Front Matter

Front Matter Page

© 2001 International Monetary Fund

October 2001

IMF Country Report No. 01/181

India: Recent Economic Developments and Selected Issues

This report on India was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on June 5, 2001. The views expressed in this document are those of the staff team and do not necessary reflect the views of the government of India or the Executive Board of the IMF.

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Front Matter Page

INTERNATIONAL MONETARY FUND

INDIA

Recent Economic Developments and Selected Issues

Prepared by a staff team from the Asia and Pacific Department, Fiscal Affairs Department, and Monetary and Exchange Affairs Department

Approved by the Asia and Pacific Department

June 5, 2001

Contents

  • I. Introduction and Summary

  • II. Economic Activity and Prices

    • A Overall Developments

    • B. Sectoral Developments

    • C. Saving and Investment

    • D. Inflation

    • E. Macroeconomic Dynamics in India

  • Text Boxes

  • II.1. The Information Technology Sector

  • Tables

  • II.1. GDP at Factor Cost by Sector of Origin, 1994/95-2000/01

  • II.2. GDP at Market Prices by Expenditure Components, 1994/95–1999/2000

  • II.3. Employment and Labor Statistics, 1993/94–1998/99

  • II.4. Agricultural Production and Yields, 1994/95-2000/01

  • II.5. Index of Industrial Production, 1995/96–2000/01

  • II.6. Saving and Investment, 1994/95-1999/2000

  • II.7. Price Developments, 1995/96–2000/01

  • Charts

  • II.1. Industrial Production and Business Confidence, 1995–2001

  • II.2. Components of Industrial Production, 1995-2001

  • II.3. Inflation Indicators 1995-2001

  • II.4. Dynamic Responses to Shocks

  • III. External Sector Developments and Trade Policies

    • A. Overall Balance of Payments

    • B. Current Account

    • C. Capital Account

    • D. Trade Policy

  • Text Boxes

  • III.1. The India Millennium Deposit Scheme

  • III.2. 2001/02 EXIM Policy Statement

  • Tables

  • III.1. Balance of Payments, 1995/96–2000/01

  • III.2. Official Reserves, 1995/96–2000/01

  • III.3. Selected Countries: Inward Foreign Direct Investment, 1995-1999

  • III.4. External Commercial Borrowing, 1993/94–2000/01

  • III.5. External Debt, 1994/95–2000/01

  • Charts

  • III.1. Quarterly External Sector Developments, 1997-2000

  • III.2. Exchange Rate Developments 1996–2001

  • III.3. Current Account Developments, 1992/93-1999/2000

  • III.4. Merchandise Exports and Imports, 1996–2000

  • III.5. Selected External Indicators, 1992/93–1999/2000

  • IV. Monetary Policy and Financial Market Developments

    • A. Monetary Policy and Interest Rate Developments

    • B. Monetary Aggregates

    • C. Stock Market Developments

    • D. Banking Sector Developments

  • Text Boxes

  • IV.1. April 2001 Monetary and Credit Policy Statement

  • IV.2. Financial Sector Reform Measures

  • Tables

  • IV.1. Selected Monetary Indicators, 1995/96–2001/02

  • IV.2. Real Interest Rates

  • IV.3. Reserve Money, 1997/98-2000/01

  • IV.4. Monetary Survey, 1997/98–2000/01

  • IV.5. Financial Performance of Commercial Banks, 1993/94–1999/2000

  • IV.6. Indicators of Financial System Soundness, 1995/96–1999/2000

  • Charts

  • IV.1. Monetary Indicators, 1996-2001

  • IV.2. Financial Market Developments, 1996-2001

  • IV.3. Selected Monetary Indicators, 1996–2001

  • V. Fiscal Developments

    • A. Background

    • B. Central Government Fiscal Performance in 2000/01

    • C. Central Government Budget for 2001/02

    • D. State Government Finances

    • E. Performance of Public Sector Undertakings (PSUs)

    • F. Oil Coordination Committee (OCC) Accounts

  • Text Boxes

  • V.1. The Fiscal Responsibility and Budget Management Bill

  • V.2. FY 2001/02 Revenue Measures

  • V.3. Recommendations of the Expenditure Reforms Commission

  • V.4. Recommendations of the Eleventh Finance Commission and the Fiscal Reform Facility

