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PRESENTATION ON

ECONOMY OF THE LAST DECADE

PRESENTED BYGAGAN JAIN

MOINUDDIN ANSARI

CHINKY PASRIJA

ROSHNI SAHU

RISHI RATHORE

JEETENDRA YADAV

PRADEEP KUMAR

SANTOSH BEHRA

BHAGWAN DAS

MUBASHSHIR MALIK

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INTRODUCTION

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Economy of India 2010

y Rank = 11th

y Currency = Rupee

y GDP Growth = 8.43%

y GDP = $1.367 Trillion

y GDP Per capita = $1124

y GDP By sector

Services 57%

Industry 28%Agriculture 15%

y BPL = 37%

y Unemployment = 9.4%

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Facts and figuresy Indian GDP Trend Of Growth Rate1960-1980 : 3.5%1980-1990 : 5.4%1990-2000 : 4.4%2000-2009 : 6.4%

Contribution of Various Sectors in GDP

The contributions of various sectors in the Indian GDP for 1990-1991 are as follows:

Agriculture: - 32%Industry: - 27%Service Sector: - 41%

The contributions of various sectors in the Indian GDP for 2005-2006 are as follows:

Agriculture: - 20%

Industry: - 26%Service Sector: - 54%

The contributions of various sectors in the Indian GDP for 2007-2008 are as follows:

Agriculture: - 17%Industry: - 29%Service Sector: - 54%

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Export = $176.5 billion (18th, 2009)Import = $287.5 billion (15th, 2009)

MAIN IMPORT PARTNERS MAIN EXPORT PARTNERS

China 11% US 12.3%

Saudi Arabia 7.5% UA E 9.4%

US 6.6% China 9.3%

UAE 5.1%

Gross external debt = $223.9 billion(31dec,2009)

Public debt = $758.45 billion(31dec,2009)Revenue = $129.8 billionExpenses = $214.6 billionForeign reserve = $294.1 billion

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GDP = 14.3 Trillion (in 2009)

Inflation = 1.1%

BPL = 14.3%

Unemployment Rate = 9.4%

Contribution by Sector

Services = 76.9%

Industry = 21.9

Agriculture = 1.2%

ABOUT USA Economy

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INFLATION RATEy Developed countries = 1% to 4%y Developing countries = 5% to 60%

And India's inflationrate = 8.43%

y 50% GDPhas borrowedasadebt. It ledto increase inhugedemand .ThereforeRBI needstoproduce currencytohavemore liquidity.

y GDPProjection:-2011- 9%

GDP=C+Inv+G+(ex-i)C=Private consumptionInv= InvestmentG= Gross InvestmentEx=Export, I=import

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Per Capita Income

393

461

519

583

651

0

100

200

300

400

500

600

700

2002-03 2003-04 2004-05 2005-06 2006-07

US

Increasing per capita

income coupled with an

emerging middle class

has provided the

necessary impetus to

consumerism in India

Increasing per capita income

and large population movinginto middle class has led to

high level of consumerism in

India

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Strength of India

India is a cost effective and labor intensive economy

Growing middle class people

Ample of resources(iron ore,chemical,coal,textiles etc)

Effective human capital

FIIs contributing in India's development

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Look at these indicators of US power

Military power: USmilitary budget of over US$ 300billion a year accounts for 40-45 percent of globaldefense spending.

The US budget is equivalent to the combined militarybudgets of the next 15 most powerful countries.

Defense spending is only around 3.5 percent of GDP.

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China

Chinas economy continues to grow at its current rate of

9 percent.

It will overtake Japan by 2020 to become the worlds

second largest economy

Already a nuclear weapons power

Problems that need to be overcome: reform of financial

structure, unemployment, corruption.

Aging population due to one child policy.

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Terrorism( 9/11, 26/11 )

War (Kargil, Iran war)

Disease(Swine flu)

climate change

Reasons affecting economy

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What could change the current

world order? Other rising nations and groups of nations:

-The European Union

-China

-Japan

-India

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Globalisation

We live in a world that is more interconnectedthan it has ever been

It has also opened up a host of new issues thatneed international cooperation to be solved:health, climate change, poverty reduction,

money laundering, drug smuggling to name afew..

