governing factors for making India $5 trillion economy : GDP, FDI, role of states, oil price, investment, inflation, employment, etc.,

1. Mission towards $5 trillion
Economy by 2024
Presented by
Debarun paul

2. GOVERNING FACTORS FOR MAKING INDIA $5 TN
ECONOMY
• ROLE OF STATES
• OIL PRICE
• INFLATION
• GDP
• FDI
• MOVES BY FINANTIAL
INSTITUTES
• AGRICULTURAL SECTOR
• EXPORT-IMPORT
• INVESTMENT
• EMPLOYMENT
• GROWTH IN TERMS OF $ RATE

3. • STATE GDP ACROSS INDIA VARIES
ENORMOUSLY, DRIVEN BY
POPULATION, FERTILITY AND OTHER
FACTORS.
• INDIA CANNOT DEVELOP UNLESS ITS
HIGHLY POPULATED AREAS-THE NORTH
CENTRAL-EAST REGIONS BECOME
PROSPEROUS.
• PHDCCI ORGANIZED THE ‘STATE
POLICY CONCLAVE 2019’ TO
EMPOWER STATES TO STRENGTHEN
INDIA’S FEDERAL STR OF GOVERNANCE
• MAHARASHTRA AND UP BOTH GOVT.
HAVE PUT FORTH A MISSION OF $1 TN
ECONOMY TO MATCH THE $5 TN
ECONOMY OF NATION.
ROLE OF STATES
India’s GDP rate state wise : 2018

4. CRISIS IN FINANCIAL INSTITUTIONS :
• LACK OF TRUST AMONG PRIVATE LENDERS
• NOT MATCHING REPO RATE CUT WITH LENDING
• LIQUIDITY CRISIS
• AVERSE NBFCs
Measure taken to revive financial sectors:
• 1.76 LAKH CRORE CASH INFLOWS IN BANKS BY RBI
• REVOKED ANGEL TAX FOR START UPS AND RICH INVESTORS
• BANK CONFORMING TO RBI GUIDEANCE TO CUT RATE
MOVES BY FINANCIAL INSTITUTES

5. • THE FY2018-19 ENDED WITH OVERALL
GDP GROWTH OF 6.8%, IN THE 4TH
QUARTER IT STOOD AT 5.8%
• THE ECONOMIC SURVEY SAID THAT TO
ACHIEVE THE $5 TN TARGET, THE
COUNTRY NEEDS TO GROW AT EIGHT
PERCENT RATE OF GDP.
• BANKS HAVE AGREED TO PASS RBI’s
REPO RATE CUT BENEFIT TO
CUSTOMERS FOR HAVING LOANS AT
LOWER INTEREST. THIS MOVE WILL
BOOST PURCHASING POWER.
• RBI TRANSFERS 1.76 LAKH CRORES
FROM ITS RESERVE TO PROP UP
PUBLIC INVESTMENT.
GDP
GDP rate of India in the FY18 & FY19 and estimation upto FY20

6. • FDI EQUITY INFLOWS ROSE 28% IN THE FIRST QUARTER
OF 2019-20 TO $16.3 BILLION FROM $12.7 BILLION IN THE
YEAR-AGO PERIOD
• IT WILL ACCELERATE GROWTH, BOOST MANUFACTURING
AND MAKE SECTORS LIKE HEALTH AND REAL ESTATE
LUCRATIVE FOR FOREIGN INVESTORS.
• FDI WILL ALSO HELP IN MAKE IN INDIA INITIATIVE
THROUGH GETTING FOREIGN COMPANIES DIRECT
INVESTMENT CAUSING MORE EMPLOYMENT
• GOVERNMENT HAS TAKEN MANY INITIATIVES IN
RECENT YEARS SUCH AS RELAXING FDI NORMS
ACROSS SECTORS SUCH AS DEFENCE, PSU OIL
REFINERIES, TELECOM, ETC.,
• ANNUAL FDI INFLOWS IN THE COUNTRY ARE EXPECTED
TO RISE TO US$ 75 BILLION OVER THE NEXT FIVE
YEARS, AS PER A REPORT BY UBS.
FDI
FDI inflow in 2018-19 & 2019-20 (In $ , billion)

7. • INDIA IS MAJOR IMPORTER OF CRUDE OIL
AND IMPORTS AROUND 100 MILLION TONS
OF CRUDE OIL.
• WHICH RESULTS IN SPENDING HUGE AMT
OF FOREIGN EXCHANGE.THE INCREASING
QUANTUM OF IMPORT OF OIL HAS A SIGNI-
FICANT IMPACT ON INDIAN ECONOMY.
• ACCORDING TO RBI REPORT FOR EVERY
UNIT OF $ INCREASES IN CRUDE OIL
PRICE, WPI INFLATION RISES BY 30 BASIS
POINTS.
• UNDER VARIOUS FOREIGN POLICIES
INDIA’S CRUDE OIL IMPORT EXPENSE
GRADUALLY INCREASING WHICH
DIRECTLY AFFECTS THE TARGET OF $5 TN
ECONOMY.
OIL PRICE
Crude oil import ( in million
tonne)
Crude oil import bill (in ₹
crores)

8. • EXPORT STOODS AT $56.07 BN IN APR MAY
2019-20 AS AGAINST $54.77 BN DURING
APR-MAY 2018-19 REGISTERING A
POSITIVE GROWTH OF 2.37%
• IMPORTS APR-MAY 2019-20 STOOD AT
$86.75 BN AS AGAINST $83.11 BN DURING
THE PERIOD IN 2018-19 WITH A POSITIVE
GROWTH OF 4.37%
• TRADE DEFICIT WIDENED TO $30.69 BN IN
THE PERIOD UNDER REVIEW FROM $28.34
BN IN THE CORRESPONDING PERIOD OF
LAST YEAR.
• BESIDES, THE ONGOING TRADE WAR
BETWEEN USA & CHINA OFFERS AN
OPPORTUNITY TO INDIA FOR BOOSTING
EXPORTS SIGNIFICANTLY TO THESE
COUNTRIES.
EXPORT-IMPORT

