state of indian economy

8/2/2019 State of Indian Economy

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Ankita

Chaitanya

Harita

Himanshu

Khizer

By,


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Steel, mining, machine tools, water, telecommunications,insurance, and electrical plants, among other industries,were effectively nationalized in the mid-1950s.

Economy transformed from primarily agriculture,forestry, fishing, and textile manufacturing in 1947 tomajor heavy industry, transportation, andtelecommunications industries by late 1970s.

According to economic historian Angus Maddison in hisbook The World Economy: A Millennial Perspective, Indiahad the world's largest economy from the 1st century to11th century, with a 32.9% share of world GDP in the 1stcentury to 28.9% in 1000 CE.


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What ISthe economy of a country ? 1 . G D P - R e a l a n d N o m i n a l .

2 . S e c t o r s h a r e i n G D P .

a ) A g r i c u l t u r e

b ) m a n u f a c t u r i n gc ) s e r v i c e

3 . I n f l a t i o n r a t e , P r i c e l e v e l o f e c o n o m y

4 . A g g r e g a t e D e m a n d

a ) P e r c a p i t a i n c o m eb ) P e r s o n a l d i p o s a b l e i n c o m e .

c ) T a x e s r a t e s

5 . I n v e s t m e n tI n t e r e s t r a t eL i q u i d i t y o f e c o n o m y

6 . G o v e r n m e n t p o l i c i e s

a ) F i s c a l p o l i c i e si ) r e v e n u e b u d g e t

i i ) e x p e n d i t u r e b u d g e tb ) M o n e t a r y p o l i c i e s

{ c r r , s l r , r e p o r a t e , r e v e r s e r e p o r a t e . . . . . e t c . }

7 . e x p o r t a n d i m p o r t s ( i n c r e a s e a n d d e c r e a s e i . e s u r p l u s a n d d e f i c i t )

8 . I S L M


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GDP :$1.846 trillion (nominal: 9th; 2011) :$4.469 trillion (PPP: 3rd; 2011)GDP growth :8.5% (201011)GDP per capita : $1,527 (nominal: 135th; 2011) :$3,703 (PPP: 127th; 2011) GDP by sector :agriculture: 18.1%,

:industry: 26.3%, :services: 55.6% (2011 est.)

GDP growthIn Q4, 2010-11, GDP growth came down to 7.8 percent. Sectors like manufacturing and mining & quarrying have seen

considerable erosion of growth momentum overthe last one year. While consumption demand is still holding, a sharp decline in growth ofinvestments is seen. Growth in GrossGiven the evolving situation, growth in 2011-12 is likely to be close tothe 8 percent mark.


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Industrial ProductionWeakness in industrial production trend continues. In

April 2011, IIP registered a growth of 6.3 percent. InApril 2010, growth in IIP was to the tune of 13.1 percent.

Amongst the use based industrial groups, a similar streakof weakness is seen with growth in the capital goodssegment, intermediate goods segment and consumergoods segment slowing down from 35.5 percent, 11.9percent and 13.8 percent respectively in April 2010 to14.5 percent, 3.4 percent and 2.9 percent in April 2011.


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Core SectorData for April 2011 shows a perceptible decline in performance of

the core sector with growth dipping from8.5 percent in April 2010 to 4.6 percent in April 2011. Sectors likenatural gas, fertilizers, cement and steel arelargely responsible for this poor performance. Growth in the coalsector however moved from (-) 2.9 percentin April 2010 to 2.8 percent in April 2011.


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InflationThe inflation situation in the economy continues to be a cause for concern.

Despite large scale tightening of

the monetary policy by the RBI and other steps taken by the government,inflation continues to remain closeto the double digit mark.

In May 2011, WPI based headline inflation stood at 9.1 percent. This is higherthan 8.7 percent inflationrecorded in April 2011. Core inflation too has moved up from 8 percent in April2011 to 8.6 percent in May2011.

Near term outlook for inflation is not too encouraging and there are chancesthat we may see inflation jumpto the double digit territory on a few occasions.

High international oil prices, likely decontrol of diesel prices, high global foodprices and hike in MinimumSupport Prices for the upcoming agriculture season are some of the factors thatconstitute the upside risks toinflation.


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Foreign TradeThe strong momentum in exports, seen particularly during the second half of 2010-11,

has continued in theyear 2011-12 as well.

In April 2011 exports totaled US$ 23.8 billion and represented a growth of 34.4 percentover the same month

of the previous year when exports totaled US$ 17.7 billion.While this strong start in 2011-12 is encouraging, there are indications that this high

growth will not besustained in the months ahead.

Rising interest rates, rising raw materials costs and oil prices, withdrawal of incentiveschemes like DEPB andlikely slowdown in Asian economies are some of the reason that have tempered theoutlook for exports.

In April 2011, our imports totaled US$ 32.8 billion and registered a growth of 14.1percent over the samemonth of the previous year when imports amounted to US$ 28.8 billion.

