inidan economy

8/3/2019 Inidan Economy

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Indian Economy

Sneha Bose

Somesh Dwivedi

Sonam Taneja


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Characteristics of ancient Indianeconomy

Agriculture was the predominant occupation.

Religion played an important role in shaping economic

activities.

Caste system prevented people from changingoccupations.

Barrier to mobility on labour restricted economicprosperity to upper castes.


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Organizational entities in ancientIndia

Nigama Organization of merchants

Pani Organization of craftsmen

Sreni Organization of artisans

These entities share many similarities with moderncorporations. The use of such entities was widespread in

business, political and municipal activity.


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Coinage

Punch marked silver ingots were circulated in 5thcentury BC.

Metallic coins were minted in 6th

century BC byMahanjapadas of the gangetic plains.

Barter system was still widely prevalent.

Each village, as an economic unit wasself-sufficient.


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Exports in ancient India

Muslin of Dacca

Calicos of Bengal

Steel and iron works

Agricultural products pepper, cinnamon, opium andindigo.

The aforementioned products were exported to Europeand Middle east in return for gold and silver.


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GDP estimates of ancient India

India was the worlds largest economy in the timeframe 1st century- 11th century.

Indias share of the world GDP stood at a whopping

32.9% in this period.

It dropped marginally to 28.9% at the end of thisperiod.

ReferenceThe World Economy : A MillenialPerspective byAngus Maddison(economic historian).


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Time frames of ancient Indianeconomy

Mughal Empire India was the 2nd largest economy inthe world. Indias GDP was estimated at about 40% ofChinas.

Nawabs, Marathas & NizamsIndias GDP wasestimated at about 80% of Chinas.

British East India Company Rule British foreignpolicies stifled trade with the rest of the world.


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Post-independence scenario (contd.)

Influence by colonial experience This was seen byIndian leaders as exploitative in nature.

Formulation of economic policy J.L Nehru, along

with Prasanta Chandra Mahalanbois oversaw economicpolicy.

State intervention It involved public and private

sectors in a less extreme soviet-style system.

In the late 80s, under Rajiv Gandhi, economic policieswere liberal.


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Obstacles faced by the young Indianeconomy

Impairment of productivity

Socialist controls on the economy (eg. License Raj)

Trade deficits

Currency devaluation in 1966

Decrease in foreign exchange reserves


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Pre-liberalization scenario of Indianeconomy

Fixed exchange rate system As of 1991, rupee waspegged to the value of a basket of currencies of majortrading partners.

Imbalance of payments

Refusal of new credit by central bank

Reduction in foreign exchange reserves

Inability to finance imports


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Aftermath of liberalization

Under PM P.V. Narsimha Rao, Finance Minister ManmohanSingh initiated the economic liberalization of 1991.

Abundant job opportunities

Reduction in corporate taxesIncreased rate of growth, highfiscal deficits.

Increase in the number of private banks

Flooding of Indian markets with western goods

Rise in disposable income

More foreign direct investments


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Primary economic achivements post -2000

Universal license in telecom field It allowed CDMAlicense holders to provide GSM services and vice versa.

Golden quadrilateral road network The network

connects the metros of Delhi, Chennai , Mumbai andKolkata. The project is still under construction.

Sarva Shiksha Abhiyaan

Steady rise in the GDP


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Economic achievements (contd.)

I.T services and software exportsThis domainregisterd a growth of 33% in FY 2003-04.

Revenue generated I.T services and software

exports generated a revenue of US $ 17.3 bn.

Foreign Exchange reserves The figure rose to$308397 forex reserves as of July08.

Rise in urban employment


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Introduction to present Indianeconomy

Mixed economy

Currency is Indian rupee.

Fiscal year April 1st -March 31st

12th largest economy in the world.

Unemployment at 7.8%.

GDP stands at US $ 1 trillion.

Union budget in Parliament on last working day ofFebruary.

Imports $ 187.9 bn.

Exports - $ 125 bn.

Poverty is rampant at 25% of the total population.


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Present Indian economy ( contd.)

Robust growth numbers in all sectors.

Consistent 8-9% growth rate.

Highest growth rate attained in last 2 decades was in2006 9.6%.

Industrial expansion in different parts of India.

Sustained investment and high saving rates.


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GDP comparisons in recent years

5.3

5.4

5.6

6.0

6.3

6.5

6.6

6.8

9.5

5.2Pakistan

Cambodia

Indonesia

India

Thailand

Malaysia

Vietnam

Taiwan

South Korea

China


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Business and Economy

Textile IndustryTextile Industry has a high importance as it has been rendering themost basic needs of people and improving quality of life.

Indian Retail Industry

Indian Retail Industry has been waiting for the boom since a longtime. The inception of country's retail industry dates back to timeswhen retail stores were found in the village fairs , Melas or in theweekly markets.

Software Industry

Technical young people and English-speaking scientific professionalshas brought tremendous success in India's software industry.

Cement IndustryPresently the Cement Industry in India is based on modern andenvironment-friendly dry process technology.


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Industries in the economy

Steel IndustryWorldwide strong demand for steel particularly in China hasbenefited the Indian steel Industry.

Automobile Industry

Easier availability of finance and discounts offered by the dealersand manufacturers have resulted a strong growth of the Indianautomobile industry.

IT IndustryIndian IT Industry has built valuable brand equity in the global

markets.

