The Reserve Bank of India today released the September 2012 issue of its monthly Bulletin. The Bulletin includes five special articles: i) India’s Foreign Trade: 2012-13 (April-June), ii) Monthly Seasonal Factors of Selected Economic Time Series, iii) International Banking Statistics of India: December 2011 and March 2012, iv) Corporate Investment: Growth in 2011-12 and Prospects for 2012-13 and v) Performance of Private Corporate Business Sector during 2011-12.

1. India’s Foreign Trade: 2012-13 (April-June)

This article reviews India’s merchandise trade performance during April-June 2012-13 (Q1) on the basis of data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S). It also analyses disaggregated commodity-wise and direction-wise details for the year 2011-12.

Highlights

• During Q1 of 2012-13, exports stood at US$ 75.2 billion and showed a decline of 1.7 per cent as against an increase of 36.4 per cent during Q1 of 2011-12. The significant deceleration in export performance observed in the second half of 2011-12 continued during Q1 of 2012-13, as global economic and trade environment remained unsupportive.

• During Q1 of 2012-13, imports declined by 6.1 per cent over the corresponding quarter of 2011-12 and stood at US$ 115.3 billion. Lower imports during Q1 of 2011-12 mainly reflected the contraction in imports of gold and silver and a moderate growth in imports of petroleum, oil and lubricants (POL).

• Lower growth in POL imports at 5.5 per cent during Q1 of 2012-13 as compared with a growth of 52.5 per cent during Q1 of 2011-12 could be partly reflecting the moderation in international crude oil prices.

• Imports of gold and silver at US$ 9.4 billion during Q1 of 2012-13 were 48.4 per cent lower than that in Q1 of 2011-12.

• Non-oil non-gold imports during Q1 of 2012-13 at US$ 65.3 billion recorded a decline of 2.9 per cent as compared to an increase of 18.9 per cent in Q1 of preceding year.

• Trade deficit during Q1 of 2012-13 stood lower at US$ 40.1 billion as compared with US$ 46.2 billion during Q1 of 2011-12.

• Commodity-wise data on merchandise exports for the year 2011-12 show that engineering goods, petroleum products, chemicals, textiles, gems & jewellery and agricultural products accounted for more than 89 per cent of India’s exports.

• During 2011-12, while the share of European Union in India’s total merchandise exports declined marginally, the same of OPEC countries declined by more than two percentage points.

2. Monthly Seasonal Factors of Selected Economic Time Series

This article presents the estimated monthly seasonal factors of selected 99 major macroeconomic series, for the period 2002-03 to 2011-12, broadly covering five major sectors, namely, Monetary and Banking Indicators (20 series), Prices (WPI/CPI) (32 series), Industrial Production (37 series), External Trade (2 series), and Services Sector Indicators (8 series).

Main Findings

• The estimated seasonal factors and the variation over time revealed that seasonal variations of M3, Currency in circulation and M1 declined gradually. However, the seasonal variations of Reserve Money (RM) increased since 2008-09.

• For Scheduled Commercial Banks, an upward movement in the seasonal variation of Non-Food Credit and Investments was observed in the recent years, while the seasonal variation of Aggregate Deposits showed a decrease. Within Aggregate Deposits, Demand Deposits exhibited higher seasonal fluctuations than Time Deposits.

• Among the price related series, seasonal variation for WPI-All commodities remained low and exhibited steady decline in recent years. The variation in seasonality for WPI-Primary Articles was much higher than that of WPI-Manufactured products. For WPI-Fuel and Power group, no significant seasonality was observed. However, the subgroup of freely priced products (excluding petrol) showed significant seasonal variation. Seasonal variation of CPI-IW was observed to be stable in the recent years but consistently higher than in WPI-All Commodities and marginally lower than CPI-AL and CPI-RL.

• With respect to production data, seasonal variation of IIP-General Index was seen to increase steadily over the time period. The seasonal peaks of IIP-General, sectoral and use-based group indices occurred in March every year. The seasonal trough, however, occurred in different months. Among the use-based classification of IIP, ‘Capital Goods’ and 'Intermediate Goods' showed the highest and lowest seasonal variations, respectively.

• During 2011-12, 45 out of the 99 select series had registered their seasonal peaks in March. In terms of seasonal variations, over the last five years, the top five series were ‘IIP-Office, accounting and computing machinery’, ‘IIP-Food products and beverages’, ‘Coal Production’, ‘WPI-Potatoes’, and ‘WPI-Onions’; while bottom five series were ‘WPI- Manufactured Products’, ‘WPI-All Commodities’, ‘WPI-Non Food Manufactured Products’, ‘WPI-Food Products’ and ‘WPI-Milk’.

3. International Banking Statistics of India: December 2011 and March 2012

The article presents analysis of international liabilities and assets of banks in India, classified under Locational Banking Statistics (LBS) and consolidated international/foreign claims under Consolidated Banking Statistics (CBS), collected as per the reporting system of the Bank for International Settlements (BIS), for the quarters ended December 2011 and March 2012.

