India is on the verge to become financial Super Power by 2020 Author - Chiranjeev Sharma (200901079)

Introduction
Quoting from the Goldman Sachs report of October 1, 2003 Dreaming with BRICS the Path to 2050 Indias GDP will reach $ 1 trillion by 2011, $ 2 trillion by 2020, $ 3 trillion by 2025, $ 6 trillion by 2032, $ 10 trillion by 2038, $27 trillion by 2050, becoming the third largest economy after USA and China. In terms of GDP, India will overtake Italy by 2016, France by 2019, Germany by 2 023 and Japan by 2032. According to Dun & Bradstreet India will become a $5.6 trillion economy by 2020 predicting a threefold jump in countrys GDP from $ 1.7 trillion in 2010-11on the back of rapid investment and growing customer expenditure. The pre diction by Goldman Sachs hold good as of now, so can we expect other prediction to hold true by 2020 too? Is India really going to be a financial superpower by 2020? This paper takes into account several factors that affect Indian economy and whether the current scenario is leading India on the path to become a financial superpower by 2020. The Economy of India is the ninth largest in the world by nominal GDP and third largest by Purchasing Power Parity (PPP). The country is one of the G-20 major economies and a member of BRICS. The countrys per capita GDP (nominal) was $1,527 (IMF, 135 th in the world) in 2011, making it a lower middle income economy. The post-Independence Indian economy was inspired by the Soviet Union with socialist practices. That was the era that saw large public sector enterprises, major inefficiencies associated, corruption, minimal private participation, high import duties and very protected economy. It was in 1991, when India was on the verge of bankruptcy that Dr. Manmohan Singh under the leadership of the then Prime Minister P.V. Narsimha Rao adopted free market principles and introduced free market economy. Following this liberalization acts and principles, India progressed at a rapid race with very high rates of growth and large increase in the incomes of people. Mid- 2000s witnessed the highest growth rates for Indian economy and was on the track of rapid growth in terms of finance and development. The huge population, once considered to hold back India, became the primary cause of development due to large size of middle class consumer and a huge large labor force in addition to considerable foreign investments. The statistics show the same story that India being 14 th largest exporter and 11th largest importer in the world. Economic growth rates are projected around 7.0% for 2011-12 fiscal year.

Keywords
Goldman Sachs - American multinational burlge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. BRICS - grouping acronym that refers to the countries of Brazil, Russia, India and China, which are all deemed to be at a similar stage of newly advanced economic development. Gross Domestic Product (GDP) - refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living Nominal GDP - Nominal GDP reflects Gross Domestic Product in today's prices. As opposed to Real GDP, which controls the growth figure for the affects of inflation, Nominal GDP may increase due to either increased output in an economy, or to increased prices in that economy.

Purchasing Power Parity (PPP) - PPP asks how much money would be needed to purchase the same basket of goods and services in two different countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries Consumer Price Index (CPI) - measures changes in the price level of consumer goods and services purchased by households. The CPI in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." Foreign Direct Investments (FDI) - refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, other long-term capital, and short-term capital as shown in the balance of payments. Balance Of Payments (BOP) - accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers.

Indias financial projection 2020

Regarding the future estimates, one fact that is most probable to prevail is that India will continue to achieve annual 9.0% economic growth rate in this decade in comparison to the previous two decades of post liberalization i.e. 7.5 % for 2001-10 and 6% for 1991- 2000. Thus, the economic growth is ensured. As per various reports, India is expected to move up in global rankings in terms of economic development and other areas. India is expected to outrun the economies of Russia and Brazil, even Canada and Spain in terms of per capita GDP, thus the improved overall life standard of the citizens of India. Per capita income is expected to be doubled this decade. Some of the sectors are particularly expected to grow at a much greater pace as we have seen the case of mobile communications industry in India. The industry is expected to reach a size of Rs. 344,921 crore (US$75.88 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. The same golden path is expected to occur for Information Technology industry in India. The sector has increased its contribution to India's GDP from 6.1% in 2009-10 to 6.4% in 2010-11. At present direct employment reached nearly 2.5 million, while indirect job creation stood at 8.3 million. According to NASSCOM, the IT-BPO sector in India aggregated revenues of US$88.1 billion in FY2011. The growth will be inhibited as the infrastructure in the country is improved. This pattern of increased growth can be attributed to the increasing pool of middle class families in India which will be the primary working sector in the coming times. According to NCAER, India's middle class population is expected to touch 267 million in 5 yrs. Further ahead, by 2025-26 the number of middle class households in India is likely to more than double from the 2015-16 levels to 113.8 million households or 547 million individuals. The average income the middle class families will be twice as is today. The spending power of this middle class is expected to increase six fold. This spending is sure to boost some of the markets ten-fold hence the scale of some businesses is expected to touch sky. Thus some of the sectors like retailing could mimic the software industry path in the coming decade. Aviation industry in India will be a fast growing business. The Airport Authority of India (AAI) manages total 122 Airports in the country, which include 11 International Airports, 94 domestic airports and 28 civil enclaves. Passenger and cargo traffic has growth at an average of about 9% over the last 10 years. Airbus, for instance, has said that Indias will be the fastest growing aviation market in the next 20 years (growing faster even than Chinas, which already has over 800 domestic planes, compared to about 200 in India). The same will be story

