Macroeconomic Concepts of Investment & Indian Technological EnvironmentPresentation Transcript
Macroeconomic Concepts of Investment & Indian Technological Environment Group Members: Arushi (16) Beenu (19) J.Arjun (28) Karthik R (32) NitinTiwari (45) Saurabh Singh (59)
Agenda Introduction Trends of Investment in the Five Year Plans Indian Technological Environment Evolution of Technological Environment Shaping Technological environment with Investment Future prospects
INVESTMENT DEFINITION: Investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schoolings or on-the-job training like). In measures of national income and output, gross investment (represented by the variable I) is also a component of Gross domestic product (GDP). Investment is often modeled as a function of Income and Interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money.
Five Year Plans First Five Year Plan: Focused on Agriculture and thus Investment were made in dams and Irrigation projects. At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions. University Grant Commission was set up to take care of funding and take measures to strengthen the higher education in the country. Second Five Year Plan : Followed the Mahalanobis model, The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximize long-run economic growth Focused on education , Research and Heavy Industries like steel plants, railways, coal production etc.
Contd. Third to Seventh : Focused investments upon defense, energy, manufacturing industries, transportation infrastructure, secondary education, modernization of industries. Eighth: It was the beginning of privatization and liberalization in India. Focus was on Human Resource Development and Infrastructural development. Energy was also a priority. Ninth to Eleventh : The major thrust shifts from social well being and ICT towards green technologies and inclusive growth with Investment increasing majorly in health, education ,Infrastructure development and environment.
Trend of investment in S&T over the plan period
Indian Technological Environment
The Time of Independence No Great Industries 5 IITs Start of few industries 5 steel Plants (1959-65) Hindustan Aeronautics Limited(HAL) , Heavy Vehicles Factoy(HVF)
Almost every Indian company went into Technical collaboration with a foreign company and produced them in India
Even The Products were advertised as Japanese/German technology etc
Even the green revolution was largely on the Hybrid’s developed outside India.
After Liberalization Foreign companies came to India and brought the competition to India. Few companies succumbed to competition. Those that survived, grew stronger and are now challenging them. Also their arrival has meant flow of knowledge. Towards the end of 90’s Indian companies began Investing in R&D and came out with Products developed in India. Tata Indica –First Indian Car, M & M Scorpio, Indica V2, Bajaj’s DTSI Also a Change in Perspective towards technology, because of globalisation. Today we consider Maruti to be an Indian company though its substantially owned by Suzuki
Innovations from India IT companies are beginning to make Products. Infosys – Finacle, TCS –BANCS Everyone said Its impossible to build a car for Rs 1 lac, which meets all Safety standards and Emission Norms 2008 – Tata Nano made it possible Many Small cars are now Developed in India and Sold worldwide India is now the Small Car Hub of the world, Exporting more than China. Nokia’s Largest production by volume is in India.
Made in India is now beginning to get respect worldwide, Thanks in Part to the Indian IT Sector. Nokia 1100, Hyundai i10, are some products that are developed for and launched in India but sold worldwide Most of the VAS of Mobile/telecom are developed and first launched in India. This was largely aided by Government policy and arrival of Private players. Popping from nowhere Micromax is now India’s 3rd largest Mobile phone Manufacturer selling 7 lac units a month. They didn’t develop the product, Nor do they manufacture it!!
Defense & Space Technologies LCA is 4th generation Multirole aircraft developed by India. No other country has done this with crossing previos Stages. India is Developing 2 Aircraft carriers and Submarine. Is Developing 5th gen aircraft in Collaboration with Russia PSLV/GSLV Launch satellite. INSAT Satellites. IRS satellites have a resolution of 1m and is among the best in world Chandrayan ISRO now makes commercial launches, satellites and also provides Remote Sensing services.
Indian R&D spending is very low as compared to its GDP. But still India is fast emerging as an R&D hub for MNC’s because of the human Resource factor The respective ranks of India and China are 26 and 57 in business sophastication and 28 and 38 in innovation. Apart from this technology transfer and rich human capital is working hard towards developing real estate infrastructure, which is very necessary for growth of a country.
Time lag in technology introduction and absorption is decreasing in India. e.g. wifi , wimax, dish tv, DTH. FDIs and technology partnership with developed nations is possible because of sustainable infrastructure which started developing around 2000-2001. Areas of Promotion and Regulation for foreign technology Following needs to be considered : The extent and terms of equity participation. Phasing of Domestic manufacturing. Appropriateness of technology. Payment terms and Forex outflow. Restrictive terms in Agreement.
S&T Policy Till now S&T institutions and Industry interaction was minimum. Former was working on strategic and non competitive areas of R&D whereas industrial R&D was more towards incremental production problem. Move towards a market economy is compelling both to work together and synergize the alliance. Government can provide economic environment for development of different kinds of business and also to synergistic technological development, its absorption and upgradation. The increased participation of industry in decision making bodies of R&D institutions will make their programmes more attractive to industry as well as to financing such programs will be much easier.
Future Prospects As mentioned in 11th Five year plan and also from current global situation the next big investment by government will be towards Green technologies. Also the technological environment will have to develop while taking care of Nature and emission laws. Policies are and will come with more focus towards nature friendly technologies. Apart from this digital as well as social inclusion will carry the mantra of success in market.