Changing economic environment of India

8/2/2019 Changing economic environment of India

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THE CHANGINGECONOMIC

ENVIRONMENT

OF INDIA Presentation by:Sarabjeet KaurSanchit

Sanjeev

Sandeep Koul

(Group 7)


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2

BRIC Report,

Goldman Sachs

I think it is still an

incredible event that

the Indian economyis expected to grow

at 6.57 per cent.

Robert

Morrice,

Chai rman

(Asia-Pacific),

Barclays Plc

We see India as the

most attractive market in

the region.

John Redwood

Economic

Comp eti t iveness Pol icy

Group, UK

India is now truly a

land of opportunity.

HS Lheem , MD,Hyund ai Motor India

We have proven to

the world that global

cars can be

manufactured in

India.

Ravi

Venkatesan,

Chairman,

Microsoft India

By 2032, India will be

among the three

largest economies in

the world.

Why India?Quote Unquote

Travyn

Rhal l

ACNielsen

The Indian market has two

core advantagesan

increasing presence of

multinationals and an upswing

in IT exports.

Dr.C.K.Prahlad,

Management

Guru

Constraints in India can

be a source of dramatic

global innovation, such as

Tata Nano and a host ofother low-cost products.

Andrew Moss,CEO,

Aviva Global

The growth potential inIndia will remain strong

in the long run

compared to many of

our other businesses in

the world.


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Environment

External

Factors

Internal

Factors


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Internal Environment

Value Chain

Management Structure Human Resources

Company Image and Brand


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External Environment

Micro Environment

Suppliers

Customers Competitors

Public

Financers Macro Environment

Global Environment


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Factors of Economic

Environment1. Nature and structure of economy

2. Economic Conditions

3. Economic Policies

4. Global Linkages


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I. Nature and Structure of

Indian Economy

Level of development ofEconomy

Sectoral Composition of output


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Level of development of

Economy

India as an UnderdevelopedEconomy

India as a Developing Economy

India as a Mixed Economy


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Low per capita income

India ranks 169 with GDP per capita of $2900

(2008 est, CIA World Factbook)

Per capita income for 2007-08 : Rs 24,295


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What is HDI?

Who coined this term?


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Measures life expectancy, living standard and

knowlwdge and was developed in 1990 by

Pakistani economist Mahbub ul Haq, Sir

Richard Jolly, with help from Gustav Ranis ofYale University and Lord Meghnad Desai of the

London School of Economics.


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Low Level of Human Development

The HDI for India is 0.609, which gives the

country a rank of 132nd out of 179 countries

with data (2008, Country Factsheets) Iceland being on top with HDI value0.968


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High Level of Unemployment

1978 (a) 1983 (b) 1994 (a)8th Plan 9th Plan 10th Plan

(1992-97) (f) (1997-02) (f) (2002-07) (f)

Population

(c)

637.6718.2(2.19)

895.0(2.12)

951.2(1.89)

1028.9(1.58)

1112.9(1.58)

Labour Force 255.8286.6(2.09)

368.5(2.42)

374.2 423.4 478.8

Employment 249.1281.2(2.23)

361.5(2.42)

367.2 416.4 474.7

Unemployme

nt

6.7 5.4 7.0 7.0 7.0 4.1

Rate (%) 2.63 1.89 1.89 1.87 1.66 0.86

(figures in million)


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India as a Developing

Economy

Rise in Net National Income

Rise in per capita income

High growth rate of population Existence of Unemployment and Under-

employment

Structural changes in India GDP


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Rise in Net National Income

3.5 4.2

2.8 3.2

4.7 5.5 5.6

6.5

5.5

7.8

9.1

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

1951

-56

1956

-61

1961

-66

1969

-74

1974

-79

1980

-85

1985

-90

1992

-97

1997

-200

2

2002

-200

7

2007

-08

Year

P

ercentagegro

thove

rthepreviousyear


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High growth rate of Population

Year Population growth rate (%)

2000 1.58

2001 1.55

2002 1.51

2003 1.47

2004 1.44

2005 1.4

2006 1.38

2007 1.606

2008 1.578

Population as on Jan09 : 1.140 billion, yearly increase 17million


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Growth from

Apr08-Jan09 :

