economy of india

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Economy of India

The Economy of India is the tenth-largest in the world by nominal GDP and the third-largest by purch
21. Global trade relations
Until the liberalisation of 1991, India was largely and intentionally isolated from the world markets, to protect its economy and to achieve self reliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions, while foreign direct investment FDI was restricted by upper limit equity participation, restrictions on technology transfer, export obligations and government approvals; these approvals were needed for nearly 60 Percent of new FDI in the industrial sector. The restrictions ensured that FDI averaged only around $200 million annually between 1985 and 1991; a large percentage of the capital flows consisted of foreign aid, commercial borrowing and deposits of non resident Indians. India s exports were stagnant for the first 15 years after independence, due to general neglect of trade policy by the government of that period. Imports in the same period, due to industrialisation being nascent, consisted predominantly of machinery, raw materials and consumer goods.Since liberalisation, the value of India s international trade has increased sharply, with the contribution of total trade in goods and services to the GDP rising from 16 Percent in 1990 91 to 47 Percent in 2008 10.India accounts for 1.44 Percent of exports and 2.12 Percent of imports for merchandise trade and 3.34 Percent of exports and 3.31 Percent of imports for commercial services trade worldwide.201 India s major trading partners are the European Union, China, the United States of America and the United Arab Emirates. In 2006 07, major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver. In November 2010, exports increased 22.3 Percent year on year to INR850.63 billion US$13 billion , while imports were up 7.5 Percent at INR1251.33 billion US$20 billion . Trade deficit for the same month dropped from INR468.65 billion US$7.4 billion in 2009 to INR400.7 billion US$6.3 billion in 2010.

India is a founding member of General Agreement on Tariffs and Trade GATT since 1947 and its successor, the WTO. While participating actively in its general council meetings, India has been crucial in voicing the concerns of the developing world. For instance, India has continued its opposition to the inclusion of such matters as labour and environment issues and other non tariff barriers to trade into the WTO policies.

22. Balance of payments
Since independence, India s balance of payments on its current account has been negative. Since economic liberalisation in the 1990s, precipitated by a balance of payment crisis, India s exports rose consistently, covering 80.3 Percent of its imports in 2002 03, up from 66.2 Percent in 1990 91. However, the global economic slump followed by a general deceleration in world trade saw the exports as a percentage of imports drop to 61.4 Percent in 2008 09.India s growing oil import bill is seen as the main driver behind the large current account deficit, which rose to $118.7 billion, or 11.11 Percent of GDP, in 2008 09.Between January and October 2010, India imported $82.1 billion worth of crude oil.

Indian economy has run a trade deficit every year over 2002 2012 period, with a merchandise trade deficit of US$189 billion in 2011 12.Its trade with China has the largest deficit, about $31 billion in 2013.

India s reliance on external assistance and concessional debt has decreased since liberalisation of the economy, and the debt service ratio decreased from 35.3 Percent in 1990 91 to 4.4 Percent in 2008 09. In India, External Commercial Borrowings ECBs , or commercial loans from non resident lenders, are being permitted by the Government for providing an additional source of funds to Indian corporates. The Ministry of Finance monitors and regulates them through ECB policy guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act of 1999.India s foreign exchange reserves have steadily risen from $5.8 billion in March 1991 to $318.6 billion in December 2009.In 2012, the United Kingdom announced an end to all financial aid to India, citing the growth and robustness of Indian economy.

23. Income and consumption
India s gross national income per capita had experienced high growth rates since 2002. India s Per Capita Income has tripled from Rs. 19,040 in 2002 03 to Rs. 53,331 in 2010 11, averaging 13.7 Percent growth over these eight years peaking 15.6 Percent in 2010 11.However growth in the inflation adjusted Per capita income of the nation slowed to 5.6 Percent in 2010 11, down from 6.4 Percent in the previous year. These consumption levels are on an individual basis, not household.240 On a household basis, the average income in India was $6,671 per household in 2011.

