.38 7366.59 8651.77 Investment 748.82 964.11 1101.95 1351.56 1400.68 1696.56 1725.32 2413.79 3049.80 3218.48 Fixed Investment 721.94 856.69 1027.75 1240.04 1365.03 1588.57 1747.02 2164.07 2715.94 3059.83 Change in Stocks 26.88 107.42 74.20 111.52 35.65 107.99 -21.70 249.72 333.86 158.65 DomesticSavings 662.89 839.18 989.76 1199.77 1361.67 1602.75 1614.86 2148.56 2663.48 2796.31 Net Factor Income -31.97 -37.98 -54.15 -71.02 -98.50 -107.09 -113.56 -116.52 -117.02 -127.22 Current Transfers 34.99 38.42 38.01 37.14 92.75 80.29 165.18 254.11 284.63 393.03 National Savings 665.92 839.63 973.62 1165.88 1355.92 1575.95 1666.47 2286.16 2831.08 3062.12 Foreign Savings 82.90 124.48 128.33 185.68 44.76 120.61 58.85 127.63 218.72 156.36 GDPpercapita(Rs.) 4228.44 4916.55 5557.43 6383.00 7205.60 8095.39 9130.06 10658.10 12162.65 13642.88 Percapitaprivateconsumption 2868.89 3286.12 3693.94 4216.66 4803.42 5356.04 6298.84 7169.67 8007.16 9243.35 Average Exchange Rates: RupeesperUS$ 12.97 14.48 16.66 17.95 24.52 28.95 31.37 31.40 33.46 35.50 RupeesperSDR' 17.12 19.26 21.37 24.85 33.43 37.14 43.89 45.79 50.54 50.89 Memo Items: Priv. Consumption (CSO) 2240.61 2589.93 2900.72 3323.64 3851.50 4353.17 4989.27 5753.35 6490.94 7348.66 Population (mill) 788.00 805.00 822.00 839.00 856.00 872.00 888.00 904.00 920.00 936.00 Note: Exports, Imports, Foreign Savings, Net Factor Income and Capital Transfers numbers are used from the BOP. Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. 66 Statistical Appendix Table Al.l (b) National Accounts Summary (Rs. billion at 1980-81 prices) 1987-88 1988-89 1989-90 199o-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 GDPfc 1703.22 1884.61 2014.53 2122.53 2139.83 2252.40 2391.45 2577.00 2761.32 2968.45 Agricultureandallied 534.79 622.14 632.63 656.53 641.18 680.09 705.13 741.33 719.07 775.64 Industry 493.67 538.66 593.98 637.00 628.67 655.03 698.02 770.87 866.87 922.40 Mining and Quarrying 30.80 35.42 38.01 42.07 43.62 44.12 44.88 47.51 51.51 51.38 Manufacturing 348.18 378.65 422.85 448.63 432.00 450.05 487.70 545.70 622.07 667.85 Registered 209.02 231.26 263.36 276.57 270.24 278.74 310.70 349.40 398.84 431.57 Unregistered 139.16 147.39 159.49 172.06 161.76 171.31 177.00 196.30 223.23 236.28 Construction 77.77 83.79 88.07 98.33 100.47 103.86 104.84 111.34 122.16 128.51 Electricity 36.92 40.80 45.05 47.97 52.58 57.00 60.60 66.32 71.13 74.66 Services 674.76 723.81 787.92 829.00 869.98 917.28 988.30 1064.80 1175.38 1270.41 Net Indirect Taxes 237.63 248.84 259.14 279.85 272.72 290.92 277.89 309.37 337.85 358.76 GDPmp 1940.85 2133.45 2273.67 2402.38 2412.55 2543.32 2669.34 2886.37 3099.17 3327.21 TernsofTradeEffect 14.79 23.60 22.89 9.16 14.39 12.39 21.61 14.59 -10.76 -54.80 Gross Domestic Income 1955.64 2157.05 2296.56 2411.54 2426.94 2555.71 2690.95 2900.96 3088.41 3272.41 Resource Gap (M-X) 70.63 95.32 76.34 70.66 27.28 39.83 51.35 78.28 74.27 23.39 Imports (g+nfs) 192.51 223.07 221.76 228.95 201.64 227.21 265.85 312.45 377.21 356.81 Capacity to import 136.67 151.36 168.31 167.45 188.75 199.76 236.10 248.76 292.18 278.62 [Exports (g+nfs)] 121.88 127.76 145.42 158.29 174.36 187.38 214.50 234.17 302.94 333.42 Total Expenditure 2026.27 2252.37 2372.90 2482.20 2454.22 2595.53 2742.30 2979.24 3162.68 3295.80 Consumption 1608.41 1756.60 1866.06 1913.35 1947.89 2026.59 2198.77 2254.78 2313.56 2451.62 General Gov't 226.60 238.68 252.15 260.59 259.12 267.79 284.95 290.34 304.41 319.97 Private 1381.81 1517.92 1613.91 1652.76 1688.77 1758.80 1913.82 1964.44 2009.15 2131.65 Investment 417.86 495.77 506.84 568.85 506.33 568.94 543.53 724.46 849.12 844.18 Fixed Investment 399.55 427.70 464.83 510.91 490.46 524.61 553.41 638.17 744.80 793.44 Change in Stocks 18.31 68.07 42.01 57.94 15.87 44.09 -9.88 86.29 104.32 50.74 DomesticSavings 347.23 400.45 430.50 498.19 479.05 529.11 492.18 646.18 774.85 820.79 Net Factor Income -20.77 -21.80 -25.80 -28.77 -32.56 -31.33 -30.58 -27.98 -25.76 -23.56 CurrentTransfers 22.74 22.06 18.11 15.05 30.66 23.49 44.48 61.02 62.65 72.79 National Savings 324.49 378.40 412.39 483.15 448.39 505.63 447.70 585.15 712.20 748.01 Foreign Savings 68.67 95.06 84.03 84.39 29.18 47.67 37.46 45.24 37.38 -25.84 GDPpercapita(Rs.) 2463.01 2650.25 2766.02 2863.38 2818.40 2916.65 3006.01 3192.89 3368.66 3554.71 Percapitaprivateconsumption 1753.57 1885.61 1963.40 1969.92 1972.86 2016.98 2155.21 2173.05 2183.86 2277.40 Rupee Deflators (1980-81=100): GDPmp 171.68 185.51 200.92 222.92 255.66 277.56 303.73 333.81 361.05 383.80 Imports(g+nfs) 153.88 174.20 209.90 246.83 302.52 341.85 371.35 416.41 454.31 539.97 Exports(g+nfs) 172.56 206.38 242.94 261.11 327.49 364.44 408.77 442.35 438.17 451.23 Total Expenditure 168.68 181.26 197.24 221.86 252.91 275.59 299.67 332.30 366.02 400.26 Govt. Consumption 180.24 198.30 214.96 237.07 268.06 293.50 315.59 346.14 380.92 413.06 Priv. Consumption 163.60 174.27 188.14 214.05 243.47 265.55 292.26 329.94 366.65 405.87 FixedInvestment 180.69 200.30 221.10 242.71 278.32 302.81 315.68 339.11 364.65 385.64 Total Investment 179.20 194.47 217.42 237.60 276.63 298.20 317.43 333.18 359.17 381.26 Note: Exports, Imports, Foreign Savings, Net Factor Income and Capital Transfers numbers are used from the BOP. Source: CSO, National Accounts Statistics 1997 and CSO Quick Estimates 1998. Statistical Appendix 67 Table A 1.2 (a) Gross Domestic Product at Factor Cost - By Industry of Origin (Rs. billion at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 AgriculturalSector 923.79 1140.73 1270.51 1480.01 1727.71 1930.45 2237.05 2590.64 2768.52 3101.44 Agriculture 835.15 1041.03 1154.47 1351.62 1592.99 1779.10 2063.22 2391.59 2556.13 2871.32 Forestry&Logging 61.78 68.28 78.23 82.81 83.90 88.54 98.36 111.54 112.67 112.93 Fishing 26.86 31.42 37.81 45.58 50.82 62.81 75.47 87.51 99.72 117.19 Industry Sector 838.29 1000.73 1196.93 1400.25 1540.74 1784.47 2040.42 2502.32 3053.39 3445.92 Mining&Quarrying 70.85 92.08 103.08 117.85 128.03 145.89 168.18 188.79 205.54 205.44 Manufacturing 528.65 628.63 770.76 891.60 963.05 1110.44 1276.46 1597.13 1983.48 2226.09 Registered 322.07 390.50 483.69 555.53 608.43 688.93 812.29 1017.40 1260.84 1434.59 Unregistered 206.58 238.13 287.07 336.07 354.62 421.51 464.17 579.73 722.64 791.50 Electricity,Gas &Water 62.68 73.25 87.23 104.64 127.20 161.14 188.79 236.62 280.21 328.56 Construction 176.11 206.77 235.86 286.16 322.46 367.00 406.99 479.78 584.16 685.83 Services Sector 1186.43 1385.60 1619.18 1897.88 2259.23 2592.80 3051.27 3587.23 4240.95 4944.79 Transport, Storage& Com. 199.38 238.72 277.31 339.13 410.04 488.92 560.96 666.80 753.65 886.05 Railways 43.56 47.51 55.75 64.33 73.42 84.46 96.48 112.03 125.80 131.86 Other Transport 124.68 152.29 177.85 223.11 275.22 328.39 370.66 436.17 485.21 588.30 Storage 3.17 3.34 3.88 4.45 4.77 5.23 5.69 6.96 8.15 9.08 Communication 27.97 35.58 39.83 47.24 56.63 70.84 88.13 111.64 134.49 156.81 Trade, Hotels etc. 384.33 452.22 529.10 618.83 708.07 827.69 980.24 1184.88 1428.08 1676.08 Banking&Insurance 111.43 134.13 171.31 210.96 295.15 312.32 435.70 522.03 653.14 758.73 Real Estate etc. 136.13 148.43 164.46 178.06 195.41 214.07 235.75 262.65 291.61 321.34 Public Admin&Defence 179.48 208.58 241.33 271.09 314.41 362.50 399.50 445.80 520.81 606.48 Other Services 175.68 203.52 235.67 279.81 336.15 387.30 439.12 505.07 593.66 696.11 GDPatFactorCost 2948.51 3527.06 4086.62 4778.14 5527.68 6307.72 7328.74 8680.19 10062.86 11492.15 Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. 68 Statistical Appendix Table A1.2 (b) Gross Domestic Product at Factor Cost - By Industry of Origin (Rs. billion at 1980-81 prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Agricultural Sector 534.79 622.14 632.63 656.53 641.18 680.09 705.13 741.33 719.07 775.64 Agriculture 492.58 579.40 585.68 609.91 593.98 633.27 657.62 692.06 668.63 723.62 Forestry&Logging 29.86 29.40 31.95 31.05 30.83 29.50 28.81 29.32 29.25 29.30 Fishing 12.35 13.34 15.00 15.57 16.37 17.32 18.70 19.95 21.19 22.72 Industry Sector 493.67 538.66 593.98 637.00 628.67 655.03 698.02 770.87 866.87 922.40 Mining & Quarrying 30.80 35.42 38.01 42.07 43.62 44.12 44.88 47.51 51.51 51.38 Manufacturing 348.18 378.65 422.85 448.63 432.00 450.05 487.70 545.70 622.07 667.85 Registered 209.02 231.26 263.36 276.57 270.24 278.74 310.70 349.40 398.84 431.57 Unregistered 139.16 147.39 159.49 172.06 161.76 171.31 177.00 196.30 223.23 236.28 Electricity,Gas&Water 36.92 40.80 45.05 47.97 52.58 57.00 60.60 66.32 71.13 74.66 Construction 77.77 83.79 88.07 98.33 100.47 103.86 104.84 111.34 122.16 128.51 Services Sector 674.76 723.81 787.92 829.00 869.98 917.28 988.30 1064.80 1175.38 1270.41 Transport,Storage&Com. 92.27 98.04 106.63 111.64 117.85 123.67 130.65 140.91 152.64 166.64 Railways 15.76 15.60 16.23 16.77 17.78 17.58 17.46 17.69 19.06 19.64 Other Transport 62.61 67.92 75.01 78.53 82.75 87.04 92.20 99.06 105.28 114.07 Storage 1.69 1.64 1.70 1.77 1.75 1.80 1.85 1.94 1.99 2.03 Communication 12.21 12.88 13.69 14.57 15.57 17.25 19.14 22.22 26.31 30.90 Trade,Hotelsetc. 218.01 233.85 252.31 265.80 268.27 286.53 309.23 346.47 399.68 433.13 Banking&lnsurance 73.99 86.23 102.69 111.69 131.07 138.61 166.10 181.82 206.34 230.80 Real Estate etc. 94.72 97.93 101.34 105.31 108.65 112.23 116.00 120.50 125.18 129.65 PublicAdmin&Defence 97.04 103.42 112.14 113.28 115.70 121.70 124.83 126.68 134.22 143.12 Other Services 98.73 104.34 112.81 121.28 128.44 134.54 141.49 148.42 157.32 167.07 GDPatFactorCost 1703.22 1884.61 2014.53 2122.53 2139.83 2252.40 2391.45 2577.00 2761.32 2968.45 Source: CSO, National Accounts Statistics 1997 and CSO Quick Estimates 1998. Statistical Appendix 69 Table A 1.2 (c) Implicit Price Deflators for GDP at Factor Cost (1980-81=100) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Agricultural Sector 172.74 183.36 200.83 225.43 269.46 283.85 317.25 349.46 385.01 399.86 Agriculture 169.55 179.67 197.12 221.61 268.19 280.94 313.74 345.58 382.29 396.80 Forestry & Logging 206.90 232.24 244.85 266.70 272.14 300.14 341.41 380.42 385.20 385.43 Fishing 217.49 235.53 252.07 292.74 310.45 362.64 403.58 438.65 470.60 515.80 Industry Sector 169.81 185.78 201.51 219.82 245.08 272.43 292.32 324.61 352.23 373.58 Mining & Quanying 230.03 259.97 271.19 280.13 293.51 330.67 374.73 397.37 399.03 399.84 Manufacturing 151.83 166.02 182.28 198.74 222.93 246.74 261.73 292.68 318.85 333.32 Registered 154.09 168.86 183.66 200.86 225.14 247.16 261.44 291.18 316.13 332.41 Unregistered 148.45 161.56 179.99 195.32 219.23 246.05 262.24 295.33 323.72 334.98 Electricity,Gas&Water 169.77 179.53 193.63 218.14 241.92 282.70 311.53 356.79 393.94 440.08 Construction 226.45 246.77 267.81 291.02 320.95 353.36 388.20 430.91 478.19 533.68 Services Sector 175.83 191.43 205.50 228.94 259.69 282.66 308.74 336.89 360.82 389.23 Transport, Storage & Com. 216.08 243.49 260.07 303.77 347.93 395.34 429.36 473.21 493.74 241.03 Railways 276.40 304.55 343.50 383.60 412.94 480.43 552.58 633.30 660.02 671.38 Other Transport 199.14 224.22 237.10 284.11 332.59 377.29 402.02 440.31 460.88 515.74 Storage 187.57 203.66 228.24 251.41 272.57 290.56 307.57 358.76 409.55 4.47 Communication 229.07 276.24 290.94 324.23 363.71 410.67 460.45 502.43 511.17 507.48 Trade, Hotels etc. 176.29 193.38 209.70 232.82 263.94 288.87 316.99 341.99 357.31 386.97 Banking& Insurance 150.60 155.55 166.82 188.88 225.19 225.32 262.31 287.11 316.54 328.74 Real Estate etc. 143.72 151.57 162.29 169.08 179.85 190.74 203.23 217.97 232.95 247.85 Public Admin & Defence 184.95 201.68 215.20 239.31 271.75 297.86 320.04 351.91 388.03 423.76 Other Services 177.94 195.05 208.91 230.71 261.72 287.87 310.35 340.30 377.36 -2053.42 GDPatFactorCost 173.11 187.15 202.86 225.12 258.32 280.04 306.46 336.83 364.42 387.14 Source: Derived from Tables 1.2(a) and 1.2(b). 70 Statistical Appendix Table A1.3 Gross Savings and Investment (Rs. billion) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 GROSSNATIONALSAVINGS 665.92 839.63 973.62 1165.88 1355.92 1575.95 1666.47 2286.16 2831.08 3062.12 Households 535.79 675.43 782.89 962.12 1037.00 1271.95 1326.10 1769.32 2105.22 2319.39 Private corporate sector 57.90 83.19 116.50 149.40 200.04 196.35 294.80 341.93 473.91 495.45 Public sector 72.23 81.01 74.23 54.36 118.88 107.65 45.57 174.91 251.95 247.28 Foreign Savings 82.90 124.48 128.33 185.68 44.76 120.61 58.85 127.63 218.72 156.36 GROSS DOMESTIC INVESTMENT 748.82 964.11 1101.95 1351.56 1400.68 1696.56 1725.32 2413.79 3049.80 3218.48 Change in stocks 26.88 107.42 74.20 111.52 35.65 107.99 -21.70 249.72 333.86 158.65 GROSS FIXED CAPITALFORMATION 721.94 856.69 1027.75 1240.04 1365.03 1588.57 1747.02 2164.07 2715.94 3059.83 By Type of Asset: Construction 347.87 414.45 478.92 583.63 669.32 756.26 810.34 946.53 1150.35 1310.42 Machinery&Equipment 374.07 442.24 548.83 656.41 695.71 832.31 936.68 1217.54 1565.59 1749.41 By Sector: Public sector 345.71 398.66 438.62 501.76 587.37 601.17 675.53 872.08 898.84 917.94 Private sector 376.23 458.03 589.13 738.28 777.66 987.40 1071.49 1291.99 1817.10 2141.89 GDPmpatcurrentprices 3332.01 3957.82 4568.21 5355.34 6167.99 7059.18 8107.49 9634.92 11189.64 12769.74 GROSS DOMESTIC INVESTMENT 417.86 495.77 506.84 568.85 506.33 568.94 543.53 724.46 849.12 844.18 Change in Stocks 18.31 68.07 42.01 57.94 15.87 44.09 -9.88 86.29 104.32 50.74 GROSS FIXED CAPITAL FORMATION 399.55 427.70 464.83 510.91 490.46 524.61 553.41 638.17 744.80 793.44 By Type of Asset: Construction 150.45 164.23 170.69 187.57 191.91 197.49 194.26 209.68 229.71 244.28 Machinery & Equipment 249.10 263.47 294.14 323.34 298.55 327.12 359.15 428.49 515.09 549.16 By Sector: Public sector 186.60 195.39 196.51 206.01 210.12 195.08 209.15 251.98 233.23 222.63 Private sector 212.95 232.31 268.32 304.90 280.34 329.53 344.26 386.19 511.57 570.81 Note: Exports, Imports, Foreign Savings, Net Factor Income and Capital Transfers numbers are used from the BOP. Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. Statistical Appendix 71 Table Al.4 Disposable Income and Its Uses (Rs. billion at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 GDPmp 3332.01 3957.82 4568.21 5355.34 6167.99 7059.18 8107.49 9634.92 11189.64 12769.74 Net Factor ncome from abroad -31.97 -37.98 -54.15 -71.02 -98.50 -107.09 -113.56 -116.52 -117.02 -127.22 Other current transfers 34.99 38.42 38.01 37.14 92.75 80.29 165.18 254.11 284.63 393.03 Disposable income 3335.03 3958.26 4552.07 5321.46 6162.24 7032.38 8159.10 9772.51 11357.25 13035.55 Private disposable income 2854.37 3403.94 3935.81 4649.31 5348.77 6138.77 7214.27 8592.62 9945.73 11466.61 Public disposable income 480.66 554.32 616.26 672.15 813.47 893.61 944.83 1179.89 1411.52 1568.94 Gross National Savings 665.92 839.63 973.62 1165.88 1355.92 1575.95 1666.47 2286.16 2831.08 3062.12 Private savings 593.69 758.62 899.39 1111.52 1237.04 1468.30 1620.90 2111.25 2579.13 2814.84 Public savings 72.23 81.01 74.23 54.36 118.88 107.65 45.57 174.91 251.95 247.28 Final Consumption 2669.12 3118.64 3578.45 4155.57 4806.32 5456.43 6492.63 7486.36 8526.16 9973.43 Private Consumption 2260.69 2645.33 3036.42 3537.78 4111.73 4670.47 5593.37 6481.38 7366.59 8651.77 Public Consumption 408.43 473.31 542.03 617.79 694.59 785.96 899.26 1004.98 1159.57 1321.66 Note: Exports, Imports, Foreign Savings, Net Factor Income and Capital Transfers numbers are used from the BOP. Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. 