Indian

Economy

www.time4education.com
 Part 1:
Historical
Overview
 Pre-LPG
Inward looking economy; socialist outlo

Shortage & premiums; sellers market;

monopoly

Conserve forex; import substitution

Feeling of shortage in the economy

91 - Huge trade deficit; forex reserves

USD$1 bn
 First Generation
Reforms
Delicensing; import liberalization

Taxation reform direct & indirect

Relaxed forex norms; FII & FDI allowed

Dividend repatriation

Stock Exchange reforms SEBI

Banking sector reforms Private banks

allowed

RBI relaxes controls

 Second Generation
Insurance GIC & LIC Reforms
Infrastructure

Telecom reforms

Labour law reforms

Disinvestment

Power sector reforms

 Part 2:
Vital Statistics
 Population 121 crore
Population growth rate 1.58% (2012)
GDP (nominal) $1.87 trillion
Global Rank 10
GDP (PPP) $7.27 trillion
Global Rank 3
GDP growth rate 4.7% in 2013-14
Per capita income $1625 (nominal, 2014); $5777
(PPP, 2014)
Forex Reserves Approx. $318 billion

Labour Force 478 million

Unemployment rate 3% urban; 2% rural
External debt $440 billion
 India : Basic Features
Low per capita income / High

population

Dependence on Agri / High rural pop

High density of population 382/sq

km

High rate of unemployment

 India : Basic Features
Still high rate of illiteracy

Low 2013 HDI report of UNDP rank

136/186

Low level of technology and productivity

Widespread poverty

46% of children suffer from malnutrition

High savings and low capital formation

Indian Economy Today

Three main sectors of the

economy:
Agriculture: 2nd in the world in
farm output
Manufacturing: 14th in the
world in industrial output
Services: 15th in the world in
output
 Part 3:
Sector-wise
Analysis
 3 Sectors of Economy

Primary agriculture, forestry,

fishery, animal husbandry

Secondary mineral, power, mining,

manufacturing industries

Services transport, trade,

communication, banking, other
services
Sectoral share in GDP
Distribution of
Workforce
 Agriculture Sector
Overview
Growth rate of 4.7% (2013-14)

Green / Blue / White / Yellow

Revolutions

43% land arable

60% of arable land monsoon

dependent

MSP on pulses, oilseeds, sugarcane

 Superlatives

Largest producer of Tea, Jute, Milk,

Pulses

Largest buffalo livestock

Second largest producer of wheat,

rice, fish, vegetables, groundnuts
 Strengths

Huge arable land area (second

largest)
Diverse soil types, climate
Huge labour force
Government focus, subsidies
 Weaknesses

Fragmented land holdings

59% of holdings are marginal (<1 hectare)
21% of holdings are small (12 hectare)

Low productivity
Average yield is 2890 kg per hectare which
is much lower than China, Japan

Monsoon dependence
60% arable land without irrigation
 Weaknesses
Landless labour

Seasonal unemployment

Poor infrastructure
Electricity
Roads and transport
Farm mechanization

Illiteracy
Low awareness about improved methods /
products
 Weaknesses
State disparity

Financing at usurious rates by local

moneylenders

Low remuneration to farmer

middleman

Antiquated laws
 Opportunities
Horticulture

Organic Farming

Fisheries

Packaged / processed farm products

Productivity improvements

Use of IT / Communications
 Industrial Sector
Overview
IIP in 2013-14: minus 0.1% (-0.1 per
cent)

Size: < 20% of Chinese industry

Huge unorganized sector

Effective corporate tax rate of 35%

FII, FDI, SEZ

 Main Industries

Textile (largest employer, 4% GDP)

Synthetic fibers

Mineral products / chemicals

Automobiles + components

Cement / machinery and equipment

 Strengths
Huge, low-cost labour force
Educated, skilled workforce
English Language skills
Good Managerial Skills
Variety of raw materials available
Strong Economy
Stable Polity
 Weaknesses
Lack of infrastructure

High cost of utilities

Red tape
Number of days to start a business in India
is 88 days

Cascading effect of indirect taxes

High cost of finance

Tardy judicial system

 Opportunities
Drugs & Pharmaceuticals

Textiles

Transport

Biotechnology

Automobiles + Components

Engineering goods
 Services Sector
Overview
Second fastest growing services
sector with its CAGR at 9%, below
Chinas 10.9 per cent, during the last
11-year period from 2001 to 2012.

Growth is not sector specific;

however, concentration in urban areas

India ranks 12th in commercial

 Key Sectors
Hotels + Tourism

Trade + Transport

Communication

Financial / Insurance / Banking / Real

Estate

IT & ITeS

Social + Personal Services

 Strengths

Huge educated labour force

Low labour cost: only 14% of U.S. labour

cost

Factor cost advantage for foreign co

Less capital intensive than

manufacturing

Inherent advantages in tourism, health

industries
 Weaknesses

High attrition rates in IT and BPO

industry

Lack of world-lass infrastructure

Dearth of highly-skilled labour

Low investment in R&D and higher

education
 Opportunities

Health + Medical Tourism

Hospitality

Off-shore consultancy

Retail

KPOs
 Part 4:
India and the
World
 Foreign Trade in
Apr.-Dec. 2014-15

Item In US$
billion

Exports 241
Imports 351
Trade Deficit 110
 Please note that all
data are taken from
Govt
ministry/department
websites.

THANK YOU!