indian ecnonomy ppt

7/29/2019 indian ecnonomy ppt

1/40

Ref: Business Environment, Suresh Bedi


2/40

India is the second largest country in the world interms of population and having roughly 12% of theworlds land

It is also the worlds 4 th largest economy in termsof GDPIndia has changed from a public sector domination

in industries to an increasingly liberalised system,with both private and public players.Agricultural activity contributes only 23% to theGDP but employs 65% of the workforce


3/40

Diversified economy ranging from technologyto Agriculture.

16% of world population and 12% of worldland area.

India is a mixed economy.


4/40

Gross Domestic Product dipped from 9 per cent to 6.7 per centduring 2008-09.

Services sector contributing to 50 % of GDP.

Industry has grown at the rate of 8.5%

The growth in agriculture and allied activities decelerated 1.6per cent in 2008-09.

The manufacturing, electricity and construction sectorsdecelerated to 2.4, 3.4 and 7.2 per cent respectively during2008-09. Service sector growth fall by 7.8 %


5/40

1) AgrarianEconomy

2) HighPopulationgrowth.

3) Low Percapita income

Features

4)Unemployment

5) Capital scarcity

6) Large pool of skilled manpower.


6/40

It is considered as a developing economyThe salient features of Indian economy can

be specified as1. predominance of agriculture2. Rapid population growth3. Low per capita income4. Unemployment5. Capital scarce economy


7/40

A socialistic systemThe Govt has a constitutional obligation to

prepare state policies on socialistic principles.Parliament accepted the socialistic pattern of society as far back as in December 1954. in

1976 the constitution was amended (42nd

amendment) to declare India is socialisticstate.


8/40

Minimisation of inequalities in income andopportunities

Ownership and control of material resourcesfor common goodPrevention of concentration of wealth andmeans of productionEqual pay for equal work for men and women


9/40

The phenomenal expansion of the public sectorby itself is a testimony to the socialistphilosophy of the state

The gradual disinvestment in the public sectortaking place during the process of economicreforms initiated in 1991 should not bemisconstrued as the reversal of socialistphilosophyIt was exercise to manage the gigantic publicsector and unleash some more competitiveforces in the economic system.


10/40

A welfare state is continuously engaged inimproving the average quality of life of the peopleand takes particular care of the weaker, marginal orvulnerable sections of the society, which are proneto exploitation

Right against exploitation is a fundamental rightgiven in the constitution


11/40

Promotion of the welfare of the people bysecuring a social orderAdequate means of livelihood

Health and strength of workersSecurity, right to work, education and socialsecurity subject to limitation of resourcesJust and humane condition of workParticipation of workers in the management of undertakingsRaising the level of nutrition, standard living,public health and prohibition of intoxicateddrinks and drugs injurious to health


12/40

Conforming to the obligation the Govtundertakes a no of welfare programs for the

broader enhancement of human well-beingand general quality of life of people.In 2001-02 total budgetary allocation onsocial services, employment scheme andrural development was about INR 40000crore ( 2% GDP)


13/40

Education, sports and youth affairsHealth and family welfareWater supply, sanitation, housing and urbandevelopmentInformation and broadcastingWelfare of sc/st and other backward classesLabour, employment and labour welfareSocial welfare and nutritionRural developmentBasic minimum services and slum developmentPrime ministers gramodya yojnaPrime ministers Gram sadak yojnaNREGA


14/40

The underlying premise of the mixed economy is that the meansof production are mainly under private ownership; that marketsremain the dominant form of economic coordination; and thatprofit-seeking enterprises and the accumulation of capital wouldremain the fundamental driving force behind economic activity.

Additionally, the government would wield considerable influenceover the economy through fiscal and monetary policies designedto counteract economic downturns and capitalism's tendencytoward financial crises and unemployment, along with playing arole in social welfare interventions.

Subsequently, some mixed economies have expanded to includeindicative economic planning or large public enterprise sectors


15/40

There are comparable roles of the private enterpriseand market mechanism on the one hand and that of the Govt and the public sector on the other.

Under the present industrial policy, a number of areas which were earlier preserve of the public

sector have been opened to the private enterprisebut the public sector will continue to have dominantpresence perpetuating the mixed character of theeconomy


16/40

There is co-existence of an ultra modernsector using sophisticated technology and aprivate sector using traditional and obsoletemethod of productionThe sectors which use modern technologyinclude

Petro chemicals, iron and steel, informationtechnology, telecommunication, mineralexploration, automobiles, civil construction,civil aviation and shipping.


17/40

Sectors use traditional, outmoded technology areagriculture, trade, local transportation, and smallscale industries.

The technology transfer from form modern sector isvery slow.Modern sector is capital intensive, it fails to create jobs at the rate at which it grows.

The burden of employment thus falls on thetraditional sector that leads to un-employmentCapital formation in the traditional sector is so slowand depends heavily on state support


18/40

The development and growth of the Indian economy takesplace under a full fledged system of economic planning bythe Govt.

