Economy of India and Global Trends

1. GLOBAL ECONOMY & INDIAPRESENTED BY: GROUP 10
ALOK KUMAR 1510006
NIYAS N 1510031

2. AGENDA
• Introduction
• Objective
• Review of Literature
• Methodology
• Indian Economy on Global Scale
• Reforms & Economic Crisis
• Conclusion
• Recommendation
2

3. Introduction
• Fastest growing major economy* in the world &
will continue at 7-7.75% during FY2016-17
• Market based
• GDP: ₹ 122.15 trillion at 2011-12 constant prices
• Population: 1.31 billion & Labor force- 513.7
million
• Unemployment rate- 4.9% urban, 5.1% rural, 5%
national
• Exports- 272.4 billion
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*Central Statistics Organisation, 2016
Agricultur
e, 17.05%
Services,
53.23%
Industry,
29.72%
GDP COMPOSITION
Source: World Bank, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#

4. OBJECTIVE
• Indian Economy vs Global
Economies on different
macroeconomic indicators
• Indian Economy performance
in Agriculture, Manufacturing
& Service Sector
• 1991 Reforms and Impact of
Asian & Global Economic
crisis
4
GLOBAL
ECONOMY
US
UK
Japan INDIA
China

5. Review of Literature
• Economies has been area of interest for researcher from a long time.
• Economist, Government bodies as well as private institution are involved in
analyzing the economy of a country.
• S. Ghosh (2015) published a paper containing effect of colonial rule in Indian
economy.
• Government of India published a report in December 2007 containing details of
global crisis and impact on India.
• IMF and World-Bank also published various reports containing cause and effect
of Asian Crisis as well as Global Crisis.
• Ministry of finance releases yearly report on economic situation of India.
5
Research by
Economists
& Private
Institutions
Indian
Government
Reports
IMF Reports

6. Methodology
6
Data
Collection
• IMF database
• World Bank
Database
Plot &
Comparison
• Developed
Countries: US, UK
& Japan
• Developing
Countries: China
Analysis
• India performance
in Agriculture,
Manufacturing &
Service Sector

7. Indian Economy on Global Scale
7
6.91%
7.56%
2.63%
-7.00%
-2.00%
3.00%
8.00%
13.00%
18.00%
23.00%
GDP Annual Growth %
China India United States World
Between 1980 and 2010, India achieved a growth of 6.2 per cent,
while the world as a whole registered a growth rate of 3.3 per cent
Source: World Bank, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#

8. Indian Economy on Global Scale
8
Brazil is on the top with 4.23% of GDP being equivalent to FDI inflow
India’s FDI inflow ranges between 1-2% and increasing
4.23%
0.09%
0.61% 0.75%
0.99%
0.75%
2.11%
3.66%
1.65%
2.10%
5.23%
2.87%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FDI Inflow (% of GDP)
Brazil China India Japan United States World
Source: World Bank, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#

9. Indian Industry: Agriculture
• Global agricultural powerhouse
• world’s largest producer of milk, pulses, and spices, and has the world’s largest
cattle herd (buffaloes)
• At 157.35 million hectares, India holds the second largest agricultural land in the
world.
• Agriculture GDP is expected to grow above-trend at 4.1 per cent to Rs 1.11
trillion*
• Total allocation for rural, agricultural and allied sectors for FY 2017-18 has been
increased by 24 per cent year-on-year to Rs 1,87,223 crore (US$ 28.1 billion).
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Data Source: IMF database

10. Indian Industry: Manufacturing
• India’s ranking 6th among the world’s 10 largest manufacturing countries
• Strong technical and engineering capabilities- IITs and NITs
• Constant Share in GDP despite growth in exports
• The cost of manpower is relatively low as compared to other countries.
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Source: World Bank, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#

11. Indian Industry: Service
• India in the 8th place currently amongst the top 10 exporters of services in the world.
• India’s share in global services exports was 3.2 per cent in 2014-15, double that of its
merchandise exports in global merchandise exports at 1.7 per cent
• The multiplier effect on ancillary industries owing to the growth in the services sector
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53.23%
68.29%
45.00%
50.00%
55.00%
60.00%
65.00%
70.00%
Service Industry (% of GDP)
India World
• Key driver of India’s economic
growth & most attractive sector for
FDI (Foreign Direct Investment)
inflows.
• Growing at 10 per cent per annum,
the fastest growing in the world.
Source: World Bank, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#

