India

Introduction
 India, an emerging economy, has witnessed unprecedented levels of
economic expansion, along with countries like China, Russia,
Mexico and Brazil. India, being a cost effective and labor intensive
economy, has benefited immensely from outsourcing of work from
developed countries, and a strong manufacturing and export oriented
industrial framework. With the economic pace picking up, global
commodity prices have staged a comeback from their lows and
global trade has also seen healthy growth over the last two years.
 The global economy seems to be recovering after the recent
economic shock. The Indian economy, however, was hit in the latter
part of the global recession and the real economic growth witnessed
a sharp fall, followed by lower exports, lower capital outflow and
corporate restructuring. It is expected that the global economies will
continue to sustain in the short-term, as the effect of stimulus
programs is yet to bear fruit and tax cuts are working their way
through the system in 2010. Due to the strong position of liquidity in
the market, large corporations now have access to capital in the
corporate credit markets
 Interest Growth Inflation Jobless Current Exchange
Country
Rate Rate Rate Rate Account Rate

India 5.25% 8.90% 9.70% 8.00% -14 45.355

 Overview
Mainly as a result of the economic reforms initiated in 1991, India’s long-
term trend rate of growth increased from 3.6% during the 1950s–1970s, to
5.2% in the 1980s, 6.1% in the 1990s, and to more than 9% during fiscal year
(FY)2005–FY2007. Like other emerging economies, India was affected by the
turmoil and uncertainty gripping global financial markets and the world
economy since the second half of 2008. Growth rates declined to 6.7% in
FY2008, as compared to 9.2% in FY2007 and 9.7% in FY2006. The
Government of India took several prompt monetary and fiscal measures to
enhance demand, boost credit flows, and lower interest rates to counter the
slowdown. Some early indicators suggest that the government’s stimulus
package has been effective in reviving growth.
.
 Overview
 India's diverse economy encompasses traditional village farming, modern
agriculture, handicrafts, a wide range of modern industries, and a multitude of
services. Slightly more than half of the work force is in agriculture, but services
are the major source of economic growth, accounting for more than half of
India's output, with less than one-third of its labor force. India has capitalized on
its large numbers of well-educated people, skilled in the English language, to
become a major exporter of software services and software workers.
 The index of industrial production (IIP) registered a growth rate of 9.6% during
April–January FY2009 as compared to 3.3% in the same period in 2008; and
exports reversed a 13-month decline, growing by an impressive 12.7% in
November 2009–January 2010. The IIP has grown at an average of more than
12% since August 2009. This growth is stronger than expected, and cuts across
categories, such as transport equipment, metal products, textiles, and mining.
From a use-based perspective, too, consumer spending continues to gain
strength both in durables and non-durables.
Growth rate of Sectors
The growth is driven by robust performance of the manufacturing sector on
the back of government and consumer spending. According to government
data, the manufacturing sector witnessed a growth of 16.3 per cent in January-
March 2010, from a year earlier. Economic activities which showed
significant growth rates in 2009-10 over the corresponding period last year
were
sectors growth rate
mining and quarrying 10.60%
manufacturing 10.80%
electricity, gas and
water supply 6.50%
construction 6.50%

trade, hotels,transport
and communications 9.30%

financing,
insurance,real estate
and business services 9.70%

community, social and

Economic indicator
Project success rates
 GDP - real growth rate (%)

Year GDP - real growth rate (%)

2000 5.5
2001 6
2002 4.3
2003 4.3
2004 8.3
2005 6.2
2006 8.4
2007 9.2
2008 9
2009 7.4
http://www.indexmundi.com/g/g.aspx?
c=in&v=66
GDP (purchasing power parity)
(Billion $)
GDP (purchasing power
Year parity) (Billion $)
2000 1805
2001 2200
2002 2660
2003 2660
2004 3033
2005 3319
2006 3666
2007 4156
2008 2966
2009 2816
 GDP - per capita (PPP) (US$)

GDP - per capita

Year
(PPP) (US$)
2000 1800
2001 2200
2002 2540
2003 2540
2004 2900
2005 3100
2006 3400
2007 3800
2008 2600
2009 2500
Literacy (%)
Year Literacy (%)
2000 52
2001 52
2002 52
2003 59.5
2004 59.5
2005 59.5
2006 59.5
2007 61
2008 61
2009 61
 Population growth rate (%
Population growth
Year
rate (%)
2000 1.58
2001 1.55
2002 1.51
2003 1.47
2004 1.44
2005 1.4
2006 1.38
2007 1.606
2008 1.578
2009 1.548
Stages of development
http://rbidocs.rbi.org.in/rdocs/Publication
s/PDFs/0HANDB210910_F.pdf
Book1(1).xls
Policies
Investment policy
Fiscal policy
Monetary policy
Outlook
Despite the lagged impact of monetary
tightening and the pullout of fiscal stimulus, real
GDP growth will accelerate to 7.5% this year
and 7.9% in 2011, driven largely by greater
investment and industrial activity.
The election victory of the Congress Party bodes
well for continued economic reforms, with
which will help growth return to the 8-9% rates
seen before the crisis, while double-digit rates
remain a few years away.
Recent performance
 Real GDP growth rose to 8.8% y/y in Q2-10, above the already
strong 8.6% growth rate in Q1. On a seasonally adjusted basis
however, real GDP slowed to 8.9% at an annualized rate from
13.5% in Q1. Almost half the y/y growth in Q2 came from personal
consumption, which strengthened for the first time in 3 quarters
despite tighter monetary policy, as more favourable weather has
boosted farmers’ income, and public and private investment,
heavily supported by infrastructure spending. Stronger imports
constrained the overall growth figure, but at the same time reflect
healthy domestic demand.
 Growth slowed across nearly all industries, including in
manufacturing and in the trade, hotel, transport and
communications sector, but was supported by a large rebound in the
volatile business, personal and social services. As further evidence
of the slowdown, industrial activity in August grew at its slowest
pace since May 2009, rising 5.6% y/y.