Economy of India

Post Independence
The post independence period of economy of India was a litmus test for the economic planners. Having
come out of the shadow of colonial rule, the nation had a huge challenge of undoing the exploitation of
colonial era. The founding fathers had to use economic upliftment as a tool for nation building. The
economy then was backward in nature.

Industry was characterized by ill equipped technology and unscientific management. Agriculture was
still feudal in nature and characterized by low productivity. Transport and communication systems were
not properly developed, educational and health facilities insufficient and the complete absence of social
security measures.

Poverty was visible and unemployment widespread, resulting in a low standard of living. To guide the
Indian economy towards a path of growth and development, the economic planners decided to adopt a
course of mixed economy, assigning a vital role to public sector enterprises and economic planning.
Private enterprise participation was negligible. A system of License Raj developed, by which
entrepreneurs had to seek permission from government to set up manufacturing units. The government
effectively controlled everything. During this period the banks were nationalized between late 1960's
and early 1970's.

India resorted to economic planning by the way of five year plans for economic development.

Crisis In The Economy

By the beginning of 1990’s, the Indian Economy was under great crisis and faced its stiffest challenge.
India faced a serious balance of payment problem and foreign exchange reserves were at record low.
That is when the government decided to alter the course of the Indian economy.

Post Reforms
The introduction of reforms in 1991 resulted in sweeping changes in the Indian Economy. The reforms
process consisted of three processes, liberalization, privatization and globalization (LPG model). Under
liberalization markets were deregulated, under privatization private participation was encouraged and
many a public sector undertaking (PSU) were privatized and under globalization restrictions on foreign
investments were removed. The Indian economy moved away from its isolation, to be integrated with
the global economy and to competitively utilize its advantages to make rapid strides in terms of growth.

In India today 60% of the population is dependent directly and indirectly on agriculture and agriculture
contributes 17% of GDP.

The Industrial sector has witnessed massive restructuring by the way of mergers and acquisitions,
process reengineering, foreign joint ventures, technological up gradation. Certain sectors like cement,
steel, aluminium, pharmaceuticals, and automobiles have been witnessing unprecedented growth.

The service sector has been one of the major beneficiaries of the economic boom. The outsourcing
industry comprising of IT and ITE’S became the new poster boy of the Indian economy. The huge pool
of engineering talent was absorbed by the IT industry, while graduates could carve out a career in the
ITE'S industry. The purchasing power of the booming middle class was enhanced, who went on a
consumption spree, which in turn allowed the retail sector to flourish. The booming economy also
created a wave of real estate boom across the country.

The supply of money into the economy has increased steadily due to FDI’s. (Between April 2008 and
January 2009, India received total foreign investments of US $ 15,545 million).The Foreign
Institutional Investors (FII’s) have invested heavily in the stock market, resulting in a continual bull run
for an extended period of time. The BSE indices scaled a new peak of 21,000 in January 2008.
Summary
To summarise, post liberalization the Indian economy is one of the fastest growing economies in the
world. It can also be said that the Indian economy has coped well to the pressures of the global
recession, far better than most other nations. The future looks positive for India and one can expect the
nation to progress strongly in the path of development.
Indian Currency
Currency System From The Ancient Times To The British Period
Ever since the dawn of civilization, man has been trading with each other. In the ancient times when
there was no concept of money, people used barter system. In this system goods were exchanged with
each other instead of paying money. Gradually, with development, metals were used to cast coins.

In India, during the rule of the slave dynasty, silver coins known as tanka and copper coins known as
jintal were introduced by Iltutmish. During his brief rule, Sher Shah Suri introduced a silver coin known
as Rupiya. Mughal coinage highlighted originality and innovative skills. Earliest issues of paper rupees
were by Bank of Hindustan (1770-1832) and Bengal Bank (1784-91). During the British rule, and even
in the first decade of independence, rupee was divided into 16 annas, which was divided into 4 paisa.

Currency System After Independence

Pre Decimal Issues (1950 - 57)

The first coins were introduced in 1950's. They were 1 paisa, 1/2, 1 and 2 annas, 1/4, 1/2 and 1 rupee
denominations.

Decimal Issues (1957 - till date)

The first decimal issues of India consisted of 1,2,5,10,25 and 50 paisa along with 1 rupee. The 1 naya
paisa was made of bronze while the 2, 5 and 10 naya paisa was of cupro-nickel. The 25 and 50 naya
paisa and the 1 rupee were made of nickel. In 1964, the term naya was eliminated from all coins. In
1964 and 1967, aluminum 1,2,3,5 and 10 paisa were introduced.

In 1968, nickel brass 20 paisa was introduced which was replaced by aluminum coins in 1982. In 1982,
cupro nickel 2 rupee coins were introduced. In 1988, stainless steel 10, 25 and 50 paisa were introduced,
followed by 1 rupee coins in 1992. In 1992 5 rupee coins were also introduced.

Bank Notes Before Independence

The Reserve bank of India began production of notes in 1938, issuing 2, 5,10,1000 rupee notes, while
the government of India continued to issue 1 rupee notes.

Bank Notes After Independence

After independence the government introduced new designs in bank notes. In 1970s, 20 and 50 rupee
notes were introduced. In 1987, 500 rupee note was reintroduced followed by 1000 rupee in 2000. The
language panel on the Indian rupee banknotes has 15 of the 22 national languages of India.

Demographics Of Currently Circulating Notes

Value Dimension Colour Reverse Date of Issue

Rs. 5 117 × 63 mmGreen Tractor 2002
Rs. 10 137 × 63 mmOrange-violet Rhinoceros, elephant, tiger 1996
Rs. 20 147 × 63 mmRed-orange Palm trees 2002
Rs. 50 147 × 73 mmViolet Parliament of India 1997
Rs. 100 157 × 73 mmBlue-green at center brown Himalaya Mountains 1996
purple at 2 sides
Rs. 1000 177 × 73 mm Pink Economy of India 2002
Convertibility
The Indian Currency has a market determined by the exchange rates. The Reserve Bank of India trades
actively in the INR/USD to have effective rates.
Finance Commission of India
The Finance Commission of India came into existence in 1951. The Finance commission is established
under article 280 of the Indian Constitution of India by the President of India. The Indian Finance
Commission Act was passed to give a structured format to the Finance Commission of India as per the
world standard. The need for the Finance Commission was felt by the British for guiding the finance of
India. The structure of the modern Act was laid in the early 1920's. The Finance Commission is formed
to define the financial relations between the centre and the state. The Finance Commission Act of 1951
tells about the qualification, appointment, term, eligibility, disqualification, powers etc of the Finance
Commission.

Functions Of The Finance Commission

The Finance Commission's duty is to recommend to the President as to-

• The distribution of net proceeds of taxes between the Union and the States.
• To evaluate the increase in the Consolidated Fund of a state to affix the resources of the
Panchayat in the state.
• To evaluate the increase in the Consolidated Fund of a state to affix the resources of the
Municipalities in the state.

Implementation Of The Recommendation Of Finance Commission

The recommendation of the Finance Commission are implemented

• By an order of the President or by executive orders.

Powers of the Commission:

The Finance Commission has the following powers:

• The Commission shall have all the powers of the Civil Court as per the Code of Civil Procedure,
1908.
• It can call any witness, or can ask for the production of any public record or document from any
court or office.
• It can ask any person to give information or document on matters as it may feel to be useful or
relevant.
• It can function as a civil court in discharging its duties.

Qualifications for appointment and the manner of selection:

The Chairman of the Finance Commission is selected among persons who have had the experience of
public affairs, and four other members are selected among persons who

• Are, or have been, or are qualified as judges of High Court, or

• Have knowledge of finance, or
• Have vast experience in financial matters and are in administration, or
• Have knowledge of economics

Term of Office of the members:

Every member of the commission shall be in the office as specified by the President. He can also be
reappointed, provided that he has already addressed a letter to the President for his resignation.

Conditions of service and salaries and allowance of members:

 • Each member should provide whole time or part time service to the Commission as the President
with respect to each case might specify.
• Each member shall receive salaries according to the provisions made by the central government.

Disqualification:

A member may be disqualified if:

• He is of unsound mind.
• He is involved in a vile act.
• If his interests are likely to affect the smooth functioning of the Commission.
GDP of India
The Indian economy is the 12th largest in USD exchange rate terms. India is the second fastest growing
economy in the world. India’s GDP has touched US$1.25 trillion. The crossing of Indian GDP over a
trillion dollar mark in 2007 puts India in the elite group of 12 countries with trillion dollar economy.
The tremendous growth rate has coincided with better macroeconomic stability. India has made
remarkable progress in information technology, high end services and knowledge process services.

However cause for concern would be this rapid growth has not been an inclusive in nature, in the sense
it has not been accompanied by a just and equitable distribution of wealth among all sections of the
population. This economic growth has been location specific and sector specific. For e.g. it has not
percolated to sectors were labor is intensive (agriculture) and in states were poverty is acute (Bihar,
Orissa, Madhya Pradesh and Uttar Pradesh).

Though India has the second highest growth rate in the world, its rank in terms of human development
index (which is broadly used has a measure of life expectancy, adult literacy and standard of living) has
gone down to 128 among 177 countries in 2007 compared to 126 in 2006.

Indian GDP –Trend Of Growth Rate

1960-1980 : 3.5%
1980-1990 : 5.4%
1990-2000 : 4.4%
2000-2009 : 6.4%

Contribution of Various Sectors in GDP

The contributions of various sectors in the Indian GDP for 1990-1991 are as follows:

Agriculture: - 32%
Industry: - 27%
Service Sector: - 41%

The contributions of various sectors in the Indian GDP for 2005-2006 are as follows:

Agriculture: - 20%
Industry: - 26%
Service Sector: - 54%

The contributions of various sectors in the Indian GDP for 2007-2008 are as follows:

Agriculture: - 17%
Industry: - 29%
Service Sector: - 54%

It is great news that today the service sector is contributing more than half of the Indian GDP. It takes
India one step closer to the developed economies of the world. Earlier it was agriculture which mainly
contributed to the Indian GDP.

The Indian government is still looking up to improve the GDP of the country and so several steps have
been taken to boost the economy. Policies of FDI, SEZs and NRI investment have been framed to give a
push to the economy and hence the GDP.
Globalization
The human society around the world, over a period of time, has established greater contact, but the pace
has increased rapidly since the mid 1980’s.The term globalization means international integration. It
includes an array of social, political and economic changes. Unimaginable progress in modes of
communications, transportation and computer technology have given the process a new lease of life.

The world is more interdependent now than ever before .Multinational companies manufacture products
across many countries and sell to consumers across the globe. Money, technology and raw materials
have broken the International barriers. Not only products and finances, but also ideas and cultures have
breached the national boundaries.

Laws, economies and social movements have become international in nature and not only the
Globalization of the Economy but also the Globalization of Politics, Culture and Law is the order of the
day. The formation of General Agreement on Tariffs and Trade (GATT), International Monetary Fund
and the concept of free trade has boosted globalization.

Globalization in India
In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new
economic model known as Liberalization, Privatization and Globalization in India (LPG), was to make
the Indian economy one of the fastest growing economies in the world. An array of reforms was
initiated with regard to industrial, trade and social sector to make the economy more competitive. The
economic changes initiated have had a dramatic effect on the overall growth of the economy. It also
heralded the integration of the Indian economy into the global economy. The Indian economy was in
major crisis in 1991 when foreign currency reserves went down to $1 billion and inflation was as high
as 17%. Fiscal deficit was also high and NRI's were not interested in investing in India. Then the
following measures were taken to liberalize and globalize the economy.

Steps Taken to Globalize Indian Economy

Some of the steps taken to liberalize and globalize our economy were:

1. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to
19%.

2. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private
sector.

3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as
Insurance (26%), defense industries (26%) etc.

4. NRI Scheme: The facilities which were available to foreign investors were also given to NRI's.

Merits and Demerits of Globalization

The Merits of Globalization are as follows:

• There is an International market for companies and for consumers there is a wider range of
products to choose from.
• Increase in flow of investments from developed countries to developing countries, which can be
used for economic reconstruction.
• Greater and faster flow of information between countries and greater cultural interaction has
helped to overcome cultural barriers.
 • Technological development has resulted in reverse brain drain in developing countries.

The Demerits of Globalization are as follows:

• The outsourcing of jobs to developing countries has resulted in loss of jobs in developed
countries.
• There is a greater threat of spread of communicable diseases.
• There is an underlying threat of multinational corporations with immense power ruling the
globe.
• For smaller developing nations at the receiving end, it could indirectly lead to a subtle form of
colonization.

