1OVERVIEW OF INDIANECONOMY&OVERVIEW OF GREECEECONOMYBy :Members EnrolmentnumbersAbhijeet Roy 010111118Nilanka Ghosh 010111146Paromita Chatterjee 010111030Sazid Mohammed 010111122Sweta Singh 010111063
2HISTORICAL BACKGROUND OF INDIAN ECONOMYThe British came to India in the year in the year 1600 as traders of the East India Company.During the British rule in India, Government Policy towards Industry and business was indifferent.The first century of British rule saw the decline of nearly all indigenous industries for many reasons– technological, economic and political. The British did not become a ruling power in India until thesecond half of the 18th century till when it was as trading concern. Modern industrial enterprises inIndia developed only after 1850. Its earliest manifestations came on the wake of the construction ofrailways, which made it essential to have modern workshops for repair and maintenance of therolling stock. The development of railways ended the isolation of the villages, made the worldmarket available to the Indian producer, facilitated both foreign and domestic trade, and created thenecessary condition for the growth of Large -scale industry.The outbreak of the First World War brought an end to the policy of hostility between British BengalChamber of commerce and the government and forced on the Government a more progressive policy thatincluded selective encouragement of some industries and protective tariff in order to meet war demands. Thisled to the appointment of Indian Industrial commission in 1916 to examine and report the possibilities ofindustrial development in India and subunit recommendation for policy for industrial growth. The commissionpresented its report in 1918. Its proposals were based upon the fundamental principles that in the futureGovernment must play and active part in the industrial development of the country. It proposed improveddepartmental organization for the encouragement and control of industries. Second suggestions were made toimprove technical training and education and to improve the conditions in factories and industrial center.Third, there were proposals for the reorganization of the scientific staff of the industrial developments. Fourth,recommendations were made for technical and financial aid to industries, encouragement of industrial co-operatives, and provisions of improved transport and freight facilities.The Second World War was major watershed in the development of Government – business relationsin India. As India became the main supply base of the allied War efforts I the Far Eastern fronts, its industrialdevelopment received a tremendous boost from the substantial orders for logically manufactured goods andthrough setting up of a large number of new industrial units. During the two brief wars that intervenedbetween the end of the war (1945) and independence (1947), Government efforts were mostly directed atdealing with shortages that developed in large numbers of items both consumer goods and essential warmaterials. In almost all the industries, for example cotton, textile, cement, steel sugar and paper, productionshowed a steep downward trend caused by the fall in demand, overworking of the plants during the war, non-availably of capital requirement, shortage of many materials, general unrest in the country and transport anddistribution bottlenecks. Government efforts were mainly directed at price and distribution controls throughemergency powers in respect of a whole range of articles like cotton, textile, woollens, and paper, coal, steel,mica, petroleum and petroleum products.Pandit Jawaharlal Nehru laid the foundation of modern India. His vision and determination have left alasting impression on every facet of national endeavour since independence. The goals and objective set outfor the nation by Pandit Nehru on the eve of independence were as follows:1. Rapid agricultural and industrial development of the country2. Rapid expansion of opportunities for gainful employment3. Progressive reduction of social and economic disparities4. Removal of poverty and attainment of self-reliance
3The emergence of India as an independent nation of August 15, 1947, was the beginning of the newglorious era in the history of our country. Initial Government efforts were directed towards improving theclimate of industrial relations. On April and, 1948, the Parliament adopted an Industrial Policy Resolutionlaying down the broad objectives of the government policy in the field of industrial development anddemarcating the respective shapers for public and private sector. The government also took steps 6to clarify itspolicy toward foreign capital in a policy statement made by the Prime Minister on April 6, 1949. Since 1950-51, India has passed through ten five-year plans and is now in the Eleventh Five-year plan. The financial andthe balance of payment crises that the nation faced from the onset of the 1990s compelled the acceptance ofderegulation, reduced role for public sector, making the public sector efficient and surplus generating, andmuch reliance in general on the private sector for industrial and infrastructure development.Industrial PoliciesIndustrial Policy means rules, regulations, principles, policies and procedures laid down bygovernmentfor regulating, developing and controlling industrial undertakings in the country. Itprescribes therespective roles of the public, private, joint and co-operative sectors for thedevelopment of industries.It also indicates the role of the large, medium and small-scale sector. Itincorporates fiscal and monetarypolicies, tariff policy, labour policy, and the Government attitudetowards foreign capital and the role tobe played by Multinational corporations in the development ofthe industrial sector. Afterindependence, the Government of India had formulated policies forindustrial growth and development.For regulating these industrial policies, adequate measures werealso adopted by way of industriallicensing policies. These policies have substantial regulated thebusiness environment in the country.Objectives of Industrial PoliciesIndustrial policy statements have been announced from 1948 onwards. A number of objectiveshavebeen projected by the Government of India while making industrial policy declarations. Some oftheImportant objectives of the Industrial policies were as follows:• Achieving a socialistic pattern of society• Preventing undue concentration of economic power• Achieving industrial development• Achieving economic growth• Reducing disparities in regional development• Developing heavy and capital goods industry• Providing opportunities for gainful employment• Expanding the public sector for achieving socialism• Achieving a self-sustained economy• Alleviating poverty• Protecting and developing a healthy small sector• Building up large and growing co-operative sector• Updating technology and modernization of industry