Main Findings

Locational Banking Statistics - International Liabilities

• The international liabilities (in ` terms) of banks in India, at end-March 2012 grew by 8.6 per cent over the position a year ago and by 8.2 per cent over the previous quarter.

• Foreign currency borrowings, NRO and NRE deposits contributed to the high growth in the international liabilities. The share of equities of banks held by non-residents in the total liabilities, however, declined in the last two quarters.

• At end-March 2012, the annual increase in the international liabilities emanated from the increase in exposure towards various countries, primarily, the USA, UK, Hong Kong and Singapore.

• The share of the international liabilities towards the non-bank sector was marginally lower at 73.3 per cent as compared with 74.0 per cent a year ago.

Locational Banking Statistics - International Assets

• At end-March 2012, the international assets (in ` terms) of banks in India registered a substantial growth of 21.6 per cent over the position a year ago and an increase of 7.9 per cent over the previous quarter.

• The high annual growth in international assets at end-March 2012 can be ascribed to each of the items under the major component 'Loans and Deposits'.

• The share of the non-bank sector in total international assets declined to 62.3 per cent at end-March 2012 from 66.5 per cent a year ago.

• At end-March 2012, the share of the international assets denominated in US Dollar increased further to 81.3 per cent from 79.2 per cent a year ago.

Consolidated Banking Statistics

• The annual growth in consolidated international claims (in ` terms) of banks based on country of immediate risk, as at end-March 2012, was 14.0 per cent as compared to the annual growth of 5.9 per cent a year ago.

• Major part of consolidated international claims of Indian banks on immediate risk basis, at end-March 2012, continued to be of short-term nature (less than one year) and accounted for 65.2 per cent of total claims as compared with 62.5 per cent a year ago.

4. Corporate Investment: Growth in 2011-12 and Prospects for 2012-13

This article captures capital investment intentions of companies in private and joint business sector in order to broadly assess the likely short-term changes in business sentiment. The estimation of capital investment during the year is based on phasing details of investment intentions indicated by companies while raising funds through sanctioned assistance by banks/financial institutions, ECB/FCCBs and domestic equity. Capital expenditure envisaged from pipeline projects are also estimated for the year 2012-13.

Main Findings:

• New investment intentions in 2011-12 aggregating `2,509 billion were lower by 41.0 per cent as compared to `4,263 billion in the previous year.

• Industries, such as, power, metal & metal products, telecom, cement and hotel & restaurants witnessed decrease in total project cost; whereas, textile, chemical & pesticides and transport services observed an increase in total project cost in 2011-12 as against in 2010-11.

• Maharashtra, Karnataka, Uttar Pradesh and Rajasthan were preferred destinations of investment and witnessed an increase in share in the total envisaged projects in 2011-12 when compared to last year. The shares of Andhra Pradesh, Chhattisgarh (which attracted the highest investment last year) and Odisha have, however, gone down.

• The capital expenditure already planned to be spent in 2012-13 aggregated `2,073 billion. Even if companies adhere to their investment plans, the envisaged investment by the private corporate sector in 2012-13 is expected to be significantly lower than that in the previous year.

5. Performance of Private Corporate Business Sector during 2011-12

The article analyses the performance of private corporate sector in 2011-12 based on the abridged financial results of 2,679 non-government non-financial (NGNF) listed companies and provides, inter alia, a brief analysis by size and industry.

Main Findings:

• The sales growth of the private (non-financial) corporate business sector moderated during 2011-12. The deceleration in sales growth was sharper in the fourth quarter of 2011-12. Growth in profits declined sharply on account of continued pressure from rising raw material costs and relatively higher growth in power & fuel and interest cost.

• Profitability, in terms of operating, gross and net profit margins (expressed as percentage to sales) contracted for the second consecutive year.

• In terms of the sectoral breakdown, sales growth was higher for companies in the manufacturing sector as compared to those in the services sector. However, IT sector with significant support from other income witnessed substantial growth in net profits during 2011-12 unlike the manufacturing and services other than IT, where the net profits declined.

• The performance of bigger companies (sales above `10 billion) was relatively better. However, profit margins contracted for all size classes

Sangeeta Das
Director

 

Central bank bulletin outlines trade slowdown, seasonal indicator shifts and weaker corporate investment and profitability. The Bulletin presents five analytical articles: a review of Q1 2012-13 merchandise foreign trade showing declining exports, reduced gold imports and a narrower trade deficit; estimated monthly seasonal factors for 99 macro series with notable shifts in money and production seasonality; international banking statistics showing growth in banks' international liabilities, assets and consolidated claims with short-term and US dollar concentration; corporate investment intentions revealing a marked fall in new projects and lower envisaged capital expenditure; and private corporate sector results indicating moderated sales and contracted profit margins.