Presented by : Sancheeta S Tendulkar Batch: PGDM- 1st Semester Subject: Business Economics.

INDIAN ECONOMY

WHAT IS ECONOMICS?

Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek (oikonomia, "management of a (oikos, household, administration") from (nomos, "custom" or "law"), hence "house") + "rules of the house(hold)". Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business, finance and government, but also in crime,[3] education, the family, health, law, politics, religion, social institutions, war, and science.

A nations economy can be divided into various sectors to define the proportion of the population engaged in the activity sector. A nations economy has usually 3 main sectors: Primary Sector Secondary Sector Tertiary Sector

INDIAN ECONOMY

India officially ,the Republic of India is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world. India is one of only three countries that makes supercomputers (the US and Japan are the other two). India is one of six countries that launches satellites. The Bombay stock exchange lists more than 6,000 companies. Only the NYSE has more.

Eight Indian companies are listed on the NYSE; three on the NASDAQ. By volume of pills produced, the Indian pharmaceutical industry is the worlds second largest after China. India has the second largest community of software developers, after the U.S. India has the second largest network of paved highways, after the U.S. India is the worlds largest producer of milk, and among the top five producers of sugar, cotton, tea, coffee, spices, rubber, silk, and fish. 100 of the Fortune 500 companies have R&D facilities in India.

Ninth largest in the world by NOMINAL GDP. Fourth largest by PURCHASING POWER PARITY (PPP). India's gross domestic product (GDP) growth rate is 8.5% (201011) Indias GDP by sector: Services (55.2%), industry (26.3%), agriculture (18.5%) (2010 est.) Main industries in India: telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals.

GDP growth in India, other large emerging economies and the OECD In per cent

Export goods: Petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel. Main export partners: UAE , US, China, Hong Kong, Singapore. Import goods: Crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals.

Main import partners : China, US, UAE, Saudi Arabia, Australia, Germany, Iran

Indian rupee is the only legal tender in India, and is also accepted as legal tender in the neighboring Nepal and Bhutan, both of which peg their currency to that of the Indian rupee. The rupee is divided into 100 paise. The highestdenomination banknote is the 1,000 rupee note; the lowestdenomination coin in circulation is the 50 paise coin. India's monetary system is managed by the Reserve Bank of India (RBI), the country's central bank. Established on 1 April 1935 and nationalized in 1949, the RBI serves as the nation's monetary authority, regulator and supervisor of the monetary system, banker to the government, custodian of foreign exchange reserves, and as an issuer of currency.  It is governed by a central board of directors, headed by a governor who is appointed by the Government of India.

The

CURRENCY OF INDIA:

Modern Indian currency notes

SECONDARY SECTOR OF INDIA

FUNCTIONS:

Industrial sector or secondary sector is one of the 3 sectors that make up a country's economy. The other two are the primary sector (includes agriculture, fishing, and mining) and service sector (includes hospitality, consultancy and nursing). Secondary sector is one that makes a complete product which can then be utilized. Examples of industrial sector are manufacturing industry and construction.

CHARACTERISTICS:

Industrial sector usually accepts the primary sector end product and then applies them to construct completed products that are then either purchased by the end user or sent for further processing or fabrication. The industrial or secondary sector can be classified into two types: heavy industry and light industry. Most industries transform raw materials into finished products. Large quantities of energy are consumed to run the process. Manufacturing industries tend to generate pollution and are the source of environmental problems. Construction is making a building or the fabrication of infrastructure. Effective planning is required for successful execution. The activity requires a mastery of multitasking.

DIVISIONS OF SECONDARY SECTOR:

A few common industrial sector divisions are: l. Automobile industry 2. Chemical industry 3. Consumer electronics 4. Industrial equipment 5. Steel production 6. Tobacco industry 7. Aerospace manufacturing 8. Brewing industry 9. Textile industry l0. Energy industry viz. electricity industry, natural gas industry, petroleum industry 11. Metal working 12. Telecommunications

BETTER QUALITY OF LIFE

Economists are of the opinion that manufacturing industry creates wealth compared to the service sector. The service sector is regarded as a consumer of wealth. Countries that export manufactured goods are usually found to have higher marginal GDP growth. This translates into a better quality of life for that country's citizens. Manufacturing promotes economic development. This sector employs a better quality of white collar professionals. Social mobility in the upward direction is also created.

HIGHLIGHTS OF GENERAL UNION BUDGET 2011-12

I-T exemption limit raised to Rs 1.80 lakh from Rs 1.60 lakh . Exemption for senior citizens raised to Rs 2.5 lakh Tax under women slab unchanged. Tax exemption raised to Rs 5 lakh for senior citizens of 80 years. To increase service tax on air travel Excise and customs duty proposals to result in the net gain of Rs 7,300 crore. Export duty rates on iron ore unified and kept at 20% ad valorem. Basic customs duty on agricultural machinery reduced to 4.5% from 5%

Basic customs duty on raw silk reduced from 30 to 5 per cent Excise and customs duty proposals to result in the net gain of Rs 7,300 crore Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted. Peak rate of customs duty maintained at 10% in view of the global economic situation. Customs duty exemptions for hybrid auto parts. Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted. Standard rate of central exercise duty maintained at 10%. Central government debt in proportion to GDP will be 44.2% in 2011-12. 20% export duty on all grades of iron ore.