4• Liberalization and Globalization of economyIndustrial Policy Resolutions• Following are the important Industrial Policy Resolutions, post independence:• Industrial Policy Resolution, 1948• Industrial Policy Resolution, 1956• New Industrial Policy Resolution, 1991Details of each Five Year Plan are as follows:First Five Year Plan (1951 – 56)Community Development Program was launched in 1952. This plan emphasized onagriculture, price stability, power & transport. It was more than a success, because of good harvestsin the last two years.The main objectives of this plan were:Community and agriculture developmentEnergy and irrigationCommunications and transportIndustryLand rehabilitationSocial servicesThe target of GDP growth in the first five year plan of India was 2.1% per year and the actual growthof GDP that was achieved had been 3.6% per year. This shows the extent to which the first five yearplan in India had been successful. During the period of India first five year plan, many projectsrelated to irrigation had been started, such as the Mettur Dam, Bhakra Dam, and Hirakud Dam.In the first five year plan of India, provisions have been made for the rehabilitation of agriculturalworkers who were landless. Apart from that financial allocation was also made for conservation ofsoil, experiments, and training in co-operative organizations. Increased provisions have also beenmade for the improvement of roads, civil aviation, railways, telegraphs, and posts. For thedevelopment of the basic industry which includes the manufacture of fertilizers and electricalequipment, provisions have been made in the Indian first five year plan. Emphasis has also beengiven to small scale and village industries in the Indian plan of first five years. First five year planin India had improved the living condition of the people of the country and is of historicalimportance.
5Second Five Year Plan (1956 – 61)Its objective was rapid industrialization. Advocated huge imports which led to emptying offunds leading to foreign loans. It shifted basic emphasis from agriculture to industry far too soon.During this plan, price level increased by 30%, against a decline of 13% during the First Plan.The various tasks of the second five year plan in India are:To increase by 25% the national incomeTo make the country more industrializedTo increase employment opportunities so that every citizen gets a jobIn India, the second five year plan focused on industry - more specifically on the heavy industry.The domestic production of industrial goods in the public sector was encouraged by the second fiveyear plan in India.Mining and industryCommunity and agriculture developmentPower and irrigationSocial servicesCommunications and transportMiscellaneousDuring the second five year plan India, 5 steel plants in Jamshedpur, Durgapur, and Bhilaihad been established, apart from a hydro-electric power project which was also undertaken andimplemented. The production of coal increased during this period. Also, more railway lines wereadded in the north-east part of the country, during the Indian second five year plan. Land reformmeasures have been taken during the period of the second five year plan India, in order to removethe socio-economic constraints of the rural population.The second five year plan India has, to alarge extent, improved the living standards of the people.Third Five Year Plan (1961 – 66)At its conception time, it was felt that Indian economy has entered a take-off stage.Therefore, its aim was to make India a „self-reliant‟ and „self-generating‟ economy. Also, it wasrealized from the experience of first two plans that agriculture should be given the top priority tosuffice the requirement of export and industry.Complete failure due to unforeseen misfortunes, viz.Chinese aggression (1962), Indo-Pak war (1965), and severest drought in 100 years (1965-66).Three Annual Plans (1966-69) Plan holiday for 3years. The prevailing crisis in agriculture andserious food shortage necessitated the emphasis on agriculture during the Annual Plans.During these plans a whole new agricultural strategy involving wide-spread distribution of High-
6Yielding Varieties of seeds, the extensive use of fertilizers, exploitation of irrigation potential andsoil conservation was put into action to tide-over the crisis in agricultural production.During the Annual Plans, the economy basically absorbed the shocks given during the Third Plan,making way for a planned growth.The various tasks of the third five year plan India are:To increase the national income by 5% per yearTo increase the production of agriculture so that the nation is self sufficient in food grainsTo provide employment opportunities for every citizen of the countryTo establish equality among all the people of the countryWhile formulating the third plan, it was realized that agriculture production was thedestabilizing factor in economic growth. Hence agriculture was given due importance. Alsoallotment for power sector was increased to 14.6% of the total disbursement.Emphasis was on becoming self reliant in agriculture and industry. The objective of importsubstitution was seen as sacrosanct. In order to prevent monopolies and to promote economicdevelopments in backward areas, unfeasible manufacturing units were augmented withsubsidies. The plan aimed to increase national income by 30% and agriculture production by30%.The wars with China in 1962 and Pakistan 1965 and bad monsoon in almost all the years,meant the actual performance was way of the target.Fourth Five Year Plan (1969 – 74)Main emphasis on agriculture‟s growth rate so that a chain reaction can start. Fared well inthe first two years with record production, last three years failure because of poor monsoon. Had totackle the influx of Bangladeshi refugees before and after 1971 Indo-Pak war.At the time of initiating the fourth plan it was realized that GDP growth and rapid growth ofcapital accumulation alone would not help improve standard of living or to becomeeconomically self-reliant. Importance was given to providing benefits to the marginalizedsection of the society through employment and education.Disbursement to agricultural sector was increased to 23.3% .Family planning programmedwas given a big stimulus.The achievements of the fourth plan were below targets. Agriculture growth was just at 2.8%and green revolution did not perform as expected. Industry too grew at 3.9%.Fifth Five Year Plan (1974-1979)The Fifth Five Year Plan India was chalked out for the period spanning 1974 to1979 with theobjectives of increasing the employment level, reducing poverty, and attaining self-reliance.