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ECONOMY

Primary agriculture, forestry, fishery, animalhusbandry

Secondary mineral, power, mining,manufacturing industries

Services transport, trade, communication,banking, other services

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y DEFICITS

Revenue deficit

y Revenueexpenditure (interest+subsidy+defense+police) - Revenuereceipts ( tax+nontax)

Budget deficit

y Total expenditure - total receipts

y Fiscal deficit

y Budgetdeficit+ borrowingsfrom banks & public

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IN I A O S OF E ONOMY

INFLATION Steadyrise inprices,resulting indecline in

purchasingpowerofthe money.

2 types - costpush & demandpull.

Normally measured intermsofWPI,on

YoYbasis. Moderate inflation isgoodforeconomy.

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Effects of Inflation :

1) LowerExport

2)Decline in Earning Capacity

3)Unemployment

4)Decline in Purchasing Power5)Anarchy in Political System

6)Low Demand

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Effects of recession on world

economyy There isageneral economic declineduringrecession.

y Theeconomyhasatremendoussetback.

y Thepurchaseofthepeople comesdowndueto lowsalariesor

lackofsufficient income.y Thisresults inslump in marketwithgoodsandservicesnot

beingavailedofbypeople.

y Productionslowsdownand inturnpricesgoup.

y Infactduringrecession, manyfirmsareforcedtosell their

productsatthrow-awaypricesandsufferfrom lossesasaresult.

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Top 5 major economic effects of recession on economy

y Slump in the market

y Stock prices come down

y Increase in unemploymenty Depression

y National debts on the rise

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Slump in the markety Goodsandservicesaredifficultto besoldasthe

purchasingpowerofthepeople comesdown.

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Stock prices come downy Investmentsuffers. The industrial production is badly

affectedas investorsavoid investing in companiesthat

mights

uffe

r losses

duringre

cess

ion. Bigge

r companies

areabletowithstandthesetbacks butsmallercompanieshaveatoughtimeandsome mayendupclosingdown.

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Increase in unemploymenty Peoplearethrownoutofjobs. Theyare left inthe

lurch. Theyareunableto meet bothends. Manygoods

andse

rv

ices

are

notwithinthe

irre

ach.

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Depressiony Recession causesdepression ifitpersistsfora long

time. Negativetrendsarevisible inthestock market

andrapidune

mployme

nt is

the

re

.C

ompanies

nee

dtobe bailedout bythegovernment. Public spendingsuffersaset back

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National debts on the risey Increase innational debts means less money can bespent bythegovernmentondevelopment. Moneygets

dive

rte

d in bailingout companies

. The

re

ce

ntrecession inthe U.S. indicateshow bankshavetodependuponfederal aidfortheirsurvival. Taxpayersmoney is beingspent ingivingthese banksa boost.

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Brief of topicy Recession isdefinitely badforeconomic growthand

development.y Itslowsdowntheeconomy. Investorshesitateto invest,and

producersareunableto churnoutproducts.y Consumer lackthenecessary moneyduetounemploymentand

cannottherefore buygoodsavailable inthe market.y Forthefirst quarterof2009 theannualizedrateofdecline in

GDPwas 14.4% ingermany,15.2% injapan,7.4%inuk,9.8% ineuroareaand 21.5% in Mexico.

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Effect of The Global eltdown on the Indian

Economy

y Indiahasnot beendirectly impacted bytheglobal financial crisis,weshould be cautiousaboutthe indirectknock-oneffectoftheglobal crisis.

y AccordingtotheGET report,over 50 million could losetheirjobs by 2009worldwide.y Theworstthing isthataswe live inanagrarianeconomywheretheunemploymentrate

isalreadyhighand 60% ofthepopulation isstill dependentonagriculture,therateof

unemployment isrisingfurtherduetotheseworldwide lay-offsas mostofthestudentsofIndiagoabroadforjob purposes.

y Goingfurther,notonlythe labor market, butalsothefinancial market, IT/ITes,exportand manufacturingsectorshavebeenaffectedadversely. The IT/ITes sector isthemajorcomponentofIndiasgrowth becausetheshare in GDPgiven byagriculturehas beentakenup bytheservicessector inrecentpast.

