Indian Economy in 2010

With many hopes pinned on it as always, Finance Minister Pranab Mukherjee presented the Budget for the year 2010-11 on February 26.

Keeping to the aim of reverting to a high GDP path of 9 per cent and cross the double-digit growth barrier', the minister briefed the nation on new tax reforms the government plans to implement soon.

The Direct Tax Code will be implemented from April 1 next year, even as consensus-building exercise is still on for the Goods and Services Tax - a combination of customs, excise and service tax.

Initial public offers (IPO) and rights issues by India Inc raked in a whopping Rs 19,109.7 crore in October, mobilised through seven offers, including five IPOs, during the month.

It wasn't just about October, as the government's disinvestment drive kept investors happy and gay throughout the year. Following are some PSUs which went on the offer floor:

NTPC, REC, United Bank of India, NMDC, Satluj Jal Vidyut Nigam, Engineers India, Coal India , PowerGrid, MOIL and Shipping Corp .

Without a doubt, Coal India topped the charts, generating a total demand for shares worth Rs 2.34 lakh crore - the most in the history of India's primary market. In all, the issue was oversubscribed 15 times. The offer brought something for the company, too. It posted a net of Rs 4,020 crore for the April-September period, up 29 per cent from the year-ago period.

Showing their faith in the Indian economy, overseas funds infused a whopping $6.11 billion in October, the highest amount brought in any single month by foreign institutional investors (FIIs), ever since they were allowed to invest in local stocks.

With another $4.78 billion in November, the total FII inflows so far in 2010 had crossed a record $38.76 billion-mark - something which reaffirms India's status as THE investment destination.

The Bombay Stock Exchange benchmark Sensex made a brisk 111-point dash to end Samvat Year 2066 at an all-time high of beyond 21,000 - to 21,004.96, a level never seen before - during over an hour-and-a half long Muhurat trading session on Diwali.

The market had by this time rallied over 5,000 points since last Diwali, adding close to Rs 20 lakh crore in market capitalisation.

However, the year also saw some of the major falls in its history - 432 points on November 12 and 444.55 points on November 16, to list a couple.

Driven by good performance of agriculture and manufacturing sectors, the Indian economy grew 8.9 per cent in the second quarter of 2010-11, up from 8.7 per cent in the corresponding period a year ago.

However, finance minister Pranab Mukherjee maintained a conservative growth forecast of 8.75 per cent for the year.

After keeping the general public worried for a good part of the year, food inflation fell to single-digit level - a four-month low in November based on a new WPI series (takes 2004-05 as the base year, instead of the earlier 1993-94).

The decline raised hopes that overall inflation would fall to around 6 per cent by the end of the year, as predicted by the government.

And even the data did help keep up the positive sentiment. Inflation fell to 7.48 per cent in November, mainly boosted by lowering of pressure on certain food items.

One can get an inkling of how confident the Indian consumer got during the year when domestic passenger car sales jumped 37.99 per cent to 1,82,992 units in October.

With scores of cars and bikes getting launched every month, about a lakh cars were added to the roads for a good part of the year.

The country's largest car maker even registered growth of 39 per cent in sales for the month of October year-on-year, at 1.18 lakh units.

After giving a scare in the middle of the year, industrial output registered double-digit growth after two months - in October it rose 10.8 per cent on back of healthy performance of automobile, electronic goods and power sectors.

The factory output had crossed 15 per cent in July, dipped to 6.91 per cent in August and further to 4.4 per cent in September.

The data revealed that manufacturing sector during October grew 11.3 per cent, helping the output through April-October at an average 10.3 per cent.

India's exports in November rose 26.8 per cent to $18.9 billion year-on-year, prompting the government to exude confidence that the outbound shipments will touch $215 billion this financial year.

The figure is much higher than the target of $200 billion set by the government for 2010-11. During the April-November period, exports were now worth $140.3 billion.

However, despite imports also growing 11.2 per cent to $27.8 billion for the month, the government said the trade gap of $120 billion should not be worrying and be "manageable".

Bullion on a bull run

Despite see-sawing on prices for a major part of the year, gold and silver rose to their all-time high of Rs 21,050 per ten grams and Rs 45,500 per kg, respectively, driven by firm global trend and brisk buying during the marriage season.

Trading activity gathered momentum after gold in global markets, which normally set a price trend at the domestic front, rose to a record-high of $1,428.70 an ounce. Silver, too, was at 30-year high of $30.32 an ounce.