  • V.5. Power Sector Issues

  • Tables

  • V.1. Consolidated Public Sector Operations, 1995/96-2001/02

  • V.2. Fiscal Targets

  • V.3. Central Government Operations, 1995/96–2001/02

  • V.4. State Government Operations, 1995/96–2001/02

  • Charts

  • V.1. Government Deficits and Debt 1990/91-2001/02

  • V.2. Fiscal Trends—Central and State Governments, 1990/91–2001/02

  • V.3. Central Government Budget Targets vs. Outturns, 1991/92–2001/02

  • V.4. State Government Budget Targets vs. Outturns, 1991/92–2000/01

  • V.5. Fiscal Indicators—PSUs, 1990/91–2001/02

  • V.6. OCC Accounts, 1990/91-2000/01

  • VI. Structural Policies and the Report of the Prime Minister’s Economic Advisory Council

    • A. Introduction

    • B The EAC Report

    • C. Recent Structural Measures

    • D. Concluding Remarks

  • Text Boxes

  • VI.1. Major Reform Initiatives in 2000/01

  • VII. Interstate Differences in Rural Poverty in India

    • A. Introduction

    • B. Trends in Rural Poverty

    • C. Has Growth Been Pro Poor?

    • D. Poverty Dynamics During the Reform Period

    • E. Conclusions

  • Text Boxes

  • VII.1. Agricultural Wages: Some Unpleasant Arithmetic

  • Tables

  • VII.1. Panel Regressions, 1978-97

  • Charts

  • VII.1. Incidence of Rural Poverty in India’s States

  • VII.2. Estimated Interstate Distribution of Poverty, 1978-97

  • VII.3. Intradistribution Dynamics, 1978-97

  • VII.4. Poverty Dynamics Between 1988–97

  • VII.5. Poverty Convergence Across India’s States, 1978-97

  • VII.6. Interstate Distribution of Conditioned Poverty, 1978-97

  • VII.7. Intradistribution Dynamics of Residual Poverty, 1978-97

  • VII.8. Poverty Dynamics in the Early and Late Reform Years

  • VII.9. Poverty Convergence During the 1990s

  • VII.10. Conditioned Poverty Dynamics in the Early and Late Reform Years

  • VIII. Postal Savings in India

    • A. Introduction

    • B. Financial Products

    • C. Government Policy and Costs of the System

    • D. Reform Considerations

    • E. Conclusion

  • Text Boxes

  • VIII.1. Interest Rates on Postal Savings Schemes

  • VIII.2. National Savings Organization (NSO)

  • VIII.3. The Taxation of Income from Postal Savings

  • VIII.4. Loans Against Small Savings Collections

  • VIII.5. The Postal Savings System in Japan

  • Tables

  • VIII.1. Amount Outstanding under Postal Savings Schemes

  • VIII.2. Effective Cost of Postal Savings Schemes, 2000/01

  • Charts

  • VIII.1. Postal Savings Deposits vs. Bank Deposits

  • VIII.2. Postal Savings Deposits as Percent of Bank Deposits

  • IX. Pension Reform in India

    • A. The Current System of Pensions and Provident Funds

    • B. Problems with the Current System

    • C. Ongoing Reform Efforts

    • D. Concluding Remarks

  • Tables

  • IX.1. Employee Provident Fund and Employee Pension Scheme, 1996/97-1998/99

  • IX.2. Civil Service Pension System 1998

  • IX.3. Parameters of the Civil Service Pension System

  • Appendix

  • IX.1. Small Saving Schemes

  • X. Foreign Exchange Market Developments and Policies

    • A. Overview of the Indian Foreign Exchange Market

    • B. The Structure of the Indian Foreign Exchange Market

    • C. Gauging the Flexibility of the Rupee

    • D. Offshore Markets

    • E. Foreign Exchange Market Intervention

    • F. Concluding Observations

  • Tables

  • X.1. Exchange Rate Volatility 1996-2000

  • X.2. Interest Rate Volatility 1996–2000

  • X.3. Reserves Volatility, 1996–2000

  • X.4. Exchange Rate Flexibility 1996-2000

  • X.5. Exchange Rate Regressions: Co-Movement with the U.S. Dollar

  • Charts

  • X.1. Exchange Rates and Reserves, 1990-2001

  • X.2. Daily Exchange Rate Movements (log difference)