for automobile industry of India. The automotive industry in India is one of the largest in the world and one of the fastest growing globally. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. With time, India is shining in terms of global markets and the consumer is attracting several companies to invest preferably in India over the fading economies of Europe and Japan. Indias demand or imports are also going to be changed in a major way in the sense that more raw materials will be imported than the finished products. The reason will be the increased domestic manufacturing. Thus various natural resources demand of metals, energy, agro commodities etc. will increase. The global economies will also be affected in a major way by the Indian market. The example being the increased oil demand by India, China leading to turmoil in global markets. Indias oil consumption is ~3M bbl /da y Figure(1) in 2010 compared to ~2M bbl/day in 2000. Quoted by US president Barack Obama in a speech on Jul 30, 2011 Increasing oil demand in India, China leading to price rise. The manufacturing sector domestically will increase manifold to cater to the needs and demands of the working and middle class families. The biggest problems in rapid industrialization of the country are the challenges of climate change and catering to green development standards. One major issue that prevails is the high population density pre square kilometer in India. The harsh fact is that India has 350 people per square km something like eight or 10 times the global average which is expected to increase to 400 people per sq km by the end of decade. Thus, for a particular large industrial project several people will be required to displace to other place. The setting up of such major projects is of utmost importance to India in the wake of growing demands of employment and service. Thus in future, a lot of thought be required in settling the displaced people and whether such large scale displacements are feasible or not. The situation is particularly grave in states like West Bengal where the population density is thrice the national average. In addition to the economic factors, Indias socio -economic indicators are sure to improve in a sustained manner. The main predictions are reducing the poverty in India to half of the present, literacy rate of 80% by 2020 (against the world average of 84%), increasing the life expectancy mark to 70 or probably 75 years. These predictions are expected to hold even in case of governmental inefficiencies, poor implementation of policies thus ensuring the improved quality of the overall living conditions of the citizens of India. Also, India will witness major urbanization drives because of the economic opportunities in cities and metropolis. Over the decade from 2001, Indian cities and towns added 91 million people, while agricultural areas added 90.4 million people. Indias population now stands at 1.2 billion, according to figures first released in late March, and it added 181.4 million people in the last decade. The general public opinion regarding the politics and choosing their leaders for governance is changing. The people are now being less secular and the trend is expected to continue in the coming years. The people now votes based on the competence of the candidate and capability to serve the public right in a sound and efficient way rather than the caste based vote banks. States have large responsibilities over their economies. The annualized 1999 2008 growth rates for Gujarat (9.6%), Haryana (9.1%), or Delhi (8.9%) were significantly higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (6.5%). India is the ninth-largest economy in the world and the third largest by purchasing power parity adjusted exchange rates (PPP). On per capita basis, it ranks 128th in the world or 118th by PPP.

India is fourteenth in the world in factory output. Manufacturing sector in addition to mining, quarrying, electricity and gas together accounts for 27.6% of the GDP and employ 17% of the total workforce. Economic reforms introduced after 1991 brought foreign competition, led to privatization of certain public sector industries, opened up sectors hitherto reserved for the public sector and led to an expansion in the production of fast-moving consumer goods.

