intro on INDIAN economy

1. Indian Economy: Structure & Emerging Issues
Dr. Udai Bhan Singh
ABS, AUR

7. Problem
Mostly talk about growth not development, especially politicians
A very few talk about human development
In HDI, India rank 129 among 189 countries

8. Determinants of economic growth
• Human Resource
• Natural Resources
• Capital Formation
• Technological Development
• Social and Political Factors

9. Characteristics of developing countries
1. Low Standards of Living, characterized by low incomes, inequality,
poor health and inadequate education
2. Low Levels of Productivity
3. High Rates of Population Growth & Dependency Burdens
4. High & Rising Levels of Unemployment & Underemployment
5. Substantial Dependence on Agricultural Production & Primary
Product Exports
6. Prevalence of imperfect markets & limited information.
7. Dominance, Dependence and Vulnerability in International
Relations.

10. Employment: by status & formal/informal
% Share 1983 1993 2009-10
Regular Emp. 16.1 15.7 17.7
Regular-formal 10.2 9.3 7.4
Regular-Informal 5.9 6.4 10.3
Casual Emp. 31.6 34.3 34.9
Self Employment 52.3 50.0 47.4
Organised 13.6 12.4 14.2
Unorganised 86.4 87.6 85.8

11. Share of casual/informal/self-employment by different
sectors for 2017-18 (usual status and all age; in %)
Sector Self-employed Casual Regular formal Informal Total
Construction 10.8 83.7 1.5 3.9 11.7
Trade 70.6 3.9 3.7 21.8 10.1
Transport 45.5 12.7 10.0 31.9 4.8
Hotel and
restaurant
58.1 9.8 4.6 27.5 1.9
Total 52.2 24.9 9.6 13.2 100.0

12. Employment: Sectoral Share
Sectoral Share in Employment Sectoral Share in GDP
1983 1993-94 2009-10 2018 1983 1993-94 2009-10 2018-19
Primary 68.59 63.98 51.30 43.86 37.15 30.01 15.23 17.39
Secondary 13.78 14.96 22.02 24.69 24.30 25.15 25.92 28.45
Manufact
uring
10.66 10.63 11.50 14.52 14.46 15.41 18.32
Tertiary 17.63 21.07 26.67 31.45 38.56 44.84 58.84 54.15
All Non-
AG
31.41 36.02 48.70 62.85 69.99 84.77 82.61

15. COVID Impact on Unemployment

18. Before Lockdown
• Unemployment rate at45 years high
• Consumption expenditure declined significantly
• Poor demand for manufacturing goods
Reasons

19. SMEs Sector in India
• Number of SMEs in India: The number is estimated to be at 42.50 million, registered &
unregistered together. A staggering 95% of the total industrial units in the country.
• SME & Employment opportunity: Employs about 106 million, 40% of India’s workforce.
Next only to the agricultural sector.
• Products: produces more than 6000 products.
• GDP Contribution: Currently around 6.11% of the manufacturing GDP and 24.63% of
Service sector GDP.
• SME Output: 45% of the total Indian manufacturing output.
• SME Exports: 40% of the total exports.
• Bank Lending: Accounts for 16% of bank lending.
• Fixed Assets: Current fixed assets at INR 1,471,912.94 crore.
• SME Growth Rate: Has maintained an average growth rate of over 10%.

20. International Trade

22. Monetary Policy: Objective
• Economic Growth
• Employment generation
• Price stability
• Exchange rate stability
• Balance of payment equilibrium

23. Monetary Policy: Tools
• Bank rate
• CRR
• SLR
• Open market operations
Buying and selling of government securities by the RBI in the open market is called
open market operations.
• Repo rate:
It is the rate at which the RBI lends money to banks against government securities.
When the repo rate increases it becomes expensive for banks to borrow money
from RBI and the money supply decreases, therefore it acts as a contractionary
monetary policy. The decrease in repo rate will increase the money supply and it is
a type of expansionary monetary policy.

24. Monetary Policy: Tools
• Reverse repo rate
The rate which other banks receive when they deposit their extra cash with RBI
along with the repurchase agreement of government securities in future is called
reverse repo rate. An increase in reverse repo rate results in decrease of money
supply and is a contractionary measure. A decrease in reverse repo rate increases
the money supply and it is expansionary measure.
• Qualitative measures or selective credit controls
Credit rationing refers to the control of government over the amount of credit
available for certain industrial sectors. Such control is exercised to ensure that all
sectors get adequate amount of credit. Change in margin requirements affects the
minimum amount of money that an individual is required to use from his own
resources when he borrows money from the bank.

25. Fiscal Policy
• Tax (Direct/Indirect)
i. Direct Tax
ii. Indirect Tax
• Public Expenditure
• Public Debt