Why India? – Quote Unquote ―India has evolved into one of the worlds ―I have never seen ―India is now truly a leading technology India so land of opportunity‖. centers―. dynamic, vibrant and full of business opportunities‖. Craig Barrett Intel John Redwood Corporation By 2032, India will be Peter Loescher Economic Competitiveness among the three President and Chief Executive Policy Group, UK largest economies in Siemens the world. ―The Indian market has two ―We came to India for the core advantages - an costs, stayed for the BRIC increasing presence of quality and are now Report, Gold multinationals and an upswing investing for innovation‖. man Sachs in the IT exports‖. ―India is a Travyn- DanScheinman, Cisco developed country ―India is a very exciting Rhall, System Inc. as told to as far as intellectual market and the luxury ACNielsenBusiness Week, August capital is car segment is growing 2005 concerned‖. exponentially here‖. Jack Welch Mr Paul de Voijs General Electric Managing Director 17 Volvo Car India
India Nominal GDP Rate Fiscal year end March 1800 1600 1400 1200Billion USD 1000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 Billion Dollars 724.0166667 841.8964706 977.7305882 1187.792128 1284.366863 1750.654889 Source : Ministry of Finance, Annual Report
As Percentage of GDP 12.00% 10.00% 0.00% 2.00% 4.00% 6.00% 8.00%Year1981198219831984198519861987198819891990199119921993199419951996199719981999 GDP Growth rate2000200120022003200420052006200720082009 India GDP Growth Rate GDP Growth rate
World GDP Share GDP Share 1% United States 2.9% 2% Japan 2.94% India 3% 19% Middle East Germany 3.96% Russia Brazil 4.97% United Kingdom 5.82% France 5.4% Japan Other Pakistan IndiaSource : World Economic Outlook , IMF
INDIAN ECONOMY SEVENTH Largest in size. SECOND Most Populous country in the world. NINTH largest in the world by nominal GDP.
THIRD Largest by purchasing power parity (PPP). SECOND fastest growing economy in the world.
GOLDMAN SACHS PREDICTIONS India will become THIRD largest economy of the world by 2032 behind US and China. Indias GDP in current prices will overtake France and Italy by 2020. Germany, UK and Russia by 2025. Japan by 2035.
INDIAN ECONOMY India is a mixed economy capitalist market economy socialist command economy
Indias economy is diverse and encompasses –agriculture – handicrafts –Textile –Manufacturing – Multitude of services.
Two-thirds of the Indian workforce still earn their livelihood through agriculture. Services are a growing sector and are playing an increasingly important role in Indias economy.
FEATURES OF INDIAN ECONOMY India is a major exporter of highly-skilled workers in software and financial services, and software engineering. Following sectors are showing strong potential with higher growth rates. Manufacturing Nanotechnology Pharmaceutical Telecommunication Biotechnology Shipbuilding Aviation Tourism
NATURAL RESOURCES Indias total cultivable area is 1,269,219 km² (56.78% of total land area) India has a total water surface area of 314,400 km² and receives an average annual rainfall of 1,100 mm.
Irrigation accounts for 92% of the water utilization, and comprised 380 km² in 1974, and is expected to rise to 1,050 km² by 2025 In 2008, India had the worlds THIRD largest fishing industry.
• Indias oil reserves, found in – Bombay High off, the coast of Maharashtra, – Gujarat, – Rajasthan and – in eastern Assam meet 25% of the countrys demand.
Agriculture Agriculture is the mainstay of the Indian economy. Livelihood of almost two thirds of the work force in the country.
AGRICULTURE Agriculture accounts for approx. 18% of Indias GDP. Largest producer in the world of milk cashew nuts, coconuts tea ginger turmeric and black pepper
AGRICULTURE Second largest producer of wheat, rice, sugar, groundnut and inland fish
AGRICULTURE Worlds LARGEST cattle population. THIRD largest producer of tobacco. India accounts for 10% of the world fruit production with LARGEST in the production of banana.
AGRICULTURE More than 52% of Indias population depend on agriculture for employment. Contributes 17.5% to GDP.
INDUSTRY India is FOURTEENTH in the world in factory output. They together account for 27.6% of the GDP. Employs 17% of the total workforce.
INDUSTRY Metal and machinery & transport equipment industries are the two major industries. Each one of these account for about one- fifth of GVA(Gross Value Addition) in the organized manufacturing sector. Chemical Industry accounts for about 13% of GVA of the total organized manufacturing sector.
SERVICES India is FIFTEENTH in services output. India stands out for the size and dynamism of its services sector.
SERVICES Accounts for 55.2% share in GDP. Growing at 10% annually.
Contributes to about 25% of total employment. Over one-third of total exports.
Employment Distribution of Service Sector Primary Secondary Tertiary 0.00% 25.40% 55.90% 18.70%
RETAIL The Indian retail industry is the FIFTH largest in the world by economic value. Accounts for about 15% of the GDP.
