PRESENTED BY - GROUP
INDIA AS AN EMERGING ECONOMY
One of the largest emerging economy
Huge investment opportunities
Low wage rate
More productive manufacturing sector
Strong Banking sector
Huge talent pool in a rapidly growing middle class
Forward growing trend in middle class
Forward growing trend in urbanization
HUMAN DEVELOPMENT INDEX
India ranks 136 in human development Index
South Africa 0.629
MAJOR CHALLENGES IN INDIAN ECONOMY
Sustaining and achieving annual average growth of 9-10 %
Providing investor friendly laws and tax system
Current Account Deficit
Developing world-class infrastructure for sustaining growth in all the
sectors of the economy
Depreciation of Currency
Political environmental barrier for FDI
Allowing foreign investment in more areas
2012 4.7 3.2
2013 4.8 4.8
2014 5.3 6.2
2015 5.5 6.6
2016 5.7 7.1
2012 2013 2014 2015 2016
DEVELOPING COUNTRIES INDIANN GDP
Projected Growth of India GDP
Fiscal policy deals with the taxation and expenditure decisions of the
Fiscal deficit for the current fiscal year is 4.6 % of the GDP ,
smaller than 4.9 % recorded previous year
Government is focusing on tax reforms and targeting social
expenditures to achieve fiscal consolidation
It aimed at reducing fiscal deficit, revenue deficit & borrowings from
The part of the economic policy which regulates the level of money in
the economy in order to achieve certain objectives.
Central Bank of the country controls the monetary policy of the
It aims at price stability , economic growth , employment & flow of
CURRENT MONETARY POLICIES TOOLS
RBI increases bank rate from 8.75% to 9% on 28th January,2014
Present cash reserve ratio is 4% continuing from 30th December 2012
Current SLR is 23% since 11th October,2012
Repo rate has increased from 7.75% to 8% on 28th January,2014
Reserve repo rate has also increased from 6.75% to 7% on 28th
BALANCE OF PAYMENT TRENDS IN JULY-SEPTEMBER 2013
• India’s current account deficit (CAD) narrowed sharply to US$ 5.2 billion in
Q2 of 2013-14 from US$ 21.0 billion.
• Merchandise exports increased by 11.9 per cent to US$ 81.2 billion in Q2 of
• Merchandise imports at US$ 114.5 billion, recorded a decline of 4.8 per
cent in Q2 of 2013-14 as compared with a decline of 3.0 per cent in Q2 of
• As a result, the merchandise trade deficit (bop basis) contracted to US$
33.3 billion in Q2 of 2013-14 from US$ 47.8 billion
SOURCE: RBI WEBSITE
• Currently india's total external debt is 21.7% of gdp.
• Foreign debt service ratio ( principal and interest payments on the foreign debt as a
percent of t0tal exports of goods and services) is 5.9 percent in 2012-13.
• India aiso had a sizeable cushion of international reserves totaling us $ 291 billion in
jan 2014 to draw on if there should be capital flight out of the country for any reason.
FREE TRADE ZONES
• Free trade zones were established by the government of india to promote export-
oriented production. This step was taken in order to increase exports and thus reduce
the current account deficit.
• Special economic zones (sez)
• Export processing zones( epz)
• Software technology parks (stp)
• Service sector is a key driver of growth.
• India is expected to grant banking licenses to private-sector banking and
non-banking finance companies.
• Foreign banks play important role in financial innovation.
• Exports proceeds payments must be received only through banking