India Shining: Myth Or Fact.

By: saurav k chandan Vivek kumarAnkur SinghAditya raj Arif khan Rahul Ranjan Surj anandMohit raj Rajeev ranjan

Contents

Economics that hurt the moral well-being of an individual or a nation are immoral.

Mahatma Gandhi

Background

British Rule and The Indian Economy:

Two hundred years of colonial rule built a country incapable of meeting the basic needs of its own population

Turning the economy into a conveyor belt for raw commodities destined for the manufacturing industries in Britain

To tackle these problems, post-independence India chose a path of state socialism, with a centrally planned industrialization policy aimed at input substitution in manufacturing and agriculture.

In the early 1990s, increased domestic and international pressures finally led to full-fledged structural adjustment, and a process of economic liberalization.

Statistics

Pre- Independence

Agriculture contribution to GNP: 56.5% in 1950-51

Workforce engaged in agriculture: 76% in 1961

Post- Independence

Agriculture contribution to GNP: 24.3 % in 2001-02

Workforce engaged in agriculture: 60% in 1999-2000

Defining India.

India is a huge, heterogeneous entity that many of us know little of. Consequently, we often think it as a vast tract of woefully poor people, who labor under the scorching sun with rude ploughs and emaciated bullocks to earn meager incomes that barely make ends meet.

We know little of our heartland, and have hardly any idea of how it has been changing over the last decade.

India includes hundreds of millions of people, living very different lives, and undertaking profound and rapid change.

What kinds of changes? How profound? How quick?

Changing Contours of India.

Among their findings: Over 1/3 of all households now have a main source

of livelihood other than farming; An increasing percentage of households live in

permanent dwellings; Families are investing more in the education of their

children

9% of households owned TVs (other surveys I've seen have shown that radio ownership is now nearly universal, creating interesting opportunities);

over 30% of rural and urban households had at least one bank account.

But this is not the end………..There is still overwhelming and appalling poverty is rural and urban

India -- and in some places it's getting worse, not better.

Poverty is shining in India The official Head Count Ratio (HCR)

indicates that poverty on the aggregate level declined at a slightly higher rate than urban poverty in the period from 1993/94 to1999/00,indicating that poverty reduction was indeed happening in the countryside right along with booming urban areas

The official statistics that rural and urban poverty is declining more rapidly than urban poverty have been questioned.

It is possible that poverty has gone down during the 1990s, but not at the levels published by the World Bank and not in the states that are particularly impoverished.

Neither the official nor adjusted poverty ratios show encouraging changes in the geographical patterns of economic growth and poverty reduction.

Lets know what constitute the poor..Two regions in particular are subject to very high rates of poverty:

Eastern India and Central Tribal India.

Who are Poor ?

Lets know what constitute the poor..Two regions in particular are subject to very high rates of poverty:

Eastern India and Central Tribal India. These areas include East Uttar Pradesh, North Bihar, North Bengal,

Coastal Orissa, Assam, Tripura, Bundelkhand, Jharkand, Vidarbha, Madya Pradesh, Rajasthan, Western Orissa, and Telangana.

Economic Liberalization: Myths or Reality

Myth-1: Higher percentage of people were lifted out of poverty under the free market.

Facts: Official data show a drastic decline in poverty during the last half of the 1990s. But the fall in poverty owes much more to a change in the way that poverty data were collected and interpreted. Poverty declined at no faster pace than in the 1980s and there are in fact indications of a deceleration in poverty reduction despite a 30 percent increase in per capita income.

Myth-2 The Green Revolution will save India from hunger once again.

Facts: But this revolution has bypassed most Indian farmers, who live in the poorer states and who are without access to large areas of land necessary to profit from these technologies.Small farmers produce 41 percent of the total grain and over half of India's total fruits and vegetables and they are more productive than the Green Revolution farms even though they cultivate rain-fed lands using only human labor and animal traction. The Green Revolution is not the answer to India's hunger. The Green Revolution is not the answer to India's hunger. The problem is of distribution, not of production.

Myth-3 Trade liberalization will benefit farmers.

Facts: Liberalization has forced small farmers to compete in a global market where commodity prices have plummeted while the reduction of government subsidies has made farming more expensive.

Government sector investment in agriculture registered a decline of 28.9 percent, leaving farmers without access to affordable loans and forcing them to turn to private lenders who charge significantly higher interest rates.

Private banks only directed 10.8 percent of total credit to agriculture, well below the government required 18 percent

Subsequently, farmers have turned to contract farming for large national and international corporations, producing cash crops--cotton, potatoes and chilies--for US and European markets instead of food for India's people.

But contract farming has greater risk and have left many farmers heavily indebted, driving thousands of them to suicide

Myth-4 India's economic reform of public services target the poor more efficiently.

Facts: Development expenditures as a share of GDP declined from 14 percent in the late 1980s to less than 6 percent of total GDP in 2000.

In 2001 millions of tons of rotting grain was thrown into the sea, while starvation deaths were reported in several states for the first time since the 1960s.

