MANEGERIAL ECONOMICS

Executive Summary

Economic growth, economic development and economic challenges and opportunities are
prerequisites of any country. Every country must tackle economic, social and governmental
situations. OECD stands for these tackles helps to provide support for both developing and
developed countries. This study investigates economic theories, practices and implications
relating to the India’s economy which had slowed since 2011 is coming out of some tough
times and it is now recovering faster. In recent years, this country had high inflation, complex
labour markets and infrastructure and a wide current account deficit. This study also shows
some major forces of India’s economic growth. And it also summarizes the necessary actions
of OECD needed to be implemented to improve the economic conditions of India.
 Table of Contents
1.0. Introduction ................................................................................................................................. 3
2.0. Discussion..................................................................................................................................... 3
2.1. Economic Factors and Its Contribution in India’s Economic Growth........................................... 4
Human Resources: .............................................................................................................................. 4
Natural Resources: .............................................................................................................................. 5
Capital Formation: .............................................................................................................................. 5
Technology and Entrepreneurship: .................................................................................................... 6
2.2. Necessary Actions of OECD for the Improvement of India’s Economic Growth ......................... 7
Creating more and better quality employment .................................................................................. 7
Improving the business environment: ................................................................................................ 7
Improving infrastructure ..................................................................................................................... 7
Reforming the financial sector ............................................................................................................ 8
3.0. Conclusion .................................................................................................................................... 8
4.0. References ................................................................................................................................... 9
1.0. Introduction
Economic growth is an enormous activity largely depends on drawing upon several forces and
factors of economic matters. The twenty first century has experienced major turbulent changes
in the living standards of many parts of the world especially in South Asia. Over the past few
years, the world have seen an immersive strong economic growth in few countries and India is
one of them. Such both micro and macro-economic environment of the country has faced its
tremendous growth in their industry, finance, GDP, GNP and employment. This prosperity
indicates that economic growth of this country lead by several forces, factors and prosperity
indicators of India. This study indicates economic theories, practices and implications relating
to the chosen country of India. Moreover, this study also summarizes the necessary actions of
OECD to better improve the economic conditions of India.

2.0. Discussion
Almost everybody is in favour of economic growth and sustainability, but there are many
criticisms about how this economic growth can be achieved to fulfil the goal. Improving the
economic frameworks of India support cumulative growth over the few decades in terms of
structural reformation of their newly structured fiscal and monetary policy to support inclusive
and sustainable economic growth. In between 2012 and 2014, India has faced high inflation
rate and interest rates of past reform also this country has faced a tight both monetary and fiscal
policies (Husain, Z., N. and Goyal, R. 2012).

India has reduced its level of poverty in half of the percentage of the previous reform and
account deficit. Currently, the previously increased inflation rate is decreasing gradually and
previously account deficit problems has condensed. Moreover, the government rules and
regulation has been simplified for the social infrastructure to increase the degree of public
investment by reducing the amount of tax rate for the native peoples. Government’s
administrative procedures and regulations of laws has also been eased for the long term
economic growth plan of India. The fact is that the country is still facing some problems in few
areas. Though it is still a semi-developed country with it’s over populous constraints, this
country has some major problems. India is still facing high inflation rate, monetary policies are
up to the mark but the fiscal policies are in deficit. This country is facing problems in managing
their rising nonperforming physical infrastructure loans. To improve the long term economic
growth and sustainability these problems has to be solved by the Indian government (R.S. Bora
and T. Nandakumar, 2012).
2.1. Economic Factors and Its Contribution in India’s Economic Growth
Most common economic factors are in between four wheels of progress. India’s Economic
Growth and the factors behind this are analysed by the theory of Classical Dynamics of Smith
and Malthus (Husain, Z., N. and Goyal, R. 2012). According to them factors that impacts the
economic growth of the country depends on:

Human Resources:
India has immense possibilities to create vast number of human resources for the manufacturing
sector. Thus the manufacturing sector can make contribution to the GDP by the income of the
people, can contribute to export and can contribute to export and development of human
resources. In recent years, India’s economy has faced structural dysfunction on managing
labour and tax regulations. India’s top most companies and groups have contributed largely on
the GDP growth of the country. The size of the labour force, number of employment has been
raising more than services (Government of India, 2014). But, the labour and tax regulations are
simplified by the country and thus the cost of doing business tend to be lower which leads to
the overall productivity much higher than previous decades.

(Source: OECD, 2014)

The country encourages female that is why India has it numerous number of opportunities to
create adequate, knowledgeable human resources for the country. Female economic
participation is increasing day by day which creates more and better employment increases
growth and living standards. Female participation has increased 35% more since 2005 to 2012.
(Figure: 1) Women’s wage employment has risen, increasing household incomes, and thereby
allowing more women to stay home. Self-employed rural female workers are paid and this has
been important for the increase in participation.

(Source: OECD, 2014)

Compared to the other countries, India has a much less percentage of female economic
participation (Government of India, 2014).

Natural Resources:
Natural resources of India includes Coal which is the 4th in terms of the largest reserves of the
world. Moreover, the country has Iron ore, Manganese ore which is ranked as 7th as the highest
reserve of the world, Mica as 5th largest and Diamonds, chromite, natural gas, limestones make
the country’s resourceful and positive for its economy (Government of India, 2014).