Current Indian Economy and major key sectors

India is an emerging economy which has witnessed unprecedented levels of economic expansion, alongside China, Russia, Mexico and Brazil. India is a cost effective and labor intensive economy, and has benefited immensely from outsourcing of work from developed countries, and has a strong manufacturing and export oriented industrial framework. The global economy seems to be recovering after the recent financial crisis in 2008. The Indian economy, however, was hit in the latter part of the global recession as real economic growth witnessed a sharp fall, followed by lower exports, capital outflow and corporate restructuring. Current Indian Economy Statistics Rank GDP GDP Growth GDP per capita GDP by sector Inflation ( CPI ) Population below poverty line Labor Force Labor Force by occupation Unemployment Average Gross Salary Main Industries 9th (nominal) / 3rd (PPP) $ 1.846 trillion ( nominal 2011 ) $ 4.469 trillion ( PPP 2011 ) 8.5% (2010-11) $1,527 (nominal 2011) $3073 (PPP 2011) Services (55.2%), industry (26.3%), agriculture (18.5%) 7.47% (December 2011) 37% (2010) 478 million ( 2nd in world 2010 ) Agriculture (52%), industry (14%), services (34%) 9.4% ( 2009-10 ) $1,527 yearly (2011) Telecommunications, textiles, chemicals, food processing, steel, transportation, equipment, cement, mining, petroleum, machinery, software, pharmaceuticals $ 343 billion Petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel US 12.6%, UAE 12.2%, China 8.1%, Hong Kong (4.1%) 2010 $ 443 billion Crude oil, precious stones, machinery, iron and steel, chemicals China 12.4%, UAE 6.5%, Saudi Arabia 5.8% , US 5.7%, Australia 4.5% - 2011 $ 35.6 billion (2009-10) $ 238 billion ( 31st Dec, 2010 ) 71.42% of GDP (2011) $ 185.4 billion (2010) $ 269.8 billion (2010) $ 2.107 billion (2010) BBB- (Domestic) BBB- (Foreign) BBB+ (T&C Assessment) Outlook: Stable

Exports Export Goods Main Export Partners Imports Import Goods Main Import Partners FDI Stock Gross External Debt Public Debt Revenues Expenses Economic Aid Credit Rating ( Standard & Poors )

Foreign Reserves

$ 292.5 billion ( Jan 2011 )

Figure(2) Showing the increasing GDP, increasing services sector , decreasing agriculture sector Following are some of the functional sectors that play a key role in Indian economy : Industry and Services After the 1991 economic reforms, the Industrial sector went on a boost attracting foreign and domestic investors to flourish trade in India. Industry accounts for 28% of the GDP and employ 14% of the total workforce. Major industries include: Textiles, Automobiles, Information Technology, Mining, Retail etc. Agriculture - India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and fisheries accounted for 16.6% of the GDP in 2009, about 50% of the total workforce. Banking and Finance - The Indian money market is classified into: the organized sector (comprising private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks); and the unorganized sector (comprising individual or family owned indigenous bankers or money lenders and non-banking financial companies (NBFCs)). The unorganized sector and microcredit are still preferred over traditional banks in rural and sub-urban areas, especially for non-productive purposes, like ceremonies and short duration loans. Energy and Power - As of 2009, India is the fourth largest producer of electricity and oil products and the fourth largest importer of coal and crude-oil in the world. Coal and oil together account for 66 % of the energy consumption of India. Infrastructure - India has the world's third largest road network, covering more than 4.3 million kilometers and carrying 60% of freight and 87% of passenger traffic. India has a national tele density rate of 74.15% with 926.53 million telephone subscribers, two-thirds of them in urban areas, but Internet use is rare, with around 13.3 million broadband lines in India in December 2011. However, this is growing and is expected to boom following the expansion of 3G and wimax services. Global Trade Relations - Since liberalization, 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% in 1990 91 to 47% in 200810. India accounts for 1.44% of exports and 2.12% of imports for merchandise trade and 3.34% of exports and 3.31% of imports for commercial services trade worldwide. India's major trading partners are the European Union, China, the United States of America and the United Arab Emirates.

Balance Of Payments - Since independence, India's balance of payments on its current account has been negative. Since economic liberalization in the 1990s, precipitated by a balance of payment crisis, India's exports rose consistently, covering 80.3% of its imports in 2002 03, up from 66.2% in 199091. 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 9.7% of GDP, in 200809. Between January and October 2010, India imported $82.1 billion worth of crude oil. Foreign Direct Investments - As the fourth-largest economy in the world in PPP terms, India is a preferred destination for FDI. India has strengths in telecommunication, information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI policies were a significant hindrance. However, due to positive economic reforms aimed at deregulating the economy and stimulating foreign investment, India has positioned itself as one of the front-runners of the rapidly growing Asia-Pacific region. During 200010, the country attracted $178 billion as FDI.