Summary
India gained highly from the LPG model as its GDP increased to 9.7% in 2007-2008. In respect of
market capitalization, India ranks fourth in the world. But even after globalization, condition of
agriculture has not improved. The share of agriculture in the GDP is only 17%. The number of landless
families has increased and farmers are still committing suicide. But seeing the positive effects of
globalization, it can be said that very soon India will overcome these hurdles too and march strongly on
its path of development.
WTO
The World Trade Organization is an international organization which was created for the liberalization
of international trade. The World Trade Organization came into existence on January 1st, 1995 and it is
the successor to General Agreement on Trade and Tariffs (GATT). The World trade organization deals
with the rules of trade between nations at a global level. WTO is responsible for implementing new
trade agreements. All the member countries of WTO have to follow the trade agreement as decided by
the WTO.

Structure of the WTO:

Following is the structure of WTO.

Highest Level: Ministerial Conference

The Ministerial Conference is the top most body of the WTO, which meets in every two years. It brings
together all the members of WTO.

Second Level: General Council

The General Counsel of the WTO is the highest level decision making body in Geneva, which meets
regularly to carry out the functions of WTO.

Third Level: Councils for Trade

The Workings of GATT, which covers international trade in goods, are the responsibility of the Council
of Trade.

Fourth Level: Subsidiary Bodies

There are subsidiary bodies under the various councils dealing with specific subjects such as
agriculture, subsidies, market access etc.

Benefits Of WTO

• It helps promote peace and prosperity across the globe.

• Disputes are settled amicably.
• Rules bring about greater discipline in trade negotiations, thereby reducing inequalities to a large
extent.
• Free trade reduces the cost of living and increases household income.
• Companies have greater access to markets and consumers have wider range of products to
choose from.
• Good governance accelerates economic growth

India and WTO

India is one of the founding members of WTO along with 134 other countries. India's participation in an
increasingly rule based system in governance of International trade, would ultimately lead to better
prosperity for the nation. Various trade disputes of India with other nations have been settled through
WTO. India has also played an important part in the effective formulation of major trade policies. By
being a member of WTO several countries are now trading with India, thus giving a boost to
production, employment, standard of living and an opportunity to maximize the use of the world
resources.
Inflation in India
Inflation is caused due to several economic factors:

• When the government of a country print money in excess, prices increase to keep up with the
increase in currency, leading to inflation.
• Increase in production and labor costs, have a direct impact on the price of the final product,
resulting in inflation.
• When countries borrow money, they have to cope with the interest burden. This interest burden
results in inflation.
• High taxes on consumer products, can also lead to inflation.
• Demands pull inflation, wherein the economy demands more goods and services than what is
produced.
• Cost push inflation or supply shock inflation, wherein non availability of a commodity would
lead to increase in prices.

Problems

The problems due to inflation would be:

• When the balance between supply and demand goes out of control, consumers could change
their buying habits, forcing manufacturers to cut down production.
• The mortgage crisis of 2007 in USA could best illustrate the ill effects of inflation. Housing
prices increases substantially from 2002 onwards, resulting in a dramatic decrease in demand.
• Inflation can create major problems in the economy. Price increase can worsen the poverty
affecting low income household,
• Inflation creates economic uncertainty and is a dampener to the investment climate slowing
growth and finally it reduce savings and thereby consumption.
• The producers would not be able to control the cost of raw material and labor and hence the
price of the final product. This could result in less profit or in some extreme case no profit,
forcing them out of business.
• Manufacturers would not have an incentive to invest in new equipment and new technology.
• Uncertainty would force people to withdraw money from the bank and convert it into product
with long lasting value like gold, artifacts.

Inflation in India Economy

India after independence has had a more stable record with respect to inflation than most other
developing countries. Since 1950, the inflation in Indian economy has been in single digits for most of
the years

Between 1950-1960
The inflation on an average was at 2.00%

Between 1960-1970
The inflation on an average was at 7.2%

Between 1970-1980
The inflation on an average was at 8.5%.

Inflation At Present
Inflation in India a menace a few years ago is at a 30 year low. The inflation ended at a low of 0.61% in
the week ended May 9, 2009 this after reaching a 16 year high of 12.91 % in August 2008, bringing in a
sigh of relief to policymakers.
National Income
The study of National Income is important because of the following reasons:

• To see the economic development of the country.

• To assess the developmental objectives.
• To know the contribution of the various sectors to National Income.

Internationally some countries are wealthy, some countries are not wealthy and some countries are in-
between. Under such circumstances, it would be difficult to evaluate the performance of an economy.
Performance of an economy is directly proportionate to the amount of goods and services produced in
an economy. Measuring national income is also important to chalk out the future course of the
economy. It also broadly indicates people’s standard of living.

Income can be measured by Gross National Product (GNP), Gross Domestic Product (GDP), Gross
National Income (GNI), Net National Product (NNP) and Net National Income (NNI).

In India the Central Statistical Organization has been formulating national income.

However some economists have felt that GNP has a measure of national income has limitation, since
they exclude poverty, literacy, public health, gender equity and other measures of human prosperity.

Instead they formulated other measures of welfare like Human Development Index (HDI)

Calculating National Income

There are various methods for calculating the national income such as production method, income
method, expenditure method etc.

Production Method
The production method gives us national income or national product based on the final value of the
produce and the origin of the produce in terms of the industry.

All producing units are classified sector wise.

• Primary sector is divided into agriculture, fisheries, animal husbandry.

• Secondary sector consists of manufacturing.
• Tertiary sector is divided into trade, transport, communication, banking, insurance etc.

Income Method:
Different factors of production are paid for their productive services rendered to an organization. The
various incomes that includes in these methods are wages, income of self employed, interest, profit,
dividend, rents, and surplus of public sector and net flow of income from abroad.

Expenditure Method:
The various sectors – the household sector, the government sector, the business sector, either spend
their income on consumer goods and services or they save a part of their income. These can be
categorized as private consumption expenditure, private investment, public consumption, public
investment etc.

Calculation of National Income of India: A Brief History

The first attempt to calculate National Income of India was made by Dadabhai Naroji in 1867 -68. This
was followed by several other methods. The first scientific method was made by Prof. V.K.R Rao in
1931-32. But this was not very satisfactory. The first official attempt was made by Prof.P.C.Mahalnobis
in 1948-49, who submitted his report in 1954.
Difficulties in Calculation of National Income
In India there are various difficulties in calculating the national incomes .The most severe one is the
finding of reliable data. Most of the time, it is based on assumptions. Soon after independence the
National Income Committee was formed to collect data and estimate National Income. The two major
problems which remain in the calculation of National Income are:

• Most of the data is not from the current year.

• Even if current data are available then values are underreported.

Obstacles in High Growth of National Income of India

Even if the Indian economy grows faster than the BRIC countries and G 6, the benefits of the growth
would not be evenly distributed. India’s progress in education cannot be termed as satisfactory. In terms
of higher education it has achieved tremendous success, but its unsatisfactory performance in primary
education and secondary education has been a major obstacle to growth. Similarly India’s healthcare
system is in a less than desirable state. Governments’ spending on public health has not been up to the
required levels.

Growth Of National Income In India

Sector 1950-1980 1980-2005

GDP Total 3.5 5.6
GDP Per capita 1.4 3.6

Sectoral Composition Of National Income (in percent)

Year Primary Secondary Tertiary Total GDP

1950-51 59 13 28 100
1980-81 42 22 36 100
2002-03 24 24 52 100
Pay Commission
Pay Commission of India: History
Pay commission is a panel consisting of the members of the Union Cabinet of India for hiking the
salaries of the government employees.

First Pay Commission

The first pay commission of India was constituted in May 1946, which submitted its report in a year.

Second Pay Commission

The second pay commission was set up in August 1957 and it gave its report after two years. The
recommendations of the second pay commission had a financial impact of Rs 396 million.

Third Pay Commission

The third Pay Commission was set up in April 1970 and it gave its report in March 1973. The third pay
commission created proposals cost the government Rs 1.44 billion.

Fourth Pay Commission

The fourth Pay Commission was constituted in June 1983, which gave its report in three phases within
four years. The proposals of the fourth Pay Commission cost the government Rs 12.8 billion.

Fifth Pay Commission

The fifth Pay Commission was set up was set up in 1994 and its proposals were implemented in 1997,
which cost the government about Rs 17,000 crores.

Sixth Pay Commission

In July 2006, the sixth pay commission was set and its proposals will cost the government about Rs
20,000 crores. The government employees had threatened to go on a strike if their salaries were not
raised. The government employees want a hike in their salaries mainly because the Indian economy is
facing a serious problem called inflation. The class 1 officers of the Indian government are not
adequately paid and the salaries of IAS officers are also very stumpy.

Members of the Sixth Pay Commission

Following are the members of the sixth Pay Commission:

Chairman: Mr. Justice B.N.Srikrishna
Members: Prof. Ravindra Dholakia, Mr. J.S.Mathur
Member-Secretary: Smt. Sushama Nath
Per Capita Income
Meaning and Significance
Per capita Income means how much an individual earns, of the yearly income that is generated in the
country through productive activities. It means the share of each individual when the income from the
productive activities is divided equally among the citizens. Per capita income is reported in units of
currency. Per capita income reflects the gross national product of a country. Per capita income is also a
measure of the wealth of a population of a nation when compared with other countries. It is expressed in
terms of commonly used international currency such as Euro, Dollars because these currencies are
widely known.

Per Capita Income In India

India's per capita income is found by the Atlas method and by employing official exchange rates for
conversion. Further, this Atlas method of calculating the per capita income of India is not determined by
using purchasing power parity, which essentially adjusts exchange rates for purchasing power of
currencies.

Economist have been giving considerable importance to the performance of states vis a vis each other in
terms of per capita income. It has been observed that those states that were more open and better
adapted to economic liberalization have overall shown faster rate of growth.

Per Capita Income of Various Indian States

The two backward states of the Indian republic Jharkhand and Orissa are growing at a rapid rate in
terms of the per capita income because of rise of industrial activities in these two states. Karnataka is at
the top of the chart with the fastest growing per capita income (nearly 9.28%) followed by Gujarat with
8.92%.The per capita income in 17 states is below the national average of 8.4%. Per capita income
shows the purchasing power of the states and so it is very important for the states to increase the per
capita income of each person.

History of India Per Capita GDP

• In 2002-03 the Per Capita Income in India was Rs 19040.

• In2003-04 the Per Capita Income in India was Rs 20989.
• In2004-05 the Per Capita Income in India was Rs 23241.
• In2008-2009 the Per Capita Income in India was37490.
• GDP at factor cost at constant (1999-2000) prices in the year 2008-2009 is likely to attain a level
of Rs 3351653.India achieved a growth rate of 7.1 per cent in 2008-2009.
• Agriculture, forestry and fishing had a combined growth rate of 2.6 per cent during 2008-2009
• Industry had growth rate of 3.4 per cent during 2008-2009
• Service sector had a growth rate of 10.3 per cent during 2008-2009

Inspite of the global meltdown, India has performed well in comparison to the rest of the world
Planning Commission
The Planning Commission in India was set up on March 1950 to promote a rapid rise in the standard of
living of the people by utilizing the resources of the country, increasing production and offering
employment opportunities to all. The Planning Commission has the responsibility for formulating plans
as to how the resources can be used in the most effective way.

The Planning Commission has to make periodic assessment of all resources in the country, boost up
insufficient resources and formulate plans for the most efficient and judicious utilization of resources.

Jawaharlal Nehru was the first chairman of the Planning Commission.

Structure of the Planning Commission:

The Prime minister is the chairman of the Planning Commission. The Deputy Chairman and the full
time members give advice and guidance for the formulation of Five Year Plan, Annual Plans, State
Plans, Projects and Schemes etc. Currently the structure of the planning commission is like this:

1. Chairman - Dr. Manmohan Singh

2. Deputy Chairman- Shri Montek Singh Ahluwalia
3 Minister of State- Shri M.V. Rajshekharan
4. Members - Dr. Kirit Parikh,Prof. Abhijit Sen ,Dr. V.L. Chopra ,Dr. Bhalchandra Mungekar ,Dr.(Ms.)
Syeda Hameed ,Shri B.N. Yugandhar ,Shri Anwar-ul-Hoda, Shri B. K. Chaturvedi
5. Secretary- Dr. Subhas Pani

Functions of the Planning Commission India:

Following are the functions of the Planning Commission of India:

• To make an assessment of the resources of the country and to see which resources are deficient.
• To formulate plans for the most effective and balanced utilization of country's resources.
• To indicate the factors which are hampering economic development.
• To determine the machinery, that would be necessary for the successful implementation of each
stage of plan.
• Periodical assessment of the progress of the plan.
• With the changing times, the Planning commission is preparing itself for long term vision for the
future. The commission is seeing to maximize the output with minimum resources.
• From being a centralized planning system, the Indian economy is slowly progressing towards
indicative planning wherein the Planning Commission has set the goal of constructing a long
term strategic vision for the future.
• It sets sectoral targets and provides the catalyst to the economy to grow in the right direction.
• The Planning Commission plays an integrative role in the development of a holistic approach to
the formulation of policies in critical areas of human and economic development.
Poverty in India
Poverty in India: Current Situation
Poverty is one of the main issues, attracting the attention of sociologists and economists. It indicates a
condition in which a person fails to maintain a living standard adequate for a comfortable lifestyle.

