Unit-5

Anatomy of Indian Economy

Syllabus Content
Indian Economy: Agriculture, Industry, Public sector, Money market and Capital Market, Demographic features, other socio-economic problems like unemployment and the inequalities Economic Planning in India, importance.

IBE Unit-5 Anatomy of Indian Economy

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Indian Agriculture
Agriculture Sector is changing the socio-economic environments of the population due to liberalization and globalization About 75% people are living in rural areas and are still dependent on Agriculture. About 43% of Indias geographical area is used for agricultural activity Agriculture continues to play a major role in Indian Economy
IBE Unit-5 Anatomy of Indian Economy 12/1/2013

Indian Agriculture
Provides about 65% of the livelihood Accounts for 27% of GDP Contributes 21% of Total Exports, and Supplies Raw materials to Industries Growth Rate in production - 5.7% Food grains production 211.17 mt

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Indias position in world Agriculture

Rank

Total Area Irrigated Area Population Economically Active population Total Cereals Wheat Rice Coarse grains Total Pulses Oil Seeds Fruits and Vegetables Implements (Tractors) Milk Live Stock (castles, Buffaloes)

Seventh First Second Second Third Second Second Fourth First Second Second Third First First
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IBE Unit-5 Anatomy of Indian Economy

Mile Stones in Agricultural Development

Green Revolution (1968) Ever-Green Revolution (1996) Blue Revolution (water, fish)

White Revolution (Milk)

Yellow Revolution (flower, edible) Bio-Technology Revolution

ICT Revolution

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Development of Indian Agriculture : Basic Issues

Revitalization of Cooperative Institutions Improving Rural Credits

Research, Education & Extension

Human Resources Development Trade & Export Promotion Land Reforms Enabling Environment for higher Agricultural Growth
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The thrust areas

Diversification of Agriculture
Inter-cropping Micro Management Water Management Organic Farming Agri-Clinics and Agri-business Centers Bio-Technology
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Industry
Types of Industries
Public sector Private sector Joint and cooperative sector

Factors influencing location of industry

Raw Materials Power

Market
Transport Labour
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Major Industries The Iron and Steel Industry The Cotton Textile Industry Sugar Industry Petrochemical Industries Knowledge based Industries
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Liberalization, Privatization, Globalization (LPG) and Industrial Development in India

Objectives of this policy were To build on the gains already made Correct the distortions or weaknesses that have crept in Maintain A sustained growth in productivity and gainful employment Attain international competitiveness.
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Public Sector
The part of the economy concerned with providing basic government services. Public sector includes such services as the police, military, public roads, public transit, primary education and healthcare for the poor

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Objectives of public sector

To accelerate the industrial growth and development of the economy. To build up a strong infrastructure for supporting economic growth and development of the country. To provide competition to the private sector for welfare of the state and the public at large. To generate employment and strive for removal of poverty. To make investment in order to fill the gap between savings and investment. To promote balanced and comprehensive IBE Unit-5 Anatomy of Indian Economy economic growth of the country.
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Objectives of public sector

To redistribute income and wealth in order to remove inequalities in society. To make investment in those areas where the private sector is not willing to invest. To promote the development of small and ancillary industries. To focus on increasing exports of the country for earning foreign exchange and also to enter sectors where imports can be substituted by products made in India. To help the government in implementation of economic policies and achieving objectives of five year plans. To eliminate monopolies and prevent monopolistic practices.
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Percentage Share of Public and Private Sector in Capital Formation

Plan
First Plan
Second Plan Third Plan Fourth Plan Fifth Plan Sixth Plan Seventh Plan Eighth Plan Ninth Plan Tenth Plan Eleventh IBE Unit-5 Anatomy of(2007-12) Indian Economy

Public Sector (in per cent)

46 54 63 61 58 53 48 45 33 24 22

Private Sector (in per cent)

54 46 37 39 42 47 52 55 67 76 78

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Problems in Pubic Sector

Social welfare rather than profit maximization

Lack of good management

Lack of autonomy to make decisions regarding their own growth and development

Over-staffing and inefficiency of employees

Under-utilization of production capacity Industrial disputes

Wrong pricing policies

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Problems in Pubic Sector

Political interference and corruption Obsolete technology Over-capitalization

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Suggestions for the improvement of Public Sector

Suitable reforms in the board of directors. Politicians should not be appointed as directors of these boards. Control over political interference Appointment and selection of efficient employees Granting autonomy Regular inspection and auditing Reforms in labour policy Increase in efficiency Reforming pricing policies Voluntary retirement Scheme Use of sophisticated technology

Revival of PSUs
Memorandum of understanding (MOU)
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MONEY MARKET

PRESENTED TO:PUSHKAL PANDEY SUSHIL KUMAR PUJIL KHANNA

PRESENTED BY:

SUMIT GROVER

AVINASH JESWANI
ROBIN CHOUDHARY

What is Money Market

As per RBI definitions A market for short terms financial assets that are close substitute for money, facilitates the exchange of money in primary and secondary market. The money market is a mechanism that deals with the lending and borrowing of short term funds (less than one year). A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded.