72 Statistical Appendix Table A1.5 (a) Gross Domestic Investment by Industry of Origin (Rs. billion at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Agricultural Sector 91.81 99.84 111.12 128.53 147.76 181.13 187.08 245.20 293.35 319.30 Agriculture 83.89 90.63 100.25 115.92 133.90 166.14 169.82 224.87 268.86 291.98 Forestry & Logging 2.56 2.95 3.81 4.56 4.43 4.51 4.74 4.98 6.10 6.89 Fishing 5.36 6.26 7.06 8.05 9.43 10.48 12.52 15.35 18.39 20.43 Industry Sector 329.22 470.77 454.02 543.38 572.81 765.51 723.38 1145.82 1350.17 1295.75 Mining& Quarrying 42.17 47.89 63.04 66.26 63.36 65.85 65.36 156.72 125.14 78.71 Manufacturing 170.86 298.59 248.62 310.95 303.02 484.38 408.38 744.73 947.93 935.29 Registered 118.71 238.14 171.46 223.83 223.07 377.81 298.21 592.55 753.28 738.29 Unregistered 52.15 60.45 77.16 87.12 79.95 106.57 110.17 152.18 194.65 197.00 Electricity,Gas &Water 103.78 112.95 123.44 144.06 188.95 189.84 221.85 215.45 241.93 241.30 Construction 12.41 11.34 18.92 22.11 17.48 25.44 27.79 28.92 35.17 40.45 Services Sector 274.14 315.01 405.84 511.11 562.91 593.72 717.24 990.53 1151.64 1248.44 Transport, Storage & Com. 80.58 106.44 128.22 143.33 161.56 196.99 241.15 257.30 298.22 355.59 Railways 21.52 26.37 26.43 30.78 33.17 49.19 55.81 49.91 52.10 55.50 Other Transport 43.98 57.93 73.64 83.25 95.81 97.32 126.86 134.66 161.50 201.16 Storage 0.78 0.76 0.88 0.69 0.46 0.49 0.98 1.18 0.88 1.12 Communication 14.30 21.38 27.27 28.61 32.12 49.99 57.50 71.55 83.74 97.81 Trade, Hotels etc. 17.09 2.96 55.99 87.92 75.07 30.08 53.89 179.78 209.29 159.83 Banking & Insurance 14.76 21.06 23.60 30.86 49.79 47.28 68.75 113.16 141.42 170.88 Real Estate etc. 90.09 101.56 118.06 147.35 168.24 194.09 216.53 241.47 279.05 307.28 PublicAdmin&Defence 55.08 62.24 55.78 75.13 82.27 95.17 106.32 148.89 164.75 185.48 Other Services 16.54 20.75 24.19 26.52 25.98 30.11 30.60 49.93 58.91 69.38 Gross Domestic lnvestment 695.17 885.62 970.98 1183.02 1283.48 1540.36 1627.70 2381.55 2795.16 2863.49 Memo Items Gross Domestic Investment a 764.56 969.72 1146.49 1481.95 1446.28 1690.41 1885.01 2589.78 3037.83 3484.85 Errors&Omissions 15.74 5.61 44.54 130.39 45.60 -6.15 159.69 175.99 -11.97 266.37 Gross Domestic Investment 748.82 964.11 1101.95 1351.56 1400.68 1696.56 1725.32 2413.79 3049.80 3218.48 (unadjusted) b a. Refers to CSO's savings-based estimate of investment. b. Refers to Gross Capital Formation unadjusted for errors and omissions, which is CSO's direct estimate of investment based on physical flows. Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. Statistical Appendix 73 Table Al.5 (b) Gross Domestic Investment by Industry of Origin (Rs. billion at 1980-81 prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Agricultural Sector 47.78 47.33 47.91 50.76 52.12 58.73 55.64 68.23 75.87 76.73 Agriculture 44.14 43.46 43.53 45.94 47.29 53.72 50.31 62.56 69.61 69.99 Forestry & Logging 1.24 1.26 1.51 1.68 1.40 1.26 1.22 1.16 1.33 1.34 Fishing 2.40 2.61 2.87 3.14 3.43 3.75 4.11 4.51 4.93 5.40 Industry Sector 192.19 258.80 220.23 242.27 218.46 276.73 241.33 362.84 394.09 355.73 Mining & Quarrying 24.33 25.47 29.92 28.44 23.80 22.23 19.98 49.32 34.61 19.26 Manufacturing 101.59 170.07 122.64 141.93 118.20 180.70 139.12 240.56 283.27 262.80 Registered 74.44 141.00 88.26 106.35 91.05 145.77 105.69 196.87 231.52 214.69 Unregistered 27.15 29.07 34.38 35.58 27.15 34.93 33.43 43.69 51.75 48.11 Electricity,Gas &;Water 58.55 56.57 57.72 61.51 69.32 64.32 72.29 63.37 65.14 61.86 Construction 7.72 6.69 9.95 10.39 7.14 9.48 9.94 9.59 11.07 11.81 Services Sector 136.82 141.48 174.49 205.83 196.60 185.85 216.33 283.15 298.24 309.70 Transport, Storage&Com. 45.70 53.82 58.75 60.43 59.93 67.39 80.11 79.18 84.99 97.28 Railways 10.04 11.11 9.82 10.55 9.97 14.36 15.71 12.08 12.14 12.69 OtherTransport 27.43 31.94 36.50 37.88 38.64 36.81 46.50 46.08 51.33 61.18 Storage 0.34 0.30 0.35 0.27 0.13 0.13 0.29 0.31 0.18 0.22 Communication 7.89 10.47 12.08 11.73 11.19 16.09 17.61 20.71 21.34 23.19 Trade, Hotels etc. 9.99 -0.50 28.73 43.23 31.39 9.18 18.40 59.62 60.88 48.33 Banking&Insurance 8.77 11.31 11.42 13.71 19.44 16.93 23.59 35.38 40.59 47.06 Real Estate etc. 36.57 38.57 42.25 49.74 50.01 54.07 55.34 56.74 58.77 61.08 PublicAdmin&Defence 27.44 28.70 23.12 28.39 27.11 28.96 29.99 38.47 38.30 39.80 Other Services 8.35 9.58 10.22 10.33 8.72 9.32 8.90 13.76 14.71 16.15 Gross Domestic Investment 376.79 447.61 442.63 498.86 467.18 521.31 513.30 714.22 768.20 742.16 Memo Items Gross Domestic Investment a 426.57 498.57 526.98 622.57 522.71 566.91 594.12 776.36 845.84 913.25 Errors & Omissions 8.71 2.80 20.14 53.72 16.38 -1.79 50.59 51.90 -3.28 69.07 Gross Domestic Investment 417.86 495.77 506.84 568.85 506.33 568.94 543.53 724.46 849.12 844.18 (unadjusted) b a. Refers to CSO's savings-based estimate of investment. b. Refers to Gross Capital Formation unadjusted for errors and omissions, which is CSO's direct estimate of investment based on physical flows. Source: CSO, National Accounts Statistics 1997 and SO Ouick Estimates 1998. 74 Statistical Appendix Table A1.5 (c) Investinent Deflators by Industry of Use (1980-81=100) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Agricultural Sector 192.15 210.94 231.93 253.21 283.50 308.41 336.23 359.37 386.65 416.13 Agriculture 190.05 208.54 230.30 252.33 283.15 309.27 337.55 359.45 386.24 417.17 Forestry&Logging 206.45 234.13 252.32 271.43 316.43 357.94 388.52 429.31 458.65 514.18 Fishing 223.33 239.85 245.99 256.37 274.93 279.47 304.62 340.35 373.02 378.33 Industry Sector 171.30 181.90 206.16 224.29 262.20 276.63 299.75 315.79 342.60 364.25 Mining & Quarrying 173.33 188.03 210.70 232.98 266.22 296.22 327.13 317.76 361.57 408.67 Manufacturing 168.19 175.57 202.72 219.09 256.36 268.06 293.55 309.58 334.64 355.89 Registered 159.47 168.89 194.27 210.47 245.00 259.18 282.16 300.99 325.36 343.89 Unregistered 192.08 207.95 224.43 244.86 294.48 305.10 329.55 348.32 376.14 409.48 Electricity,Gas &Water 177.25 199.66 213.86 234.21 272.58 295.15 306.89 339.99 371.40 390.07 Construction 160.75 169.51 190.15 212.80 244.82 268.35 279.58 301.56 317.71 342.51 Services Sector 200.37 222.65 232.59 248.32 286.32 319.46 331.55 349.83 386.15 403.11 Transport, Storage &Com. 176.32 197.77 218.25 237.18 269.58 292.31 301.02 324.96 350.89 365.53 Railways 214.34 237.35 269.14 291.75 332.70 342.55 355.25 413.16 429.16 437.35 Other Transport 160.34 181.37 201.75 219.77 247.96 264.38 272.82 292.23 314.63 328.80 Storage 229.41 253.33 251.43 255.56 353.85 376.92 337.93 380.65 488.89 509.09 Communication 181.24 204.20 225.75 243.90 287.04 310.69 326.52 345.49 392.41 421.78 Trade, Hotels etc. 171.07 -592.00 194.88 203.38 239.15 327.67 292.88 301.54 343.77 330.71 Banking & Insurance 168.30 186.21 206.65 225.09 256.12 279.27 291.44 319.84 348.41 363.11 Real Estate etc. 246.35 263.31 279.43 296.24 336.41 358.96 391.27 425.57 474.82 503.08 PublicAdmin&Defence 200.73 216.86 241.26 264.64 303.47 328.63 354.52 387.03 430.16 466.03 Other Services 198.08 216.60 236.69 256.73 297.94 323.07 343.82 362.86 400.48 429.60 Gross Domestic Investment 184.50 197.86 219.37 237.14 274.73 295.48 317.11 333.45 363.86 385.83 Memo Items Gross Domestic Investment a 179.23 194.50 217.56 238.04 276.69 298.18 317.28 333.58 359.15 381.59 Gross Domestic Investment 179.20 194.47 217.42 237.60 276.63 298.20 317.43 333.18 359.17 381.26 (unadjusted) b a. Refers to CSO's savings-based estimate of investment. b. Refers to Gross Capital Formation unadjusted for errors and omissions, which is CSO's direct estimate of investment based on physical flows. Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. Statistical Appendix 75 Table A1.6 (a) Gross Domestic Investment in Public Sector (Rs. billion at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 Agricultural Sector 33.03 34.42 33.54 36.28 36.53 41.75 49.20 60.22 65.57 Agriculture 30.57 31.62 29.89 31.93 32.30 37.49 44.69 55.51 59.78 Forestry & Logging 2.42 2.78 3.62 4.33 4.20 4.25 4.48 4.70 5.77 Fishing 0.04 0.02 0.03 0.02 0.03 0.01 0.03 0.01 0.02 Industry Sector 192.84 204.32 235.48 277.65 324.88 309.66 298.88 419.82 455.26 Mining & Quarrying 40.96 47.59 62.46 65.04 61.92 63.76 63.36 147.97 111.59 Manufacturing 50.73 51.72 54.66 71.45 85.08 82.98 48.92 67.92 127.20 Electricity,Gas&Water 98.81 105.62 117.55 137.69 174.10 158.41 178.96 195.92 210.56 Construction 2.34 -0.61 0.81 3.47 3.78 4.51 7.64 8.01 5.91 Services Sector 104.72 154.91 186.64 207.58 203.96 276.22 347.15 387.45 Transport, Storage & Com. 46.40 61.50 75.92 79.58 92.16 123.71 159.73 159.10 168.89 Railways 21.52 26.37 26.43 30.78 33.17 49.19 55.81 49.91 52.10 Other Transport 10.12 13.48 21.86 19.73 26.67 24.36 45.78 37.09 32.80 Storage 0.46 0.27 0.36 0.46 0.20 0.17 0.64 0.55 0.25 Communication 14.30 21.38 27.27 28.61 32.12 49.99 57.50 71.55 83.74 Trade, Hotels etc. -22.61 -2.98 17.48 14.54 -16.67 12.74 34.78 21.30 -38.43 Banking & Insurance 9.49 14.82 16.99 17.98 23.59 18.04 19.72 25.22 32.33 Real Estate etc. 6.70 7.57 7.32 6.16 8.66 10.19 10.78 12.69 15.15 Public Admin & Defence 55.08 62.24 55.78 75.13 82.27 95.17 106.32 148.89 164.75 Other Services 9.66 11.76 13.15 14.19 13.95 16.37 15.82 20.25 21.25 Gross Domestic Investment 330.59 393.65 455.66 521.51 565.37 627.63 695.23 867.49 884.77 Source: CSO, National Accounts Statistics 1997 and CSO Quick Estimates 1998. 76 Statistical Appendix Table A1.6 (b) Gross Domestic Investment in Public Sector (Rs. billion at 1980-81 prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 Agricultural Sector 15.76 14.82 13.01 13.15 11.35 11.79 12.69 14.26 13.94 Agriculture 14.58 13.62 11.56 11.54 10.02 10.61 11.53 13.16 12.68 Forestry & Logging 1.16 1.19 1.43 1.60 1.32 1.18 1.15 1.09 1.26 Fishing 0.02 0.01 0.02 0.01 0.01 0.00 0.01 0.01 0.00 Industry Sector 110.85 105.94 111.41 120.36 121.28 106.29 95.82 127.92 127.78 Mining & Quarrying 23.59 24.76 29.63 27.85 23.21 21.40 19.31 46.40 30.44 Manufacturing 30.36 28.61 26.50 32.49 33.32 30.60 16.55 21.92 39.45 Electricity,Gas &Water 55.59 52.65 54.81 58.56 63.38 52.79 57.66 57.38 56.37 Construction 1.31 -0.08 0.47 1.46 1.37 1.50 2.30 2.22 1.52 Services Sector 50.73 72.20 81.99 82.41 67.84 87.75 106.95 107.27 87.65 Transport, Storage & Com. 24.34 28.90 32.75 31.15 31.63 39.38 49.91 45.23 43.49 Railways 10.04 11.11 9.82 10.55 9.97 14.36 15.71 12.08 12.13 Other Transport 6.21 7.22 10.70 8.68 10.42 8.89 16.39 12.29 9.98 Storage 0.20 0.10 0.15 0.19 0.05 0.04 0.20 0.15 0.04 Communication 7.89 10.47 12.08 11.73 11.19 16.09 17.61 20.71 21.34 Trade, Hotels etc. -14.53 -1.94 9.56 7.19 -7.44 4.98 12.74 7.01 -11.95 Banking & Insurance 5.71 8.05 8.26 8.03 9.27 6.55 6.93 8.01 9.37 Real Estate etc. 2.82 2.98 2.69 2.12 2.64 2.87 2.82 3.06 3.27 Public Admin&Defence 27.44 28.70 23.12 28.39 27.11 28.96 29.99 38.47 38.30 Other Services 4.95 5.51 5.61 5.53 4.63 5.01 4.56 5.49 5.17 Gross Domestic Investment 177.34 192.96 206.41 215.92 200.47 205.83 215.46 249.45 229.37 Source: CSO, National Accounts Statistics 1997 and CSO Ouick Estimates 1998. Statistical Appendix 77 Table A2.1 Balance of Payments (US$ million at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Exports of Goods andNon-Factor Services 16217 18213 21201 23028 23288 23585 27947 32990 39668 42379 Merchandise (fob) 12646 14257 16955 18477 18266 18869 22683 26855 32311 33764 Non-factor Services 3571 3956 4246 4551 5022 4716 5264 6135 7357 8615 ImportsofGoodsandNon-FactorServices 22843 26843 27934 31485 24879 26825 31468 41437 51213 54271 Merchandise(cif) 19816 23618 24411 27914 21064 23237 26739 35904 43670 48063 Non-factor Services 3027 3225 3523 3571 3815 3588 4729 5533 7543 6208 Trade Balance -7170 -9361 -7456 -9437 -2798 -4368 -4056 -9049 -11359 -14299 Nonfactor Services Balance 544 731 723 980 1207 1128 535 602 -186 2407 Resource Balance -6626 -8630 -6733 -8457 -1591 -3240 -3521 -8447 -11545 -11892 Net Factor Income -2465 -2623 -3249 -3957 -4017 -3699 -3620 -3711 -3497 -3584 Factor Service Receipts 446 397 936 1123 758 733 395 886 1429 1073 Factor Service Paymentsa 2911 3020 4185 5080 4775 4432 4015 4597 4926 4657 Net Current Transfers 2698 2654 2281 2069 3783 2773 5265 8093 8506 11071 Transfer Receipts 2724 2670 2297 2083 3798 2784 5287 8112 8539 11139 TransferPayments 26 16 16 14 15 11 22 19 33 68 Current Account Balance -6393 -8599 -7701 -10345 -1825 -4166 -1876 -4065 -6536 -4405 Foreign Investment 181 287 350 103 133 557 4235 4922 4794 5834 DirectForeignlnvestment 181 287 350 97 129 315 586 1343 2133 2524 Portfolio Investment 0 0 0 6 4 242 3649 3579 2661 3310 Official Grant Aid 410 406 500 462 460 363 368 416 345 410 'NetMedium&Long-TermCapital 7367 10714 7762 5910 4820 6225 5662 3175 1506 2778 Gross Disbursements 7269 10330 7372 7119 7461 7358 8597 7533 7585 6483 Principal Repayments 1894 1944 1906 2745 2931 3253 4033 5175 7023 7240 CapitalFlowsNEI -822 -3030 -732 986 -1024 -3242 149 2410 -2113 1582 Net Short-Term Capital 727 685 1143 1043 -1474 -730 -2714 638 785 1677 Others' b-731 141 167 -1193 -1240 -878 -1053 -983 -952 -727 Capital flows n.e.i.' -818 -3856 -2042 1136 1690 -1634 3916 2755 -1946 632 Overall Balance 743 -222 178 -2884 2563 -263 8538 6858 -2004 6199 NetlMF Credit -1082 -1210 -1028 1113 821 1290 189 -1174 -1719 -972 Change in Reserves (Excl. Gold) 338 1432 850 1771 -3384 -1027 -8727 -5684 3723 -5227 (- = increase) Memorandum Items: EndofYearGrossReserves(Excl. Gold) 6391 4959 4109 2338 5722 6749 15476 21160 17436 22664 ReservesinMonthsofIrnports 3.9 2.5 2.0 1.0 3.3 3.5 6.9 7.1 4.8 5.7 Current Account Balance / GDP -2.5% -3.1% -2.8% -3.5% -0.7% -1.7% -0.7% -1.3% -2.0% -1.2% Debt Service Ratio d 29.3% 27.9% 28.7% 32.4% 29.0%/. 28.4% 24.8% 25.6/% 21.6% 23.2% OtherLTlnflows(NRI) 1992 2328 2295 1536 290 2120 1097 818 944 3536 Note: Debt related information is taken from the World Bank Debt Reporting Systenm a. Includes interest on military debt to FSU and retums on foreign investments. 1b. Corresponds to bilateral balance or servicing of the Russia debt from 1990-91 onwards. c. Residual item including reserve valuation changes, rupee trade imbalance, etc. (L As proportion of gross current receipts (GNFS exports + factor receipts + current transfer receipts). Source: Govermment of India; Reserve Bank of India; Ministry of Commerce; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. 78 Statistical Appendix Table A2.2 (a) Merchandise Exports (US$ million at current prices) 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Primary Exports 3280 3288 3255 3852 4355 4189 3935 5002 5242 7299 7979 Fish 422 411 435 412 535 589 602 813 1126 1010 1121 Rice 154 261 229 256 257 308 337 410 384 1365 888 Cashews 257 243 191 221 249 276 259 334 397 370 361 Coffee 232 202 203 208 140 135 130 174 335 449 400 Tea 451 463 421 550 596 494 337 338 311 350 279 Spices 218 260 190 170 133 161 136 181 195 237 337 Iron Ore 428 427 465 557 584 585 381 438 413 514 483 OtherPrimary 1118 1020 1122 1478 1859 1641 1753 2313 2080 3004 4110 Manufactured Exports 6458 8798 10696 12715 13783 13774 14607 17231 21088 24484 25490 Chemicals 456 618 890 1287 1176 1591 1378 1813 2434 2358 2685 LeatherManufactures 721 964 1051 1170 1449 1276 1278 1300 1611 1730 1554 Textiles 995 1407 1312 1598 2266 2164 2153 2536 3297 3829 4755 Garments 1041 1403 1452 1936 2235 2211 2394 2586 3282 3674 3745 Gems&Jewellery 1622 2015 3034 3178 2923 2753 3072 3995 4500 5273 4745 Engineering Goods 886 1141 1558 1967 2157 2246 2458 3023 3486 4389 4845 Petroleum Products 321 500 349 418 522 417 476 398 439 454 482 OtherManufactures 416 750 1050 1161 1053 1115 1398 1581 2039 2776 2680 TOTAL EXPORTS (Commerce)b 9738 12086 13951 16568 18137 17963 18542 22233 26330 31783 33469 Statistical Discrepancy 682 560 306 387 340 303 327 450 525 528 295 TOTAL EXPORTS (B.O.P.) 10420 12646 14257 16955 18477 18266 18869 22683 26855 32311 33764 a. Including unclassified exports. b. Net of crude petroleum exports. Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. Statistical Appendix 79 Table A2.2 (b) Merchandise Exports (US$ million at 1980-81 prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Primary Exports 3097 3218 3983 4496 4365 4527 5714 5273 8166 8157 Fish 354 386 424 480 570 570 679 778 766 860 Rice 152 137 165 197 265 227 300 348 1919 966 Cashews 228 202 266 305 288 344 404 440 389 385 Coffee 317 291 437 339 343 445 447 453 560 480 Tea 479 450 487 463 503 390 361 353 373 325 Spices 114 122 115 110 115 104 174 136 148 191 Iron Ore 461 541 578 530 490 344 431 428 530 457 Other Primary 993 1089 1512 2073 1791 2104 2918 2337 3480 4493 Manufactured Exports 8411 9180 10414 11299 12673 14137 15905 18406 22586 25204 Chemicals 542 847 1182 1584 2156 1333 1724 2268 2801 3405 LeatherManufactures 899 957 961 979 956 1070 1151 1412 1527 1186 Textiles 1074 915 1122 1329 1872 2512 2266 2868 3266 5482 Garments 1142 1136 1485 1640 1758 1822 1806 2176 2514 3045 Gems & Jewellery 1602 2081 1908 1573 1645 2081 2639 2982 3625 3562 Engineering Goods 1390 1728 2220 2470 2513 3228 3878 4455 7019 6622 Petroleum Products 985 694 784 917 980 1241 1346 1086 1146 839 Other Manufactures 778 823 752 808 793 850 1095 1158 688 1063 TOTAL EXPORTS (Commerce)b 11508 12398 14397 15795 17039 18664 21619 23679 30752 33361 Statistical Discrepancy 533 272 337 296 288 329 438 472 511 294 TOTAL EXPORTS (B.O.P.) 12041 12670 14734 16091 17326 18993 22057 24151 31262 33655 a. Including unclassified exports. b. Net of crude petroleum exports. Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance. Economic Survey, various issues; World Bank Staff estimates. 80 Statistical Appendix Table A2.2 (c) Export Unit Value Indices (US$ terms: 1980-81 = 100) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Primary Exports 106.1 101.2 96.7 96.8 96.0 86.9 87.5 99.4 89.4 97.8 Fish 116.1 112.7 97.2 111.5 103.2 105.6 119.9 144.8 131.8 130.4 Rice 172.2 167.5 155.6 130.5 116.4 148.7 136.8 110.4 71.1 91.9 Cashews 106.3 94.6 82.9 81.7 95.6 75.1 82.8 90.2 94.9 93.9 Coffee 63.7 69.8 47.7 41.4 39.5 29.2 39.0 74.1 80.2 83.3 Tea 96.8 93.4 113.0 128.9 98.2 86.6 93.5 88.0 93.7 85.9 Spices 228.1 155.3 147.3 121.4 139.3 130.4 104.0 142.9 160.7 176.1 IronOre 92.7 85.9 96.4 110.2 119.5 110.9 101.5 96.6 97.0 105.8 Other Primary 102.7 103.0 97.7 89.7 91.6 83.3 79.3 89.0 86.3 91.5 Manufactured Exports 104.6 116.5 122.1 122.0 108.7 103.3 108.3 114.6 108.4 101.1 Chemicals 114.0 105.1 108.9 74.3 73.8 103.4 105.2 107.3 84.2 78.8 LeatherManufactures 107.3 109.8 121.7 147.9 133.4 119.4 112.9 114.0 113.3 131.0 Textiles 131.1 143.4 142.4 170.6 115.6 85.7 111.9 114.9 117.3 86.7 Garments 122.9 127.8 130.4 136.3 125.8 131.4 143.1 150.8 146.2 123.0 Gems & Jewellery 125.8 145.8 166.6 185.9 167.4 147.6 151.4 150.9 145.5 133.2 Engineering Goods 82.1 90.2 88.6 87.4 89.4 76.2 78.0 78.3 62.5 73.2 Petroleum Products 50.8 50.3 53.4 57.0 42.5 38.4 29.5 40.5 39.6 57.4 Other Manufactures a 96.4 127.5 154.3 130.4 140.6 164.5 144.4 176.1 403.2 252.2 TOTALEXPORTS(Commerce)b 105.0 112.5 115.1 114.8 105.4 99.3 102.8 111.2 103.4 100.3 Statistical Discrepancy 105.0 112.5 115.1 114.8 105.4 99.3 102.8 111.2 103.4 100.3 TOTAL EXPORTS (B.O.P.) 105.0 112.5 115.1 114.8 105.4 99.3 102.8 111.2 103.4 100.3 a. Including unclassified exports. b. Net of crude petroleum exports. Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. Statistical Appendix 81 Table A2.3 (a) Merchandise Imports (US$ million at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Food 1292 1203 714 690 426 702 550 1464 1295 1477 Foodgrains 25 437 227 102 71 334 93 29 24 136 Edible Oils 709 503 127 182 101 58 53 199 676 824 Others 557 263 361 407 254 311 404 1236 595 517 OtherConsumerGoods 600 700 800 851 637 782 680 790 1075 820 P.O.L 3148 2938 3766 6005 5318 5887 5651 5681 7201 10036 CrudePetroleuma 2395 1891 2455 3409 3189 3691 3407 3285 3442 4797 Petroleum Products 753 1047 1311 2596 2128 2196 2244 2396 3759 5239 Capital Goods 5063 4805 5300 5834 4256 3743 5311 6366 8454 7735 Intermediate: PRIMARY 2997 3800 4488 4653 3821 4554 4533 4296 5599 6229 FertilizerRawMaterial 243 301 329 348 311 279 194 288 301 230 Gems 1538 1984 2546 2082 1968 2443 2634 1630 2105 3045 Other 1217 1515 1613 2222 1543 1832 1705 2378 3193 2954 Intermediate: MANUFACTURES 4056 6051 6151 6031 5058 6219 6575 10056 13038 12110 Fertilizer Manufactures 132 341 737 636 649 699 632 764 1381 683 Iron & Steel 982 1341 1383 1177 803 779 795 1082 1446 1469 Non-Ferrous Metals 444 544 752 614 342 395 479 718 904 1105 Others 2497 3826 3279 3605 3264 4346 4670 7492 9308 8853 TOTAL IMPORTS (Commerce) a 17156 19497 21219 24065 19516 21888 23301 28654 36662 38406 Statistical Discrepancy 2660 4121 3192 3849 1548 1349 3438 7250 7008 9657 TOTALIMPORTSa 19816 23618 24411 27914 21064 23237 26739 35904 43670 48063 a. Net of crude oil exports. b. 1987-88 onwards Capital Goods includes Project Goods. Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. 82 Statistical Appendix Table A2.3 (b) Merchandise Imports (USS million at 1980-81 prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Food 1710 1968 865 807 446 1015 612 1344 1125 1425 Foodgrains 35 1021 310 126 77 662 165 33 27 274 Edible Oils 980 539 160 259 III 51 56 171 522 633 Others 695 409 395 422 258 302 391 1140 576 518 OtherConsumerGoods 513 555 643 647 475 559 482 535 763 604 P.O.L 5944 6734 7272 8287 9409 11395 12131 11679 13483 11342 CrudePetroleuma 4630 4651 5089 5405 6264 7660 8128 7825 9033 7599 Petroleum Products 1314 2083 2183 2882 3145 3735 4003 3854 4449 3743 Capital Goods b 4203 3702 4142 4312 3081 2598 3662 4190 5837 5534 Intermediate: PRIMARY 2419 2841 3363 3314 2660 3076 3074 2779 3781 4355 FertilizerRawMaterial 161 178 157 174 152 147 121 177 172 119 Gems 1262 1511 1965 1521 1408 1676 1795 1060 1437 2153 Other 996 1151 1242 1619 1101 1253 1158 1543 2173 2083 Intermediate: MANUFACTURES 3529 4728 5057 4803 3969 4846 4979 6847 9223 8731 Fertilizer Manufactures 320 472 876 808 835 1117 981 904 1392 708 Iron&Steel 874 1275 1162 936 626 581 589 766 1074 1131 Non-Ferrous Metals 540 553 775 599 327 362 436 624 824 1044 Others 1795 2428 2244 2460 2181 2785 2973 4553 5934 5848 TOTAL IMPORTS (Cornmerce)' 18318 20528 21342 22171 20040 23488 24940 27374 34212 31991 Statistical Discrepancy 2840 4339 3210 3546 1590 1448 3680 6926 6540 8044 TOTALIMPORTSa 21158 24867 24552 25717 21629 24935 28620 34300 40752 40035 a. Net of crude oil exports. b. 1987-88 onwards Capital Goods includes Project Goods. Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. Statistical Appendix 83 Table A2.3 (c) Import Unit Value Indices (US$ Terms: 1980-81 = 100) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Food 75.5 61.1 82.6 85.5 95.5 69.2 89.9 109.0 115.1 103.6 Foodgrains 72.0 42.8 73.1 80.3 91.9 50.4 56.0 89.3 90.1 49.5 EdibleOils 72.4 93.4 79.3 70.2 90.9 114.0 94.5 116.5 129.4 130.1 Others 80.2 64.5 91.4 96.5 98.6 102.8 103.5 108.4 103.3 99.7 Other Consumer Goods 117.1 126.1 124.5 131.5 134.3 140.0 141.0 147.7 140.8 135.9 P.O.L 53.0 43.6 51.8 72.5 56.5 51.7 46.6 48.6 53.4 88.5 Crude Petroleum 51.7 40.7 48.2 63.1 50.9 48.2 41.9 42.0 38.1 63.1 Petroleum Products 57.3 50.3 60.1 90.1 67.7 58.8 56.1 62.2 84.5 140.0 Capital Goods 120.5 129.8 128.0 135.3 138.1 144.1 145.0 151.9 144.8 139.8 Intermediate: PRIMARY 123.9 133.8 133.4 140.4 143.6 148.1 147.5 154.6 148.1 143.0 Fertilizer Raw Material 150.7 168.7 209.6 199.8 204.7 190.1 160.8 163.3 175.4 192.5 Gems 121.9 131.3 129.6 136.9 139.8 145.8 146.8 153.7 146.5 141.4 Other 122.2 131.6 129.9 137.3 140.2 146.2 147.2 154.2 147.0 141.8 Intermediate: MANUFACTURES 114.9 128.0 121.6 125.6 127.4 128.3 132.1 146.9 141.4 138.7 Fertilizer Manufactures 41.3 72.3 84.2 78.6 77.7 62.5 64.4 84.5 99.2 96.5 Iron & Steel 112.3 105.2 119.0 125.8 128.4 133.9 134.8 141.2 134.6 129.9 Non-Ferrous Metals 82.3 98.3 97.0 102.5 104.6 109.1 109.9 115.1 109.7 105.9 Others 139.1 157.6 146.1 146.5 149.6 156.0 157.1 164.6 156.9 151.4 TOTAL IMPORTS (Commerce) 93.7 95.0 99.4 108.5 97.4 93.2 93.4 104.7 107.2 120.1 Statistical Discrepancy 93.7 95.0 99.4 108.5 97.4 93.2 93.4 104.7 107.2 120.1 TOTAL IMPORTS 93.7 95.0 99.4 108.5 97.4 93.2 93.4 104.7 107.2 120.1 Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. 84 Statistical Appendix Table A2.4 Invisibles on Current Account (US$ million) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 GROSS RECEIPTS 6741 7023 7479 7757 9578 8233 10946 15133 17325 20827 Non-Factor Services 3571 3956 4246 4551 5022 4716 5264 6135 7357 8615 of which: Transport 680 898 907 983 939 982 1433 1696 2011 1939 Travel 1431 1419 1433 1456 1977 2098 2222 2365 2713 2878 Others 1460 1639 1906 2112 2106 1636 1609 2074 2633 3798 Factor Income 446 397 936 1123 758 733 395 886 1429 1073 Current Transfersa 2724 2670 2297 2083 3798 2784 5287 8112 8539 11139 GROSS PAYMENTS 5964 6261 7724 8665 8605 8031 8766 10149 12502 10933 Non-Factor Services 3027 3225 3523 3571 3815 3588 4729 5533 7543 6208 of which: Transportb 870 1027 1115 1093 1289 1485 1765 1863 2169 2394 Travel 376 405 403 392 465 385 497 81S 1167 858 Others 1781 1793 2005 2086 2061 1718 2467 2852 4207 2956 Factor Income 2911 3020 4185 5080 4775 4432 4015 4597 4926 4657 Current Transfers 26 16 16 14 15 11 22 19 33 68 NET RECEIPTS 777 762 -245 -908 973 202 2180 4984 4823 9894 Non-Factor Services 544 731 723 980 1207 1128 535 602 -186 2407 of which: Transport -190 -129 -208 -110 -350 -503 -332 -167 -158 -455 Travel 1055 1014 1030 1064 1512 1713 1725 1547 1546 2020 Others -321 -154 -99 26 45 -82 -858 -778 -1574 842 Factor Income -2465 -2623 -3249 -3957 -4017 -3699 -3620 -3711 -3497 -3584 Current Transfers 2698 2654 2281 2069 3783 2773 5265 8093 8506 11071 a. Excluding foreign grants, and including the Bhopal settlement in 1988-89. b. Excluding freight included in c.i.f value of merchandise imports. Note: Debt related information is taken from the World Bank Debt Reporting System. Source: Ministry of Commerce (D.G.C.I.S); Reserve Bank of India; Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. Statistical Appendix 85 Table A2.5 Decomposition of Recent Export Growth (US$ million at current prices - annual averages) 1985-86 1991-92 Increase Contribution to 90-91 to 96-97 to Growth (%) Manufactured Exports 9682 19446 9764 85.3 Consumption goods 5349 10631 5282 46.1 Leather 851 1440 590 5.2 Gems (gross) 2020 3753 1733 15.1 Garments 1255 2730 1475 12.9 Textiles 1224 2708 1484 13.0 Investment goods a 1189 2960 1771 15.5 Intermediate goods 3143 5854 2711 23.7 Chemicals 677 1792 1115 9.7 Petroleum Prod. 370 451 81 0.7 Others b 2096 3611 1515 13.2 PrinLar Exports 3322 5004 1682 14.7 Fish 389 779 390 3.4 Rice 200 510 310 2.7 Cashews 208 314 106 0.9 Coffee 207 227 21 0.2 Tea 507 404 -103 -0.9 Spices 206 174 -33 -0.3 Iron Ore 456 486 30 0.3 Other Primary 1148 2108 960 8.4 TOTAL EXPORTS (Customs) c 13003 24449 11446 100.0 Discrepancy 635 412 -223 TOTAL EXPORTS (BOP) c 12252 22910 10659 Merno: Gems (Net)d 317 1449 1132 a. Refers to engineering goods. b. Including unclassified exports. c. TIotal exports, f.o.b., net of crude oil. d. E,xports less imports of gems and jewellery. Source: Ministry of Commerce, (D.G.C.I.S.); Reserve Bank of India. 86 Statistical Appendix Table A3.1 (a) External Debt Summary: Debt Outstanding and Disbursed (US$ million at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 A. Public & Publicly Guar. LT 44174 50073 68788 78062 73355 77921 84087 87608 80817 74406 1. Official Creditors 30356 31180 46216 53136 49446 52987 55856 61997 57112 53223 a. Multilateral 16588 18061 20187 22700 23964 26130 27826 31486 30048 29332 aa. ofwhichlBRD 4661 5590 6615 7685 8459 9067 9870 11120 9849 8768 ab. ofwhichIDA 11615 12019 13044 14216 14203 15339 15978 17666 17499 17616 b. Bilateral 13768 13119 26029 30437 25482 26857 28029 30511 27065 23891 2. Private Creditors 13818 18893 22571 24925 23909 24934 28232 25611 23705 21183 a. Commercial Banks 10459 12899 15507 17178 16025 17006 18908 14716 13942 14182 b. SuppliersCredits 715 632 538 439 455 817 1211 1017 875 1197 c. Bonds (including IDB) 1214 1785 2875 3581 4102 4021 3832 3740 3257 1089 d. Other Private 1430 3576 3651 3727 3328 3090 4281 6139 5632 4715 B. Private Non-Guaranteed LT 1652 1473 1551 1488 1545 1205 1770 6427 6618 7382 C. Total LT DOD (A+B) 45827 51546 70339 79550 74901 79126 85858 94035 87436 81788 D. Use of IMF Credit 4023 2573 1744 3056 3451 4798 5041 4312 2374 1313 E. Short-Term Debt 5673 6358 7501 8544 7070 6340 3626 4264 5049 6726 F. Total External Debt (C+D+E) 55522 60477 79584 91150 85421 90264 94524 102611 94859 89827 Memo items: Total NRI Deposits 8616 10482 12368 13953 12676 14258 14498 14661 13894 14903 Military Debt to FSU .. .. 9972 11645 9222 9661 9160 8763 7488 6431 .. Not available. Source: World Bank, DRS data. Statistical Appendix 87 Table A3.1(b) External Debt Summary: Disbursements (US$ million at cufrent prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 A. Public & Publicly Guar. LT 6921 10155 7132 6905 7152 7105 7538 6666 6406 5698 1. Official Creditors 3618 3635 3611 3876 4582 4160 3645 3334 2828 3072 a. Multilateral 2269 2625 2115 2270 2758 2424 2084 2230 1942 2234 aa. IBRD 1295 1716 1445 1219 1231 852 1216 741 589 686 ab. IDA 917 755 576 821 953 1186 669 966 729 906 b. Bilateral 1349 1010 1496 1606 1824 1736 1561 1104 886 838 2. Private Creditors 3303 6520 3521 3029 2570 2945 3893 3332 3578 2626 a. Commercialbanks 2968 3361 2657 1990 516 2145 1722 851 2164 1701 b. Suppliers Credits 5 16 3 10 92 415 466 213 71 449 c. Bonds (including IDB) 116 679 735 637 1607 0 0 0 86 0 d. OtherPrivate 213 2463 127 392 355 384 1705 2267 1258 476 B. Private Non-Guaranteed LT 348 175 240 214 309 254 1060 867 1179 785 C. Total LT Disbursements (A+B) 7269 10330 7372 7119 7461 7358 8597 7533 7585 6483 D. IMF 0 0 0 1898 1309 1624 323 0 0 0 B. Net Short-Term Capital 727 685 1143 1043 -1474 -730 -2714 638 785 1677 F. Total Disbursements (C+D+E) 7269 10330 7372 9017 8769 8982 8921 7533 7585 6483 Source: World Bank, DRS data. 88 Statistical Appendix Table A3.1(c) External Debt Summary: Principal Repayments (US$ million at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 A. Public & Publicly Guar. LT 1604 1665 1584 2427 2658 2947 3538 5052 6867 7000 1. OfficialCreditors 1120 990 1074 1292 1518 1618 1890 2365 3876 3272 a. Multilateral 508 397 467 609 703 838 1000 1102 1513 1218 aa. of which IBRD 430 303 352 472 527 634 758 827 943 840 ab. ofwhich IDA 69 81 98 114 141 155 174 194 226 234 b. Bilateral 612 593 607 683 815 780 890 1263 2364 2054 2. Private Creditors 485 675 510 1134 1140 1329 1647 2688 2991 3728 a. CommercialBanks 284 363 215 274 309 438 666 1086 1840 1511 b. Suppliers Credits 98 96 99 112 58 74 111 472 143 132 d. Bonds (including IDB) 6 14 29 294 255 206 338 404 311 1242 e. OtherPrivate 97 202 167 455 518 612 532 726 696 843 B. Private Non-Guaranteed LT 290 280 322 318 273 306 495 123 156 240 C. Total LTRepayments (A+B) 1894 1944 1906 2745 2931 3253 4033 5175 7023 7240 D. IMF Repayments 1082 1210 1028 785 488 334 134 1174 1719 972 E. Total LT Repayments (C+D) 2976 3155 2933 3530 3419 3587 4167 6349 8742 8213 Source: World Bank, DRS data. Statistical Appendix 89 Table A3.l(d) External Debt Summary: Net Flows (US$ million at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 A. Public&PubliclyGuar. LT 5316 8490 5549 4478 4494 4158 4000 1613 -461 -1302 1. Official Creditors 2498 2645 2537 2584 3064 2543 1755 970 -1048 -200 a. Multilateral 1761 2228 1649 1661 2054 1587 1084 1129 429 1016 aa. of which IBRD 865 1414 1094 747 703 219 458 -86 -354 -154 ab. of which IDA 848 675 478 707 812 1030 495 773 503 672 b. Bilateral 737 417 888 922 1010 956 670 -159 -1477 -1216 2. Private Creditors 2818 5845 3011 1895 1430 1615 2245 644 587 -1103 a. Commercial Banks 2684 2999 2442 1716 207 1707 1056 -235 324 189 b. Suppliers Credits -93 -80 -95 -102 34 342 355 -259 -73 317 c. Bonds (including IDB) 110 665 705 343 1352 -206 -338 -404 -226 -1242 d. Other Private 117 2261 -41 -62 -163 -227 1173 1541 562 -367 B. Private Non-Guaranteed LT 59 -104 -82 -104 36 -53 565 744 1023 545 C. Total LT Repayments (A+B) 5375 8386 5467 4374 4530 4105 4565 2357 562 -758 D. Net IMF Credit -1082 -1210 -1028 1113 821 1290 189 -1174 -1719 -972 E. Net Short Debt Flows 727 685 1143 1043 -1474 -730 -2714 638 785 1677 F. Total Net Flows (C+D+E) 4293 7175 4439 5487 5351 5395 4754 1183 -1157 -1730 Memo item: Total NRI Net Flows 1992 2328 2295 1536 290 2120 1097 818 944 3536 Source: Derived from Tables 3.1 (b) and 3. 1 (c). 