ECONOMY OF INDIA

FACTS AND FIGURES

• India is the 11th largest in the world by GDP and the 3rd largest by PPP

• Member of G- 20 and BRICS

• By considering per capita income- 129th in the world (out of 196)- thus lower-middle income economy.

• GDP- $1.676 trillion (2011)

• GDP growth 6.5% (FY 2012)

• GDP per capita $1,389 ( 2011)

GDP by sector(2011)agriculture: 18.1%, industry: 26.3%-12th in terms of outputservices: 55.6%

Inflation (CPI) 7.55% (May 2012)Income- grew by 14.3% to reach Rs.60,972 during 2011–12.

ECONOMIC HISTORY

• Pre Colonial: ( since Indus Valley Civilization to 1700 AD )• had very good trade relations with

other parts of world,

• evident from the coins of various civilizations found at the site of Indus valley.

• Colonial: ( 1700 AD to 1947)• Company rule in India brought a major

change in the taxation and agricultural policies

• India's share of world income collapsed from 22.6% in 1700, almost equal to Europe's share of 23.3% at that time, to as low as 3.8% in 1952.

• Pre-liberalisation period (1947–1991)• the process of rebuilding the economy started

• Five year plans started in 1952 by Jawaharlal Nehru

• Trade liberalization, financial liberalization, tax reforms and opening up to foreign investments were some of the important steps, which helped Indian economy to gain momentum.

Post-liberalisation period (since 1991)

Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalisation of 1991reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors.

SECTORSMANUFACTURING

• Economic reforms 1991- removed import restrictions-brought in foreign competition- threat of cheaper Chinese imports- privatization of certain public sector industries-liberalized FDI -improved infrastructure.

• Textile manufacturing – 2nd largest source of employment-1st agriculture

Indian economy - investment slowdown, growth momentum is weakening. Manufacturing industry growth rate down to 5.0 % from 5.6 %.Export growth- moderate due to slowing growth in the country’s export destinations, notably Europe.

SERVICE SECTOR

• 13th in services output-

• Largest share in GDP-62%- expected GPD growth rate has been lowered by CRISIL to 6.5% due to the sluggish growth in IT/ITES as a result of slowing export demand from the Eurozone, and slower than earlier anticipated growth of the hotels, trade and transport sector due to moderation in private consumption growth.

TEXTILE SECTOR• Indian Textile sector grew by more than

5% in the last two fiscal years and is projected to grow at 16% by 2012.

• second largest employer of Indians after agriculture, it currently employs 88 million people and is expected to generate another 17 million jobs by 2012.

• third largest of textile to both USA and Europe and exports grow by 24% in last fiscal year.

• They are likely to grow by 25% in the next 5 years increasing the Indian Textile Industry’s share in world textile market from 3% to 7%.

INFRASTRUCTURE

• needs to grow at a CAGR of 15% over the next five years to support the growing requirements of virtually every other sector of the Indian Economy.

• will require US$ 1.7 trillion investment in the next 10-years

• expects to invest about USD 500 billion in infrastructure, mainly in power, telecommunication, roads, railways and oil pipelines, in the five years

• India have:

- 12 Major Ports

- Fifth largest electricity generation capacity in the world

- 454 airports and airstrips in India

- Fourth largest rail network in the world

EDUCATION SECTOR

• the total literacy rate 74.04%

• female literacy rate is 65.46 %

• male literacy rate is 82.14%

• Higher education enrollment ratio-11%US -83%

A study by the National Assessment and Accreditation Council: 90 per cent of the colleges and 70 per cent of the universities were of poor quality

RETAIL SECTOR

• accounts for 14-15% of its GDP

• one of the top five retail markets in the world by economic value.

• one of the fastest growing retail market in the world, with 1.2 billion people

• 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India. Indian government continues the hold on retail reforms for multi-brand stores

• IKEA, Apple, Nike- single brand stores

• Walmart, Carrefour, Tesco- multi brand retail stores

TOURISM

• Tourism - is relatively undeveloped, but a high growth sector.

• contributes 6.23% to the national GDP

• majority of foreign tourists come from USA and UK.

• India's rich history and its cultural and geographical diversity make its international tourism appeal large and diverse.

