Jaipuria Institute of Management,

Vineet Khand, Gomti Nagar

Lucknow – 226010

Academic Year 2021-22

Batch 2021-2023
Trimester 2nd
Programme PGDM-FS
(PGDM / / PGDM-RM)
Name of Course Emerging Economic Environment
Section E
Name of Faculty Dr. RK Ojha

Nature of Submission Assignment

(Assignment / Project Report)
Topic of Assignment / Project Analysis of 5 news articles related to Macro-
economics of India

Deadline for Submission 17th January, 2022

Group/ Learning Team Number LT-06
Maximum Marks Allotted

Contribution of Group/LT members in the Assignment/Project

Sl. Name & Enrollment Contribution Signature

No. Number of Student

1 Mohammed Ayaad Siddiqui- Analysis of 5 news articles related to Macro-economics

JL21FS014 of India

8
Date of receiving at PMC: Signature of PMC Staff:
Penalty [Marks to be deducted (if any)]:
 Economics Assignment
What is Macro-economics and why is it important? If you happen to have an interest in the
economic health of your country than these are the questions you should be looking at. Macro-
economics refers to changes in the economic output of a country, its inflation, its exchange rates,
etc. In simple words, aspects such as employment and sustainable growth are all dependent on the
monetary and fiscal policies of macro-economics. It helps us to examine the forces which are
responsible for the growth of a country and helps us to reach the highest level of it and sustain it.
But recently the global economy got hot by a phenomenon which plunged it into darkness. The
phenomenon was COVID-19. India was no exception to it and we were one of the most wrecked
economies because of it. In the post-independence period, India's national income has declined only
four times before 2020 – in 1958, 1966, 1973 and 1980 – with the largest drop being in 1980
(5.2%). The GDP which had seen a growth of about 4.2% in the 2019-2020 period got hit by a
7.7% reduction in it in the 2020-2021 period. If one delves into the data, it can be seen the wealth
and income inequality has been on the rise. More than 42.5% of the total wealth was held by the top
1% of the population. During the national lockdown, individual income decreased by more than
40%. In retrospect, one can compare it to losing 3 months of salary. Unemployment had been at all
time high due to the crisis with younger population dominating the personnel as they make up the
majority of the population. One of the major sectors which was hit was the manufacturing sector.
Due to the ban on non-essential items during the lockdown, companies were operating in lesser size
and numbers, thus leading to diseconomies of scale. Add to it the global disturbance in the logistics,
procurement of raw materials got harder and expensive. As we know, when we talk about macro-
economics, its inter-dependent on a global level and the manufacturing sector is an apt example of
it. Similarly, oil production was reduced in the OPEC countries which caused inflation and increase
in the prices of fuel in India, adding further to the burdens of the Government. But India’s policy
and grants response robust and managed to mitigate the damage to some level. One can get an idea
as to how macro-economic works- how it affects various parameters such as employment, wealth
accumulation, GDP, growth, etc., how global incidents affect our economy, how our incidents
affect other economies and how the steps taken by the government affects us and others. To further
elaborate on the point, below are 5 news articles which sows how COVID-19 and global factors
affected our economy, was it good or bad, what could have been done, etc.
 News Articles

1. “India warns of high oil prices hurting global economic recovery”- The Economic
Times

Link- https://economictimes.indiatimes.com/industry/energy/oil-gas/india-warns-of-high-
oil-prices-hurting-global-economic-recovery/articleshow/87164512.cms

Written by-Press Trust of India, Date- Oct 20, 2021

 Analysis- Organization of the Petroleum Exporting Countries also known as OPEC

led by Saudi Arabia works as an association and fixes prices in a favorable band.
 They have the muscle to bring down oil prices by increasing the production or vice
versa.
 Reasons contributing to slow production are many such but some of the main ones
are- In 2020 due to restrictions on travel, etc. due to the pandemic, the production
was halted. But as the economy started to recover later, instead of a sharp increase in
production, the OPEC countries are increasing the production gradually, much lesser
than the demand.
 Disruptions caused by Hurricane Ide caused supply issue of natural gas.
  Impact on India- Increased oil prices will increase India’s import bill and interrupt
its current account deficit.
 Increased oil prices may lead to inflation.
 Increased trade deficit
 Suggestions- Appeal to OPEC countries to increase production and supply oil faster
as it could deprive the Global Economy of its growth rate.
 Countries should dig into their oil reserves and make us of it until the scenario with
OPEC is resolved and production is brought back to the desired level.
 Excise cut and VAT reduction

2. “Gadkari asks automakers to start producing flex-fuel vehicles in 6 months”- Business

Standard

Link-https://www.business-standard.com/article/current-affairs/govt-asks-automakers-start-
producing-flex-fuel-vehicles-in-6-mnths-gadkari-121122700821_1.html

Written by-Press Trust of India, Date- December 27, 2021

 Analysis- The Government of India has asked Automobile Manufacturers in India to

manufacture Flex Fuel Vehicles (FFV) and Flex Fuel Strong Hybrid Electric
Vehicles (FFV-SHEV) which also complies with BS-6 Norms.
 The action will help to reduce the demand for petroleum products thus easing
pressure on the import bill.
 Since the process uses ethanol, it will provide additional jobs pertaining to making
ethanol and also increase the revenue of farmers.
 Suggestions- The Government of India should impose a time stamp as to when the
cars should be in the market so as to speed up the process.
 Incentivize the automobile manufacturers from domestic and foreign markets who
are already into this segment to set up factories here, so as to increase employment
opportunities and generate revenue.
  Should act on it as soon as possible as currently India imports more than 80% of its
petroleum requirements and therefore contributes majorly to its cash outflow thus
increasing the import bill.