Per 2011 census, India has about 330 million houses and 247 million households. The household size in India has dropped in recent years, with 2011 census reporting 50 Percent of households have 4 or less members. The average per 2011 census was 4.8 members per household, and included surviving grandparents.These households produced a GDP of about $1.7 Trillion. The household consumption patterns per 2011 census approximately 67 Percent of households use firewood, crop residue or cow dung cakes for cooking purposes; 53 Percent do not have sanitation or drainage facilities on premises; 83 Percent have water supply within their premises or 100 metres from their house in urban areas and 500 metres from the house in rural areas; 67 Percent of the households have access to electricity; 63 Percent of households have landline or mobile telephone connection; 43 Percent have a television; 26 Percent have either a two wheel motorcycle or four wheel car vehicle. Compared to 2001, these income and consumption trends represent moderate to significant improvements.One report in 2010 claimed that the number of high income households has crossed lower income households.

24. Poverty
The World Bank in 2010, using its older 2005 methodology, estimated about 400 million people in India, as compared to 1.29 billion people worldwide, live on less than $1.25 PPP per day. The World Bank reviewed and proposed revisions in May 2014, to its poverty calculation methodology and purchasing power parity basis for measuring poverty worldwide, including India. According to this revised methodology, the world had 872.3 million people below the new poverty line, of which 179.6 million people lived in India. In other words, India with 17.5 Percent of total world s population, had 20.6 Percent share of world s poorest in 2013. According to a 2005 2006 survey,India had about 61 million children under the age of 5 who were chronically malnourished. A 2011 UNICEF report stated that that between 1990 to 2010, India achieved a 45 percent reduction in under age 5 mortality rates, and now ranks 46 in 188 countries on this metric.

Since the early 1950s, successive governments have implemented various schemes to alleviate poverty, under central planning, that have met with partial success.In 2005, Indian government enacted the Mahatma Gandhi National Rural Employment Guarantee Act, guaranteeing 100 days of minimum wage employment to every rural household in all the districts of India.In 2011, this Rural Employment Guarantee programme was widely criticised as no more effective than other poverty reduction programs in India. Despite its best intentions, MGNREGA is beset with controversy about corrupt officials, deficit financing as the source of funds, poor quality of infrastructure built under this program, and unintended destructive effect on poverty.ther studies suggest that the Rural Employment Guarantee welfare program has helped in reducing rural poverty in some cases. Yet other studies report that India s economic growth has been the driver of sustainable employment and poverty reduction, but a sizable population remains in poverty.

25. Employment
Agricultural and allied sectors accounted for about 52.1 Percent of the total workforce in 2009 10. While agriculture employment has fallen over time in percentage of labor employed, services which includes construction and infrastructure have seen a steady growth accounting for 20.3 Percent of employment in 2012 13. Of the total workforce, 7 Percent is in the organised sector, two thirds of which are in the government controlled public sector. About 51.2 Percent of the labor in India is self employed. According to 2005 06 survey, there is a gender gap in employment and salaries. In rural areas, both men and women are primarily self employed, mostly in agriculture. In urban areas, salaried work was the largest source of employment for both men and women in 2006.

Unemployment in India is characterised by chronic disguised unemployment. Government schemes that target eradication of both poverty and unemployment which in recent decades has sent millions of poor and unskilled people into urban areas in search of livelihoods attempt to solve the problem, by providing financial assistance for setting up businesses, skill honing, setting up public sector enterprises, reservations in governments, etc. The decline in organised employment due to the decreased role of the public sector after liberalisation has further underlined the need for focusing on better education and has also put political pressure on further reforms.India s labour regulations are heavy even by developing country standards and analysts have urged the government to abolish or modify them in order to make the environment more conducive for employment generation. The 11th five year plan has also identified the need for a congenial environment to be created for employment generation, by reducing the number of permissions and other bureaucratic clearances required.Further, inequalities and inadequacies in the education system have been identified as an obstacle preventing the benefits of increased employment opportunities from reaching all sectors of society.

