Archana Shukla

271

Rajeshwar Singh

272

Sachin Singh

273

Bhaveek Sonigra

274

Krishnapriya Yadav

275

Of Indian Economy

INDIAN POLITICAL ENVIRONMENAL ANALYSIS

The political environment includes all laws

and government agencies that influence or

restrict individuals or organization in the

society.

The political environment in an economy is influence by:

OThe ideology of the party in

power

OThe political stability

OThe foreign policy

O Political factors are basically to what

degree the government intervenes in

the economy. Specifically, political

factors include areas such as tax

policy, labour law, environmental

law, trade restrictions, tariffs, and

political stability.

Income Tax Slabs for the Individual

(Below 60 Years Age) for the Assessment

Year 2013-2014SI NO. INCOME TAX SLAB INCOME TAX

RATE PAYABLE

1. Rs. 0 To 200,000 No Income Tax

2. Rs. 200,001 to 500,000 10%

3. Rs. 500,001 to 1000,000 20%

4. Rs. 10,00,001 30%

Income Tax Slabs for the Individual

(Above 60 Years Age) for the Assessment Year 2013-2014SI NO. INCOME TAX SLAB INCOME TAX

RATE PAYABLE

1. Rs. 0 To 250,000 No Income Tax

2. Rs. 250,001 to 500,000 10%

3. Rs. 500,001 to 1000,000 20%

4. Rs. 10,00,001 30%

INDIAN LABOUR LAWO Indian labour law refers to laws regulating employment

in India. There are over fifty national laws and many more

state-level laws.

O Traditionally Indian governments at federal and state level

have sought to ensure a high degree of protection for

workers. So for instance, a permanent worker can be

terminated only for proven misconduct or for habitual

absence.

Collective labour laws

O The Industrial Disputes Act (1947) requires companies

employing more than 100 workers to seek government

approval before they can fire employees or close down. In

practice, permissions for firing employees are seldom

granted.

O Trade Unions Act 1926

O Provisions of the Factories Act, 1948

Practise required by law India China America

Minimum wage (US$/month) 75 182.5 1242.6

Standard work day 5 hours 8 hours 8 hours

Minimum rest while at work 30 minutes per 5 hour None None

Maximum overtime limit 200 hours per year 1 hour per day None

premium time for overtime 100% 50% 50%

Dismissal due to redundancy allowed? Yes, if approved by government

Yes, without approval of government

Yes, without approval of government

Government approval required for 1 person dismissal

Yes No No

Government approval required for 9 person dismissal

Yes No NO

Government approval for redundancy dismissal granted

Rarely NA NA

Dismissal priority rules regulated Yes Yes NO

Severance pay for redundancy dismissalof employee with 1 year tenure

2.1 week salary 4.3 week salary None

Severance pay for redundancy dismissalof employee with 5 year tenure

10.7 week salary 21.7 Week Salary None

CURRENT POLITICAL ENVIRONMENTO 2 weeks before, One perspective was that the India

government is generally stable. Although corruption runs

deep within the government and there is a stark diversity of

politics, the government is generally stable

O If a week is a long time in politics, a year must be

equivalent to near-eternity and the next year may not be a

good time for Indian investors.

O The Lanka resolution at the United Nations provoked the

exit of the Dravida Munnetra Kazhagam from the United

Progressive Alliance (UPA) government.

O This signals the likelihood of recurring bouts

of political uncertainty until the next general

elections at the very least

O Every sign of disagreement between the

UPA's coalition partners will now be seen as a

possible trigger for a no-confidence motion.

http://im.rediff.com/business/2013/feb/27eco.jpg

Indian Economic Environment Analysis

Macroeconomic performanceSectoral contribution to GDP and GDP growth

rate Pricing trends - inflation and interest ratesConsumption, saving and investment Trends International trade and its contribution to GDP

Macroeconomic Performance

Sectoral contribution to GDP

GDP Growth

India's quarterly GDP at factor cost at constant (2004-05) prices for Q3 of 2012-13 is estimated at Rs. 14,11,594 crore, as against Rs. 13,51,252 crore in Q3 of 2011-12,

showing a growth rate of 4.5 percent over the corresponding quarter of previous year. 