7At the onset of the Fifth Five Year Plan India in the 1970s, the international economy was ina turmoil, which had a great impact on the economy of both, developed and developing countries ofthe world. The main changes were perceived in sectors such as food, oil, and fertilizers where pricessky-rocketed. As a result of this, attaining self-reliance in food and energy became a top priority.During this period, the Indian economy was affected by several inflationary pressures. Food grainproduction was above 118 million tons due to the improvement of infrastructural facilities like thefunctioning of the power plants and the rise in the supply of coal, steel, and fertilizers. Regarding theoil, credibility of Bombay High had shot up the commercial production of oil in India. In 1974-75,Indian exports crossed 18%, and the large earnings from these exports have further increasedtheIndian foreign exchange reserves.The Fifth Five Year Plan India was designed with emphasis on certain objectives, enlisted asunder:• To reduce social, regional, and economic disparities for developmental planning• To enhance agricultural productivity• To initiate land reforms• To check rural and urban unemployment• To emphasize on household industries like carpet-weaving, handlooms, sericulture, andhandicrafts to encourage self-employment through a well-integrated local planning• To encourage import substitution in areas like industrial machinery, chemicals, paper, ironand steel and non-ferrous metals• To capture the markets with location advantages• To initiate appropriate use of fiscal, credit and production support policies in the cottageindustry sector• To develop labour intensive technological improvements Outlay: A total outlay of Rs.53,410 crore was proposed for the Fifth Plan.Sixth Five Year Plan (1980-1985)The Sixth Five Year Plan India was undertaken for the period between 1980 to1985, with themain aim of attaining objectives like speedy industrialization, rise in the employment level, povertyreduction, and acquisition of technological self-reliance.At the onset of the Sixth Five Year Plan India, Rajiv Gandhi, the then prime ministerprioritized speedy industrial development, with special emphasis on the information technologysector. From the Fifth Five Year Plan, the nation had been able to achieve self sufficiency in food.Moreover, the industrial sector was also diversified and science and technology also made asignificant advance. One of the major hindrances in the way of further development in this periodwas the boom in the Indian population. However, several successful programs on improvement of
8public health and epidemic control were also undertaken to reduce infant mortality and increase lifeexpectancy. Significant investments were made by the government in the Indian healthcare sector.The objectives of the Sixth Five Year Plan India were mainly focused on increasing industrializationand reducing long-standing problems such as poverty and unemployment. Some of the highlights andpredominant aims of the Sixth Five Year Plan India are enumerated as under:• To increase the growth rate of the economy• To concentrate on the promotion of efficient use of resources• To improve productivity level• To initiate modernization for achieving economic and technological self-reliance• To control poverty and unemployment• To develop indigenous energy sources and efficient energy usage• To promote improved quality of life of the citizens• To introduce Minimum Needs Program for the poor and needy with an emphasis to reduce thediscrepancies in income and wealth accumulation• To initiate Family Planning Programs in order to check the growing population trends• To protect and improve ecological and environmental assets• To promote the education at all levelsWhen Rajiv Gandhi was elected as the prime minister, the young prime minister aimed forrapid industrial development, especially in the area of information technology. Progress was slow,however, partly because of caution on the part of labour and communist leaders.The Indian national highway system was introduced for the first time and many roads were widenedto accommodate the increasing traffic. Tourism also expanded.The sixth plan also marked the beginning of economic liberalization. Price controls were eliminatedand ration shops were closed. This led to an increase in food prices and an increased cost of living.Family planning also was expanded in order to prevent overpopulation. In contrast to Chinasharshly-enforced one-child policy, Indian policy did not rely on the threat of force. More prosperousareas of India adopted family planning more rapidly than less prosperous areas, which continued tohave a high birth rate.Outlay: The proposed outlay for the Sixth Plan totalled Rs.1, 58,710 crore.Seventh Five Year Plan (1985-1989)
