Indian Economy 2010

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Introduction To Indian Economy:

Since the last two decades Indian economy is on a rise and has proved its mettle to the indian.
India is one of the fastest growing economies and is often considered as one of the major super
powers. India is an Asian nation with seventh largest land base and second largest in term of
population. The economy of India is the largest economy in the indian by nominal GDP and the
fourth largest by purchasing power parity (PPP).

Understanding Indian Economy:

Indian economy stands today as one of the influential and attractive economy. The liberalization
move by the Indian Government in 1990s has given a boost to the Indian economy and put her
into a fast track economic growth route. With the beginning of the new millennium, India was
considered as an emerging super power. In 2009, Indian GDP based on purchasing power
parity (PPP) stood at USD 3.5 trillion making it the fourth largest economy. India’s service industry
accounts for 62.5% of the GDP while the industrial sector contributes 20% to the GDP. The
agricultural sector which was the back bone of Indian economy post-independence took a back
seat in 21st century and contributed only 17.5% to the GDP. India growth rate has been an
average of 7% since 1997 and has maintained a growth rate above 5% even in times of global
recession. The Information Technology and IT outsourcing services has been the biggest
contributor to India’s growth. India’s per capital income (PPP) is not too attractive and stands at
USD 4542. India currently accounts for 1.5% of the total indian trade as per WTO, 2007
publications.

Indian Sector Analysis:

Indian Economy VS Industry:

Industrial activities accounts for 20% of the economy. India is characterized by small and
medium manufacturing units with few major players. 14% of the total workforce is engaged in
manufacturing activities. Liberalization has brought in many private players and multi national
organizations into manufacturing foray.

Services - Service Providers & Services Sector contribution in Indian Economy:

India is one of the leading service providers and services sector contributed 62.5% to the GDP and
employ 34% of the work force. With large base of English speaking educated people, India has
become a preferred destination for business services.

Agriculture Indian Economy:

Though agricultural activities employ 52% of the total work force yet it contributes only 17.5%
to the total GDP. Mostly, agriculture is carried out using traditional methods and farmers are
dependent on heavily on monsoons. Green revolution and white revolution has given a boost to
this sector but it is yet embrace technology on a large scale.

Banking and Finance - Indian Economy:

India has one the largest network of bank branches and most of the people in India enjoy banking
facilities. India has a robust banking economy which was proved by the fact that it remained
largely unaffected by the global recessions.

External Trade and Investments:

Balance of Payments:

India’s balance of payment has been in RED since independent and though growing exports in
post-liberalization era is expected to bring it down, the current rising oil bill is making it look
difficult.

Foreign Direct Investments (FDI):

India is the preferred destination for FDI since liberalization. Industrial reforms have made the
scenario more attractive and with growing economy it looks promising in terms of return.

Global Trade Relations:

Since liberalization India’s contribution to total global trade has increased to 5%. China, UK, The
US, Japan, Russia and EU are the major trading partners to India. Both imports and exports
have taken a leap by 20% on an average.

Concerns:

Though India is considered as a major economic power but it faces many challenges.

Indian Economy VS Agriculture:

Agriculture sector in India lacks innovation and investment. It still uses the traditional methods of
farming giving less produce per hectare of cultivated land as compared to global standards. The
total area under farming is also reduced due to growing industrialization and urbanization. India
has to strike a balance between industrial growth and agricultural growth.
Effect of Poverty on Indian Economy:

24% of the Indian population lives below the poverty line (USD 1.25 per day). There is a large
regional income disparity in India where six low income states are home to more than one third of
population. According to Indian Bank, India is classified as low income economy.

Effect Corruption on Indian Economy:

Corruption has been a wide spread problem in India. Liberalization has reduced the red tape
and bureaucracy but still it never lost it ground. Most of the government spending fail to reach
the general public and government initiative are marked by large scale corruption.

The United Kingdom of Great Britain and Northern Ireland is also known as UK, United Kingdom or
Britain. United Kingdom is located in the north western coast of the European Continent. UK is a
sovereign state. It is referred to as an island country as its primary territory consists of parts of
one or more islands. United Kingdom consists of four counties. They are: England, Northern
Ireland, Scotland, s and Wales. It is a unitary state as all these countries are governed as a single
unit.

United Kingdom is a member of European Union, G 8, G-20, World Trade Organization,

Common Wealth of Nations, United Nations Security Council, NATO, Organization for
Economic Cooperation and Development (OECD). United Kingdom is a well developed
country. It has a rich economy brought up by economies of its individual countries England,
Scotland, Wales and Northern Ireland. Landon which is the capital of UK and England is the most
important financial center for international business and commerce. UK is one of the most
important globalised countries of the world.

