CP-208 ;Business Environment of india.

Topic : A Comparative Study On Asian Economy & Indian

EconomyPresented by –

Mushfiqul Hassan Sarkar

Introduction about Indian Economy:

LPG 1991 & impactsGlobal Recession 2008-09 & its impact..The economy has turned itself into a services-

driven economy.

Services sector now accounts for almost 57 % of India’s GDP

Agriculture 14.6%, & Industries 28.5%.

Although one notices signs of recovery, there are areas of concern as well.

GROWTH RATE OF GDP AT CONSTANT (2004-05) PRICES (PERCENT)

Industry 2005-06 2006-07 2007-082008-09

(QE) 2009-10 (RE)

2010-11 (H1)

I. Agriculture 5.2 3.7 4.7 1.6 0.2 3.5

II. Industry 9.3 12.7 9.5 3.9 9.3 10.1

mining & quarrying 1.3 8.7 3.9 1.6 10.6

manufacturing 9.6 14.9 10.3 3.2 10.8 11.4

electricity, gas & water supply 6.6 10 8.5 3.9 6.5

construction 12.4 10.6 10 5.9 6.5

III. Services 11.1 10.2 10.5 9.8 8.5 9.6

GDP at factor cost 9.5 9.7 9.2 6.7 7.4 8.9

Sectoral shares (%) of GDP at constant (2004-05) prices

14.6

2.4

16.1

2

8

56.9

Agriculture mining & quarrying manufacturing electricity, gas & water supplyconstruction Services

Agriculture: Growth Trend (%): Growth of agricultural production is erratic; with very low or no growth.

2005-06 2006-07 2007-08 2008-09(QE)

2009-10 (RE)

2010-11 (H1)

0

1

2

3

4

5

6

Growth of Industrial Production (all figures in %): Industrial Production seems recovering, but slowly… 2005-2006 2006-2007 2007-2008 2008-2009 2009-10 April-Nov,10

Index of Industrial Production (Overall) 8 11.9 8.7 3.2 10.5 9.6#

Capital Goods 14.2 22.4 1 19.1 8 8.2 20.9 1 25.8#

Consumer Durables 13.6 8.3 -1.8 4.7 25.5 20.72#

Consumer Non-durables 10.8 10.4 8.6 6.1 0.4 0.8#

Other Indicators

FDI Equity Inflows 154.7 52.6 8.6 -0.2 -27.0

Non-Food Credit of SCBs 39.6 28.5 23.0 17.8 17.0 20.48#

Exports 23.4 22.5 29.2 13.6 -3.6

Manuf. Exports (with petro) 24.8 23.4 27.0 13.9 -4.2

Imports 33.8 24.4 35.6 20.7 -5.6

Capital Goods 49.3 24.3 899.4 -37.5 -9.6

GDP at factor cost: Growth Trend (%)

2005-06 2006-07 2007-08 2008-09(QE)

2009-10 (RE)

2010-11 (H1)

0

2

4

6

8

10

12

After Black Monday 2008…Current Scenario of Asian Economy

AIG Lehman Bros. bankrupts..Real Estate BubbleProactive Federal Reserve

SystemUS Government Pump PrimingNo Panic in the Banking SectorNo Crash in the Stock MarketUnemployment Rate ManageableCountervailing Power of

Emerging Markets Liquidity of Sovereign FundsMassive intervention of European

governments

Services: Growth Trend (%): Growth Rate in Services sector is also still less than the 2007-08 level.

2005-06 2006-07 2007-08 2008-09(QE)

2009-10 (RE)

2010-11 (H1)

0

2

4

6

8

10

12

Rates of Inflation (Base Year: 2004-05=100)

Item Weight 2006-07 2007-08 2008-09 2009-10 Sep Oct Nov Dec Jan, 11

ALL COMMODITIES 100.0 6.5 4.8 8.0 3.6 8.9 9.1 7.5 8.4 8.2

PRIMARY ARTICLES , 20.1 9.6 8.3 11.0 12.7 18.2 18.1 13.0 16.5 17.3of which

Food 14.3 15.7 of which

Vegetables 1.7 64.9

FUEL & POWR 14.9 6.5 0.0 11.6 -2.1 11.1 11.0 10.3 11.2 11.4of which

LPG 0.9 15.0

Petrol 1.1 27.4

High speed diesel 4.7 14.7

Manufact. Products 65.0 5.6 4.9 6.2 1.8 4.8 5.0 4.6 4.5 3.8

of which Consumer Non Durable 37.4 6.4 4.6 7.5 10.2 10.4 9.6 6.5 8.4 (-)

