Indian Economy

9 Key excerpts on "Indian Economy"

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  Contemporary India

  • Katharine Adeney, Andrew Wyatt(Authors)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  The economy is now much more open to global forces. The Government of India uses the three broad categories of agri- culture, industry, and services as an aid to describing India’s massive economy. This three-fold division is used by many when preparing statistics and this helps when describing the structure of the Indian Economy. We begin with agriculture. 194 Contemporary India Illustration 7.1 Brick factory Brick making is an activity that exemplifies many aspects of the informal economy. The work is seasonal, labour-intensive and workers are driven hard. The workers, who are often migrants engaged by labour contractors, are vulnerable to exploitation. Agriculture India’s physical environment (discussed in Chapter 2) influences economic possibilities. Large parts of India receive only seasonal rainfall and good arable land is in short supply. Farmers gain some advantage over these obstacles by making use of irrigation and fertil- izers. These techniques have long been in use in parts of India. The Indian countryside has changed substantially since independence. In 1950, agriculture contributed 53 per cent of India’s GDP. In 2007–08 this had fallen to 17.8 per cent (Government of India, 2009a). However, the declining proportion of wealth produced in agriculture is not matched by a corresponding sharp decline in agricultural employment. The majority of the population still depend on the land for a living, approximately 52 per cent of the workforce (Government of India, 2009a). In 1947 India’s villages were fairly self-contained even if they were not exactly the unchanging mini-republics that Gandhi eulogized (Gupta, 2004). Unemployment, under-employ- ment, and low productivity on farms were (and are) causes of large- scale rural poverty. Congress argued that British deindustrialization and neglect had exacerbated poverty in the countryside. To rectify this, Congress promised to modernize the Indian village.

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  India in a globalized world

  • Sagarika Dutt(Author)
  • 2013(Publication Date)
  • Manchester University Press

    (Publisher)

  Chapter 4 , however, the external constraints on the Indian Economy need to be explored further here. On a more general note, Tooze (1997: 222) remarks that ‘the way that any national economy fits into the international economy produces distinct political problems – for the state and international relations – depending on the nature of that state’s economic activity and the power it has to structure the system’. This implies that a discussion of the economy of any state is bound to be inadequate if it is carried out without any reference to the international/global economy. However, before proceeding any further, we should make it explicit that the international economy is an economic system based on world markets and production and that the market economy has its origins in the industrial revolution. Moreover, the system is a capitalist system, notwithstanding the existence of the communist bloc from the late 1940s to the late 1980s.

  In a similar vein to Hirst and Thompson, Rothermund (1993) argues that there is a relationship between power and wealth or between the political and economic domains. Of course, markets have always existed for the exchange/buying and selling of goods. However, prior to the eighteenth century there was no market system based on industrial production. The emergence of the market economy had an impact on the economy of the Indian subcontinent. However, given that the Indian Economy was not completely transformed by capitalism, our discussion of India in the global economy has to start long before capitalism was introduced in the subcontinent. Most scholars would agree, for example, that we cannot treat the mercantilist period as irrelevant to any discussion of the evolution of the Indian Economy, as mercantilism promoted colonial rule in India which, in turn, determined how India was to be integrated into the capitalist world economy. An examination of contemporary India in the global political economy, therefore, could benefit from some knowledge of the past, especially of the colonial period which has left its mark on the Indian subcontinent and its relations with the rest of the world. The first chapter on the history of the subcontinent dealt with the political aspects of colonial rule; this section will deal with the economic aspects. Another point that needs to be made at this juncture is that, regardless of the views of the Indian government and political parties on contemporary globalization, India has for many centuries already been affected by it. In recent years, the debate in India has been about self-reliance and protectionism versus liberalization, and it is in the context of this debate that the potential impact of globalization is considered. However, the present author takes a much wider view of the phenomenon and this needs to be clarified at the outset.

