SWOT ANALYSIS ON INDIAN

ECONOMY

SUBMITTED BY
RAMANUJ PHUKON
ROLL NO. PM-201-836-0044

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 Today India is ranked the sixth largest economy, and third largest in
terms of Purchasing Power Parity (PPP). The Indian economy’s GDP is
pegged at $ 3.05 tn. The GDP per capita in India was $ 2191 in 2021.
India has a mixed economy. Half of India's workers rely on agriculture,
the signature of a traditional economy. One-third of its workers are
employed by the services industry, which contributes two-thirds of
India's output. The productivity of this segment is made possible by
India's shift toward a market economy.
SWOT ANALYSIS: -
Introduction: -
SWOT is a Short Form for Strength, Weakness, Opportunities and
Threats. SWOT analysis is an important tool for audit and analysis of
overall strategic position of business as well as its environment. It takes
into account all positive and negative factors, inside and outside of firm
that affects success. SWOT analysis provides information that helps in
synchronizing firm’s resources and capabilities with competitive
environment where firm operates.
STRENGTH: -
The adoption of the New Economic Policy in 1991(LPG) saw a landmark
shift in the Indian economy, as it ended the mixed economy model and
license raj system and opened the Indian economy to the world. An
overview of the top performing sectors of the Indian economy is given
below: –

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Agriculture: -
One of the most important sectors of the Indian economy remains
Agriculture. It’s share in the GDP of the country has declined and is
currently at 16.38%. However, more than 50% of the total population
of the country is still dependent on agriculture. In the 2020-21 Union
Budget presented by Finance Minister Nirmala Sitharaman, the Ministry
of Agriculture and Farmers’ Welfare has been allocated Rs.1,31,531
crore. The government has given a clear signal to rural India that it is
committed to their cause.
Highlights of Union Budget 2020-21 as announced by the finance
minister on 1 February 2021
 The government has reduced the excise duty component to
compensate for the additional access.
 The target for agricultural credit has been increased to Rs.16.5
lakh crores in order to ensure availability of higher credit to
farmers and for sectors like animal husbandry, diary, and
fisheries.
 Allocation towards rural infrastructure development fund is
proposed to be increased to Rs.40,000 crore by 2021-22.
 Water conservation commitment stands further enhanced since
the Micro Irrigation Fund corpus has been increased to
Rs.10,000 crore via NABARD.
 SWAMITVA scheme will be extended to all states and union
territories
 2 perishable products to be included under ‘Operation Green
Scheme’ and will ensure strengthening these crops’ production
clusters
 1,000 more mandis to be integrated with e-NAM to help boost
transparency in the Agri markets

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  Setting up a multi-purpose seaweed park in Tamil Nadu proposed
to help leverage country’s vast ocean resources and R&D
capabilities.

WEAKNESS: -

Low level of national income and per capita income:

Economic growth of any country can be viewed from its level of
national income and per capita income. It is said that higher the level of
national income, higher is the rate of economic growth. India’s per
capita net national income or NNI was around 126 thousand rupees in
financial year 2021. In contrast, the gross national income at constant
prices stood at over 128 trillion rupees. The previous year, GNI growth
rate at constant prices was around 6.6 percent.

National income indicators

  While GNI and NNI are both indicators for a country’s economic
performance and welfare, the GNI is related to the GDP plus the net
receipts from abroad, including wages and salaries, property income,
net taxes and subsidies receivable from abroad. On the other hand, the
NNI of a country is equal to its GNI net of depreciation. In 2017, India
ranked third amongst the Asia Pacific countries in terms of its gross
national income, with China leading the way at 12.206 trillion U.S.
dollars. This has been possible due to a favorable GDP growth in India,
standing at 2.72 trillion US dollars in 2018.

Measuring wealth versus welfare

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  National income per person or per capita is often used as an indicator
of people's standard of living and welfare. However, critics object to
this by citing that since it is a mean value, it does not reflect the real
income distribution. In other words, a small wealthy class of people in
the country can skew the per capita income substantially, even though
the average population has no change in income. This is exemplified by
the fact that in India, the top one percent of people, control over 58
percent of the country’s wealth.
Standards of living of masses are miserably low. Even the basic
necessities are beyond the means of the majority of population.
Comparing India’s per capita income with the other countries of the
world, one comes to the conclusion that India is one of the poorest
nations of the world. Vast inequalities in income and wealth: Not only
per capita income is low, but Indian economy is also marked by great
inequalities in the distribution of income and wealth. In India, as years
roll on, inequalities are on the rise. The logical corollary of this
inequality is mass poverty. Nearly 60 percent of the total population
share one-third of India’s national income while only rich 5 percent of
the total population enjoy the same amount of national income. This
inequality widens the problem of poverty. Even in 1972-73, more than
50 percent of the total population lived below the poverty line. Thanks
to some economic progress it has come down from 36 percent in 1993-
94 to about 27.5 percent in 2004- 05, poverty estimate based on
Uniform Recall Period. In short, Indian economy still reels under the
vicious circle of poverty. Tremendous population In Less developed
countries (LDCs), the rate of growth of population is very high. So far as
the size of population is concerned, India ranks second next only to
China (1312 million in 2006). India’s population is now 1110 million in
2006- 07. During the decade of 1991, the growth rate of population in