O Based on an assessment of the current macroeconomic situation, the Reserve Bank of India decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.75 percent to 7.5 percent with immediate effect.

Consumer Spending in India increased to 9298.39 INR Billion in the fourth quarter of 2012 from 8198.25 INR Billion in the third quarter of 2012. Consumer Spending in India is reported by the Central Statistical Organisation, India. Historically, from 2004 until 2012, India Consumer Spending averaged 6646.54 INR Billion reaching an all time high of 9298.39 INR Billion in November of 2012 and a record low of 4469.88 INR Billion in August of 2004.

Personal Savings in India increased to 20037.20 INR Billion in 2012 from 18329.01 INR Billion in 2011. Personal Savings in India is reported by the Central Statistical Organisation, India. Historically, from 1951 until 2012, India Households Savings averaged 2778.25 INR Billion reaching an all time high of 20037.20 INR Billion in June of 2012 and a record low of 6.34 INR Billion in June of 1952. In India, Households Savings correspond to the total income saved by households during a certain period of time.

The current account deficit widened to 4.6 percent of GDP in the first six months ending September 2012 as export growth slowed more sharply than imports and is expected to be at its highest at around 5 percent in 2012/13

Exports in India increased to 1412.06 INR Billion in February of 2013 from 1389.82 INR Billion in January of 2013. Exports in India is reported by the Directorate General of Commerce. Historically, from 1978 until 2013, India Exports averaged 235.01 INR Billion reaching an all time high of 1421.73 INR Billion in March of 2012 and a record low of 3.75 INR Billion in May of 1978. India’s main exports are engineering goods (19 percent of total exports), gems and jewelry (15 percent), chemicals (13 percent), agricultural products (9 percent) and textiles (9 percent). India is also one of Asia’s largest refined product exporters with petroleum accounting for around 18 percent of total exports. India’s main export partners are United Arab Emirates (12 percent of total exports) and United States (11 percent)

Imports in India decreased to 2214.49 INR Billion in February of 2013 from 2475.94 INR Billion in January of 2013. Imports in India is reported by the Directorate General of Commerce. Historically, from 1978 until 2013, India Imports averaged 350.87 INR Billion reaching an all time high of 2475.94 INR Billion in January of 2013 and a record low of 4.98 INR Billion in April of 1978. India is heavily dependent on coal and foreign oil imports for its energy needs. Other imported products include: machinery, gems, fertilizers and chemicals. India’s main import partners are China (12 percent of total imports), United Arab Emirates, Switzerland, Saudi Arabia, United States, Iraq and Kuwait.

Social Analysis

Demographic Dividend

Facts & FiguresO Population:1,220,800,359 (2013 est.)(2nd)O Growth rate:1.41% (2009 est.) (93rd)O Birth rate:22.22 births/1,000 population (2009 est.)O Death rate:1.4 deaths/1,000 population (2009 est.)O Life expectancy:69.89 years (2009 est.) –male:67.46 years (2009 est.) –female:72.61 years (2009 est.)O Fertility rate:2.5 children born/woman (SRS 2010)

(82nd)O Infant mortality rate:30.15 deaths/1,000 live births

(2009 est.)

Age Structure & Sex RatioO Age structure

0-14 years:31.1% (male 190,075,426/female 172,799,553) (2009 est.)

15-64 years:63.6% (male 381,446,079/female 359,802,209) (2009 est.)

65-over:5.3% (male 29,364,920/female 32,591,030) (2009 est.)

O Sex ratio At birth:1.12 male(s)/female (2009 est.) Under 15:1.10 male(s)/female (2009 est.) 15-64 years:1.06 male(s)/female (2009 est.) 65-over:0.90 male(s)/female (2009 est.)

Rural Snapshot

O Rural Population72.2%,

male: 381,668,992,

female: 360,948,755 (2001 Census)

O Bottom Of Pyramid - $ 1.8 trillion

O Increasing standard of living

O Schemes Like MNREGA

Human Development Index World

HDI – Indian States

Income Distribution

Income DistributionO How rich are the Indians today? What is the distribution of wealth in

India among its 1.2 billion citizens? What is considered rich? What is the income range of middle class households?

