Economic Development 2012Economic Development 2012The Indian SceneThe Indian Scene2011-12 / 2012-132011-12 / 2012-13
•Economic development consists of the reduction or elimination ofpoverty, inequality and unemployment within the context of a growingeconomy•Traditional economic measures: GDP: is the market value of all final goods and services producedwithin a country in a given period of time GNP: is the market value of all final goods and services producedby permanent residents of a country in a given period of timeECONOMIC DEVELOPMENT
MAJOR INDICATORS OF ECONOMIC DEVELOPMENT►Gross Domestic Product (GDP)Gross domestic product is a measure of economic activity in a country. It is calculatedby adding the total value of a country’s annual output of goods and services.GDP = private consumption +investment + public spending+ the change ininventories +(exports - imports).It is usually valued at market prices; by subtracting indirect tax and adding anygovernment subsidy.►Gross National Product (GNP)GNP is calculated by adding to GDP the income earned by residents from investmentsabroad, less the corresponding income sent home by foreigners who are living in thecountry.►National DebtNational debt is the total outstanding borrowing of a country’s government (usuallyincluding national and local government).►Trade BalanceThe balance of trade (or net exports, sometimes symbolized as NX) is the differencebetween the monetary value of exports and imports of output in an economy over acertain period.
►Credit RatingA credit rating estimates the credit worthiness of an individual, corporation, or even acountry. It is an evaluation made by credit bureaus of a borrower’s overall credithistory. A credit rating is also known as an evaluation of a potential borrower’s abilityto repay debt, prepared by a credit bureau at the request of the lender.►Distribution of WealthThe distribution of wealth is a comparison of the wealth of various members or groupsin a society. It differs from the distribution of income in that it looks at the distribution ofownership of the assets in a society, rather than then current income of members ofthat society.Wealth is a person’s net worth, expressed as:Wealth = Assets − Liabilities
77COMPARISON OF GNPCOMPARISON OF GNPGNP Per Capita (US $)Country Exchange rate PPPUK 24,500 23,550USA 34,260 34,260Zimbabwe 480 2,590Bangladesh 380 1,650China 840 3,940India 460 2,390Sri Lanka 870 3,470
DRIVERS OF ECONOMIC DEVELOPMENTDrivers of economic development are the economy operating sectors which areresponsible for the growth and development of country’s economy. In Indian contextthe major operating sectors are:AgricultureIndian Industry.Balance of Payments.Exchange Rate.Foreign Direct Investment.
AGRICULTURE•Share in National Income: The contribution from agriculture has beencontinuously falling from 55.1% in 1950-51 to 37.6% in 1981-82 & further to 18.5%in 2011-12. But agriculture still continues to be the main sector because it provideslivelihood to a majority of the people.•Largest Employment Providing Sector: in 1951, 69.5% of the workingpopulation was engaged in agriculture. This percentage fell to 66.9% in 1991 & to56.7% in 2001.•Provision of Food Surplus to the Expanding Population: Because of theheavy pressure of population in labor-surplus economies like India & its rapidincrease the demand for food increases at a fast rate. Experts foresee that by theend of 11thfive year plan (i.e., 2011-2012), the demand for food-grains is expectedto increase to 280.6 million tons. Meeting this demand would require 2% growthper annum. The challenge facing the country is clear as during the last 10 yearsthe food-grains have been growing at a meager 0.48%.
Industry accounts for 28% of the GDP and employ 14% of the total workforce.AUTOMOBILEThe overall Indian automobile industry grew by 12.12per cent in 2011-12 by selling 17.3 million unitsdriven largely by demand for two wheelers and lighttrucks.Sales growth of 12.46 per cent in 2012 .BIOTECHNOLOGYGrew 33 per cent in 2012 and is likely toreach $10 billion revenue by 2015.CEMENTSecond largest producer of qualitycement in the world.The 330 MT industry grew by 6.4 percent in 2011-12.
EDUCATION AND TRAINING.Market size of this sector in 2012: US$ 34 billionRise : 14 per centHigher Education Sector rise: 12 per centENGINEERINGEngineering goods accounts for 30.5% of theshare in index of industrial production, 29.9%of share in total investment and 62.8% of sharein foreign collaborations. Engineering exportsincreased by 17 percentFOOD INDUSTRYIndia is the world’s largest produceraccounting for around 17% of theglobal milk production.
FOOD PROCESSING INDUSTRYIndia has emerged as world’s top rice exporterwith total export of 6.5-7 million tonnes whichis around 7% of the country’s total production.GEMS AND JEWELLERYThis sector in 2012 has gone up byabout 5% and accounts for India’s14% of the total merchandise exports.HEALTHCAREThe size of Indian healthcare deliverymarket was Rs. 2.6 lakh crore in 2012.Contribution to GDP- 1.6%INFORMATION TECHNOLOGYContribution to GDP-7.5 percent.Revenue generated in 2012- US $ 87.6billionGrowth: 16%
MANUFACTURINGTop five sub sectors are food products, basic metals,rubber, petrochemicals, chemicals and electricalmachinery. They all account for over 66% of the totalrevenues in the manufacturing industry. MEDIA & ENTERTAINMENTTelevision: value- 32,900 croreCAGR: 17 per cent.Radio: Value-1,200 croreGrowth: 15 per centDigitization: Revenue: 8% of total M&E industry.CAGR: 30 per centMusic Industry: Revenue- 1,100 croreGrowth: 7%Film Industry: Revenue generated-1500 croreCAGR: 10.1 %Growth: 13.5%Print : Growth- 9.3 %
OIL & GASDiesel & Petrol: Growth of consumption- 7 %Growth in production: 3.144 million metric tonnesGas: Increase in consumption-160% since 1995CAGR- 19.5%PHARMACEUTICALSGrowth by 9%FDI attracted- US$ 9,173.50 millionREAL ESTATEContribution to GDP- 6%
RESEARCH & DEVELOPMENTGrowing rate- 9 %India ranks 1stin the Global EngineeringResearch and Development and Design(ER&D) outsourcing industry with a 22 %share in the revenue.RETAILFDI allowed: 51%Growth-5%FDI worth US$ 44,4 millionSERVICESContribution to GDP- 7.5%Revenue- US$ 100 billionEmployment to 2.8 million
TELECOMMUNICATIONTele density increased to 78.1 %.Contribution to GDP- 3.8%Added 8 million subscribers in 2012TEXTILESAccounts for 20% of manufacturingoutput. Total size of textile industry inIndia is Rs. 3.75 lakh crore.TOURISM AND HOSPITALITYContribution to GDP: 6.23 %Employment opportunity: 8.78 %CAGR: 13%FDI attracted: US$ 2.64 billion.
BALANCE OF PAYMENTSBalance of payments is the systematic record of a country’s monetary transactionswith the rest of the world in a year. Its main component are :a)The Current Account- all import and export of goods and services.b)The Capital Account- all capital flows-inflows and outflows-relating to FDI, NRIDeposits etc.c)The Official Reserve Account- variations in foreign exchange reserves.For the year 2012•Current Account Balance: $ -44,281 million•Total Capital Account: $ 59,747 million.•Reserve and Monetary Gold: $ 13050 million.