CURRENCY FLUCTUATION

TEAM – QUATRE

Presenters
Azmina Jivani - 37
Aziz Patanwala - 16
Ismail Bhilwarawala - 15
Nikhil Gawde - 10
SUMMARY

 Currency Fluctuation
 Foreign Exchange Market
 Foreign Exchange Reserves
 What Causes a Currency to fall in Value?
 Factors Affecting Currency Fluctuation or Causes of Currency
Fluctuation
 Currency Fluctuations Affect International Investments
 Effects of Currency Fluctuations on Investments
 Translation Effect
 Protection Against Currency Fluctuation

 Forward Contract or Forward Foreign Exchange Contract

 Currency Option

 Opening Foreign Currency Accounts

 Minimizing impact of differing in Currency Fluctuations
 Top 10 Currency Traders

 How Dollar Fluctuations Impact the Indian Economy??

 The Impact of Rising Rupee on the Indian Economy

 The Impact of Rising Rupee on the Indian Multinationals

 Ranking & Predictions of Indian Economy.
  Currency Fluctuation
Currency fluctuation. A currency has value, or worth, in relation to other currencies, and those values
change constantly.

Currency fluctuations are simply the ongoing changes between the relative values of the currency issued
by one country when compared to a different currency. The process of currency fluctuation is something
that occurs every day and impacts the relative rate of exchange between various currencies on a
continual basis. It is currency fluctuations that investors in currency exchange deals look to closely in
order to generate a profit from their investments.

For example, if demand for a particular currency is high because investors want to invest in that
country's stock market or buy exports, the price of its currency will increase. Just the opposite will
happen if that country suffers an economic slowdown, or investors lose confidence in its markets.

While some currencies fluctuate freely against each other, such as the Japanese yen and the US dollar,
others are pegged, or linked. They may be pegged to the value of another currency, such as the US
dollar or the euro, or to a basket, or weighted average, of currencies.

 Foreign Exchange Market

The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-
counter financial market for the trading of currencies. Financial centers around the world function as
anchors of trading between a wide range of different types of buyers and sellers around the clock, with
the exception of weekends. The foreign exchange market determines the relative values of different
currencies.

The primary purpose of the foreign exchange market is to assist international trade and investment, by
allowing businesses to convert one currency to another currency. For example, it permits a US business
to import British goods and pay Pound Sterling, even though the business's income is in US dollars.

According to the Bank for International Settlements, average daily turnover in global foreign exchange
markets is estimated at $3.98 trillion, as of April 2010 a growth of approximately 20% over the $3.21
trillion daily volume as of April 2007.
  Foreign Exchange Reserves

Foreign exchange reserves (also called Forex reserves or FX reserves) in a strict sense are only the
foreign currency deposits and bonds held by central banks and monetary authorities. However, the term
in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This
broader figure is more readily available, but it is more accurately termed official international reserves
or international reserves. These are assets of the central bank held in different reserve currencies,
mostly the US dollar, and to a lesser extent the euro, the UK pound, and the Japanese yen, and used to
back its liabilities, e.g. the local currency issued, and the various bank reserves deposited with the
central bank, by the government or financial institutions.

 What Causes a Currency to Fall in Value?

There can be many complex reasons, most of which are very hard to predict. However, if

(1) A country runs very large budget deficits which are funded in large part by foreigners, or

(2) A country runs very large trade deficits (the country imports more than it exports), then the
country’s currency will tend to come under increasing pressure.
  Factors Affecting Currency Fluctuation or Causes of Currency
Fluctuation
Actually, there are a lot of factors affecting the currency fluctuation. Generally speaking, changes in
economic position and the macroeconomics policies are the underlying factors for the long term
currency trend. You can always notice that analysts are very concerned about certain economic indices
like GNP (gross national product), consumer index and changes in interest rate, etc. By knowing these
economic indices, we are more capable to find out the currency fluctuation trend. Invest in and
withdraw from the forex trading market more actively.

International profits significantly affect the currency trend. International profits are the net amount of
income and expenses on foreign economic activities. Under normal circumstances, trade deficit
indicates that the demand exceeds the supply for the foreign currency/trade/imports. Under the
floating rate system, market demand and supply determine the currency fluctuation. A trade deficit can
cause the depreciation of local currency while appreciation of foreign currency, vice versa.