O "Rich" households        $35,000+ per year: 1.3% (16 million people) 

O "Middle-class" households       $8,000 to $35,000 per year: 13% (160 million)

O "Aspiring middle-class" households       $3,500 to $8,000 per year: 30% (359 million)

O "Deprived" households       Below $3,500 per year: 57% (684 million)

O I wish there had been another category of "Severely deprived" households comprising, say, the bottom 300 million people. I bet the household income there is below $800 per year (~$2/day).

O About 170,000 people, or 0.01%, have a net-worth over $1 million. Of these, 25 are dollar billionaires. Read the rest of the report.

Income Distribution

Education

Education – Facts & FiguresO As per Population Census of India 2011, the Literacy rate of

India has shown as improvement of almost 9%.

O It has gone up to 74.04% in 2011 from 65.38% in 2001, thus showing an increase of 9% in the last 10 years.

O It consists of male literacy rate 82.14% and female literacy rate is 65.46%.

O Kerala with 93.9% literacy rate is the top state in India.

O Lakshadweep and Mizoram are at second and third position with 92.3% and 91.06% literacy rate respectively.

O Bihar with 63.08% literacy rate is the last in terms of literacy rate in India.

EducationO Government of India has taken several measures to

improve the literacy rate in villages and towns of India.

O State Governments has been directed to ensure and improve literacy rate in districts and villages where people are very poor.

O There has been a good improvement in literacy rate of India in last 10 years but there is still a long way to go.

Technological Analysis

R&D Spending World

R & DO For instance, out of a total global R&D spend of $1143

billion, the percentage claimed by the US is 33.6, Europe 24.5, and Japan and China 12.6 each, while India’s share is a meagre 2.1.

O  Government sources pick up 75-80 per cent of the R&D expenditure, and only 20-25 per cent spent by private sector and a mere three per cent by universities. Whereas the break-up of percentages for OECD countries is 69 by private enterprises, 18 by universities, 10 by government agencies and three by non-profit bodies. 

O The rates of super deductions go up to 200 per cent in India, being comparable with those across the globe and on par with countries such as Singapore, Malaysia and Hungary.

Outsourcing Hub

O Government supported policies like SEZ, STP

O Global Outsourcing Hub

O Size - $100 billion

O Major – IT & ITES

O Major Cities – Bangalore , Hyderabad, Pune,

Chennai

O Total Direct Employment – around 25 lakh

CommunicationO Well Developed Network

O Second Largest and next to china

O More than 96 crore registered sims

O Internet connectivity – 3rd largest in the world

O More then 13 crore people connected

O Size of telecommunication US$ 59 billion

O Size of online market US $ 12 billion

O Very fast growing market

LEGAL FACTOR

O Legal factors include discrimination law,

consumer law, antitrust law, employment

law, and health and safety law. These

factors can affect how a company operates,

its costs, and the demand for its products.

LEGAL FACTOR

O Legal System is based on English Common Law

O Consumer goods need import license.

O Ban of Alcohol in 5 states

O Health warning on Alcohol Container.

Statistics

O Rank: 10th (nominal) / 3rd (PPP)

O Currency: 1 Indian Rupee (INR) ( ) = 100 Paise

O Fiscal year:1 April – 31 March

O Trade organizations:WTO, SAFTA, G-20 and

others

StatisticsO GDP: $ 1.946 trillion (nominal: 10th;

2012 IMF est.)[

$4.710 trillion (PPP: 3rd; 2012 IMF est.)[1

O GDP growth: 5.3% (2012-2013)[2]

O GDP per capita: $1,455 (nominal: 139th; 2011) $3,944 (PPP: 125th; 2011)[1]

O GDP by sector : agriculture: 17.2%, industry: 26.4%, services: 56.4% (2011 est.)

O Inflation(CPI) : CPI: 10.56%, WPI: 7.18% (Dec 2012)

O Populationbelow poverty line: 29.8% (2010)

O Labour force: 487.6 million (2011 est.)

Cont.O Labour force: 487.6 million (2011 est.)

O Labour forceby occupation: Agriculture: 52%, industry: 14%,

services: 34% (2009 est.)

O Unemployment: 9.4% (2011 est.)