Myth-5 Economic reform has helped more Indians eat better.Facts: Malnutrition has increased during the 1990s. The average

calorie intake has declined especially among India's poorest.

Furthermore, the production of some of the most important staples has declined as agricultural land is increasingly used for export crops.

During the 1990s, five million hectares were converted from food-grain production into cash crop production.

Net availability of food grains per person plummeted to levels unheard of since the 1930s economic depression under British colonial rule.

Myth-6 Economic liberalization will lead to better economic opportunities for women.

Facts: Historically, women have been the backbone of the economy, but they are paid less, work longer, and do harder manual labor than men.

This situation has been exacerbated under neoliberalism. Between 1991 and 2001, for example, the number of women in

marginal jobs more than doubled from 25 million to 51 million.

Myth-7 These problems caused by economic liberalization are only temporary.

Facts: The government seems to be more concerned with turning India into a leading global exporter and technology hub than resolving the massive poverty problems.

Budget cuts for development programs and the public distribution system show that the political will to address poverty problems has disappeared, and without this political will, India's areas will continue to experience increased hardship.

Myth-8 The information technology boom in India will benefit the poor.

Facts: Information technology only contributes 2 percent of total GDP and employs fewer than one million people. While more than 230 million people are employed in the agricultural sector.

Moreover they are unlikely to benefit directly from the technology boom because the social and economic mechanisms for redistributing the gains of the information technology industry have been eroded by the introduction of regressive taxes and cuts in social welfare programs.

Job creation in the urban information technology sector does little to create economic gains for India's poor.

Neoliberal policies have ghettoized the poor into particular states, into areas, and into increasingly stratified social divisions.

INDIA

1. OVERVIEW• The Economy of India is the ninth largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP).• The famous Goldman Sachs report ( Dreaming with BRICs: The Path to 2050 ) states that, among Brazil, Russia, India and China, India will grow the fastest over the next 30 to 50 years by leveraging its demographic advantages and through continued development• India’s GDP will exceed Italy’s in 2016, France’s in 2019, Germany’s in 2023 and Japan’s in 2032• INDIA TO BECOME THE 3RD LARGEST ECONOMY IN THE WORLD BY 2032 AND… THE STORY BEGAN IN 1947

Average GDP growth - India & the World

SCENARIO

Current scenario• India’s large service industry accounts for 57.2% of the country’s GDP• The industrial sectors contribute 28.6%• The agricultural sectors contribute 14.6%• Major industries in India are Food processing, Chemicals, Textiles.

Telecommunications includes Information Machinery, Petroleum, Mining, Cement, Steel, technology-enabled services and pharmaceuticals. (2009-10)

Gross Domestic Product

GDP growth after LPG Introduction to LPG• July 1991,India has taken a series of measures to structure the economy and improve the BOP position. The new economic policy introduced changes in several areas.• The policy have salient Liberalization (internal and external) feature which are: - Globalization of the economy Extending Privatization

Pre LPG• Social democratic policies governed India’s economy from 1947 to Extensive regulation 1991.• The economy was characterized by Slow growth. Pervasive corruption and Public ownership Protectionism.

GDP- A COMPARISON Graph shows per capita GDP of south Asian economies & South Korea as a percent of the American GDP per capita.

VARIOUS FACTORS

The path to Liberalization• Relief for foreign investors• Devaluation of Indian rupees• New industrial Policy• New trade policy• Removal of import Restrictions• Liberalization of NRI remittances• Freedom to import technology• Encouraging foreign tie-ups• MRTP relaxation• Privatization of public sector

Indian Oil Corporation National Thermal Power Corporation Examples are:- Bharat Steel Authority India Limited, Mananegar Telephone Nigam Limited, Hindustan Petroleum Corporation Limited, Petroleum Corporation Limited, Bharat Heavy Electronics Limited.

Privatization

The path to Privatization• Liberalization Approach• Relative Share Enlargement Approach• Association of Private Sector Management Approach• Transfer of Minority Equity Ownership Approach• Transfer of Complete Ownership Approach

Examples• Lagan Jute Machinery Company Limited (LJMC)• Videsh Sanchar Nigam Limited (VSNL)• Hindustan Zinc Limited (HZL)• Hotel Corporation Limited of India (HCL)• Bharat Aluminum Company limited (BALCO)

Contract -Licensing/Franchising, Exporting-The path to Globalization Fully owned Assembly operations, Management contract,

manufacturing , Merger and acquisition, Joint venturing, manufacturing facilities Countertrade, Strategic alliance.