National Income or Gross National Income (GNI) also affects the currency trend. In general, when the
national income increases, the people spend more locally. This is in fact an indication of local currency
demand. If the demand of local currency remains unchanged, the additional demand on local currency
cause it to appreciate.

Of course, whether the change in national income induces a currency depreciation or currency
appreciation depends on factors causing the change in national income. If the change is caused by
increased product supply, the purchasing power of such currency increases in the long run. Foreign
currency is likely to depreciate. If the national income increases due to governmental expenses or
demand, which may increase the foreign import, then foreign currency may appreciate.

Inflation rate is another fundamental factor that affects currency fluctuation. If a nation has over issued
its currency which exceeds the demand in product purchasing, there will be inflation. Inflation decreases
the purchasing power of the people and therefore leads to currency depreciation. In general sense, the
local currency depreciates means the foreign currencies appreciate.

The change in inflation rate changes the demand and supply in currencies, bonds, and currency value
expectation.  Inflation leads to higher product price internally. Under the same currency rate, the nation
loses on exports and gain in imports. In the currency market, the demand of foreign currencies
increases, therefore causing the appreciation of foreign currencies.
Basically the fluctuations are caused by the demand and supply of the currency. The demand and supply
is generally affected by a country's trade and its macro economy policies.

Interest Rates

When the interest rate of a country is high, investors and speculators will take advantage of the higher
interest rates. Money will flow into the country. This will boost the demand for the country's currency
and can cause the currency to appreciate.

Money Supply and Inflation

When central banks print money, money supply will increase. There will be more money in circulation.
Inflation goes up, the currency value becomes weaker and this causes the currency to depreciate.

Balance of Trade

When a country exports more than it imports, the country is known to be in a trade surplus. Demand for
its currency usually follows and this causes the currency to appreciate.

Economic Growth

When a country anticipates weakening economy, investors will cash out their investments and transfer
their money to other countries with higher growth prospects. Demand for the currency falls and the
currency will depreciate. This is evident in the recent financial crisis in Oct 2008. The Euro and GBP
depreciated as investors cash out to buy US Treasury bonds.

Market Speculators

Speculators will sell currencies they anticipate will weaken, and buy currencies they anticipate will
strengthen. Central banks have limited foreign reserves and if the volume sold and bought by
speculators is huge, even central banks cannot do much to stabilize their currencies. This is evident in
the 1997 Asian financial crisis whereby speculators short Asian currencies, causing these currencies to
devalue.

Foreign Debt

Many nations, especially the developing and under developed nations, are fond of getting loans from
developed nations and international funding sources like IMF and World Bank. This money is
immediately added to the balance of payment of the borrowing nation. This will lower the currency
value of the borrowing nation. The currencies of the under developed and developing nations always go
down because of this unplanned borrowing. African, Caribbean and South eastern nations are good
example of this scenario.
  Currency Fluctuations Affect International Investments
As the globalization of investment portfolios continues, important risk factor investors have to take into
consideration when investing overseas is currency fluctuation. A U.S. investor's foreign investment
returns depend on both the foreign assets' market value in terms of the local currency, as well as the
currency's exchange rate against the U.S. dollar, since the foreign assets will be converted into dollars at
some future date.

How Currency Fluctuations Affect International Investments

For a U.S. investor, a currency gain arises when the value of the dollar falls against the currency in which
a foreign security is denominated. An appreciation of the dollar against the foreign currency could result
in a loss regardless of how well the foreign security performed. For example, assume stocks of a
particular foreign company gained 10% in market value in a given year, but that the U.S. dollar
appreciated 8% against this foreign currency during this time period. Your return in terms of dollars for
this period would be only 2%.

But currency fluctuations are not necessarily a negative factor. Depreciation of the U.S. dollar can make
overseas investing more attractive to U.S. investors. For instance, the dollar depreciated 36%, from the
end of 2001 to the end of 2008 against the euro, making an investment denominated in that currency
56% more valuable once it was converted back to dollars and that's before counting any appreciation of
the underlying investment. In addition to direct impacts of currency fluctuations, there are also indirect
impacts. Various economic factors often interact with each other and result in adverse movements of
exchange rates and equity prices. For example, a surging U.S. dollar against the Japanese yen would cut
demand for some American products and increase demand for some Japanese products. This would
help increase the competitiveness of some Japanese companies, particularly those export-oriented
companies. This would soon be reflected in these companies' stocks; and the rise in stock prices could
offset currency losses incurred from the conversion of the yen into the dollar. On the other hand, a
weakening of the dollar against the yen could negatively impact some export-driven Japanese
companies, especially those with a large presence in the American marketplace. These Japanese
companies' stock prices might be depressed, but there would be gains arising from the conversion of the
U.S. dollar into the yen.