Though India boasts of a high economic growth, it is shameful that there is still large scale poverty in
India. Poverty in India can be defined as a situation when a certain section of people are unable to fulfill
their basic needs. India has the world's largest number of poor people living in a single country. Out of
its total population of more than 1 billion, 350 to 400 million people are living below the poverty line.
Nearly 75% of the poor people are in rural areas, most of them are daily wagers, landless laborers and
self employed house holders. There are a number of reasons for poverty in India. Poverty in India can
be classified into two categories namely rural poverty and urban poverty.

Reasons for Rural Poverty

Some of the basic reasons of rural poverty in India are:

• Unequal distribution of income.

• High population growth.
• Illiteracy.
• Large families.
• Caste system.

Problems Of Rural Poverty

• Presence of malnutrition, illiteracy, diseases and long term health problems.

• Unhygienic living conditions, lack of proper housing, high infant mortality rate, injustice to
women and social ill-treatment of certain sections of society.

Steps Taken by Government to Reduce Rural Poverty

The government of India has been trying its best to remove poverty. Some of the measures which the
government has taken to remove rural poverty are:

• Small farmer’s development Programme.

• Drought area development Programme.
• Minimum needs Programme.
• National rural employment Programme.
• Assurance on employment.

Causes for Urban Poverty

The causes of urban poverty in India are:

• Improper training
• Slow job growth.
• Failure of PDS system

Problems Of Urban Poverty

• Restricted access to employment opportunities and income.

• Lack of proper housing facilities
• Unhygienic environments
• No social security schemes
 • Lack of opportunity to quality health and educational services.

The steps taken by government to remove urban poverty are:

• Nehru Rozgar Yojna.

• Prime Minister Rozgar Yojna.
• Urban Basic services for the poor Programme.
• National social Assistance Programme.

But these processes can be helpful only if the policies go to those people for whom it is meant. The
clash between the central government and the state government often results in the lack of
implementation of these policies. So it is very important that the governments do not play power politics
when it comes to a serious issue such as poverty.

Year All India % Rural % Urban%

1973 54.9 56.4 49.0
1978 51.3 53.1 45.2
1983 44.5 45.7 40.8
1988 38.9 39.1 38.2
1994 36.0 37.3 32.4
1999 26.1 27.1 23.6
Union Budget of India
Union Budget: A Brief Summary
Budget is a systematic plan for the expenditure of a usually fixed resource during a financial year. It is a
detailed plan of the government’s finances and it is the most important economic and financial event in
India.

The budget is usually anteceded by an economic survey which gives the general course for the budget
and gives an outlook for the economic performance of the country.

The budget is a detailed account of the Governments finances, in which revenues from various sources
and expenses of all activities undertaken are aggregated. It consists of revenue budget and capital
budget and the budget estimates, which is a financial projection for the next fiscal year.

The Union Budget of India is presented on the last working day of February by the Finance Minister of
India in the parliament. The Budget has to be passed by both the houses of the Parliament before it can
come to effect on April 1st.The Union Budget is also known as the general budget.

The first budget of independent India was presented by R.K Shanmukham Chetty on November 26,
1947. Morarji Desai has presented the Union Budget for the maximum number of times (8 times).

Revenue Budget
Revenue Budget consists of revenues from tax and other sources and the expenditure covered by these
revenues.

Revenue receipts are divided into tax and non tax revenue. Tax revenues are made up of taxes such as
income tax, corporate tax, excise, customs and other duties which the government levies. Non tax
revenues are made up of interest and dividend on investments made by government, fees and other
receipts for services rendered by Government.

Revenue expenditure is the payment incurred for the normal day to day running of government
departments and various services that it offers to its citizens. The other expenditure for the government
would be interest on its borrowings, subsidies etc.

Capital Budget
It consists of capital receipts and payments. Under capital receipts the main subject would be loans by
Government from public, which can also be termed as Market Loans, borrowing from Reserve Bank
and other lenders through the sale of treasury bills, loans received from foreign governments and
recovery loans granted by Central government to State and Union Territory, corporations and other
parties.

Contents of the Union Budget

The Union Budget highlights the receipts and payments of the government under three accounts:-

Consolidated Fund: It is the main bank account of the government.

Contingency Fund: It is the amount kept in reserve to guard against losses.

Public Account: Accounts which have funds provided by the entities of government.

The union budget also announces policies and it tells about the government's economic thinking. It also
determines activities such as exports and foreign direct investment. The Union Budget has both short
and long term effect. Short term effect is due to the taxes levied and prices determined. The
announcement of Income Tax has a big impact on the salaried people, who have fixed income. In the
long run, the main factor is inflation. If the government goes on printing notes to pay off its debts then it
will assist inflation.

Highlights of Union Budget 2008 - 2009

Recently Mr. P Chidambaram presented the union budget 2008-09. Some of the highlights of the budget
were:

• Changes in Income Tax slab. Threshold of exemption for all Income Tax assesses raised from
Rs 1, 10,000 to Rs 1, 50,000.
• Every income tax assesses to get relief of minimum of Rs 4,000.
• No change in rate of surcharge.
• New tax slabs will be: 10 per cent for Rs 150,000 to Rs 300,000, 20 per cent for Rs 300,000 to
Rs 500,000 and 30 % above Rs 500,000.
• For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh. In case of senior
women citizens, it increases from Rs 1.95 lakh to Rs 2.25 lakh.
• Fresh facilities, encouragement to sports and guest houses exempted from Fringe Benefit Tax.

[Fringe / employee Benefits Tax (FBT) is the tax applied to most, although not all, fringe benefits. A new tax was imposed on employers by India's
Finance Act 2005 introduced for the financial year commencing April 1, 2005.

The following items are covered:

o Employer's expenses on entertainment, travel, employee welfare and accommodation. The definition of fringe benefits that have
become taxable has been significantly extended. The law provides an exact list of taxable items.
o Employer's provision of employee transportation to work or a cash allowances for this purpose.
o Employer's contributions to an approved retirement plan (called a superannuation fund).
o Employee stock option plans (ESOPs) have also been brought under Fringe Benefits Tax from the fiscal year 2007-08.]
• Five year tax holiday for setting up hospitals in tier II and tier III regions for providing
healthcare in rural areas from April 1, 2008.
• Five year tax holiday for promoting cultural tourism.
• Short-term capital gains increases to 15 %.
• Commodities Transaction Tax to be introduced on the lines of Securities Transaction Tax.
• Banking cash transaction tax withdrawn from April one, 2009.
• Direct tax proposals to be revenue neutral. Indirect tax proposals to result in loss of Rs 5,000
crore.
• Customs duty on specified life saving drugs reduced from ten per cent to five per cent.
• Special Countervailing Duty on power imports.
• Customs duty on specified sports goods machinery down from 7.5 per cent to five per cent.
• Duty withdrawn on naphtha for production of polymers.
• Duty on crude and unrefined sulphur reduced from five to 2 per cent to help raise domestic
fertilizer production.
• Excise duty reduced from 16 % to 8% on all pharmaceutical goods manufacture.
• Excise duty on small cars reduced to 12 % from 16 % and hybrid cars to 14 per cent.
• Excise duty reduced from 16 to 8 % on water purification items.
• Duty on non filter cigarettes to be raised.
• Asset management service under mutual funds, services by stock exchanges to be brought under
Services Tax net.
Exports
Export means the transferring of any good from one country to another country in a legal way for the
purpose of trade. Export goods are provided to the foreign consumers by the domestic producers.

Indian Exports: A History

The history of Indian exports is very old. During ancient times India exported spices to the other parts
of the world. India was also famous for its textiles which were a chief item for export in the 16th
century. Textiles and cotton were exported to the Arab countries from Gujarat. During the Mughal era
India exported various precious stones such as ivory, pearls, tortoise stones etc. But during the British
era, Indian exports declined as the East India Company took control of foreign trade.

Markets
Though India has seen some product diversification in its export basket, it has not expanded
significantly in the two big markets-Africa and Latin America.

India’s business with South Asian countries is also negligible. This region has not been integrated with
the global economy, though political and economic initiatives have been taken in the recent past in this
direction.

Leading Export Items of India

In the past ten years, Indian exports have grown at a rate of nearly 22%. Some commodities have
enjoyed faster export growth than others. Some of India's main export items are cotton, textiles, jute
goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp, juices, jams, preserved vegetables
etc. India exports its goods to some of the leading countries of the world such as UK, Belgium, USA,
China, Russia etc.

Restriction on the Exports of Items

However there are some restrictions on the export of goods. Under sub section (d) of section 111 and
sub section (d) of section 113, any good exported or attempted to be exported, contrary to any
prohibition imposed by or under the customs act or any other law is liable for confiscation.

Export Trends
If the Indian economy grows at the same pace, India would most definitely export goods worth US $500
billion by 2013 and may supersede the exports of other large developing countries like Brazil.

The Way Ahead

India needs the right mix of policy formulation sector focus and industry led initiatives to move up the
value chain in the global export basket

The Opportunity
It is very clear that Indian exports have still not achieved their true potential and there exists immense
opportunities for expanding the basket of India’s exports. With a strategic attention on the new markets
that are evolving due to free trade, India is witnessing a boom in both manufacturing and services.

Problems of the Indian Export Sector

There are few problems which need to be solved before India makes a mark for itself in the export
sector. The Indian goods have to be of superior quality. The packaging and branding should be such that
countries are interested to export from India. At the same time India must look for potential market to
sell their goods. The government should frame policies which gives boost to the exports.

Directional Change In Exports

India has seen massive directional change in the context of origin of demand for Indian products. Till
2001-02 North America and the EU markets shared nearly 21% and 23.2 % respectively of total exports
and the remaining to the rest of the globe. By 2006-07, North America had a share of only 16% of the
total exports and the EU's share was 21.2%.
Five Year Plans
When India gained independence, its economy was groveling in dust. The British had left the Indian
economy crippled and the fathers of development formulated 5 years plan to develop the Indian
economy. The five years plan in India is framed, executed and monitored by the Planning Commission
of India. Currently, India is in its 11th five year plan. Let's see the journey of five year's plan in India
and the objectives in each plan.

Objectives of all the Five Year's Plan:

1st Plan (1951-56)

• The first five year plan was presented by Jawaharlal Nehru in 1951. The First Five Year Plan
was initiated at the end of the turmoil of partition of the country. It gave importance to
agriculture, irrigation and power projects to decrease the countries reliance on food grain
imports, resolve the food crisis and ease the raw material problem especially in jute and cotton.
Nearly 45% of the resources were designated for agriculture, while industry got a modest
4.9%.The focus was to maximize the output from agriculture, which would then provide the
impetus for industrial growth.
• Though the first plan was formulated hurriedly, it succeeded in fulfilling the targets. Agriculture
production increased dramatically, national income went up by 18%, per capita income by 11%
and per capita consumption by 9%

2nd Plan (1956-61)

• The second five year plan was initiated in a climate of economic prosperity, industry gained in
prominence. Agriculture programmes were formulated to meet the raw material needs of
industry, besides covering the food needs of the increasing population. The Industrial Policy of
1956 was socialistic in nature. The plan aimed at 25% increase in national income.
• In comparison to First Five Year plan, the Second Five Year Plan was a moderate success.
Unfavorable monsoon in 1957-58 and 1959-60 impacted agricultural production and also the
Suez crisis blocked International Trading increasing commodity prices.

3rd Plan (1961-66)

• While formulating the third plan, it was realized that agriculture production was the
destabilizing factor in economic growth. Hence agriculture was given due importance. Also
allotment for power sector was increased to 14.6% of the total disbursement.
• Emphasis was on becoming self reliant in agriculture and industry. The objective of import
substitution was seen as sacrosanct. In order to prevent monopolies and to promote economic
developments in backward areas, unfeasible manufacturing units were augmented with
subsidies. The plan aimed to increase national income by 30% and agriculture production by
30%.
• The wars with China in 1962 and Pakistan 1965 and bad monsoon in almost all the years, meant
the actual performance was way of the target.