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  Indian Financial Markets

  An Insider's Guide to How the Markets Work

  • Ajay Shah, Susan Thomas, Michael Gorham(Authors)
  • 2008(Publication Date)
  • Elsevier Science

    (Publisher)

  A unique feature of Indian growth is the rise of a large services sector at relatively low levels of per capita GDP. Some economists believe that a manufac-turing stage is an essential way station in the process of economic development. So far, India appears to be successfully contradicting this position, with high economic growth and a small manufacturing sector. 12 1.3.5 G LOBALIZATION One of the most important phenomena about the Indian Economy in the 1990s was the growth of international trade. We see striking changes in policy in the period following 1991–1992. India has engaged in unilateral removals of barriers to trade, and this process has been assisted by WTO obligations. Capital 12 Sometimes, concerns are expressed about reliability of statistics on services, where it is felt that services data is grossly overstated. Recent explorations of these questions (Gordon and Gupta, 2004) suggest that such fears are overstated. 18 India’s Financial Markets controls have been eased, giving greater financial integration. At present, there is de facto convertibility for firms, foreign institutional investors, non-resident Indians, and inbound FDI. A complex system of capital controls inhibits global diversification by local households, transactions in the Indian market by global individuals and debt inflows. This process of globalization has far-reaching ramifications for accelerat-ing GDP growth, by giving gains from trade, by giving dynamic benefits in terms of improved competition and flow of knowledge into the country, and by improving the allocative functions of finance. Table 1.7, adapted from Shah and Patnaik (2007a), summarizes India’s glo-balization. While GDP, measured in USD, grew at a compound rate of 9.63% per year, gross flows on the current account and the capital account grew much faster.

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  Investing in India

  A Value Investor's Guide to the Biggest Untapped Opportunity in the World

  • Rahul Saraogi(Author)
  • 2014(Publication Date)
  • Wiley

    (Publisher)

  CHAPTER 3 The Economy

  India's economy has witnessed many changes in perception and expectation over the decades. In the 1970s and 1980s, India's economy was branded as one that could not exceed the Hindu rate of growth of 3.5 percent due to its socialist orientation. Economic liberalization in the 1990s and the Goldman Sachs BRICs report of the 2000s created expectations that India's economy would converge with China's and experience double-digit growth rates. The aftermath of the global financial crisis and the emergence of India's own policy stagnation has once again put into question India's ability to grow at high rates and has brought out the naysayers who explain away the 9 percent growth rates of the 2004–2009 period as an aberration. The problem has always been with the perception and expectation from India's economy and the comparison with other economies that have very different development models. India's economy is driven by its own unique model and is likely to follow a path that is distinct from any other economy.

  OVERVIEW OF THE Indian Economy

  India is a fairly small economy relative to its size, history, and population. In 2012, India's gross domestic product (GDP) measured $1.80 trillion in nominal terms. Compared with China's GDP at $8.20 trillion, Brazil's GDP at $2.45 trillion, the United Kingdom's GDP at $2.45 trillion, and Russia's GDP at $2.0 trillion, India is an also-ran in the world economy.

  Even when one looks at India's other economic indicators, the data are mediocre at best. India's headline inflation rate is in the range of 6.00 percent, and overnight interest rates are at 8.00 percent. India runs a fiscal deficit (Union government and state governments combined) of close to 8.00 percent and a current account deficit of between 4.00 percent and 5.00 percent of GDP.

  Given these figures, one wonders what all the fuss is about. I recently met with the CEO of a very large Japanese leasing company that has been in India for over 20 years and asked him about his experience in India. They have made no money in India and have not been able to build a meaningful presence for various reasons. I asked him why they do not forget about India and focus on other markets that are much easier to work with. He replied that, for them, India was too big to be ignored.

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  Indian Economic Policy and Development

  • P. T. Bauer(Author)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  The aim of the discussion of the preceding pages should not be misunderstood. Its purpose was to show the presence of certain attitudes, customs and policies affecting material progress. However, it should not be inferred from the discussion that the propositions of economics are irrelevant to India. There, as elsewhere, people tend to buy less of commodities the prices of which have risen; and they try to make the most of their limited opportunities, resources and knowledge. The relevance of these considerations is recognized by Indian governments which discourage the consumption of some commodities by taxing them, and encourage the consumption and production of other commodities by subsidizing them. The Hindu peasant will not kill a cow, but he will sell his output where he can get the highest price, and cultivate the crops which are the most profitable.