Salt IndustrySalt Industry in India is well developed. India is presently the thirdlargest producer of salt in the world.


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Industries in the economy ( contd.)

Banking IndustryIndia is one of the fastest growing economy in the world. Adoptionof new economic policies in the country has given immenseopportunities to develop the country.

The financial market reforms have led the foreign banks to operatein India.

Fertilizer IndustryAccording to Given Statistics, total capacity of the industry as on30.01.2003 has reached a level of 121.10 lakh MT of nitrogen

(inclusive of an installed capacity of 208.42 lakh MT of urea afterreassessment of capacity) and 53.60 lakh MT of phosphatic nutrient.

Presently there are 57 large fertilizers plants in the countryproducing urea, DAP, Complex fertilizer, Ammonium Sulphate (AS)and Calcium Ammonium Nitrate (CAN).


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Industries in the economy ( contd.)

Jute IndustryAround 0.14 million people are engaged in the tertiary sector andallied activities, supporting the jute economy. Presently it also

contributes to exports to the tune of nearly Rs.1000 crore.

Sugar Industryin India is well developed with a consumer base ofmore than billions of people. It is also the second largest producer of sugarin the world.

Tourism Industry

The year 2004-05 saw tourism emerging as one of the majorsectors for growth of Indian economy, the foreign exchangeearnings increased from Rs. 16,429 crore to 21,828 crore up toDecember.


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Globalization in India

Transformed countrys system

Large number of global multinational brands

Increase in level of spending on privateconsumption

Fall of political dominance.


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FDI

Cumulative amount of FDI inflows from Aug 91-March 08 is Rs. 330705 crores

FDI Equity inflows during current calendar year

is Rs. 47421 crores % growth over last year is 66

Mauritius is the top investing country in FDI,contributing 44.86%

Sectors attracting highest FDI: Services,Computer Software and hardware,Telecommunication etc.


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Financial institutions in India

Central bank RBI

Commercial banks

Credit rating agencies

Financial authorities

Insurance companies

Specialized financial institutions


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Forex reserves and debts

Forex includes gold, SDRs, etc.

India ranks 4th with $308397 forex reserves as ofjuly08, surpassing South Korea.

External debts as of 2007 worsened compared to theprevious years.

Outstanding loan on Indian govt. stands at $41.57 bn.

Attributed primarily to RBI lending.


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What India needs for sustaininggrowth and poverty reduction

Make growth more inclusive by stimulatingagricultural growth.

Improve the output and labour share ofmanufacturing.

Improve labour participation rates further from61% to 82% as in China.

Maintain price stability which is threatening to rise onall fronts.

Fiscal consolidation..

Infrastructure bottlenecks particularly in power androads needs to be addressed.


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Factors driving economic growthDemographic

forces

Continuedexpansion of

services sector

Resurgentindustrial sector

GDP growthof over 8%

Globalisation

Rural potential is still largely untapped


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INDIA- A KNOWLEDGE ECONOMY

The World BankInstituteoffers a formal definition of aknowledge economy as one that creates, disseminates, and uses knowledgeto enhance its growth and development.

India enjoys unique advantages in having a large pool ofEnglish-speaking professionals with degrees in engineering, science ormathematics.

The Indian Diaspora in the United Statesand theUnitedKingdom have several among them who have achievedthought leadership in knowledge intensive fields.

The entrepreneurial and energetic businesscommunity in India has the capacity to step up to this challenge andis capable of working closely with a supportive government to removebarriers that stand in the way of achieving of this vision.

I di i l d l d i


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India is already a leader inknowledge services

Source: neoIT 2005

Israel

Czech

Hungary

Russia

China

Vietnam

Malaysia

Mexico

Ireland

CanadaSingapore

IndiaPhilippines

Totallabourc

osts

Quality of supply


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Interesting facts and figures

Inflation predicted to rise to 17% by September-prediction by barclays capital.

Another round of oil price hike to $170/barrel.

India has 16% of the world population, 2.45% ofthe worlds land area and 4% of the worlds waterresources.

India spends 5.63% of its GDP on infrastructure,while China spends 9%.


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INTERESTING FACTS AND FIGURES

Less than 1% of the GDP is invested in publichealth provisions, India is currently one of themost privatised health economies.

Indias per capita expenditure on health is $ US23, while the world average is $ US482 perperson.

80% of our population earns less than Rs. 90a day.


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INDIA: A FUTURESUPERPOWER?

For four years running, excluding 2005, theIndian economy has produced annual growthrate of 8.8%

Growth rate in 2006-2007 was a record 9.6%,highest in last 18 years.

Indian Economy is consistently posting robustgrowth numbers in all sectors leading toimpressive growth in Indian GDP.

The economy has been stable and reliable inrecent times, experienced a positive upwardgrowth trend.


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India : A Future Superpower (contd.)

India could grow to almost 90 percent of thesize of the US by 2050, predictsPricewaterhouse Coopers.

The BRIC report ofGoldman Sachs forecastedthat between 2000 and 2050 India's GDP willincrease by 60 times and China's by 40 times.

India could become a superpower based on itsknowledge capital and strong fundamentals.

Goldman Sachs predicted that India's GDP incurrent prices will overtake France and Italy by2020, Germany, UK and Russia by 2025 andJapan by 2035.


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India is on a roll and weare happy rolling with it..

Thank You

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