90 Statistical Appendix Table A3.1(e) External Debt Summary: Interest Payments (US$ million at current prices) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 A. Public & Publicly Guar. LT 1837 1993 3188 3796 3497 3316 3400 3448 3509 3661 1. Official Creditors 810 940 1362 1562 1556 1631 1674 1846 1867 1680 a. Multilateral 479 581 640 741 796 899 940 1014 1061 966 aa. of which IBRD 378 474 529 615 643 708 721 768 770 674 ab. of whichIDA 98 98 91 100 101 109 114 121 131 130 b. Bilateral 331 360 722 821 761 732 733 832 806 714 2. Private Creditors 1027 1053 1826 2234 1941 1685 1727 1602 1642 1981 a. Commercial Banks 778 787 1527 1803 1447 1200 1206 905 959 963 b. Suppliers Credits 67 61 53 43 32 31 55 108 68 65 c. Bonds (including IDB) 79 104 147 209 218 230 258 221 183 572 d. Other Private 103 100 98 179 245 224 208 368 432 381 B. Private Non-Guaranteed LT 147 127 140 135 126 123 139 391 531 441 C. Total LT Interest (A+B) 1985 2120 3328 3931 3624 3440 3540 3839 4040 4102 D. IMF Service Charges 297 233 188 145 216 271 271 228 182 87 E. Interest Paid on STDebt 429 437 570 899 826 399 367 312 385 268 F. Total Interest Paid (C+D+E) 2710 2790 4085 4975 4665 4110 4178 4379 4607 4457 Memo item: Total NRI Interest Payments 715 609 1076 1282 1036 918 905 1046 1247 1627 Source: World Bank, DRS data. Statistical Appendix 91 Table A3.2 External Reserves (US$ million) Reserve Reserves Reserves Foreign Position excluding including Use of Net Exchange SDRs in the Fund Gold Golda Gold IMF Credit Reserves 1980-81 5850 603 405 6858 370 7228 327 6901 1981-82 3582 473 405 4460 335 4795 964 3831 1982-83 4281 291 393 4965 324 5289 2876 2413 1983-84 5099 230 518 5847 320 6167 4150 2017 1984-85 5482 145 483 6110 325 6435 3932 2503 1985-86 5972 131 554 6657 416 7073 4290 2783 1986-87 5924 179 626 6729 470 7199 4291 2908 1987-88 5618 97 676 6391 507 6898 3653 3246 1988-89 4226 103 630 4959 473 5432 2364 3067 1989-90 3368 107 634 4109 487 4596 1493 3102 1990-91 2236 102 -- 2338 504 2842 2623 219 1991-92 5631 90 1 5722 542 6264 3451 2812 1992-93 6434 18 297 6749 557 7306 4798 2508 1993-94 15068 108 300 15476 583 16059 5040 11019 1994-95 20809 19 332 21160 695 21855 4312 17543 1995-96 17044 82 311 17436 654 18090 2374 15715 1996-97 22367 2 295 22664 620 23284 1313 21971 End of the Month 1994 March 15068 108 300 15476 583 16059 5040 11019 June 16372 45 308 16725 598 17323 4002 13321 September 18856 3 312 19171 606 19777 4055 15722 December 19386 2 310 19698 603 20301 4034 16267 1995 March 20809 19 332 21160 695 21855 4312 17543 June 19601 95 334 20030 702 20732 3933 16799 September 19064 49 320 19433 674 20107 3377 16729 December 17467 139 316 17922 665 18587 2923 15664 1996 March 17044 82 311 17436 654 18090 2374 15715 June 17526 128 307 17961 646 18607 2079 16527 September 18433 57 306 18796 644 19440 1755 17685 December 19742 122 306 20170 643 20813 1560 19253 1997 March 22367 2 295 22664 620 23284 1313 21971 June 25404 3 295 25702 621 26323 1144 25179 September 25697 30 290 26017 611 26628 946 25682 December 24324 77 287 24688 602 25290 796 24494 1998 March 25975 1 284 26260 596 26856 664 26192 -- Not available. Note: IMF Credit refers to Use of IMF credit within the General Resources Account (GRA) excluding Trust Fund, Structural Adjustnent Facility (SAF), and Enhanced Structural Adjustment Facility (ESAF) loans. a. Valued at 35 SDR's per fine troy ounce. Source: IMF, International Financial Statistics, various issues. 92 Statistical Appendix Table A4.1 Central Govemment Finances Summary (Rs billion at current prices) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1997-98 1998-99 B.E. R.E. B.E. Revenue' 660.30 741.28 754.53 910.83 1101.30 1262.79 1531.42 1385.14 1619.94 Tax Revenue 500.69 540.44 534.49 674.54 819.39 937.01 1133.93 991.58 1168.57 Customs 222.57 237.76 221.93 267.89 357.57 428.51 525.50 410.00 481.48 UnionExciseb 160.17 163.67 172.24 210.64 221.76 234.63 276.37 252.54 307.82 Income Taxb 16.27 18.31 13.46 34.68 43.16 47.15 60.09 51.78 0.00 Corporate Tax 78.53 88.99 100.60 138.22 164.87 185.67 218.60 213.60 265.50 Other 23.15 31.71 26.26 23.11 32.03 41.05 53.37 63.66 113.77 Non-Tax Revenue 159.61 200.84 220.04 236.29 281.91 325.78 397.49 393.56 451.37 Interest Receipts 109.33 124.87 150.62 157.97 184.19 221.06 240.92 253.27 279.54 Other 19.90 56.36 69.90 27.54 94.10 100.17 108.57 131.23 121.83 Expenditure' 1053.93 1162.62 1356.62 1543.94 1717.70 1934.67 2233.97 2257.66 2580.19 Non-Plan Expenditure 804.53 859.58 981.91 1133.61 1319.01 1474.73 1693.24 1746.15 1959.25 InterestPayments 265.63 310.35 366.95 440.49 500.31 594.78 680.00 657.00 750.00 Defense 163.47 175.82 218.45 232.45 268.56 295.05 356.20 360.99 412.00 Subsidies 122.53 119.95 126.82 129.32 133.72 161.25 182.51 196.44 220.25 OtherNon-Plan Expenditure 252.90 253.47 269.69 331.35 416.42 423.65 474.53 531.72 577.00 Plan Expenditure 309.61 366.60 436.62 473.78 463.74 535.34 628.52 606.30 720.02 Less: Recovery of Loans 60.21 63.56 61.91 63.45 65.05 75.40 87.79 94.79 99.08 DisinvestmentofPSEs 30.38 19.61 -0.48 50.78 3.62 4.55 48.00 9.06 50.00 Gross Fiscal Deficit 363.41 401.74 602.57 582.33 612.79 667.34 654.56 863.47 910.26 Financed by: Reserve BankofIndia (net)d 59.04 32.73 13.48 9.17 213.81 15.06 n.a. 37.95 n.a. Marketable Securities (net)' 114.22 181.80 387.19 183.43 350.56 272.19 301.38f 258.24 344.25f Other Domestic Borrowing (net) 135.94 134.01 151.16 338.27 45.24 350.22 630.21 555.26 886.89 Extemal Borrowing (net) 54.21 53.19 50.74 51.46 3.18 29.87 24.35 12.02 23.37 Memo: GDPmp 6167.99 7059.18 8107.49 9634.92 11189.64 12769.74 14545.68 14154.92 16254.46 Fiscal Deficitl GDP 5.9 5.7 7.4 6.0 5.5 5.2 4.5 6.1 5.6 Revenue/GDP 10.7 10.5 9.3 9.5 9.8 9.9 10.5 9.8 10.0 Expenditure / GDP 17.1 16.5 16.7 16.0 15.4 15.2 15.4 15.9 15.9 Note: BE = Budget estimates; RE = Revised estimates. a. Including sale of public assets (disinvestment). b. Net of states' share. c. Net of loan recoveries. d. Monetized deficit (equal to net RBI credit to Central Govemment). e. T-Bills and dated securities, excluding those issued to RBI. f Includes RBI (net) figure. Source: Ministry of Finance, Union budget documents. Statistical Appendix 93 Table A4.2 Budgetary Classification of Central Government Finances (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1997-98 1998-99 B.E. R.E. B.E. Revenue receipts 435.91 499.96 549.54 660.30 741.28 754.53 910.83 1101.30 1262.79 1531.42 1385.14 1619.94 Tax revenue 337.51 383.49 429.78 500.69 540.44 534.49 674.54 819.39 937.01 1133.93 991.58 1168.57 Non-tax revenue 98.40 116.47 119.76 159.61 200.84 220.04 236.29 281.91 325.78 397.49 393.56 451.37 of which: Interest from states 37.70 44.24 51.74 65.22 77.54 95.53 111.83 130.02 151.63 180.32 183.59 212.83 Revenue expenditure (A+B+C+D) 541.06 642.07 735.15 823.08 927.02 1081.69 1221.11 1398.62 1589.34 1834.09 1822.01 2100.63 A. Developmental 140.36 184.15 196.01 198.17 208.60 243.68 301.50 355.92 399.53 459.53 464.93 544.65 1. Social services 22.43 24.99 27.53 30.57 34.30 40.97 47.43 66.29 84.23 113.44 109.41 139.63 2. Economic services 117.93 159.17 168.48 167.60 174.30 202.71 254.07 289.63 315.30 346.09 355.52 405.03 B. Non-developmental 287.69 335.47 391.00 450.34 521.58 613.17 708.20 816.78 942.77 1129.63 1109.00 1257.23 Defenceservices 95.58 101.94 108.74 114.42 121.09 149.77 164.26 188.41 209.97 267.13 268.02 308.40 Interest payments 142.61 177.57 214.71 265.63 310.35 366.95 440.49 500.31 594.78 680.00 657.00 750.00 C. Grants-in-aid and contributions 102.08 109.36 134.39 159.53 180.54 211.11 204.83 218.28 238.17 236.53 237.56 287.84 of which: Grants to states 100.15 86.44 132.02 157.00 178.30 208.30 200.47 212.87 231.57 230.27 302.41 275.30 D. Revenue expenditLre of UTs 10.92 13.09 13.75 15.05 16.30 13.73 6.59 7.63 8.86 8.41 10.51 10.91 Net current balance -105.15 -142.11 -185.61 -162.78 -185.74 -327.16 -310.28 -297.32 -326.55 -302.67 -436.87 -480.69 Capital expenditure (A+B+C+D) 204.08 237.18 260.88 231.01 235.60 274.93 322.82 319.09 345.35 399.89 435.66 479.57 A. Developmental 60.03 70.95 69.23 58.26 73.82 55.60 73.96 50.49 46.82 82.21 81.85 114.21 1. Social services 3.51 3.21 2.47 2.39 2.59 3.32 7.26 5.48 6.58 9.06 6.25 10.51 2. Economic services 56.52 67.74 66.77 55.87 71.23 52.28 66.70 45.01 40.24 73.14 75.60 103.71 B.Non-developmental 40.76 45.27 49.56 52.32 58.88 73.92 72.51 88.26 93.29 100.94 102.51 115.43 of which: Defence services 37.83 42.22 45.52 49.05 54.73 68.67 68.19 80.15 85.08 89.07 92.97 103.60 C. Capital expenditure of UTs 1.76 1.87 2.68 3.42 3.50 2.78 2.44 2.24 1.84 2.66 2.43 3.10 D. Loans and advances (net) 101.53 119.09 139.40 117.01 99.41 142.63 173.91 178.10 203.40 214.09 248.86 246.82 to States & UTs 67.30 79.55 98.69 94.18 86.97 100.72 143.13 148.37 175.71 185.85 185.85 222.65 to Others 34.23 39.55 40.71 22.83 12.44 41.92 30.78 29.73 27.68 28.24 26.21 34.71 Disinvestment of equily in PSEs 0.00 0.00 0.00 30.38 19.61 -0.48 50.78 3.62 4.55 48.00 9.06 50.00 Gross fiscal deficit (GOI Deffi.) 309.22 379.30 446.50 363.41 401.74 602.57 582.33 612.79 667.34 654.56 863.47 910.26 Finance by instruments Market loans 84.18 74.04 80.01 75.10 36.76 289.28 203.26 330.87 200.06 344.25 335.25 559.31 Small savings 58.35 85.75 91.04 66.40 57.17 91.00 165.78 127.90 152.57 140.00 254.78 216.40 Provident funds 71.12 90.86 89.37 79.56 87.55 93.58 102.65 75.56 84.97 125.56 121.84 148.45 External loans 24.60 25.95 31.81 54.21 53.19 50.74 51.46 3.18 29.87 24.35 12.02 23.37 Treasurybills 62.44 109.11 117.69 68.87 117.73 119.82 -2.68 114.63 127.28 0.00 0.00 0.00 Other 8.53 -6.41 36.58 19.27 49.33 -41.85 61.86 -39.35 72.59 20.40 139.58 -37.27 Note: BE = Budget estimates; RE = Revised estimates. Source: Ministry of Finance, Union budget documents; Department of Expenditure, Finance Accounts; World Bank Staff Estimates. 94 Statistical Appendix Table A4.3 Budgetary Classification of State Government Finances (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 R.E. B.E. Revenue receipts 507.09 568.08 673.19 813.59 911.04 1050.65 1222.82 1373.45 1544.56 1708.22 Taxrevenue 330.70 392.27 448.80 529.53 603.90 686.66 805.75 931.63 1074.10 1239.46 Directtax 24.13 30.06 33.75 39.59 42.28 49.73 70.05 81.10 88.94 103.27 Indirect tax 199.88 229.89 269.70 317.98 356.40 414.51 487.29 557.55 634.56 733.64 State share in central taxes 106.69 132.32 145.35 171.97 205.22 222.42 248.40 292.98 350.61 402.54 Non-tax revenue 176.38 175.81 224.39 284.06 307.14 363.99 417.07 441.82 470.45 468.76 of which: Grants from centre 100.15 86.44 132.02 157.00 178.30 208.30 200.47 212.87 230.27 302.41 Revenue expenditure [A+B+C] 522.96 602.53 717.73 861.86 962.05 1093.76 1284.40 1450.04 1730.69 1915.50 A. Developmental (1+2) 362.37 407.81 488.55 585.05 634.65 708.38 786.37 892.76 1087.01 1112.27 1. Social services 205.74 240.17 279.62 310.92 345.65 389.61 449.02 536.07 631.37 682.69 2. Economic services 156.63 167.64 208.92 274.13 288.99 318.78 337.36 356.69 455.64 429.57 B. Non-developmental 155.06 188.69 221.34 266.66 315.06 373.67 484.99 541.97 623.55 776.14 of which: Interestpayments 59.33 71.86 86.55 109.44 132.10 158.00 192.02 219.32 265.63 310.89 Tocentre 37.70 44.24 51.74 65.22 77.54 95.53 111.83 130.02 180.32 183.59 To others 21.63 27.62 34.81 44.23 54.56 62.47 80.19 89.30 85.31 127.30 C. Otherexpenditurea 5.53 6.03 7.84 10.16 12.35 11.71 13.03 15.31 20.14 27.10 Net current balance -15.87 -34.45 -44.54 -48.27 -51.01 -43.11 -61.58 -76.59 -186.14 -207.28 Capital expenditure [A+B+C] 98.66 117.52 134.78 132.49 157.77 167.84 206.19 232.25 258.70 303.57 A. Developmental (1+2) 68.53 77.28 89.61 98.61 103.44 120.51 169.31 178.37 183.55 216.20 1. Social services 11.28 11.71 12.57 16.47 16.64 18.31 23.04 26.21 35.79 44.50 2. Economic services 57.25 65.57 77.03 82.14 86.80 102.21 146.27 152.16 147.76 171.70 B. Non-developmental 2.25 2.36 2.63 2.34 3.10 3.99 4.20 6.57 7.43 8.80 C. Loans and advances (net) 27.88 37.88 42.55 31.54 51.22 43.33 32.68 47.30 67.72 78.56 Gross fiscal deficit 114.53 151.96 179.32 180.77 208.78 210.95 267.77 308.84 444.84 510.85 Finance by instrument: Market loans 22.46 25.95 25.60 33.10 38.50 42.28 41.05 64.04 65.36 76.15 Loans from centre (Net) 67.07 79.30 98.39 93.75 86.60 99.01 137.61 139.98 167.40 175.08 Small savings & Provident funds 20.01 23.07 30.69 29.09 36.22 43.30 47.79 49.02 62.21 73.94 Other 4.98 23.65 24.63 24.82 47.45 26.36 41.33 55.81 149.87 185.68 Note: BE = Budget estimates; RE = Revised estimates. a. Other expenditure include compensation and assignments to local bodies and panchayat raj institutions and reserve with the finance department. Source: Ministry of Finance, Union budget documents; Reserve Bank of India, RBI bulletins on state finances. Statistical Appendix 95 Table A4.4 Budgetary Classification of General Government Finances (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 /a/ B.E. Revenue receipts 805.15 937.36 1038.97 1251.67 1396.48 1501.35 1821.35 2131.86 2424.15 2829.05 Taxrevenue 668.21 775.76 878.58 1030.22 1144.34 1221.15 1480.29 1751.02 2011.11 2373.39 Non tax revenue 136.94 161.60 160.39 221.45 252.13 280.20 341.06 380.84 413.04 455.66 Revenue expenditure [A+B+C+D] 926.17 1113.92 1269.12 1462.73 1633.23 1871.62 2193.21 2505.77 2936.83 3339.00 A. Developmental 502.73 591.96 684.56 783.22 843.24 952.06 1087.87 1248.68 1486.54 1571.79 1. Social services 228.17 265.15 307.16 341.49 379.95 430.58 496.45 602.36 715.60 796.13 2. Economic services 274.55 326.80 377.40 441.72 463.29 521.48 591.42 646.32 770.94 775.66 B. Non-developmental 405.05 479.92 560.60 651.78 759.10 891.30 1081.36 1228.73 1414.69 1725.44 C. Revenue disbursements ofUTs 10.92 13.09 13.75 15.05 16.30 13.73 6.59 7.63 8.86 8.41 D. Other expenditureb 7.46 28.95 10.21 12.68 14.59 14.53 17.39 20.72 26.75 33.36 Net current balance -121.02 -176.56 -230.15 -211.05 -236.75 -370.28 -371.87 -373.91 -512.69 -509.95 Capital expenditure [A+B+C+D] 235.66 275.40 297.27 269.76 306.77 343.76 391.40 411.37 436.65 528.38 A. Developmental (1+2) 128.56 148.23 158.84 156.87 177.26 176.11 243.28 228.86 230.37 298.41 1. Social services 14.79 14.92 15.04 18.86 19.23 21.63 30.30 31.69 42.38 53.57 2. Economic services 113.76 133.31 143.80 138.00 158.03 154.49 212.97 197.17 187.99 244.84 B. Non-Developmental 43.01 47.63 52.19 54.67 61.98 77.90 76.71 94.84 100.71 109.74 C. Loans and advances (net) 62.33 77.67 83.56 54.79 64.03 86.96 68.98 85.43 103.72 117.57 D. Capital disbursements of UTs 1.76 1.87 2.68 3.42 3.50 2.78 2.44 2.24 1.84 2.66 Disinvestment of equities inPSEs. 0.00 0.00 0.00 30.38 19.61 -0.48 50.78 3.62 48.00 9.06 Gross fiscal deficit 356.68 451.96 527.42 450.43 523.91 714.51 712.49 781.65 944.78 990.33 Finance by Instrument: Market Loans 106.64 99.99 105.61 108.20 75.26 331.56 244.31 394.91 265.42 420.40 Small Savings 58.35 85.75 91.04 66.40 57.17 91.00 165.78 127.90 152.57 140.00 ProvidentFunds 91.13 113.93 120.06 108.65 123.77 136.88 150.44 124.58 147.18 199.50 External Loans 24.60 25.95 31.81 54.21 53.19 50.74 51.46 3.18 29.87 24.35 Treasury Bills 62.44 109.11 117.69 68.87 117.73 119.82 -2.68 114.63 127.28 0.00 Other 13.52 17.24 61.21 44.09 96.79 -15.49 103.19 16.46 222.46 206.07 Note: BE = Budget estimates; RE = Revised estimates. a. Actuals for centre and revised estimates for states. b. Other expenditure include compensation and assignments to local bodies and panchayat raj institutions and reserve with the finance department. Source: Union Budget Documents; RBI bulletin on state finances; World Bank Staff Estimates. 