  It should not be thought that Indians are unresponsive to economic opportunity or unfit for material progress, and that the prospects of development are therefore hopeless. This is not the case. There are in India large reserves of latent talent and energy, the development of which is greatly impeded or even suppressed by the restrictive social environment, the effects of which are often reinforced rather than mitigated by official action.

  The presence of these latent reserves is suggested, for instance, by the rapid development of certain sectors of the economy, and by the energy, enterprise and resourcefulness displayed in these sectors by large numbers of Indian traders and industrialists. It is suggested also by the large numbers of Indian emigrants, and by their performance in their country of adoption. Until their movement was barred by restrictions both abroad and in India, hundreds of thousands of Indians emigrated, especially from the poorest and most caste-ridden areas of South India, which shows that even ignorant and illiterate people were anxious to improve their lot, and especially to escape the bondage of caste. And the economic success of large numbers of these often penniless emigrants in Burma, Malaya, Ceylon and East, Central and Southern Africa is evidence of valuable economic qualities such as industry, thrift, endurance and perception of economic opportunity. Although where large numbers of both Indian and Chinese migrants arrived in comparable conditions, as in Malaya and Burma, the performance of the Indians was generally well below those of the Chinese, they nevertheless contributed considerably to economic development. This performance suggests both their capacity for economic advance, and also the stifling effects of their home environment.

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  Sourcing in India

  Strategies and Experiences in the Land of Service Offshoring

  • Guido Nassimbeni, Marco Sartor(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  It is estimated that one in three engineers in this district is of Indian origin. Their good training, the high level of English com- mand, all at low costs, make India an attractive pool as far as staff is con- cerned. This is a competitive advantage that numerous foreign companies like IBM, ST, Intel, Microsoft, Oracle, Cisco, Sun and HP have made use of for some time already. 2.4. Macroeconomic profile 2.4.1. The GDP Over the fiscal year 2006 11 India achieved a GDP of 873,65 billion dol- lars, a value that situates it on the twelfth place on the world economies list. However if we consider the value of the GDP derived from Purchas- ing Power Parity (PPP) calculation, India occupies third position after the USA and China (International Monetary Fund – IMF, 2007). According to the data reported in Tab. 2.1, beginning with 1990 there are periods of sustained growth alternated with periods of lower growth. The average growth of GDP over these years was about 6%. The best results were achieved during the last two fiscal years 2005 and 2006, with a complex growth of almost 9.0%. If we analyse the composition of the GDP and its evolution over time we notice a growth of the secondary and tertiary sectors to the detriment of agriculture. The tertiary (service) sector that in 1980 accounted for less than 40% of GDP, in 2006 had surpassed 55% while industry evolved from 21% in 1980 to 26% in 2006 (World Bank and Economic Survey 2006–2007). Even though agriculture employees are the majority of the active workforce, these count only for 18% of the overall GDP (Tab. 2.2). 2.4.2. The trade exchange The reforms of 1991 promoted foreign commerce, favouring a better integration of Indian Economy in the global market (Ministry of Com- merce and Industry – Department of Commerce, 2002). Data in Tab. 2.3 refer to the transaction of goods and show how the trade exchange grew significantly over the last 16 years, even if without a linear trend.

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  Macroeconomics

  An Introduction

  • Alex M. Thomas(Author)
  • 2021(Publication Date)
  • Cambridge University Press

    (Publisher)

