Nikhil Jain (11220) Mahesh Khot (11226) Sushil Taru (11253) Shridhar Patil(11252)

The GDP measures the total (money) value of final output of goods and services produced within the countrys domestic economy by residents and non-residents

Growth rate at which inflation is kept low with low level of unemployment Non inflationary rate of growth is the maximum rate of growth that the Indian economy can achieve without fanning inflationary pressures. It is similar to the concept of potential rate of growth and is crucial input in the monetary decisions

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

GDP Growth rate Inflation Crude oil(Brent ) Currency

9.6

9.3

6.7

8.4

8.4

6.7

6.6

4.7

8.1

3.8

9.6

9.1

$ 60
45

$65
45

$98
40

$ 45
49

$ 80
47

$ 105
48

Monetary policy
To control the inflation RBI has continuously increased interest rates from 2010 until recently This made the credit availability costlier which hampered growth

Euro crisis Consumer and business confidence is very important for determining economic growth. If consumers are confident about the future they will be encouraged to borrow and spend. If they are pessimistic they will save and reduce spending.

Crude oil
India imports about 70 % of its crude oil need There has been continuous increase in crude oil prices which is hampering the BOP Crude oil prices increased from $70 to current $115

Value of Exchange Rate.

If the rupee depreciates exports would become more competitive and imports more expensive. This would help to increase demand for domestic goods and services but a depreciation could cause inflation.

Policy reforms (GST , DTC)

It can be said that Union Budget 2012 was largely just statement of revenue & expenditure , pretty much nonevent Significant tax reforms like GST & DTC have remained in pipeline

Growth in various sectors (Mining, manufacturing)

Mining sector growth is -2.2 % vs 5% Illegal mining in karnataka Slowdown in manufacturing growth from 7.6 % to 3.9 % Costlier credit availability , high commodity prices , crude , high wages impacting growth

Level of infrastructure.

Investment in roads, transport and communication can help firms reduce costs and expand production. Without necessary infrastructure it can be difficult for firms to be competitive in the international markets. This lack of infrastructure is often a factor holding back some developing economies.

Human Capital.

Human capital is the productivity of workers. This will be determined by levels of education, training and motivation. Increased labour productivity can help firms take on more sophisticated production processes and become more efficient.

Development of Technology.

In the long run development of new technology is a key factor in enabling improved productivity and higher economic growth.

Political Instability.
Political instability can provide a negative shock to growth. UPA government is more concerned about satisfying alliance parties than solving economy problems

Weather
The monsoon can really impact the gdp growth The forecast for 2012 is normal monsoon

Rising wages
Rising wages has been a serious problem The focus is shifting from BRIC countries to african

Increase in petroleum product prices may increase inflation Tough stand is needed for deregulation of diesel , urea etc. Need to speed up the reforms It is expected that in the latter half part of 2012 growth will pick up Need to handle both inflation as well as growth.