New developments in the currency world can also affect currency fluctuations in new and unpredicted
ways. For example, the long-awaited introduction in 1999 of a single euro currency shared by many
European nations was greeted by projections that the currency would strengthen. After initially being
weaker than the U.S. dollar, by the close of 2008, the euro was 39% above par with the dollar.
  Effects of Currency Fluctuations on Investments
Invest $1,000 in the Toyko Stock Market with an Exchange Rate of 100 Yen per U.S. Dollar.*

U.S. Dollars Exchange Rate Ending Value

$1,000 80 Yen $1,200

$1,000 100 Yen $1,000

$1,000 120 Yen $800

*Values given represent a hypothetical $1,000 investment made and its ending value when converted
after a change in exchange rates.

Summary

Currency risk is an essential element of international investing and is only one risk of investing across
borders. Others include possible increased taxation as well as political uncertainties. For investors
seeking higher returns from overseas markets, it is important to understand how currency risk could
affect returns. As more and more investors invest overseas, currency risk is becoming a major factor to
consider. Currency risk is an essential element of international investing, and it is important to
understand how currency fluctuations can affect returns.

 Translation Effect
The most obvious impacts that currency fluctuations have on investments is known as the “translation
effect.” To invest in an overseas company, a U.S.-based investor generally uses dollars to purchase
shares of stock denominated in other currencies, such as the euro. If the dollar is strong relative to the
euro, it takes fewer dollars to make such purchases. If the dollar is weak, it takes more dollars to do so.
The same logic holds true when it comes to selling those shares. If the dollar is strong, the proceeds
from the euro-denominated stock will convert it to fewer dollars than if the dollar is weak. Thus, a falling
dollar will bolster returns while a rising one will diminish them.
  Protection Against Currency Fluctuation
All businesses involved in international trade, both importers and exporters, have a responsibility to
protect themselves from the potentially negative impacts of currency fluctuation.

“Hedging your currency risk is something that most people, whether they are importing or exporting,
should be doing as a matter of course.”

 The two main options available to help businesses manage these risks are forward contracts and
currency options.

1. Forward Contract or Forward Foreign Exchange Contract

‘‘The most important and most used is a forward contract, used for 98 per cent of all currency hedging,”
‘‘It is the simplest product and there is no cost associated with it. If used in the way it is intended to be
used it is a brilliant product.” 

A forward contract allows a company to set the exact exchange rate they will pay on a transaction, even
if this transaction is to be completed sometime in the future. The cost to the customer is zero, and the
bank agrees to take on all the currency fluctuation risk involved in the transaction.

 For example, a company may export a product and agree to receive payment in three months time of
$200,000. If the dollar/euro exchange rate is 1.25 per cent, they will receive €160,000.

 However, if the rate has risen during the three months to 1.29 per cent the company, will receive
€155,000.This could have a serious effect on the business’ bottom line.

 With a forward contract, agreed with a treasury specialist, the company can set the rate at 1.25 per
cent in advance.

 They will receive the agreed sum of €160,000 in three months' time. The risk will have been passed on
to the treasury specialist.

 Of course, exchange rates can also move in the other direction.  Agreeing a forward contract removes
any potential gain from the currency fluctuation for the exporter.

Knowing in advance how much you are going to receive in any business deal is a fundamental to most
businesses; hence the popularity of the forward contract.

 ‘‘With a forward contract you have certainty. You know what a consignment is going to cost you in euro
terms, so you can price outputs accordingly to achieve the profit margins you would like to achieve,” .

 
 2. Currency Option
Another package, aimed at protecting importers and exporters from currency fluctuation, is the
currency option. 

This is similar to a forward contract; however the customer now pays a fee to give them the opportunity
to take advantage of any favorable movement in the exchange rate. 

‘‘A currency option is almost identical to a forward contract, the only difference being that you can pay a
premium on it for the ability to walk away from it. The reason you would walk away from it is that if in
three months time the rate goes down to 1.21 you can deal at 1.21, but for that flexibility you pay a
premium,”

 Both the currency option and the forward contract are available in nearly every traded currency, and
work equally well whether a company is primarily an importer, exporter, or both.