9. • A CRITICAL COMPONENT OF THE MISSION IS HIGH LEVEL OF INVESTMENT, DRIVEN
BY THE PRIVATE SECTOR AND A LARGER PRESENCE IN THE GLOBAL MARKETS.
• THE GOVT. IS LOOKING TO PUSH THE INVESTMENT ON 3 BROAD THEMES :
SUSTAINABILITY LIVING (PROMOTION 9F ELECTRIC VEHICLES), PROMOTING MAKE IN
INDIA AND EASE OF LIVING THROUGH HIGHER INFRASTRUCTURE SPENDING.
• THE RBI, ENCOURAGED BY ADEQUATE FOREX RESERVES, HAS RELAXED THE
NORMS FOR DOMESTIC COMPANIES TO INVEST ABROAD.
• GOVT. OF INDIA’S PSUs HAVE INVESTED OVER $5 BILLION IN RUSSIA’S OIL AND GAS
PROJECTS AND ARE PLANNING TO UNDERTAKE MORE INVESTMENTS IN THE
COUNTRY’S OIL AND GAS FIELDS.
• THE BUDGET PROVIDED RS 70,000 CRORE FOR THE RECAPITALISATION OF BANKS
AND A REVIVAL PACKAGE OF RS 1 LAKH CRORE FOR THE STRIKEN NON-BANKING
FINANCIAL COMPANIES (NBFC) SECTOR.
INVESTMENT

10. • HIGH INFLATION NEGATIVELY IMPACTS GDP
GROWTH
• INDIA’S INFLATION HAS BEEN BELOW 4%
SINCE 2019
• STABLE INFLATION GOING TO AID INDIA TO
ACHIEVE $5 TN TARGET
• FORECAST SHOWS THAT INFLATION RATE IS
EXPECTED TO BE AROUND 4% IN THE NEXT 5
YEARS SO THIS HAS BECOME A NEW NORMAL
AND IT IS SUPPOSED TO SUPPORT THE IDEAL
STATE OF ECONOMIC INDICATORS – HIGH
GROWTH WITH LOW INFLATION.
INFLATION
Comparison of Inflation rates in 2018 & 2019

11. • JOB CREATION IS MANDATORY TO ACHIEVE
THE $5 TRILLION ECONOMIC STATUS.
• INDIA NEEDS 15 MILLION JOBS A YEAR,
WHILE 11-12 MILLION ARE COUNTED
• SHORTAGE OF JOBS IS NOT THE ONLY
PROBLEM, LOW QUALITY JOBS AND WAGES
ARE ALSO A CAUSE OF WORRY.
• ACCORDING TO ILO RATE OF
UNEMPLOYMENT WAS 3.5% IN 2018 AND
18.6 MILLION PEOPLE WERE UNEMPLOYED.
• IN 2019 THIS RATE REMAINED CONSTANT
TO 3.5% AND UNEMPLOYMENT INCREASED
TO 18.9 MILLION.
EMPLOYMENT
Unmployment rate of India in 2017,2018 & 2019 and
Projection upto 2020 ( source : ILO )

12. • THE AGRI SECTOR IS A POTENTIAL
EMPLOYER FOR 53% OF THE POPULATION
• IT IS EXPECTED TO CONTRIBUTE NEARLY
20% TO THE $5 TN ECONOMY.
• BUDGET 2019 FOCUSES ON AGRI SECTOR
WITH VARIOUS SCHEMES ----
PM-KISAN – AIM TO DOUBLE FARMER’S
INCOME BY 2022, ADOPTION OF ZERO
BUDGET FARMING, SET-UP OF 10K NEW
FARMER PRODUCER ORGANIZATION.
• GDP FROM AGRICULTURE HAS BEEN
CONSIDERABLY HIGHER THAN THE PREV
YEAR.(2.7% GROWTH RATE)
• IT IS PROJECTED TO TREND AROUND
7163 INR BILLION BY 2020.
AGRICULTURAL SECTOR
GDP from Agriculture in India ( In INR billion )

13. • THE RUPEE-DOLLAR EXCHANGE RATE
NEEDS TO BE SCRUTINIZED TO REACH THE
DESIRED TARGET.
• APPRECIATION OF RUPEE AGAINST DOLLAR
WILL FACILITATE THE GROWTH IN
ECONOMY.
• THE AVG ANNUAL DEPRECIATION OF RUPEE
IN THE LAST 5 YEARS WAS 2.9%
• THE RUPEE EXCHANGE IS INFLUENCED BY
THE FACTORS --- GLOBAL GEOPOLITICAL
RISKS, CRUDE OIL PRICE, FUNDAMENTALS
OF DOMESTIC ECONOMY, ETC.,
• RUPEE MAY DEPRECIATE BY 10% IN NEXT 5
YEARS WHICH MAY LEAD TO $4.4 TRILLION
ECONOMY BY 2023-24
GROWTH IN TERMS OF DOLLAR RATE
Rupee-Dollar exchange rate in 2018 & 2019 and projected
trend upto 2023

14. OPPORTUNITIES & OBSTACLES
OPPORTUNITIES :
• INFLATION
• AGRICULTURAL SECTOR
• INVESTMENT
• EXPORT-IMPORT
• FDI
• MOVES BY FINANTIAL INSTITUTES
OBSTACLES :
• EMPLOYMENT
• GROWTH IN TERMS OF DOLLAR
• CRUDE OIL PRICE
• GDP

15. Any questions?