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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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