4th Plan (1969-74)

• At the time of initiating the fourth plan it was realized that GDP growth and rapid growth of
capital accumulation alone would not help improve standard of living or to become
economically self-reliant. Importance was given to providing benefits to the marginalized
section of the society through employment and education.
• Disbursement to agricultural sector was increased to 23.3% .Family planning programme was
given a big stimulus.
 • The achievements of the fourth plan were below targets. Agriculture growth was just at 2.8%
and green revolution did not perform as expected. Industry too grew at 3.9%.

5th Plan (1974-79)

• As a result of inflationary pressure faced during the fourth plan, the fifth plan focused on
checking inflation. Several new economic and non-economic variables such as nutritional
requirements, health, family planning etc were incorporated in the planning process. Investment
mix was also formulated based on demand estimated for final domestic consumption.
• Industry got the highest allocation of 24.3% and the plan forecasted a growth rate of 5.5% in
national income.
• The fifth plan was discontinued by the new Janata government in the fourth year itself.

6th Plan (1980-85)

• The Janata government moved away from GNP approach to development, instead sought to
achieve higher production targets with an aim to provide employment opportunities to the
marginalized section of the society. But the plan lacked the political will.
• The Congress government on taking office in 1980 formulated a new plan with a strategy to lay
equal focus on infrastructure and agriculture.
• The plan achieved a growth of 6% pa.

7th Plan (1985-89)

The first three years of the seventh plan saw severe drought conditions, despite which the food grain
production rose by 3.2%.Special programmes like Jawahar Rozgar Yojana were introduced. Sectors like
welfare, education, health, family planning, employment etc got a larger disbursement.

8th Plan (1992-97)

• The eighth plan was initiated just after a severe balance of payment crisis, which was intensified
by the Gulf war in 1990.several structural modification policies were brought in to put the
country in a path of high growth rate. They were devaluation of rupees, dismantling of license
prerequisite and decrease trade barriers.
• The plan targeted an annual growth rate of 5.6% in GDP and at the same time keeping inflation
under control.

9th Plan (1997-2002)

It was observed in the eighth plan that, even though the economy performed well, the gains did not
percolate to the weaker sections of the society. The ninth plans therefore laid greater impetus on
increasing agricultural and rural incomes and alleviate the conditions of the marginal farmer and
landless laborers.

10th Plan (2002-2007)

• The aim of the tenth plan was to make the Indian economy the fastest growing economy in the
world, with a growth target of 10%.It wanted to bring in investor friendly market reforms and
create a friendly environment for growth. It sought active participation by the private sector and
increased FDI's in the financial sector.
• Emphasis was laid on corporate transparency and improving the infrastructure.
• It sought to reduce poverty ratio by 5 percentage points by 2007and increase in literacy rates to
75 per cent by the end of the plan.
• Increase in forest and tree cover to 25 per cent by 2007 and all villages to have sustained access
to potable drinking water.

11th Plan (2007-2012)

• The eleventh plan has the objective to increase GDP growth to 10%.
• Increase agricultural GDP growth to 4% per year to ensure a wider spread of benefits. Create 70
million new work opportunities. Augment minimum standards of education in primary school.
• Reduce infant mortality rate to 28 and malnutrition among children of age group 0-3 to half of
its present level. Ensure electricity connection to all villages and increase forest and tree cover
by five percentage points.
India Imports
Indian Import Policy
Import is the antonym of export. In the terms of economics, import is any commodity brought into one
country from another country in a legal way. The economic needs of the country, effective use of
foreign currency are the basic factors which influence India's import policy. There are mainly 3 basic
objectives of the Indian import policy :

• To make the goods easily available.

• To simplify importing license.
• To promote efficient import substitution.

Current Scenario of Imports in India

There are few goods which cannot be imported namely tallow fat, animal rennet, wild animals,
unprocessed ivory etc. Most of the restrictions are on the ground of security, health, environment
protection etc. Imports are allowed free of duty for export production. Input output norms have been
specified for more than 4200 items. The norms tell about the amount of duty free import of inputs
allowed for specified products. There are no restrictions on imports of capital goods. Import of second
hand capital goods whose minimum residual life is of five years is permitted. Export Promotion Capital
Goods (EPCG) scheme provides exporters to import capital goods at a concessionary custom rates. In
the past 30 years Indian imports have risen quite dramatically. At present imports accounts for 17% of
the GDP. Capital goods have been continued to be imported and in the last three years, their share has
fallen from 25% to 22%.

Major Indian Imports

There are facilities available for the service industries to enjoy the facility of zero import duty under
EPCG scheme. Some of the major imports of India are edible oil, newsprint, petroleum and crude
products, crude rubber, fabrics, electronic goods etc.

Problems due to Large Import of Products

The recent trend of imports is of some concern. The regular imports of oil reflect upon the fact that
India is not able to produce the quantity of oil required in India. Moreover the increase in the imports of
products also highlights the fact that the Indian domestic industries need to be developed. High cost of
imports also put pressure on the foreign exchange reserves.
India Industry
Industrial Growth After Independence
Prior to independence the ownership or control of much of the large private industries were in the hands
of managing agencies, which grew under the British system and had access to London money markets.
Thus the owners of these managing agencies controlled a major portion of the economy, prior to
independence.

But things changed after independence. Parliament enacted a legislation to curb the powers of managing
agencies. By 1971 the government had banned the managing agencies. The Industrial Policy Resolution
declared in 1948, clearly put forward the goal of the Government's policy with respect to
industrialization and classified them into four categories.

Those industries completely owned by the Government e.g. ordinance, atomic energy, railways and any
industry of national importance. Certain important industries like coal, iron and steel, aircraft
manufacture, ship building, telephone, telegraphs and communications, were given the permission to
operate for ten years, at the end of which the government would nationalize them.

A group of 18 specified industries were in control of the central government in liaison with the state
governments. The remaining industrial options were left open to the private sector.

Industrial Development & Regulation Act 1951

The act gave complete authority to the government. This resulted in the bureaucracy extending
complete control over the industrialization of the country.

• They controlled the authorization of capability, whereabouts and growth of any request for
manufacture of new products.
• They controlled the authorization of foreign exchange expenditure on the import of plant and
machinery.
• They controlled the authorization for the terms of international joint ventures.

Industrial Policy In 1956

In 1956 a new policy for industrialization was initiated. All basic industries and sensitive industries in
India were under the purview of public sector enterprises and were called as category A type of
industries. In category B, industries were a joint venture of both public and private enterprises. The
remaining industries came under category C, to be under the control of private initiative.

The policy of 1956 for the first time recognized the contribution of small scale industries in the growth
of the Indian economy. It laid stress on rational distribution of national income and effective utilization
of resources.

Monopolies Commission -1964

The Government of India appointed a monopolies inquiry commission to study the presence and
outcomes of concentration of economic power in private sector. The commission observed the presence
of monopolistic and restrictive practices in certain key sectors of the economy. The commission
recommended the setting up of the Monopolies and Restrictive Trade Practices Commission.

FERA Amendment 1973

The Foreign Exchange and Regulation Act was amended in 1973.This resulted in a tremendous shift in
the foreign investment policy of the Government of India. Foreign Investment was allowed in only
those industries that were directly into exports.

Restrictions were placed on foreign investments. International companies could hold a maximum of
40% equity. But some industries in the field of advanced technology were given permission for 51%
foreign capital.

Industrial Policy 1973

The policy listed out the various appendix 1 industries that could be started by large business houses so
that small industries were not driven out of business. The establishment of small and medium industries
was encouraged.

Private industries were encouraged to set up production units in rural areas and in backward areas with a
vision to give thrust for the economic development of those areas.

Industrial Policy 1977

The focus of this industrial policy was judicious promotion of small scale and cottage industries. The
idea of District Industries Centre’s was introduced for the first time. Small industries were encouraged
to set up base in rural areas away from the big cities.

Industrial Policy In 1980's

The first step towards liberalization was taken up in the 1980's.The government took corrective steps to
vitiate the licensing system and encourage private entrepreneurs.

The following steps were mooted:

• Re endorsement of licenses: The scope mentioned in the licenses could be re advocated, only if
it was 25% greater than the licensed capacity.
• Broad banding and discerning de licensing (1985-86) extended to 25 industries.

Industrialization Post 1990

• Exemption from licensing for all start ups and for those with an investment worth of Rs2.5
crores in fixed assets and a right to import up to 30% of the total value of plant and machinery.
• Foreign equity investment was allowed up to 40%.
• Geographical restrictions and investment cap for small industries were removed.

At the time of liberalization the Indian industries were not competitive in the global scenario. They
could not face the stiff competition from the foreign industries; hence many industries sold their
company to multinational corporations or entered into joint ventures with foreign companies or shut
down the business.

At the same time a new wave of service industries emerged, which positioned itself in the outsourcing
segment. IT and ITE's industries flourished providing employment to millions of graduates.
Automobile Industry
The automobile industry consisting of cars, trucks, buses, two-wheelers and three-wheelers, is vital to
the growth of the Indian economy. In the last decade their share in the Indian economy is around 5% of
GDP.

Economic progress is indicated by the amount of goods and services produced which give the impetus
for transportation and boost the sale of vehicles. Increase in automobile production has a catalyst effect
by indirectly increasing the demand for a number of raw materials like steel, rubber, plastics, glass,
paint, electronics and services.

Since transportation is the nerve center of every other industry, the well being of the automobile
industry is a good indicator of the health of the economy. Economic studies have shown that every truck
manufactured creates anywhere between eight to twelve jobs and a bus would create around seven,
which would include salespeople, drivers, mechanics, cleaners and servicing staff.

Indian Automobile Industry

Before Independence
Before independence India was seen as a market for imported vehicles. The assembling of cars
manufactured by General Motors and other leading brands was the order of the day. Indian auto
industry focused on servicing, dealership, financing and maintenance of vehicles. Manufacturing started
only after a decade from independence.

After Independence
Till the 1950s the Indian Railways played a pivotal role in meeting India's transportation needs. The
railways used to carry 90 per cent of the total freight, while road transport accounted for the balance.
But in the current context the dynamics have changed. Surface transport accounts for 65% of freight
movement and 80% of passenger movements. The slow growth of railway infrastructure has been partly
due to administrative reasons, partly due to difficulty in acquiring land and partly due to high capital
cost involved for every additional railway line.

The Indian automobile industry faced several challenges and road blocks to growth since independence.
Manufacturing capability was restricted by the rule of license and could not be increased. The total
production of passenger cars was limited to 40,000 a year for nearly three decades. This production was
also confined to three main manufacturers Hindustan Motors, Premier Automobiles and Standard
Motors. There was no homegrown expertise or research & development initiative. It was difficult to
import scientific know how and vital spare parts and cumbersome to recruit foreign technical experts.

The pricing was kept under control by the government. Here was the contradiction, a passenger car was
thought to be a premium product only for the rich, yet it came under the purview of protection of a
socialist regime.

Initially labor was unskilled and had to go through a process of learning through trial and error. But to
the credit of these workers, it was they who developed the skill set required for future expansion in the
industry.

The earlier automobiles were a domestic version of prominent International Brands. The Morris
Oxford popular in the 1950s, became the Ambassador, the Fiat 1100 became the Premier Padmini.
By 1960s nearly 98% of the product was developed indigenously.

By the end of 1970s, significant changes in the automobile industry were witnessed. Initiatives like joint
ventures for light commercial vehicles did not succeed. New models like Contessa, the Rover and the
Premier 118NE, hit the market.
Socialistic Pattern Of Growth
India by and large followed a socialist system till the later part of 1980s.The government focused on
development through heavy, long gestation, capital intensive projects like steel manufacturing. The
quality of the finished good and customer feedback were not given much priority. As a result the
country missed a golden opportunity to accelerate to a faster growth trajectory by at least 2 decades.

The Pioneering Achievements

Mr. J.R.D Tata's role in the development of the Indian automobile industry has to be mentioned. The
Tata group set up a high standard Engineering Research Centre (ERC) in 1965 to facilitate
technological advancement. Mr. Tata pioneered the indigenization of scientific knowledge for trucks in
collaboration with Mercedes Benz.

The launch of Maruti 800 in 1983 changed the dynamics of the passenger car sector in India. It was also
known as the people’s car.

Stability In The Market

The Indian automobile industry has come a long way since independence. From being an importer of
automobiles to a manufacturer. From having minimum foreign collaborations to joint ventures. This
attribute cannot be considered as a weakness, but as sharing of best practices. This phenomenon can be
compared to the business collaboration in the outsourcing industry.