Post LPG Agriculture• India• The world’s most irrigated land

mass• World’s 2nd largest exporter of rice & 5th largest exporter of wheat• Food production: India’s Ranking in the World • 1st Tea, Milk • 2nd Rice, wheat, sugar•

Industrialization

Industrialization• Industry accounts for 28% of the GDP & employs 14% of the total workforce.• Textile manufacturing is the second largest It accounts for 20% of source of employment after agriculture Provides employment to over 20 million people manufacturing output Ludhiana produces 90% of woolens in India and is known as the Manchester Provides employment to of India• India is 13th in services output. It has the largest share in the GDP, accounting 23% of the work force for 55% in 2007, up from 15% in 1950

Industrialization• Information technology and business process Having a cumulative outsourcing are among the fastest growing sectors In 2009,growth rate of revenue 33.6% between 1997–98 and 2002–03 seven Indian firms were listed among the top 15 technology outsourcing companies in the world.• Mining forms an important segment of the Indian The country produces 79 different minerals (excluding fuel economy and atomic resources) in 2009–10• Organized retail supermarkets accounts for 24% of the market as of 2008

Banking & Finance• The Indian money market is classified into the Public banks as scheduled Private banks organized sector comprising Cooperative banks.

• The Foreign owned commercial banks and banks Individual or family owned indigenous unorganized sector includes bankers or money lenders and non- banking financial companies.

MNCs leveraging the India Advantage

FDI INFLOWS TO INDIA

Indian advantage The India Advantage Excellent network Well-

developed of research laboratories base industries Proficiency in Pro active English policy framework Extensive clinical trial opportunities Rich biodiversity Low manpower Trained manpower costs and knowledge base

Banking, finance & Energy

Banking & Finance• Prime Minister Indira Gandhi nationalized 14 banks in 1969• Followed by six others in 1980• The number of bank 8,260 in 1969 to 72,170 in 2007• India’s branches has increased from gross domestic saving in 2006–07 as a percentage of GDP stood at a high 32.7%

Energy and Power• India is the fourth largest consumer of oil in the world• India’s oil reserves meet 25% of the country’s domestic oil demand• India imported $82.1 billion worth of oil in the first three quarters of 2010 which had an adverse effect on its current account deficit.• The petroleum industry in India mostly consists of public sector companies Hindustan Petroleum Oil and Natural Gas Corporation (ONGC) such as Indian Oil Corporation Limited (IOCL) Corporation Limited (HPCL) Reliance Industries Limited (RIL) operates the worlds largest oil refining complex

INDIA SHINING ON PAPER OR IN REAL

We are Indian, so we have right to know where India was and where India is? And It is our duty to decide whether India is shining on paper or in real. It is known to all of us that the India's GDP is about 9.2%. But the question arises is it enough to know the prosperity of a country? Can we say only on this basis that how our brothers are living in the country? What kind of problems they are facing?

Definitely, the answer is in BIG numbers;. And if we are talking about GDP then I want to say that we cannot compare our GDP to the USA, Japan, Germany, UK, France, China, Italy, Spain and Canada. (GDP in million 2006-07) India 691,876 China 1,932,093 (Almost 2.5 times of Indian GDP) USA 11,667,515 (Almost 17 times of Indian GDP) we should never forget that India is a country of farmers.

Agriculture

It plays a vital role in the economy of India and the GDP of agriculture is only 2.7%. It is too less in compare of last year's 6%. About 70%of the Indian population are based on the agriculture .In other word we can say that G.D.P.(9.2%)is the growth of that 30%people whose life is based on the Industry . Not only in the area of agriculture but also Industries (cement, steel), port, mining, gas and power are the main cause of concern.

Education

Next cause of concern is education. Education for all is still a dream. Government missed the target for providing education for all by 2007. About 70.5lakh children in the 6-14 age group are still out of school. Apart from these, poverty, population, crime, corruption, illiteracy, unemployment and misguided policies are the main hindrance in the way of India to become a super power. Growth in population is one of the main hindrance in the way of India shining. It is the root of rest other hindrance like poverty, crime, corruption, illiteracy, and unemployment.

But not only the population is affecting the rise of India because the population of china is more than India and still china is at the better position than India. Then question again arises who is responsible for that? Is that crime, corruption, illiteracy or unemployment? No doubt there are corruption in each field.

EDUCATION AND ITS ADVERSERIES Education, politics, civil service, almost there is

corruption in each area. The persons are seated at top level are corrupt. Next is crime, It is growing like the mouth of surah. Most of the states are suffering the problem of naxalite. We are fighting each other on the name of cast, religion and region. At that time we forget that we are Indian. Illiteracy and unemployment are also major factor that affecting our country’s growth. Neither we have proper or suitable policy to stop growth in population and brain drain nor to remove crime, corruption, illiteracy, and unemployment. Where one part of our country is facing problem of flood, the same time other part is facing problem of drought.

We don’t have any policies to fight with that problem. “Now, I want to ask Is India shining? And my answer is “yes” but in area of crime, corruption, brain drain, illiteracy and unemployment.” 

Conclusion

SHINING INDIA: LEAVING THE POOR BEHIND The costs and benefits of neoliberalism have been

unevenly spread in India, and saw strong evidence to suggest that the Indian government and the World Bank were being misleading in their laudatory appraisal of the benefits of structural adjustment in India.

India won its independence with a vision of a country in which all were able to feed themselves.

The policies implemented under Nehru, and under Indira and Rajiv Gandhi, were far from perfect, and were in many ways crafted by elite pressure.

The past ten years have hurt too many, and at too high a price, for the lessons of economic liberalization to be ignore.