• heritage and cultural tourism along with medical, business and sports tourism. fastest growing medical tourism sectors

Top 10 Tourist Destination in

India

10 Kerala backwaters

9 Lake Palace

8 Virupaksha Temple

7 Palolem

6 Kanha National Park

5 Harmandir Sahib

4 Jaisalmer

3 Ajanta Caves

2 Varanasi

1 Taj Mahal

AGRICULTURE• One of the strong sectors of Indian

economy (18% of GDP)

• 58 % population of India depends on Agriculture

• largest producer of coconuts, mangoes, bananas, cashew nuts, pulses, ginger

• Second largest producer of rice, wheat, cotton, fruits and vegetables

• Contributes to 1/6th of the export earnings

• Green Revolution- breakthrough

• Exports- coffee, spices

BANKING SECTOR

• State Bank of India-1806

• 1990’s reform- entry of many foreign banks

• IT revolutionised- so came online banking

• The public sector banks hold s 75% of total assets of the banking industry, with the private banks holding- 18.2% ,foreign banks - 6.5%

• mandatory for banks to provide 40% of their net credit to priority sectors like agriculture, small-scale industry, retail trade, small businesses

STATE BANK OF INDIA

Impact of New Banking Policies

• Encouraging mergers

• reducing government interference

• increasing profitability and competitiveness

• foreign players

FINANCE

• Rating agency S&P degrade India, as result foreign players withdraw their investments. This leads to a decrease in the forex reserve.

• the banking industry in india is in a good position, which makes good profit from its operations.

• the value of rupee depreciating when compared to the us dollars. As now INR/1USD= 55.339.

• - Sensex crossed 17000 mark recently after a long time. Nifty crossed 5200 mark.

-current inflation rate in india is at 7.25%. The fight against inflation is done by central banks which control the money supply by increasing or decreasing short term interest rates. current bank rate is 9%, repo rate is 8% and reverse repo rate is 7%.CRR=4.75% and SLR is 24%non banking financial institutions also plays an important role .

EXTERNAL TRADE

• Some of its regional and bilateral trade agreements are

• India-Sri Lanka Free Trade Agreement,

• Trade Agreements with Bangladesh, Bhutan, Sri Lanka, Maldives, China, and South Korea.

• India-Nepal Trade Treaty,

Comprehensive Economic Cooperation Agreement (CECA) with Singapore. Framework Agreements with the Association of Southeast Asian Nations (ASEAN), Thailand and Chile. Preferential Trade Agreements with Afghanistan, Chile, and Mercosur (the latter is a trading zone between Brazil, Argentina, Uruguay, and Paraguay).

India- pushing for a more liberal global trade regime, especially in services.

EMPLOYMENT & UNEMPLOYMENT

• Agricultural and allied sectors -52.1%.

• Avenues for employment- IT and travel and tourism sectors, which have high annual growth rates of above 9%.

• Unemployment in India is characterised by chronic (disguised) unemployment.

• 11th five-year plan identified the need for - congenial environment for employment generation, by reducing the number of permissions and other bureaucratic clearances required.

• Inequalities and inadequacies in the education system have been identified as an obstacle preventing the benefits of increased employment opportunities from reaching all sectors of society.

PUBLIC WELFARE IN INDIA

The Directive Principles of State Policy, enshrined in Part IV of the Indian Constitution reflects that India is a welfare state. Seats are reserved for scheduled castes and scheduled tribes in government jobs, educational institutions, Lok Sabha and Vidhan Sabha.

The government has passed laws for the abolition of untouchability, Begar and Zamindari. The government has opened Fair Price Shops, where essential commodities are sold at reasonable prices to the poorer sections of the society.

In 2000, the union government's expenditure on social services (includes education, health, family welfare, women and child development, and social justice andempowerment), rural development, and basic minimum services was approximately US$7.7 billion (Rs361.7 billion), which was 11.1 percent of total government expenditures and 1.7 percent of gross domestic product (GDP).

The union and state governments maintain reserved seats in political and education institutions for lower castes, indigenous persons, and others based on their percentage of the population. Development programs have been produced — often at state or local levels — for social development and the empowerment of women and lower castes.

THANK YOU