By, Ankita Chaitanya Harita Himanshu Khizer

Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries, were effectively nationalized in the mid-1950s. Economy transformed from primarily agriculture, forestry, fishing, and textile manufacturing in 1947 to major heavy industry, transportation, and telecommunications industries by late 1970s. According to economic historian Angus Maddison in his book The World Economy: A Millennial Perspective, India had the world's largest economy from the 1st century to 11th century, with a 32.9% share of world GDP in the 1st century to 28.9% in 1000 CE.

What IS the economy of a country ?

1. GDP- Real and Nominal. 2. Sector share in GDP. a) Agriculture b) manufacturing c) service

3. Inflation rate ,Price level of economy

4. Aggregate Demand a) Per capita income b) Personal diposable income. c) Taxes rates 5. Investment Interest rate Liquidity of economy 6. Government policies a) Fiscal policies i) revenue budget ii) expenditure budget b)Monetary policies { crr, slr ,repo rate ,reverse repo rate.....etc. } 7. export and imports ( increase and decrease i.e surplus and deficit ) 8. ISLM

GDP GDP growth GDP per capita GDP by sector

:$1.846 trillion (nominal: 9th; 2011) :$4.469 trillion (PPP: 3rd; 2011) :8.5% (201011) : $1,527 (nominal: 135th; 2011) :$3,703 (PPP: 127th; 2011) :agriculture: 18.1%, :industry: 26.3%, :services: 55.6% (2011 est.)

GDP growth In Q4, 2010-11, GDP growth came down to 7.8 percent. Sectors like manufacturing and mining & quarrying have seen considerable erosion of growth momentum over the last one year. While consumption demand is still holding, a sharp decline in growth of investments is seen. Growth in Gross Given the evolving situation, growth in 2011-12 is likely to be close to the 8 percent mark.

Industrial Production Weakness in industrial production trend continues. In April 2011, IIP registered a growth of 6.3 percent. In April 2010, growth in IIP was to the tune of 13.1 percent. Amongst the use based industrial groups, a similar streak of weakness is seen with growth in the capital goods segment, intermediate goods segment and consumer goods segment slowing down from 35.5 percent, 11.9 percent and 13.8 percent respectively in April 2010 to 14.5 percent, 3.4 percent and 2.9 percent in April 2011.

Core Sector Data for April 2011 shows a perceptible decline in performance of the core sector with growth dipping from 8.5 percent in April 2010 to 4.6 percent in April 2011. Sectors like natural gas, fertilizers, cement and steel are largely responsible for this poor performance. Growth in the coal sector however moved from (-) 2.9 percent in April 2010 to 2.8 percent in April 2011.

Inflation The inflation situation in the economy continues to be a cause for concern. Despite large scale tightening of the monetary policy by the RBI and other steps taken by the government, inflation continues to remain close to the double digit mark. In May 2011, WPI based headline inflation stood at 9.1 percent. This is higher than 8.7 percent inflation recorded in April 2011. Core inflation too has moved up from 8 percent in April 2011 to 8.6 percent in May 2011. Near term outlook for inflation is not too encouraging and there are chances that we may see inflation jump to the double digit territory on a few occasions. High international oil prices, likely decontrol of diesel prices, high global food prices and hike in Minimum Support Prices for the upcoming agriculture season are some of the factors that constitute the upside risks to inflation.

Foreign Trade The strong momentum in exports, seen particularly during the second half of 2010-11, has continued in the year 2011-12 as well. In April 2011 exports totaled US$ 23.8 billion and represented a growth of 34.4 percent over the same month of the previous year when exports totaled US$ 17.7 billion. While this strong start in 2011-12 is encouraging, there are indications that this high growth will not be sustained in the months ahead. Rising interest rates, rising raw materials costs and oil prices, withdrawal of incentive schemes like DEPB and likely slowdown in Asian economies are some of the reason that have tempered the outlook for exports. In April 2011, our imports totaled US$ 32.8 billion and registered a growth of 14.1 percent over the same month of the previous year when imports amounted to US$ 28.8 billion. With developments in the Middle East and North Africa region showing no signs of a let up and with OPEC resisting any upward revision in daily oil production quota, oil prices are likely to remain firm in the near term. This will continue to put pressure on Indias overall oil import bill. As regards non-oil imports, while a slowdown in the domestic economy could lead to some moderation in the non-oil import bill, any large respite here can be ruled as prices of commodities other than oil are also firming