9The Seventh Five Year Plan India was for the duration between 1985 and 1989 under the approval ofthe National Development Council in India. The main objectives of the 7th five year plans were toestablish growth in the areas of increasing economic productivity, production of food grains, andgenerating employment opportunities. As an outcome of the sixth five year plan, there had beensteady growth in agriculture, control on rate of Inflation, and favourable balance of payments whichhad provided a strong base for the seventh five Year plan to build on the need for further economicgrowth. The 7th Plan had strived towards socialism and energy production at large. The thrust areasof the 7th Five year plan have been enlisted below:• Social Justice• Removal of oppression of the week• Using modern technology• Agricultural development• Anti-poverty programs• Full supply of food, clothing, and shelter• Increasing productivity of small and large scale farmers• Making India an Independent EconomyBased on a 15-year period of striving towards steady growth, the 7th Plan was focused on achievingthe pre-requisites of self-sustaining growth by the year 2000. The Plan expected a growth in labourforce of 39 million people and employment was expected to grow at the rate of 4 percent per year.Anti-poverty program:Special emphasis was given to the most vulnerable classes of people in the society viz., women,children, schedule tribes, and schedule castes. The poverty ratio was expected to decline to 26percent in 1989-90.Agriculture:The government undertook to increase productivity of oilseeds, fruits, vegetables, pulses, cereals,fish, egg, meat, and milk.Welfare:Improved facilities for education to girls, family welfare, healthcare, reduction in infant mortalitywere undertaken by the government as part of the 7th five year plan.Communications:
10Emergence of informatics, telematics, and hooking up of telecommunications with computers wereimportant features of the 7th five year plan in terms of development in Communications.Transport:More stress was laid on increasing supplementary modes of transport such as inland waterways,product pipelines, civil aviation, coastal shipping. The 7th Plan expected an increase in accessibilityto about 60 percent of the villages in India.Some of the expected outcomes of the Seventh Five Year Plan India are given below:• Balance of Payments (estimates): Export - Rs. 33 thousand crore, Imports - (-) Rs.54 thousandcrore, Trade Balance - (-) Rs.21 thousand crore• Merchandise exports (estimates): Rs. 60,653 crore• Merchandise imports (estimates): Rs. 95,437 crore• Projections for Balance of Payments: Export - Rs.60.7 thousand crore, Imports - (-) 95.4 thousandcrore, Trade Balance- (-) Rs.34.7 thousand croreSeventh Five Year Plan India strove to bring about a self-sustained economy in the country withvaluable contributions from voluntary agencies and the general populace.Eighth Five Year Plan (1992-1997)Eighth Five Year Plan India runs through the period from 1992 to1997 with the main aim ofattaining objectives like modernization of the industrial sector, rise in the employment level, povertyreduction, and self-reliance on domestic resources.Just before the formulation of the Eighth Five Year Plan India, there was great political instability inIndia which hindered the implementation of any five years plan for the following two years after theSeventh Five Year Plan. This period is characterized by extreme FOREX reserve crisis andintroduction of liberalization and privatization in Indian economy. To invite FDI in Indian industrialsector and to follow free market reforms were the only possible ways to revive the country fromforeign debt.Objectives of the Eighth Five Year Plan India:The main objectives of the Eighth Five Year Plan India are:• To prioritize the specific sectors which requires immediate investment to generate full scale employment
11• To promote social welfare measures like improved healthcare, sanitation, communication and provision forextensive education facilities at all levels• To check the increasing population growth by creating mass awareness programs• To encourage growth and diversification of agriculture• To achieve self-reliance in food and produce surpluses for increase in exports• To strengthen the infrastructural facilities like energy, power, irrigation• To increase the technical capacities for developed science and technology• To modernize Indian economy and build up a competitive efficiency in order to participate in the globaldevelopments• To place greater emphasis on role of private initiative in the development of the industrial sector• To involve the public sector to focus on only strategic, high-tech and essential infrastructural developments• To create opportunities for the general people to get involved in various developmental activities by buildingand strengthening mass institutionsEnergy was given priority with 26.6% of the outlay. An average annual growth rate of 6.7%againstthe target 5.6% was achieved.Ninth Five Year Plan (1997-2002)Ninth Five Year Plan India runs through the period from 1997 to 2002 with the main aim of attainingobjectives like speedy industrialization, human development, full-scale employment, povertyreduction, and self-reliance on domestic resources.Ninth Five Year Plan was formulated amidst the backdrop of Indias Golden jubilee of Independence.The main objectives of the Ninth Five Year Plan of India are:To prioritize agricultural sector and emphasize on the rural developmentTo generate adequate employment opportunities and promote poverty reductionTo stabilize the prices in order to accelerate the growth rate of the economyTo ensure food and nutritional security.To provide for the basic infrastructural facilities like education for all, safe drinking water,primary health care, transport, energyTo check the growing population increaseTo encourage social issues like women empowerment, conservation of certain benefits for theSpecial Groups of the societyTo create a liberal market for increase in private investmentsDuring the Ninth Plan period, the growth rate was 5.35 per cent, a percentage point lower than thetarget GDP growth of 6.5 per centThis plan was developed in the context of four important dimensions: Quality of life, generation ofproductive employment, regional balance and self-reliance.