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India was 1.61 percent per annum, as compared to 0.7 percent growth
rate of population of developed countries. High birth rate (23.5 per
1000) coupled with low death rate (7.5. per 1000 in 2005-06) is the
genuine cause for population explosion in India. In the 20th century,
India’s population went up by 5 percent as against 3 percent increase in
the world’s population as a whole.
Predominance of agriculture
LDCs live mainly upon agriculture and extractive industries, like mining,
fisheries and forests. Predominance of agriculture is explained from the
viewpoint of sectoral composition of national income and occupational
pattern. In India, in 1950- 51, more than 55 percent of our GDP came
from the agricultural sector or the so-called primary sector. In 2007-08,
however, the contribution of this sector toward GDP came down to
19.4 percent. The contributions of the secondary and tertiary sectors
were 24.9 percent and 55.7 percent, respectively. Thus, even after 58
years of planning, agriculture alone contributes less than one-fifth of
our national income. Occupational structure also tells a story of
predominance of the agricultural sector and the backwardness of the
industrial sector. In India, 52 percent of the total population was
engaged in agriculture in 2004-05. Though agriculture occupies a
predominant position in India, it is still backward.
Scarcity of capital and low rate of capital formation
As people in LDCs are poor, their capacity to save is low. This results in
a low rate of capital formation. That is why development economists
suggest that to break the vicious circle of poverty it is necessary to push
up the rate of investment. Since India is a capital-poor country, capital
per head is low. This scarcity of capital causes overall backwardness of
the Indian economy.

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Massive unemployment
In LDCs, not only natural resources are under-utilized, but also a
massive wastage occurs in the case of manpower resources. Slow
economic growth rate on the one hand, and rapid growth of population
on the other hand, has accentuated the problem of unemployment in
India. Between 1971 and 1999, the number of unemployed in India
increased by 10 times though the number of job-seekers increased by
2.5 percent annually; but the employment possibilities increased by a
modest rate of 1.8 percent. Number of registered job-seekers in 2006-
07 stood at 40.7 million.
Underdeveloped infrastructure
Being an LDC, India’s infrastructural facilities or economic and social
overheads of capital are inadequate. It consists of (a) transport and
communications, (b) energy, (c) finance, housing and insurance, (d)
science and technology, and (e) health, education, etc. Availability of
these infrastructures creates the conditions for favorable growth. The
superstructure of an economy largely depends on the availability of
infrastructural facilities. As far as social and economic overheads are
concerned, India is poor. It is indeed true that her railway and road
networks are comparable to the developed nations. But her demand
for infrastructural facilities and services outpaces their supplies. Per
capita energy use (oil equivalent) of an Indian in 2004 was 531 kg vis-a-
vis USA’s 7,921 kg. Even China’s per capita energy use was higher
(1,242 kg.) than India’s. Compared to other countries, India is poor in
information technology. In 2005, the use of personal computers per
1,000 Indians was as low as 16 as against 762 per 1,000 US people.
India’s health expenditure as a percentage of GDP was 1.39 p.c. in
2007-8 over the USA’s 15 p.c. of GDP. Thus, India’s social infrastructural

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facilities are not only inadequate compared to the needs, but also
awfully low compared to different countries of the world.

Low level of technology

Due to illiteracy, use of advanced or sophisticated technology is rather
an exception in India. Because of the limited growth of technological
institution, we are forced to use primitive methods of technology
whose productivity is low.

OPPURTUNITY: -
Energy: -
In the future, the world is expected to exit the "fossil fuel age", and
perhaps the "nuclear energy age", and enter the "renewable-energy
age" or even further into the "fusion power age", if and whenever
these technologies become economically sustainable. Being a region in
the sunny tropical belt, the Indian subcontinent could greatly benefit
from a renewable energy trend, as it has the ideal combination of both
- high solar insolation and a big consumer base density.
High population: -
India has the world's second largest population. The PGR for the
country is 1.1. A very large number of India's population, about 50% is
below the age group of 24. This provides the nation with a large
workforce for many decades, helping in its growth.
Young population: -
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Due to its high birth rate, India has a young population compared to
more developed nations. It has approximately 65% of its population
below the age of 35. In addition, declining fertility is beginning to
reduce the youth dependency rate which may produce a demographic
dividend. In the coming decades, while some of the powerful nations
will witness a decrease in workforce numbers, India is expected to have
an increase.

