India and the global Economy

Presented by: BALAJI BHARATH CHETAN PRAVEEN RAMYA

Economy of India
The economy of India is the tenth-largest in the world by nominal GDP and the thirdlargest by purchasing power parity (PPP). India is the 19th-largest exporter and the 10th-largest importer in the world. Economic growth rate slowed to around ~5.5% for the 201213 fiscal year compared with 6.2% in the previous fiscal.

India GDP Facts

For financial year 2012-13 the governments projection for growth is 5.7-5.9 per cent FM Expects Indias GDP to grow at 6 per cent in 2013-14. India targets 8 per cent average growth rate over a period of five years ( 2012-17). Indias Foreign exchange reserves increased by US$ 39.6 million to touch US$ 296.57 billion for the week ended December 28, 2012.

Graphical representation of GDP

Pre-colonial period (up to 1773)

The citizens of the Indus Valley civilization, a permanent settlement that flourished between 2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform weights and measures, made tools and weapons, and traded with other cities Streets Drainage system Water supply Urban planning Sanitation Maritime trade was carried out extensively between South India and southeast and West Asia from early times until around the fourteenth century AD.

Colonial period (17731947)

An aerial view of Calcutta Port taken in 1945. Calcutta, which was the economic hub of British India, saw increased industrial activity during World War II.

Company rule in India brought a major change in the taxation and agricultural policies Establishment of Railways & Telegraphs The 1872 census revealed that 91.3% of the population of the region constituting presentday India resided in villages

Pre-liberalization period (19471991)

Indian economic policy after independence was influenced by the colonial experience, which was seen by Indian leaders as exploitative, and by those leaders' exposure to British social democracy as well as the progress achieved by the planned economy of the Soviet Union

Strong emphasis was given on

Import substitution Industrialization cottage industries Public sector Business regulation Central planning

Liberalization Why did it start???

In 1991, India Faced a Balance of Payments Crisis. It had to Pledge its Gold to Foreign Countries. It was a deal with The IMF.

Then PM of India, P V Narsimha Rao Knew that It was time for Some Bold Decision.

History of Liberalization in India

1) 2) 3) July 1991,India has taken a series of measures to structure the economy and improve the BOP The new economic policy introduced changes in several areas. The policy have salient feature which are-: Liberalization Extending Privatization Globalization of the economy

Which are known as LPG. (liberalization privatization globalization)

Economic Liberalization in India

It means the process of opening up of the Indian economy to trade and investment with the rest of the world. It means that opening the Door for doing Business to all over the world. Till 1991 India had a import protection policy wherein trade with the rest of the world was limited to exports. Foreign investment was very difficult to come into India due to a bureaucratic framework.

After the start of the economic liberalization, India started getting huge capital inflows and it has emerged as the 2nd fastest growing country in the world.

The Policies of Liberalization Included the Following

Opening the Gate for International Trade and Investment.

an industry or sector, to allow for a free and efficient marketplace).

Deregulation. (The removal of government controls from Initiation of Privatization.

Tax Reforms. Inflation Controlling Measure.

Impact of Liberalization on Indian Economy

Increase in Employment.

Arrival of New Technology or Development of Technology. Development of Infrastructure. Identity at World Level. Increase Our Currency Value (INR).

GDP Growth.
Increase Consumption and Adaptation of New Lifestyle. Increment of Competition. Increment in Foreign Investor.

Advantages of liberalization
Development of economy without capital investment. Increase the foreign investment.

Increase the foreign exchange reserve.

Increase in consumption and Control over price. Reduction in dependence on external commercial borrowings

Disadvantages of Liberalization

Loss to domestic units. Increase dependence on foreign nations.

Privatization
Privatization means transfer of ownership and/or management of an enterprise from the public sector to the private sector . Privatization is opening up of an industry that has been reserved for public sector to the private sector. Privatization means replacing government monopolies with the competitive pressures of the marketplace to encourage efficiency, quality and innovation in the delivery of goods and services.

Globalization
It Means that opening up of the economy for foreign direct investment by liberalizing the rules and regulations and by creating favorable socio-economic and political climate for global business.

Opening and planning to expand business throughout the world. Buying and selling goods and services from/to any countries in the world.

MACROECONOMIC OUTLOOK

Growth Forecasts for Selected Countries/Country Groups (%)

Growth Forecasts for Selected Countries/Country Groups (%) Turkey Euro Area US Brazil Russia India China IMF OECD WB UN
2013 2014 2013 2014 2013 2014 2013 2014 3.4 3.7 4.1 5.2 4.0 5.0 3.2 5.4 -0.3 1.1 -0.1 1.3 0.7 1.4 -0.3 0.9 1.9 3.0 2.0 2.8 2.4 2.8 2.1 2.3 3.0 4.0 4.0 4.1 4.2 3.9 3.3 4.5 3.4 3.8 3.8 4.1 4.2 4.0 4.4 4.4 5.7 6.2 5.9 7.0 6.9 7.1 6.7 7.2 8.0 8.2 8.5 8.9 8.1 8.4 8.3 8.5

Source: IMF, OECD, UN, WB

Global economic outlook Prospects for the world economy in 2012-2013

The world economy is on the brink of another recession
The problems are multiple and interconnected

Policy paralysis has become a major stumbling block

Faltering growth
Global output growth is slowing and risks for a double-dip recession have heightened Developing country growth remains strong, but is decelerating because of the economic problems in developed countries

Key assumptions for the United Nations baseline forecast for 2012 and 2013
The forecast presented in the text is based on estimates calculated using the United Nations World Economic Forecasting Model (WEFM) and is informed by countryspecific economic outlooks provided by participants in Project LINK, a network of institutions and researchers supported by the Department of Economic and Social Affairs of the United Nations.