Child labour in India is a complex problem that is basically rooted in poverty. The Indian government has implemented, since the 1990s, a variety of programs to eliminate child labor. These have included setting up schools, launching free school lunch program, setting up special investigation cells and others.Desai et al. state that recent studies on child labour in India have found some pockets of industries in which children are employed, but overall, relatively few Indian children are employed. Child labour below the age of 10 is now rare. In the 10 14 group, the latest surveys find only 2 Percent of children working for wage, while another 9 Percent work within their home or rural farms assisting their parents in times of high work demand such as sowing and harvesting of crops.

India has the second largest diaspora around the world, an estimated 25 million people, many of whom work overseas and remit funds back to their families. The Middle East region is the largest source of employment of expat Indians. The crude oil production and infrastructure industry of Saudi Arabia employs over 2 million expat Indians. Cities such as Dubai and Abu Dhabi in United Arab Emirates alone have employed another 2 million Indian construction workers during its construction boom in recent decades.In 2009 10, remittances from Indian migrants overseas stood at INR2500 billion US$39 billion , the highest in the world, but their share in FDI remained low at around 1 Percent.

26. Corruption
Corruption has been one of the pervasive problems affecting India. A 2005 study by Transparency International TI found that more than half of those surveyed had firsthand experience of paying bribe or peddling influence to get a job done in a public office in the previous year.A follow on 2008 TI study found this rate to be 40 percent. In 2011, Transparency International ranked India at 95th place amongst 183 countries in perceived levels of public sector corruption.

In 1996, red tape, bureaucracy and the Licence Raj were suggested as a cause for the institutionalised corruption and inefficiency.More recent reports suggest the causes of corruption in India include excessive regulations and approval requirements, mandated spending programs, monopoly of certain goods and service providers by government controlled institutions, bureaucracy with discretionary powers, and lack of transparent laws and processes.

The Right to Information Act 2005 which requires government officials to furnish information requested by citizens or face punitive action, computerisation of services, and various central and state government acts that established vigilance commissions, have considerably reduced corruption and opened up avenues to redress grievances.

In 2011, the Indian government concluded that most spending fails to reach its intended recipients. A large, cumbersome and tumor like bureaucracy sponges up or siphons off spending budgets.India s absence rates are one of the worst in the world; one study found that 25 Percent of public sector teachers and 40 Percent of government owned public sector medical workers could not be found at the workplace Similarly, there are many issues facing Indian scientists, with demands for transparency, a meritocratic system, and an overhaul of the bureaucratic agencies that oversee science and technology.

The Indian economy has an underground economy, with a 2006 report alleging that the Swiss Bankers Association suggested India topped the worldwide list for black money with almost $1,456 billion stashed in Swiss banks. This amounts to 13 times the country s total external debt.These allegations have been denied by Swiss Banking Association. James Nason, the Head of International Communications for Swiss Banking Association, suggests The black money figures were rapidly picked up in the Indian media and in Indian opposition circles, and circulated as gospel truth. However, this story was a complete fabrication. The Swiss Bankers Association never published such a report. Anyone claiming to have such figures for India should be forced to identify their source and explain the methodology used to produce them.

27. Education
India has made huge progress in terms of increasing primary education attendance rate and expanding literacy to approximately three fourths of the population.India s literacy rate had grown from 52.2 Percent in 1991 to 74.04 Percent in 2011. The right to education at elementary level has been made one of the fundamental rights under the eighty sixth Amendment of 2002, and legislation has been enacted to further the objective of providing free education to all children.However, the literacy rate of 74 Percent is still lower than the worldwide average and the country suffers from a high dropout rate. Further, the literacy rates and educational opportunities vary by region, gender, urban and rural areas, and among different social groups.
28. Insurance
India became the 10th largest insurance market in the world in 2013, rising from 15th rank in 2011.At a total market size of US$66.4 billion in 2013, it remains small compared to world s major economies, and Indian insurance market accounts for 2 Percent of world s annual insurance business. India s life and non life insurance industry has been growing at double digit growth rates and this growth is expected to continue through 2021.