GDP Growth Rates

Asia: The Most Dynamic Region

SOUTHEAST ASIA 2004 2005 2006 2007 2008F 2009FIndonesia 5.0 5.7 5.5 6.3 6.1 5.5 Malaysia 6.8 5.3 5.8 6.3 5.8 4.8 Philippines 6.4 5.0 5.4 7.2 4.4 3.8 Singapore 9.0 7.3 8.2 7.7 3.6 3.5 Thailand 6.3 4.5 5.1 4.8 4.7 4.5 Vietnam 7.8 8.4 8.2 8.5 6.3 5.5

Source: World Economic Outlook, Oct 2008 (IMF)

NORTHEAST ASIA 2004 2005 2006 2007 2008F 2009FChina 10.1 10.4 11.6 11.9 9.7 9.3 Hong Kong 8.5 7.1 7.0 6.4 4.1 3.5 Korea, Republic of 4.7 4.2 5.1 5.0 4.1 3.5 Taiwan 6.2 4.2 4.9 5.7 3.8 2.5

OTHERSIndia 7.9 9.1 9.8 9.3 7.9 6.9

Source: World Economic Outlook, Oct 2008 (IMF)

Opportunities in China

• GDP growth of 8% or over for the last two decades• Domestic market of some 250-300 million high-

income consumers• High rate of investment at 50% of GDP• Foreign direct investments (FDIs) of US$60 billion

or more yearly• Surging raw material demand • Greater integration of China and other Asian

countries (e.g. ASEAN + China)• Demand for middle managers

Overheating economy: possible credit and stock market bubble

Inflation rate reached 6.5% in October 2007, the highest monthly inflation in 11 years

Efforts to cool down economy may result in hard landing

Underdeveloped banking sector Undervalued currency Uncontrolled local officials Shortage of local entrepreneurs and managers High rates of poverty Stricter regulations in IT

Threats in China

Japanese EconomyPolitical instability caused by successive

resignations of two Prime MinistersThe Tsunami – Badly broken the economy

Despite a stronger than expected GDP outturn in the first quarter of 2010, Japan’s economic outlook is weak for 2010 and 2011.

The yen weakened against the U.S. dollar in June but may strengthen if U.S. economy continues to be troubled by financial crisis.

Consumer prices will rise in 2012Reserves may be used to help ailing banks in

the Asian region

Emerging Engines of Growth GDP % Change

US 2.8 2.0 1.6 0.1Euro Area 2.8 2.6 1.3 0.2Japan 2.4 2.1 0.7 0.5BRICA

Brazil 3.8 5.4 5.2 3.5Russia 7.4 8.1 7.0 5.5India 9.8 9.3 7.9 6.9China 11.6 11.9 9.7 9.3ASEAN 6.0 6.5 5.4 5.4

2008F 2009F2006 2007

US, EU, JAPAN AND BRICA

Bangladesh 6.5 6.3 7.0 5.6Egypt 6.8 7.1 7.2 6.0Indonesia 5.5 6.3 6.1 5.5Iran 5.8 6.4 5.5 5.0Mexico 4.9 3.2 2.1 1.8Nigeria 6.2 5.9 6.2 8.1Pakistan 6.9 6.4 5.8 3.5Philippines 5.4 7.2 4.4 3.8South Korea 5.1 5.0 4.1 3.5Turkey 6.9 4.6 3.5 3.0Vietnam 8.2 8.5 6.3 5.5

2009F

THE NEXT ELEVEN

2006 2007 2008F

F-forecastsSources: World Economic Outlook, Oct 2008 (IMF)aseansec.org

The Developmental Trends in Asia 2000 onwards…..Expanding middle class e.g more productive

HR..Diversity of consumer tastes and lifestyles“Mallification” of Asian cities Demographic gift stage in South and