 Opening Foreign Currency Accounts

An alternative is opening foreign currency accounts, where, if possible, you can hold money until the
exchange rate favours you, or opening an account with a bank overseas.
  Minimizing impact of differing in Currency Fluctuations
Currency fluctuation is among the most frustrating dynamics for a global brand to contend with.

With all the effort that goes into the design, product development, merchandising, planning and
marketing of a leading energetic line of any apparel or accessory line the added expertise of arbitrage is
now a key component of success.

This is an ever changing dynamic that involves geo political nuances that are far too complicated for the
apparel business to predict or pretend to have a handle on. The smart financial C.E.O’s and C.F.O’s know
that arbitrage is way out of their core competencies and knowledge base and seek outside guidance
when planning their respective business.

The advice that is given from these outside consultants comes down to 5 basic strategies:

1. Develop strong banking relationships globally. Rather the manufactures are Italian, French, and
English or based in the United States these corporations rarely exploit the opportunity to borrow
available money outside their home countries. Fluctuations in currency could be greatly mitigated by the
establishment of subsidiaries in their most important trading zones. This not only eases the selling of
product in these other markets but eases the problems in borrowing money from local banks.

2. Barter has become a very inventive way of allaying the fluctuation in currency. Although this seems
like an ancient style of conducting business it needs to be looked at seriously. A global company needs
to open up a dialog with their customers and suppliers (who are also being pressured by currency
fluctuations) and determine mutually beneficial trading pursuits.

3. It is imperative to seek advice and then enter into long term contracts with your suppliers and
customers utilizing a specific currency. This greatly reduces any currency fluctuations. It is important
that you get this right as the antithesis can do great harm to your company.

4. It is obvious but has to be stated that your company always has to be thinking globally.
Contingencies should be in place depending on the current global economic environment with the
necessary agility in place to react to the ever moving target.

5. In case of change in the global business environment, Gucci, Prada, Burberry, Hermes and the close
to 100 other luxury brands will react to the change in the Yen, Yuan, Wan, Euro, Pound and dollar
depending on the positions that they have taken. If business looks tough in Japan than the company
should shift its focus to China or any other favorable economy. The other advantage that the “super”
luxury brands have is that they can indeed pass some of the cost onto the consumer. The aspirational
brands such as Coach and Burberry are the companies that need to be the most diligent in their
prognostications.
  Top 10 Currency Traders

Percent of overall volume, May 2010 Rank Name Market Share

1 Deutsche Bank 18.06%

2 UBS AG 11.30%

3 Barclays Capital 11.08%

4 Citi 7.69%

5 Royal Bank of Scotland 6.50%

6 JPMorgan 6.35%

7 HSBC 4.55%

8 Credit Suisse 4.44%

9 Goldman Sachs 4.28%

10 Morgan Stanley 2.91%

  How Dollar Fluctuations Impact the Indian Economy??
Indian foreign exchange rate system – India FX rate system was on the fixed rate model till the 90s,
when it was switched to floating rate model. Fixed FX rate is the rate fixed by the central bank against
major world currencies like US dollar, Euro, GBP, etc. Like 1USD = Rs. 40. Floating FX rate is the rate
determined by market forces based on demand and supply of a currency. If supply exceeds demand of a
currency its value decreases, as is happening in the case of the US dollar against the rupee, since there is
huge inflow of foreign capital into India in US dollar

Why is the US dollar walking down? – When it comes to the US being a consumer, it has one of the
largest appetites in the world. To keep up its demand for consumption, its imports are huge when
compared to exports. This created pressure since there were more payments in dollars than receipt of
any other currency. This created a state of inflation and made consumables costlier to US. To control
inflation US resorted to increase in interest rates to cool down pressure on demand side of
consumption. This factor along with recession in all other sectors, particularly real estate, is causing the
mighty US dollar to shake.