  While it is possible to look at several aspects of India’s growth, I shall focus on the following: 1. economic growth and its connection to historical inequalities, 2. growth of agricultural, manufacturing and service sectors, 3. the link between economic growth and employment creation, 4. the connection between rate of profit and rate of economic growth, and 5. the impact of economic growth on our ecology. Economic growth and unequal land ownership Any exercise that attempts to understand the nature of growth should pay attention to the initial conditions. A good analogy to convey the significance of the initial conditions would be the idea of compound interest. How much do the initial sums of INR 1,000 and INR 1,400 translate into after five years if both earn an interest of 6 per cent compounded monthly? INR 1,349 and INR 1,888. Notice that the initial difference between the sums was only INR 400, but after the compounding, there is a difference of INR 539. One of the underlying reasons for economic growth (compounding) is the inter- sectoral and intra-sectoral linkages which produce multiplier effects(recall the discussion of the multiplier in Section 4.2). In both supply-side and demand-led growth theories, the initial level of aggregate output is not a determinant of the rate of growth of aggregate output. However, understanding the nature of economic growth warrants a study of the initial conditions. The Indian Economy’s initial condition is a complex web of colonialism, caste system, patriarchy, unequal land ownership, rain-dependent agriculture, availability of minerals and natural resources, and so on. Since the majority of Indians are engaged in the agricultural sector, let us take a look at the MACROECONOMICS 102 ownership of land; it is an important marker of social and economic status and a source of financial security.

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  Contemporary Hospitality and Tourism Management Issues in China and India

  • Stephen Ball, Susan Horner, Kevin Nield(Authors)
  • 2009(Publication Date)
  • Routledge

    (Publisher)

  Table 1.3 gives the structure of the Indian econ- omy. The main agricultural products are rice, wheat, oilseed, jute, tea and cotton. The main manufacturing industries are textiles, chemicals, steel, food processing, cement and software. The actual labour force is estimated at 496.4 million in 2003 (CIA, 2006). As with China, a huge amount of the workforce (three-fifths) is engaged in the primary sector, yet this produces less than one-fifth of the country’s GDP. Similar to China, this may indicate inefficiencies in agriculture but may also indicate the number of the population that are tied to rural communities. Indeed, India has often been referred to as two countries – urban India and rural India. 9 • • • • Contemporary Hospitality and Tourism Management Issues in China and India Table 1.3 The structure of the Indian Economy – 2003 Sector Contribution to gross domestic product (%) Labour force employed (%) Primary (agricultural and extractive industries) 18.6 60 Secondary (manufacture and construction) 27.6 17 Services (banking, insurance, finance and tourism) 53.8 23 Total 100.0 100 Source: Extrapolated from CIA World Factbook (2006). As shown by Table 1.3, services are the source of economic growth accounting for over half of GDP while employing less than a quarter of the workforce. Much of this growth in the service sector has derived from highly skilled and educated personnel using their English language skills (CIA, 2006). For an emerging economy, the service sector is unusually large, but this is a reflection of service industry employment that has migrated to India largely from the West over the past decade. Key economic indicators • • • Table 1.4 shows the key economic indicators for India. India has been called the “world’s fastest growing democracy” (Smith, 2006). Its GDP growth rate has increased from 2.4% to 7.8% over the past 15 years.

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  World Trade Agreement and Indian Agriculture:Implementation Experience

  • Satyanarayana, T V(Authors)
  • 2021(Publication Date)
  • Daya Publishing House

    (Publisher)

  Chapter 2 Macro Economic Environment of Indian Agriculture Economics experts and various studies conducted across the globe envisage India and China to rule the world in the 21st century. For over a century, the USA has been the largest economy in the world, but major developments have taken place in the world economy since then, leading to the shift of focus from the USA and the rich countries of Europe to the two Asian giants–India and China. By 2025, the Indian Economy is projected to be about 60 per cent the size of the USA economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian Economy only a little smaller than the USA economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the USA. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within ten years. As India prepares herself for becoming an economic superpower, it must expedite socio-economic reforms and take steps for overcoming institutional and infrastructure bottlenecks inherent in the system. Availability of both physical and social infrastructure is central to sustainable economic growth. More than 58 per cent of country’s population depends on agriculture, a sector producing only 22 per cent of Gross Domestic Product (GDP). The agriculture and allied sector witnessed a growth of 9.1 per cent in 2003-04, which fell steeply to 1.1 per cent in 2004-05. Favourable monsoon facilitated an impressive growth rate of 9.6 per cent in 2003-04 on the back of negative This ebook is exclusively for this university only. Cannot be resold/distributed. growth in the preceding year. However, deficient rainfall from the south-west monsoon is estimated to have caused a significant decline in kharif crops production in 2004-05.

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