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An overview - 08
Some General Facts
• India is the world’s second most populous country of over 1 billion
people.
• Measured in USD exchange rate terms, 12th largest in the world, with a
GDP of $1 trillion (2008)
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• Labour force participation rate 71% in 2003. (China 87%)
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Composition of India’s GDP
(at Factor Cost by Economic Activity –
at 1999-2000 prices, in%)
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India- Structural Transformation-?
ii) India’s low average growth rate ( 3%) from 1947-80 was referred as
‘Hindu rate of growth’, because of the unfavorable comparison with
the other Asia countries, especially the ‘East Asian Tigers’.
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• A period of import tariff, export taxes, quantitative
restrictions , approvals needed for 60% of new FDI in the
industrial sector.
• Phase of high growth with high fiscal deficit and worsening current
account
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Agriculture
• India ranks second world wide in farm output.
• In 2007, accounted for 16.6% in GDP employing
60% of the total workforce.
• After having growth rate of 2% for many years-
now the growth rate is about 4.5%.
• Two thirds of India’s workforce still earn their
livelihood directly or indirectly through
agriculture.
• High level of disguised unemployment.
• Despite improvements, average yield in India
ranges from 30-50% of the highest average yield
in the world.
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Industry
• India ranks 14th in the world in factory output.
• Industry accounts for 27.6% of the GDP and
employs 17% of the work force.
• Manufacturing growth rate 8.4%.
• One third of industrial labour force is engaged in
simple household manufacturing only.
• Economic reforms led to more private sector
participation, an expansion in the production of
consumer goods and both domestic and foreign
competition.
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Services
• India is fifteenth in services output.
• The growth rate which was 4.5% in 1951-80 increased to
7.5% in 1991-2000. Recent growth rate 10.7%.
• Its share in GDP was 15% in 1950 which is now about
55.6%.
• Fastest growing services are –business services,
information technology enabled services, business
process outsourcing contributing about one third of total
output of services in 2000.
• India’s IT industry an important contributor to BOP,
accounts for only about 1% of total GDP and 1/50th of the
total services
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Foreign Trade & FDI
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• Though net importer, since 1996-7, overall BOP has been positive
largely on account of increased FDI and deposits from NRIs.
• Its major trading partners are the U.S.A., UK, China, Germany,
Japan and UAE.
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Trade Openness: India (% of GDP)
Year Export Import Exim
1990-91 6.08 7.86 15.62
1993-94 8.12 8.52 15.63
1995-96 9.00 10.38 18.50
1996-97 8.72 10.20 18.62
1997-98 8.58 10.17 17.63
1998-99 7.93 10.12 19.90
1999-00 9.09 12.25 21.35
2000-01 10.70 12.13 22.51
2001-02 10.1 11.89 21.66
2002-03 11.3 13.18 24.49
Source: Calculated from Govt.
2003-04 11.6 14.25 25.65 of India, Economic Survey
2004-05 12.7 17.25 29.97
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Situating India in World Merchandise Exports and Imports
Imports(% share)
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India-China Trade & FDI Partners
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Source: Source: Reserve Bank of India
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Source: CEIC Source: CEIC 19
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Percentage Share(2006) and growth rate (1996-2006) : Trade in
Commercial Services of India and few selected countries and regions
EX IM EX IM
World 100 100 7.2 7.4
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Is development
inclusive?
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Labour Market
Growing employment is accompanied by poor
quality of labor with proportion of regular wage
earner employees only about 15%.
Economic growth could be made more inclusive
by achieving faster growth in regular employment,
as opposed to casual and self-employment.
Although regular employment has risen, its growth
has been almost exclusively in the smaller, least
productive enterprises.
About 87% of manufacturing employment taking
place in micro enterprises(<10 persons) producing
just a third of manufacturing output.
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Employment in firms with more than ten employees
accounts for only around 3.75 per cent of total employment
(one quarter of regular employment) and has been falling.
Indeed, India has a much smaller proportion of employment
in enterprises with ten or more employees than any OECD
country.
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Sex Ratio in Population with Rural-Urban break up
Year Sex Ratio
Rural Urban Total
1901 979 910 972
Source : Office of the Registrar
1911 975 872 964 General, India
1921 970 846 955 Sex Ratio 1901-91 (Total, Rural and
Urban) from Brief Analysis of PCA
paper-2 of 1992
1931 966 838 950 1961 Population from PCA 1961
1971 Population from Social and
1941 965 831 945 Cultural Tables
1981 figures from Series Part-II A(I),
1951 965 860 946 General Population Tables –
Census of India 1981.
1961 963 845 941 Figures of 1991 (including interpolated
data for JK-1991 based on 2001
1971 949 858 930 census) and 2001 from PCA census
of India -2001
1981 951 879 934
1991 938 894 927
2001 946 901 933 26
Trends in Gender Disparity in Literacy Rate
Male-Female
LR
disparity is on
decline.
Femal Male Femal Male Femal Male Femal Male F’male Male
RURAL e e e e
July 1999 – 3.7 5.1 0.4 0.6 0.2 0.1 0.0 0.2 1.5 2.1
June 2000
July 2004 – 7.0 5.2 1.8 0.6 0.5 0.3 0.5 0.2 3.1 2.1
June 2005
URBAN
July 1999 – 16.6 11.5 2.8 1.4 0.5 0.4 0.0 0.0 7.1 4.8
June 2000
July 2004 – 19.9 10.0 5.1 1.2 0.8 1.0 0.0 0.3 9.1 4.4
June 2005
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The Working Poor by Gender and Activity Status:
1999-2005 (in%)
Pop. Seg. 1999-2000 2004-05
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India-China Human Development Scenario-2003
Particulars India China
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GLOBAL COMPETITIVENESS RANKING 2007-8: India and China
(Rank out of 131 countries)
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• Two divergent development Paths:
India China
i) Increasingly building ground up Top down approach
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• Yet-- India can learn from China in:
– Social and Physical Infrastructure
– Improving manufacturing sector’s productivity
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