12Achievements of the Ninth Plan in IndiaGrowth rate of GDP during the plan was 5.4% per annum as against the target of 6.5%.Agriculture grew by 2.1% as against the target of 4.2% p.a.Industrial growth was 4.5% as against the target of 3% p.a.Exports grew by 7.4% (target was 14.55%) and imports grew by 6.6% (target was 12.2%p.a.).Services grew at the rate of 7.8% per annum.Failures of the Ninth Plan in IndiaThe average rate of growth of industrials production during ninth plan (1997-98 to 2001-02)work out to only 5.0 per cent per annum which was by all means, a un satisfactoryperformance.The performance of the capital goods sector and the basic good sector was particularlydiscouraging during the period of the Ninth Plan.From 9.4 per cent per annum in the pre reform decade (1980-81 to 1991-92) the rate ofgrowth of the capital goods sector fell to only 4.7 per cent per annum during the Ninth PlanOver the same period, the annual rate of growth of the basic goods sector fell from 7.4 percent to 4.1 per cent.The performance of the intermediate goods sector and the consumer goods sector particularlythe durable consumer goods sector was relatively better.Services grew at the rate of 7.8% per annum.Tenth Five Year Plan (2002 - 2007)The major objectives were as under:To attain a growth rate of 8%.Reduction of poverty ratio to 20% by 2007 and to 1.0% by 2012.Providing gainful high quality employment to the addition to the labour force over the TenthPlan period.Universal access to primary education by 2007.Reduction in gender gaps in literacy and wage rates by at least 50% by 2007.Reduction in decadal rate of population growth between 2001 and 2011 to 16.2%.Reduction of poverty ratio by 5 percentage points by 200720 point program was introduced.Increase in literacy rate to 72% within the plan period and to 80% by 2012.Providing gainful and high-quality employment at least to the addition to the labour force.Reduction of Infant Mortality Rate (IMR) to 45 per 1000 live births by 2007 and to 28 by2012.Reduction of Maternal Mortality Rate (MMR) to 20 per 1000 live births by 2007 and to 10 by2012.Increase in forest and tree cover to 25% by 2007 and 33% by 2012.All villages to have sustained access to potable drinking water by 2012.Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012.
13The plans have traditionally focused on setting national targets, but it has been found thatthere is a variation in the performance of different States. The Tenth Plan focused on waysand means of correcting the regional imbalance.Currently, eight States, with poor health and demographic indices, constitute 44.7% of Indiaspopulation. Special efforts were made during the Tenth Plan to enable these States to fullyachieve their potential.The plan laid great emphasis on agriculture since growth in this sector is likely to lead to thewidest dissemination of benefits, especially to the rural poor including agricultural labour.The growth strategy of the Tenth Plan seeked to ensure the rapid growth of those sectors which aremost likely to create high quality employment opportunities. These included such sectors asconstruction, real estate, and housing, transport, Small Scale Industries, modern retailing,entertainment, IT-enabled services, etc.Target growth: 8.1% Growth achieved: 7.7%Achievements of Tenth PlanThenation registered a growth rate of 12.02 % at the beginning of the year and 8.89%during the 4thyear (2010-11) of 11thplan period.Regarding sectorial growth rates Agricultural sector unlike during the 10thplan periodshowed certain signs of recovery and posted an average growth of 7.16% during four yearperiod.The industries sector during this period grew at 6.82%.The services sector continuing its predominance posted a growth rate of 8.84% during the11thplan period.The food grain productions has recorded 204.21 lakh tonnes during the year 2008-09 andslipped to 156 lakh tonnes during 2009-10 due to seasonal condition and 189.78 lakhtonnes during 2010-11.4. Education: 53% of them are covered under Bank to make education more meaningfuland linkage effective, the State Government has been Social Harmony implementingseveral schemes of its own and from the year 2008-09, applications and those sponsoredby the Government of India. Sanction of scholarships to S.C, S.T and B.C133.64 lakhchildren have been enrolled in students were made ONLINE to ensure that differentlevels with 53.40% in the Primary scholarships reach the students by the 1st offstage.Government is taking all necessary every month and also to ensure transparency measuresto retain children in schools. By keeping all the information in the public during 2009-10,the dropout rates have fallen domain. To 15.80% at Primary level and 53.36% at theApart from the above, other educational and Secondary level. Economic developmentprogrammes are also an amount of Rs. 3530.21 crores has been being implemented to SC,ST, BC and spent towards General Education in the State Minorities. During the 4-yearperiod of the 11th Plan.
