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Indian Economy
                                                                              Deepti Ramanujam
   Sept - 20...
Agenda

•   Introduction
•   Growth Indicators
•   Significant Industries
•   Monetary Policy & Fiscal Policy
•   Foreign ...
Introduction

• 2nd fastest growing major economy
• Diverse economy – agriculture, handicrafts,
  textile, manufacturing, ...
Key Economic Indicators
             2001     2002     2003     2004     2005     2006


Total
population
(millions)    10...
Composition of GDP
            40.0
            35.0
            30.0
            25.0                                    ...
Price Indices
          14.0

          12.0

          10.0

           8.0                                              ...
Monetary & Fiscal Policy
Overview of the Monetary & Fiscal Policy
   (2002-07)
• Maintaining Price stability and ensuring
...
Policies (contd…)

• Liquidity through LAF & MSS
• Cash reserve Ratio – 6.5% TO 7.0%
• Flexible reverse Repo Rate
• Lifted...
Policies (contd…)
• Huge government deficits : 8-9% of GDP
  (central & state fiscal deficits)
• After 1991- economic poli...
Foreign Exchange Policy

• Prevention of destabilization speculation
• The foreign reserves have risen from $ 5 Bn
  in 19...
Balance of Payments

 • Fiscal 2004-05 marked a turn around
 • Appreciating rupee, imports rising and
   exports slowing
 ...
Items              2004-05   2003-04   2002-03   2001-02   2000-01




Trade Balance      -38,130   -15,454   -10,690   -1...
G-Effect

 • Present day world

 • Appraisal of public policies

 • Financial Integration
S#   India                             China
1    Trade amounts to 31% of GDP       Trade amounts to 52% of GDP
2    Takes...
Striking future projections
 What Goldman Sachs says -
 India likely to show the fastest growth
  over the next 30 to 50 ...
References

•   BRIC Report
•   CRISIL report
•   www.rbi.org.in
•   www.forbes.com
•   www.frsb.org
Thank You



Compiled by students of SP Jain – Singapore / Dubai for Educational Purpose
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MacroEconomics Of India - Fiscal & Monetary Outlook 2007 - SPJCM

Research and Presentation on India & its Monetary & Fiscal outlook of 2007 by Management students SPJCM.

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MacroEconomics Of India - Fiscal & Monetary Outlook 2007 - SPJCM