Life Insurance

Indian economy retains about 360 million active life insurance policies, the largest in the world. Of the 52 insurance companies in India, 24 are active in life insurance business. The life insurance industry in the country is projected to increase at double digit compounded annual growth rates through 2019, with targets to reach US$1 trillion annual notional values by 2021.

Other Insurance

The industry which reported a growth rate of around 10 percent during the period 1996 97 to 2000 10 has, post opening up the sector, reported average annual growth of 15.85 Percent over the period 2001 02 to 2010 11.citation needed In addition, the specialized insurers Export Credit Guarantee Corporation and Agriculture Insurance Company AIC are offering credit guarantee and corp insurance respectively. AIC, which has initially offering coverage under the National Agriculture Insurance Company NAIS , has now started providing crop insurance cover on commercial line as well.citation needed It has introduced several innovative products such as weather insurance and specific crop related products. The premium underwritten by the non life insurers during 2010 11 was Rs 42,576 crore as against Rs 34,620 crore in 2009 10. The growth was satisfactory, particularly in the view of the across the broad cuts in the tariff rates. The private insurers underwrote premium of Rs 17,424 crore as against rs Rs 13,977 crore in 2009 10. The public sector insurers on the other hand, underwrote a premium of Rs 25,151.8 in 2010 11 as against Rs 20,643.5 crore in 2009 10, i.e. a growth of 21.8 Percent as against 14.5 Percent in 2009 10.citation needed

Market Penetration

The Indian insurance business has in the past remained under developed with low levels of insurance penetration. Post liberalization sector has succeeded in raising the levels of insurance penetration from 2.3 life 1.8 and non life 0.7 in 2000 to 5.1 life 4.4 and non life 0.7 in 2010.

29. Security Markets
The development of Indian security markets began with launch of Bombay Stock Exchange BSE , Mumbai in July 1875 and Ahmedabad Stock exchange in 1894 and 22 other exchange in various cities over the years. In 2014, India s stock exchange market became the 10th largest in the world by market capitalization, just above those of South Korea and Australia.India s two major stock exchanges, BSE and National Stock Exchange of India, had a market capitalization of US$1.4997 trillion and US$1.4722 trillion respectively as of June 2014, according to World Federation of Exchanges.

The Initial Public Offering IPO market in India has been small compared to NYSE and NASDAQ, raising US$300 million in 2013 and US$1.4 billion in 2012. Ernst and Young states that the low IPO activity reflects market conditions as well as slow government approval process and complex regulations. Before 2013, Indian companies were not allowed to list their securities internationally without first completing an IPO in India. In 2013, these security laws were reformed and Indian companies can now choose where they want to list first overseas, domestically, or concurrently.Further, security laws have been revised to ease overseas listings of already listed companies, to increase liquidity for private equity and international investors in Indian companies.

30. Research and development
The Indian Agricultural Research Institute IARI , established in 1905, was responsible for the research leading to the Indian Green Revolution of the 1970s. The Indian Council of Agricultural Research ICAR is the apex body in kundiure and related allied fields, including research and education. The Union Minister of Agriculture is the President of the ICAR. The Indian Agricultural Statistics Research Institute develops new techniques for the design of agricultural experiments, analyses data in agriculture, and specialises in statistical techniques for animal and plant breeding. Prof. M.S. Swaminathan is known as Father of the Green Revolution and heads the MS Swaminathan Research Foundation. He is known for his advocacy of environmentally sustainable agriculture and sustainable food security. Was labert ihr Nutten im Club.

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