business perpespective

8/4/2019 Business Perpespective

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BUSINESS PERPESPECTIVE

TOPIC 2

Explain GDP growth of Indian Economy in the last

5yrs; 2010, 2009, 2008, 2007 and 2006.

Which industries have contributed mainly Per capita income Comparison with corresponding figures in China,

Japan, U.K and U.S

Any other relevant points

Group B

Debaki

Deepak S

Deepika Sharma

Ganesh C

Samarth J V

Tanya Verma


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BUSINESS PRESPECTIVE

2

What is Gross Domestic Product (GDP)?

Gross domestic product (GDP) refers to the market value of all final goods and

services produced in a country in a given period. GDP per capita is often

considered an indicator of a country's standard of living.

GDP = private consumption + gross investment + government spending +

(exports imports),orGDP = C + I + G + (eX - i)

Analysis of GDP in India for the last 5 yearsThe financial crisis which began in the industrialized nations in 2007, spread to

real economy across the world. India was not an exception to this. The effect was

visible when the Gross Domestic Product (GDP) of India came down from 9.3% in

2007-08 to 6.8% in 2008-09. To reverse the trend, Policy Makers were forced to

take calculated risk in providing fiscal expansions, to boost the economy. The

result was, the Fiscal deficit shot up from 2.5% of GDP in 2006-07 to 6% in 2007-

08 and 6.3% in 2008-09 which is a natural phenomena.

The continued recession in the developed world affected the export of goods and

services heavily, slowing financial inflow as well. Even then by the end of the year

2009-10 economy posted a remarkable recovery to achieve the GDP growth of

8%. During year 2010-11 estimated GDP growth is 8.6% which adds to the

comfort of Indian economy.

Monetary-wise every sector has shown reasonable growth year after year to

achieve required Gross Domestic Product growth. From 2004-05 to 2009-10 allsectors such as Services, Manufacturing, Agriculture etc, have grown almost in

same proportion to give stability to our Indian economy. The Gross Domestic

Savings have shown steady growth except in the year 2008-09, which suffered

because of recession. It regained its position with a strong comeback in the year

2009-10.


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Industries which have contributed mainly

India is a vast country, so the sectors contributing to the country's GDP is also big

in numbers. Various sectors falling under the India GDP composition includes food

processing, transportation equipment, petroleum, textiles, software, agriculture,

mining, machinery, chemicals, steel, cement and many others. Agriculture is the

pre dominant occupation in India, employing more than 50% of the population.

The service sector accounts for employing more than 25% while the industrial

sector accounts for more than 10%.

Agriculture Growth Rate in India GDP has declined over the years, from 20.2% in

2005 to 14.2% in 2010. The Indian government must take steps to boost the

agricultural sector for this in its turn will lead to the growth of Agriculture GrowthRate in India GDP. The main reasons for decline are due to the small size of farms

which has resulted in low productivity, use of modern technology and agricultural

practices and insufficient irrigation facilities.

The Services Sector contributes the most to the Indian GDP. The Sector of Services

in India has the biggest share in the country's GDP for it accounts for around

57.8% in 2010. The contribution of the Services Sector in India GDP has increased

a lot in the last few years. The Services Sector contributed only 53.6% to the

Indian GDP in 2005. The bulk of the growth has come from Communication and

Transport.

The Industry Sector Growth Rate in India GDP has been on the rise in the last few

years. The Growth Rate of the Industry Sector in India GDP has grown due to

several reasons and this has given a major boost to the country's economy.

It has grown from 26.2% in 2005 to 28% in 2010.


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Per Capita Income

Per capita Income means how much an individual earns, of the yearly income that

is generated in the country through productive activities. It means the share of

each individual when the income from the productive activities is divided equally

among the citizens. Per capita income is reported in units of currency. Per capita

income reflects the gross national product of a country. Per capita income is also

a measure of the wealth of a population of a nation when compared with other

countries. It is expressed in terms of commonly used international currency such

as Euro, Dollars because these currencies are widely known.

Per Capita Income in India

India's per capita income is found by the Atlas method and by employing official

exchange rates for conversion. Further, this Atlas method of calculating the per

capita income of India is not determined by using purchasing power parity, which

essentially adjusts exchange rates for purchasing power of currencies.

Economist have been giving considerable importance to the performance of

states vis a vis each other in terms of per capita income. It has been observed that

those states that were more open and better adapted to economic liberalization

have overall shown faster rate of growth.

Per Capita Income of Various Indian States

The two backward states of the Indian republic Jharkhand and Orissa are growing

at a rapid rate in terms of the per capita income because of rise of industrial

activities in these two states. Karnataka is at the top of the chart with the fastest

growing per capita income (nearly 9.28%) followed by Gujarat with 8.92%.The per

capita income in 17 states is below the national average of 8.4%. Per capita

income shows the purchasing power of the states and so it is very important for

the states to increase the per capita income of each person.


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Comparison with China, Japan, U.K and U.S

India is a large country having population of more than a billion, second highest in

the world. It is the largest democracy in the globe. GDP India is fourth highest in

the world in PPP terms. Here is a comparison of Indian economy with the US, EU,

Canada, Japan, China and rest of the world.

Indian GDP ranks to No.12 in nominal term of world GDP after US, Japan, UK,

Germany, China, France, Italy, Spain, Canada, Brazil and Russia. However, India

($3000B) comes to No.4 after US (($13800B), China ($7000B) and Japan ($4300B)

in PPP terms.

India has a very large economy. It has GDP of $1100 B (2007) or RS.55000 B. It is

approximately two percent of the GDP of the world i.e. $55000 B. It does not tell

the real story because world GDP is counted based on dollars but Indians have to

buy, sell and spend in Indian rupee. Price parity parameter shows comparatively

better picture. In PPP method, Indian GDP is calculated to $3000B that is

approximately 4.7 percent of world GDP of $64000B in PPP.

More over India is growing at the rate of eight to nine percent per annum

whereas most of the developed countries including US, Canada, Japan and

countries of EU and UK are growing at a very slow speed until last year. Only

China has shown greater growth rate than India.

Picture is little different this year. Most of the developed countries have started

showing tendency of negative growth. This will surely affect India and China but

they can manage their growth in a positive range. It is expected that China will

manage a growth rate of eight to nine percent where as India will anywhere

between seven to eight percent.


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Relevant Points

GDP India is twelfth largest economy in the world in nominal parameter. GDP India represents the fourth largest economy in the world in price

parity parameter (PPP).

India has the second highest growth rate in the world after China. BSE stock index of India has grown at the fastest pace beating all stock

indexes in the world including America, Canada, China, Japan and of course,

all stock markets in EU.

India has no.1 growth rate in stock market in the world. Human Resource outsourcing increased by almost $18.9 billion in 2010. Agricultural growth, dependent as it is on monsoon, continues to fluctuate.

Overall food grains production in 2007-08 expected to fall short of the

target by 2.2 million tons. Need for second green revolution particularly in

rain fed areas emphasized.

Economy moves decisively to higher growth phase. Buoyant growth in Government Revenues. Concern over slowdown in consumer goods segment of industry and

infrastructure constraints.

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