Issues with Indian Economy

Inflation: The Indian economy is burdened with the rising prices of the overall living. Caused due to several factors like increasing public debt and the interest, high taxes on consumer products, demand supply gap, inflation is putting more and more pressure on the middle class even with increasing salaries. Inflation is currently between 6-7%. There are major problems arising due to this factor like changing the buying habits of customers thus forcing the manufacturers to cut down production, dramatic decrease in demand in the market of certain areas, impoverish the low income households, creates economic uncertainty and dampener to the investment climate. This problem needs to be dealt immediately if India wants a sustained and continued economic growth. Poverty: One-third of India's population (roughly equivalent to the entire population of the United States) lives below the poverty line and India is home to one-third of the world's poor people. Though the middle class has gained from recent positive economic developments, India suffers from substantial poverty. According to the new World Bank's estimates on poverty based on 2005 data, India has 456 million people, 41.6% of its population, living below the new international poverty line of $1.25 (PPP) per day. The World Bank further estimates that 33% of the global poor now reside in India. Despite significant economic progress, 1/4 of the nation's population earns less than the government-specified poverty threshold of $0.40/day. Major reforms on the governments side needs to be done to alleviate the widespread poverty in Indian population. Illiteracy: Poor educational standards have haunted Indian economy for several years now thus shortage of skilled people for various jobs. The Adult literacy rate in India is 74.94% against world average of 84%. Various socio economic and administrative factors are responsible for low literacy rates in India. Some of them are improper facilities, inefficient teaching staff, caste disparities, discrimination with lower castes, poverty and large proportion of illiterate females. Six Indian states account for about 70% of all illiterates in India: Uttar Pradesh, Bihar, Madhya Pradesh, Rajasthan, Andhra Pradesh and West Bengal. Absolute poverty in India has also deterred the pursuit of formal education as education is not deemed of as the highest priority among the poor as compared to other basic necessities. Corruption: A 2005 study conducted by Transparency International in India found that more than 55% of Indians had first-hand experience of paying bribes or influence peddling to get jobs done in public offices successfully. Transparency International estimates that truckers pay US$5 billion in bribes annually. The recent scams involving unimaginably big amounts of money, such as the 2G spectrum scam, are well known. It is estimated that more than trillion dollars are stashed away in foreign havens, while 80% of Indians earn less than 2$ per day and every second child is malnourished. According to a report by KPMG, "high-level corruption and scams are now threatening to derail the India's credibility and its economic boom". As of December 2008, 120 of India's 522 parliament members were facing criminal charges. Many of the biggest scandals since 2010 have involved very high levels of government, including Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam, the 2010

Commonwealth Games scam and the Adarsh Housing Society scam, mining scandal in Karnataka and cash for vote scam. Officials often steal state property. In cities and villages throughout India, consisting of municipal and other government officials, elected politicians, judicial officers, real estate developers and law enforcement officials, acquire, develop and sell land in illegal ways. Government officials having discretionary powers in awarding contracts engage in preferential treatment for selected bidders and display negligence in quality control processes. Poor Infrastructure: Many Indians lack basic amenities lack access to running water. Indian public services are creaking under the strain of bureaucracy and inefficiency. Over 40% of Indian fruit rots before it reach the market; this is one example of the supply constraints and inefficiencys facing the Indian economy. According to the Economist Intelligence Unit (2006), India has one of the lowest infrastructure ratings in the world, which translates into one of the highest levels of risk on infrastructure. Although largest Indian cities have been equipped in the past few years with infrastructure, many of the rural areas have remained unaffected, fostering inequality. The main facades of poor infrastructure are energy and water supply, educational and health facilities, and transportation. Some 600 million Indians have no electricity at all. While 80% of Indian villages have at least an electricity line, just 44% of rural households have access to electricity. Some half of the electricity is stolen, compared with 3% in China. The stolen electricity amounts to 1.5% of GDP. Transmission and distribution losses amount to around 20%, as a result of an inefficient distribution system, handled mostly by cash-strapped state-run enterprises. Almost all of the electricity in India is produced by the public sector. Power outages are common, and many buy their own power generators to ensure electricity supply. Economic Disparities: It is hoped that economic growth would help drag the Indian poor above the poverty line. However, so far economic growth has been highly uneven benefiting the skilled and wealthy disproportionately. Many of Indias rural poor are yet to receive any tangible benefit from the Indias economic growth. More than 78 million homes do not have electricity. 33% (268million) of the population live on less than $1 per day. Furthermore with the spread of television in Indian villages the poor are increasingly aware of the disparity between rich and poor. Six low-income states Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa and Uttar Pradesh are home to more than one third of India's population. Severe disparities exist among states in terms of income, literacy rates, life expectancy and living conditions. 5 years plan emphasized on encouraging industrial development in the interior regions, but industries still tend to concentrate around urban areas and port cities while on other hand, union and state governments of backward regions are putting their efforts to bring the country under the state of economic equality rather than economic disparity. Balance Of Payments deterioration: Although India has built up large amounts of foreign currency reserves the current account deficit has deteriorated in recent months. This deterioration is a result of the overheating of the economy. Aggregate Supply cannot meet Aggregate Demand so consumers are sucking in imports. Excluding workers remittances, Indias current account deficit is approaching 5% of GDP . Huge Debts: Buoyed by a property boom the amount of lending in India has grown by 30% in the past year. However there are concerns about the risk of such loans. If they are dependent on rising property prices it could be problematic. Furthermore if inflation increases further it may force the RBI to increase interest rates. If interest rates rise substantially, it will leave those indebted facing rising interest payments and potentially reducing consumer spending in the future. Low Output of Agriculture: India's population is growing faster than its ability to produce rice and wheat. The low productivity in India is a result of several factors. According to the World Bank, India's large agricultural subsidies are hampering productivity-enhancing investment. While overregulation of agriculture has increased costs, price risks and uncertainty, governmental intervention in labor, land, and credit markets are hurting the market. Infrastructure and services are inadequate. Further, the average size of land holdings is very small, with 70% of holdings being less than one hectare in size. The partial failure of land reforms in many states, exacerbated by poorly