14Failures of 10thfive year planThe share of agriculture in GDP has consistently declined over the years and was merely 18.5per cent in 2006-07. This sector continues to be the source of livelihood for more than 50crore people and provides employment to 52 per cent of the workforce. However, theperformance of the agricultural sector has been highly unsatisfactory. The rate of growth ofthis sector was merely 2.5 percent per annum in the ninth and tenth five year plans. Thisindicates a situation of almost stagnation in the agricultural sector of the economy. As a resultthe condition of the rural poor has further deteriorated. In other words the so called high rateof growth of almost 8 per cent annum has failed to improve the lot of the poor people.The unemployment problem: The unemployment rate has risen from 7.31 per cent in 1999-2000 to 8.28 percent in 2004-05. The number of unemployment rose to as high as 3.47 crorein 2004-05 from 2.03 crore in 1993-94. Increasing unemployment is a cause of concern.Unrealistic power and energy target: The tenth plan targeted capacity addition of 41,110MW in the power sector. However the actual achievement at 21,080 MW is just about halfthe target. It is estimated that the average energy shortage in the country is 10 per cent andthe peak hour shortage is over 13 per cent. In some states the peak hour shortage is as high as25 per cent.Eleventh Five Year Plan (2007-2012)The eleventh plan has the following objectives:1. Income & PovertyAccelerate GDP growth from 8% to 10% and then maintain at 10% in the 12th Plan inorder to double per capita income by 2016–17Increase agricultural GDP growth rate to 4% per year to ensure a broader spread ofbenefitsCreate 70 million new work opportunities.Reduce educated unemployment to below 5%.Raise real wage rate of unskilled workers by 20 percent.Reduce the headcount ratio of consumption poverty by 10 percentage points.2. EducationReduce dropout rates of children from elementary school from 52.2% in 2003–04 to 20%by 2011–12
15Develop minimum standards of educational attainment in elementary school, and byregular testing monitor effectiveness of education to ensure qualityIncrease literacy rate for persons of age 7 years or above to 85%Lower gender gap in literacy to 10 percentage pointIncrease the percentage of each cohort going to higher education from the present 10% to15% by the end of the plan.3. HealthReduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live birthsReduce Total Fertility Rate to 2.1Provide clean drinking water for all by 2009 and ensure that there are no slip-backsReduce malnutrition among children of age group 0–3 to half its present levelReduce anaemia among women and girls by 50% by the end of the plan4. Women and ChildrenRaise the sex ratio for age group 0–6 to 935 by 2011–12 and to 950 by 2016–17Ensure that at least 33 percent of the direct and indirect beneficiaries of all governmentschemes are women and girl childrenEnsure that all children enjoy a safe childhood, without any compulsion to work5. InfrastructureEnsure electricity connection to all villages and BPL households by 2009 and round-the-clock power.Ensure all-weather road connection to all habitation with population 1000 and above(500 in hilly and tribal areas) by 2009, and ensure coverage of all significant habitationby 2015Connect every village by telephone by November 2007 and provide broadbandconnectivity to all villages by 2012Provide homestead sites to all by 2012 and step up the pace of house construction forrural poor to cover all the poor by 2016–176. Environment
16Increase forest and tree cover by 5 percentage points.Attain WHO standards of air quality in all major cities by 2011–12.Treat all urban waste water by 2011–12 to clean river waters.Increase energy efficiency by 20%Target growth:8.33% Growth achieved:7.9%Twelfth five-year plan (2012-2017The aim of the 12thfive year plan is to renew Indian economy and use the funds from government inimproving the facilities of education, sanitation and health. This plan has seen a three-fold increasein the budget constraints when compared to that of the 11th five-year plan. The plan would infuse ahuge fund of 47.7 lakh crore rupees and this will help to accomplish the economic growth to anaverage level of 8.2 percent.12th five-year plan is guided by the policy guidelines and principles to revive the following Indianeconomy, which registered a growth rate of meager 5.5 percent in the first quarter of the financialyear 2012-13.The plan aims towards the betterment of the infrastructural projects of the nation avoiding all typesof bottlenecks. The document presented by the planning commission is aimed to attract privateinvestments of up to US$1 trillion in the infrastructural growth in the 12th five-year plan, which willalso ensure a reduction in subsidy burden of the government to 1.5 percent from 2 percent of theGDP (gross domestic product) & the UID (Unique Identification Number) will act as a platform forcash transfer of the subsidies in the plan.The plan aims towards achieving a growth of 4 percent in agriculture and to reduce poverty by 10percentage points, by 2017.Indian economy at presentThe Indian economy is the worlds tenth-largest by nominal GDP and third-largest by purchasingpower parity (PPP) it is becoming one of the fastest-growing major economies in the world.According to CRISIL Research Consumption the GDP of India is growing at a higher rate of 6.7 percent in 2013-14 in comparison to 5.5 per cent estimated for the current fiscal due to a revival inconsumption.India is expected to be the second largest manufacturing country in the next five years,followed by Brazil as the third ranked country it is also been adjourned the fifth best country in theworld for dynamic growing businesses, as per the Grant Thornton Global Dynamism Index. Theindex gives a reflection of how suitable an environment the country offers for dynamic businesses.Moreover India is the 5thlargest exporter and importer of commercial services preceded by Europeancountries and US. It is also the 4thlargest foreign exchange reserve holder in the world after China,Japan and Russia.