  1. 1. Indian Economy Deepti Ramanujam Sept - 2007 Mohit Agarwal Navneet Dubey Rahul Ghelli Rajesh Joshi Sagar Mewada Tejas Deshmukh Compiled by students of SP Jain – Singapore / Dubai for Educational Purpose
  2. 2. Agenda • Introduction • Growth Indicators • Significant Industries • Monetary Policy & Fiscal Policy • Foreign Exchange Policy & BoP • India v/s China • Future projections
  3. 3. Introduction • 2nd fastest growing major economy • Diverse economy – agriculture, handicrafts, textile, manufacturing, and a multitude of services • Population-1.17bn & Labor Force-509.3 mn • Exports ~ $125 bn • Imports ~ $188 bn • M&A
  4. 4. Key Economic Indicators 2001 2002 2003 2004 2005 2006 Total population (millions) 1038 1051 1068 1085 1101 1118 GDP 5.8 3.8 8.5 7.5 8.4 9.4 Per capita GDP 21976 23299 25773 28684 32224 36771 Unemployme nt rate ... ... ... ... 3.1 ... Interest rates (12 months) 7.10 5.75 5.00 5.50 6.00 8.25
  5. 5. Composition of GDP 40.0 35.0 30.0 25.0 Services 20.0 Industry 15.0 Agriculture 10.0 GDP 5.0 0.0 -5.0 2001 2002 2003 2004 2005 2006 -10.0 2001 2002 2003 2004 2005 2006 GDP 5.8 3.8 8.5 7.5 8.4 9.4 Agri. 6.3 -7.2 10.0 0.0 6.0 2.7 Industry 2.7 7.1 7.4 9.8 9.6 10.9 Services 7.2 7.4 8.5 9.6 9.8 11.0
  6. 6. Price Indices 14.0 12.0 10.0 8.0 GDP DEFLATOR FPI 6.0 CPI 4.0 2.0 0.0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 CPI 3.8 4.3 3.8 3.8 4.2 FPI 2.2 2.5 3.5 2.8 3.3 GDP Deflator 3.1 3.9 3.8 4.4 4.4
  7. 7. Monetary & Fiscal Policy Overview of the Monetary & Fiscal Policy (2002-07) • Maintaining Price stability and ensuring adequate flow of credit to the economy • Inflation around 4.4 - 6.0% • M3 at about 21.3% when projected was 17.3% • Consistent objectives of price & financial stability
  8. 8. Policies (contd…) • Liquidity through LAF & MSS • Cash reserve Ratio – 6.5% TO 7.0% • Flexible reverse Repo Rate • Lifted a cap of Rs. 30bn on daily Repo transactions • Rupee has risen considerable to 10% against dollar
  9. 9. Policies (contd…) • Huge government deficits : 8-9% of GDP (central & state fiscal deficits) • After 1991- economic policy shifted towards long-term domestic debt • Constrained public infrastructure crowded out private sector • Undermines reforms- concerns on funding debt • Tax Revenue to GDP ratio – 10% GDP
  10. 10. Foreign Exchange Policy • Prevention of destabilization speculation • The foreign reserves have risen from $ 5 Bn in 1991 to around $ 200 Bn in 2007 • The increase in foreign reserves is due to FDI, Net FII investments and NRI deposits. • FX reserves protects the market against exchange rate volatility. • Increase in FX reserves can cause inflationary pressures.
  11. 11. Balance of Payments • Fiscal 2004-05 marked a turn around • Appreciating rupee, imports rising and exports slowing • Widening CAD due to trade deficit • Increase in FDI/FII liabilities
  12. 12. Items 2004-05 2003-04 2002-03 2001-02 2000-01 Trade Balance -38,130 -15,454 -10,690 -11574 -12460 Invisibles 31,699 26,015 17,035 17,035 9,794 Net Current Account -6,431 10,561 6,345 6,345 2,666 Balance Capital Account 32,175 20,542 10,840 10,840 8,840 Overall Balance 26159 31,421 16,985 16,985 5,868 Foreign Exchange Reserve -26,159 -31,421 -16,985 -16,985 -5,842 Increase (+) /Decrease (-)
  13. 13. G-Effect • Present day world • Appraisal of public policies • Financial Integration
  14. 14. S# India China 1 Trade amounts to 31% of GDP Trade amounts to 52% of GDP 2 Takes about 88 days to start Less by around 50% business and 176 to close 3 Proportion of population over 18% the age 15 with no schooling was 44% in 2001 4 Cargo transit times to US is 8-12 Cargo transit times to US is 2-3 weeks weeks 5 Contribution to world growth – Contribution to world growth – 0.4% 1.2% 6 Proportion of population in the 66% productive cohort is 60% 7 Overseas Indians account for Above 50% only 9% of country’s FDI 8 6 times of India 9 Average investment rate 22% 36%
  15. 15. Striking future projections What Goldman Sachs says -  India likely to show the fastest growth over the next 30 to 50 years  Growth could be higher than 5% over the next 30 years and close to 5% as late as 2050  India’s GDP will exceed Italy’s in 2016, France’s in 2019, Germany’s in 2023 and Japan’s in 2032  India to become the world’s 3rd largest economy by 2032
  16. 16. References • BRIC Report • CRISIL report • www.rbi.org.in • www.forbes.com • www.frsb.org
  17. 17. Thank You Compiled by students of SP Jain – Singapore / Dubai for Educational Purpose

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