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INDIAN ECONOMY

OVERVIEW
The economy of India is the eleventh largest in the world by nominal GDP and the third largest by purchasing power parity (PPP).The country is one of the G-20 major economies and a member of BRICS. On a per capita income basis, India ranked 140th by nominal GDP and 129th by GDP (PPP) in 2011, according to the IMF.

(Continued)
India recorded the highest growth rates in the mid-2000s, and is one of the fastest-growing economies in the world. India has recorded a growth of over 200 times in per capita income in a period from 1947 ( 249.6) to 2011. The growth was led primarily due to a huge increase in the size of the middle class consumer, a large labour force, growth in the manufacturing sector due to rising education levels and engineering skills and considerable foreign investments. India is the nineteenth largest exporter and tenth largest importer in the world. Economic growth rate stood at around 6.5% for the 201112 fiscal year, as against 8.4% achieved in each of two preceding years. The sharp decline in India's GDP growth rates is mainly due to the Central bank's high-interest regime & it is widely believed reduction in key interest rates would immediately boost India's growth to over 8%, easily making it world's fastest economy. But the Central bank is keen in curbing inflation to less than 5% as against present levels of ~7.5% (out-pacing growth) and hence it has refrained from slashing down interest rates which would cause the inflation to spiral out of control ultimately neutralizing growth rates.

(Continued)
India's large service industry accounts for 57.2% of the country's GDP while the industrial and agricultural sectors contribute 28.6% and 14.6% respectively. Agriculture is the predominant occupation in Rural India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%. However, statistics from a 200910 government survey, which used a smaller sample size than earlier surveys, suggested that the share of agriculture in employment had dropped to 45.5%.

(Continued)
Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software and pharmaceuticals. The labour force totals 500 million workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. In 20102011, India's top five trading partners are United Arab Emirates, China, United States, Saudi Arabia and Germany.

Sectors in INDIAN ECONOMY

PRIMARY SECTOR: PRIMARY SECTOR Activities undertaken by directly using natural resources. ExampleAgriculture , Mining, Fishing, Forestry, Dairy etc. It is called primary sector because it forms the base for all other products that we subsequently make. Since most of the natural products we get are from agriculture, dairy, forestry, fishing it is also called Agriculture and related sector . SECONDARY SECTOR: SECONDARY SECTOR It covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is a next step after primary, where the product is not produced by nature but has to be made. Some process of manufacturing is essential, it could be in a factory, a workshop or at home. Example : Using cotton fibre from plant, we spin yarn and weave cloth; using sugarcane as a raw material we make sugar or gur; we convert earth into bricks. Since this sector is associated with different kinds of industries, it is also called industrial sector .

(Continued)
TERTIARY SECTOR: TERTIARY SECTOR These are the activities that help in the development of the primary & secondary sector. These activities by themselves do not produce good but they are an aid and support to the production process. Example: a)Transportation--Goods that are produced in the primary sector need to be transported by trucks or trains and than sold in the wholesale and retail shops; b ) Storage--at times it is necessary to store these products in godowns , which is also a service made available. c)Communication --talking to others on telephone ); d ) Banking-borrowing money from the banks. Since these activities are generate services rather than goods it is also called Service sector .

National Income
The sum total of the values of all goods and services produced in a year It is the money value of the flow of goods and services available in an economy in a year

National Income
National Income Committee of India 1951 defines National Income as follows: A national income estimate measures the volume of commodities and services turned out during a given period counted without duplication.

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Technological Environment
Impulsive Factors Propulsive Factors Economic & Business Development
Economic Factors Social / Demographic Factors Political / Government Factors

Technology Natural Factors

Natural and technological environments are the impulsive factors. With these factors as given, the propulsive factors determine the extent of development potential and the pace, direction and pattern of development of any economy.

Natural Environment
The natural environment is the source and support of everything used by businesses raw material, energy source, climactic conditions etc. Resource availability is the fundamental factor for every business set-up. Natural Environment: Provides a biological chemical and physical system that enables human life to exist. Supply of natural resources: Natural environment provides raw materials and energy for economic production and household activity. Absorption of waste products: Waste products resulting from production activity and household activity are absorbed by the natural environment. However there are certain waste products that are difficult for the natural environment to dispose of safely. Supply of amenity services: Natural environment also provides amenity services ie. natural beauty and space for outdoor pursuits.

