Understanding Indian Economy

1
Understanding Indian Economy

• By-Sandhir Sharma

2
Economic Development

• Approach to Economic Development
• Gradual Approach
• Big Push Approach
• Factors in Economic Development
• Natural Resources
• Capital Formation
• Technological Progress
• Knowledge
• Infrastructure
• Population and Human Resource
• Investment Conditions
• Political and Social Factors

3
Indian Economy an overview

• India as Mixed Economy
• Instruments of Mixed Economy
• Industrial Policy Resolution
• Industrial Licensing
• Nationalisation
• Promotion of Private Sector
• Subsidies SAPs
• Shortcomings of Mixed Economy

4
Features of Indian Economy

• Mass Poverty and Low Per Capita Income
• Inequalities in income distribution
• Inadequate Capital Formation
• Predominance of Agriculture
• Demographic Peculiarities
• Unemployment and Underemployment
• Technological Backwardness
• Infrastructural Inadequacies
• Dualistic Economy
• Unfavourable social and value structure

5
India as progressive nation

• Sustained Growth
• Self reliance and minimal dependence
• Agriculture Transformation
• Industrial Changes
• Infrastructural revolution
• Changes in Foreign Trade
• Strong Fundamentals
• Expansion of Education
• Reduction in Poverty
• More Employment

6
Economic Planning of India

• Growth of Idea of Planning in India
• Bombay Plan
• Gandhian Plan
• Sarvodya Plan
• Planning Commission and Five Year Plans
• Currently 11th five year plan (2007-2012) going on

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Economic Planning - Features

• Democratic
• Different Sectors
• Existence of Central Plan and State Plan
• Financial Planning
• Unchanging Priorities
• Prospective and Perspective Planning
• Central Planning Authority
• Set Objectives
• Government Control
• Complete Development
• Definite Time
• Slogans

8
National Income (2007-08)

• GDP growth rate approx. 9 per annum
• 8.7 increase in National Income
• 7.2 increase in per capital income
• Agriculture growth in 2.6
• Industry growth is 9.4
• Services Sector growth is 10.7

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Main Features of National Income

• Dependence on Agriculture
• Poor Growth rate of Per Capita Income
• Unequal Distribution
• More expenditure on Food
• Low standard of Living
• Low growth rate of National Income
• Unequal growth rate of different sectors
• Income levels in Urban and Rural areas
• Regional Disparity
• More income on private sector
• Increasing share of organized sector
• Increasing significance of Territary sector.

10
Cause of Low National Income of India

• Low rate of saving and investment
• Backward technology
• Rapid increase in population
• More dependence on agriculture
• Inadequate industrial development
• Unbalanced growth of different regions
• Fatalism
• Illiteracy
• Political factors

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Regional Imbalances

• Goa, Haryana, Maharashtra, Punjab and Gujarat
  having max. per capita income in India
• Bihar, UP, MP, Orissa and Jharkhand having min.
  per capital income in India

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Causes of Inter regional variations

• Difference in agricultural productivity
• share in total foodgrain production
• Difference in Net Irrigated Area
• Difference in Industrial Development
• of People below poverty line
• Growth rate of Population

13
Infrastructure of India

• Two types
• Economic / Physical Infrastructure
• Transport
• Energy
• Communication
• Irrigation
• Science Technology
• Social Infrastructure
• Health
• Education

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Infrastructure a challenge

• Low priority in Plans
• Huge requirement of Investment
• Long Gestation Period
• Exclusion of Private Sector
• Regional Imbalances
• Poor Maintenance
• Less Expenditure on RD

15
Infrastructure Development Plans in 11th Five
Year Plan

• Highways 40000 Kms to be developed by 2012
• Airports - likely investment by 2012 is Rs.
  40,000 crore
• Railways - likely investment by 2012 is Rs.
  22,000 crore
• Power generation 60 to 70 thousand MW with an
  investment of Rs. 5,00,000 crore
• 1.5 Lakh villages to be electrified

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Infrastructure Development Plans in 11th Five
Year Plan

• Six lanning of roads upto 6500 Kms
• Construction of 7 Green field Airpots
• Telecommunication subscriber base to be increased
  to 600 million
• Construction of new rural roads upto 1,65,244 kms
• Rs. 11,02,327 crore has been porposed for social
  services

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Agriculture in India

• India has been ranked no. 1for
• Total irrigated area
• Pulses
• Jute
• Spices
• Milk
• Butter and ghee
• Cashew nuts

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Agriculture in India

• India has been ranked no. 2 for
• Cultivable land
• Wheat
• Rice
• Sugar
• Fruits Vegetables
• Tobacco
• Tea

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Agriculture Growth

• 10th Plan noticed 2.5 growth rate
• Per labourer productivity is only 391 US
• Egypt productivity of rice is more than thrice in
  India
• Wheat productivity in UK is about three times
  more than India
• Per hectare output of cotton in China is about
  three times in comparison to India

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Causes of Backwardness of Agriculture

• Human Factors
• Pressure of Population on Land
• Social Atmosphere
• Institutional Factors
• Small Size of farms
• Land Tenure System

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Causes of Backwardness of Agriculture

• Technical Factors
• Inadequate Irrigation Facilities
• Old Agricultural Implements
• Old Methods of Cultivation
• Inadequate High Yielding Variety Seeds
• Shortage to Manures
• Defective Marketing
• Diseases of the crops and Pests
• Weak Cattle
• Defects of Soil
• Lack of Credit Facilities

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11th five year plan for agriculture

• Second Green Revolution
• Growth rate to increase by 4
• Focus on agricultural research
• Increase in irrigation faciltiies
• Development of modern agricultural markets
• Completing unfinished agenda of land reforms
• Improving dry land farming practices
• Promoting agro-based industries and agro exports
• Utilization of waste and underutilized land

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Industrial Growth of India

• Industrial growth noticed at 8.6 approx in
  2007-2008.
• Target to achieve 10 growth rate.
• Turnaround in 1991
• Liberalization
• Privatization
• Globalization

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Weaknesses

• Irregular Increase in Industrial Production
• Underutilization of Installed Production
  Capacities
• Increase in Monopoly Powers
• Capital Investment in Low Priority Industries
• Poor Performance of Public Sector
• Increase in Regional Imbalances
• Less Development of Small Industries
• Industrial Sickness
• Poor Quality Production
• Industrial disputes

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Major Growth Tools of Indian Economy

• Industrial Policy 1991
• Green Revolution
• Land Reforms
• Five Year Plans (currently 11th plan 2007-2012)
  going on

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Major Problems of Indian Economy

• Problem of Poverty
• Problem of Population
• Problem of Unemployment
• Regional Imbalances
• Inequalities of Income and Wealth in India
• Foreign Trade Balance of Payments

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Current Challenge for India

• Global Crisis
• Inflation
• Corruption
• Political Environment
• Neighbour countries of India
• Terrorism

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Thanks