Agriculture Industries

Finance
Services Natural Resources

Agriculture is the mainstay of the Indian economy It is the means of livelihood of almost two thirds of the work force in the country Agriculture accounts for approx 18% of India's GDP Largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper World's largest cattle population Second largest producer of wheat, rice, sugar, groundnut and inland fish Third largest producer of tobacco India accounts for 10% of the world fruit production with first rank in the production of banana and sapota

Important highlights of Economic Outlook 2011-12

Agriculture grew at 6.6% in 2010-11. This years monsoon is projected to be in the range of 90 to 96 per cent, based on which Agriculture sector is pegged to grow at 3.0% in 2011-12! Industry grew at 7.9% in 2010-11. Projected to grow at 7.1% in 2011-12 Services grew at 9.4% in 2009-10. Projected to grow at 10.0% in 2011-12 Investment rate projected at 36.4% in 2010-11 and 36.7% in 2011-12 Domestic savings rate as ratio of GDP projected at 33.8% in 2010-11 & 34.0% in 2011-12 Inflation rate would continue to be at 9 per cent in the month of July-October 2011. There will be some relief starting from November and will decline to 6.5% in March 2012.

Agriculture grew at 6.6% in 2010-11. This years monsoon is projected to be in the range of 90 to 96 per cent, based on which Agriculture sector is pegged to grow at 3.0% in 2011-12! Industry grew at 7.9% in 2010-11. Projected to grow at 7.1% in 2011-12 Services grew at 9.4% in 2009-10. Projected to grow at 10.0% in 2011-12

Inflation has remained elevated at 8-10% range for more than 18 months since March 2010. The RBI's second quarter monetary policy review has projected baseline inflation to be 7% by end-March 2012. Since February 2010, the RBI has increased rates 13 successive times, the largest such sequence of increases in its history. The repo and reverse repo rates have risen by 375 and 425 basis points respectively during this time. Adding to the pressure is the steep recent depreciation in the value of rupee. While beneficial to exporters, it has the potential to add to inflationary pressures by making imports, espcially of oil, costlier. In a reflection of the tightening monetary conditions, anchored inflation expectations, and increased government borrowings(government recently announced an increase in its 201112 fiscal borrowing by an additional Rs 52,872 Cr, taking it to a record Rs 4.7 trillion), long-term interest rates have been climbing.

AD = C + I + G + (X-M) Aggregate demand refers to the total amount that differentsectors in the economy are willing to spend in a given period. Itisthesumspendingbyconsumers,businessmen,Governmentandotheragenciesin thecountryi.e. It measures the totalspending by all different entities in the economy It depends upon: 1. Level of prices 2. Monetary policy 3. Fiscal policy 4. Other factors

Per capita income of Indians grew by 17.9 per cent to Rs 54,835 in 2010-11 from Rs 46,492 in the year-ago period Per capita income (at 2004-05 prices) stood at Rs 35,917 in FY11 as against Rs 33,731 in the previous year, the latest data on national income said. The size of the economy at current prices rose to Rs 73,06,990 crore in 201011, up 19.1 per cent over Rs 61,33,230 crore in FY10. Per capita income is calculated by evenly dividing the national income among the country's population. The country's population increased to 121 crore at the end of March 2011, from 117 crore in fiscal 2009-10.

 During the year 2010-11. The growth rates of reserve money (M0) and narrow money (M1)1 have been higher as compared to the preceding year while broad money (M3) growth has been lower During 2010-11, on a financial-year basis, M0 expanded by 8.4 per cent. The net foreign assets (NFA) of the RBI increased by 6.1 per cent. M1 increased by 3.1 per cent The growth in M3 was 8.2 per cent among the sources of M3, however, bank credit to the commercial sector has been accelerating since November 2009.

Exports in December 2011 grew by a modest 6.7 per cent over the previous year to $25 billion, mainly due to the weak demand in traditional destinations such as Europe and the US. Month-on-month export growth this fiscal had shown a clear deceleration till November from a peak of 82 per cent in July. On the other hand, imports during December 2011 recorded a 19.8 per cent growth to $37.8 billion taking the trade deficit to $12.8 billion for the month.