Business Environment

Interim Report

Submitted By Gaurisha

Submitted To :Dr. Gajavelli VS

Mayank Bhatt Jigar Nayar Navneet Makharia Nisarg

India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. In 2010. and increasing integration into the global economy. GDP . inadequate physical and social infrastructure. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers.3 4. which has averaged more than 7% per year since 1997.463 17% Agriculture Industry 56% 27% Services 2011 Fig 2. and a multitude of services. scarce access to quality basic and higher education. Economic liberalization. limited non-agricultural employment opportunities. including widespread poverty. privatization of state-owned enterprises. yet traces of its past autarkic policies remain. handicrafts. However. and reduced controls on foreign trade and investment.13 4. modern agriculture.INDIAN ECONOMY India is developing into an open-market economy. India’s GDP in Trillion US$ . with only one-third of its labor force. a wide range of modern industries. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio. Slightly more than half of the work force is in agriculture. accounting for more than half of India's output. India has many long-term challenges that it has not yet fully addressed. but services are the major source of economic growth.and growth exceeded 8% year-on-year in real terms. 4.5 GDP in Trillion $ 4.76 2010 Years 4. the Indian economy rebounded robustly from the global financial crisis .in large part because of strong domestic demand . began in the early 1990s and has served to accelerate the country's growth. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's diverse economy encompasses traditional village farming.7 2009 3.1 3. and accommodating rural-to-urban migration.Composition by sector Fig 1. and a worsening current account deficit. including industrial deregulation.9 3. healthy savings and investment rates. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit.

Budget has taken a step in a very big way. barring ‘electricity. real weighted average lending rates. were lower than they were in the pre-crisis period between 2003-04 and 2007-08.The Indian economy was one of the fastest growing economies in the post-crisis period. The prime focus was how to achieve fiscal consolidation. One of the reasons was the persistence of inflation at a much higher level than the threshold for two successive years. . Second challenge was how to achieve ‘growth’ and eliminate ‘economic inequalities’. fertilizers. But. Growth slowed down due to multiple factors.7% in the subsequent years but at the same time ensuring availability of food under the subsidy scheme. It has taken care of fiscal deficit. that have an inverse relationship with investment activity. when investment boomed CHALLENGES FOR INDIAN ECONOMY 2012-13  The foremost challenge before the new budget was to reduce the fiscal deficit. however. It has increased gross budgetary support by 18 per cent. there was continuous deceleration of economic activity in each of the four quarters which pushed the expansion of the economy to below potential. inflation needs to be maintained at a tolerable level. Finance Minister Mr Pranab Mukherjee had suggested acceleration of reforms and keeping food subsidies under 2% in 2012-13 while that was brought down to 1. headline inflation was expected to moderate in the coming months. Recent research suggests that real interest (lending) rates explain only about one-third of GDP growth.9 per cent. It has come down substantially. social and personal services’. As of March 2012. There has been a deceleration in all sub-sectors of the economy. Persistent and high inflation necessitated continued tightening of monetary policy.9% in 2011-12 was due to weak industrial growth but recovery signs are visible in coal. gas and water supply’ and ‘community. During 2011-12. Third challenge was inflation.   IMPACT OF BUGET 2012-13 ON INDIAN ECONOMY The year 2011 was a year of recovery and drop in GDP growth to 6. cement and electricity and inflation was largely under control in 2011.4% and now it has come down to 6. which is the maximum level of output that the economy can sustain without creating macroeconomic imbalances. The growth curve was once 8.

Major contraction in the construction projects. . The recent economic meltdown has created several challenges which when addressed appropriately. Additionally. However. white goods demand from the third quarter of 2012 resulted in the global demand for steel dropping by 21% compared to the level consumed in the same quarter of the previous year. unlike the previous global recessions. The global downturn also had a major effect on various industries dependant on steel. Indian steel production has increased by 5 million tones every year. amplified by severe destocking by both end users and service centers. The economic reforms initiated by the government since 1991 have added new dimensions to industrial growth in general and steel industry in particular. The demand for steel declined by 26% in the UK and Europe in the third quarter compared to a year earlier and after a further contraction in the fourth quarter.STEEL INDUSTRY The steel industry has traditionally been very sensitive to the changing economic conditions. can be countered to positive effect. demand had fallen by 57% in the UK and 44% in Europe compared with a year ago. Automotic approval of foreign equity investment up to 100% is now available. this time around. Price and distribution controls have been removed from January 1992. as well as large falls in automotive and mechanical engineering. automobiles. with a view to make the steel industry efficient and competitive. Steel industry has been removed from the list of industries reserved for the public sectors. there has been tremendous amount of governmental response to the global depression which is helping to bring about a possible easing the situation. This reflected in a sharp downturn in private construction projects. all the countries have come together and taken action.

the flagship company of the JSPL Group. JSPL Steel is one of the lowest cost steel producers in the world. The Company has also acquired mining assets in Chile. JSPL’s history can be traced back to 1982. It has established a strong presence in the global value-added steel segment with the acquisition of steel mill in US and a service center in UK. JSPL Steel has also formed a joint venture for setting up a steel plant in Georgia. Sajjan Jindal led enterprise JSPL Group is one of the largest business conglomerates in India with a strong presence in the core economic sector. is the largest integrated private steel manufacturer in India in terms of installed capacity. It had grown from a steel rolling mill in 1982 and is presently a multi business conglomerate worth US$5 billion. By 2020.JINDAL STEEL JSPL Steel Ltd is an Indian steel company owned by the JSPL Group based in Mumbai. the Company aims to produce 34 million tons of steel annually with Greenfield integrated steel plants coming up in West Bengal near Salboni about 35 km from Kharagpur and Barenda in Ranchi district of Jharkhand. with a capacity of 10 MT as of 2011. when the Jindal Group acquired Piramal Steel Limited. . India JSPL Steel is among India's largest steel producers.3 MTPA by March 2011. which operated a mini steel mill at Tarapur in Maharashtra and renamed it as Jindal Iron and Steel Company (JISCO). JSPL Steel has recently acquired a majority stake in Ispat Industries Ltd. This will make JSPL Steel India’s largest steel producer with a combined capacity of 14. The Company has also tied up with JFE Steel Corp. Japan for manufacturing the high grade automotive steel. USA and Mozambique. Maharashtra. JSPL Steel.