ECONOMIC ENVIRONMENT

2. What is economic….?
Economic means “pertaining to the
production and use of income.”
Economic activities – Money earning and
spending.

3. What is environment..??
Circumstances ,influences ,stresses and
competitive , culture ,demographic ,
economic ,natural , political , regulatory
and technological factors that effects the
survival , operations , and growth of an
organization.

4. Economic Environment
 Those economic factors which have their affects on
the working of the business is known as economic
environment .
 It includes system, policies and nature of an
economy , trade cycles, economic resources , level of
income, distribution of income and wealth etc.
 The economic environment represents the
economic conditions in the country where the
international organization operates.

5.  Economic environment refers to the
aggregate of the nature of economic system
of the country, business cycles , the socio-
economic infrastructure etc.
 Economic environment is very dynamic
and complex in nature. It does not remain
the same. It keeps on changing from time to
time with the changes in an economy like the
Govt. policies, political situation.

6. Importance of Economic
Environment
 Managers study economic environment to
estimate how market trends and govt. policy
influence the performance of their companies.
 A country’s economic policies are a leading
indicator of government’s goals and it’s planned
use of economic tools and the market reforms.
 Economic development directly impacts citizens
, managers, companies ,policymakers and
institutions

7. Elements of the Economic
Environment
 Gross National Product(GNP) : the value of all
final goods and services produced within a nation in a
given year , plus the income earned by its citizens
abroad , minus the income earned by foreigner from
domestic production.

8.  Gross Domestic
Product (GDP): the
total value of all final
goods and services
produced in a country
in a given year equal
to total consumer
,investment and govt.
spending , plus the
value of exports ,
minus the value of
imports.

9. Three sectors of economy

10. These Sectors are Interdependent

12. Types Of Economic Systems

13. . Capitalism : The economic system in
which business units or factors of
production are privately owned and
governed is called Capitalism. The
profit earning is the sole aim of the
business units. Government of that
country does not interfere in the
economic activities of the country. All
the decisions relating to the
economic activities are privately
taken. Examples of capitalistic
economy :- England , Japan , America
etc.

14. 2. Socialism : Under
socialism economic
system, all the
economic activities of
the country are
controlled and
regulated by the govt.
in the interest of
public. The first country
to adopt this concept
was soviet Russia.

15. • The 2 main forms of socialism are :-
a) Democratic Socialism: All the economic
activities are controlled and regulated
by the govt. but the people have the
freedom of choice of occupation and
consumption.
b) Totalitarian Socialism: This form is also
known as communism. Under this ,
people are obliged to work under the
directions of govt.

16. 3. Mixed Economy : The
economic system in which
both public and private sectors
co-exist is known as mixed
economy. Some factors of
production are privately
owned and some are owned
by the govt. There exists
freedom of choice of
occupation and consumption .
Both the private and public
sectors plays key roles in the
development of the country.

19. Features of economic
Environment

20. • INFLATION
• EMPLOYMENT
• POVERTY
• DEBT
• INCOME DITRIBUTION
• INTEREST RATES
• BALANCE OF PAYMENTS

22. What is 'Inflation'
Inflation is the rate at which the general level of prices for
goods and services is rising and, consequently, the
purchasing power of currency is falling

23. India's consumer price
inflation came in at increased
3.28 per cent year-on-year in
September 2017, unchanged
from the previous month's five-
month high and below market
expectations of 3.6 per cent.
Food inflation slowed while
prices rose at a faster pace for
housing, fuel and clothing.

26.  Unemployment in India is projected to increase from
17.7 million last year to 17.8 million in 2017 and 18
million next year.
In percentage terms, unemployment rate will remain
at 3.4 per cent in 2017-18.
India had performed slightly well in terms of job
creation in 2016, when a "majority" of the 13.4
million new employment created in Southern Asia
happened in the country.
India's 7.6 per cent growth in 2016 helped Southern
Asia achieve 6.8 per cent growth that year.

28. What is 'Poverty'
Poverty is a state or condition in which a person or community
lacks the financial resources and essentials to enjoy a minimum
standard of life and well-being that's considered acceptable in
society.
The Government of India says that the poverty line for rural
areas is ₹ 672.8 per month and ₹ 859.6 in urban areas. This
means that many people do not have enough money. India's
proposed but not yet adopted official poverty line is ₹972
(US$14) a month in rural areas or ₹1,407 in urban areas.
India is home to 26% of the global extreme poor.S$21) a month
in cities

30. • Global Hunger IndexGlobal Hunger Index (GHI)
is an index that places a third of weight on
proportion of the population that is estimated to
be undernourished, a third on the estimated
prevalence of low body weight to height ratio in
children younger than five, and remaining third
weight on the proportion of children dying before
the age of five for any reason.

31. India has been ranked
100th among 119
developing countries on
the Global Hunger Index
(GHI), behind North
Korea, Bangladesh and
even Nepal by the
International Food
Policy Research
institute(IFPRI)

32. INDIA BETTER THAN PAKISTAN
India ties with Djibouti and Rwanda for the 100th rank, and with a
score of 31.4 of 100 (with 0 being best and 100 the worst) but its
neighbours in South Asia, Nepal, Sri Lanka and Bangladesh are
doing better than India. Only Pakistan and Afghanistan are doing
worse than India.

34. India is the largest recipient of loans from the World Bank,
amounting to $102.1 billion, between 1945 and 2015 (as on July
21, 2015), according to the Bank’s lending report
A 70% Debt to GDP Ratio is high but normal for an Emerging
Market Country.

35. INCOME DISTRIBUTION

36. • Inequality in earnings has doubled in India over
the last two decades, making it the worst
performer on this count of all emerging
economies
• The top 10% of wage earners now make 12 times
more than the bottom 10%, up from a ratio of six
in the 1990s.
• India's Gini coefficient, the official measure of
income inequality, has gone from 0.32 to 0.38,
with 0 being the ideal score.

39. The Reserve Bank of India (RBI) reduced its repo rate to 6.75%
from 7.25%, with economists having forecast it would trim rates
to 7%.
The repo rate is the level at which the central bank lends to
commercial banks.

40. The bank has been under pressure
to boost growth after inflation hit a
record low of 3.6% in August due to
falling commodity prices.
The latest cut takes interest rates in
the country to the lowest level in
four and a half years.

45. Conclusion
• India is one of the runners in the global economy. As being
relatively new to the market economy and already achieved
impressive results in many sectors, it still has a great potential for
future development. To achieve future expansion India has to
implement certain changes.
• First of all, India needs to improve its inflation control since
inflation remains one of the barriers to the development and
growth.
• t is also very important to improve governance, introduce
credible fiscal policy, and continue with liberalization of financial
markets.

46. • As it was mentioned earlier in the report India needs to
improve the social sector, raise educational standards as
well as the quality of education.
• One of the other obstacles on the way to economic growth is
infrastructure that remains an issue. However, it is a great
opportunity for investments.
• Sustainability is another important factor to consider in order
to develop the country in a more efficient and beneficial way.
If India manages to improve and implement all these points, it will
ensure a good, strong, long-term growth for the country.

47. Made by –
Navjyoti yadav
khushboo wadhwa