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Indian economy
Attractive destination for business and investments Huge manpower base (1.2 billion people), diversified natural resources and strong macro-economic fundamentals Second fastest growing economy after China India ranks 51 in World Economic Forums Global Competitiveness Index for 2010-11, ahead of South Africa, Brazil and Russia India among top four major wealth creating countries in the world in 2010 ( Global Wealth Report- Boston Consulting Group) IMF cuts world GDP forecast to 3.3% this year; Indias cut to 4.9%
Indian economy
(future prospect)
An emerging economic powerhouse Goldman Sachs predicts by 2050 India would emerge as the second largest economy in the world (After China) India could be 40 times bigger by 2050 Price water house Coopers forecast Indian economy will register the second fastest growth between now and 2050 and emerge as the second biggest economy in the world by the middle of the Century
Industry 15 21
24 26 27
28.6
Manufactu ring 9 14 14 16 17
-
Service 28 31
36 41 52
57.2
Economic planning
Indias leaders adopted the principles of formal economic planning after independence as an effective way to intervene in the economy to foster growth and social justice. The planning commission was established in 1950. Responsible only to the Prime minister, the commission is independent of the cabinet. A staff drafts national plans under the guidance of the commission; draft plans are presented for approval to the National Development Council, which consist of the planning commission and the chief ministers of the states.
Budgetary provisions
o The Union Budget 2012-13 stated that investment in infrastructure is to go up to Rs 50 lakh crore. o More sectors proposed to be added as eligible sectors for Viability Gap Funding. o Tax free bonds of Rs 60000 crore. o The Union Budget announced harmonised master list of infrastructure sector approved by the Government. o The budget permitted direct import of Aviation Turbine Fuel for Indian carriers.
The budget also stated that the ECB is to be permitted for working capital requirement of airline industry for one year subject to a total ceiling of US $ 1 billion.
Union Budget 2012-13 proposed an increase of allocation of the Road Transport and Highways Ministry by 14 per cent to Rs 25360 crore . ECB proposed to be allowed for capital expenditure on the maintenance and operations of toll systems for roads and highways, if they are part of original project
The
Key developments
Approval of US$ 250 million loan by ADB to finance the BMRTSP Reliance infra. to bid for 5 big projects out of 18 in 2011 Approval of US$ 975 million loan by the world bank for development of eastern arm Soft loan worth US$ 1.6 billion to be given by Japan international corporation agency
government initiatives
Opening up a number of infrastructure sectors to private players Promoting investment by permitting FDI
Road ahead 3 major projects KG-D6, Mundra power project, IGI project An investment opportunity of US$ 25 billion in 2011-2012 Opportunity for other allied sectors Opportunity in water and environmental engineering Rajiv Awas Yojana programme
Globalization refers to increasing global connectivity and integration in the economic, social, technological, cultural, political, and ecological spheres
Introduction of Globalization
Globalization happened in 1991 in India. Its main intention was to liberalize, privatize and Globalize the industrial sectors. Industries were facing so much government intervention, so after that industrial sectors became almost free to make their own decision about establishing a new branch, producing the products and marketing etc,. Drastic change is that now the Indian consumer is free to purchase the product which he likes from anywhere in the world. Foreigners can also buy from India, so the economies off all the nations are interdependent on other.
ON FINANCIAL SECTOR
Technology infusion
Outsourcing Innovation Better risk management practices
IMPACT
India's growth rate in the 1970s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. India's position in the global economy has improved from the 8th position in 1991 to 3rd place in 2011; when GDP is calculated on a purchasing power parity basis
PETROLEUM SUBSIDY
FOOD SUBSIDY
AGRICUTURE SUBSIDY
The Reserve Bank of India, on Friday, said all public sector banks would get an interest subsidy of 2 per cent annually against short-term production loan up to Rs.3 lakh to farmers. The government will provide interest subvention of 2 per cent per annum to public sector banks (PSBs) in respect of short-term production credit up to Rs.3 lakh during 2012-13, the RBI said in a notification. This subvention will be available to public sector banks on the condition they make available shortterm production credit up to Rs.3 lakh at ground level at 7 % p.a
PETROLEUM SUBSIDY
Indians on an average consume around 7.25 million MT of kerosene, 12.88 million MT of LPG, 15 million MT of petrol and 72 million MT of diesel per year. In 201112 nearly 76% petroleum products were imported. The subsidy provided by the government is Rs 32 per litre on kerosene, Rs 13 per litre of diesel and Rs 503 per LPG cylinder.(Figures can vary slightly but not significantly).It is estimated that ,at prevailing prices, the oil companies are loosing a whooping Rs 512 crore per day, due to under recoveries on sales of kerosene, diesel and LPG.This shortfall is made up by the central government.
In 2011-12, the total subsidy on these products was Rs1,38,541 crore Of this the government provided Rs 83,000 crore from its budget and balance Rs 55,000 crore was provided by govt.owned companies like ONGC,GAIL and Oil India. In the fiscal 2012-13, the govt. has estimated the total subsidy to rise to Rs 1,90,000 crore. It has provided for a budgetary subsidy of only Rs 43,580 crore and the balance will have to be provided by itself and the three oil companies, as usual.
FOOD SUBSIDY
75,551 cr
72,370 cr
(2011-12) 62,929 cr (2010-11)
(budgeted)
The governments expenditure on food subsidy for the current fiscal could touch R1 lakh crore, an alltime high, due to significant rise in procurement of grains and huge stocks, food minister KV Thomas has said. The government had budgeted R74,551 crore in food subsidy for 2012-13. Last fiscal, the government had to incur a food subsidy bill in excess of R72,000 crore In the current rabi marketing season, while the food ministry had set a target of lifting 31.8 million tone (mt) of wheat, the procurement has already crossed 33 mt and is expected to hit 35 mt by end of the procurement season.