Highlights of Indian Automobile Industries

• India is the world's largest two wheel manufacturer.

• India is the world's second largest tractor manufacturer.
• India has the fourth largest car market in Asia.
• India has the world's largest three wheeler market.

The Future

• The Indian automobile industry is expected to grow to US$ 40 billion by 2015 from the current
level of US$ 7 billion in 2008. By the year 2016 the industry is expected to contribute 10% of
the nation’s GDP. The industry manufacturers over 11 million vehicles a year, employing more
than three million people.
• The greatest challenge and competition would be from the Chinese automobile industry. The
Chinese automobile industry has been able to give stiff completion to India in terms of
productivity, cost of manufacturing and technology. Again the present trend of excess
manufacturing capability, reduced margins put additional pressure on the industry.
• The global recession has had a dampener effect on the growth of the industry, but market experts
believe it is only a short term phenomenon and are confident of the industry bouncing back.
• On the positive side, India’s strength in software sector, combined with skilled labor and low
cost of manufacturing should place it in a favorable position globally.
• Recently Ratan Tata, Chairman (Tata Motors) created history by launching the world's cheapest
car NANO. The cars pricing is around one lakh, gaining instant recognition in the automobile
industry across the globe. It heralded the coming to age of the Indian Automobile Industry.
Biotechnology
Biotechnology is the offshoot of science in which living beings are used for making products. Flora and
fauna and microorganisms like bacteria are used for this purpose. In the field of medicine and
agriculture, bio technology has been used to produce food, test for diseases and to remove waste.

Biotechnology is divided into three sub field-red, white and green biotechnology.

Red biotechnology deals with genetically changed microorganisms being used for manufacturing
products like insulin and vaccine for medical use. It is due to research in red biotechnology that
antibiotics for various infections have been developed and vaccines to bolster the bodies’ resistance to
various diseases were developed. It has also been used in reproductive technologies like invitro
fertilization, DNA profiling, forensics and transplantation technologies.

White biotechnology deals with creating useful chemicals for the industrial sector through organisms
like moulds or yeast. This type of bio technology is also referred to as grey biotechnology. White
biotechnology has proven to be of immense benefit environmentally in cleaning oil spills and in storing
DNA samples of endangered species for future research. It is also useful for removing excess nutrients
in soil and water and for detection of landmines.

Green biotechnology also called agricultural biotechnology is to do with factors pertaining to

agriculture. Green biotechnology is concerned with the genetic modification of plants and animals to
produce environmentally friendly species.

Bio Technology Industry In India

This industry is one of the sunrise sectors in India.

The biotech industry can be classified into five different segments.

Biopharma, Agri-biotech, Bioinformatics, Bio industrial and Bio services with each concentrating on a
particular area.

• Bio pharma deals with the production of vaccines, therapeutics and diagnostics, while the end
products of the biotech industry find two different kinds of buyers, the first type include private
hospitals, governments; patients and the second type include industries like pharmaceutical.
• Agri-biotech deals with hybrid seeds and transgenic crops, biopesticides and biofertilizers.
• Bio informatics deals with creation and maintenance of extensive electronic databases on
various biological systems.
• Bioservices market deals with clinical trial, contract research and manufacturing activities.
• Bio Industrial industry deals with enzyme manufacturing and marketing companies and these
enzymes are used in detergent, textile, food, leather, paper and pharmaceutical industry.

At present there are more than 350 biotech companies in India providing employment for over 20,000
scientists. Most of the companies are located in the six major cities of Delhi, Mumbai, Pune, Chennai,
Bangalore, Hyderabad and Ahmadabad. The leading companies in India are Biocon, Serum Institute of
India(in the biopharma space),MahycoMonsanto, Rasi seeds(in the agri-bio tech field),Strand
Genomics, GVK Biosciences (in the bioinformatics arena),Syngene and Quintiles in the (in bio
services).

Importance of Biotechnology:

• In today's era, when people are exposed to so many physical disorders, biotechnology plays a
vital role in developing medicines, vaccines, energy production, and conservation. To keep pace
with the competitive world, India has launched a comprehensive programme in biotechnology to
 make use of the resources available. In India the Department of Biotechnology (DBT) was
established in the year 1986 under the ministry of Science and Technology.
• It is imperative that India has to keep up with the increasing demand for food from the ever
expanding population. Agricultural land is also shrinking. Genetic engineering of plants to
increase their yield is the way to go in future.
• Biotechnology can be used in a wide range of economic activity ranging from environment,
animal husbandry, medicinal and aromatic plants, bio fuels, aquaculture and products like silk
and leather.

Future of the Bio Technology Sector

• According to reports bio technology industry in India has become the fourth largest adopter of
biotech crop in the world, replacing Canada. The Indian biotechnology industry is slated to
become a US$ 5 billion industry by 2010.
• India is gaining recognition in the field of clinical trial. A large number of companies are
providing research and development expertise to global pharmaceutical companies.
• The availability of a vast pool of English speaking science graduates, good regulatory processes
and the cost advantage have positioned India as a favorable investment destination by the way of
globalization, mergers and acquisition and alliances.
• Indian companies are also expanding overseas. The acquisition of 70 per cent stake of the
German pharma company AxiCorp by Biocon is a case in testimony.
• In terms of technology, the nanotechnology is the next big opportunities.
• Stem Cell Therapy research also has huge potential.
Cement Industry
The cement industry is one of the vital industries for economic development in a country. The total
utilization of cement in a year is used as an indicator of economic growth.

Cement is a necessary constituent of infrastructure development and a key raw material for the
construction industry, especially in the government’s infrastructure development plans in the context of
the nation’s socioeconomic development.

Cement Industry In India

Prior To Independence
The first endeavor to manufacture cement dates back to 1889 when a Calcutta based company
endeavored to manufacture cement from Argillaceous (kankar).

But the first endeavor to manufacture cement in an organized way commenced in Madras. South India
Industries Limited began manufacture of Portland cement in 1904.But the effort did not succeed and the
company had to halt production.

Finally it was in 1914 that the first licensed cement manufacturing unit was set up by India Cement
Company Ltd at Porbandar, Gujarat with an available capacity of 10,000 tons and production of 1000
installed. The First World War gave the impetus to the cement industry still in its initial stages. The
following decade saw tremendous progress in terms of manufacturing units, installed capacity and
production. This phase is also referred to as the Nascent Stage of Indian Cement Industry.

During the earlier years, production of cement exceeded the demand. Society had a biased opinion
against the cement manufactured in India, which further led to reduction in demand. The government
intervened by giving protection to the Industry and by encouraging cooperation among the
manufacturers.

In 1927, the Concrete Association of India was formed with the twin goals of creating a positive
awareness among the public of the utility of cement and to propagate cement consumption.

After Independence
The growth rate of cement was slow around the period after independence due to various factors like
low prices, slow growth in additional capacity and rising cost. The government intervened several times
to boost the industry, by increasing prices and providing financial incentives. But it had little impact on
the industry.

In 1956, the price and distribution control system was set up to ensure fair prices for both the
manufacturers and consumers across the country and to reduce regional imbalances and reach self
sufficiency.

Period Of Restriction (1969-1982)

The cement industry in India was severely restrained by the government during this period. Government
hold over the industry was through both direct and indirect means. Government intervened directly by
exercising authority over production, capacity and distribution of cement and it intervened indirectly
through price control.

In 1977 the government authorized higher prices for cement manufactured by new units or through
capacity increase in existing units. But still the growth rate was below par.

In 1979 the government introduced a three tier price system. Prices were different for cement produced
in low, medium and high cost plants.
However the price control did not have the desired effect. Rise in input cost, reduced profit margins
meant the manufacturers could not allocate funds for increase in capacity.

Partial Control (1982-1989)

To give impetus to the cement industry, the Government of India introduced a quota system in 1982.A
quota of 66.60% was imposed for sales to Government and small real estate developers. For new units
and sick units a lower quota at 50% was effected. The remaining 33.40% was allowed to be sold in the
open market.

These changes had a desired effect on the industry. Profitability of the manufacturers increased
substantially, but the rising input cost was a cause for concern.

After Liberalization
In 1989 the cement industry was given complete freedom, to gear it up to meet the challenges of free
market competition due to the impending policy of liberalization. In 1991 the industry was de licensed.

This resulted in an accelerated growth for the industry and availability of state of the art technology for
modernization. Most of the major players invested heavily for capacity expansion.

To maximize the opportunity available in the form of global markets, the industry laid greater focus on
exports. The role of the government has been extremely crucial in the growth of the industry.

Future Trends

• The cement industry is expected to grow steadily in 2009-2010 and increase capacity by another
50 million tons in spite of the recession and decrease in demand from the housing sector.
• The industry experts project the sector to grow by 9 to 10% for the current financial year
provided India's GDP grows at 7%.
• India ranks second in cement production after China.
• The major Indian cement companies are Associated Cement Company Ltd (ACC), Grasim
Industries Ltd, Ambuja Cements Ltd, J.K Cement Ltd and Madras Cement Ltd.
• The major players have all made investments to increase the production capacity in the past few
months, heralding a positive outlook for the industry.
• The housing sector accounts for 50% of the demand for cement and this trend is expected to
continue in the near future.
Pharmaceutical Industry
Before Independence
Indian pharmaceutical industry has grown over a period of time and has seen many ups and down
during its evolution.

The architect of the Indian pharmaceutical industry would be Acharya P.C.Ray. In the year 1901
Acharya P.C.Ray founded Bengal Chemicals and Pharmaceuticals Works Ltd. It started by making
drugs from indigenous materials and then went on to manufacture quality chemicals, drugs,
pharmaceuticals and employed local technology, skills and resources.

But prior to independence bulk of the drugs were imported and very negligible quantity was
manufactured in India.

After Independence
Just after Independence many Multinational Companies set base in India as trading companies and later
moved to repacking of finished formulations within the country. They then progressed to manufacture
of bulk drugs.

The turnover of Indian pharmaceutical industry was around 10 crores then and the over reliance on
imports continued. The Multinational Corporations controlled 70 to 80 per cent of the market. The
prices of the medicines were very high, quiet out of reach for the Indian population.

Indian pharmaceutical industry was still regulated by product patent regime, a legacy of the British
colonial era.

The government of India took a historic decision by introducing the Patent Act 1970 that allowed only
process patent and put an end to product patent in the field of food, agrochemicals and pharmaceuticals.

This development came as a major boost to the Indian entrepreneurs to establish manufacturing units.
The Patent Act 1970 legalized "reverse engineering" and Indian companies started manufacturing
medicines at a cheaper rate than Multinational Companies. It helped the country break free from the
curbs imposed by monopoly

Post 2005
As part of India's commitment to WTO, India issued the patent ordinance, to recognize foreign product
patents from January 1, 2005, the conclusion of a 10 year process. Under these circumstances Indian
pharmaceutical manufacturers would not be able to manufacture patented drugs.

To meet the challenges of this new initiative, the industry started probing new business models.

Some of the features of the new model included

• Contract research (drug discovery and clinical trials).

• Contract manufacturing.

The focus of the industry shifted from process improvisation to drug discovery and research and
development.

Contract Research
By 2002 the market for clinical trials in India was $70 million and this market is increasing at a rate of
20% per annum. Companies specialized in this line of business offered services which include product
development, formulation and manufacturing, clinical trial management, toxicology and clinical,
medical and safety monitoring.
Contract Manufacturing
Many pharmaceutical multi nationals are looking to outsource manufacturing to Indian companies,
which have a cost advantage in comparison to companies in the developed countries.

With regard to this, the pharmaceutical companies are undertaking compliance with reputed
International regulatory agencies like USFDA, MCC for their manufacturing units.

SWOT Analysis

Strengths

• Cost Effective
• Strong Manufacturing Base
• Availability of high quality skilled workforce.
• Excellent marketing and distribution network
• Diverse ecosystem

Weaknesses

• Less investment in research and development

• Lack of coordination between industry and academia.
• Negligible expenditure on healthcare in the country.
• Manufacture of fake and low quality medicines bring

Opportunities

• Increased export potential

• Marketing ties ups with multinational companies to sell their products in domestic market.
• Immense scope to position India as a centre for international clinical trials.
• Key player in global pharmaceutical R&D.
• Export of generic drugs to developed markets.

Threats

• Product patent regime is a major threat to domestic industry unless the industry takes up R&D
initiative aggressively.
• Drug Price Control Order puts undue pressure on product prices, affecting the profitability of the
pharmaceutical companies.
• The new MRP based excise duty regime threatens the business of smaller pharmaceutical
companies.