96 Statistical Appendix Table A4.5 Tax Revenue - Center and States (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97a 1997-98 1997-98 1998-99 B.E. R.E. B.E. Central Government A. Gross tax revenue 444.74 516.36 575.76 673.61 746.37 757.44 922.94 1112.37 1287.62 1536.47 1427.20 1577.11 Corporation tax 44.07 47.29 53.35 78.53 88.99 100.60 138.22 164.87 185.67 218.60 213.60 265.50 Taxesonincome 42.41 50.04 53.71 67.31 78.88 91.15 120.25 156.03 182.31 217.00 187.00 209.30 Customs 158.05 180.36 206.44 222.57 237.76 221.93 267.89 357.57 428.51 525.50 410.00 481.48 Union Excise Duties 188.41 224.06 245.14 281.10 308.32 316.97 373.47 401.87 450.08 522.00 477.00 576.90 Other 11.80 14.61 17.12 24.10 32.42 26.79 23.11 32.03 41.05 53.37 139.60 43.93 B. States Share of Tax Revenue 106.69 132.32 145.35 171.97 205.22 222.42 248.40 292.98 348.35 350.61 350.61 402.54 Income Tax 27.49 39.22 41.21 51.04 60.57 77.69 85.57 112.87 135.16 156.91 135.22 209.30 Estate Duty 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 UnionExciseDuties 79.19 93.10 104.14 120.93 144.65 144.73 162.83 180.11 215.45 245.63 224.46 269.08 C. Assignments of UT taxes to 0.54 0.55 0.63 0.95 0.71 0.53 0.00 0.00 0.00 0.00 0.00 0.00 local bodies Tax Revenue (net) [A-B-C] 337.51 383.49 429.78 500.69 540.44 534.49 674.54 819.39 937.01 1133.93 991.58 1168.57 State Government States own Tax Revenue 224.01 259.95 303.45 357.56 398.68 464.24 557.35 638.65 723.49 836.92 Direct Tax 24.13 30.06 33.75 39.59 42.28 49.73 70.05 81.10 88.94 103.27 Taxes on income 3.12 4.53 6.34 6.45 6.02 6.50 7.17 8.35 10.02 11.24 Landrevenue 5.94 6.90 6.07 6.36 6.17 7.32 11.41 13.26 10.40 13.59 Stamps and registration fees 14.86 18.45 21.12 26.54 29.78 35.55 50.91 58.98 67.90 77.80 Other 0.21 0.19 0.22 0.24 0.31 0.36 0.56 0.52 0.61 0.65 Indirect Tax 199.88 229.89 269.70 317.98 356.40 414.51 487.29 557.55 634.56 733.64 Sales Tax 131.22 150.60 176.67 210.64 233.49 276.38 331.54 354.77 445.08 517.33 State excise 30.81 38.64 47.95 54.39 62.65 71.06 77.47 85.16 87.66 97.40 Taxeson Vehicles 12.90 14.15 15.66 18.37 21.94 25.83 30.81 37.26 40.29 47.58 Other 24.96 26.49 29.41 34.58 38.32 41.25 47.47 80.35 61.52 71.34 State's Share of Central Taxes 106.69 132.32 145.35 171.97 205.22 222.42 248.40 292.98 348.35 402.54 Tax revenue retained by states 330.70 392.27 448.80 529.53 603.90 686.66 805.75 931.63 1074.10 1239.46 a. Actuals for Central Government and Revised Estimates for States. Source: Ministry of Finance, Union budget documents; Reserve Bank of India, RBI bulletins on state finances;World Bank Staff Estimates. Statistical Appendix 97 Table A4.6 Non-Tax Revenue - Center and States (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97' 1997-98 1997-98 1998-99 B.E. R.E. B.E. Central Government Non-tax revenue 98.40 116.47 119.76 159.61 200.84 220.04 236.29 281.91 325.78 397.49 393.56 451.37 Interest receipts 69.81 84.66 87.30 109.33 124.87 150.62 157.97 184.19 221.06 240.92 253.27 279.54 from state govermments 37.70 44.24 51.74 65.22 77.54 95.53 111.83 130.02 151.63 180.32 183.59 212.83 Dividends and profits 4.75 7.16 7.74 10.58 24.93 24.48 27.16 32.48 38.54 60.13 58.62 73.73 Othergeneralservices 3.95 4.05 5.06 5.72 10.14 10.46 11.87 12.42 13.00 17.76 15.83 16.37 Social services 0.80 0.57 0.65 0.90 0.79 1.01 0.95 1.09 1.26 1.41 1.55 1.55 Economic services 8.93 5.45 8.60 21.46 17.86 13.26 18.60 32.45 33.17 60.32 46.18 63.42 Grants-in-aid and contribution 6.00 7.54 5.86 9.47 9.19 9.93 10.38 11.38 11.90 11.00 11.70 10.54 Other 4.16 7.04 4.55 2.15 13.06 10.28 9.36 7.90 6.85 5.95 6.41 6.22 State Government States own Non-tax revenue 76.24 89.37 92.37 127.06 128.84 155.69 216.60 228.95 238.89 238.49 Interest receipts 23.87 26.34 24.03 53.20 39.38 47.25 53.65 57.92 76.14 58.19 General services 9.51 11.40 19.13 17.28 18.44 29.47 72.22 77.18 59.17 69.17 Social services 5.73 6.76 5.86 7.74 8.48 9.12 9.65 10.95 12.31 12.85 Economic services 36.64 44.59 43.01 48.39 61.48 69.21 80.35 81.86 90.16 97.10 Forestry and wild life 10.08 11.96 11.37 12.71 12.72 14.94 16.40 16.57 17.17 18.53 Industries 12.08 14.31 12.23 15.37 23.17 25.09 30.51 35.67 38.28 42.05 OtherEconomic Services 14.48 18.32 19.41 20.31 25.59 29.19 33.44 29.62 34.70 36.52 Other 0.49 0.28 0.34 0.45 1.06 0.63 0.74 1.03 1.10 1.18 Grants from centre 100.15 86.44 132.02 157.00 178.30 208.30 200.47 212.87 230.27 302.41 Non-tax revenue retained by sta 176.38 175.81 224.39 284.06 307.14 363.99 417.07 441.82 470.45 468.76 Note: BE = Budget estimates; RE = Revised estimates. Source: Ministry of Finance, Union budget documents; Reserve Bank of India, RBI bulletins on state finances; World Bank Staff Estimates. 98 Statistical Appendix Table A4.7 Revenue Expenditure of the Central Govermment (Rs. billion at current prices) 1988.89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1997-98 1998-99 B.E. R.E. B.E. Revenue expenditure (A+B+C+D) 541.06 642.07 735.15 823.08 927.02 1081.69 1221.11 1398.62 1589.34 1834.09 1822.01 2100.63 A. Developmental 140.36 184.15 196.01 198.17 208.60 243.68 301.50 355.92 399.53 459.53 464.93 544.65 1. Social services 22.43 24.99 27.53 30.57 34.30 40.97 47.43 66.29 84.23 113.44 109.41 139.63 Education, Sports, ArtandCulture 11.12 11.41 12.74 13.72 14.97 18.37 22.30 29.70 33.14 46.39 45.07 56.78 HealthandFamilywelfire 3.11 3.48 3.97 4.50 5.59 6.47 7.82 8.33 10.54 14.17 14.55 20.01 Information and Broadcasting 2.36 3.23 3.60 4.43 4.61 4.15 5.08 5.49 6.36 6.04 8.29 8.48 Water supply and Sanitation 0.51 0.78 0.93 0.64 0.63 0.84 0.84 3.80 3.17 4.90 4.88 6.06 Labour and labour welfare 2.43 2.64 2.78 3.00 3.29 5.11 4.14 4.88 5.50 6.57 6.02 7.52 Social securityandwelfare 1.96 2.36 2.25 2.81 3.44 3.71 4.47 8.73 10.41 15.40 11.34 17.66 Other 0.94 1.09 1.27 1.47 1.77 2.33 2.77 5.36 15.10 19.97 19.26 23.12 2. Economic services 117.93 159.17 168.48 167.60 174.30 202.71 254.07 289.63 315.30 346.09 355.52 405.03 Agricultureandalliedservices 7.45 7.75 22.92 19.25 21.26 11.11 16.92 13.45 13.67 15.40 20.14 26.48 Fertilizer Subsidy 32.01 45.42 43.89 51.85 61.36 51.94 57.69 67.35 75.78 91.90 100.26 99.83 Food Subsidy 22.00 24.76 24.50 28.50 28.00 55.37 51.00 53.77 60.66 75.00 75.00 90.00 Export Subsidy 13.86 20.14 27.42 17.58 8.18 6.65 6.58 0.16 0.20 4.40 4.40 5.00 Irrigation and Flood Control 0.85 0.81 0.89 1.20 1.07 1.68 1.35 1.64 1.99 2.24 2.25 2.80 Rural Development 3.61 3.70 3.77 3.57 4.06 16.25 41.56 56.29 44.35 52.94 48.45 53.73 Spccial Areas Programmes 0.05 0.07 0.12 0.19 0.17 0.20 7.92 7.87 8.13 8.37 9.22 11.27 Energy 5.59 6.90 7.49 5.37 2.67 5.48 3.97 5.48 7.42 7.36 8.80 13.29 Industry and Minerls 12.20 17.96 12.26 12.03 17.98 17.93 12.88 17.20 29.82 21.94 20.92 20.94 Transport and Communications 6.79 15.62 8.05 9.19 9.68 14.45 17.80 20.44 22.59 24.78 11.32 13.07 Science, Technology and Environment 9.34 10.40 11.27 12.87 13.68 15.86 17.20 18.76 21.92 25.98 27.08 30.46 General Economic Services 4.18 5.62 5.90 6.00 6.20 5.78 19.19 27.22 28.77 15.77 27.69 38.16 B. Non-developmental 287.69 335.47 391.00 450.34 521.58 613.17 708.20 816.78 942.77 1129.63 1109.00 1257.23 Defence services 95.58 101.94 108.74 114.42 121.09 149.77 164.26 188.41 209.97 267.13 268.02 308.40 Interestpayments 142.61 177.57 214.71 265.63 310.35 366.95 440.49 500.31 594.78 680.00 657.00 750.00 on Intenal Debt 69.13 82.73 96.22 109.09 129.89 154.83 193.91 233.64 264.97 315.85 314.59 382.60 on Extenal Debt 12.42 14.94 17.78 25.69 34.51 37.92 41.10 39.02 52.28 47.46 41.50 41.92 on Small Savings, PFs. etc. 58.01 75.73 96.37 124.20 138.83 168.42 198.91 220.64 268.39 308.38 290.47 293.40 Other 3.06 4.17 4.34 6.66 7.12 5.78 6.57 7.01 9.13 8.31 10.44 32.08 Administrative Services 17.91 20.71 25.24 27.98 37.83 38.27 42.14 48.48 58.20 103.03 73.19 82.24 Fiscal Services 11.00 12.78 12.12 17.69 20.48 21.37 23.55 25.90 25.49 25.55 34.79 35.04 Pensions and misc. services 20.60 22.46 30.19 24.63 31.84 36.80 37.76 53.67 54.34 53.91 76.00 81.55 C. Grants-in-aid and contributions 102.08 109.36 134.39 159.53 180.54 211.11 204.83 218.28 238.17 236.53 237.56 287.84 Grants to State Govenments 100.15 86.44 132.02 157.00 178.30 208.30 200.47 212.87 231.57 230.27 302.41 275.30 a. NonPlan 24.11 2.69 42.19 45.16 31.77 27.22 24.79 58.62 60.95 49.51 117.67 63.56 b. State Plan Schemes 35.59 36.00 38.78 56.51 79.76 102.39 107.93 86.71 104.10 108.71 116.42 124.13 c. Central and Centraly sponsored 40.46 47.75 51.05 55.32 66.78 78.69 67.75 67.54 66.51 72.06 68.31 87.61 schemes GrantstoUTs.andOthers 1.93 22.92 2.37 2.53 2.24 2.81 4.36 5.42 6.60 6.26 11.09 12.53 D. RevenueDisbursmentsofUTs (net) 10.92 13.09 13.75 15.05 16.30 13.73 6.59 7.63 8.86 8.41 10.51 10.91 Memo Items: Total Subsidies 77.32 104.74 121.58 122.53 119.95 126.82 129.32 133.72 161.25 182.51 196.44 220.25 Major Subsidies 67.87 90.32 95.81 97.93 94.15 107.64 115.27 124.30 136.64 171.30 183.66 198.83 Other Subsidies 9.45 14.42 25.77 24.60 25.80 19.18 14.05 9.42 24.61 11.21 12.78 21.42 Rural Employment Programme 12.44 21.00 20.00 18.17 25.46 39.06 46.75 46.42 34.95 40.48 38.58 40.85 of which: JawaharRojgarYojana 0.00 20.96 20.00 18.17 25.26 33.06 35.35 28.73 16.55 20.78 0.00 0.00 Note: BE = Budget estimates; RE = Revised estimates. Source: Ministry of Finance, Union budget documents; Department of Expenditure, Finance Accounts; World Bank Staff Estimates. Statistical Appendix 99 Table A4.8 Revenue Expenditure of State Govemments (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1996-97 1997-98 B.E. R.E. B.E. Revenue expenditure (A+B+C) 522.96 602.53 717.73 861.86 962.05 1093.76 1284.40 1450.04 1629.84 1629.84 1730.69 A. Developmental (1+2) 362.37 407.81 488.55 585.05 634.65 708.38 786.37 892.76 992.06 992.06 1087.01 1. Social services 205.74 240.17 279.62 310.92 345.65 389.61 449.02 536.07 599.60 599.60 631.37 Education, Sports, Artand Culture. 109.43 135.71 155.28 170.77 192.61 215.94 249.77 289.11 327.30 327.30 340.15 Health and Farnily Welfare. 34.77 39.64 45.86 50.54 56.62 66.69 74.29 84.79 95.23 95.23 98.80 Water supply and Sanitation 13.94 14.77 16.38 18.45 20.95 24.24 29.80 31.41 33.75 33.75 38.03 Welfare ofSC, ST and BCs 13.18 14.69 17.90 20.71 23.01 25.70 30.12 33.95 41.78 41.78 43.81 Social security and welfare 9.70 11.07 13.62 14.77 16.63 18.65 21.44 45.83 28.81 28.81 51.49 Other 24.72 24.29 30.59 35.68 35.83 38.38 43.60 50.98 72.74 72.74 59.09 2. Economic services 156.63 167.64 208.92 274.13 288.99 318.78 337.36 356.69 392.46 392.46 455.64 Agriculture and Allied Services 42.65 48.29 62.67 69.81 84.34 88.93 90.64 99.32 107.15 107.15 110.15 Crop Husbandry 11.06 12.65 16.97 20.82 29.37 29.12 28.88 27.36 29.88 29.88 30.82 Food Storage amd Warehousing 1.23 1.56 1.88 2.38 4.16 3.81 4.36 8.39 8.58 8.58 9.20 Forestry and Wild Life 9.46 10.28 11.75 13.42 14.90 15.74 17.22 18.75 21.42 21.42 21.60 Other 20.90 23.80 32.06 33.19 35.91 40.25 40.19 44.82 47.28 47.28 48.54 Rural Development 36.54 28.27 46.75 52.87 63.62 72.77 67.79 65.70 82.63 82.63 87.06 Special Areas Programmes 3.09 3.54 3.57 4.11 3.96 4.88 4.96 5.76 8.57 8.57 8.57 Irrigation and Flood Control 33.19 33.94 34.56 41.40 48.68 54.28 64.44 71.47 75.08 75.08 78.40 Energy 7.74 10.92 9.89 50.30 26.15 31.68 29.89 31.83 24.19 24.19 76.07 Industry and Minerals 8.69 12.17 11.65 12.71 13.56 14.18 16.85 19.60 25.14 25.14 24.55 Transport and Communications 17.35 19.22 23.36 27.59 31.28 35.12 37.55 44.44 45.65 45.65 47.79 Science, Technology and Environm 0.23 0.26 0.29 0.36 0.39 0.53 0.53 0.54 1.17 1.17 0.98 General Economic Services 7.15 11.02 16.18 14.98 17.01 16.40 22.68 17.83 22.23 22.23 22.07 B. Non-Developmental 155.06 188.69 221.34 266.66 315.06 373.67 484.99 541.97 617.87 617.87 623.55 Interest Payments 59.33 71.86 86.55 109.44 132.10 158.00 192.02 219.32 263.99 263.99 265.63 On loans from the centre 37.70 44.24 51.74 65.22 77.54 95.53 111.83 130.02 151.63 151.63 180.32 On the Intemal Debt 10.42 13.41 15.68 21.70 24.67 27.77 31.41 42.60 56.81 56.81 58.52 On Small Savings, PFs. 10.58 12.70 17.03 21.17 24.73 30.87 31.27 38.88 45.61 45.61 46.64 Other 5.41 6.34 7.76 1.36 11.71 11.28 28.86 18.49 10.45 10.45 8.84 Administrative Services 50.31 59.74 70.18 78.10 93.44 104.73 116.64 133.91 172.52 172.52 152.84 Pensions and Miscellaneous Service 23.92 29.31 35.93 44.79 52.72 69.99 119.27 128.34 121.37 121.37 133.20 Other 16.72 22.96 23.01 34.33 30.24 33.51 45.72 49.74 47.22 47.22 58.34 C. Other expenditure8 5.53 6.03 7.84 10.16 12.35 11.71 13.03 15.31 19.91 19.91 20.14 Note: BE = Budget estimates; RE = Revised estimates. a. Other expenditure include compensation and assignments to local bodies and panchayat raj institutions and reserve with the finance department. Source: Reserve Bank of India, RBI bulletins on state finances; World Bank Staff Estimates.. 100 Statistical Appendix Table A4.9 Capital Expenditure: Center and States (Rs. billion at cwrent prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1997-98 1998-99 B.E. R.E. B.E. Central Government Capital expenditure [A+B+C+D] 204.08 237.18 260.88 231.01 235.60 274.93 322.82 319.09 345.35 399.89 435.66 479.57 A. Developmental (1+2) 60.03 70.95 69.23 58.26 73.82 55.60 73.96 50.49 46.82 82.21 81.85 114.21 1. Social services 3.51 3.21 2.47 2.39 2.59 3.32 7.26 5.48 6.58 9.06 6.25 10.51 Education, Sports,Art etc. 0.13 0.08 0.06 0.04 0.05 0.06 2.25 0.14 0.13 0.22 0.24 0.22 Health and Family welfare 0.15 0.20 0.00 0.20 0.07 0.03 0.69 0.12 0.55 0.43 0.29 0.28 Housing 0.99 0.98 1.11 1.26 1.78 1.87 1.86 2.37 2.40 3.01 2.81 4.15 Information and Broadcasting 1.71 1.78 1.06 0.35 0.07 0.24 0.25 0.47 0.53 0.79 0.67 0.74 Other 0.52 0.18 0.24 0.53 0.62 1.12 2.23 2.39 2.97 4.61 2.25 5.11 2. Economic services 56.52 67.74 66.77 55.87 71.23 52.28 66.70 45.01 40.24 73.14 75.60 103.71 Agriculture and allied 0.55 0.45 0.45 0.49 0.47 0.48 2.83 3.60 3.34 4.24 3.44 4.68 Energy 19.05 26.07 27.09 19.91 16.21 17.69 22.68 20.58 11.05 14.50 19.53 21.18 IndustryandMinerals 13.10 11.52 7.71 6.70 8.82 9.87 8.04 6.32 4.49 7.23 7.21 7.12 Transport& Communications 21.51 26.15 26.45 24.72 33.81 19.45 22.t4 20.61 27.19 40.08 38.89 49.11 General Economic Services 0.00 1.26 2.52 2.57 9.07 1.58 6.86 -10.68 -10.76 2.79 3.19 16.86 Other 2.31 2.28 2.56 1.48 2.85 3.21 4.14 4.59 4.93 4.30 3.34 4.76 B. Non-developmental 40.76 45.27 49.56 52.32 58.88 73.92 72.51 88.26 93.29 100.94 102.51 115.43 Defence Services 37.83 42.22 45.52 49.05 54.73 68.67 68.19 80.15 85.08 89.07 92.97 103.60 Other 2.93 3.05 4.04 3.27 4.14 5.24 4.32 8.11 8.20 11.87 9.54 11.84 C.CapitalExpenditureofUTs 1.76 1.87 2.68 3.42 3.50 2.78 2.44 2.24 1.84 2.66 2.43 3.10 D.LoansandAdvances(Net) 101.53 119.09 139.40 117.01 99.41 142.63 173.91 178.10 203.40 214.09 248.86 246.82 To State Govemments & UTs. 67.30 79.55 98.69 94.18 86.97 100.72 143.13 148.37 175.71 185.85 222.65 212.11 To Others 34.23 39.55 40.71 22.83 12.44 41.92 30.78 29.73 27.68 28.24 26.21 34.71 State Government Capital expenditure [A+B+C] 98.66 117.52 134.78 132.49 157.77 167.84 206.19 232.25 258.70 303.57 A.Developmental(1+2) 68.53 77.28 89.61 98.61 103.44 120.51 169.31 178.37 183.55 216.20 I. Social Services 11.28 11.71 12.57 16.47 16.64 18.31 23.04 26.21 35.79 44.50 Education,Sports,Artetc. 1.68 2.64 2.84 2.78 3.02 3.14 3.97 4.54 5.27 6.02 Health and Family welfare 2.04 1.84 2.37 2.76 2.63 2.80 3.24 3.68 4.64 6.05 Water supply and Sanitation 4.04 3.37 3.54 4.99 5.49 6.77 8.94 8.96 12.06 16.03 Housing 1.90 1.99 1.82 2.09 1.88 2.01 2.65 3.59 4.26 5.48 Other 1.63 1.87 2.00 3.86 3.62 3.57 4.24 5.43 9.56 10.93 2. Economic Services 57.25 65.57 77.03 82.14 86.80 102.21 146.27 152.16 147.76 171.70 Agricultureandallied 2.69 5.91 6.11 8.32 7.85 7.26 8.82 7.86 10.60 11.93 Irrigation and Flood control 32.66 32.91 36.56 38.52 42.93 49.68 58.62 65.87 71.43 81.64 Transport 10.27 11.59 13.42 13.92 15.90 20.47 24.20 28.91 32.58 34.89 Other 11.63 15.16 20.94 21.38 20.13 24.80 54.64 49.53 33.15 43.24 B. Non-developmental 2.25 2.36 2.63 2.34 3.10 3.99 4.20 6.57 7.43 8.80 C. Loans and advances(Net) 27.88 37.88 42.55 31.54 51.22 43.33 32.68 47.30 67.72 78.56 Note: BE = Budget estimates; RE = Revised estimates. a. Actuals for the center and revised estimates for the states. Source: Ministry of Finance, Union budget documents; Reserve Bank of India, RBI bulletins on state finances; World Bank Staff Estimates. Statistical Appendix 101 Table A4.10 Transfers between Center and States (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1997-98 1998-99 B.E. R.E. B.E. States' share in central taxes 106.69 132.32 145.35 171.97 205.22 222.42 248.40 292.98 348.35 350.61 402.54 0.00 Union excise duties 79.19 93.10 104.14 120.93 144.65 144.73 162.83 180.11 215.45 245.63 224.46 269.08 Income tax 27.49 39.22 41.21 51.04 60.57 77.69 85.57 112.87 135.16 156.91 135.22 209.30 Estate duty 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Grants to States 100.15 86.44 132.02 157.00 178.30 208.30 200.47 212.87 231.57 230.27 302.41 275.30 Non-plangrants 24.11 2.69 42.19 45.16 31.77 27.22 24.79 58.62 60.95 49.51 117.67 63.56 State plan schemes 35.59 36.00 38.78 56.51 79.76 102.39 107.93 86.71 104.10 108.71 116.42 124.13 Central and Centrally sponsored 40.46 47.75 51.05 55.32 66.78 78.69 67.75 67.54 66.51 72.06 68.31 87.61 schemes Loans to States & UTs 99.15 109.16 135.66 123.30 121.41 139.85 188.04 192.96 230.50 252.59 291.12 291.17 Loan Repayments by States and UTs 31.85 29.62 36.97 29.12 34.44 39.13 44.91 44.58 54.79 66.74 68.47 79.06 Interest Payments by States 37.70 44.24 51.74 65.22 77.54 95.53 111.83 130.02 151.63 180.32 183.59 212.83 NET TRANSFER (Center to States) 236.43 254.07 324.32 357.93 392.94 435.91 480.17 524.20 604.00 586.41 744.02 274.58 Note: BE = Budget estimates; RE = Revised estimates. Source: Union budget documents; RBI bulletins on state finances; Finance Accounts; World Bank StaffEstimates. 102 Statistical Appendix Table A4.11 Explicit Subsidies in the Central Government Budget (Rs. billion at current prices) 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1997-98 1998-99 B.E. R.E. B.E. A. Major Subsidies 67.87 90.32 95.81 97.93 94.15 107.64 115.27 124.30 136.64 171.30 183.66 198.83 1. Food 22.00 24.76 24.50 28.50 28.00 55.37 51.00 53.77 60.66 75.00 75.00 90.00 2. Indegenious Fertilizers 30.00 37.71 37.30 35.00 48.00 38.00 40.75 43.00 47.43 52.40 66.00 60.00 3. Imported Fertilizers 2.01 7.71 6.59 13.00 9.96 7.62 11.66 19.35 11.63 19.50 8.26 9.83 4. Other Fertilizer Subsidy 0.00 0.00 0.00 3.85 3.40 6.32 0.00 0.00 0.00 0.00 0.00 0.00 5. ExportPromotion and 13.86 20.14 27.42 17.58 8.18 6.65 6.58 0.16 0.20 4.40 4.40 5.00 Market Development. 