India’s Transformation Rasha Itani

Sireesh Pallikonda

Maria Paula Silva

Indian economy before privatization

• India secured its independence in 1947.

• India is the biggest democratic nation with the highest population

• Since then its followed mixed economy.

• Most of the Indian industries were with the government

• In 1994 India´s economy was smaller than the Beligium´s.

• Private companies could expand only with goverment permission.

Do you know how India was before transformation?

The Post-independence years 

• India in 1947 was characterized by very low per capita income. There were a lot of people, so there was always a big GDP, but per capita income was very low.

• In some ways India had a fully developed capitalist economy, and it had some of the oldest capitalist institutions in Asia. So there was a modern economy, but it was very thin.

• There was a manufacturing sector, but it didn't cover many industries. There was even a steel industry and a relatively strong textile industry, but these were limited.

• It was predominantly a subsistence economy. Most of the villages at the time didn't even have road connections. They were connected only by tracks to the outside world. They weren't part of the market economy.

BOOM : NEW INDIA

1.Protecting Indian Industries . 2.High Customs Tariffs. 3.Financial Infrastructure .4.Oil and Natural Gas. 5.Training and skills development. 6.Scientific Research.

After India became independent in 1947, the country embarked upon an

Ambitious plan of industrial development and encouraged setting up new industries and expansion of existing industries .

And In the second half of the 1990s one also began seeing the rise of

the IT sector.

Two explanations are given for why that sector became so successful:

1.The first is that the bureaucrats didn't notice what was happening until it had already happened, so they couldn't really interfere and put up a web of regulations and restrictions.

2.The other is that the government did some things right. Its founding of the Indian Institutes led to a flow of highly qualified manpower, many of whom found vocation in the IT sector. India at long last found its niche in the world economy, which wasn't in exporting manufactures, like the East Asian countries, but instead was in the services sector, and IT in particular.

Secret of the success

Liberalization and its effects• 1990 India adopted free market principles and liberalized its

economy to international trade under the guidance of Manmohan Singh, who then was the Finance Minister of India

• under the leadership of P.V.Narasimha Rao the then Prime Minister.

India was more open to industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment,

• Since then India’s economic growth progressed at a rapid pace with very high rates of growth and large increases in the incomes of people.

• One main reason for Indian economic growth is it demographics • 1,189,172,906 (July 2011 est.)

country comparison to the world: 2

• 0-14 years: 29.7% (male 187,450,635/female 165,415,758)• 15-64 years: 64.9% (male 398,757,331/female 372,719,379)• 65 years and over: 5.5% (male 30,831,190/female 33,998,613)

(2011 est.)• total: 26.2 years

Why India is a favorite destination • Abundant supply of engineering talent. Every year 4lakh

engineering students pass out from Indian institutes.• Labor cost are low (avg cost of Indian graduate to be hired is

12% of the western graduate)• Many Indians are fluent in English, which makes coordination

between western firms and India easier. • Due to time differences Indians can work while Americans can

sleep

Results of economic trasformation• It is Ninth largest in the world by nominal GDP • It is fourth largest by purchasing power parity (PPP)• It is one of the G20 major economies• Member of the BRIC

Reasons for economic growth

Rise of economy in various sectors.

• Information technology• With its hubs in Bangalore in Hyderabad generates $54.33 billion of revenue

and it is expected to be $225 billion by 2020

• Aviation • Civil aviation has seen 17% passenger growth with revenue of $423.31 million

• Education• India has made progress interns of primary education expanding literacy two

thirds of the population.• The private education worth $40 billion and will increase to $68 billion by 2012• India has open its gates for 100% FDI in education .• 57% of the college professors has a masters or Phd

• Telecommunication • Every month 15 million cell phones are purchased in India.• With 900 million cell phones, India stands 1st in telecommunication

services• India has 121 million internet users • With a revenue of $19 billion in 2011

• Tourism • Is the largest service industry with a contribution 6.23% to the GDP• In 2010, 19.9 million tourist visited India with a annual growth rate of

9.9%.• Revenue of $275 billion is expected by 2018

• Transport• Indian railways carries 17 million passengers every day.• It contributes 5.5% of the GDP. • India is launching a national transport plan with a budget of $40 billion

• Pharmaceutical • Is the 4th largest by the volume.• The revenues of Indian pharmacy= $3billion

• Agriculture• It is one biggest producers of fresh fruits and vegetables majority of

them are fruits, milk and spices.

• Bollywood • Largest film producer with 800 movies a year.

The future of India