Five year plans were started in the year 1951 and Theplanning commission is charged with the responsibility of framing them.

A five year plan lay downs the overall development strategy,assesses resource requirements and lays down resourcemobilisation patterns.


19/40

The main and common objectives of planninghave been high growth, reduction in income

and wealth inequalities, development of infrastructure, poverty reduction, pricestability, employment generation, andbalanced economic development


20/40

In 90s Indian economy was going through a financial crisis due to : -

1. Large and Persistent Fiscal deficit.

2. Foreign exchange crisis.

3. Huge deficit in the balance of Payments.

4. Economic slowdown.

5. Gulf war and Recession.

6. High Tariffs


21/40

LiberalizationPrivatisation

Globalisation


22/40

Process of liberating economy from the variousregulatory and control mechanisms of the state andof giving greater freedom to private enterprise.

Liberalisation has taken place in almost all the majorsectors of economy including industry and services,infrastructure, banking, capital market, taxation and

external sector covering foreign trade andinvestments in international financial transactions


23/40

De-licensingFreedom from locational requirement and

government clearanceFreedom to PSUs to access capital marketFreedom to banks to enter the insurancesectorsTax exemptions, holidays and concession


24/40

Privatisation is not merely the transfer of ownership of government or publicly owned

assets into private hands, it also refers to aprocess in which major economic decisionsconcerning production, exchange ,distribution and compensation are entrustedto the market forces and decisions are takenby a large number of individual and privateeconomic units.


25/40

Divestiture the sale of equity in full or part , of public sector units to private companies andindividualsFranchising of public sector services todesignated private sector unitsLicensing of technology of public sector units toprivate enterprises on annual royalty linked tooutput

Government withdrawal from a particular fieldof production or service to be occupied byprivate enterprises. Withdrawal may be by wayof voluntary closure of PSUs


26/40

Privatisation of management in which thegovt retains the ownership but management

is entrusted to private hands through lease ormanagement contracts.


27/40

Its a process of global integration of products,technology, labour, investment, information and evencultures.

It tends to narrow down international differences inprices, wage rates and interest rates.Globalisation happens through international trade,foreign investment, joint ventures, internationallicensing, franchising and sub-contracting, horizontaland vertical integration of industries, strategicalliances, international market sharing arrangements,advertisement and information exchange.


28/40

Restrictive trade practice are repealedIncrease FDI in no of areasCreation of foreign investment promotionboard as a separate body to study and clearFDI proposals.Reduction in the custom duty rates on a

number of import itemsreplacement of restrictive FERA act withmore liberal FEMA


29/40

1. Reduction in Government expenditure.

2. Cutting down subsidies on agriculture, industry etc.3. Promotion of private investment and liberalisation of trade


30/40

a) It was initiated as a part of economic reforms.

b) Trade liberalisation and removal of protective entry barriers.

c) Financial liberisation and reducing the public sector financialinstitutions.

d) Reviving monetary policies, rate of interest to be determinedby market forces.

e) Gradual privatisation of all Public sector institutions andlimited privatisation in core sectors like defence.


31/40

d) Reduction in social sector spending.

e) Tax reforms.

f) Poverty alleviation through social development fund.

g) Liberal policy for FDI and FII .


32/40

Infrastructure

Promotion of private investments in development of ports, highways and public transport system.

Separation of Regulatory functions from policy andoperational functions.

Simplification of guidelines, procedures and equityparticipation made easier.


33/40

Industry

Disinvestment of Public sector enterprises.

Promotion of private and foreign players.

FDI cap increased Ex 100 % FDI in refining

Promotion of foreign collaboration, tie ups in automobileindustry


34/40

Jewellery & Textiles

Removal of trade restrictions on the import of gold .Promotion of more private players and limited restrictions forimports.

100 percent FDI is allowed in textile sectors.


35/40

Steel Industry

Automation and New technology acquisitions.

More FDI was allowed with liberalisation.


36/40

Strengths

1. Large pool of skilled and unskilled manpower.

2. Diversified nature of economy.

3. Huge English speaking population.

4. Large base of technocrats Ex- 3rd

largest in terms no of engineers.

5. High growth rate of Economy

6. Abundant Natural resources.


37/40

Weakness

1. Majority of work force engaged in Agriculture.

2. High rate of poverty.(42 % of population).

3. Low productivity.

4. Poor Infrastructure.5. Red tapism , corrupt political system and Bureaucracy.

6. Rural- Urban divide and Unequal distribution of wealth.


38/40

Opportunities

1. Inflow of FDI more.

2. Cost of Production is low

3. Large percent of young population. (41.05%).

4. Huge Natural gas deposits, agricultural resources etc.


39/40

Threats

1. High Fiscal deficit.

2. Population explosion.

3. Seasonal nature of Agriculture.

4. Volatility of crude oil prices.5. Unwanted political interventions and growing corruption in the

system.


40/40

Date post:	04-Apr-2018
Category:	Documents
Upload:	vishnu-menon
View:	223 times
Download:	0 times

indian ecnonomy ppt

Documents