2.9%


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Secondary Sector

Comprises of manufacturing, construction,

electricity, gas, water supply

Contribution to GDP

15% in 1950-5122.3% in 1970-71

24.7% in 2006-07


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TertiarySector Comprises of trade, transport, storage,

communication, banking, insurance, real

estate

Contribution to GDP

28.5% in 1950-51

31.8% in 1970-71

54.8% in 2006-07


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Overall Sectoral Contribution to

GDP

105 105 135 154190

103 125204 245

314

564

191237

398439

0

200

400

600

800

1,000

1,200

199900 200203 200506 200607 200708

US$

Billion

Agriculture Indus try Services


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What Causes Recession ?

An economy typically expands for 6-10 yearsand tendsto go into a recession for about six months to 2 years.

A recession normally takes place when consumers loose

confidence in the growth of the economy and spend less.

This leads to a decreased demand for goods and services,

which in turn leads to a decrease in production, lay-offs

and a sharp rise in unemployment.

Investors spend less as they fear stocks values will

falland thus stock markets fall on negative sentiment.


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What Actually Happened

Loans given out to anyone and everyone

Investment bankers look to the U.S. housing

market

Mortgage backed security = pool of thousands ofdifferent mortgages

2003-2006 Housing prices started increasing

However, housing prices then started to decreaseand more houses came on market

Result was credit crisis


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Impact on India

A slowdown in the US economy is bad news for India

because:

Indian companies have major outsourcing deals from

the US

India's exports to the US have also grown substantially

over the years. Indian companies with big tickets deals in the US are

seeing their profit margins shrinking.

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Impact Contd

(GDP) grew by 5.3%, compared with 7.6% in

the previous three months and 8.9% in the

same period a year earlier (as on 27 Feb09)

Sensex crashed by 50%, from 21,206.77 on

jan 08 to around 9000 in Jan09

Indian currency depreciated against the US

dollar over the past four months by more than15%

Currency reserves have come down from a

record $300bn to around $250bn


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Impact Contd

Industrial production fell 0.4 percent.

Crude oil jumped from under $40 per barrel a

year ago to nearly $150 per barrel in August

Exports for Oct08 declined by 15%

More than 5 lakh lay offs

Forex reserves declined by $6.498 billion

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Future Prospects

Elections ahead

After the signing of the US-India civil nuclear deal, India will

now be partnering several countries for nuclear fuel

technology projects, and this will further boost the economy.

India and Russia signed 10 agreements in December 2008,

including a pact on civil nuclear cooperation.

Thorium Power, a US firm, and Punj Lloyd will be forming anuclear fuel technology joint venture (JV). The JV will offer

thorium fuel technology for light water reactors (LWR) in

India.


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Balance of payments


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What common distinction is held by Morarji

Desai, Chaudhary Charan Singh, VP Singh and

Manmohan Singh?


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Finance ministers who went on to become

prime ministers


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This word comes from the French word for

leather pouch or bag. The present

connotation of this word is from the notion

that the treasury minister would usually keephis fiscal plans in such a bag. Which term?


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Open market operation is a part of

a. Income Policy

b. Fiscal Policy

c. Credit Policyd. Labour Policy


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Five Years


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VAT is imposed

a. Directly on consumer

b. On final stage of production

c. On first stage of productiond. On all stages between production and final

sale


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Which was the best performing major

currency in the world in 2008, rising by 21%

against the dollar?

a. Swiss franc

b. Icelandic krona

c. Japanese yen


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The Yen

The yen was the worlds strongest major

currency against the dollar in 2008. The Swiss

Franc has risen by 4% and is benefiting fromits traditional safe havenstatus. The

Icelandic Krona fell by 84% against the dollar

in the wake of that countrys financial crisis


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MORAL

Every morning in Africa, a gazelle awakens. He has only onethought on his mind - To be able to run faster than the fastestlion. If he cannot, then he will be eaten.

Every morning in Africa, a lion awakens. He has only onethought on his mind - To be able to run faster than the slowestgazelle. If he cannot, he will die of hunger.

Whether you choose to be a gazelle or a lion is of no

consequence. It is enough to know that with the rising of thesun, you must run.


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Changing economic environment of India

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