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MONEY MARKET

FINANCIAL MARKETS

MONEY MARKET
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CAPITAL MARKET
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Features
Transaction have to be conducted without the help of brokers. It is not a single homogeneous market, it comprises of several submarket like call money market, acceptance & bill market. The component of Money Market are the commercial banks, acceptance houses & NBFC (Non-banking financial companies). In Money Market transaction can not take place formal like stock exchange, only through oral communication, relevant document and written communication transaction can be done.

Objective
To provide a reasonable access to users of short-term funds to meet their requirement quickly, adequately at reasonable cost. To provide a parking place to employ short term surplus funds.

Importance

Development of trade & industry.

Development of capital market. Smooth functioning of commercial banks.

Effective central bank control.

Formulation of suitable monetary policy. Non inflationary source of finance to government.

Composition
Money Market consists of a number of submarkets which collectively constitute the money market. They are, Call Money Market Commercial bills market or discount market Acceptance market Treasury bill market

Instruments
A variety of instrument are available in a developed money market. In India till 1986, only a few instrument were available. They were

Treasury bills Money at call and short notice in the call loan market. Commercial bills, promissory notes in the bill market.

New instrument
Now, in addition to the above the following new instrument are available: Commercial papers. Certificate of deposit. Inter-bank participation certificates. Repo instrument Banker's Acceptance Repurchase agreement Money Market mutual fund

Structure of Indian Money Market

I :- ORGANISED STRUCTURE 1. Reserve bank of India. 2. DFHI (discount and finance house of India). 3. Commercial banks i. Public sector banks SBI with 7 subsidiaries Cooperative banks 20 nationalized banks ii. Private banks Indian Banks Foreign banks 4. Development bank IDBI, IFCI, ICICI, NABARD, LIC, GIC, UTI etc.

II. UNORGANISED SECTOR 1. Indigenous banks 2 Money lenders 3. Chits 4. Nidhis III. CO-OPERATIVE SECTOR 1. State cooperative Central cooperative banks Primary Agri credit societies Primary urban banks 2. State Land development banks Central land development banks Primary land development banks

CAPITAL MARKET The market where investment instruments like bonds and equities are traded is known as the capital market. The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit.

 The capital market offers both long term and overnight funds. The different types of financial instruments that are traded in the capital markets are: > equity instruments > insurance instruments, > foreign exchange instruments, > hybrid instruments

Types of capital market

There are two types of capital market: Primary market, Secondary market

Primary Market

It is that market in which shares, debentures and other securities are sold for the first time for collecting long-term capital. This market is concerned with new issues. Therefore, the primary market is also called NEW ISSUE MARKET.

In this market, the flow of funds is from savers to borrowers (industries), hence, it helps directly in the capital formation of the country. The money collected from this market is generally used by the companies to modernize the plant, machinery and buildings, for extending business, and for setting up new business unit.

 The secondary market is that market in which the buying and selling of the previously issued securities is done. The transactions of the secondary market are generally done through the medium of stock exchange. The chief purpose of the secondary market is to create liquidity in securities.

Secondary Market

 If an individual has bought some security and he now wants to sell it, he can do so through the medium of stock . exchange to sell or purchase through the medium of stock exchange requires the services of the broker presently.

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Demographic features of India

Area of India : 3,287,240 Sq km.*
Largest State Smallest State Largest Union Territory Rajasthan Goa Andaman & Nicobar Islands 342,239 Sq km 3,702 Sq km 8,249 Sq km

Smallest Union Territory Largest District Smallest District

IBE Unit-5 Anatomy of Indian Economy

Lakshadweep Kachchh (Gujarat) Mahe ( Pondicherry )

32 Sq km 45,652 Sq km 9 Sq km
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Population

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Persons Males Females

Population
1,028,737,436 532,223,090 496,514,346

Highest / Lowest Population : State with Highest Population Uttar Pradesh State with Lowest Population Sikkim UT with Highest Population Delhi UT with Lowest Population Lakshadweep District with Highest Population District with Lowest Population
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166,197,921
540,851 13,850,507 60,650 9,610,788

Medinipur (West Bengal) Yanam (Pondicherry)

31,394

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39 Religious Composition Religious Composition Population * Hindus Muslims Christians Sikhs Buddhists Jains Other Religions & Persuasions Religion not stated Total *
by Religion Table 2001 - CD

(%) 80.5 13.4 2.3 1.9 0.8 0.4 0.6 0.1 100.0

827,578,868 138,188,240 24,080,016 19,215,730 7,955,207 4,225,053 6,639,626 727,588 1,028,610,328

IBE Unit-5 Anatomy of Indian Economy

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