Indian Economy And its Place in the World

A Presentation by Group 9 Asha Nachi Kritika Prabhakar Nitesh Kumar Raunaq Chawla Seshu Pinnamineni Vijay Pal Singh

Growth since 1991
• • • • • •
ECONOMIC REFORMS POLICY INTRODUCED IN 1991 AGRICULTURAL PRODUCTION INCREASED- CAPITAL INVESTMENT, BETTER FACILITIES, RESEARCH ELECTRICITY GENERATED INCREASED 50 FOLD, STEEL PRODUCTION ROSE, POVERTY REDUCED FROM 50% TO 26% FDI’s, FII’s LED TO INFRASTRUCTURE DEVELOPMENT, TECHNOLOGY UPGRADATION LAISSEZ FAIRE- INCREASE IN EARNINGS- GROWTH OF GDP. AVERAGE GROWTH RATE-6% GROWTH WAS SLOW- 2ND HALF OF 1990’s -DAMPENING EFFECT- INDIAN ECONOMY

• • Job losses across sectors • Cost of imports • Governments cuts excise and
service taxes to improve the Export/import situation.

Exports and Imports15% Exports contracted by

• Exports: $163 million v/s

imports $230.5 million causing fiscal deficit

GDP Trends
• • • • •
Crossed US$ 1 trillion mark in April 2007 Major industries – iron & steel, reality, energy, automobiles, aviation, textiles, cement, electronics & hardware, biotechnology, pharma, tourism 60% of the GDP is dependent on the domestic market and now the demand in the domestic market is seen to be loosing steam Growths in all the three main sectors of the overall industry were observed to decelerate as compared to that of the previous year sharp acceleration in the consumer goods segment in November 2008 by 4.4% , the growth came from the consumer durables segment that recorded a 7.3% increase

GDP Trends
• Quarterly GDP at factor
cost at constant (19992000) prices for Q3 of 2008-09 is Rs. 8,73,426 crore, as against Rs. 8,29,172 crore in Q3 of 2007-08 - growth rate of 5.3% current prices in Q3 of 2008-09, is estimated at Rs. 13,04,468 crore against Rs. 11,43,862 of that in 2007-08 –

• GDP at factor cost at

Human Development Index
HDI Value 1.Iceland (0.968) 128.India (0.619) 177.Sierra Lone (0.336) 177.Zambia (40.5) 139. Burkina 172.Nigeria Fasco (23.6) (22.7) 174.Malawi (667) Life Expectancy at birth(years) Japan

Adult Literacy rate(% ages 15 and 1.Georgia above) (100%) 114.India (61)

(82.3) 125.India (63.7)

Combined Primary , Secondary and Tertiary 1.Australia Gross (113.0) Enrollment ratio 122.India (63.8)

GDP per capita (PPP US$) 1.Luxembour g (60,228) 117.India (3,452)

HDI v/s GDP percapita

HDI Trends

• • • • • • •

Dragon v/s Tiger
GDP growth in China averaged to 9.1% whereas In India  it is 6.1%. Alleviation of the poor in both countries China and India account for 5% and 2% of world’s GDP  respectively Contribute to 37.5 % of worlds population China’s contribution to the world’s growth is 12.8% and  India’s is 3.2% Other regions of growth are literacy late, bringing down  population growth. FDI of China and India Sis $137 billion and $17.21 billion.

The Recession effect
The GDP estimates have been declining since 2008

While imports have steadily increased, exports are moving south Oil imports have the biggest chunk of Exports

Impact on Finance Channels

• Equity Markets
The Great Indian equity dream seems to be over The sensex has lost over 10,000 points in the last year

• Forex Markets The Rupee has
touched all time low of 51.50. Depreciation of rupee makes external borrowings costlier. The corporates have undertaken external commercial borrowings to finance their businesses and the volumes have grown substantially over the years(see

Impact on Finance Channels

Impact on Finance Channels

• Credit Markets
bank credit continues to expand and showed growth of 27.7% in 200809 As banks are central to trade, this may indicate an increase in NPAs

Impact on Finance Channels

• Foreign capital Inflows
The FII for 2008 (till November 19, 2008) in equity markets show outflow of USD 13 billion and an inflow of USD 2.3 billion in debt markets, leading to a total FII outflow of 10.7 billion).

Change in GDP growth during US Recession

Interestingly, every time there has been an global economic downturn, India has remained Insulated(positive GDP growth)!!!

Although, people are positive about India on the world stage, ground realities show a different picture....

The only thing constant is ‘CHANGE’

Source: WEF Global competitiveness report 2009

Thank You!

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