6. Sale of decontroSledfertilise ... ... ... ... ... ... 5.28 5.00 16.72 20.00 26.00 30.00 with concession to farmers B. Debt relief to farmers ... ... 15.02 14.25 15.00 5.00 3.41 3.41 0.00 0.00 0.00 0.00 C. Other Subsidies 9.45 14.42 10.75 10.35 10.81 14.18 10.64 11.77 24.61 11.21 12.78 21.42 5. Railways 2.07 2.33 2.83 3.12 3.53 4.12 4.20 4.18 4.66 5.37 5.26 6.28 6. Mill-made cloth 0.27 0.10 0.10 0.15 0.15 0.16 0.00 0.01 0.00 0.00 0.00 0.00 7. Handloom Cloth 1.46 1.81 1.85 1.87 1.61 1.74 1.48 1.43 0.98 0.84 0.64 0.46 8. Inport/Export of Sugar, 0.40 0.00 .. 0.00 0.00 0.00 0.00 1.00 0.50 0.50 0.20 0.30 Edible Oils etc. 9.InterestSubsidies 4.06 8.81 3.79 3.16 1.13 1.13 0.76 0.34 12.57 0.34 0.78 0.39 10. Other Subsidies 1.19 1.37 2.18 2.05 0.99 1.86 4.20 4.81 5.90 4.16 5.90 13.99 TOTAL-Subsidies 77.32 104.74 121.58 122.53 119.95 126.82 129.32 133.72 161.25 182.51 196.44 220.25 ... Not available. Note: BE = Budget estimates; RE = Revised estimates. Source: Minstry of Finance, Union Budget Documents. Statistical Appendix 103 Table A4.12 Outstanding Debt of Central Goverrnent (Rs. billion at current prices) 1980-81 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96a 1. To Reserve Bank of India 152.78 516.97 582.00 720.13 884.44 943.48 976.21 989.69 998.86 1212.67 a.Treasurybills 118.44 70.91 123.18 235.73 49.80 61.59 167.17 238.38 251.67 318.10 b. CG Securities 38.58 88.43 110.89 141.02 174.50 171.47 86.43 33.11 34.47 0.00 c. Special securities 5.85 371.77 369.87 368.81 671.02 720.46 720.46 720.46 720.46 720.46 d. Other liabilities -2.92 -6.12 -11.69 -25.43 -10.88 -10.04 2.15 -2.26 -7.74 174.11 e. Cash balances and Dpts. 7.17 8.02 10.25 n.a. n.a. n.a. n.a n.a n.a n.a 2.Toconmnercialbanks 73.64 241.46 287.66 333.85 388.13 460.46 531.12 796.56 945.88 1067.01 a. Treasury bills 5.21 0.14 0.03 0.06 0.10 0.11 3.06 0.72 0.00 0.00 b. CG Securities 68.43 241.32 287.63 333.79 388.03 460.35 528.06 795.84 945.88 1067.01 To Banking system' 226.42 758.43 869.66 1053.98 1272.57 1403.94 1507.33 1786.25 1944.74 2279.68 3.To Private Sector 258.09 964.95 1170.59 1344.52 1557.76 1773.20 2089.21 2518.98 2932.09 3270.15 a. Small savings 79.76 283.58 338.33 417.91 501.00 557.55 601.28 672.85 817.10 917.86 b. Others 178.33 681.37 832.26 926.61 1056.76 1215.65 1487.93 1846.14 2114.99 2352.29 4. External Debt 112.98 232.23 257.46 283.43 315.25 369. t8 422.69 473.45 509.28 512.49 5. Total outstanding debt 597.49 1955.61 2297.71 2681.93 3145.58 3546.62 4019.24 4778.68 5386.11 6062.32 n.a. Not available. Note: End of year stocks are used to calculated outstanding debt and External Debt as shown in the central budget a. Provisional. Source: RBI, Report on Currency and Finance, various issues; Ministry of Finance, Union Budget & Indian Economic Statistics (Public Finance); Ministry of Finance, Economic Survev, various issues; World Bank Staff estimates. 104 StatisticalAppendix Table A4.13 Outstanding Debt of State Government (Rs. billion at current prices) 1980-81 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96a I. To Reserve Bank oflndia 11.65 9.90 14.14 16.70 20.90 17.50 19.26 25.17 25.65 25.81 2.To commercial banks 19.11 75.37 89.92 100.83 125.32 182.01 246.77 249.62 263.53 297.28 a. SG Securities 16.81 69.47 85.02 103.49 122.90 150.12 171.82 195.09 227.97 301.34 b. Others 2.30 5.90 4.90 -2.66 2.42 31.89 74.95 54.53 35.56 -4.06 To Banking System (1)+-(2) 30.76 85.27 104.06 117.53 146.22 199.51 266.03 274.79 289.18 323.09 3.To Private Sector 44.82 130.75 164.07 201.30 237.11 254.24 252.46 329.49 448.73 534.37 a. Provident Fund 25.36 95.83 115.85 138.91 169.61 198.70 234.92 278.22 326.01 375.02 b. Others 19.46 34.92 48.22 62.39 67.50 55.54 17.54 51.27 122.72 159.35 4.To Central Govt. (a-b-c) 164.01 483.69 542.06 623.41 719.56 809.63 903.29 996.49 1107.36 1264.80 a.LoansfromCenter 170.71 495.34 562.22 641.39 741.17 834.90 924.12 1019.45 1167.05 1315.06 b. States' holding of Trs.Bill 4.35 8.88 17.38 15.18 18.80 24.95 20.83 22.96 59.69 50.26 c. States holding of CG Sec. 2.35 2.77 2.78 2.80 2.81 0.32 0.00 0.00 0.00 0.00 5. Total outstanding debt 239.59 699.71 810.20 942.24 1102.89 1263.38 1421.78 1600.77 1845.27 2122.26 n.a. Not available. Note: End of year stocks are used to calcualte outstanding debt. a. Provisional. Source: RBI, Report on Currency and Finance, various issues; Ministry of Finance, Union Budget & Indian Economic Statistics (Public Finance); Ministry of Finance, Economic Survev, various issues; World Bank Staff estimates. Statistical Appendix 105 Table A4.14 Outstanding Debt of Central and State Governments (Rs. billion at current prices) 1980-81 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96a 1. To Reserve Bank of India 164.43 526.87 596.14 736.83 905.34 960.98 995.47 1014.86 1024.51 1238.48 a. Center 152.78 516.97 582.00 720.13 884.44 943.48 976.21 989.69 998.86 1212.67 b. State 11.65 9.90 14.14 16.70 20.90 17.50 19.26 25.17 25.65 25.81 2.To commercial banks 92.75 316.83 377.58 434.68 513.45 642.47 777.89 1046.18 1209.41 1364.29 a. Center 73.64 241.46 287.66 333.85 388.13 460.46 531.12 796.56 945.88 1067.01 b. State 19.11 75.37 89.92 100.83 125.32 182.01 246.77 249.62 263.53 297.28 To Banking System (1)+(2) 257.18 843.70 973.72 1171.51 1418.79 1603.45 1773.36 2061.04 2233.92 2602.77 3.To Private Sector 289.51 1072.40 1294.35 1509.86 1751.65 1976.89 2300.02 2802.55 3261.44 3704.01 a. Small savings 79.76 283.58 338.33 417.91 501.00 557.55 601.28 672.85 817.10 917.86 b. Others 209.75 788.82 956.02 1091.95 1250.65 1419.34 1698.74 2129.71 2444.34 2786.15 4. External Debt 112.98 232.23 257.46 283.43 315.25 369.48 422.69 473.45 509.28 512.49 5. Total outstanding debt 659.67 2148.33 2525.53 2964.80 3485.69 3949.83 4496.07 5337.04 6004.64 6819.26 Loans to States from Center 170.71 495.34 562.22 641.39 741.17 834.90 924.12 1019.45 1167.05 1315.06 Note: End of year stocks are used to calculated outstanding debt and External Debt as shown in the central budget. a. Provisional. Source: RBI, Report on Currency and Finance, various issues; Ministry of Finance, Union Budget & Indian Economic Statistics (Public Finance); Ministry of Finance, Economic Survey, various issues; World Bank Staff estimates. 106 Statistical Appendix Table A4.15(a) Projected and Actual Plan Outlays by Sectors (Rs. billion) Seventh Plan Annual Plans Eighth Plan (85-86 - 89-90) 90-91 91-92 (92-93 - 96-97) 92-93 93-94 94-95 95-96 96-97 Proj. Actuals Actuals Actuals Projected Actuals Actuals Actuals Revised Proj. A Agriculture&Allied Programs 222.34 315.10 85.44 90.59 636.43 105.91 126.60 157.12 173.08 198.33 Agniculture 105.24 127.93 33.96 38.51 224.67 42.16 42.64 53.50 60.94 69.26 Rural Development 89.06 152.46 41.21 41.42 344.25 50.91 70.33 87.17 94.74 110.42 SpecialAreaProgram 28.04 34.70 10.27 10.67 67.50 12.84 13.64 16.45 17.40 18.65 B Irrigation & Flood Control 169.79 165.91 38.37 42.32 325.25 47.05 53.71 61.04 65.47 97.60 Minorirrigation 28.05 31.92 8.35 8.44 59.77 9.95 10.48 11.85 12.17 17.16 Majorlnrigation 115.56 110.20 25.01 28.24 224.15 30.47 35.71 41.59 45.00 70.81 Flood Control 9.47 9.45 2.08 2.64 16.23 3.30 3.66 3.08 3.57 5.31 Command Area Development 16.71 14.33 2.93 3.00 25.10 3.33 3.85 4.52 4.74 4.31 C Industry and Minerals 221.08 290.99 82.40 65.64 469.22 74.44 84.81 90.88 128.62 142.24 Village & Small Scale 27.53 32.49 9.07 9.41 63.34 9.95 11.52 15.12 17.66 19.26 Large & Medium Industries 193.55 258.50 73.33 56.23 405.88 64.49 73.29 75.76 110.96 122.97 D Energy 551.29 618.20 179.98 197.34 1155.61 202.90 269.09 274.82 300.67 354.01 Power 342.74 378.95 113.34 145.18 795.89 121.57 147.73 163.46 171.35 190.85 Petroleum 129.35 161.31 41.30 33.40 240.00 56.98 95.89 86.44 106.19 126.22 Coal 74.01 71.22 23.92 17.10 105.07 22.77 22.93 22.39 18.53 30.46 E Transport 229.71 297.70 86.96 93.14 559.26 106.63 119.77 120.97 141.31 208.51 Railways 123.34 165.50 49.16 53.93 272.02 61.62 59.01 54.72 75.00 81.30 Roads & Road Transport 71.90 84.59 21.32 24.82 169.52 28.48 32.49 38.44 26.36 10.61 Ports & Shipping' 23.13 26.07 10.97 8.45 76.14 7.28 16.20 13.13 18.24 26.27 Civil Aviation 7.58 18.99 4.92 5.47 40.83 8.82 11.46 14.44 21.00 41.39 F Communication & Broadcasting 61.14 98.93 33.54 36.14 289.66 51.51 62.02 72.74 97.79 97.56 G Science & Technology 24.63 30.23 7.87 8.62 90.42 9.30 11.53 14.07 16.32 18.42 H Social Services 295.78 332.61 87.90 102.99 751.55 113.23 140.16 174.09 231.79 304.91 Education 63.83 76.85 20.63 23.75 196.00 26.19 31.47 35.66 58.53 33.87 Health&Family Welfare 64.49 68.09 17.46 19.48 140.76 22.22 26.13 33.11 35.16 23.49 Housing& Urban Development 42.30 48.36 12.53 13.52 105.50 14.42 21.47 20.81 38.12 20.50 Water Supply & Sanitation 65.22 70.92 18.45 22.46 167.11 22.84 27.20 32.60 41.51 12.57 Other Social Services 59.94 68.38 18.84 23.77 142.19 27.55 33.89 51.92 58.46 214.47 I Others 24.24 57.94 12.72 10.74 63.60 17.56 13.11 15.94 44.50 39.50 J TOTAL 1800.00 2207.60 615.18 647.51 4341.00 728.52 880.81 981.67 1199.54 1461.07 Note: The Plan totals are at base year prices for projections and at current prices for actuals. a. Covers Major and Minor ports, Shipping, Lighthouses and Inland Water. Source: Planning Commission. Statistical Appendix 107 Table A4.15(b) Projected and Actual Plan Outlays by Sectors (Annual averages at constant 1980-81 prices - Rs. billion) Seventh Plan Annual Plans Eighth Plan (85-86 - 89-90) 90-91 91-92 (92-93 - 96-97) 92-93 93-94 94-95 95-96 96-97 Proj. Actuals Actuals Actuals Projected Actuals Actuals Actuals Revised Proj. A Agriculture & Allied Programs 30.3 33.7 36.0 32.7 46.0 35.5 39.9 47.2 45.4 49.0 Agriculture 14.3 13.7 14.3 13.9 16.2 14.1 13.4 16.1 16.0 17.1 Rural Development 12.1 16.3 17.3 15.0 24.9 17.1 22.2 26.2 24.9 27.3 Special Area Program 3.8 3.7 4.3 3.9 4.9 4.3 4.3 4.9 4.6 4.6 B Irrigation&FloodControl 23.1 17.7 16.2 15.3 23.5 15.8 16.9 18.3 17.2 24.1 Minor Irrigation 3.8 3.4 3.5 3.1 4.3 3.3 3.3 3.6 3.2 4.2 Majorlrrigation 15.8 11.8 10.5 10.2 16.2 10.2 11.3 12.5 11.8 17.5 Flood Control 1.3 1.0 0.9 1.0 1.2 1.1 1.2 0.9 0.9 1.3 Command Area Development 2.3 1.5 1.2 1.1 1.8 1.1 1.2 1.4 1.2 1.1 C Industry and Minerals 30.1 31.1 34.7 23.7 33.9 25.0 26.7 27.3 33.7 35.1 Village & Small Scale 3.8 3.5 3.8 3.4 4.6 3.3 3.6 4.5 4.6 4.8 Large & Medium Industries 26.4 27.6 30.9 20.3 29.3 21.6 23.1 22.7 29.1 30.4 D Energy 75.2 66.0 75.8 71.3 83.5 68.0 84.8 82.5 78.9 87.5 Power 46.7 40.5 47.7 52.5 57.5 40.8 46.5 49.1 44.9 47.1 Petroleum 17.6 17.2 17.4 12.1 17.4 19.1 30.2 25.9 27.9 31.2 Coal 10.1 7.6 10.1 6.2 7.6 7.6 7.2 6.7 4.9 7.5 E Transport 31.3 31.8 36.6 33.7 40.4 35.8 37.7 36.3 37.1 51.5 Railways 16.8 17.7 20.7 19.5 19.7 20.7 18.6 16.4 19.7 20.1 Roads & Road Transport 9.8 9.0 9.0 9.0 12.3 9.6 10.2 11.5 6.9 2.6 Ports & Shipping' 3.2 2.8 4.6 3.1 5.5 2.4 5.1 3.9 4.8 6.5 Civil Aviation 1.0 2.0 2.1 2.0 3.0 3.0 3.6 4.3 5.5 10.2 F Communication & Broadcasting 8.3 10.6 14.1 13.1 20.9 17.3 19.5 21.8 25.6 24.1 G Science & Technology 3.4 3.2 3.3 3.1 6.5 3.1 3.6 4.2 4.3 4.6 H Social Services 40.3 35.5 37.0 37.2 54.3 38.0 44.2 52.3 60.8 75.3 Education 8.7 8.2 8.7 8.6 14.2 8.8 9.9 10.7 15.4 8.4 Health & Family Welfare 8.8 7.3 7.3 7.0 10.2 7.5 8.2 9.9 9.2 5.8 Housing&UrbanDevelopment 5.8 5.2 5.3 4.9 7.6 4.8 6.8 6.2 10.0 5.1 Water Supply& Sanitation 8.9 7.6 7.8 8.1 12.1 7.7 8.6 9.8 10.9 3.1 Other Social Services 8.2 7.3 7.9 8.6 10.3 9.2 10.7 15.6 15.3 53.0 I Others 3.3 6.2 5.4 3.9 4.6 5.9 4.1 4.8 11.7 9.8 J TOTAL 245.4 235.9 258.9 234.1 313.8 244.3 277.5 294.6 314.6 360.9 Memo Item: Investment Deflator 146.7 187.2 237.6 276.6 276.6 298.2 317.4 333.2 381.3 404.8 a. Covers Major and Minor ports, Shipping, Lighthouses and Inland Water. Source: Planning Commission. 108 Statistical Appendix Table A4.15(c) Projected and Actual Plan Outlays by Sectors (percentage distribution and achievement rates) Seventh Plan Annual Plans Eighth Plan (85-86 - 89-90) 90-91 91-92 (92-93 - 96-97) 92-93 93-94 94-95 95-96 % Achieve- Achieve- Achieve- % Achieve- Achieve- Achieve- Achieve- sharea mentb mentb mentb share' mentb mentb mentb mentb A Agriculture&Allied Programs 12.4 111.1 93.4 90.1 14.7 94.2 97.3 97.9 94.3 Agriculture 5.8 95.3 89.6 86.1 5.2 83.0 78.8 91.5 91.5 Rural Development 4.9 134.2 96.5 93.2 7.9 104.1 113.7 101.0 95.5 Special Area Program 1.6 97.0 95.1 93.4 1.6 100.9 96.3 104.5 97.8 B Irrigation & Flood Control 9.4 76.6 96.7 90.1 7.5 88.5 91.7 94.0 87.6 Minor Irrigation 1.6 89.2 94.5 87.1 1.4 84.8 86.2 83.9 80.0 Major lrrigation 6.4 74.7 99.3 91.8 5.2 90.4 93.0 97.1 89.2 Flood Control 0.5 78.2 84.3 91.6 0.4 85.0 107.5 95.9 96.2 Command Area Development 0.9 67.2 91.0 81.9 0.6 86.3 84.3 95.0 88.4 C Industry and Minerals 12.3 103.1 75.4 76.2 10.8 69.9 74.6 72.3 92.7 Village & Small Scale 1.5 92.5 89.2 79.3 1.5 79.8 89.3 94.9 94.6 Large & Medium Industries 10.8 104.7 73.6 75.7 9.3 68.6 72.8 69.0 92.4 D Energy 30.6 87.9 90.6 92.6 26.6 79.8 87.0 83.5 85.3 Power 19.0 86.6 91.3 106.1 18.3 75.5 90.0 88.6 87.3 Petroleum 7.2 97.7 94.7 67.9 5.5 87.3 83.2 75.9 89.0 Coal 4.1 75.4 81.1 67.8 2.4 87.8 84.2 80.5 57.8 E Transport 12.8 101.6 86.8 93.9 12.9 84.1 85.9 81.1 78.1 Railways 6.9 105.1 97.9 101.3 6.3 100.3 85.5 76.5 97.5 Roads & Road Transport 4.0 92.2 97.9 91.2 3.9 90.7 93.7 95.9 57.9 Ports & Shipping' 1.3 88.3 37.5 62.0 1.8 32.9 84.5 65.9 94.4 Civil Aviation 0.4 196.3 61.7 124.2 0.9 77.9 71.0 84.0 54.6 F Communication & Broadcasting 3.4 126.8 92.2 92.3 6.7 97.7 99.3 101.1 117.5 G Science & Technology 1.4 96.2 85.0 84.7 2.1 87.0 87.6 98.1 93.5 H Social Services 16.4 88.1 100.3 91.5 17.3 81.8 90.8 96.5 103.5 Education 3.5 94.4 93.3 91.2 4.5 82.5 86.5 81.0 109.5 Health & Family Welfare 3.6 82.7 104.6 100.7 3.2 89.3 90.3 101.9 93.7 Housing & Urban Development 2.4 89.6 128.2 77.3 2.4 66.5 93.6 77.4 105.1 Water Supply & Sanitation 3.6 85.2 95.9 89.3 3.8 89.6 92.3 90.8 96.0 Other Social Services 3.3 89.4 90.8 96.6 3.3 79.5 92.5 126.0 109.3 I Others 1.3 187.3 86.1 70.2 1.5 111.0 64.6 61.6 144.7 J TOTAL 100.0 96.1 90.2 89.5 100.0 83.7 88.0 87.5 93.3 Note: Derived from Table 4.15(b). a. Percentage share in total plan outlay. b. Actual outlay as a percentage of target outlay for the Plan. c. Covers Major and Minor ports, Shipping, Lighthouses and Inland Water. Source: Planning Commission. Statistical Appendix 109 Table A5.1 Money Supply and Sources of Change, 1985-86 - 1996-97 (Rs. billion) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 BROAD MONEY SUPPLY (M3) 1642.79 2002.41 2309.48 2658.28 3170A9 3668.25 4344.07 5314.26 6040.07 7001.83 NarrowMoney Supply (Ml) 585.59 711.01 810.58 928.92 1144.06 1240.66 1507.78 1922.57 2148.35 2405.95 CurrencywithPublic 335.59 380.71 463.00 530.48 610.98 682.73 823.01 1006.81 1182.58 1324.33 Deposit Money (total) 246.00 323.40 341.60 391.70 524.23 544.80 659.52 881.93 932.33 1049.24 Time Deposits with Banks 1057.20 1291.40 1498.90 1729.36 2026.43 2427.59 2836.29 3391.69 3891.72 4595.88 SOURCES OF CHANGE NetBankDomesticCredit 1918.57 2300.36 2688.57 3119.62 3462.56 3963.73 4416.92 5151.42 6024.26 6641.71 To Government 843.70 973.73 1171.53 1401.93 1582.63 1762.38 2039.18 2224.19 2577.78 2888.16 FromReserveBankoflndia(RBI) 526.87 596.15 736.83 8884A 940.16 984A9 993.00 1014.78 1213A9 1241.81 FromOtherBanks 316.83 377.58 434.70 513.45 642.47 777.89 1046.18 1209.41 1364.29 1646.35 To Commercial Sector 1074.87 1326.63 1517.04 1717.69 1879.93 2201.35 2377.74 2927.23 3446.48 3753.55 From Reserve Bank of India 37.90 55.24 63.49 63.42 72.60 62.20 64.45 65.93 68.55 62.47 From OtherBanks 1036.97 1271.39 1453.55 1654.27 1807.33 2139.15 2313.29 2861.30 3377.93 3691.08 Net Foreign ExchangeAssets 56.72 68.00 66.51 105.81 212.26 244.43 546.12 790.32 821.41 1029.14 of Banking Sector Government's Currency Liabilities 13.80 14.75 15.55 16.21 17.04 18.24 19.90 23.79 25.03 29.33 to the Public NetNon-MonetaryLiabilities 346.30 380.70 461.15 583.36 521.37 558.15 638.87 651.27 830.63 698.35 ofReserveBankofIndia 142.25 169.36 175.36 270.22 274.15 282.46 260.37 293.58 322.96 351.87 ofOtherBanks 204.05 211.34 285.79 313.14 247.22 275.69 378.50 357.69 507.67 346.48 BroadMoneySupply(M3) 1642.79 2002.41 2309.48 2658.28 3170.49 3668.25 4344.07 5314.26 6040.07 7001.83 GDPatmarketprices 3332.01 3957.82 4568.21 5355.34 6167.99 7059.18 8107.49 9634.92 11189.64 12769.74 Note: 1996-97 figures are as of March 31 on the basis of the closure of government accounts. Source: Ministry of Finance, Economic Survev, various issues; Reserve Bank of India, RBI Bulletin (Weekly Statistical Supplement). 