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Shortcomings of Public Sector:

yInabilityto Innovative

y Delay indecision

y Large interference inDecision

y MakingProcess

y Costoverrun

y LowCapacityutilization

y Lowefficiencyduetoover making

y

Poorworkethics.

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y HRpoliciessuchashireandfirepolicyshould bereformed.

y Indiahasdevelopedtremendously isstill power,fertilizer,energysectorhaveto begiven morefocus.

y Reform in Bureaucracy System.

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Afull tow-third (67%) ofIndias laborforceofmorethan 450millionpeople isemployed inagriculture,whichaccountsforabout 23% ofthe countrys GDP.

Another 26% ofthe GDP isaccountedfor by industryand 47%byservices.

Inpastdecades, Indiaattemptedtodevelop its industryaspartofanefforttoattainself-sufficiency,andasaresult,theeconomyhadremained closedtoforeign investors.

Rece

nt libe

ral re

forms

,howeve

r,have

ope

ne

ds

omese

ctorstointerestedforeign investors.

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y Goldman sachs arguesthateconomic potential ofBrazil, Russia, IndiaandChina issuchthatthey could

be

come

amongthe

four mos

tdominante

conomies

bythe year 2050.

BRICNations

25% of the land area is covered

40% of the world population$15.435 trillion GDP

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India has among the

highest returns on

foreign investment.

-Dan Scheinman, Cisco System Inc. as told to

Business Week, August 2005

We came to India for the

costs, stayed for the quality

and are now investing for

innovation.

A T Kearney ence Index2005

India is among the three

most attractive FDIdestinations in the

world.

Jack Welch

General Electric

India is a developed

country as far as

intellectual capital is

concerned.

USDepartment of

CommerceBy 2032, India will be

among the three largest

economies in the world.

BRIC Report, Goldman Sachs

Why I ia? Q te U q te

Travyn Rhall,

ACNielsen

The Indian market has two core

advantages - an increasing

presence of multinationals and

an upswing in the IT exports.

Craig Barrett

Intel Corporation

India has evolved into

one of the world's

leading technologycenters.

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MajorM&Aand Invest ents Announce ents in India

USD 11

illionUSD 11

illionVodafone uys HutchVodafone uys Hutch

USD 0.98

illionUSD 0.98

illionAditya Birla Group increased itsstake in Idea

Cellular yacquiring 48.14-percentstakeAditya Birla Group increased itsstake in Idea

Cellular yacquiring 48.14-percentstake

USD 1

illionUSD 1

illionPlans investment in privateequity,real estate,and privatewealth management

Plans investment in privateequity,real estate,and privatewealth management

USD 1.7

illionUSD 1.7

illionPlansto spend on its development operations

in India overthe nextfour yearsPlansto spend on its development operations

in India overthe nextfour years

USD 0.905

illionUSD 0.905

illion

Renault, Nissan and Mahindra & Mahindra hasinitiated a Greenfield automo ileplantprojectin Chennai.

Renault, Nissan and Mahindra & Mahindra hasinitiated a Greenfield automo ileplantprojectin Chennai.

Mylan Laboratoriesacquired a majoritystake inMatrixLaboratories

Mylan Laboratoriesacquired a majoritystake inMatrixLaboratories

USD 0.74 billionUSD 0.74 billion

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MajorM&A Deals UndertakenAbroadby India Inc.

USD

12.1 billionUSD

12.1 billionTata Steel buysCorusPlcTata Steel buysCorusPlc

USD 6 billionUSD 6 billionHindalco ac uired ovelis Inc.Hindalco ac uired ovelis Inc.