Natural Resources
India's total cultivable area is 1,269,219 km (56.78% of total land area), which is decreasing due to constant pressure from an ever growing population and increased urbanisation . India has a total water surface area of 314,400 km and receives an average annual rainfall of 1,100 mm. Irrigation accounts for 92% of the water utilisation, and comprised 380 km in 1974, and is expected to rise to 1,050 km by 2025 In 2008, India had the world's third largest fishing industry India's oil reserves, found in Bombay High off the coast of Maharashtra, Gujarat, Rajasthan and in eastern Assam meet 25% of the country's demand

INFRASTRUCTURE IN INDIAN ECONOMY

Infrastructure Industry
Second largest employer in India One of the largest and most dynamic infrastructure and project finance market Investments in the construction sector Opening up of opportunities for global investors

Factors, size and growth

Political will and funding from multi-lateral agencies It is expected to touch 10% GDP in the 12th five year plan (2012-2017) Role of government in making the sector an attractive investment

Sectors under infrastructure

Electricity Non conventional energy Water supply and sanitation Telecommunication Roads & bridges Ports Airports Railways Oil and gas pipeline networks

Infrastructure of Indian economy

Urban development Expanding the source of fund for financing Improvement in public private partnership Issuing of municipal bonds to generate finance Rural development Key for rural economic progress Constraints in rural infrastructure development Rural Infrastructure Development Fund (RIDF)-

Projected Investment in infrastructure during the Eleventh Plan (2007-2012)

Sectors Electricity Roads & Bridges Telecommunication Railways Irrigation Water & Sanitation Ports Airports Storage Gas -----------------------------Total Amount $ Billion 166.6 78.5 64.6 65.5 63.3 35.9 22.0 7.7 5.6 4.2 -----------------------514.0

GLOBALISATION & ITS IMPACT ON INDIAN ECONOMY

WHAT IS GLOBALISATION ?

The term globalization means International Integration. It is a process through which the diverse world is unified into a single society. Opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas

GLOBALISATION

Impact of Globalization on Indian Economy

The impact of globalisation has been highly positive in almost all spheres of economic and social life and virtually no negative effect. India's economic growth has been high, exports have boomed, incidence of poverty has been reduced, employment has surged, begging by India for economic aid has stopped, long-term inflation rate has gone down, scarcity of goods have disappeared, the quality of products available have improved substantially and overall India has become progressively vibrant and internationally competititive.

Continued
Service sector is the lifeline for the social economic growth of a country. The real reason for the growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services. In advanced economies the growth in the primary and secondary sectors are directly dependent on the growth of services like banking, insurance, trade, commerce, entertainment, etc.

Conclusion
Indian economy has made rapid strides in the process of globalisation. Globalisation is increasing the integration of national markets and the interdependence of countries world wide for a wide range of goods, services, and commodities. The most important lesson that we must learn from the crisis is that we must be self-reliant. Indias trade reform programme resulted in strong economic growth in the globalization age. In particular, difficult decisions are to redress the fiscal imbalance, by reducing subsidies, completing the process of tariff and tax reform, and stepping-up privatization of state-owned enterprises. The efforts are needed to balance the trade and consider expansion of trade in other countries of the world.

Poverty in India
Despite the growth and development of the Indian economy during the last couple of decades, poverty is, parallel, increasing in absolute terms. The bare fact is that nearly 27.5 % of Indias population still lives below the poverty line, and 75 % of this, lives in rural areas. A recent report laments that 77 % of Indians live on a daily income of Rs.20 only.

(Rural) About two thirds of Indias more than 1 billion people live in rural areas, and almost 170 million of them are poor. Although many rural people are migrating to cities, 3 out of 4 of Indias poor people live in the vast rural parts of the country. Poverty is deepest among scheduled castes and tribes in the countrys rural areas. Indias poorest people include 50 % of members of scheduled tribes and 40 % of people in scheduled castes. On the map of poverty in rural India, the poorest areas lie in parts of Rajasthan,

Madhya Pradesh, Uttar Pradesh, Bihar, Jharkhand, Chhattisgarh, Orissa and West
Bengal. In these areas shortages of water and recurrent droughts impede the transformation of agriculture that the Green Revolution has achieved elsewhere.