maintained or non-existent land records, has resulted in sharecropping with cultivators lacking ownership rights, and consequently low productivity of labor.

Recommendations
Employment Guarantee: The NREGA should be strengthened and extended to the urban areas. Extending the period of guaranteed employment beyond 100 days should also be considered. To meet the challenge of chronic underemployment in the rural areas, what is required is to provide productive work to the agricultural population, during seasonal idleness. The problem of seasonal unemployment may be tackled by starting public works. The government may take up useful irrigation and drainage projects, requiring local labor and material, which would gainfully employ seasonal idle agricultural population. Similarly construction of village roads, dispensaries and school buildings would result in net addition to the national wealth apart from offering employment to the unemployed. The perennial unemployment problem is naturally a much more difficult one which can be solved by bringing more land under cultivation and by pursuing a vigorous policy of rapid industrialization. With regard to tackling the urban unemployment problem, it may be suggested that if more land is brought under cultivation, the exodus from the rural areas to the cities is bound to be arrested. In addition development of village and cottage industries may also help in halting this one-sided traffic of idle labor. Some special schemes are necessary to remedy the increasing urban employment. Some may be encouraged to start their own independent business. Machinery and loans may be arranged for them at concessional rates. Another field which may be suggested for adding additional employment for urban youth is transport. It would not only absorb a section of unemployed persons, but would create facilities for the public. A vigorous drive to end illiteracy can provide employment to a large number of educated unemployed. Similarly an extensive programme of public health measures would provide jobs to a large number of persons. Slum clearance schemes and construction of houses for the poor may also open avenues of employment. These measures suggested to reduce the level of unemployment in rural as well urban areas are only short term. A bold and imaginative plan to meet the challenge on a permanent basis would have to be adopted with special reference to the national policy on education and industry. Agriculture: Food grains production has to be encouraged and public procurement operations expanded for all major crops across the country. The allocations for the Food Security Mission and the Rashtriya Krishi Vikas Yojana should be enhanced substantially. Public investment in irrigation also needs to be stepped up substantially. For cash crops like cotton and oilseeds, import protection should be accorded through higher tariffs. Protection should also be extended to cash crops like rubber, cashew etc. to prevent sharp falls in prices. Increase biodiversity by eliminating monoculture dependency in terms of variety. By doing so, you would be using varieties that are suitable for the region where they are grown. This type of agriculture has never been used since the invention of large-scale modern equipment. The current methodology is resulting in the loss of genetic information each day. Preserving heirloom seeds that have been bred for a particular region is the key. If these are put into a conventional agricultural setting (with slight modifications), there would be a phenomenal increase in yield and quality. Creating a more productive, internationally competitive and diversified agricultural sector would require a shift in public expenditures away from subsidies towards productivity enhancing investments. Second it will require removing the restrictions on domestic private trade to improve the investment climate and meet expanding market opportunities. Third, the agricultural research and extension systems need to be strengthened to improve access to productivity enhancing technologies. The diverse conditions across India suggest the importance of regionally differentiated strategies, with a strong focus on the lagging states. Increase in multi-sectoral competition for water highlights the need to formulate water policies and unbundle water resources management from irrigation service delivery. Other key priorities include: (i) modernizing Irrigation and Drainage Departments to integrate the participation of farmers and other agencies in irrigation management; (ii) improving cost recovery; (iii) rationalizing public expenditures, with priority to completing schemes with the highest returns; and (iv) allocating sufficient resources for operations and maintenance for the sustainability of investments. Rising incomes are fueling demand for higher-value fresh and processed agricultural products in domestic markets and globally, which open new opportunities for agricultural diversification