Until the 70s and 80s India aimed at to be self-reliant by concentrating more on imports and allowing
very little exports to cover import costs. However, this could not last long because the oil price rise in
the 1970s and 80s created a big gap in India’s balance of payment. Balance of payment (BOP) of any
country is the balance resulting from the flow of payments/receipts between an individual country and
all other countries as a result of import/exports happening between an individual country, in our case
India and rest of the world. This gap widened during Iraq’s attempt to take over Kuwait. Thereafter,
exports also contributed to FX reserve along with Foreign Direct Investment into the Indian economy
and reduced the BOP gap

Indian rupee appreciation against dollar impacted heavily to the following:

   1. Exporters
   2. Importers
   3. Foreign investors

Exports from India are of handicrafts, gems, jewelry, textiles, ready-made garments, industrial
machinery, leather products, chemicals and related products. Since the 1990s, India is the world’s
largest processor of diamonds. The mentioned export items contribute substantially to foreign receipts.
During the periods when the dollar was moving high against the rupee, exporters stood to gain, when $1
= Rs. 48, was getting them Rs. 4800 for every $100. Since the beginning of the year 2007, rupee
appreciated by about 10%. With its value of rupee Rs. 39.35 = $1 as on 16 Nov 2007, for every $100,
exporters would get only Rs. 3935. This difference is towing away the profit margins of exporters and
BPO service providers alike.

Imports to India are of petroleum products, capital goods, chemicals, dyes, plastics, pharmaceuticals,
iron and steel, uncut precious stones, fertilizers, pulp paper etc. With the same scenario as given for
export, if we analyze - an importer is paying Rs. 3935 now instead of Rs. 4800 paid during yester years
for every $100. This gain on FX is likely to create savings in cost, which could be passed on to consumers;
thereby contributing to control inflation
Foreign investment into India is also contributing well to dollar depreciation against dollar. With the
recent liberalized norms on foreign investment policy like – Foreign investment of up to 51% equity limit
in high priority industries; foreigners & NRIs are allowed to repatriate their profits and capital with
exception for Indian nationals who were allowed to do so only under special circumstances; allowing
free usage of export earnings to exporters, made foreign investment in India very attractive. It is this
favorable atmosphere which made FX reserve surplus in US dollar and helped rupee to appreciate

Conclusively, appreciation and depreciation of rupee cannot certainly be taken as beneficial to the
Indian economy in general. On one hand the rupee appreciation will affect exporters, BPOs, etc., on the
other, rupee depreciation will affect importers. So now it depends on what the future has to reveal for,
how effectively the central bank can balance the FX rates with little impact to the relative areas of FX
usage. Can the Dollar remain king or not, is no longer a million dollar question, but a million Rupee
question!

Although the Indian rupee-US dollar exchange rate has a significant impact on the Indian
economy and business sector, the rupee has also appreciated against other currencies as
well. In January-July 2007, the rupee's value in terms of Pounds, Euros and Yen rose by 8%,
6.9% and 11.2%, respectively. According to the Reserve Bank of India (RBI) during 2005-06,
86% of Indian exports and 89% of imports were invoiced in US dollars. The Euro was a distant
second, with shares of 8% in exports and 7% in imports.

Scenario 2

 The Impact of Rising Rupee on the Indian Economy

The Indian rupee (INR) has appreciated by nearly 10% since late 2006, posing an acute dilemma for
Indian policymakers. It suggests that the country's attractiveness to foreign investors is increasing and
signals optimism about the future of Indian economy in general.

The main reason for the INR's appreciation since late 2006 has been a flood of foreign-exchange
inflows, especially US dollars. The surge of capital and other inflows into India has taken a variety of
forms, ranging from FDIs to remittances sent home by Indian expatriates. In each case, the flow seems
unlikely to slacken. The main impact of these various types of flows is examined below:

Foreign Direct Investment (FDI) - India's outstanding economic growth has created a large
domestic market that offers promising opportunities for foreign companies. Moreover, the country's
rising competitiveness in many sectors has made it an attractive export base. These factors have
boosted FDI inflows into the country. For example, in 2006-07, FDI amounted to around US $16bn,
almost three times the previous year's figure. More than half of these inflows arrived in the final four
months of the fiscal year (December 2006-March 2007).

External Commercial Borrowings (ECBs) - Indian companies have borrowed enormous

amounts of money overseas to finance investments and acquisitions at home and abroad. India's
balance-of-payments (Bop) data reveal that inflows through ECBs amounted to an enormous US $12.1bn
during April-December 2006, a year-on-year jump of 33%. The flood of borrowed money is likely to grow
in 2007. In the first three months of the year, Indian companies have notified the RBI of their plans to
raise nearly US $10bn in overseas debt markets.