Capital Formation:
Capital growth of India has both inflows and outflows. In 2009 the country faced high gain by
their fiscal and monetary policies. This growth has fall in 2012. To retain this fall inflation rate
is stimulated for the prospect of the economy and monetary policies are left for little to pass
the reformation of the economic growth of the country. Meanwhile, the economy has faced
another turn around in 2014. The level of activities are increased to revive the current deficit
of the balance. Exports are increased due to the less value of the Indian money to the current
account deficit. Revenue rate is increased more than 15% and estimated the growth rate of GDP
is 6.4% in the fiscal year of 2012-13. Tax rate is increased from 25-30% for the multinational
organisations and the corporate income tax has risen more than 3% for the capital formation.
For large group of organisations, domestic companies has been faced less than 30 % of tax rate
and foreign organisations have faced more than 30% of the high tax rate. Shown in above
figure:

(Source: OECD, 2014)

The tax rate is high for the foreigners to manage capital formation and low for the domestic
organisations, thus this factors encourages entrepreneurship, investment and growth for the
economic growth (Gulati, A., and J. Gujral 2012).

Technology and Entrepreneurship:

India is considerably developing technologies to the open world. In fact India has become one
of the largest mobile exporter in Southern Asia. Electronic products especially refrigerators,
televisions, watches are exported as a higher rate. Consultancy businesses has also increased.
Number of entrepreneurship level has also risen. Reducing barriers to manufacturing growth
and deregulation of export and import of the technological materials in 2014 has eased the
immense way of technology transfer in the south Asian countries. Foods, retail businesses has
increased tremendously in India. As a result more and more businesses are coming through
which will contribute relatively high to growth of GDP or exports (R.S. Bora and T.
Nandakumar, 2012).
2.2. Necessary Actions of OECD for the Improvement of India’s Economic Growth
Creating more and better quality employment
A definite and structured employment policy inspires the employees and allows them perform
rather than the complex Labour regulations, devote, manage and complete their jobs
confidently. A structured employment policy depicts the safety and security of the employees
and motivate them for the best in their performance in the all levels employment protection
legislation of the management structure in their organization. Moreover, a structured
employment policy and gender-specific policies assigns each employees with their suitable and
relevant tasks and laws on employment and wages other than the random alignment by which
employees can share their tasks parallel with other employees to meet the corporate goals and
objectives. Nonetheless, both type of structured employment policies, simplification and
modernisation of labour laws and women’s economic participation rates can lead to the
motivation of the workers who serves for success and must assist their qualities to make a
strong base for the labour market. So, flexible simple labour law is needed for the reduction of
barriers (Government of India, 2014).

Improving the business environment:

In 2008, India has the highest state level of control of the economy to manage the market
regulations, but this level is decreasing because of the public ownership is not enough to face
the polygamy market. To improve the internal business environment of India, the economy
must have the high productivity, low production cost and large market share, these all
represents the competency of the managerial level of an economy. Indian Economy will be
poured and greatly influenced by the financial structure. Export and import trade decisions in
every sectors of the government should be as efficient and intelligent which obviously improve
productivity and raise overall efficiency and thus the economic growth will be competent.

Improving infrastructure
Improving infrastructure is needed whether top level of management basically the flat
organisation must make enough guidelines to provide adequate support and the tall
organisations must make a friendly environment to run their inherit performances alongside
with the organisation structures (Hagemann, R. 2010).

A structured organisation where employees perform their jobs by their team effort rather than
individual performances creates a new possibility of business profits generated more than the
individual employees. A structured organisation represents both reliability and accountability
of the employees and additionally it have clear reporting lines to report employee ideas,
challenges, issues or problems. Thus it builds a strong platform to combine all these
opportunities, issues and problems in one hand to make the infrastructure flexible and reliable
with the economy and build a strong communication channel to generate accountability among
the employees in their economic structure (Government of India, 2014).

Reforming the financial sector

Incorporation of the proper reformation of the financial sector is crucial and it is mandatory to
use every sectors must be engaged their defined duties and responsibilities according to the
planning programs to develop the high potentiality of the organisational growth to enlarge
economic opportunities. Accommodating the information from the past data is also important
to get the accurate insights to reform the financial sector. To ensure the overall growth and
profit of the organisation, a proper financial is necessary for the endeavours to take on. Keeping
of the regular survey of the economic data and financial record must be regularly monitored
for the optimum performance at each level of the organisation in terms of their financial goal
to reform agenda for the long-term impact which will be significant that would raise equity and
boost economic growth to 3% from the current year’s 2% (Husain, Z., N. and Goyal, R. 2012).

3.0. Conclusion
The Indian economy is showing positive signs of a turnaround of their economic development.
New reforms, need to be implemented to put the country on a path to strong, sustainable and
inclusive growth. India’s economy had slowed since 2011 is coming out of some tough times
and it is now recovering faster. In recent years, this country had high inflation, complex labour
markets and infrastructure and a wide current account deficit. But these situations are now
improving. India’s GDP should grow by more than 6.5 percent annually in the coming years to
make up the previous loss. It must implement a broad national vat to the public finances, the
country must adopt a simple flexible inflation rate framework and it must provide support for
saving and investment for the entrepreneurs.
4.0. References

Government of India (2014), Economic Survey of India 2013-13, Indian Ministry of Finance,
http:// indiabudget.nic.in.

R.S. Bora and T. Nandakumar (2012) “Opportunities and challenges: Sustainable Level of
India’s Current Account Deficit”, MPRA Paper no: 123.

Gulati, A., and J. Gujral (2012), “National Food Security Bill – Challenges and Options”, RBI,
page: 212.

OECD (2014) “Improving fiscal performance of INDIA”, OECD Economics, Department

Working Papers, No. 829, www.oecd.org/eco/surveys/46673013.pdf.

Husain, Z., N. and, Goyal, R. (2012), “Economic information system in India: A case study of
Uttar”, Working Paper No- 45.

Hagemann, R. (2010), “Economic Survey of India through fiscal councils”, Working Paper
No- 35.