SWOT ANALYSIS OF INDIAN ECONOMY

BUSINESS ENVIRONMENT

INTRODUCTION
India is the 10th largest economy in world in terms of GDP 3rd largest by PPP. Population: 1.22 billion Yearly increase: 18 million Major group: 50% - 0 25 years More than 1.53 billion people by the end of 2030. Average life expectancy: 68.6 years Economic growth rate slowed to around 5.3% for the 201213 fiscal year.

STRENGTH
Agriculture High percentage of cultivable land 56.78% Huge English speaking population Availability of skilled manpower Extensive Higher Education Diversified nature of the economy System Third largest reservoir of engineers High growth rate of economy Rapid growth of IT and BPO sector brining valuable foreign exchange Abundance of natural resources

Weakness
Rural poverty leads horrible wave of suicides by indebted farmers Presence of Vast Industrial sickness In rural India, about 34 percent of the population lives on less than $1.25 a day Coal Mines Corruption Illegal allotment and Kick Backs Inequality in prevailing socio economic conditions Poor infrastructural facilities Huge population leading to scarcity of resources Low literacy rate Unequal distribution of wealth Rural urban divide, leading to inequality of high standards

Opportunities
Scope for entry of private firms in various sectors for business Inflow of Foreign Direct Investment Huge foreign exchange earnings Area of biotechnology Area of Infrastructure Huge Domestic Market Huge agricultural resources, fishing, plantation crops, livestock Investment in R & D, engineering design Huge population of India in foreign countries . Vast forest area and diverse wildlife

CONCLUSION
Indian economy is robust in nature Banking & credit system have been able to survive the down turn. Youth of INDIA Economists predict that India economy will be the third largest by 2025 after USA & China

Overview of the 11th Five Year Plan (2007 - 2012)

As per syllabus

Income & Poverty

Accelerate growth rate of GDP from 8% to 10% and then maintain at 10% in the 12th Plan in order to double per capita income by 2016-17. Increase agricultural GDP growth rate to 4% per year. Reduce educated unemployment to below 5%. Raise real wage rate of unskilled workers by 20 percent. 11th Five Year Plan Target

Education
Reduce dropout rates of children from elementary school from 52.2% in 2003-04 to 20% by 2011-12. Increase literacy rate for persons of age 7 years or more to 85%. Lower gender gap in literacy to 10 percentage points. Increase the percentage of each cohort going to higher education from the present 10% to 15% by the end of the 11th Plan. Provide clean drinking water for all by 2009 and ensure that there are no slip-backs by the end of the 11th Plan. Reduce malnutrition among children of age group 0-3 to half its present level. Reduce anemia among women and girls by 50% by the end of the 11th Plan.

Health
Ensure that at least 33 percent of the direct and indirect beneficiaries of all government schemes are women and girl children. Ensure that all children enjoy a safe childhood, without any compulsion to work Women and Children

Infrastructure
Ensure electricity connection to all villages and BPL households by 2009 and round-the-clock power by the end of the Plan. Ensure all-weather road connection to all habitation with population 1000 and above (500 in hilly and tribal areas) by 2009, and ensure coverage of all significant habitation by 2015. Connect every village by telephone by November 2007 and provide broadband connectivity to all villages by 2012. Provide homestead sites to all by 2012 and step up the pace of house construction for rural poor to cover all the poor by 2016-17. Increase forest and tree cover by 5 percentage points. Attain WHO standards of air quality in all major cities by 2011-12. Treat all urban waste water by 2011-12 to clean river waters. Increase energy efficiency by 20 percentage points by 2016-17 Environment

Conclusion
Economic Planning help in mobilizing and allocating the resources in desired manner. Objective of economic planning is to reduce inequality, economic growth, balanced regional growth, modernization. Each five year plan aims at achieving certain target. Five year plan constitute the steps toward the fulfillment of objectives of economic planning.