With developments in the Middle East and North Africa region showing no signs of a letup and with OPEC

resisting any upward revision in daily oil production quota, oil prices are likely to remainfirm in the near term.This will continue to put pressure on Indias overall oil import bill.

As regards non-oil imports, while a slowdown in the domestic economy could lead tosome moderation in thenon-oil import bill, any large respite here can be ruled as prices of commodities otherthan oil are also firming


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Agriculture

Industries

Finance

Services

Natural Resources


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Agriculture is the mainstay of the Indian economyIt is the means of livelihood of almost two thirds of the workforce in the countryAgriculture accounts for approx 18% of India's GDPLargest producer in the world of milk, cashew

nuts, coconuts, tea, ginger, turmeric and black pepperWorld's largest cattle populationSecond largest producer of wheat, rice, sugar, groundnut andinland fishThird largest producer of tobaccoIndia accounts for 10% of the world fruit production with first

rank in the production of banana and sapota

I t t hi hli ht f E i O tl k


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Important highlights of Economic Outlook2011-12 Agriculture grew at 6.6% in 2010-11. This years monsoon is

projected to be in the range of 90 to 96 per cent, based on whichAgriculture sector is pegged to grow at 3.0% in 2011-12!

Industry grew at 7.9% in 2010-11. Projected to grow at 7.1% in2011-12

Servicesgrew at 9.4% in 2009-10. Projected to grow at 10.0% in

2011-12 Investment rateprojected at 36.4% in 2010-11 and 36.7% in 2011-12

Domestic savings rateas ratio of GDP projected at 33.8% in 2010-11& 34.0% in 2011-12

Inflation rate would continue to be at 9 per cent in the month of

July-October 2011. There will be some relief starting fromNovember and will decline to 6.5% in March 2012.


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Agriculture grew at 6.6% in2010-11. This yearsmonsoon is projected to be

in the range of 90 to 96 percent, based on whichAgriculture sector ispegged to grow at 3.0% in2011-12!Industry grew at 7.9% in

2010-11. Projected to growat 7.1% in 2011-12Services grew at 9.4% in2009-10. Projected to growat 10.0% in 2011-12


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Inflation has remained elevated at 8-10% range for more than 18months since March 2010. The RBI's second quarter monetary policy

reviewhas projected baseline inflation to be 7% by end-March2012.

Since February 2010, the RBI has increased rates 13 successive times,the largest such sequence of increases in its history. The repo andreverse repo rates have risen by375 and 425 basis pointsrespectively during this time.

Adding to the pressure is the steep recent depreciation in the valueof rupee. While beneficial to exporters, it has the potential to addto inflationary pressures by making imports, espcially of oil,costlier.

In a reflection of the tightening monetary conditions, anchoredinflation expectations, andincreased governmentborrowings(government recently announced an increase in its 2011-12 fiscal borrowing by an additional Rs 52,872 Cr, taking it to arecord Rs 4.7 trillion), long-term interest rates have beenclimbing.
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AD = C + I + G + (X-M)

Aggregate demand refers to the total amount that differentsectors in theeconomy are willing to spend in a given period.Itisthesumspendingbyconsumers,businessmen,Governmentandotheragenciesinthecountryi.e.It measures the totalspending by all different entities in the economy

It depends upon:

1. Level of prices

2. Monetary policy

3. Fiscal policy

4. Other factors


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Per capita income of Indians grew by 17.9 per cent to Rs 54,835 in 2010-11from Rs 46,492 in the year-ago periodPer capita income (at 2004-05 prices) stood at Rs 35,917 in FY11 as against Rs

33,731 in the previous year, the latest data on national income said.The size of the economy at current prices rose to Rs 73,06,990 crore in 2010-

11, up 19.1 per cent over Rs 61,33,230 crore in FY10.Per capita income is calculated by evenly dividing the national income among

the country's population.

The country's population increased to 121 crore at the end of March 2011,from 117 crore in fiscal 2009-10.


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During the year 2010-11.

The growth rates of reserve money (M0) and narrow money(M1)1 have been higher as compared to the preceding yearwhile broad money (M3) growth has been lower

During 2010-11, on a financial-year basis, M0 expanded by 8.4

per cent. The net foreign assets (NFA) of the RBI increased by 6.1 per

cent.

M1 increased by 3.1 per cent

The growth in M3 was 8.2 per cent among the sources of M3,however, bank credit to the commercial sector has beenaccelerating since November 2009.


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Exports in December 2011 grew by a modest 6.7 per cent over the previous yearto $25 billion, mainly due to the weak demand in traditional destinations such asEurope and the US.Month-on-month export growth this fiscal had shown a clear deceleration tillNovember from a peak of 82 per cent in July.On the other hand, imports during December 2011 recorded a 19.8 per centgrowth to $37.8 billion taking the trade deficit to $12.8 billion for the month.

state of indian economy

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