Foreign language skills: -

The importance of the English language in the 21st century is a topic of
debate, nevertheless the growing pool of non-native English speakers
makes it the best contender for "Global language" status. Incidentally,
India has the world's largest English speaking/understanding
population. It claims one of the largest workforces of engineers, doctors
and other key professionals, all comfortable with English. It has the 2nd
largest population of "fluent English" speakers, second only to the
United States, with estimates ranging from 150 to 250 million speakers,
and is expected to have the largest incoming decades.
Candidacy for Security Council: -
India has been pressing for permanent membership of the United
Nations Security Council (as part of the G4 nations) but with a clause
that it won't exercise its veto for the next 15 years. It has received
backing from United States, France, Russia, and the United Kingdom.
Foreign relations: -
India has developed relationships with the world powers like the
European Union, Japan, Russia, and the United States. It also developed
relationships with the African Union (particularly South Africa), the Arab
World, Southeast Asia, Israel and South American nations (particularly
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Brazil). To make the environment favorable for economic growth, India
is investing on its relations with China. It has significantly boosted its
image among Western nations and signed a civilian nuclear deal with
the United States in March 2006. It is also working for better
relationships with Pakistan.
Role in international politics: -
Historically, India was one of the founding members of Non-Aligned
Movement and had good relationships with Soviet Union and other
parts of western world. It played regional roles in South Asian affairs.
India is an active member of the Commonwealth and the WTO. The
evolving economic integration politics in the West and in Asia is
influencing the Indian mood to slowly swing in favor of integration with
global economy. Currently, India's political moves are being influenced
by economic imperatives. New Delhi is also being observed to slowly,
cautiously, and often hesitantly, step into the uncharted role of
becoming one of the two major seats of political power in Asia, the
other being at Beijing. Some enlightened thinkers from the
subcontinent have also envisioned, over the long run, of a South Asian
version of free trade zone and even a Union, where the South Asian
nations relinquish all past animosities and move to make economic
growth a pan subcontinental phenomenon.
Multipolarity: -
A new and highly controversial geopolitical strategy, being debated in
the West, is whether India should be trusted / helped to become an
economically strong democratic citizen of the world, and be used to
balance the powerful but non-democratic forces, to insure a more
stable world. Generally speaking, it is discussed in the context of
adopting a policy of offshore balancing on the part of the United States.

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A new American strategy towards India has been indicated in George
W. Bush's recent visit to the subcontinent.
Economic growth: -
India's current economic growth (as the world's fastest-growing major
economy as of 2015) has improved its standing on the world's political
stage, even though it is still a developing country, but one that is
showing strong development. Many nations are moving to forge better
relationships with India.
Booming economy: -
The economy of India is currently the world's third largest in terms of
real GDP (PPP) after the United States of America and the People's
Republic of China. According to the World Bank, India overtook China to
become the fastest-growing major economy in the world as of 2015. Its
record growth was in the third quarter of 2003, when it grew higher
than any other emerging economy at 10.4%. Estimates by the IMF show
that in 2011 (see List of countries by future GDP estimates (PPP)), India
became the third largest economy in the world, overtaking the
Japanese economy and the Fifth largest economy by GDP (Nominal).
India has grown at 7.5% in 2015.
Science and technology: -
India is trying to develop more highly skilled, English-speaking people to
fit in the future knowledge economy. India is becoming one of the
world's leading producers of computer software and with mushrooming
R&D centers it is experiencing a steady revolution in science and
technology. India and the United States have increased mutual co-
operation in space-travel related technologies, such as increasing the
interoperability between Indian and US systems, and prospects for a
commercial space launch agreement with India that would allow US

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satellites to be launched on Indian vehicles. India is among the world
leaders in remote sensing, a technology coming to great use, among
others, to Indian fishermen & farmers. India is also trying to join
international R&D projects. it has recently joined the European Galileo
GPS Project and the ITER for fusion energy club.