RETAIL Retail market is estimated to be US $600 billion Has 3 year compounded growth rate of 46.64%. Indian retail industry is one of the fastest growing industry in Indian economy.
RETAIL Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail. Even single-brand retail was limited to 51% ownership and a bureaucratic process
TELECOM SECTOR India has the third largest telecommunication network in the world. The SECOND largest in terms of number of wireless connections. Indias broadband growth THIRD fastest in the world.
TELECOM India added more than 2.5 million new connections of broadband in 2010. Stands at 13th in the world in terms of overall subscriber numbers as of 2011.
INVESTMENTS The Ernst & Young European Attractiveness Survey 2006 has placed India as the most preferred location for call centres and back office functions. India also figured at number five among the top 10 countries for research and development centres, after US,Canada, Germany, UK and France.
INVESTMENTS India has one of the highest exposures to FII inflows among other emerging economies. FIIs formed nearly 70% of foreign investment flow, in China and Brazil the percentage was 26% and 30%, respectively, in 2005.
BANKING SECTOR Prime Minister Indira Gandhi nationalized 14 banks in 1969, followed by six others in 1980 Since then, the number of bank branches has increased from 10,120 in 1969 to 1,15,910 in 2008 Currently, India has 88 scheduled commercial banks (SCBs) — 28 public sector banks, 29 private banks and 31 foreign bank
BANKING They have a combined network of over 53,000 branches and 17,000 ATMs. The public sector banks holds over 75% of total assets of the banking industry. The private and foreign banks holding 18.2% and 6.5% respectively .
INFRASTRUCTURE Since independence, India has allocated nearly half of the total outlay of the five-year plans for infrastructural development. Invested about USD 500 billion in infrastructure: power, telecommunication, roads, railways and oil pipelines, in the five years ending March 2012.
POWER Fifth largest electricity generation capacity in the world. Large transmission and distribution network. Per capita electricity consumption 704kWh during 2007-08
POWER• Currently, 7,200 MW installed capacity of power generation from renewable sources.• India has the target of adding a capacity of 75,000 mw during 2007-12, the 11th Plan period.
EXPORTS India is the 17th largest exporter. Indias exports were stagnant for the first 15 years after independence. India’s Exports amount to 22% of India’s GDP..
EXPORTS Minerals constitute the single largest export item, accounting for 16% of exports. India is leading exporter of Semi precious and precious stones, Vehicles and parts Electrical equipment and services. India’s main export partners are United States, United Arab Emirates , China and Hong Kong.
IMPORTS 11th largest importer in the world. India is poor in oil resources and is currently heavily dependent on coal and oil imports for its energy needs.
IMPORTS Other imported products are: machinery, gems, fertilizers chemicals. Main import partners are UAE, China and United States.
BALANCE OF PAYMENTS• India has gradually been repaying its debts. Since independence, Indias balance of payments on its current account has been NEGATIVE.
BOP Indias exports have been consistently rising, covering 80.3% of its imports in 2002–03, up from 66.2% in 1990–91.• The net capital flows increased substantially to 3.8 per cent of GDP in 2009-10
Foreign Exchange Reserves• Beginning from a low level of US$ 5.8 billion at the end of March 1991.• India’s foreign exchange reserves gradually increased to US$ 25.2 billion March 1995.
• The reserves reached their peak at US$ 314.6 billion at end-May 2008.• Currently our forex reserves amount to US $297.3 billion.
ISSUES Wealth distribution is fairly uneven, with the top 10% of income groups earning 33% of the income. Still 17.59% (over 230 million) of Indians still live below the national poverty line.
Poverty and Inequality The poverty ratio is estimated at 28.3% in rural areas, 25.7% in urban areas, and 27.5% for the country as a whole . According to HDR 2010, inequality in India for the period 2000-10 in terms of the income Gini coefficient was 36.8.
AGRICULTURE• International comparisons reveal that the average yield in India is generally 30% to 50% of the highest average yield in the world.• Land holdings is very small – less than 20,000 m²
CORRUPTION• 2G Telecoms licence Scam depriving the government of up to USD 39 billion in revenues• Adarsah Housing scam 2010 : The apartments with a value of USD 1.8 million were sold for as little as USD 130,000 each
• Commonwealth Games 2010 scam : sporting extravaganza which cost up to Rs. 70,000 crore (USD 6 billion)• 30 percent have criminal cases pending against Lok Sabha members.
Transitions in Economy From a shortage economy of food and foreign exchange, India has now become a surplus one. From an agro based economy it has emerged as a service oriented one. From the low-growth of the past, the economy has become a high-growth one in the long-term.
Joined the aid givers club. India has become a net creditor to IMF, since July 2003. Emerging as Knowledge based Economy Indian Companies, more competitive and going Global