CAUSES OF POVERTY
RURAL Rapid Population Growth Lack of Capital Lack of literacy Large Families Lack of Alternate Employment Opportunities Other than Agriculture URBAN Slow job growth Migration of Rural Youth towards Cities Voicelessness And Powerlessness Lack of Housing Facilities Public Distribution System (PDS)

Governments Initiatives for Rural Development For Employment Jawahar Gram Samriddhi Yojana (JGSY)

Governments Development

Initiative

for

Urban

For Employment Nehru Rozgar Yojana (NRY) Swarna Jayanti Shahri Rozgar Yojana

For Family Planning Family Planning / Welfare Program for Population Control For Farmers Insurance Group Life Insurance Scheme for Rural Areas

For Housing
Financial assistance for Constructing Houses Other Programmes Urban Basic Services for the Poor (UBSP) Program Prime Ministers Integrated Urban

& Agriculture Income Insurance Scheme

For Housing Rural Housing Program

For Development Small Farmer Development Program (SFDP)

Poverty
(PMIUPEP)

Eradication

Program

PARALLEL ECONOMY

BY:-MOHD.ANAS (100107117)

Parallel Economy
It is the economy on which income and other taxes has not been paid . parallel economy includes those activities that go unreported or are unmeasured by the societys current techniques for monitoring economic activity.

Main sources of Parallel Economy in India

Politics Drugs Arms & Ammunition Gambling Prostitution Copyright

Parallel economy exists due to various reasons and they are as follows:
High tax rates implemented by the government. Complicated tax paying procedures and policies. People believe that their money is not going to be properly utilized by government as their trust on government is less. High inflation which puts tax payers under high tax paying brackets. People do not get enough return on their paid taxes. Involvement of government agencies and officials in corrupt practices. Insufficient laws and their implementation to counter such activities.

IMPACT OF PARALLEL ECONOMY IN INDIA

COUNTRYS ECONOMIC GROWTH INCREASE CORRUPTION IN SOCIETY EFFECT ON INCOME DISTRIBUTION SYSTEM

IMPACT ON INDIAS REPTATION ON WORLD

INCREASING INFLATION

CREATE GAP BETWEEN RICH AND POOR

AGRICULTURE IN THE NATIONAL ECONOMY

Agriculture in the National Economy

Agriculture is one of the strongholds of the Indian economy and accounted for 17.2 per cent of the country's gross domestic product (GDP) in 2008-09. 60% of population still depends on agriculture for their livelihood. Occupied 43% of Indias geographical areas. All other sectors are growing at much faster. India has become the world's largest producer across a range of commodities due to its favourable agro-climatic conditions and rich natural resource base. Worlds largest cattle population. India is the largest producer of coconuts, mangoes, bananas, milk and dairy products, cashew nuts, pulses, ginger, turmeric and black pepper. It is also the second largest producer of rice, wheat, sugar, cotton, fruits and vegetables.

Agriculture(continued)
India's agri-export turnover is expected to double in the next five years, according to the government's agri-trade promotion body,Agricultural and Processed Food Products Export Development Authority (APEDA). Agriexport turnover is set to rise to nearly US$ 18 billion by 2014,and it was worth US$ 7.98 billion in 2008-09. At present, around 70 per cent of the country's agricultural and processed food exports are to developing countries in the Middle East, Asia, Africa and South America.

Agriculture productivity in India, growth in average yields from 1970 -10

Crop

Average YIELD, 19701971 kilogram per hectare

Average YIELD, 19901991 kilogram per hectare 1740 2281 578 771 65395 1652 225

Average YIELD, 20102011 kilogram per hectare

Rice Wheat Pulses Oilseeds Sugarcane Tea Cotton

1123 1307 524 579 48322 1182 106

2240 2938 689 1325 68596 1669 510

Indian Agriculture still suffers from

Now the question comes,how it can be strengthen?

Monson based agriculture(60% ag.depend on rain). Poor productivity Expensive credit. A distorted market. Many intermediaries who increase cost but do not add much value. Poor infrastructure(loss of Rs500 billion /yr). Produce that does not meet international standards. Inappropriate research.

Agricultural marketing(M. information, sorting-grading, transportation).cooperative,Apni mandi, etc. Retailing. Wasteland development(ex.Indira Gandhi Canal). Risk management(watershed, linkage of rivers). Farm extension(agriclinic,lab to land programme). Technological measures, Biological(seed, fertilizer) & Mechanical innovations(tractors, harvesters)etc. Contract farming. Finance.