Future Trends

• The Pharmaceutical industry is expected to grow at a rate of 10.8 per cent and reach $168 billion
in the year 2009.
• India and China are expected to account for nearly 40 per cent of the outsourced market for
dynamic pharmaceutical constituents, finished dosage formulations and intermediates.
• Experts believe the combined effect of increase in business due to many premium drugs coming
of patent and the increased confidence of international companies on India due to the product
patent regime would mean a boom for the pharmaceutical industry.
Fertilizer
Fertilizer can be described as any substance, organic or inorganic, natural or artificial, which supplies
one or more of the chemical elements required for plant growth. According to experts sixteen elements
are identified as essential elements for plant growth, of which nine are needed in larger quantities and
seven elements are required in smaller quantities.

Carbon, oxygen and hydrogen are directly supplied by air and water and therefore not treated as
nutrients by the fertilizer industry.

Indian Fertilizer Industry

Indian Fertilizer industry is one of the vital industries for the Indian economy, since it manufacturers a
very critical raw material for agriculture. The fertilizer industry especially the ammonia urea plants are
energy demanding in their operation.

The main objective of the fertilizer industry is to ensure the supply of primary and secondary nutrients
in the required quantities.

The fertilizer industry in India has performed a vital role in enabling the necessary increase in the use of
plant nutrients for achieving the objectives of self sufficiency in food grains production and accelerated
and continuous agricultural growth.

The fertilizer industry which is one of the most energy intensive sectors is very important from the
context of environmental discussions. Due importance to increasing productivity through the
implementation of competent and pollution free technologies in the manufacturing sector would be most
desirable in combining economic, environmental and social development objectives.

Pre Liberalization
In India the per hectare consumption of fertilizer in 1950-51 was less than 1/4th of the global average.
Production was by and large in the purview of public sector and co operative sector.

In 1977 the government introduced the Retention Price Scheme (RPS) with the goals of providing
fertilizers to farmers at reasonable rates without affecting the profitability of the manufacturers. Under
this policy the government would pay the manufacturers, the difference between the administered price
(sale price) and the retention price (cost of production).

Over and above the retention price subsidy, the equated freight subsidy was introduced to enable the
manufacturers to cover the cost of transportation.

Post Liberalization
The policy of economic liberalisation has its effect on the fertilizer industry too. The government in a
move aimed at reducing subsidy, decontrolled all the phosphatic and potassic fertilizers in 1992.This
strained the ratio of fertilizer utilization. With this policy of liberalization, the retention pricing scheme
(RPS) which had been introduced in 1977, got confined only to urea.

Post liberalization, the government strategized a long term fertilizer policy to be completed in three
different phase, beginning in 2000-01 and ending in 2006-2007.

Phase 1: 2000-01 and 2001-02

• Evaluate existing capacity.

• Increase in urea prices from time to time.
• Evaluate the possibility of a coal based expertise.
• Promote joint ventures.
 • Finalize policy on fertilizer pricing and capacity enhancement.
• Eliminate distribution controls on urea and augment concession scheme to bio fertilizers.

Phase II (2002-03-2003-04)

• Finalize decision on feedback.

• Long term strategy of increased capacity.
• Decide on extent of protection to local industry.
• Eliminate MRP and encourage productive investment.
• Reorganize the association between the industry and farmers.
• Judicious utilization of fertilizer and greater emphasis on eco friendly fertilizer.
• Establish Fertilizer Policy Planning Board.

Phase III (2004-05-2006-07)

• Removal of MRP
• Define government's role in decontrol setup and with respect to policy relating to LNG.

W T O Implications

• The restriction on quantity of fertilizers to be imported has been eliminated from April 1,
2001.The proposed plan to establish a tariff rate quota (TRQ) for the import of urea has been
deferred.
• The Government has planned to impose a higher tariff of 150-200 per cent on imported urea in
future. This would lead to increase in prices of imported urea and be detrimental to the demand
supply gap which is likely augment in future.

Future Trends

• India's demand for fertilizers in 2007-08 was 26 MM tons, which went up to 29 MM tons in
2008-09 against a supply of 20 MM tons in 2008-2009.
• The demand for fertilizers in 2011-12 is forecasted to be around 35.5 MM tons.
• More fertilizer projects are in the pipeline.
• Gujarat is expected to play a leading role in fertilizer production.
• Indian companies have penetrated the overseas market, signaling a new phase for the industry.
Food Processing
Food processing would include the normal preparation of foods, the modification of a food product into
another form (for e.g. manufacturing preserves from fruit) and preservation and packaging techniques.

Innovations in food processing have resulted in new products such as concentrated fruit juices, freeze
dried coffee and instant foods. Food and food enhancement have also been processed from untapped
sources such as oilseeds (like soybeans and cotton seeds); altered crops, leaves, grasses and aquatic
plants.

Food Processing In India

India is one of the most important producers of food in the world, with the second largest arable land
area. It comes first globally in the production of milk, pulses, sugarcane and tea and is the second
largest producer of wheat, rice, fruits and vegetables.

Food processing in India is one of the biggest industries -it ranks fifth in terms of production,
consumption, export and expected growth. Though India is one of the major producers of food globally,
it accounts for only 1.7 per cent of world trade in this sector.

Food processing as such is a large sector that covers various economic works like agriculture,
horticulture, plantation, animal husbandry and fisheries. The food processing industry has several
segments like

• Dairy, fruits and vegetable processing

• Grain processing.
• Meat & poultry processing.
• Fisheries.
• Consumer foods include packages foods, beverages and packaged drinking water.

Though the industry is large in terms of size in India, it is still at a budding stage in terms of
development.

Strengths In Food Processing

India has plenty of natural resources that provide it a competitive advantage in the food processing
industry. Due to it’s unlike climatic conditions, it has a wide ranging and large raw material base
appropriate for food processing industries.

The semi processed and ready to eat packaged food segment is comparatively new and constantly
changing. India's cost advantage in manpower can be used to set up large low cost production bases for
domestic and export markets. If one is to add on significant investments that have come into the
country, food processing industry is in a favorable position.

Research
The well established R&D and technical expertise of Indian research institutions like Central Food
Technological Research Institute, Central Institute of Fisheries, National Dairy Research Institute,
National Research and Development Centre etc have been a great support for food processing sector in
India.

Government Regulations
The government has introduced several steps to enhance the growth of food processing industry. In
order to further enhance investment in the food processing industry, several policy initiatives have been
initiated in the recent past.

The initiatives include

 • Full repatriation of profits and capital.
• Immediate approvals for foreign investments up to 100 per cent.
• Import duty would be zero for 100 per cent export oriented units. Reduction in customs duty on
packaging machines.
• Income tax rebate granted (100 per cent of profits for 5 year and 25 per cent of profits for next 5
years) for upcoming industries like fruits and vegetables.
• Government gives financial aid for establishing common facilities in Agro Food Park.
• Full duty exemption on all imports for units in export processing zones.

Processing Technology

• At present most of the processing in India is manual. Usage of Technology like pre cooling
facilities for vegetables, controlled atmospheric storage and irradiation facilities is very
negligible.
• Modernizing and bringing in state of the art technology should be given paramount importance
by both existing and upcoming manufacturers.

Supply Chain Management

According to estimates nearly 20 to 25 per cent of the production is lost during various stages of
cultivation. Adding to this factor are issues like poor quality of seeds, planting material and sub
standard technology in increasing productivity. Hence there is an urgent need for backward linkages
with the farmers with the help of techniques like contract farming to improve the quality of the produce.

Contract Farming
It is nothing but an agreement between the food processor (contractor) who would mostly be a very big
organized investor and the farmer, where the farmer is under contractual agreement to plant the
contractor's crop in his land, The farmer also agrees to cultivate and deliver to the contractor a portion
of the produce, calculated on the basis of expected yield and contracted land usage at a pre determined
price. The contractor also provides technology and training to the farmer.

This is a tremendous advantage to both the farmer and contractor. It guarantees to the farmer a regular
source of income and guarantees qualitative output for the contractor.

Product Innovation
In the case of certain processed food like snack foods, the customer would look for innovation, new
varieties and brand loyalty. Neat and attractive packaging would also help by making the product more
visible.

Another factor to be given due importance is the pricing. Consumers are extremely price sensitive and
due attention should be given to this factor.

Future Trends

• It is believed that the food processing industry can do to the rural economy what the
information technology industry has done for urban India.
• The Indian food processing industry is forecasted to grow at 9% to 12% in the coming years.
• The industry has set a goal of increasing its share in the global processed food trade from 1.6%
to 3% within the next 8 years.
• India having an advantage of a strong agricultural base should tap this potential favorably and
become a preferred sourcing destination for food products globally.
Mining Industry
Indian Mining Sector
India is a very vast and extensive country; it spreads over an area of 3.29 million square kilometers,
making it the seventh largest country in the world. The mining industry is the backbone of Industries in
India, since it is the main source of raw material for most of the industries. India produces as many as
84 minerals comprising 4 fuels, 11 metallic, 49 non metallic and 20 minor minerals.

Indian Mining Sector-History

India's mining activities and development dates back to early stages of civilization. It can be traced back
to nearly 6000 years. The existence of several old mine workings are a testimony to this fact. Some of
these workings have significant mineral deposits, which are still active in present age. Few e.g. of such
workings would be lead-zinc deposit at Zawar, copper deposit at Khetri and gold deposits in Karnataka.
During ancient times India was well advanced in the process of smelting. The rust free iron pillar in
New Delhi is believed to date back to the 4th century.

Indian Mining Sector-Before Independence

The industry began its operation in 1774, when the East India Company allowed an English company to
undertake mining activity in the coalfield in Ranigang. In 1880 M/s John Taylor and Sons Ltd started
gold mining at Kolar goldfields in Karnataka. In the year 1866 the first oil well was drilled in Digboi,
Assam. Inspite of all these progress the Indian mining industry continued to be backward before
independence.

Indian Mining Sector-After Independence

After Independence, the economic planners realized the importance of the mining sector for nation
building. Before independence, the annual value of mineral production was just Rs 0.58 billion, with
only a few minerals being mined. The nation was by and large dependent on imports of commodities
such as copper, lead, zinc, sulphur, graphite, petroleum and their products.

With a view to intensify industrial development, the government initiated the Industrial Policy
Resolution in 1956.The search for new mineral deposits were stepped up and the Geological Survey of
India was granted greater power. The Government started the Indian Bureau of Mines to chalk out
strategy to conserve the nations mineral resources.IBM was also given the task of searching for new
mines with specific focus on coal, iron ore, limestone, dolomite and manganese. The role and
responsibility of the IBM were transferred to the Mineral Exploration Corporation in 1972.

The Industrial Policy Resolution 1956 set a goal of improving many industries like steel, non-ferrous
metals, cement, power, fertilizers etc. This resulted in an increased demand for minerals. The public
sector enterprises were given the task of large scale production of various minerals. The production of
lignite, petroleum and natural gas, copper, lead-zinc ores, gold, silver, diamond, tungsten concentrates,
pyrites, rock phosphate were from mines under the control of public sector.

During the early stages of the mining industry, not much importance was given to mineral processing;
as a result only high grade minerals were mined. With greater emphasis by the government on judicious
use of minerals, mineral processing plants were installed. The National Metallurgical laboratory was
established in 1950 to carry out mineral process tests. In the same year, the Metal Corporation of India
installed the first mineral processing plant in the country to process lead-zinc ore. Throughout the
1950's a number of coal washeries were set up to process coking coal needed for steel plants.

Agenda Twenty One

Agenda Twenty One of Rio Conference and WTO agreement on World Trade are two most powerful
tools to regulate world trade and commerce. The Green Agenda a subsection of Agenda 21 aims to
preserve the natural resources for future generations. The Green Agenda aims to curtail mining
activities. Since the environmental cost of mining is very high. Most of the Western countries have
stopped or in the process of stopping mineral production. Instead these developed countries have
resorted to importing cheaper minerals from developing countries.

The WTO believes countries not having the technical expertise in mineral process should refrain from
such activities and should instead dependent on the technologically developed countries for mineral
processing. This would have a negative effect on the economies of developing countries. The global
outlook is in favour of the developed countries, against the developing countries. The Indian mining
industry has to gear up to face the challenges posed by global changes, by being efficient in mineral
processing at internationally competitive prices, to survive in future.
Ports
A port offers facility for receiving ships and transferring cargo. Normally they are built at the edge of
river, ocean, sea or lake. Ports have equipments which handle cargo. Some of them are cranes and
forklifts, which may be provided by individuals or public body. The use of the term Port also plays an
important role while explaining the utility of ports. For example, the term sea port is used for ports
which handle ocean going vessels, and the term river port means facilities which handle river traffic.
The ports on lakes which have access to sea or ocean are called Inland Port. Ports, also plays an
important role in the development of industries. Some of the industries are built near ports so that they
can easily access the raw materials coming from other parts of the country. Similarly they are also
useful in sending goods from one part of the country to another part.