Overview of the 12th Five Year Plan (2012 - 2017)

Twelfth Plan Strategy

There are Short Term and Medium Term Challenges Short Term : Reverse the current growth slowdown :
5.5 percent in 2012-13, Aim for 6.5 to 7 percent in 2013-14

Longer Term : Get back to high growth. This requires accelerating from 5.5% in 2012-13 to over 9% in last two years This is very difficult, especially given the global situation

Growth must not only be rapid, but also more inclusive

Inclusiveness is a multi-dimensional concept : Reduce poverty Improve regional equality across states and within states Improve conditions for SCs, STs, OBCs, Minorities Generate attractive employment opportunities for youth Close gender gaps Twelfth Plan lists 25 monitorable indicators

25 Monitorable Targets, e.g.

Average GDP Growth of 8 percent Agriculture Growth of 4 percent Reducing head-count poverty by 10 percentage point Generating 50 million work opportunities Eliminating gender and social gap in education Reducing IMR to 25, MMR to 100 and TFR to 2.1 Enhance infrastructure investment to 9% of GDP Achieve universal road connectivity and access to power for all villages Access to banking services for 90 percent households Major welfare benefits and subsidies via Aadhaar

Strategy for Achieving Inclusiveness

There are two routes to inclusiveness
through higher growth which expands income and employment opportunities through government pro-poor programmes which target poorer groups

Both are important. Twelfth Plan combines the pro-poor programme approach with efforts to get a growth pattern which is faster and inherently more inclusive Two routes are mutually reinforcing
High growth generates more revenues, to finance inclusiveness programmes Many inclusiveness programmes (health and education) contribute to growth

Macro-Economic Challenges in Achieving High Growth

Must increase the rate of investment, especially in infrastructure Domestic savings must increase even more to reduce the investment saving gap which is necessary to keep the Current Account Deficit under control Government dis-savings must be eliminated. This means fiscal deficit must be reduced Growth of subsidies has to be contained 75% of the investment in the economy is private investment (household plus corporate) Both the Centre and the States have to create an ecosystem that encourages private investment Infrastructure, especially quality of power, and availability of skills is critical

Effectiveness of Plan Programmes

Twelfth Plan sets ambitious targets for Flagship Programmes in areas of Health, Education, Rural infrastructure, Livelihood Development etc. Too much focus on the level of expenditure in these programmes. Not enough on effectiveness in terms of end results Implementation in the field is the responsibility of State Government agencies. However, programme guidelines are set by the Central Government There are demands for greater flexibility from states. We are responding as follows :
Guidelines are being made more flexible to meet the requirements of individual States 10% flexi-fund within each scheme for innovations

Energy
8 percent GDP growth requires 6 percent growth in energy supply from all sources Our fossil fuel resources are limited, and our import dependence is already high Enhanced Energy Efficiency in all sectors We need to push push for renewable Energy: Wind, Solar and Storage Hydro Difficult Policy Issues:
Coal vs. Forest Cover Petroleum Price Distortions Natural Gas Exploration Framework All Energy Prices: Coal, Petroleum product, Natural Gas and Electric power are currently under priced. Fuel adjustment is needed

Water
Management of water resource is a major challenge. Estimates of water availability have been optimistic Twelfth Plan proposes modified AIBP and expanded Watershed Management Programme Water sector needs better Regulatory Framework
New Groundwater Law Water Regulatory Authorities in each state National Water Framework Law

Agriculture accounts for 80% of water use at present, must shift to more water efficient agriculture practices Manage urban and industrial water demand through water recycling and rationalise user charges

Alternative Scenarios
12th Plan goal of 8% inclusive growth is not a foregone conclusion Depends on difficult policy decisions to be taken by Centre and States For the first time Plan presents three scenarios
Strong Inclusive Growth 8% Insufficient Action 6 to 6.5% Policy logjam 5 to 5.5%

Anything much less than 8% will not satisfy aspirations of the people