THREATS: -
The Indian economy keeps sliding downward. GDP decelerated steadily
from 8.2% in the first quarter of 2018-19 to 5.8% in the last quarter. Is
this a short-term blip, or a deeper, more serious structural problem?
The correct answer is ‘both’. The combined impact will mean maybe no
more than 5.5-6% growth in 2019-20, against the officially projected
7.5%.
Population Growth: -
India ranks second after China in total population. Its population has
grown 20% per decade, leading to problems that include food deficits,
sanitation deterioration, and pollution. Although economic growth
numbers look promising, the living standards of most citizens are not
changing. Malnutrition is a severe problem in India that is causing
childhood stunting, anemia in women of reproductive age, and
overweight adult women, according to The Hindu Business Line. Only
6% of India's poor have access to tap water versus 33% of the non-
poor. Sanitation is a massive ongoing problem that the government has
been unable to address. China, the United States, and India are the
three most egregious environmental polluters in the world in that
order. India uses coal for 75% of its power requirements, and it has
been slow to transition to cleaner energy sources. New Delhi and other
cities in India are among the most polluted in the world, and car

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emissions in these urban areas are creating breathing and other health
problems.
Deteriorating Infrastructure: -
India has struggled to improve its deteriorating infrastructure in
business, education, and healthcare. India's power grid is overstressed,
and power failures have been daily occurrences in the most developed
areas of Delhi, Mumbai, and Bangalore. The need for generators to
provide power and air conditioning during power failures results in
additional costs that businesses must subsume. Public transportation
and roadways have not kept pace with population growth, and the
education infrastructure is backward with a literacy rate of 72%. India's
healthcare infrastructure is in need of reform. India provides healthcare
to all its citizens, but the 90% who must use public health services and
don't have private insurance through an employer receive poor care in
substandard facilities.
Auto sector: -
Automobile sector is facing its worst crisis in 20 years. Reports say
around 2.30 lakh jobs have been lost in the auto sector. A large of it is
being blamed on the global trend accentuated by the Brexit situation.
But what signals a deeper problem is the Society of Indian Automobile
Manufacturers (SIAM) report that 300 dealerships have shut down in
recent times. Sales of cars, tractors, two-wheelers have declined
considerably. SIAM said about 10 lakh jobs have been hit in the auto
component manufacturing industry.
Real estate: -
The health of real estate is a massive indicator of the state of Indian
economy. It has links with about 250 ancillary industries - bricks,
cement, steel, furniture, electrical, paints etc. and affects them all if

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there is a boom or gloom in the sector. Reports are that the volume of
unsold houses over the past one year has increased in the top cities of
the countries. According to real estate research company Liases Foras,
the unsold inventory currently stands at 42 months. This means it will
take three-and-a-half years for the existing unsold inventory to clear
up. An efficient market maintains 8-12 months of inventory, the
company said.

FMCG at slow pace: -

The fast-moving consumer goods (FMCG) companies have reported
decline in volume growth in the April-June quarter. This has been
blamed on a sluggish rural demand, which, in turn, indicates less
availability of money in villages. Reports say that the demand for FMCG
in rural India was growing at 1.5 times of the urban demand. The rural
demand has come down to the level of urban growth or below. FMCG
major Hindustan Lever reported volume growth of 5.5 per cent in April-
June quarter compared to 12 per cent last year. Dabur posted a growth
of 6 per cent against 21 per cent last year. Britannia Industries recorded
a volume growth of 6 per cent against 12 per cent in the same period
last year. Asian Paints saw a volume growth slump from 12 per cent in
April-June quarter last year to 9 per cent this year.
Bank's lending to MSME At macro-level, lending by banks to industries
shows a significant jump from 0.9 per cent in April June quarter in 2018
to 6.6 per cent for the same period this year. This should reflect in job
growth in industries but the employment situation is dismal. While the
labor force survey, released by the government in July, showed a
record high unemployment rate of 6.1 per cent for 2017-18, recent

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Reserve Bank India report does not present a brighter picture. The RBI
consumer confidence survey showed a drop in consumer confidence for
July over pessimist situation in job creation and overall economic
scenario. CONCLUSION As India I s known for its unity in diversity in the
same way Indian economy is also unified blend of SO vs. WT. India has
weakness but it is space of thinking new ideas and perception,
understand it as a space of opportunities and transform into strength.
India's gross domestic product (GDP) is expected to reach US$ 6 trillion
by FY27 and achieve upper-middle income status on the back of
digitization, globalization, favorable demographics, and reforms. India's
revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412
billion) by 2019, owing to Government of India's measures to
strengthen infrastructure and reforms like demonetization and Goods
and Services Tax (GST). India is also focusing on renewable sources to
generate energy. It is planning to achieve 40 per cent of its energy from
non-fossil sources by 2030 which is currently 30 per cent and also have
plans to increase its renewable energy capacity from to 175 GW by
2022. India is expected to be the third largest consumer economy as its
consumption may triple to US$ 4 trillion by 2025, owing to shift in
consumer behavior and expenditure pattern, according to a Boston
Consulting Group (BCG) report; and is estimated to surpass USA to
become the second largest economy in terms of purchasing power
parity (PPP) by the year 2040, according to a report by
PricewaterhouseCoopers.

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