The Economic Profile of India

8/12/2019 The Economic Profile of India

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The economic profile of India


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Indian Economy - overview

India is developing into an open-marketeconomy, yet traces of its past autarkic policies

remain.

Economic liberalization measures, including

industrial deregulation, privatization of state-

owned enterprises, and reduced controls on

foreign trade and investment, began in the early

1990s and have served to accelerate the

country's growth, which averaged under 7% per

year since 1997.

India's diverse economy encompasses traditional

village farming, modern agriculture, handicrafts, a

wide range of modern industries, and a multitude


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Slightly more than half of the work force is in

agriculture, but services are the major source of

economic growth, accounting for nearly two-thirds of India's output, with less than one-third

of its labor force.

India has capitalized on its large educated

English-speaking population to become a majorexporter of information technology services,

business outsourcing services, and software

workers.

In 2010, the Indian economy rebounded robustlyfrom the global financial crisis - in large part

because of strong domestic demand - and

growth exceeded 8%year-on-year in real

terms.


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However, India's economic growth began

slowing in 2011 because of a slowdown in

government spending and a decline in

investment, caused by investor pessimism about

the government's commitment to further

economic reforms and about the global situation.

High international crude prices have

exacerbated the government's fuel subsidy

expenditures, contributing to a higher fiscal deficit

and a worsening current account deficit.

In late 2012, the Indian Government announced

additional reforms and deficit reduction measures

to reverse India's slowdown, including allowing

higher levels of foreign participation in directinvestment in the economy.


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The outlook for India's medium-term

growth is positive due to a young

population and corresponding lowdependency ratio, healthy savings

and investment rates, and increasing

integration into the global economy.


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ChallengesIndia has many long-term challenges that it has yet to

fully address. The top 10 challenges that need to beaddressed:-

1. Poverty,

2. Corruption,

3. Violence and discrimination against women and

girls,

4. An INefficient power generation and distribution

system,

5. Ineffective enforcement of intellectual property

rights,

6. Decades-long civil litigation dockets,

7. Inadequate transport and agricultural infrastructure,

8. Limited non-agricultural employment opportunities,


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What is GDP and why is it so

important?

The gross domestic product (GDP) is one theprimary indicators used to gauge the health of a

country's economy.

It represents the total dollar value of all goods

and services produced over a specific time period

- you can think of it as the size of the economy.

Usually, GDP is expressed as a comparison to

the previous quarter or year.

For example:- if the year-to-year GDP is up 3%,

this is thought to mean that the economy has

grown by 3% over the last year.


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How is GDP calculated?

Measuring GDP is complicated (which is why weleave it to the economists),.

But at its most basic, the calculation can be done

in one of two ways:

1. Either by adding up what everyone earned in a

year (income approach), or

2. By adding up what everyone spent (expenditure

method). Logically, both measures should arriveat roughly the same total.

GDP = Consumption+ Investment+ Exports-

Imports.


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Indias current GDP as compared to

China

Indias growth is expected to recover from 4.4per cent in 2013 to 5.4 per cent in 2014.

Factors determined for growth:

1.Stronger global growth,

2. Improving export competitiveness and

implementation of recently approved investment

projects.

Whereas the forecast for China is that growthwill remain broadly unchanged at about 7.5 per

cent in 2014-15, only a modest decline from

2012-13.


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GDP vs GNP


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Now lets discussthe difference

between FDI and

FII?


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What is Foreign Institutional

Investment?Any investment flowing from one country

into another is foreign investment.


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What is Foreign Direct

Investment?

Foreign direct investment (FDI) is a direct

investment into production or business in a

country by an individual or company of another

country, either by buying a company in the targetcountry or by expanding operations of an existing

business in that country.


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The Indian government differentiates cross-

border capital inflows into various categories like

foreign direct investment (FDI), foreigninstitutional investment (FII), non-resident Indian

(NRI) and person of Indian origin (PIO)

investment.

Inflow of investment from other countries isencouraged since it complements domestic

investments in capital-scarce economies of

developing countries.

India opened up to investments from abroadgradually over the past two decades, especially

since the landmark economic liberalization of

1991.

Apart from helping in creating additional


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Why is FDI

preferred over

FII investments?


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FDI is preferred over FII investmentssince it is considered to be the most

beneficial form of foreign investment for

the economy as a whole.

FDI tends to be much more stable than

FII inflows.

FDI brings not just capital but also better

management and governance practices

and, often, technology transfer.


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INDIA FOREIGN EXCHANGE RESERVES


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Thank you!!

Source :Prof.Anish!

The Economic Profile of India

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