USD 1.58 billionUSD 1.58 billionEssar Steel ac uired Algoma SteelEssar Steel ac uired Algoma Steel

USD 730 millionUSD 730 millionideocon Industriesac uired Daewoo

ElectronicsCorporationLimitedideocon Industriesac uired Daewoo

ElectronicsCorporationLimited

USD 1.6 billionUSD 1.6 billionSuzlonEnergyLtd. ac uires REpowerSuzlonEnergyLtd. ac uires REpower

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Current Prospects and Risksy In 1999world GDPgrew by 3.3%,accordingtoestimates bythe

International Monetary Fundpublished in April 2000 (see Table 1).This isafull percentagepointstrongerthanhad beenforecast bytheIMF expertsjustafew months before, inDecember 1999. Theyexpect

worldeconomic growthtoacc

ele

rateto 4.2% orpo

ssibly mor

ein 2000.

y Inthe 1998-2000 period,theaverageeconomic growthofdevelopingcountrieswill have beenfasterthanworldgrowth,whilethatofthecountries intransitionofcentral andeasternEuropeand central Asia

will have beenslower. The latterseconomiesactuallydeclined bynearly 1% in 1998

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The Leading Economies

y Giventablespresentsome currentfiguresforvariouseconcomic andsocial indicators coveringtheEuroarea (Germanyonly in Table 2),

Japan,andthe USA.

Theys

how continuingrapidgrowth inthe

USA,with littlesignofanyslowing. Theyalsoshowstrongergrowth intheEuroareathis year,and

theprospectofgrowth continuingthrough 2001. In Japan,however,growth isweakandalsoappearsto befragile. Thedecline inretail sales,for instance,pointstosluggish currenteconomic activity,andthe low

jobvacancy indexthrowsdoubtuponastrongupturn inthenearfuture.

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A new economyy Giventhevigorofthe US economic expansionand its length -

the longestsincerecords began inthe 1850s,a muchdebatedquestion iswhethertheeconomyhasundergoneaprofoundtransformationsincethe mid-1990s. And, ifso,whetherthat

transformation can beattributedtoadvances innewtechnologyandtheirwidespreadapplication. Istherea NewEconomy?

Agrowingnumberofexpertsdo believethatthe US economy -and,toa lesserextent,otheradvancedeconomies - isexperiencingfundamental change,resulting inahigherpotential

rateofnon-inflationarygrowthanda lowerpotential rateofunemployment.

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Developing economiesy Developing countriesgrew byabout 3.8% in 1999 (see Table 1), betterthan

1998, but belowtheratesobservedearlier inthedecade. Prospectsforthenearfutureareencouraging,asgrowth isexpectedtoreturntoLatin Americaandcontinueelsewhere. It isforecastthatdeveloping countrieswill grow by morethan 5% onaverage in 2000,asdomestic recoveriesaresustainedandexternal

demand continuestostrengthen.

Butthe 1997-98 financial criseshave left more lastingsocial scars. Thereweredramatic increases inunemployment,especially inEast AsianandLatinAmerican countries. The United Nationspointsoutthatthe consequencesofthe crisespersist intermsofunemployment,shiftsfromjobs intheurbanandformal sectorto lowerpaid, moreprecariousemployment intherural andinformal sector,andgenerallyheightened insecurityofemployment.

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PROBLEMS/SHORT COMINGSy Forpasttwodecades, Indiaseconomyhas beenfacing

continuousproblemsofnational budgetdeficits.

y

Muchofitasar

esultof

sub

sidi

esto in

effici

ent

stat

e-owned industries.

y The majorityofthesestatesectorenterprisesaredebt-riddenandoverstaffed.

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CONCL SION

y India isslatedto becomethe 3rd largesteconomywithashareof14.3% ofglobal economy by 2015.

y To stepuprateofgrowthfurther,requires moreinvestment in infrastructureandanagricultureandanimprovement ingovernmentfinances.

y Public andPrivatePartnershipwas been indevelopingportsandrailwayswhichhassharplysteppedup.

y Insurancesectorhas beenopenedtoprivatesectorbothdomestic and Foreign.

y Serviceshas beenattheforefrontattherapidgrowthofthe Indianeconomy.