3. “DAP fertilizer crisis may pinch farmers, put pressure on govt finances”- Business
Standard

Link- https://www.business-standard.com/article/economy-policy/dap-fertiliser-crisis-may-
pinch-farmers-put-pressure-on-govt-finances-121110101639_1.html
Written by-Sanjeeb Mukherjee, Date- November 2, 2021

 Analysis- Farmers from numerous states such as Rajasthan, Punjab, etc. facing
shortage of fertilizers, especially Di-ammonium Phosphate due to Covid-19
pandemic. Add to it that the Rabi season is upon us, there is widespread panic.
 Reasons- The Covid-19 pandemic has halted and disturbed the global supply chain
of anything and everything which also includes fertilizers.
 Due to this, India has stopped importing fertilizers due to the hiked prices but this
has led to India depleting its reserve stock of fertilizers.
 The companies dealing in the manufacturing of fertilizers deemed the subsidies
given as insufficient due to which they have scaled down the production.
 Suggestions- The main problem right now is the panic amongst the farmers. The
Government should ensure fast logistics in between the production centers and the
farmers so as to calm the situation down after which the farmers wouldn’t mind
delaying the sowing of crops by a week.
 Farmers should use a mixture of urea-single super phosphate in-stead of DAP due to
easier availability until the situation is under control.
4. “Industry players hail thrust on chip, display manufacturing in India”- Business
Standard

Link- https://www.business-standard.com/article/economy-policy/industry-players-hail-
thrust-on-chip-display-manufacturing-in-india-121121501043_1.html

Written by-IANS, Date- December 15, 2021

 Analysis- The significance of semiconductor chips has increased exponentially from

20% two decades ago to 40% nowadays.
 The semiconductor manufacturing business is highly concentrated within a few
counties namely, Taiwan, Japan, etc. This along with the increasing importance of
chips has pushed countries into action into becoming independent and treating it
with a strategic importance.
 A major contributor to this realization has been COVID-19 which has pushed all
kinds of economic as well as daily activities into online mode.
 India is currently dependent wholly on imports and in the foreseeable future the
market is thought to be worth $300 Billion by 2025 from $24 Billion now.
 The Union Cabinet has recently allocated an amount of ₹76,000 crore for supporting
the development of a semiconductors and display manufacturing ecosystem and
launched the “Scheme for Promotion of Manufacturing of Electronic Components
and Semiconductors” also known as SPECS under which Rs 3,285 crore is spread
over a period of eight years for manufacturing semiconductors.
 Challenges- The segment requires very high capital investments along with being
very risky, having long gestation and payback periods.
 The level of fiscal support or Government expenditure is minimum right now as to
what is required.
 Suggestions- Focusing India’s fiscal money on chip designing, testing facilities, etc.
as cover the distance easily in these segments rather then going into full blown
manufacturing.
 Government expenditure in the area of Research and Development should be
increased.
 Indian Public Sector Companies such as Bharat Electronics, etc. should tie up with
other foreign established companies thus increasing foreign investment and
employment opportunities here while also making use of the expertise they will
bring thus lessening the work-load.
5. “Cabinet approves Rs 4,445-cr PM MITRA Yojana to set up 7 mega textile parks”-
Business Standard

Link- https://www.business-standard.com/article/economy-policy/cabinet-approves-rs-4-
445-cr-pm-mitra-yojana-to-set-up-7-mega-textile-parks-121100600827_1.html

Written by-Press Trust of India, Date- October 6, 2021

 Analysis- The Union Cabinet has approved the establishment of 7 Mega Integrated
Textile Region and Apparel (PM MITRA) Parks at an outlay of Rs. 4,445 crores.
 Aim is to integrate the whole textile industry segments.
 It will help in reducing logistics cost and strengthen the sector to make it competitive
on a global level. India had earlier witnessed troubles in procurement of materials
from China due to the COVID-19 pandemic.
 MITRA parks are expected to directly generate 7 lakh jobs and indirectly generate a
further 14 lakh jobs.
 Will be providing developmental infrastructure of Rs. 500 crore.
 Will attract more Foreign Direct Investment (FDI). The textile industry is only
responsible for 0.69% of total FDI.
 Suggestions- Government Expenditure in the field of power looms, subsidies, etc.
should be increased.
 Until the parks are established, focus should be on establishing a simple and efficient
logistics system.
 Focus should also be on the Man-made fiber segment like car belts, seat covers, etc.