O Average gross salary : $1,410 yearly (2011)

O Main industries: Textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals

SWOT Analysis

Of Indian Economy

O The economy of The Republic of India is the tenth-largest in the world by nominal GDP and the third largest by purchasing power parity (PPP). Hence attractive destination for foreign investors. 

O India is the nineteenth largest exporter hence the Forex reserves are increasing.

-Tourism contributes 6.23% to the national GDP

Strengths

English speaking &

analytical students

World class

business-social-

spiritual –political

leader, Professor,

scientist, Manager-

Doctor-Engineer-Civil

servants etc

Very rich in Natural &

Living resources

Biodiversity & Traditional

knowledge base

Diversity vs. Ideas-

Innovation-Integration

Powerful spiritual strength

(yoga-Ayurveda-Healing-

therapy services)

Geographical

location (whole

markets are shifting

toward Asian

nations)

-India Strategic

position at various

platforms

Big democracy, Big

market & free media

O Highly educated , skilled ,young, capable &

dynamic human resources

Literacy rate

74.04% (82.14% Male and 65.46% Female)

71.7% (Age 7 and above, as of 2001)

81.4% (Total population, Age 15-25, as of 2006)

As per CIA estimates

Range of emerging professional champions

IT & Software superpower

Stable economy does not get affected by

external changes

Extensive higher education system third largest

reservoir of engineers

Age structure

0-14 years:

31.1% (male 190,075,426/female 172,799,553) (2009 est.)

15-64 years:

63.6% (male 381,446,079/female 359,802,209) (2009 est.)

65-over: 5.3% (male 29,364,920/female 32,591,030) (2009 est.)

Huge pool of labour force

Huge English speaking population

Weakness

O Lack of spirits of entrepreneurship,

patriotisms and leadership skill

O Lack of effective & execution framework

O Lack of Indian management models

O Lack of transparency-Trust-Responsibility

O Lack of learning habits & Team work spirit

O Fear of sharing knowledge & taking risk

O Thinking win-lose lose-win look-outside

O Slow absorption of Innovation & change

O Rush of getting high marks not Development

O Lack of Indian management models

O Absence of greater technology impetus

O Unawareness: Quality-Standardization

O Lack of Emotional-Spiritual development

O Blindly respect anything taught by elders

- Social Evil such as child marriage, dowry, etc

O Heavy dependence on agriculture

- 15.7 % of GDP and 52.1% of total employment.

O Huge poverty

- 33% of the total population below poverty line

O High rate of unemployment

- 9.4% unemployed

O Stark inequality in prevailing socio-economic

conditions

O Poor infrastructural facilities

O Low productivity

O Huge population leading to scarcity of resources

- 1210 million is the population currently second most

populated country and the growth rate(decadal change

17.64%) is much higher then china’s growth rate (decadal

change 5.43%)

O Low level of mechanization

O Red tapism, bureaucracy

O Low literacy rates

O Unequal distribution of wealth

O Rural-urban divide leading to inequality in

standard of living

Opportunities

O Scope for entry of private firms in various

sectors of business.

O Inflow of FDI is likely to increase in many

sectors.

- The third-largest economy in the world in

PPP terms

O Huge domestic market. Opportunity for MNC’s

for sale.

- Population of 1210 million is a huge market

O Huge natural gas deposits found in India, natural

gas as a fuel has tremendous opportunities.

- India is the fourth largest producer of

electricity and oil products

O Vast agriculture resources, fishing, plantation

crops and live stock

-India ranks second worldwide in farm output.

O Great foreign exchange earning prospects in IT

sector.(expected to grow at 12-14

O Tourism is a thriving industry in India and It will

help raise our foreign reserves and create

employment opportunities.($121billion revenue)

O Rural economic development.

O Investment in research and development.

Threats

O Global economy recession/slowdown.

O High fiscal deficit.(5.2%)

O Growing import bill.($140billion, increased by

40%)

O Agriculture excessively dependent on

monsoons.

O Population explosion, rate of growth of

population still high.(1.4%)

O Volatility in crude oil prices across the

globe.

O Self centered political leadership.

- High corruption

O Continuous threat of terrorist attacks. In past decade

there were 41 terrorist attacks in India.

O Corruption in the country is a matter of concern. 141

cases of scams have been reported in last 10 years.

Thank You