Economic History of UK

In 19th century the period of British Empire, UK had the strongest economy in the world. Much
of the profit was brought by its trade system which transported resources, people and capital. Due
to large war expenditure during the Second World War along with end of British Empire caused a
great decline in United Kingdom’s economy.

In 1979, the situation started reverting by the advent of Prime Minister Margaret Thatcher. He
helped UK to get rid of its “sick man of Europe” or simply the economic difficulty by breaking
the existing unions and shredding them in the free market.

The 1990 recession had adversely affected the United Kingdom’s economy. There was 8%
decline in the UK’s economy with increased unemployment. But this situation has got reverted in
1993 when the recession ended.

Recent Economic Details of UK

As per the report of Office of National Statistics, UK was hit by recession during the second quarter
of 2008. There was a 30 % decline in the value of United Kingdom’s currency Pound Sterling
compared to other main currencies. There was a great increase in the number of unemployment.
In 2009 the United Kingdom’s economy started declining further which had adversely affected all
sectors including real estate, manufacturing, employment etc. The Gross Primary Parite of UK
was found to have declined by 2.4% in the first quarter of 2009. During second quater of 2009,
there was a 0.6% decline seen in the Gross Primary Parity of UK which then followed a 0.2%
decline in the next quarter.

In the first quarter of 2010, the economy had grown by 0.3%, in the second quarter there was
further improvement with a growth rate of 0.7%. As per the prediction of Office of National
Statistics (ONS), an increase in GDP by 1.6 % is expected in UK.

Economic Sectors of UK

The important economic sectors of UK are:

Economic Sectors of UK - Industries:

 The agricultural industry is one of the most important industries in UK. The agricultural
sector of UK is highly developed. The agricultural practices are highly mechanized and
according to European standard. The UK’s agricultural sector is able to provide about
60 % of its food needs. There are around 535,000 employers engaged in this sector which
forms around 1.6 % of the UK’s work force.
 The fishing industry is also much importance. The major fishing areas includes
Fleetwood, Peter head, Kingston upon Hull etc. importance fishes available here are
sole, herring, salmon etc.

Economics Sectors of UK - Production

 Manufacturing industries: The manufacturing industries contribute about 16%

towards UK’s economy. This sector is also able to provide about 13% of United Kingdoms
employment. The most important manufacturing industries of United Kingdom includes
electrical and paper products, textile, food products, chemicals, automation equipments,
electronics, metals, cement, coal, paper transport industries which includes aircraft
building, ship building, train, motor vehicles etc.
 Electricity, gas and water supply: The Gas, electricity, and water supply is of very
much importance in United Kingdom’s economy. In 2004 it was reported that
electricity, gas and water supply has provided an estimated amount of £ 17,103 million
towards United Kingdom’s economy.
 Mining: Mining has contributed a lot towards the UK’s economy. The most important
among this is the coal mining. In 2004, it was estimated that mining contributed about £
21,876 millions towards the United Kingdom’s economy
  Construction: The construction sector of United Kingdom is of much importance. In
2004, the construction alone had added about£64,747 millions towards the UK’s economy.

Economics Sectors of UK - Service Sector

 Trade: The trade includes both wholesale and retail. The United Kingdom had a good
export as well as import service. In 2004, United Kingdom’s trade had brought about £
127,520 millions towards its economy.
 Transport and Storage: The transport and storage sectors have together contributed
about £ 49,516 millions in 2004 towards the UK’s economy.
 Communication department: In 2004, the various communication sectors of United
Kingdom have provided about £ 29,762 millions towards its economy.
 Real estate: There was a great increase in the property price from 2001 – 2007. The
real estate alone accounted for about £ 175,333 millions towards UK’s economy.
 Other service sectors: Other most important service sectors which contributed a lot
towards UK’s economy are defense, education, health and social work, Hotels and
Restaurants etc.GDP of UK from 1990-2005

As per Gross Domestic Productivity (GDP) and Purchasing Power Parity (PPP), UK is
Ranked 6th largest in the world. Among the countries of European Continent, United Kingdom is
ranked 2nd as per the Purchasing Power Parity and ranked 3rd as per the Gross Domestic
Productivity. The United Kingdom is ranked 19th in the world as per PPP per capital. The GDP of
UK from 1990-2005 expressed in millions of pound sterling is as follows:

 GDP in 1990- 557,300

 GDP in 1995- 718,383
 GDP in 2000- 953,576
 GDP in 2005- 1,209,334