17The Fiscal PolicyRevised BudgetTargets forEstimates2012 – 13BudgetEstimates2012-13Targets for2014-15 2015-16Effective RevenueDeficit2.71.8 0.9 0.0Revenue Deficit 3.9 3.3 2.7 2.0Fiscal Deficit 5.2 4.8 4.2 3.6Gross Tax Revenue 10.4 10.9 11.2 11.5Total outstandingliabilitiesat the end of the year45.9 45.7 44.3 42.3Fiscal Outlook for 2013-14 to 2015-16Government undertook path of fiscal consolidation with mid-year course correction in 2012-13. Fiscal policy 2013-14 has been designed to meet the macro-economic challenges faced by Indiain an uncertain international economic situation. By bringing back the focus on fiscal consolidationprocess, government has undertaken measures to reduce the fiscal deficit from 5.2 percent of GDP inRE 2012-13 to 4.8 per cent of GDP in BE 2013-14. This reduction in fiscal deficit by 0.4 percentagepoint is largely revenue driven. While expenditure is retained at the same level of 14.6 per cent ofGDP in BE 2013-14, increase in tax revenue and non-tax revenue is of the order of 0.4 per cent and0.2 percent of GDP respectively.Revenue deficit has been estimated at 3.3 percent of GDP in Budget estimate 2013-14. Therevenue deficit is marginally lower than BE 2012-13 level of 3.4 percent. However, it is substantiallylower than the revised estimate 2012-13 at 3.9 per cent.It is expected that with better expendituremanagement the revenue deficit will be reduced to 2.7 per cent and 2.0 per cent in financial year2014-15 and 2015-16 respectively.Gross tax revenue is estimated to increase from 10.4 per cent of GDP in RE 2012-13 to 10.9per cent in BE 2013-14 (reflecting growth of 19.1 per cent over RE 2012-13), which is however stilllower than peak of 11.9 per cent of GDP achieved during 2007-08 At end of 2012-13, a total liabilityof the Government is estimated at 45.9 percent of GDP which will reduce to 45.7 per cent by the endof 2013-14. Continuing the declining trend it is likely to reduce to 44.3 per cent in 2014-15 and 42.3per cent in 2015-16.
18At end of 2012-13, a total liability of the Government is estimated at 45.9 per cent of GDPwhich will reduce to 45.7 per cent by the end of 2013-14. Continuing the declining trend it is likelyto reduce to 44.3 percent in 2014-15 and 42.3 per cent in 2015-16.Monetary Measures by RBI (2012-13)Repo Rate:The bank rate has been decreased from 8.00% to 7.75% (w.e.f.29/01/2013)Bank Rate:The bank rate has been decreased from 9.00% to 8.75% (w.e.f. close of business of 29/01/2013)Cash Reserve Ratio:The CRR has been decreased from 4.25% to 4.00% (w.e.f 09/02/2013)Statutory Liquidity Ratio (SLR):SLR has been decreased from 24% to 23% (w.e.f. 11/08/2012) (announced on 31/07/2012)Inflation RateIn India, the wholesale price index (WPI) is the main measure of inflation.Wholesale price index is divided into three groups: Primary Articles (20.1% of total weight), Fueland Power (14.9%) and Manufactured Products (65%). Food Articles from the Primary ArticlesGroup account for 14.3% of the total weight. The most important components of the ManufacturedProducts Group are Chemicals and Chemical products (12% of the total weight); Basic Metals,Alloys and Metal Products (10.8%); Machinery and Machine Tools (8.9 %); Textiles (7.3%) andTransport, Equipment and Parts (5.2%).The annual rate of inflation, based on monthly WPI, is 6.62% as on January of 2013.Growth RateThe growth rate is measured by the GDP (gross domestic product). The present GDP of India is4.5%Greece Economy OverviewGreece officially the Hellenic Republic is a country in Southeast Europe. Athens is thenations capital and largest city, its metropolitan area also including the municipality of Piraeus.According to the 2011 census, Greeces population is slightly less than 11 million. It is located at the
19crossroads of Europe, Asia and Africa and has land borders with Albania, the Republic of Macedoniaand Bulgaria to the north, and Turkey to the northeast.Greece has been a member of NATO since 1952, joined the European Union in 1981, andadopted the euro in 2002. An enormous Greek sovereign debt crisis has threatened the overallstability of the eurozone. Large rescue packages have provided emergency loans from the EU, theEuropean Central Bank, and the International Monetary Fund in exchange for severe austeritymeasures. A caretaker government was formed in November 2011. When elections held in May 2012failed to produce a government, new elections in June led to formation of a “pro-Euro” coalition ledby the center-right New Democracy party along with the center-left Pan-Hellenic SocialistMovement and the Democratic Left Party. Greece‟s economy depends heavily on tourism andservices.Compounding an environment of worsening competitiveness and political volatility in Greeceis the continuing lack of economic freedom. Major fiscal weaknesses exposed and aggravated by thedebt and employment crisis have not been sufficiently addressed as the country enters its fifthstraight year of recession. Double-digit deficits and large increases in borrowing have continued evenwhile multinational financing packages have been approved to keep the government solvent.Unemployment, particularly among young people, continues to rise, and adjustments in marketconditions have been stifled or delayed by public unions and other special interests.As the Greek economy continues to undergo an extended period of economic and political turmoil,bold