to higher value products (e.g. horticulture, livestock), agro-processing and related services. The government needs to shift its role from direct intervention and overregulation to creating the enabling environment for private sector participation and competition for agribusiness and more broadly, the rural non-farm sector growth. Improving the rural investment climate includes removing trade controls, rationalizing labor regulations and the tax regime (i.e. adoption of the value added tax system), and improving access to credit and key infrastructure (e.g. roads, electricity, ports, markets). Make the government machinery corruption free: Strong steps are needed to be taken by the Indian policy makers to sustainably tread India on the path of rapid economic development. The government machinery needs to be efficient in processes and sound in judgment that will facilitate accessing services by citizens and corporations. The anti corruption organizations need to be strengthened to ensure the soundness of process as well as the people involved and not remain merely the puppets in the hand of corrupt politicians and beaureucrats. Food and Fuel Prices: The prices of these basic commodities must be kept affordable to an average Indian citizen. Only this could ensure the sustainability of development and peace among general public. There can be many ways in which the fuel consumption can be reduced like - renewable sources of energy like wind, electricity, solar energy etc. must be considered seriously by government to replace the conventional sources of energy, govt shall charge more taxes from those having 2 or more vehicles, have a control on black market by oil mafias etc. Retail Trade: With slower growth in consumption, the businesses of small and unorganized retailers are bound to be hit, affecting their livelihood. In this backdrop, allowing big organized retailers to expand their businesses and capture greater market shares would only aggravate the situation. A policy to strictly regulate the operations of domestic corporate retailers and restrict their unbridled expansion is urgently required. Small-Scale Industries: Crisis affecting the small-scale industries would cause massive job losses and affect livelihoods on a massive scale. The Government needs to devise sector specific relief packages, especially for export-oriented and labor intensive sectors like garments and leather, keeping the interests of the small-scale industries and their workers in mind. The relief packages should include rescheduling of bank credit as well as direct subsidies and should also incentives and job protection. Tariff Protection: In order to ensure that the demand injected into the economy through public investment does not leak out through increased imports, increasing customs duties should be considered. Further tariff concessions under NAMA or entering into structurally unequal trade agreements like the proposed EU-India FTA should be ruled out. Tightening Financial Regulation and Reviving Development Finance: Regulation should be strengthened in the financial sector and state control over finance need to be reasserted in order to revive development finance. While curbing reckless flow of credit to fuel elite consumption and asset price bubbles, credit should be directed towards employment intensive sectors like agriculture and small-scale industries. Banking and Insurance Sector Deregulation: The Government should abandon the moves to further deregulate the banking and insurance sectors through legislation like the Banking Regulation (Amendment) Bill, the State Bank of India (Amendment) Bill and increasing the FDI cap in the insurance sector from the present 26% to 49%.

Conclusion
After studying deeply the current economic conditions and the future forecasts, also considering the problems that hamper Indias economic development, the best case scenario suggests that India is sure to witness improvement in economical as well as well social spheres of development. The question is whether the current economic status and the path on which it treads on will make it a financial superpower or not. A lot depends on whether the recommendations suggested are accepted by Government of India and how effectively are they

deployed. The elimination of several social problems as well those pointed will surely help to fast track the process of economic development.

References

Economy of India. Available at: http://en.wikipedia.org/wiki/Economy_of_India India can be 5th largest economy by 2020: Shashi Tharoor. Available at: http://www.siliconindia.com/shownews/India_can_be_5th_largest_economy_by_2020_Shashi_Tharoornid-65735-cid-3.html India Vision 2020. Available at: http://planningcommission.nic.in/reports/genrep/pl_vsn2020.pdf Indias macro economic Outlook. Available at: http://www.dnb.co.in/India2020economyoutlook/Macro_Economic_Outlook2020.asp Indias GDP to touch 205 Trillion Rupees by 2020: Edelweiss Report. Available at: http://trak.in/tags/business/2010/03/21/india-2020-economic-growth-gdp/