INDUSTRIES ROLE IN INDIAN ECONOMY

INTRODUCTION
Industries play an important role in the economic development of any nation .Without industries, economic development is impossible. Again, in a backward and developing economy like INDIA industries are indispensable. India occupies 14th position in the world in industrial output. The manufacturing sector along with gas, electricity, quarrying and mining account for 27.5% of the countrys GDP. It also employs 17% of total workers. The economic reforms of 1991 brought a number of foreign companies to the Indian market. Indian companies started facing foreign competitions, including the cheap Chinese imports. However, they managed to handle it by cutting down costs, refurbishing, banking on technology and low labor costs and concentrating on new product development.

INDUSTRIES & EXPORTS

Major exports include textile, natural resources like tea and cotton. Service exports (outsourcing). Indias major trading partners US, China, EU, Russia and Japan

Automobile Industry
Worlds fastest growing automobile. Industry. Potential as one of the top three automobile giants in the world Ford, Hyundai, Mitsubishi, TVS, Ashok Leyland and BMW The Tata Motors Nano worlds cheapest car!

Some Corporate Achievements in India

The Tata Nano, the worlds cheapest production car The HCL laptop, the cheapest production laptop

The Infosys IT training campus the largest in the world Kingfisher Airways, voted the best airline of southeast Asia

Some facts
India is one of only three countries that makes supercomputers (the US and Japan are the other two). India is one of six countries that launches satellites. The Bombay stock exchange lists more than 6,000 companies. Only the NYSE has more. Eight Indian companies are listed on the NYSE; three on the NASDAQ. By volume of pills produced, the Indian pharmaceutical industry is the world's second largest after China. India has the second largest community of software developers, after the U.S. India has the second largest network of paved highways, after the U.S. India is the world's largest producer of milk, and among the top five producers of sugar, cotton, tea, coffee, spices, rubber, silk, and fish. 100 of the Fortune 500 companies have R&D facilities in India.

Services ?
Services are deeds, processes, and performances. Valarie Zeithaml & Mary Jo Bitner A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. James Fitzsimmons

History:
Since 1960s, there has been a steady decline in the contribution of agriculture and primary sector to Gross Domestic Product (GDP), and its place has been taken by service based enterprises. .

Role of Services in an Economy

FINANCIAL SERVICES Financing Leasing Insurance

INFRASTRUCTURE SERVICE Communications Transportation Utilities Banking

MANUFACTURING Services inside company: Finance Accounting Legal R&D and design

DISTRIBUTION SERVICES Wholesaling Retailing Repairing

PERSONAL SERVICES Healthcare Restaurants Hotels

CONSUMER (Self-service)

BUSINESS SERVICES Consulting Auditing Advertising Waste disposal

GOVERNMENT SERVICES Military Education Judicial Police and fire protection

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A statistics concerning the growth of India's service sectors are listed below:
The software services in Indian economy increased by 33% which registered a revenue of USD 31.4 billion Business services grew by 82.4% Engineering services and products exports grew by 23% and earned a revenue of USD 4.9 billion Services concerning personal, cultural, and recreational had a growth of 96% Financial services had a rise of 88.5% Travel, transport, and insurance grew by 23%

View for the long run !

There is a tremendous growth achieved by the Indian Economy in Service Sector. The excess growth achieved in service sector may temporarily benefit the economy by providing employment opportunities to millions of people.
But experts opine that high rate of Growth in Service Sector at the fall of growth rates in agriculture and industry is not good enough in the long run.

Economies of advanced contries like USA, UK, Germany, Japan, Canada, & Australia have changed from goods dominated to services dominated. In several countries including India, the service sector accounts for more employment in comparison to other sectors.
Country % of GDP Manufacturing % of GDP Services % of Employment in Service Sector

USA Japan UK Australia Canada India

21 29 32 22 24 29

74 58 69 72 70 47

80 60 77 75 79 60

CONCLUSION:-Major Areas of Reforms Needed

Business environment: Lowering the barriers to entrepreneurship Ending reservation of products for SSI Need for Bankruptcy law, fault practice. Easing of Service sector FDI restrictions More privatization of public sector enterprises Financial sector: More liberalization Privatization of public sector banks Infrastructure : Electricity reforms to be speeded up transport: More private sector involvement Public Finances: Better targeting of subsidies, GST Education: Higher public expenditure on primary and education, Addressing financing of higher edu. Modern agriculture: condition to produce surpluses in order to enhance economic growth.

OUR FINAL NOTE

If these problems are solved then the future for India looks bright, India might well become one of the superpowers of the 21st Century. India- A country with Potentials for sustaining development!!

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