Basic customs duty reduced on certain textile products No change in service tax rate of 10%. No change in central excise duty. Plan to levy 1% on 130 consumer items. Revenue deficit fixed at 2.3 per cent in revised estimates of 201011 and 1.8 per cent in 201112, Total plan expenditure will go up 100 per cent in nominal terms in the next year 15% tax on dividend for Indian cos from foreign unit. Direct Tax proposals result in expenditure of Rs 11,500 cr. To reduce surcharge on domestic companies to 5% from 7.5% MAT rate hiked to 18.5% from 18%. MAT on developers in SEZs to be levied.

Fiscal deficit revised to 5.1% from 5.5% for FY'11 Total expenditure raised by 13.4% at Rs 12.57 lakh cr over budget estimates Gross tax receipts estimated at 9.32 lakh cr for FY 2011-12 Bill to amend India Stamp Act soon. Budget allocation of Rs 100 cr for Ladakh and Rs 150 cr for Jammu for implementation of projects identified by taskforce Old age pension to persons of over the age of 80 raised from Rs 200 to Rs 500 Health allocation up by 20% to R 27,600 cr. Rs 9- lakh ex-gratia for defence personnel for 100% disability fighting Left-wing extremism.

To set up 15 more mega food parks. Remuneration of anganwadi workers raised from Rs 1,500 to Rs 3,000 per month. Helpers to get Rs 1,500 from Rs 750 Tax free bonds of Rs 30,000 cr to be issued for infrastructure development. This will cover Warehousing Corporation, NHAI, IRFC and Hudco. Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs 6,755 crore in the current year to Rs 7,860 crore. Rs 50 cr grant to Aligarh Muslim University centres in Murshidabad in West Bengal and Malappuram in Kerala. Rs 200 cr for environmental remediation programme.

Rs 500-cr for National Development Fund. Rs 400-cr as one-time grant for IIT-Kharagpur. Move to set up State Innovation Councils underway. To move insurance, pension and banking bills in Parliament Allocation to education sector raised to Rs 52,000 cr Scholarship scheme for SC/ST students in classes IX, X. Increase in allocation to higher education Increase in remuneration for Anganwadi workers from Rs 1,500 to Rs 3,000 per month. Plan 17% increase in social sector spending. To introduce Food Security Bill New companies bill to be introduced.

Tax free bonds of Rs 30,000 cr to be issued for infrastructure development. This will cover Warehousing Corporation, NHAI, IRFC and Hudco. Fertilizer industry to be included under infrastructure category. GoM to be set up to deal with corruption Five-fold strategy to deal with black money. Mega cluster for leather products to be introduced. Existing interest subvention scheme on short term farm loans at 7 % interest to continue. Self-assessment in customs to be introduced. Credit flows to farmers raised from Rs 3.75 lakh crore to Rs 4.75 lakh crore. Constitution Amendment Bill for introduction of GST in this session.

Goods and Services Tax Bill this year. Direct Taxes Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report. Public Debt Management Agency Bill in the next fiscal. Indian mutual funds to get direct access to foreign markets; FIIs to be allowed to invest in MFs. To liberalize FDI policy further. To extend infra tax breaks to fertilizer sector. To set up microfinance equity fund. Government to move towards direct cash transfer of cash subsidy as regards kerosene, LPG and fertilisers from March 2012 for BPL in view of large diversion.

3% interest subvention to farmers who repay in time. Nabard capital base to be increased by infusing Rs 10,000 cr Rural housing fund increased to Rs 3,000 cr Banks asked to step up lending to agriculture. Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs 6,755 crore in the current year to Rs 7,860 crore. Budget proposes to raise housing loan limit from Rs 20 lakh to Rs 25 lakh for priority sector lending. Allocation for farm development hiked to Rs 7,860 cr. Rs 300 cr proposed to promote production of cereals. Indian micro-finance equity with SIDBI to be formed at Rs 100 crore.

Rs 6,000 cr to be given to public sector banks to maintain capital-to-risk assets ratio norms RBI to bring in new guidelines for banking licenses. Aiming Fiscal deficit of 3% by fiscal 2014 Central electronic registry to reduce fraud cases. FII investment limit for infra corporate bonds hiked to $40 billion. Discussions on to further liberalize FDI policy. Preparation of GST rollout in final stages. Microfinance equity fund of Rs 100 cr proposed. Government committed to hold 51% in PSUs. Rs 3,000 cr to Nabard for handloom societies. Women self-help group development fund to be set up.

Direct transfer of subsidy for kerosene. Goods and Services Tax Bill to be introduced in Parliament this year. Direct Tax Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report. Disinvestment target at Rs 40,000 cr. Direct Tax Code from April 2012. SEBI-registered MFs to be allowed direct access to foreign funds. Expect RBI to moderate inflation. Public Debt Management Agency Bill to be introduced next financial year. Age for pension eligibility reduced from 65 years to 60 years under Indira Gandhi Yojana scheme

Current account deficit and average inflation in 2011-12 likely to be less than current year. FDI policy review done in Sept 2010. Economic growth in 2011-12 likely to be 9 per cent. Admits large-scale diversion of kerosene. Introduction of DTC will be a watershed moment. Debt management bill to be introduced. Constitutional Amendment Bill on GST to be introduced. Expect Agri sector to grow at 5.4% in 2011. Growth in 2010-11 broad-based. Economy resilient to shocks. RBI measures will further moderate inflation.

GDP estimated growth at 8.6% in real terms. New dynamism in rural economy. Core inflation in check. Current account deficit is at 2009-10 levels, and is a matter of concern. Huge difference in wholesale and retail prices not acceptable. Total food inflation down from 20.2 per cent last year to 9.3 per cent in Jan Revival in private investment should be sustainable. Service growing in double digits. Need to reconcile legitimate environmental concerns with developmental needs. Food Inflation has declined by half, but still a matter of concern.