110 Statistical Appendix Table A5.2 Base Money Supply and Sources of Change, 1985-86 - 1996-97 (Rs. billion) 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 TOTAL BASE MONEY SUPPLY 534.90 629.59 775.91 877.79 995.05 1107.79 1386.71 1692.82 1944.57 2000.45 Cunency with Public 335.59 380.71 463.00 530.48 610.98 682.73 823.01 1006.81 1182.58 1324.33 OtherDepositswithRBI 3.97 6.94 5.98 6.74 8.85 13.13 25.25 33.83 33.44 32.38 Cash with Banks 15.63 19.72 19.86 22.34 26.40 30.53 30.94 40.00 43.11 47.99 BankDepositswithRBI 179.71 222.22 287.07 318.23 348.82 381.40 507.51 612.18 685.44 595.75 SOURCES OF CHANGE RBI Claims 609.18 722.18 875.03 1051.97 1063.78 1145.54 1112.96 1215.41 1501.59 1374.33 OnGovemment(net) 526.87 596.15 736.83 888.48 940.16 984.49 993.00 1014.78 1213.49 1241.81 On Banks 44A1 70.79 74.71 100.07 51.02 98.85 55.51 134.70 219.55 70.05 On Commercial Sector 37.90 55.24 63A9 63.42 72.60 62.20 64.45 65.93 68.55 62.47 Net Foreign Exchange Assets 54.17 62.02 60.69 79.83 188.38 226.47 514.22 747.20 740.92 948.65 of RBI Govermment'sCunrencyLiabilities 13.80 14.75 15.55 16.21 17.04 18.24 19.90 23.79 25.03 29.33 to the Public Net Non-Monetary Liabilities 142.25 169.36 175.36 270.22 274.15 282.46 260.37 293.58 322.96 351.87 of Reserve Bank of India Total Base Money Supply 534.90 629.59 775.91 877.79 995.05 1107.79 1386.71 1692.82 1944.57 2000.45 GDP at market prices 3332.01 3957.82 4568.21 5355.34 6167.99 7059.18 8107.49 9634.92 11189.64 12769.74 Note: 1996-97 figues are as of March 31 on the basis of the closure of govemment accounts. Source: Ministry of Finance, Economic Survev, various issues; Reserve Bank of India, RBI Bulletin (Weekly Statistical Supplement). Statistical Appendix 111 Table A5.3 Selected Monetary Policy Instruments Bank Minimum Statutory Rate Cash Reserve' Liquidityb Year & Month Ratio Ratio 1984 February 4 10 9.0 35.0 July 28 10 9.0 35.5 September 1 10 9.0 36.0 October 30 10 9.0 36.0 1985 June 8 10 9.0 36.5 July 6 10 9.0 37.0 1987 February 28 10 9.5 37.0 April 25 10 9.5 37.5 October 24 10 10.0 37.5 1988 January 2 10 10.0 38.0 July 2 10 10.5 38.0 July 30 10 11.0 38.0 1989 July 1 10 15.0 38.0 1990 September22 10 15.0 38.5 1991 July 4 11 15.0 38.5 October 9 12 15.0 38.5 1992 April 1 12 15.0 30.0 1993 April 17 12 14.5 30.0 May 15 12 14.0 30.0 September 17 12 14.0 25.0 1994 June 11 12 14.5 25.0 July 9 12 14.8 25.0 August 6 12 15.0 25.0 1995 November 11 12 14.5 25.0 December 9 12 14.0 25.0 1996 April 27 12 13.5 25.0 May 11 12 13.0 25.0 July 6 12 12.0 25.0 October26 12 11.5 25.0 November9 12 11.0 25.0 1997 January 4 12 10.5 25.0 January 18 12 10.0 25.0 April 16 11 10.0 25.0 June 26 10 10.0 25.0 October 22 9 10.0 25.0 October 25 9 9.8 25.0 November 22 9 9.5 25.0 December 6 9 10.0 25.0 1998 January 17 11 10.5 25.0 March 18 11 10.5 25.0 March 23 11 10.0 25.0 April 2 10 10.0 25.0 Note: Dates given are those on which the announced measures take effect. a. Minimum cash reserves to be deposited with the RBI as % of net demand and ime liabilides (NDTL). b. The ratio of liquid assets, exclusive of those under (a), to aggregate demand and time liabilities upto March 28, 1985 and net demand and ime liabilities with effect from March 29, 1985. Sources: Reserve Bank of India, Report of the Committee to Review the Working of the Monetary System, 1985; Reserve Bank of India, Annual Report, various issues. 112 Statistical Appendix Table A5.4 Structure of Short-term and Long-tern Interest Rates (percent per annum) 1980-81 1985-86 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 A. SHORT-TERM RATES Reserve Bank Rate 9.0 10.0 10.0 12.0 12.0 12.0 12.0 12.0 12.0 Treasury Bills: 91-day' 4.6 4.6 4.6 4.6 8.8-10.7 7.1-11.1 7.2-11.9 11.4-13.0 6.9- 12.97 182-day 10.0-10.1 8.8-10.1 7.8-8.4 364-day 9.9-10.3 10.0-11.4 9.4-11.9 12.1-13.2 10.1- 13.1 Call MoneyRate (Bombay) 7.1 10.0 15.9 19.6 14.4 7.0 9.4 17.7 - Commercial Bank Rates: Maximum Deposit Rate b 10.0 11.0 11.0 13.0 11.0 10.0 11.0 12.0 Minimum Lending Rate 13.5 16.0 19.0 17.0 14.0 Free Free Free B. LONG-TERM RATES I.D.B.I. Prime Lending Rate 14.0 14.0 14.0-15.0 18.0-20.0 17.0-19.0 14.5-17.5 15.0 16.0-19.0 16.2 Company Deposit Rates:' Private Sector Companies d (i) I year 9.0-13.5 10.0-15.0 10.5-14.0 10.5-15.0 12.0-15.0 12.0-14.0 13.0-14.0 12.0-15.0 13.0-15.0 (ii) 2 years 10.0-14.5 12.0-15.0 12.0-14.0 12.0-15.0 13.0-15.0 13.0-14.0 14.0-15.0 13.0-15.0 14.0-15.0 (iii) 3 years 13.0-15.5 13.0-15.0 13.5-14.0 14.0-15.0 15.0 14.0 14.0-15.0 14.0-15.0 15.0 Public Sector Companies (i) I year 11.0 11.5-12.0 10.5-12.0 10.5-15.0 13.0 12.0-15.0 12.0-15.0 13.0-15.0 13.0-15.0 (ii) 2 years 12.0 12.0-13.0 11.5-13.0 11.5-15.0 14.0 13.0-15.0 13.0-15.0 14.0-15.0 13.0-15.0 (iii) 3 years 13.5 13.5-14.5 13.0-14.0 13.0-15.0 15.0 14.0-15.0 14.0-15.0 15.0 14.0-15.0 Average Yield - Ordinary Shares 5.9 3.2 2.6 2.1 1.7 2.2 1.8 3.1 4.2 Redemption Yield - Govemment of India Securities (i) Short-term (I-5 years) 4.7-6.0 5.4-9.8 7.0-21.7 8.4-26.3 9.1-23.8 11.9-12.9 9.8-11.8 6.0-14.3 5.2-16.2 (ii) Medium-term (5-15 years) 5.8-6.8 6.5-9.5 9.4-12.7 9.5-13.4 9.5-14.8 12.7-13.3 11.3-13.9 5.8-14.1 5.8- 14.4 (iii) Long-term (above 15 years) 6.4-7.5 8.4-11.5 10.9-12.0 9.9-12.4 8.8-12.5 12.9-13.4 11.8-13.5 11.8-13.0 9.0-14.2 Note: 1996-97 is preliminary. a. Effective 8 January, 1993, a new auction system for 91-day Treasury Bills was introduced. b. Effective 22 April, 1992, a single 'maximum deposit rate has been for deposits of various maturities. Earlier different rates were prescribed for different deposit maturities. c. Deposits accepted from the public. d. Well-established private sector companies. Source: Reserve Bank of India, Report on Currencv and Finance, various issues. Statistical Appendix 113 Table A5.5 Sectoral Deployment of Gross Bank Credit (Rs billion - change during year) Apr-Jan 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 96-97 97-98 Gross Bank Credit 76.91 154.68 169.43 153.48 79.86 211.34 97.18 401.28 348.75 175.48 84.69 329.95 Public Food ProcurementCredit -29.14 -14.21 12.37 25.00 1.64 20.73 41.64 13.68 -24.84 -21.94 -11.21 48.19 Gross Non-Food Credit 106.05 168.89 157.06 128.48 78.22 190.61 55.54 387.60 373.59 197.42 95.90 281.76 Priority Sectors 40.20 51.49 61.64 25.32 25.10 44.07 40.48 102.81 91.68 86.59 40.44 100.80 Agriculture 14.39 19.41 25.76 2.24 14.07 18.06 12.45 27.75 30.61 38.30 23.34 23.89 Small Scale Industries 17.12 23.15 24.08 16.38 9.69 18.76 25.91 50.21 42.46 22.29 2.02 48.37 Other Priority Sectors 8.69 8.93 11.80 6.70 1.34 7.25 2.12 24.85 18.61 26.00 15.08 28.54 Industry (Medium & Large) 37.97 70.32 60.87 62.46 25.82 115.46 -7.71 168.07 183.81 69.72 51.89 97.02 Wholesale Trade (other than food procurenent) 5.18 11.69 7.05 4.38 2.44 8.15 3.61 24.19 22.31 -0.47 -13.19 9.57 Other Sectors 22.70 35.39 27.60 36.32 24.86 22.93 19.16 92.53 75.79 41.58 16.76 74.37 Export Credit (included in Gross Non-Food Credit) 7.71 22.24 21.04 9.41 11.08 50.62 17.30 79.65 45.39 -10.02 -22.46 35.03 Priority Sector advances as percent ofnetbankcredita 44.10 43.20 42.40 39.20 38.70 35.10 35.30 33.30 32.10 33.30 a. In the last month of each period, advances include Participation Certificates. Source: Ministry of Finance, Economic Survey, various issues. 114 Statistical Appendix Table A6.1 Production of Major Crops 1980-81 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Total Foodgrains 129.6 143.4 140.4 169.9 171.0 176.4 168.4 179.5 184.3 191.5 180.4 199.3 Kharif 77.6 80.2 74.6 95.6 101.0 99.4 91.6 101.5 100.4 101.1 95.1 104.4 Rabi 51.9 63.2 65.8 74.3 70.0 77.0 76.8 78.0 83.9 90.4 85.3 94.9 Total Cereals 119.0 131.7 129.4 156.1 158.2 162.1 156.4 166.6 170.9 177.5 168.1 184.9 Kharif 73.9 76.0 70.2 90.0 95.5 94.0 87.2 95.8 95.0 96.4 90.5 98.9 Rabi 45.1 55.7 59.2 66.1 62.7 68.1 69.2 70.8 75.9 81.1 77.6 86.0 Rice 53.6 60.6 56.9 70.5 73.6 74.3 74.7 72.9 80.3 81.8 77.0 81.3 Kharif 50.1 53.6 49.0 63.4 65.9 66.3 66.4 65.3 70.7 72.6 67.9 71.4 Rabi 3.5 7.0 7.8 7.1 7.7 8.0 8.3 7.6 9.6 9.2 9.1 9.9 Wheat 36.3 44.3 46.2 54.1 49.8 55.1 55.7 57.2 59.8 65.8 62.1 69.3 Barley(Jowar) 10.4 9.2 12.2 10.2 12.9 11.7 8.1 12.8 11.4 9.0 9.3 11.1 Kharif 7.5 6.5 8.6 7.1 9.2 8.3 5.7 9.4 7.3 5.9 5.6 7.0 Rabi 2.9 2.7 3.6 3.1 3.7 3.4 2.4 3.4 4.1 3.1 3.7 4.1 Maize 7.0 7.6 5.7 8.2 9.7 9.0 8.1 10.0 9.6 8.9 9.5 10.6 Bajra 5.3 4.5 3.3 7.8 6.6 6.9 4.7 8.9 5.0 7.2 5.4 7.9 Total Pulses 10.6 11.7 11.0 13.8 12.8 14.3 12.0 12.8 13.3 14.1 12.3 14.4 Kharif 3.8 4.2 4.4 5.6 5.5 5.4 4.4 5.6 5.4 4.7 4.6 5.5 Rabi 6.8 7.5 6.6 8.2 7.3 8.9 7.6 7.2 7.9 9.4 7.7 8.9 Gramn 4.3 4.5 3.6 5.1 4.2 5.4 4.1 4.4 5.0 6.4 5.0 5.8 Tur 2.0 2.3 2.3 2.7 2.7 2.4 2.1 2.3 2.7 2.1 2.3 2.7 TotalOilseeedsa 9.4 11.3 12.6 18.0 16.9 18.6 18.6 20.1 21.5 21.3 22.1 25.0 Kharif 5.0 6.4 6.4 10.5 9.6 9.8 9.3 12.0 12.3 11.9 13.1 14.6 Rabi 4.4 4.9 6.2 7.5 7.3 8.8 9.3 8.1 9.2 9.4 9.0 10.4 Groundnut 5.0 5.9 5.8 9.7 8.1 7.5 7.1 8.6 7.8 8.1 7.6 9.0 Kharif 3.7 4.4 4.2 7.5 6.1 5.1 5.0 6.7 5.7 6.1 6.1 7.2 Rabi 1.3 1.4 1.7 2.2 2.0 2.4 2.1 1.9 2.1 2.0 1.5 1.8 Rapeseed & Mustard 2.3 2.6 3.4 4.4 4.1 5.2 5.9 4.8 5.3 5.8 6.0 6.9 Sugarcane 154.2 186.1 196.7 203.0 225.6 241.0 254.0 228.0 229.7 275.5 281.1 277.3 Cotton 7.0 6.9 6.4 8.7 11.4 9.8 9.7 11.4 10.7 11.9 12.9 14.3 Jute & Mesta 8.2 8.6 6.8 7.9 8.3 9.2 10.3 8.6 8.4 9.1 8.8 11.0 Jute 6.5 7.3 5.8 6.7 7.1 7.9 8.9 7.5 7.3 8.0 7.7 9.8 Mesta 1.7 1.3 1.0 1.2 1.2 1.3 1.4 1.1 1.1 1.1 1.1 1.2 Potato 9.7 12.7 14.1 14.9 14.8 15.2 16.4 15.2 17.4 17.4 18.8 25.1 Notes: Units of measurement of all commodities is million tonnes, except in the case of cotton, jute and mesta where production is in terms of millions of bales. Figures for 1995-96 are provisional. a. Includes groundnuts, rapeseeds and mustard, sesame, linseed, castorseed, nigerseed, safflower, sunflower and soybean. Source: Ministry of Finance, Economic Survev, various issues. Statistical Appendix 115 Table A6.2 Irrigated Area Under Different Crops (million hectares) 1980-81 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 Total Foodgrains 37.8 40.1 40.4 41.8 40.5 43.9 44.3 44.9 45.8 46.9 48.3 49.9 Total Cereals 35.8 38.4 38.3 39.5 38.4 41.8 41.9 42.3 43.4 44.4 45.6 46.8 Rice 16.4 17.7 17.7 18.1 17.0 19.1 19.4 19.4 20.2 20.1 20.7 21.4 Jowar 0.8 0.7 0.7 0.8 0.8 0.8 0.9 0.8 0.8 0.8 0.8 0.8 Bajra 0.6 0.6 0.6 0.7 0.8 0.6 0.7 0.5 0.7 0.6 0.7 0.6 Maize 1.2 1.0 1.1 1.3 1.2 1.2 1.2 1.2 1.3 1.3 1.4 1.3 Wheat 15.6 17.5 17.3 17.7 17.8 19.1 18.8 19.5 19.6 20.8 21.4 22.0 Barley 0.9 0.6 0.7 0.6 0.6 0.6 0.5 0.5 0.6 0.6 0.5 0.6 Total Pulses 2.0 1.8 2.1 2.3 2.0 2.2 2.3 2.6 2.4 2.5 2.6 3.1 Other Crops Oilseeds a 2.3 3.5 3.4 3.4 4.3 5.0 5.2 5.8 6.8 6.4 6.5 6.8 Cofton 2.1 1.9 2.3 2.2 2.1 2.4 2.6 2.5 2.6 2.7 2.6 2.7 Sugarcane 2.4 2.6 2.6 2.8 3.0 3.0 3.1 3.4 3.6 3.5 3.3 3.6 a. Oilseeds include groundnuts, rapeseed and mustard, linseed, sesame, and others. Source: Ministry of Finance, Economic Survey, various issues. 116 Statistical Appendix Table A6.3 Yield Per Hectare of Major Crops (kgs. per hectare) 1980-81 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 TotalFoodgrains 1023 1128 1173 1331 1349 1380 1382 1457 1501 1548 1491 1601 Kharif 933 985 996 1166 1241 1231 1174 1302 1324 1341 1292 1380 Rabi 1195 1382 1468 1628 1544 1635 1751 1725 1787 1864 1799 1944 Total Cereals 1142 1266 1315 1493 1530 1571 1574 1654 1701 1763 1703 1825 Kharif 1015 1074 1082 1270 1366 1357 1305 1440 1465 1486 1428 1527 Rabi 1434 1673 1763 1964 1875 2010 2126 2068 2132 2260 2195 2352 Rice 1336 1471 1465 1689 1745 1740 1751 1744 1888 1911 1797 1879 Kharif 1303 1393 1368 1627 1677 1670 1676 1676 1807 1841 1721 1801 Rabi 2071 2563 2640 2548 2678 2671 2720 2720 2816 2731 2678 2720 Wheat 1630 1916 2002 2244 2121 2281 2394 2327 2380 2559 2483 2671 Barley (Jowar) 660 576 762 697 869 814 655 982 898 779 823 958 Kharif 737 665 892 789 1053 969 757 1230 1065 988 996 1196 Rabi 520 437 568 550 604 582 496 632 704 555 650 715 Maize 1159 1282 1029 1395 1632 1518 1376 1676 1602 1448 1595 1698 Bajra 458 401 378 646 610 658 465 836 521 700 577 791 Total Pulses 473 505 515 598 549 578 533 573 598 610 552 623 Kharif 361 392 435 504 480 471 393 495 492 351 448 507 Rabi 571 604 587 686 616 672 672 654 701 589 640 727 Gram 657 649 629 753 652 712 739 684 783 853 700 810 Tur 689 722 685 779 763 673 588 652 762 644 670 747 Total Oilseedsa 532 605 629 824 742 771 719 797 799 843 851 931 Kharif 492 554 559 805 691 698 604 804 759 797 835 906 Rabi 588 687 720 851 822 872 886 786 860 910 876 969 Groundnut 736 841 855 1132 930 904 818 1049 941 1027 1007 1155 Kharif 629 733 737 1066 824 751 687 969 813 913 928 1082 Rabi 1444 1540 1425 1442 1532 1611 1501 1473 1624 1650 1529 1602 Rapeseed&Mustard 560 700 748 906 831 904 895 776 847 950 916 1013 Sugarcane 57844 60000 60000 61000 65000 65000 66000 64000 67000 71000 68000 67000 Cotton 152 169 168 202 252 225 216 257 249 257 246 266 Jute&Mesta 1130 1454 1274 1540 1646 1634 1662 1658 1713 1760 1712 1835 Jute 1245 1647 1496 1748 1879 1833 1837 1857 1907 1949 1875 2008 Mesta 828 865 680 909 956 988 1019 955 1008 1023 1078 1094 Potato 13256 15000 16000 16000 16000 16000 16000 15000 17000 16000 17000 19000 Note: Figures for 1995-96 are provisional. a. Includes groundnuts, rapeseeds and mustard, sesame, linseed, castorseed, nigerseed, safflower, sunflower and soybean. Source: Ministry of Finance, Economic Surve , various issues. Statistical Appendix 117 Table A6.4 Net Availability, Procurement and Public Distribution of Foodgrains (maillion tonnes) 1980-81 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Net Production 113.4 125.5 122.8 148.7 149.7 154.3 147.3 157.5 161.2 167.6 157.9 174.4 NetImnports 0.7 -0.2 3.8 1.2 1.3 -0. 1 -0.4 3.1 1.1 0.4 -1.2 1.0 Change in Government Stocks -0.2 -9.5 -4.6 2.6 6.2 -4.4 -1.5 10.8 7.5 -1.8 -8.5 -1.8 Net Availability 114.3 134.8 130.8 147.2 144.8 158.6 148.4 149.8 154.8 169.8 165.2 177.2 Procuremnent 13.0 15.7 14.1 18.9 24.0 19.6 17.9 28.1 26.0 22.6 19.8 23.6 Public Distribution 13.0 18.7 18.6 16.4 16.0 20.8 18.8 16.4 14.0 15.3 20.5 20.5 Note: Production figures relate to agricultural year. Figures for procurement and public distribution relate to calendar years. Source: Ministry of Finance, Economic Survey, various issues. 118 Statistical Appendix Table A6.5a New Index of Industrial Production (1993-94=100) 1996-97 1997-98 over over Weight 1994-95 1995-96 1996-97 1997-98 1995-96 1996-97 General Index 100.0 108.4 122.3 129.0 137.5 5.5 6.6 Mining andQuarrying 11.5 107.6 117.9 115.6 122.1 -2.0 5.6 Electricity Generated 11.4 108.5 117.3 121.9 130.2 3.9 6.8 Manufacturing Index 77.1 108.5 123.5 131.8 140.5 6.7 6.6 Food products 5.3 121.6 129.8 134.2 135.7 Beverages, tobacco, etc. 1.6 103.0 116.7 132.4 156.9 13.5 18.5 Cotton textiles 12.3 99.1 109.5 122.7 127.8 12.1 4.2 Jute textiles 2.0 95.1 102.4 98.0 114.1 -4.3 16.4 Textile products 0.8 98.5 133.7 146.3 158.2 9.4 8.1 Wood & wood products 0.5 99.3 123.2 131.9 127.4 7.1 -3.4 Paper&paperproducts 3.2 108.6 125.5 136.9 146.0 9.1 6.6 Leather& leather products 0.5 86.8 99.1 108.4 113.0 9.4 4.2 Rubber, plastic &petroleum prod. 4.0 107.7 116.1 118.4 124.3 2.0 5.0 Chemical & chemical products 12.5 105.3 117.2 122.7 139.9 4.7 14.0 Non-metallic mineral products 3.0 108.0 131.7 141.9 170.1 7.7 19.9 Basic metal& alloyproducts 9.8 113.1 131.0 139.8 141.2 6.7 1.0 Metal products 2.3 104.7 100.6 111.0 119.2 10.3 7.4 Machinery & machine tools 6.2 112.8 134.7 141.7 150.0 5.2 5.9 Electrical machinery 5.8 n.a. n.a. n.a. n.a. n.a. n.a. Transport equipment 6.4 113.2 132.8 149.9 148.1 12.9 -1.2 Miscellaneous products 0.9 104.0 117.7 123.8 119.8 5.2 -3.2 Note: Figures for 1997-98 are provisional. Source: CSO, IIP Division. Statistical Appendix 119 Table A6.5b Index of Industrial Production (1980-81=100, Old Series) 1996-97 1997-98 over over Weight 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1995-96 1996-97 General Index 100.0 166.4 180.9 196.4 212.6 213.9 218.9 232.0 253.8 284.5 304.7 317.5 7.1 4.2 Mining andQuarrying 11.5 184.6 199.1 211.6 221.2 222.5 223.7 231.5 248.9 267.3 268.1 281.2 0.3 4.9 Electricity Generated 11.4 181.0 198.2 219.7 236.8 257.0 269.9 290.0 314.7 340.1 353.4 377.4 3.9 6.8 Manufactuing Index 77.1 161.5 175.6 190.7 207.8 206.2 210.7 223.5 245.4 278.8 303.0 313.9 8.7 3.6 Foodproducts 5.3 139.0 148.5 150.9 169.8 178.0 175.3 160.0 181.6 207.0 214.1 208.9 Beverages, tobacco, etc. 1.6 84.9 92.1 103.0 104.8 107.3 113.7 137.8 134.8 160.9 184.6 193.4 14.7 4.8 Cottontextiles 12.3 111.2 107.8 112.3 126.6 139.0 150.1 160.5 155.8 173.1 191.7 202.2 10.7 5.5 lute textiles 2.0 91.0 101.9 97.4 101.6 90.8 87.0 103.2 91.4 93.6 95.8 104.1 2.3 8.7 Textile products 0.8 91.7 134.2 151.7 103.2 97.2 75.8 73.4 78.6 89.7 95.5 88.9 6.5 -6.9 Wood&woodproducts 0.5 161.7 171.7 176.0 197.2 185.0 190.5 199.3 205.5 240.8 232.9 208.9 -3.3 -10.3 Paper&paperaproducts 3.2 166.3 171.3 181.5 198.0 203.0 210.9 224.8 258.1 286.7 311.4 335.3 8.6 7.7 Leather&leatherproducts 0.5 185.5 177.4 188.3 194.3 181.3 187.7 204.3 211.9 227.3 231.9 229.3 2.0 -1.1 Rubber,plastic&petroleumprod. 