Southeast AsiaRapid aging in Northeast Asia and

SingaporeWidespread use of EnglishThe telecom revolutionSpread of university education

Asian Economic Trends 2010-2011

Domestic markets as engines of growth: double track strategy

China as engine of growth of the Asia Pacific region

The predominance of China in manufacturing Growth in intra-regional trade: increased

complementarityContinuing battle against mass poverty in the big

economiesOutsourcing of manufacturing and services to

AsiaOutsourcing is intra-company as well as inter-

countryFocus on agricultural productivity in Southeast

AsiaThe “entrepreneurial challenge” to centrally

planned economiesThe challenge of innovations and productivity

Identified Major Constraints

Infrastructure Procedural Delays Corruption Tax Rates & Tax Regulations Terrorism & Law & order

PRIORITY AREAS DEMANDING IMMEDIATE ATTENTION

1. Physical Infrastructure: electricity supply, roads, port infrastructure & overall connectivity

2. Controlling Corruption and improving overall governance standard.

3. Social sectors: Eradication of Poverty and Health & Education

4. Reduction of gender disparity & improving Female participation in labor force

Overall assessment: Asian Persepective

The investment climate and the competitive condition in Asia have shown hardly any improvement in the recent past.

There are in fact four areas where serious attention need to be given on a priority basis to improve Asia’s competitive ranking and also to facilitate speedier economic development. These are ….

ASEANGDP Growth Rates and Per Capita Income

Country 2007 2008F 2009F 2006 2007Indonesia 6.3 6.2 6.2 1,640.0 1,919.6 Malaysia 6.3 5.6 5.3 5,890.5 6,880.2 Philippines 7.2 4.5 4.7 1,355.7 1,652.8 Singapore 7.7 4.2 4.6 29,499.6 35,206.1 Thailand 4.8 5.0 5.0 3,293.9 3,740.1 Vietnam 8.5 6.5 6.0 724.4 836.7 Source: ADB, Asian Development Outlook 2008 Update (September 2008); aseansec.org

GDP Growth RatesGDP per Capita, at Current

Prices (in US$)

Some Corporate Achievements in India

The Tata Nano, the world’s cheapest production car

Kingfisher Airways, voted the best airline of south-east Asia

The HCL laptop, the cheapest production laptop

The Infosys IT training campus – the largest in the world

You To Superpower.. but You may not Know !!!

India is one of only three countries that makes supercomputers (the US and Japan are the other two).

India is one of six countries that launches satellites. The Bombay stock exchange lists more than 6,000

companies. Only the NYSE has more. Eight Indian companies are listed on the NYSE; three on

the NASDAQ. By volume of pills produced, the Indian pharmaceutical

industry is the world's second largest after China. India has the second largest community of software

developers, after the U.S. India has the second largest network of paved highways,

after the U.S. India is the world's largest producer of milk, and among

the top five producers of sugar, cotton, tea, coffee, spices, rubber, silk, and fish.

100 of the Fortune 500 companies have R&D facilities in India.

Some Encouraging Statistics.. India is the second fastest growing major economy with a 9.2%

increase in GDP per year India is already the third largest economy in the world at PPP India has seen a huge amount of foreign direct investment in the

country, totaling 67.72 billion dollars and is said to be one of the “preferred options” for FDI

India’s poverty level is decreasing by 10% annually Indian companies have gone on a buying rampage, with Tata

Steel acquiring Corus, Mittal buying Arcelor and Tata looking set to buy Jaguar and Land Rover from Ford.

Every year India’s middle class is increased by 40,000,000 new members which shows that the wealth is truly entering society

The Bombay Stock Exchange’s value has been consistently rising, currently worth 1.61 trillion dollars, the largest in South East Asia.

Unemployment has dropped by 2% annually, and illiteracy and mortality rates have also been falling, indicating that India is not only growing but developing too.

Selected Sunrise Industries in Asia

Agribusiness Mining Triple Ts: Transport, Telecom, and Tourism Infrastructures Automobiles Consumer durables IT-enabled and IT services Logistics and retailing Health care and medical tourism Education Construction and real estate Four Fs: Food, Fashion, Furniture, Fun

Thank You..