and committed policy actions are critically needed to restore fiscal sustainability, enhancelabour market flexibility, and tackle systemic corruption.The Greek economy was one of the fastest growing in the Eurozone from 2000 to 2007; during thisperiod it grew at an annual rate of 4.2%, as foreign capital flooded the country. Despite that, thecountry continued to record high budget deficits each year.Financial statistics reveal solid budget surpluses existed in 1960-73 for the Greek generalgovernment, but since then only budget deficits were recorded. In 1974-80 the general governmenthad an era with moderate and acceptable budget deficits (below 3% of GDP). Unfortunately this wasfollowed by a long period with very high and unsustainable budget deficits in 1981-2014 (above 3%of GDP).According to an editorial published by the Greek conservative newspaper „Kathimerini‟, large publicdeficits were indeed one of the features that have marked the Greek social model since therestoration of democracy in 1974. After the removal of the right-wing military junta, the governmentwanted to bring disenfranchised left-leaning portions of the population into the economicmainstream. In order to do so, successive Greek governments have, among other things, customarilyrun large deficits to finance public sector jobs, pensions, and other social benefits.First bailout loan and austerity measures (May 2010 - June 2011)
20On 1 May 2010, the Greek government announced a series of austerity measures. The nextday the Eurozone countries and the International Monetary Fund agreed to a three-year €110 billionloan retaining relatively high interest rates of 5.5%, conditional on the implementation of austeritymeasures. Credit rating agencies immediately downgraded Greek governmental bonds to an evenlower junk status. This was followed by an announcement of the ECB on 3 May that it will stillaccept as collateral all outstanding and new debt instruments issued or guaranteed by the Greekgovernment, regardless of the nations credit rating, in order to maintain banks liquidity.The new austerity package was met with great anger by the Greek public, leading to massiveprotests, riots and social unrest throughout GreeceSecond bailout loan and austerity measures (July 2011 - present)The EU and IMF provided Greece with a second financial package of 130 billion Euros.Under the agreement, Greeces private creditors would take more losses. The bailout package hopesto cut its national debt to 120% of its GDP by 2020.Some of the austerity measures planned are as followTAXATIONTaxes will increase by 2.32bn euros this year, with additional taxes of 3.38bn euros in2012, 152m euros in 2013 and 699m euros in 2014.A solidarity levy of between 1% and 5% of income will be levied on households to raise1.38bn euros.The tax-free threshold for income tax will be lowered from 12,000 to 8,000 euros.There will be higher property taxesVAT rates are to rise: the 19% rate will increase to 23%, 11% becomes 13%, and 5.5%will increase to 6.5%.The VAT rate for restaurants and bars will rise to 23% from 13%.Luxury levies will be introduced on yachts, pools and cars.Some tax exemptions will be scrappedExcise taxes on fuel, cigarettes and alcohol will rise by one third.Special levies on profitable firms, high-value properties and people with high incomes willbe introduced.PUBLIC SECTOR CUTSThe public sector wage bill will be cut by 770m euros in 2011, 600m euros in 2012, 448meuros in 2013, 300m euros in 2014 and 71m euros in 2015.
21Nominal public sector wages will be cut by 15%.Wages of employees of state-owned enterprises will be cut by 30% and there will be a cap onwages and bonuses.All temporary contracts for public sector workers will be terminated.Only one in 10 civil servants retiring this year will be replaced and only one in 5 in comingyears.SPENDING CUTSDefence spending will be cut by 200m euros in 2012 and by 333m euros each year from 2013to 2015.Health spending will be cut by 310m euros this year and further 1.81bn euros in 2012-2015,mainly by lowering regulated prices for drugs.Public investment will be cut by 850m euros this year.Subsidies for local government will be reduced.Education spending will be cut by closing or merging 1,976 schools.CUTTING BENEFITSSocial security will be cut by 1.09bn euros this year, 1.28bn euros in 2012, 1.03bn euros in2013, 1.01bn euros in 2014 and 700m euros in 2015.There will be more means-testing and some benefits will be cut.The government hopes to collect more social security contributions by cracking down onevasion and undeclared work.The statutory retirement age will be raised to 65, 40 years of work will be needed for a fullpension and benefits will be linked more closely to lifetime contributions.PRIVATISATIONThe government aims to raise 50bn euros from privatisations by 2015, including:Selling stakes this year in the betting monopoly OPAP, the lender Hellenic Postbank, portoperators Piraeus Port and Thessaloniki Port as well as Thessaloniki Water.It has agreed to sell 10% of Hellenic Telecom to Deutsche Telekom for about 400m euros.Next year, the government plans to sell stakes in Athens Water, refiner Hellenic Petroleum,electricity utility PPC, lender ATEbank as well as ports, airports, motorway concessions,state land and mining rights.It plans further sales to raise 7bn euros in 2013, 13bn euros in 2014 and 15bn euros in 2015.