Indian Ports
India has a long coastline extending over 6000 km. The country has 11 major, 11 intermediate and 168
minor ports. Nearly 95 per cent of the countries transportation of goods is by sea, making development
of ports critical for nation's progress. The major ports in India are maintained by the Central
government, while all the other ports come in the Concurrence list.

Major Ports
The Indian ports Act 1908 and the Major Port Trusts Act 1963 govern the functioning of major ports.
The former enables the law to declare any port a major port, define port limit, and levy charges etc
while the formation of Port trust Boards gives the administrators control and management of major
ports.

The Major Indian Ports Are

Calcutta,Chennai,Cochin,JNP,Kandla,NewMangalore,Mormugao,Mumbai,Paradip,Tuticorin,Visakhapa
tnam.

Minor Ports
Minor ports come under the purview of Concurrence list and their administration is the responsibility of
coastal states.

Some of the prominent minor ports are

Bhavnagar, Calicut, Karwar, Nagapattinam, Trivandrum, Veraval

Future Trends

• The Indian government has planned to increase the cargo management capability of major ports
to 1.5 billion metric tons (MT) by the year 2012.This would be feasible by investing to the tune
of $25 billion by the way of public-private partnerships.
• According to recent estimates the growth rate of Indian ports would be around 160 per cent in
2011-12.Cargo handling in major ports is expected to grow at 7.7 per cent till 2011-12 and cargo
movement is estimated to reach 877 million tons by 2011-12.
• The New Foreign Trade Policy forecasts the doubling of India's share in global exports to Rs
675000 crores ($150 billion) in the next five years.
Power Industry
The critical role played by the power industry in the economic progress of a country has to be
emphasized. A self sufficient power industry is vital for a nation to achieve economic stability.

Indian Power Industry

Before Independence
The British controlled the Indian power industry firmly before Independence. The then legal and policy
framework was conducive to private ownership, with not much regulation with regard to operational
safety.

Post Independence
Immediately after Independence, the country was faced with capacity restraint. India adopted a socialist
structure for economic growth and all the major industries were controlled by public sector enterprises.
By 1970's India had nationalized most of its energy assets, due to its commitment to social goals. By the
late 1980's the Indian economy felt the strain of the socialist agenda followed since independence.
Faced with a serious deterioration in public finance and balance of payment crisis, the Union
government as part of its policy of economic liberalization allowed greater investment by private sector
in the power industry.

Power

Constitutional Position
Power as a matter of legislative and executive competence, falls in the Concurrent List (List III of the
Seventh Schedule to the Constitution of India).Both the Parliament and state legislatures have the rights
to pass laws on the matter and any law passed by the Parliament overrides the existing state laws unless

• The existing law is conserved or saved from such a repeal or

• A law passed by the state legislature receives acknowledgment from the President of India.

Post Liberalization
Understanding the critical part played by the power industry, the Union government passed several laws
and restructured the Power Industry to gear it up to meet the challenges posed to the Indian economy
post Liberalization.

Electricity Bill 2001

Learning from the experience gained through various reform initiatives, the Indian government passed
the Electricity Bill 2001.The Bill seeks to

• Consolidate and rationalize existing laws.

• To address the issues of developing industry including regulation, power trading, non
discriminatory open access, choice of dispensing with vertically integrated state enterprises and
encouraging private enterprise.

Energy Conservation Act 2001

The Act was enacted by the Indian government to facilitate stringent steps to ensure the efficient use of
energy and its conservation. A Bureau of Energy Efficiency was set up to monitor and regulate the
Power Industry according to the provisions of the act.

Non Renewable Energy

Fossil fuels
The Industrial Revolution in Europe in the 19th century forced human's to seek alternative sources of
fuel to cater to the increasing demand. Focus was shifted to fossil fuels as an alternate source of energy.

Fossil fuels were formed millions of years ago. They are nothing but fossilized organic remains that
after millions of years has been converted into oil, gas and coal. Because this process takes a long time,
they are known as non renewable.

Coal
It is the most easily available fossil fuel in the world. It is mostly carbon and is used as a combustion
fuel, especially after the Industrial Revolution. Coal can further be divided into lignite, bituminous and
anthracite. Lignite and Bituminous have lesser percentage of carbon and therefore burn faster. They are
not environmentally friendly, Whereas Anthracite has about 98% carbon and therefore burns slowly and
is more environmentally friendly. Coal can be found in both underground mines and open mines.

Though Petroleum gained prominence through the 20th century, coal still continues to be the most used
raw material for power generation.

Oil and Gas

Oil and Gas is mostly found in underground rocks. Millions of years ago when plants and animals died,
they got buried in layers of mud and sand. The earth's crust changed its shape and put immense pressure
and heat on the dead plants and animals. Over a period of time, the energy in those plants and animals
changed into hydrocarbon liquids and gases. They then turned into chemicals called hydrocarbons .Most
of the hydrocarbons is found under the sea bed. Oil has a disastrous effect on the environment and many
scientists believe the main reason for global warming

Natural gas is usually found near a source of oil. It is a mixture of light hydrocarbons. It is lighter than
air and is odorless. It is therefore mixed with a chemical that gives it a strong odour and thereby easy to
detect in case of a leak. It is the cleanest burning fossil fuel.

Renewable Energy
Because of the environmentally disastrous effect of non renewable energy, an alternate source of energy
which would not pollute the environment and which can also be renewed was tapped. They are known
as renewable energy. The various types of renewable energy are

Solar Energy
It is the most easily available renewable resource. After the oil shock in 1970's many countries
conducted research work to tap solar energy. It is believed in the next few years millions of consumers
across the world would switch to solar energy. In India the Indian Renewable Energy Development
Agency and the Ministry of Non Conventional Energy Sources are devising strategies to encourage the
usage of solar energy.

Solar energy can be used for cooking, heating, drying, distillation, electricity, cooling, refrigeration,
cold storage etc.

Hydel Energy
Energy available in fast flowing water can be used to generate electricity. Waves occur due to the
interface of the wind with surface of sea and represent a transfer of energy. This energy can be tapped
for commercial purpose.

Hydro Power
It is the one of the best, cheapest and cleanest source of power, though large dams could have
environmental and social repercussions. In view of these problems associated with larger dams, experts
have advocated the construction of smaller dams. New environmental laws to safeguard the planet from
the effects of global warming have made smaller hydropower projects more viable.

Wind Energy
It is the kinetic energy used for many centuries in water sports like sailing and for irrigation. It converts
kinetic energy into more usable forms of power. Wind turbines help to convert the energy in the wind
into mechanical energy which can be used for generating power. Since the late 1980's the viability of
wind energy has gained in prominence across the globe. In India the states of Tamil Nadu and Gujarat
lead in the field of wind energy.

Biomass
It is sourced from the carbonaceous waste of animals and is also the by products from timber industry,
agricultural crops, raw material from forest, household waste and wood. It can be used to generate
power with the same power plant that are burning fossil fuels and is very much environmentally
friendly.

It is being used in the western countries for applications such as combined heat and power generation.
In India 90% of the rural households and 15% of the urban households use bio mass fuel.

Nuclear Energy
Nuclear energy can be created in nuclear reactors under strict human control. The nuclear power can be
generated by the fission of uranium, plutonium or thorium or the fusion of hydrogen into helium.
Nowadays mostly Uranium is used for generating nuclear power. With a view to increase India's
dependence on nuclear energy to offset the energy crisis in the country, the Indian government entered
into an agreement with the government of USA called the 123 agreement. This agreement aims to
assuage greater cooperation between the two countries in the field of nuclear technology.

Future Trends

• According to experts the private sector would play a greater role in power generation and
foreign investments would increase considerable in his sector.
• The government of India’s Hydrocarbon vision 2025 gives in detail the guidelines for the
policies in India for the next 25 years to attract investment in exploration, production, refining
and distribution of petroleum products.
Steel Industry
Steel is an important indicator to analyze the economic development of a country. The steel industry is
highly scientific and technology oriented. Technological advancement is very important for the overall
health of the steel industry.

Indian Steel Industry

During Ancient Period

The history of iron and steel making in India goes back by several centuries. It dates to 480 BC when
archers in India used arrows tipped with steel. The iron pillar of Dhar near Indore in Madhya Pradesh
dates back to about 321 AD, the iron pillar of Kutab Minar near Delhi dates back to about 400 AD and
the iron beams of Sun temple of Konark in Orissa dates back to 13th century. These pillars are a
testimony to ancient India's expertise in the making of steel.

Before Independence
The roots of the Indian Steel industry in modern times can be traced to the year 1874, when a company
called Bengal Iron works at Kulti near Asansol in West Bengal produced iron. One of the most
important landmarks in the history of Indian steel industry was the commencement of the Tata Iron and
Steel Company at Jamshedpur in the state of Bihar in 1907.The other prominent steel manufacturers
before independence were Indian Iron and Steel Company (1922),Mysore Iron and Steel Works(1923)
and Steel Corporation of Bengal (1937).

After Independence
India found it difficult to sustain development in steel sector after independence on its own due to the
lack of technological development. The high cost of developing technology in this sector proved to be a
major hindrance. That's when the government decided to go for synergy with other countries for
technology transfer. Some of the prominent steel plant set up then was in Rourkela in collaboration with
West Germany and in Bokaro in collaboration with Russia. These steel plants came under the purview
of public sector enterprises.

Post Liberalization
The post liberalization scenario in the Indian Steel industry has witnessed a monumental shift. Some of
the salient features are:

• The need for license for increasing capacity has been abolished.
• Steel industry has been removed from the list of Industries under the control of state sector.
• Foreign equity investment in steel has gone up to 74%.
• In January 1992 the price and distribution controls were removed.
• Policies like convertibility of rupee on trade account, freedom to mobilize resources from
overseas financial markets and restructuring of existing tax structure have immensely benefited
the industry.

[After liberalization began in 1991, the government eased the movement of foreign currency on trade account. I.e. exporters and importers were allowed to
buy and sell foreign currency]

Milestone
The Indian steel industry has come a long way since its humble beginnings. The takeover of the British
steel giant Corus steel by Tata Steel and the acquisition of Arcelor by Mittal Steel herald a new
beginning for the Indian steel industry. These events signify the fact that the Indian steel industry has
acquired a global identity and is today extremely competitive globally.

Some of the prominent steel producers today are Posco, Tata Steel, Essar, Ispat, Sail and Rinl.
Future trends

• It has to be said that the global recession has affected the Indian steel industry especially
stainless steel, but the steel industry is trying to offset the negative effect of the recession by
focusing on transportation and construction projects which are usually funded by the
government.
• India is the only country globally to record a positive overall growth in crude steel production at
1.01 per cent for the period January -March 2009.
• It is estimated that India's steel consumption will grow at nearly 16% annually till 2012.
• The National Steel Policy has forecasted the demand for steel would reach 110 million tons by
2019-2020.
Telecom
Telecom is the exchange of information between two distant points in space. The telecom industry is
very important for the socio economic development of a nation. It is one of the main architects for
accelerated growth and progress of different segments of the economy. Post liberalization the
telecommunication industry has grown by leaps and bounds.

Evolution Of Indian Telecom

YearEvent
185 First operational landlines were laid by the government near Calcutta
1
188 Telephone service introduced in India
1
188 Merger with the postal system
3
192 Formation of Indian Radio Telegraph Company (IRT)
3
193 Merger of ETC and IRT into the Indian Radio and Cable Communication Company(IRCC)
2
194 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and
7 Telegraph (PTT),a monopoly run by the government’s Ministry of Communications
198 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar
6 Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone
Nigam Limited (MTNL) for service in metropolitan areas.
199 Telecom Regulatory Authority Of India (TRAI) was created.
7
199 Cellular Services are launched in India. New National Telecom Policy is adopted.
9
200 DoT becomes a corporation, BSNL
0

Liberalization
As part of the policy of liberalization, telecom equipment manufacturing was delicensed in 1991 and
value added services were accessible to the private sector in 1992.As a result a number of
manufacturing units were established across the country. The National Telecom Policy resolution of
1994 further liberalized the telecom sector for private initiative.