Foreign portfolio inflows - India's booming stock market embodies the confidence of investors in
the country's corporate sector. Foreign portfolio inflows have played a key role in fuelling this boom.
Between 2003-04 and 2006-07, the net annual inflow of funds by Foreign Institutional Investors (FIIs)
averaged US $8.1bn. Trends during the first five months of 2007 indicate that this flood is continuing,
with net FII inflows amounting to US $4.6 billion. Another major source of portfolio capital inflows has
been overseas equity issues of Indian companies via Global Depositary Receipts (GDRs) and American
Depositary Receipts (ADRs). Inflows from GDRs and ADRs amounted to US $3.8bn in 2006-07, a year-on-
year increase of 48%.

Investments and remittances - Indians settled in other countries have also been a major source
of capital inflows, with many non-resident Indians (NRIs) investing large amounts in special bank
accounts. While NRIs' emotional connection to their country of origin is part of the explanation for this,
the attractive interest rates offered on such deposits have also provided a powerful incentive. In 2006-
07, NRI deposits amounted to US $3.8bn, a 35% increase over the previous year; the outstanding value
of NRI deposits as of end-March 2007 was US $39.5bn. Another large source of foreign-exchange inflows
has been remittances from the huge number of Indians working overseas temporarily. Such remittances
amounted to a colossal US $19.6bn in April-December 2006, a 15% year-on-year increase.

 The Impact of Rising Rupee on the Indian Multinationals

Even though the INR fluctuates a lot, but it is still up 7% making it the best performing currency against
the USD in 2007. A month back it touched a nine percent. According to the report, the companies that
will be impacted negatively by the rupee appreciating include global commodity stocks like Reliance,
Hindalco, Tata Steel and software companies like Satyam, Patni, etc. And the gainers will be Jet Airways,
Reliance Communications and auto companies like Tata Motors, Maruti, Hero Honda etc.

The Losers:
Global commodity companies price their products off landed costs. With a decrease in landed costs,
profits for these companies will be hit. As an example, Reliance's 70% of revenues come from exports
which again would be hit by the rising rupee thereby eroding their profitability.

The rising rupee and the fluctuating dollar have affected the Indian IT industry adversely. It has dented
profits and at the same time, many foreign clients with a dollar budget are finding it too expensive to
use Indian service providers. That is, software companies are also going to lose on the back of the
appreciating rupee as their exports are priced in foreign currency.

The Gainers:
On the other hand, sectors that are likely to gain from the currency gaining are auto, engineering and
aviation companies.

The biggest gainers in the auto sector are Hero Honda, Maruti, Tata Motors and Ashok Leyland as the
imported price of their raw materials will cost less. Engineering companies like Suzlon also gain on raw
material cost savings.

Jet Airways is the other gainer on its aviation fuel costs for its domestic routes. Though its international
revenues will get hurt, there will be more savings on account of fuel, lease rentals, interest and
depreciation.

Companies with foreign currency loans or Foreign Currency Convertible Bonds (FCCBs) like Reliance
Communications, Bharat Forge, Sun Pharma and Ranbaxy are also likely to gain due to rupee
appreciation. Allianz Global feels that a sharp rupee appreciation will have a drag effect particularly on
banks.

Government standpoint:

The government is working on schemes to offset impact of appreciating rupee. The proposed scheme
refunding local taxes and levies to labour-intensive industries with little import content, to offset the
impact of the appreciating rupee, which was at a nine-year high.

Conclusion:
Though the strengthening of the rupee will benefit certain industries, others might face the brunt. But
the gain will be to the entire Indian economy. The basic foundation for any country to become an
economic superpower is to have a strong infrastructure. This need for huge investments, are being met
through FDIs & FIIs. Similar developments in other key areas would truly help India to reach the position
of the 3rd largest economy of the world behind US and China by 2035.
 Ranking & Predictions of Indian Economy:

 India's GDP at current prices will overtake that of France and Italy by 2020 and that
Germany, UK and Russia by 2025.

 By 2035, India is expected to be of 3rd largest economy in the world behind US and China
overtaking Japan.

 India's expected growth rate of 5.3 to 6.1% in various periods in the past, at present India is
registering more than 9% growth rate. And this way, "India could overtake Britain and be
the world's fifth largest economy within a decade as the country's growth accelerates."

 "In thirty years, India's workforce could be as big as that of the United States and China
combined."

 Presently India is the third largest economy in the world as measured by Purchasing Power
Parity (PPP) and twelfth largest in the world as measured in USD exchange-rate terms, with
a GDP of US $1.0 trillion.

 Amongst the major economies of the world, India is the second fastest growing economy
with a GDP growth of 9.4% for fiscal year 2006-2007.