4.0 155.1 168.3 173.5 174.0 172.0 174.6 176.4 193.2 211.1 215.8 236.9 2.2 9.8 Chemnical & chemical products 12.5 200.9 233.4 247.6 254.1 261.2 276.9 297.9 307.4 332.3 348.0 357.0 4.7 2.6 Non-metallic mineral products 3.0 158.1 184.6 189.9 193.1 205.2 208.9 218.5 236.0 264.5 286.2 320.9 8.2 12.1 Basicmetal&alloyproducts 9.8 135.6 144.9 143.7 158.8 167.8 168.4 224.2 214.6 225.7 303.6 316.0 34.5 4.1 Metalproducts 2.3 129.6 133.5 142.6 143.1 133.1 124.6 126.5 148.8 173.8 177.1 178.7 1.9 0.9 Machinery& machinetools 6.2 139.2 161.2 171.9 186.9 183.3 181.1 189.2 228.2 274.3 279.5 281.2 1.9 0.6 Electrical machinery 5.8 335.2 346.0 459.2 563.6 493.7 483.6 460.1 460.1 460.1 460.1 460.1 0.0 0.0 Transport equipment 6.4 151.9 171.3 181.1 192.5 191.1 200.6 211.2 239.1 297.9 354.5 329.7 19.0 -7.0 Miscellaneous products 0.9 272.1 306.3 333.2 321.8 269.9 281.3 267.0 269.7 300.7 283.2 299.4 -5.8 5.7 Note: Figures for 1997-98 are provisional. Source: CSO, UIP Division. 120 Statistical Appendix Table A6.6 Production, Imports and Consumption of Fertilizers (000' nutrient tons) Nitrogenous Phosphatic b Potassic Total (Apr-Mar) Production lmports Consumption Production inports Consumption hnports Consumption Production Imports Consumption 1980-81 2163.9 1510.2 3678.1 841.5 452.1 1213.6 796.8 623.9 3005.4 2759.1 5515.6 1981-82 3143.3 1055.1 4068.7 950.0 343.2 1322.9 643.8 676.2 4093.3 2042.1 6067.8 1982-83 3429.7 424.6 4242.5 983.7 63.4 1432.7 643.7 726.3 4413.4 1131.7 6401.5 1983-84 3491.5 656.1 5204A 1064.1 142.6 1730.3 556A 775.4 4555.6 1355.1 7710.1 1984-85 3917.3 2008.6 5486.1 1317.9 745.2 1886.4 871.0 838.5 5235.2 3624.8 8211.0 1985-86 4328.0 1680.0 5661.0 1428.0 816.0 2005.0 903.0 808.0 5756.0 3399.0 8474.0 1986-87 5410.0 1103.0 5716.0 1660.0 255.0 2079.0 952.0 850.0 7070.0 2310.0 8645.0 1987-88 5466.0 175.0 5717.0 1665.0 0.0 2187.0 809.0 880.0 7131.0 984.0 8784.0 1988-89 6712.0 219.0 7251.0 2252.0 407.0 2721.0 982.0 1068.0 8964.0 1608.0 11040.0 1989-90 6747.0 523.0 7386.0 1796.0 .. 3014.0 1280.0 1168.0 8543.0 3114.0 11568.0 1990-91 6993.0 414.0 7997.0 2052.0 1311.0 3221.0 1328.0 1328.0 9045.0 2758.0 12546.0 1991-92 7301.0 566.0 8046.0 2562.0 1016.0 3321.0 1236.0 1361.0 9863.0 2769.0 12728.0 1992-93 7430.0 1160.0 8426.0 2306.0 967.0 2842.0 1082.0 884.0 9736.0 2988.0 12152.0 1993-94 7231.0 1564.0 8789.0 1816.0 687.0 2669.0 880.0 908.0 9047.0 3166.0 12366.0 1994-95 7948.0 1476.0 d 9507.0 2493.0 722.0 2932.0 1109.0 d 1125.0 10438.0 2965.0 13564.0 1995-96 8777.0 1938.0 9823.0 2558.0 380.0 2898.0 1423.0 1156.0 11335.0 4008.0 13877.0 1996-97 8599.0 1155.0 10302.0 2556.0 246.0 2977.0 613.0 1029.0 11155.0 2014.0 14308.0 1997-98' 10086.0 1362.0 11112.0 2976.0 672.0 3971.0 1212.0 1371.0 13062.0 3246.0 16454.0 --Not available. a. Excludes nitrogen meant for non-agricultural purposes. b. Excludes data in respect of bonemeal and rockphosphate. c. Anticipated. d. Incorporates import of Urea in nutrient terms, the only controlled fertiliser imported on Govemment account. Source: The Fertilizer Association of India, Fertilizer Statistics various issues; Ministry of Finance, Economic Survey, various issues. Statistical Appendix 121 Table A6.7 Indian Railways: Freight and Passenger Traffic Passenger Traffic Revenue Earning Freight Traffic Non-Suburban Suburban' Originating Net tons- Average Passenger Passenger- Average Passenger Passenger- Average tonnage kilometers lead originating kilometers lead originating kilometers lead Year (mln.tons) (million) (kilometers) (million) (million) (kilometers) (million) (million) (kilometers) 1980-81 195.9 147652 754 1613 167472 103.9 2000 41086 20.5 1981-82 221.2 164253 743 1640 176822 107.8 2064 43965 21.3 1982-83 228.8 167781 733 1626 181142 111.4 2029 45789 22.6 1983-84 230.1 168849 734 1491 180808 121.3 1834 42127 23.0 1984-85 236.4 172632 730 1449 182318 125.8 1884 44264 23.5 1985-86 258.5 196600 760 1549 195175 126.0 1884 45439 24.1 1986-87 277.8 214100 771 1610 208057 129.0 1970 48411 24.6 1987-88 290.2 222528 767 1637 217632 133.0 2171 51859 23.9 1988-89 302.1 222374 736 1495 211819 141.6 2022 52023 25.7 1989-90 310.0 229602 741 1544 226045 76.9 2129 54933 25.8 1990-91 318.4 235785 741 1599 236066 147.6 2281 59724 26.2 1991-92 338.0 250238 740 1637 251174 153.4 2436 63543 26.1 1992-93 350.1 252388 721 1467 239655 163.3 2298 60547 26.4 1993-94 358.7 252411 704 1406 233200 165.9 2318 63147 27.2 1994-95 373.0 259810 697 1451 243798 168.0 2359 63275 26.8 1995-96 390.7 270489 692 1534 268708 175.2 2527 73651 29.1 1996-97 409.0 277567 679 1575 280470 178.1 2641 77104 29.2 1997-98 430.0 288095 670 1662 291512 175.4 2720 79784 29.3 Note: Figures for 1997-98 are revised estimates. a. Passengers booked between stations within the suburban areas of Bombay; from 1988/89 onwards suburban passenger traffic include Metro Railway, Calcutta. Source. Ministry of Railways, Railway Budget. 122 Statistical Appendix Table A6.8 Petroleum Summary Commodity Balance of Petroleum and Petroleum Products (million tons) 1980-81 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 a A. CRUDE PETROLEUM I.Refinery Throughput 25.8 42.9 45.7 47.7 48.8 51.9 51.8 51.4 53.5 54.3 56.5 58.7 62.8 2.Domestic Production 10.5 30.2 30.5 30.4 32.0 34.1 33.0 30.4 27.0 27.0 32.2 35.2 32.9 (a) On-shore 5.5 9.4 9.9 10.2 10.9 12.4 11.8 11.4 11.2 11.6 12.0 11.9 11.4 (b) Off-shore 5.0 20.8 20.6 20.2 21.1 21.7 21.2 19.0 15.8 15.4 20.2 23.3 21.5 3.Imports 16.2 15.1 15.5 18.0 17.8 19.5 20.7 24.0 29.2 30.8 27.3 27.3 33.9 4.Exports -- 0.5 -- -- -- -- -- -- -- -- -- -- -- 5.Net Imports (3-4) 16.2 14.6 15.5 18.0 17.8 19.5 20.7 24.0 29.2 30.8 27.3 27.3 33.9 B. PRODUCTS 1.Domestic Consumptionb 30.9 40.8 43.4 46.4 50.1 54.1 55.0 57.0 58.9 60.8 67.4 74.4 79.2 of which: (a) Naphtha 2.3 3.1 3.2 2.9 3.4 3.4 3.4 3.5 3.4 3.2 3.4 3.7 4.0 (b) Kerosene 4.2 6.2 6.6 7.2 7.7 8.2 8.4 8.4 8.5 8.7 9.0 9.3 9.6 (c) High Speed Diesel 10.3 14.9 16.0 17.7 18.8 20.7 21.1 22.7 24.3 25.9 28.3 32.3 35.2 (d) Fuel oils 7.5 7.9 7.9 8.1 8.5 8.8 9.0 9.2 9.3 9.2 9.9 10.7 10.7 2.Domestic Production 24.1 39.9 42.8 44.7 45.7 48.7 48.6 48.3 50.4 51.1 52.9 55.1 59.0 (a) Naphtha 2.1 5.0 5.6 5.5 5.4 5.2 4.9 4.5 4.6 4.7 5.7 6.0 6.1 (b) Kerosene 2.4 4.0 4.9 5.1 5.2 5.7 5.5 5.3 5.2 5.3 5.3 5.3 6.2 (c) High Speed Diesel 7.4 14.6 15.5 16.3 16.7 17.7 17.2 17.4 18.3 18.8 19.6 20.7 22.2 (d) Fuel oils 6.1 8.0 8.0 8.5 8.9 9.0 9.4 9.6 10.4 10.3 9.8 9.6 10.3 3.1mports 7.3 3.9 3.1 3.9 6.5 6.6 8.7 9.4 11.3 12.1 14.0 20.3 20.3 4.Exports c 2.0 2.5 3.4 2.3 2.6 2.6 2.9 3.7 4.0 3.3 3.4 3.2 5.Net Imports 7.3 1.9 0.6 0.5 4.2 4.0 6.1 6.5 7.6 8.1 10.7 16.9 17.1 -- Not available. a. Provisional. b. Excludes refinery fuel consumption. c. Excludes supplies of POL products to Nepal. Source: Ministry of Finance, Economic Survev, various issues. Statistical Appendix 123 Table A6.9 Generation, Consumption and Capacity of Electricity (000 GWH) 1980-81 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97a 1997-98 A. GENERATION OF ELECTRICITY BY SOURCE AND REGION 1. Thermal' Northem 13.69 37.74 41.24 48.82 52.13 60.44 66.17 71.45 72.45 81.76 86.02 88.30 Westem 25.37 61.80 63.39 73.08 76.95 84.33 88.50 96.27 102.92 115.75 120.97 127.78 Southem 9.22 28.07 30.53 34.03 35.76 40.39 44.31 51.03 54.80 65.19 71.24 75.47 Eastem 12.53 20.77 21.40 21.55 20.39 22.40 24.56 28.36 30.54 34.67 37.61 42.53 North-Eastem 0.50 1.24 1.15 1.22 1.31 1.19 1.23 1.08 1.42 1.95 2.11 2.02 All-India 61.30 149.61 157.71 178.70 186.55 208.75 224.77 248.19 262.13 299.32 317.95 336.10 2. Hydro Northem 15.08 20.86 23.57 25.01 27.16 27.21 25.45 24.34 30.24 29.26 29.01 30.96 Westem 7.81 5.06 7.54 6.87 8.31 8.16 7.27 8.72 10.30 7.55 7.84 8.29 Southem 20.28 17.35 21.64 24.54 29.17 29.63 30.70 30.72 35.05 28.43 25.14 28.81 Eastem 2.96 3.19 3.76 4.11 5.34 5.87 4.52 4.48 5.26 5.51 4.96 4.40 North-Eastem 0.41 0.97 1.36 1.58 1.66 1.89 1.93 2.20 1.86 1.83 1.94 2.02 All-India 46.54 47.44 57.87 62.12 71.64 72.76 69.87 70.46 82.71 72.58 68.89 74.48 3. Nuclear Northem 1.23 1.39 1.87 1.73 2.16 1.66 2.77 1.50 1.34 2.75 2.82 3.91 Westem 1.77 1.61 1.90 1.55 1.90 1.71 1.97 2.43 1.88 3.82 4.26 4.24 Southem .. 2.04 2.05 1.35 2.07 2.16 1.98 1.39 2.43 1.41 1.98 1.89 All-India 3.00 5.04 5.82 4.63 6.14 5.53 6.72 5.32 5.65 7.98 9.06 10.04 4. Utilities-All India (1+2+3) 110.84 202.09 221.40 245.44 264.33 287.03 301.36 323.97 350.49 379.88 395.90 420.62 5. Self-Generation in Industry 8.42 16.89 19.91 23.23 25.11 28.60 31.35 32.28 35.07 38.16 40.99 45.00 and Railways 6.Total-Alllndia(4+5) 119.26 218.98 241.31 268.66 289.44 315.63 332.71 356.25 385.56 418.04 436.89 465.62 B. CONSUMPTION OF ELECTRICITY BY SECTORS 1.Mining&Manufacturing' 55.35 82.97 92.05 100.40 105.38 110.62 116.17 121.38 129.83 137.13 140.87 2. Transport 2.31 3.62 3.77 4.07 4.11 4.52 5.07 5.62 5.89 6.22 6.65 3. Domestic 9.25 22.12 24.77 29.58 31.98 35.85 39.72 43.34 47.92 51.74 56.29 4. Agriculture 14.49 35.27 38.88 44.06 50.32 58.56 63.33 70.70 79.30 85.73 84.33 5. Others 8.30 15.42 17.02 17.01 19.74 21.42 22.38 24.41 26.40 28.65 30.59 6. Total 89.70 159.40 176.49 195.12 211.53 230.97 246.67 265.45 289.34 309.47 318.73 C. INSTALLED CAPACITY (000' MW) Utilities Thernal 17.6 35.6 39.7 43.8 45.8 48.1 50.7 54.3 58.1 60.1 62.0 64.3 Hydro 11.8 17.3 17.8 18.3 18.8 19.2 19.6 20.4 20.8 21.0 21.7 22.0 Nuclear 0.9 1.3 1.5 1.5 1.5 1.8 2.0 2.0 2.2 2.2 2.2 2.2 Total 30.3 54.2 59.0 63.6 66.1 69.1 72.3 76.7 81.1 83.3 85.9 88.5 Non-Utilities 3.1 6.3 7.5 8.2 8.6 9.3 10.1 10.2 11.1 11.9 12.6 a. Provisional Data. b. Includes steam, cliesel, wind and gas. c. Includes industrial power from utilities plus net generation in the non-utilities. Source: Central Electricity Authority, Power Data Bank & Infomnation Directorate. 124 Statistical Appendix Table A6.10 New Index Numbers of Wholesale Prices - by Years (Base 1981-82=100) Weights 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 percent changea TOTAL FOOD ARTICLES 17.386 161.1 177.1 179.3 200.6 241.1 271.0 284.4 313.8 334.6 375.0 12.1 Food Grains 7.917 141.3 161.8 165.4 179.2 216.4 242.4 260.8 293.0 313.7 354.0 12.8 OtherFood 9.469 177.7 189.9 190.9 218.5 261.8 294.9 304.2 331.1 352.1 392.6 11.5 INDUSTRIAL RAW MAT. 14.909 142.8 140.3 145.3 166.6 192.3 192.2 211.8 247.1 267.6 274.0 2.4 Non-Food Articles 10.081 163.0 160.2 166.0 194.2 229.2 228.7 249.1 297.0 322.8 330.0 2.2 Minerals 4.828 100.5 98.6 102.2 109.0 113.5 116.1 133.9 142.9 152.4 157.0 3.0 FUEL, POWER & LUB. 10.663 143.3 151.2 156.6 175.8 199.0 227.1 262.4 280.4 284.4 324.0 13.9 MANUF. PRODUCTS 57.042 138.5 151.5 168.6 182.8 203.4 225.6 243.2 268.8 292.4 305.0 4.3 Food Products 10.143 140.5 147.8 165.4 181.7 206.3 223.8 246.7 269.9 279.3 297.0 6.4 Beverage & Tobacco 2.149 155.0 180.7 207.7 242.1 265.7 293.7 306.6 341.2 372.5 392.9 5.5 Textiles 11.545 126.6 139.6 158.2 171.2 188.0 201.3 219.9 255.4 293.1 304.0 3.7 Chemicals and 7.355 131.9 135.8 140.1 147.9 168.4 192.6 207.8 231.5 247.9 259.0 4.5 Chemical Products Basic metals and 7.632 149.7 176.4 205.6 219.9 234.8 256.6 276.6 298.7 326.3 340.0 4.2 Products Machinery and 6.268 132.3 150.8 166.2 180.2 208.3 230.6 237.9 260.7 281.9 295.0 4.7 Machine Tools TransportEqpt. 2.705 135.5 148.9 166.2 181.3 202.5 218.1 223.9 238.2 253.2 265.9 5.0 ALL COMMODITIES 100.0 143.6 154.3 165.7 182.7 207.8 228.7 247.8 274.7 294.8 314.6 6.7 Note: This WPI series based 1981-82 was introduced as of July 1989. Data for 1996-97 are provisional. a. Refers to percent change in fiscal year 1996-97 over 1995-96. Source: Ministry of Industry, Office of the Economic Adviser. Statistical Appendix 125 Table A6.1 1 Consumer Price Index Numbers for Industrial Workers, Urban Non-Manual Employees and Agricultural Laborers Urban Non-Manual Agricultural Year Industrial Workers Employees Laborers ab (April-March) Foodlndex General ILdex (1984-85=100) General lndex (1982=100) (1982=100) (1960-61=100) 1989-90 177.0 173.0 145.0 746.0 1990-91 199.0 193.0 161.0 803.0 1991-92 230.0 219.0 183.0 958.0 1992-93 254.0 240.0 202.0 1076.0 1993-94 272.0 258.0 216.0 1114.0 1994-95 297.0 279.0 232.0 1204.0 1995-96 337.0 313.0 259.0 234.0 1996-97 369.0 342.0 283.0 256.0 Average of weeks 1995 March 311 293 244 1300.0 June 331 306 254 1337.0 September 345 317 261 1413.0 December 344 317 262 1401.8 1996 March 339 319 264 1395.9 June 361 333 274 247.0 September 372 344 274 259.0 December 380 350 289 263.0 1997 March 373 351 291 262.0 June 376 355 295 259.0 September 383 361 301 263.0 December 396 372 307 265.0 Percentage Change in Index over the corresponding month of previous year 1994 March 11.5 9.9 8.3 11.6 June 12.2 10.8 9.5 12.5 September 12.4 11.2 9.7 12.4 December 10.7 9.5 8.6 11.2 1995 March 10.7 9.7 9.9 10.6 June 12.6 10.5 10.4 12.4 September 11.7 10.1 9.7 12.9 December 10.6 9.7 9.2 8.1 1996 March 9.0 8.9 8.2 7.4 June 9.1 8.8 7.9 September 7.8 8.5 5.0 -- December 10.5 10.4 10.3 1997 March 10.0 10.0 10.2 -- June 4.2 6.6 7.7 4.9 September 3.0 4.9 9.9 1.5 December 4.2 6.3 6.2 0.8 --Not available. a. Indices related to Agricultural Years (June-July) b. Earlier base of 1960-61 was discontinued w.e.f November 1987. Source: Ministry of Labor, Labor Bureau, Simla; Central Statistical Organization; Ministry of Finance, Economic Survey various issues; CMIE, Monthly Review of the Indian Economy. 126 StatisticalAppendix Table A6.12 Evolution of the Wholesale Price Index, 1991-97 (index and twelve months point-to-point increase) Weight June 1991 June 1996 Dec 1996 June 1997 Dec 1997 % Index percent Index percent Index percent Index percent Index percent Contrib. WPI 100.00 100.0 11.2 154.3 5.4 160.8 6.9 163.0 8.3 163.0 1.3 63.0 Primary Articles 32.30 100.0 8.3 155.4 7.8 162.1 8.8 160.4 7.7 166.2 2.5 21.4 Food 17.39 100.0 0.6 160.1 10.1 170.7 14.1 183.6 22.7 190.8 11.8 15.8 Foodgrains 7.92 100.0 18.6 173.9 8.9 192.0 16.8 174.4 6.1 175.8 -8.4 6.0 Non-Food 10.08 100.0 10.1 151.8 4.4 152.7 1.0 159.9 5.8 165.2 8.2 6.6 Minerals 4.83 100.0 6.4 139.9 4.8 142.1 2.1 76.3 -45.2 80.2 -43.6 -1.0 Fuel,Power,Lubricants 10.66 100.0 9.2 155.7 3.7 1757 17.1 168.6 12.4 182.1 3.6 8.8 Manufactured Products 57.04 100.0 9.4 153.1 4.3 157.3 3.9 151.7 0.2 155.1 -1.4 31.4 Food products 10.14 100.0 12.0 141.1 1.6 151.6 7.7 153.1 8.8 156.5 3.2 5.7 Textiles 11.55 100.0 5.1 167.9 4.9 169.5 1.8 147.8 -11.2 150.7 -11.1 5.9 Chemicals 7.36 100.0 6.5 163.4 5.5 165.5 4.1 129.5 -18.6 130.9 -20.9 2.3 Metal andMetal Products 7.63 100.0 8.7 145.7 4.3 149.0 3.2 167.6 16.2 169.1 13.5 5.3 Machinery 6.27 100.0 9.5 146.7 3.8 150.8 4.6 144.4 0.2 144.9 -3.9 2.8 Memo Items Administered Prices: Petroleum crude & natural gas 4.27 100.0 130.3 133.0 133.3 142.32 Petroleum products 6.67 100.0 139.6 165.1 165.7 184.77 Coal 1.26 100.0 158.4 190.2 209.1 211.12 Electricity 2.74 100.0 185.5 189.2 207.7 222.26 Urea 0.99 100.0 155.2 155.1 156.8 170.56 Decontrolled Prices: Iron and steel 2.44 100.0 142.4 148.9 147.8 156.39 Phosphatic fertilizers 0.18 100.0 317.5 313.6 288.0 337.90 Super phosphate 0.06 100.0 320.9 310.5 317.6 315.88 Anmmoniumphosphate 0.12 100.0 315.4 315.4 315.4 315.44 Lubricating oil 0.45 100.0 184.8 189.6 196.8 196.85 Note: The last column indicates each item contribution to the WPI increase, that is the index item percentage change in Dec 1996 times the weight of the item in the WPI. 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