National Telecom Policy 1994

In 1994,the government came up with the National Telecom Policy which set certain important goals
like availability of telephone on demand, providing International standard infrastructure and services at
affordable prices, enhancing India's competitiveness in global market and encouraging exports, create
environment conducive for both FDI and domestic investment, accelerate India's growth as a major
manufacturer and exporter of telecom equipment and availability of telecom services to every village.

Telecom Regulatory Authority Of India (TRAI)

The opening up of the Indian telecom sector for private enterprises resulted in the need for independent
regulation. In 1997 The Telecom Regulatory Authority Of India (TRAI) was initiated by an act of
Parliament. The purpose of this act was to regulate telecom services, fix/revise tariffs for telecom
services which till then was under the control of the central government. The objective of TRAI was to
create an environment which would enable Indian Telecomm to play an important role globally.
Another important objective for TRAI was to provide equal opportunity for all and ensure fair
competition. To ensure these objectives, TRAI has issued a large number of regulations, orders and
directives and strategized the plan to direct the telecom industry from a government controlled
monopoly to multi operator multi service competitive market. In January 2000, TRAI was modified by
an act resulting in Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to settle
disputes between a licensor and a licensee, between two or more service providers, between a service
provider and consumers and to settle appeals against any direction, decision or order of TRAI.

National Long Distance

In 2000 the government created guidelines for the entry of private sector in National Long Distance
without restricting the number of operators. Some of the salient features of NLD are:

• Unlimited entry for both inter circle and intra circle calls.
• Total foreign equity must not exceed 74%.Promoters must have a net worth of Rs 25 million.
• Private operators will have to enter into an arrangement with fixed service providers within a
circle for traffic between long distance and short distance charging centers.
• Private operators allowed to set up landing facilities that access submarine cables and use excess
bandwidth available.
• License period would be for 20 years and extendable by 10 years.

International Long Distance

• India had accepted under the GATS to open up ILD in 2004.But India allowed competition in
ILD in the year 2002 itself.
• There can be any number of service providers. The license for ILD service is issued for a period
of 20 years, with automatic extension of the license by a period of 5 years.
• The private applicant would have to pay a onetime non refundable fee of Rs 25 million plus a
bank guarantee of Rs 250 million, which will be given back on honoring of the commitment.
• The annual license fee is at 6% of the Adjusted Gross Revenue and the fee for use of spectrum is
to be paid separately.

Internet service Providers (ISPs)

In 1998 the private sector was given permission to be internet service providers. In the interest of the
customer, the government has set certain guidelines to grant license to prospective service providers.
Any company in India with a maximum foreign equity of 74% is eligible for license. The segment has
seen tremendous technological advancements.

Broad band Policy 2004

Realizing the immense potential of Broadband service in the growth of economy and the improvement
in quality of life due to various functions like tele education, tele medicine, e-governance, entertainment
and in job creation, the government came up with the Broadband policy in 2004.The main aim was to
create infrastructure to enhance the progress of broadband. Some of the technology applicable for
broadband would be Optical Fibre, Asymmetric Digital Subscriber Lines (ADSL), Cable Network,
DTH etc.

Foreign Direct Investment

• In Basic, Cellular, Paging and Value Added Service and Global Mobile Personal
Communications by Satellite, FDI of 74% is allowed subject to license granted by Department
Of Telecommunication.
• FDI up to 74% is also permitted in Radio Paging Service and Internet Service Provider.
• FDI up to 100% is allowed for Infrastructure Providers of dark fibre, electronic and voice mail.
The condition set was that these companies would divest 26% of their equity in favor of Indian
companies in five years, provided they were listed in other parts of the world.
• FDI of 100% was allowed in telecom manufacturing.
Railway Budget
Railway is a guided means of land transport designed to be used by trains, both passengers and freight
are transported on railways. Rail transport is an extremely energy efficient means of transport. In all if
the conditions are right, a train needs 50-70% less energy to transport a given tonnage of freight or to
transport a given number of passengers than by road. It is also one of the safest modes of transport and
also an efficient means of transport, because a rail line can carry more passengers or freight than a four
laned road.

History of Railways in India-Important Years

1832 Plans were proposed to introduce a rail network in India.

1844 Private entrepreneurs set up a private rail system in India.
1851 Trains became operational.
1853 Passenger trains were introduced.
1875 95 million pounds were invested into Indian railways by British companies.
Indian locomotives began to operate in the country.
1895
1901 A Railway Board was established.
1907 The government obtained total control over most of the rail companies.
1908 First electric locomotive was introduced.
1947 40% of the railway network came under Pakistan's possession.
1951 Nationalization of the rail system in India took place.
1952 Six railway zones were introduced.
1995 Steam locomotives became obsolete. Only diesel and electric locomotives were
operational.
1987- The Indian Railways reservation system was computerized.
1995

Indian Railway Budget: A Brief Summary

The Indian railways have one of the largest networks of trains in the world and since the first rail from
Bombay to Thane stated in 1853, Indian railways has come a long way. Indian railways carry millions
of passengers daily from one place to another place. The ministry of railways controls the Indian
railways. Every year the ministry of railways presents the Indian railway budget in the parliament. The
Budget is presented two days before the general budget. It has to be passed by the Lok Sabha before it is
accepted. The rail budget deals with the improvement in the existing trains and contains details of the
new trains. It also gives details about the passenger fares and tarries to be levied.

Highlights of Railway Budget 2009-10 are as follows:-

Reduced Tariffs

• For ordinary passenger trains there is reduction in passenger fares by Rupee 1 for fares costing
up to Rs 50 per passenger for journey above 10 km.
• For all mail/express and ordinary passenger trains, second class and sleeper class fares are to be
reduced by 2 per cent for tickets costing Rs 50 and more per passenger.
• Also there is to be a fare Reduction of 2 per cent for AC First Class, AC II tier, AC III tier and
AC Chair Car.

New Passenger Services

• 43 new train services to be started in 2009-10.

• Extension of 14 trains envisaged.
• Frequency of 14 trains is to be increased.
Indian Railways' Financial Health During The Year 2008-09

• Freight loading target was retained at 850 mt.

• Ordinary Working Expenses (OWE) increased to Rs 55,000 crore (Rs 550 billion) in the R.E
and the appropriation to Pension Fund to Rs 10,500 crore (Rs 105 billion). This is done keeping
in view the increased financial burden due to implementation of VI Central Pay Commission.
• Revised plan outlay kept at Rs 36,773 crore (Rs 367.73 billion).
• Cash surplus before dividend projected at Rs 19,320 crore (Rs 193.20 billion) and the Operating
Ratio at 88.3% despite implementation of the VI CPC.
• Appropriation to DRF retained at Rs 7,000 crore (Rs 70 billion).
• Dividend payable to General Revenues kept at Rs 4,711 crore (Rs 47.11 billion).

Indian Railway's Performance Review

• Tripura's capital Agartala is now connected by railway line.

• Kashmir Valley's first train service commenced between Anantnag and Rajwansher. This is to
be followed by extension of rail services to Baramulla and Qazigund.
• The number of consequential accidents has come down to 194.
• Work on Eastern Dedicated Freight Corridor commenced near Delhi on 10th February, 2009
while Work on Western DFC to commence this month.
• completion of successful trials for running electric locomotives with OHE at a height of about
7.5 mts in preparation for running double stack containers on electrified Western Dedicated
Freight Corridor.

Indian Railway Budget Estimates For The Year 2009-10

• Freight loading targeted at 910 mt while number of passengers estimated to grow by around 7%.
• Budgeted Operating Ratio 89.9%.
• Plan outlay kept at Rs 37,905 crore (Rs 379.05 billion).
• Gross Traffic Receipts estimated at Rs 93,159 crore (Rs 931.59 billion) i.e. Rs 10,766 crore (Rs
107.66 billion) more than RE 2008-09.
• Ordinary Working Expenses (OWE) budgeted at Rs 62,900 crore (Rs 629 billion) to cover the
full year impact of VI CPC and the payment of 60% arrears due in 2009-10.
• Dividend payable to General Revenues kept at Rs 5,304 crore (Rs 53.04 billion) at the current
applicable rates.

Other Announcements Of Railway Budget 2009-10

• New railway divisions at Bhagalpur and Thawe will be set up to facilitate improved train
operations.
• 25 surveys proposed comprising 14 for new lines, 3 for gauge conversion and 28 for doubling
projects.
• For running high speed bullet trains, a pre-feasibility study is being pursued.
• Bharat Wagon Limited (Mokama & Muzaffarpur) is transferred to the Ministry of Railways;
transfer of wagon units of Burn Standard at Burnpur and Howrah are also under consideration
on the same lines.
• Construction of Rail Wheel Factory, Chapra is on in full swing.
• Work on diesel and electric locomotive factories at Marhoura and Madhepura will start soon.
Service Sector
Service sector is the lifeline for the social economic growth of a country. It is today the largest and
fastest growing sector globally contributing more to the global output and employing more people than
any other sector.

The real reason for the growth of the service sector is due to the increase in urbanization, privatization
and more demand for intermediate and final consumer services. Availability of quality services is vital
for the well being of the economy.

In advanced economies the growth in the primary and secondary sectors are directly dependent on the
growth of services like banking, insurance, trade, commerce, entertainment etc.

Indian Service Sector

In alignment with the global trends, Indian service sector has witnessed a major boom and is one of the
major contributors to both employment and national income in recent times. The activities under the
purview of the service sector are quite diverse. Trading, transportation and communication, financial,
real estate and business services, community, social and personal services come within the gambit of the
service industry.

One of the key service industry in India would be health and education. They are vital for the country’s
economic stability. A robust healthcare system helps to create a strong and diligent human capital, who
in turn can contribute productively to the nation’s growth.

Post Liberalization
The Indian economy has moved from agriculture based economy to a knowledge based economy.
Today the IT industry and ITE'S industry are the dominant industry in the service sector. Media and
entertainment have also seen tremendous growth in the past few years.

Subsectors

Information Technology Industry

The Information Technology industry has achieved phenomenal growth after liberalization. The
industry has performed exceedingly well amidst tough global competition. Being knowledge based
industry; India has been able to leverage the global markets, because of the huge pool of engineering
talent available and the proficiency in English language among the middle class.

ITES sector
The ITES sector has also leveraged the global changes positively to emerge as one of the prominent
industries. Some of the services covered by the ITES industry would be:

• Customer interaction services -Non voice and Voice.

• Back office, revenue accounting, data entry, data conversion, HR services.
• Medical Transcription.
• Content development and animation.
• Remote education, market research and GIS

Retailing
Prior to liberalization, India had one of the most underdeveloped retail sectors in the world. After
liberalization the scenario changed dramatically. Organized retailing with prominence on self service
and chain stores has changed the dynamics of retailing. In most of the tier I and tier II cities
supermarket chains mushroomed, catering to the needs of vibrant middle class. This indirectly
contributed to the growth of the packaged food industry and other consumer goods.
Financial Services-Banking And Insurance
Prior to liberalization these two sectors were controlled and regulated by the government. Nationalized
banks and insurance companies had a firm grip over the market. After liberalization the banking and
insurance domain opened up for private participation.

Banking Sector
The three major changes in the banking sector after liberalization are:

• Step to increase the cash outflow through reduction in the statutory liquidity and cash reserve
ratio.
• Nationalized banks including SBI were allowed to sell stakes to private sector and private
investors were allowed to enter the banking domain. Foreign banks were given greater access to
the domestic market, both as subsidiaries and branches, provided the foreign banks maintained a
minimum assigned capital and would be governed by the same rules and regulations governing
domestic banks.
• Banks were given greater freedom to leverage the capital markets and determine their asset
portfolios. The banks were allowed to provide advances against equity provided as collateral and
provide bank guarantees to the broking community.

Insurance Sector
The Insurance Regulatory and Development Authority Act 1999 (IRDA Act) allowed the participation
of private insurance companies in the insurance sector. The primary role of IRDA was to safeguard the
interest of insurance policy holders, to regulate, promote and ensure orderly growth of the insurance
industry. The insurance sector could invest in the capital markets and other than traditional insurance
products, various market link insurance products were available to the end customer to choose from.

Some of the prominent insurance companies are:

• Bajaj Allianz Insurance Corporation

• Birla Sun Insurance Co Ltd
• HDFC Standard Insurance Co Ltd
• ICICI Prudential Insurance Co Ltd
• Max New York Insurance Co Ltd
• Tata AIG Insurance Co Ltd

Future Trends

• Globally outsourcing industry would continue to grow.

• Following the success of US and UK, more countries in the European Union would outsource
their business.
• Technological power shift from the West to the East as India and China emerge as major
players.
• Political backlash over outsourcing would come down as companies reap the benefit of
outsourcing.