Indian Economy

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Part 1: Historical Overview

Pre-LPG
Inward looking economy

Shortage & premiums / sellers market / monop

Conserve forex / import substitution

Feeling of shortage in the economy Huge trade deficit / forex reserves - $1 bn

First Generation Reforms

Delicensing / import liberalization Taxation reform direct & indirect Relaxed forex norms Allowed FII & FDI Dividend repatriation Stock Exchange reforms SEBI

Banking sector reforms Pvt banks allowed

RBI relaxes controls

Second Generation Reforms

Infrastructure

Telecom reforms
Insurance GIC & LIC Labour law reforms

Disinvestment
Power sector reforms

Part 2: Vital Statistics

Population Population growth rate

118 crore 1.37% (2010 est) $1.3 trillion Global Rank 11 $3.8 trillion Global Rank 4 7.4% in 2009-10

GDP (nominal)
GDP (PPP) GDP growth rate

Per capita income

Forex Reserves

$947 (2010 est)

$290 billion (Dec 2010)

Literacy Rate
Unemployment rate Working Age Population

64%
9.20% 46.7 crore (2009)

India: Basic Features

Low per capita income / High population Dependence on Agri / High rural pop

High density of population 324/sq km

High rate of unemployment Unequal distribution of wealth

India: Basic Features

Still high rate of illiteracy Low 2010 HDI rank 119 Low level of technology and productivity

Widespread poverty
46% of children suffer from malnutrition High savings and low capital formation

Part 3: Sector-wise Analysis

3 Sectors of Economy
Primary agriculture, forestry, fishery, animal husbandry Secondary mineral, power, mining, manufacturing industries Services transport, trade, communication, banking, other services

Indian Economy Today

Three main sectors of the economy: Agriculture: 2nd in the world in farm output Manufacturing: 14th in the world in industrial output Services: 15th in the world in output

GDP - Sector Composition

Distribution of Workforce

Agriculture Sector Overview

Targeted growth rate of 4% Green / Blue / White / Yellow Revolutions 43% land arable 60% of arable land monsoon dependent MSP on pulses, oilseeds, sugarcane

Superlatives
Largest producer of Tea, Jute, Milk, Pulses

Largest buffalo livestock

Second largest producer of wheat, rice, fish, vegetables, groundnuts

Strengths
Huge arable land area (second largest)

Diverse soil types, climate

Huge labour force

Government focus, subsidies

Weaknesses
Fragmented land holdings
59% of holdings are marginal (<1 hectare) 21% of holdings are small (12 hectare)

Low productivity
Average yield is 2890 kg per hectare which is much lower than China, Japan

Monsoon dependence
60% arable land without irrigation

Weaknesses
Landless labour Seasonal unemployment

Poor infrastructure
Electricity Roads and transport Farm mechanization

Illiteracy
Low awareness about improved methods / products

Weaknesses
State disparity Financing at usurious rates by local moneylenders Low remuneration to farmer middleman Antiquated laws

Opportunities
Horticulture Organic Farming

Fisheries
Packaged / processed farm products Productivity improvements Use of IT / Communications

Industrial Sector Overview

Growth rate of 11.3% in H1 2010-11 Size: <20% of Chinese industry Huge unorganized sector

Effective corporate tax rate of 35%

FII, FDI, SEZ

Main Industries
Textile (largest employer, 4% GDP) Synthetic fibers

Mineral products / chemicals

Automobiles + components Cement / machinery and equipment

Strengths
Huge, low-cost labour force Educated, skilled workforce English Language skills Good Managerial Skills Variety of raw materials available Strong Economy Stable Polity

Weaknesses
Lack of infrastructure High cost of utilities Red tape
Number of days to start a business in India is 88 days

Cascading effect of indirect taxes

High cost of finance

Tardy judicial system

Opportunities
Drugs & Pharmaceuticals Textiles Transport Biotechnology Automobiles + Components Engineering goods

Services Sector Overview

High growth rate over 11% Growth - not sector specific Concentration in urban areas

India ranks 12th in commercial services

exports

Key Sectors
Hotels + Tourism Trade + Transport Communication Financial / Insurance / Banking / Real Estate IT & ITeS Social + Personal Services

Strengths
Huge educated labour force Low labour cost: only 14% of U.S. labour cost Factor cost advantage for foreign co Less capital intensive than manufacturing Inherent advantages in tourism, health

Weaknesses
High attrition rates in IT and BPO industry

Lack of world-class infrastructure

Dearth of highly-skilled labour Low investment in R&D and higher education

Opportunities
Health + Medical Tourism Hospitality Off-shore consultancy

Retail
KPOs

Part 4: India and the World

Top 5 Export Partners in 09-10

Country UAE USA China Hong Kong % Share of Total Exports 13.4 10.9 6.4 4.4

Singapore

4.2

Top 5 Import Partners in 09-10

Country China UAE Saudi Arabia USA % Share of Total Exports 10.7 6.7 5.91 5.90

Australia

4.3

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