INDIAAN UNDERDEVELOPED ECONOMY

Chapter 20 Broad Profile of the Indian Economy and the Macroeconomic Scenario

Low per capita income - In 2008 Indias per capita income was as low as $ 1,070 as against $ 47,580 in USA. Inequitable distribution of income and poverty Poverty ratio was 27.5 per cent at the national level in 2004-05 if uniform recall period (URP) is used and 21.8 per cent if mixed recall period (MRP) is used. The ratio of expenditure of top 10 per cent to the poorest 10 per cent in 2004-05 was as high as 8.6. Predominance of agriculture - Indian economy is essentially agrarian. In the agricultural sector productivity is low and, as a result, a large number of farmers have virtually little purchasing power to buy industrial goods. Rapid population growth The requirement of feeding additional numbers restricts the use of resources in low return agriculture rather than higher return manufacturing.
(Contd)
Himalaya Publishing House Economic Environment of Business S.K. Misra & V.K. Puri

Chapter 20 Broad Profile of the Indian Economy and the Macroeconomic Scenario

Unemployment Scarcity of Capital - Low capital formation proportions means low rates of growth of national product, unless capital-output ratio declines. High rates of saving and investment allow business to grow at a fast rate, introduce latest technologies and become internationally competitive. Technological Backwardness Lack of entrepreneurs

Himalaya Publishing House

Economic Environment of Business S.K. Misra & V.K. Puri

INDIAA DEVELOPING ECONOMY

Chapter 20 Broad Profile of the Indian Economy and the Macroeconomic Scenario

Quantitative : National Income Trends During the first three decades of economic planning, the net national product increased at a modest rate of 3.4 per cent per annum. Net national product increased at the high rate of 7.8 per cent annum during the Tenth Plan period (2002-03 to 2006-07) Structural Changes Significant changes in sectoral distribution of domestic product Growth of basic capital goods industries Development of infrastructure Progress in the banking and financial sector
Himalaya Publishing House Economic Environment of Business S.K. Misra & V.K. Puri

INDIAA MIXED ECONOMY

Chapter 20 Broad Profile of the Indian Economy and the Macroeconomic Scenario

Private ownership of the means of production Predominance of the market. Market holds a predominant position in the Indian economy Growth of private sector monopolies. Since Independence, monopoly houses have grown rapidly and with it the concentration of economic power in the country has increased. Public sector. In India, a large public sector co-exists with the private sector and this fact alone is enough to determine the character of the economy as mixed Economic planning. Economic planning has been an integral part of the Indian economy since 1951.

Himalaya Publishing House

Economic Environment of Business S.K. Misra & V.K. Puri

Chapter 20 Broad Profile of the Indian Economy and the Macroeconomic Scenario

MACROECONOMIC SCENARIO
Fluctuations in Economic Growth Erratic Industrial Growth Savings and Investment Growth in Recent Years Prices and Inflation Fiscal Imbalance Capital Market Developments External Sector External Trade Position and Foreign Capital Flows

Himalaya Publishing House

Economic Environment of Business S.K. Misra & V.K. Puri

ECONOMIC SLOWDOWN IN 2008-2009 AND SUBSEQUENT RECOVERY

Chapter 20 Broad Profile of the Indian Economy and the Macroeconomic Scenario

Rate of growth declined from 9.0 per cent in 2007-08 to 6.7 per cent in 2008-09 Rate of growth picked up to 8.0 per cent in 2009-10. It is estimated at 8.6 per cent in 2010-11. The impact of global recession on Indian economy has been via three channels Trade Channel Financial Channel Confidence channel

Himalaya Publishing House

Economic Environment of Business S.K. Misra & V.K. Puri