12. Indian Economy- 1991 Reforms
• The fiscal crisis of 1990 was triggered by Rajiv Gandhi’s fiscal profligacy in the
1980s and the oil price hike of 1990 led to unmanageable balance of payments
deficit*
• Liberalization in Economy started on 24 July 1991.
• End of License Permit Raj
• Opening for Foreign Investments
• It was seen as the only way out for India after the balance of payments crisis
that brought the country to its knees.
• The first year of reform saw a total foreign investment of only $74 million.
• As of March 2016, India has attracted $10.55 billion worth of FDI.
12*Source: New Indian Express, http://www.newindianexpress.com/opinions/2016/aug/09/India-after-25-yrs-of-
liberalisation-1507206--1.html

13. Indian Economy & Asian Crisis
• Series of currency devaluation in Asian Miracle Countries- Thailand was 1st
• Hit East Asia and caused stock market declines, reduced import revenues and
government upheaval.
• Attributed to inflow of short term Foreign capital though the Total Factor
Productivity remained low and lack of government intervention
• IMF provided $36 billion to support reform programs in the three worst-hit
countries—Indonesia, Korea, and Thailand.
• India: short term external debt was tightly controlled; the current account
deficit was manageable
• Weak trade link with east Asian Countries helps in isolation from Crisis.
• Since 1991, RBI continues to follow policy of 'Managed Floating which helped in
stabilizing the currency during the crisis
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14. Indian Economy & Global Crisis
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Back-Drop
Boom in World Economy
US Economy Growth: Interest
Rate & Deregulation
Rapid Increase in Credit &
Loans
Development
Securitization and
Repackaging of Loans
Excessive Leverage
Mismatch between Financial
Innovation & Regulation
Failure of Global Corporate
Governance
Dimensions
Global Spread
Decline in credibility of IMF
and World Bank
State Capitalism and
Protectionism
Credit Crunch
Lack of confidence and
credibility in Financial Market

15. Indian Economy & Global Crisis
• Started in August 2007 with the sub-prime mortgage crisis in the US
• India: Total net capital flows fell from US$17.3 billion in April-June 2007 to
US$13.2 billion in April-June 2008
• FDI Inflow increased to $16.7bn while Outflow decreased to $6.4bn.
• Sensex down from 20000 to <9000 in a year, Stock prices lost its 90% value
• No contagion in banking sector due to very limited exposure to US mortgage
market
• RBI shifted policy from monetary tightening to monetary easing in order to
maintain comfortable domestic and foreign liquidity.
• Govt. launched three fiscal stimulus packages between Dec 08 and Feb 09
having combined impact of about 3% of GDP.
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16. Conclusion
• Globalization has taken us a long way from 1991 which has resultant in the
advancement our country.
• India opened up in 1990 at time when domination of knowledge-intensive
sector was beginning
• India’s post colonial policy emphasis on expanding public funded higher
education resulted in creation of an extensive network of publicly funded
colleges and universities throughout the country.
• India has been able to create and nurture technological capability due to its
technology policy
• “knowledge of English language which we had inherited from our colonial past”
• Skilled manpower & English language naturally led to the flourishing of IT sector
• India is yet to make a successful transition towards a fully knowledge-driven
economy
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17. Suggestions
• India is yet to reach the levels of the league of technologically advanced nations.
• Requirement of tapping the potentials for labour intensive “low end” sectors
• Clearing the log of pending infrastructure development projects and
rationalizing the tendering processes of projects in rail, roads, aviation, etc
sectors to promote trade
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A proactive policy framework that resolves infrastructure
deficits and improves labour productivity through investments
in health, education and technology
Increase in bilateral trade with neighbouring countries to infuse
new possibilities of trade and commerce and enhance friendly
relations

18. 18

19. References:
• India’s Role in the Emerging World Order by UMMU SALMA BAVA, FES Briefing
Paper,
• Globalization of Indian Economy, Economic Survey 2008-09
http://www.indiabudget.nic.in
• Indian And Global Economy, http://www.indiabudget.nic.in
• Reflections on india’s emergence in the world economy by s. Ghosh 2015
• Global economic crisis and its impact on India, rajya sabha secretariat, new
delhi, june 2009
• East Asian Crisis and Currency Pressure: The Case of India by Pami Dua, August
07, http://www.cdedse.org/pdf/work158.pdf
• World Economic Outlook 2016-17, IMF,
http://www.imf.org/external/ns/cs.aspx?id=29
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