Indian Economy And its Place in the

World

Indian Economy And its Place in the

World

A Presentation by Group 9

Asha NachiKritika PrabhakarNitesh KumarRaunaq ChawlaSeshu PinnamineniVijay Pal Singh

A Presentation by Group 9

Asha NachiKritika PrabhakarNitesh KumarRaunaq ChawlaSeshu PinnamineniVijay Pal Singh

Growth since 1991Growth 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

• 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

Exports and Imports

Exports and Imports

•Exports contracted by 15%

•Job losses across sectors

•Cost of imports

•Governments cuts excise and service taxes to improve the Export/import situation.

•Exports: $163 million v/s imports $230.5 million causing fiscal deficit

•Exports contracted by 15%

•Job losses across sectors

•Cost of imports

•Governments cuts excise and service taxes to improve the Export/import situation.

•Exports: $163 million v/s imports $230.5 million causing fiscal deficit

GDP TrendsGDP Trends

• Crossed US$ 1 trillion mark in April 2007

• Major industries – iron & steel, reality, energy, automobiles, aviation, textiles, cement, electronics & hardware, bio-technology, 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

• Crossed US$ 1 trillion mark in April 2007

• Major industries – iron & steel, reality, energy, automobiles, aviation, textiles, cement, electronics & hardware, bio-technology, 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 TrendsGDP Trends• Quarterly GDP at factor

cost at constant (1999-2000) 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%

• GDP at factor cost at 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 – increased 14.0%

• Quarterly GDP at factor cost at constant (1999-2000) 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%

• GDP at factor cost at 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 – increased 14.0%

Human Development Index

Human Development Index

HDI Value Life Expectancy at birth(years)

Adult Literacy rate(% ages 15 and above)

Combined Primary , Secondary and Tertiary Gross Enrollment ratio

GDP per capita (PPP US$)

1.Iceland (0.968) 1. Japan

(82.3)

1.Georgia (100%)

1.Australia (113.0)

1.Luxembourg (60,228)

128.India (0.619)

125.India (63.7)

114.India (61)

122.India (63.8)

117.India (3,452)

177.Sierra Lone (0.336)

177.Zambia (40.5)

139. Burkina Fasco (23.6)

172.Nigeria (22.7)

174.Malawi (667)

HDI v/s GDP percapita

HDI v/s GDP percapita

HDI TrendsHDI Trends

Dragon v/s TigerDragon 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.

• 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 Recession effect

While imports have steadily increased, exports are moving

south

Oil imports have the biggest chunk of

Exports

The GDP estimates have been declining

since 2008

Impact on Finance Channels

Impact on Finance Channels

•Equity Markets•Equity Markets

The Great Indian equity dream seems

to be over

The sensex has lost over

10,000 points in the last year

Impact on Finance Channels

Impact on Finance Channels

•Forex Markets•Forex MarketsThe 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

fig.)

Impact on Finance Channels

Impact on Finance Channels

•Credit Markets•Credit Markets

bank credit continues to expand and showed

growth of 27.7% in 2008-09

As banks are central to trade, this may

indicate an increase in NPAs

Impact on Finance Channels

Impact on Finance Channels

•Foreign capital Inflows•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

Change in GDP growth during US Recession

Interestingly, every time there has been an global economic downturn,

India has remained Insulated(positive GDP growth)!!!

The only thing constant is ‘CHANGE’

The only thing constant is ‘CHANGE’

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

picture....

Source: WEF Global competitiveness report 2009

Thank You!Thank You!