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An Insight into theIndian Economy

University of Wroclaw

Development Economics

Meha Lodha

2nd December 2009

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India/Bharat/Hindustan

Political Capital New Delhi Financial & Commercial Capital Mumbai Independence 1947 (62 years) Parliamentary Democracy Mixed Economy Official Languages Hindi, English 28 states, 7 union territories Indian Rupee (1USD = Rs. 45 (approx))

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1947 to 1990

Socialist inspired economy License Raj licenses, protectionism, red

tapism Green Revolution No famine after colonial period Major balance of payments crisis Bailout from IMF in exchange of reforms

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From 1991...

Market based systemEconomic liberalisation

Automatic approval of FDI in many sectorsConstant economic growthIncreasing life expectancy, literacy rates

Privatization, foreign competition

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Demographics Population 1.17 billion - 1/6th of worlds population 1.3% annual population growth 72% in villages, 28% in cities 2000+ ethnic groups 216 languages and 22 official languages 66% Literacy rate 22% below Poverty Line 7.8% Unemployment Rate 1.064 males/female Life expectancy 65 years

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Population & Growth Rate

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Age Structure & Religion

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Literacy Rate

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Indian Economy

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Leading exporters of commercial

services, growth 2000 - 2007

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GDP

GDP

B

C B B

D B B B

D C B B

E B B B

E C B B

F B B B

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G

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E B B B E B B D E B B E E B B F E B B

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GDPR S T U V W S X

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FDI Inflows

2005-06 7.8 b2006-07 19.5 b

2007-08 24 b2008-09 35b (est.)

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IT & BPO

Share in exports 1% in 1990 to 18%in 2001

Bangalore (IndiasSilicon Valley)

Chennai India and EU Joint

R&D

Pa r c a rs FY 2004 FY 2005 FY 2006FY2007

E

IT Services 10.4 13.5 17.8 23.7

- Exports 7.3 10.0 13.13 18.1

- Domestic 3.1 3.5 4.5 5.6

ITES-BPO 3.4 5.2 7.2 9.5

- Exports 3.1 4.6 6.3 8.3

- Domestic 0.3 0.6 0.9 1.2

Engineeringservices, R&Dand Software

products 2.9 3.9 5.3 6.5

- Exports 2.5 3.1 4.0 4.9

- Domestic 0.4 0.7 1.3 1.6

Hardware 5.0 5.9 7.0 8.2

Tot al T s t r 21.6 28.4 37.4 47.8

- Exports 13.4 18.2 24.1 31.9

- Domestic 8.3 10.2 13.2 15.9

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TATA NANO

Least expensive car in the world

Low end model2000Nano Europa 6000

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Exports and Imports

$175.7 b Petroleum products Textile goods Gems and jewelry Engineering goods Chemicals Leather

manufactures

$ 287.5 b Crude oil Machinery Gems Fertilizers Chemicals

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Economic Issues

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Poverty

42% below IPL (from 60% in 1981) 456 million Indians 1/3 rd of global poor Caste System Colonial rule Positive Discrimination Scheduled

Castes, Tribes, Backward Classes 80% of population less than 2/day

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Land

Avg. size of land holdings < 20,000 m2

98 b manufacturing investments on hold landacquisition problems

Mumbai 23,088/Km2 most populous city, 7 thmost densely populated city in the world

Delhi 28,438/Km2 4 th most populated city, 3 rdmost densely populated city in the world

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Literacy12% in 1947 to 66% in 2007Largest illiterate population

Adult literacy rates 77% for men and 55%for womenYouth Literacy rate 82%120 million receive free lunches in Indianschools every day, making it the largestschool meal program in the world

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Corruption Index

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Classes in Society

Lower ClassLower middle class

Middle ClassUpper middle classUpper class/Elite

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