indian economy update june 22,2007 isher judge ahluwalia june 22,2007 isher judge ahluwalia 1
TRANSCRIPT
Indian Economy Update
June 22,2007
Isher Judge Ahluwalia
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Emerging Economies : Growing Contribution
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Emerging economies’ contribution to global economy is increasing rapidly
Their share of world exports has increased from 20 per cent in 1970 to 43 per cent in 2005
Their GDP growth at 7 per cent is three times that of mature market economiesat 2.3 per cent
GDP 2005 PPP (at 2003 Constant Billion
USD)
India:4th Largest Economy in PPP terms
Source: World Bank, WDI 2006 3
In real per capita terms, India is 9 years behind China.
Demographic Dividend
% of Population aged 15-64
Source: UN, Population Statistics 4
Indian Economy on an Upward Growth Path
GDP growth at constant prices(% per annum)
Source: Central Statistical Organization
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Inflation Rate (%)
WPI CPI
Source: Central Statistical Organization
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Declining Poverty
Source: NSS Full Sample Surveys
UNIFORM REFERENCE PERIOD
MIXED REFERENCE PERIOD
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Changing Income Distribution
Gini Coefficient
India China Brazil
1980 .32 .32 .581992 .32 .38 .602000 .33 .45 .592004 .33 .46 .56
Source: World Bank, WDI 2005, NSS Full Sample Surveys8
Comments on Poverty and Income Distribution
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Social Indicators :1
Life Expectancy(Years)
Literacy Rate(% of population)
Source: Census of India, National Family Health Survey-I,II,III 10
Social Indicators :2
Infant Mortality Rate(per 1,000 live births)
Maternal Mortality Rate
(per 10,000 live births)
Source: Census of India, Sample Registration System (SRS) Estimates, National Family Health Survey-I,II,III11
Social Indicators :3Population Growth
Rate(%)
Birth RateBirth per 1000
population
Fertility RateAvg lifetime births per
women
Source: Census of India, Sample Registration System (SRS) Estimates, National Family Health Survey-I,II,III12
Social Indicators :4Access to Safe Drinking
Water(% of households)
Access to Sanitation Facility
(% of households))
Source: Census of India13
Social Indicators :5
For children under three years of age. The nutritional status (weight-for age) is measured as percentage below 2 SD from the median of the International Reference Period.Source: National Family Health Survey-I,II,III
Underweight Children (%)
Net Enrolment Rate (%)
Source: Ministry of Human Resource Development 14
Gross Domestic Saving(% of GDP)
Source: Central Statistical Organization
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Gross Investment(% of GDP)
Source: Central Statistical Organization
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Trade in Goods and Services(% of GDP)
17Source: Reserve Bank of India
Exports & Imports of Goods and Services(% of GDP)
18Source: Reserve Bank of India
Growth of Goods Exports (%)
Source: Reserve Bank of India; Directorate General of Commercial Intelligence and Statistics (DGCI&S) , Ministry of Commerce, Government of India 19
Growth of Services Exports (%)
Source: Reserve Bank of India 20
Index of Real Effective Exchange Rate
21Source: Reserve Bank of India
Share of India’s Merchandise Trade in World (%)
Source: www.stat.wto.org 22
Current Account Deficit(% of GDP)
Source: Reserve Bank of India 23
Foreign Exchange Reserves(US $ Billion)
Source: Reserve Bank of India 24
Foreign Investment Flows(US $ Billion)
Source: RBI, India 25
Structural Change over timeGDP by Major Sectors: India and China
India China
1981 1991 2004 1981199
1 2004
Agriculture 38 31 22 31 26 13
IndustryManufacturing
25(17)
27(17)
27(16)
47(40)
42(33)
46(37)
Services 37 42 51 22 32 41
Source: World Bank, WDI 200626
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Import Weighted Average Import Duty Rates in India
1991-92 2006-07
Agriculture 68.3 39.5
Mining 95.5 5.8
Consumer Goods 114.1 30.2
Intermediate Goods 65.6 12.7
Capital Goods 94.8 8.2
All Commodities 77.2 10.8
India Inc on a buying spree
Company Acquisition Price (million $)
Reliance Industries Flag Telecom, BermudaTrevira, Germany
212.0
95.0
Tata Motors Daewoo, Korea 118.0
Infosys Technologies Expert Information Services, Australia
3.1
Wockhardt CP Pharmaceuticals, UK 18.0
Cadila Health Alpharma SAS, France 5.7
Hindalco Straits Ply, Australia 56.4
Wipro NerveWire Inc, US 18.5
Aditya Birla Dashiqiao Chem, China 8.5
United Phosphorus Oryzalin Herbicide, US 21.3Source: Wall Street Journal; IBEF Research
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Top 10 overseas acquisitions
Investor Investee Price ($)Tata Steel Corus, UK 8.04 bn
Hindalco Novelis 6.00 bn
Videocon Industries Daewoo Electronics, Korea 695 mn
Tata Tea Energy Brands Inc., US 677 mn
Suzlon Energy Hansen Transmissions, Belgium
570 mn
Tata Steel NatSteel, Singapore 486 mn
Tata Tea Tetley,UK 407 mn
Tata Steel Millennium Steel, Thailand 404 mn
Ranbaxy Terapia Romania 324 mn
VSNL Teleglobe, Canada 239 mn
Source: Economic Times, IBEF Research
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Factors driving the global acquisition spree
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Challenges1. Infrastructure
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Challenges2. Human Capital
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2. Human Capital (contd.)
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Thank You
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