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Transcript of Indian Economy
Due to a general lack of infrastructure, India does not have much control over public goods. A good example would be their current water crisis. Although the government owns water sources throughout the country, they have no one to monitor usage or wear so these sources are left to the people. As a result, many groups take control of local water sources and charge townspeople money to use pumps and buy water. This gives these groups a great deal of power over townspeople without the government’s knowledge. In addition, the government does not allocate enough money to maintaining other public goods such as roads and railways. Palaniappan Chidambaram, appointed finance minister on July 31 by Prime Minister Manmohan Singh.
In his first month on the job, Chidambaram has called on banks to lower average lending rates of 10 percent, and pledged to tackle the deficit. He’s also ordered a review of the controversial proposal of his predecessor, Pranab Mukherjee, for retroactive taxation on capital gains. India's Future India has become the world's leading IT sector.
Industry includes: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals Industry and Services India has private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks. It also has individual or family owned indigenous bankers or money lenders and non-banking financial companies. The unorganised sector and microcredit are still preferred over traditional banks in rural and sub-urban areas, especially for expenses such as ceremonies and short duration loans. Banking and Finance Trade Large workforce
Many people are educated and speak English.
Agriculture still prominent
World’s leading IT sector.
part of BRICS
engaged in global trading network
Lots of resources India Economy Strengths India's Economy A Quick Overview 1,210,193,422 inhabitants
3,287, 263 km
Tons of Resources In 1947, India gained independence from the British. From 1947 to 1990, India's economy reflected that of the Soviet Union's. The Indian government focused on nationalizing the steel, mining, and telecommunication industries. In addition, emphasis was put on import substitution and central planning. by Gaby Nesmith, Matt Barton, and Kristen Gonzalez "Never talk to me about profit, Jeh, it is a dirty word. ”
—Nehru 1960-1991 1947-1960 Green Revolution Since 1965, the use of high-yielding varieties of seeds, increased fertilizers and improved irrigation facilities contributed to the Green Revolution in India, which improved the condition of agriculture by increasing crop productivity, improving crop patterns and strengthening forward and backward linkages between agriculture and industry.
This has been criticized as an unsustainable effort resulting in the growth of capitalistic farming, ignoring institutional reforms and widening income disparities. Post-Liberalization Period 1991-2010 India Today Economic Downturn of 2012 Agriculture In the late 1970s, government eased restrictions on capacity expansion for incumbent companies, removed price controls, and reduced corporate taxes.
These measures helped improve India's economy; however, the government's policy of Fabian socialism dampened that success and instead lead India into great debt.
The Soviet Union was one of India's largest trading partners, so when it fell, it caused economic decrease Government Reform Liberalization of the Economy The End! What happened in 2012? GDP and Ranks Government structure Currency Health Care Water Economy Indian Economy Weaknesses So What happened in 2012?
- Impacted public sector, state owned enterprises, infrastructure investment
-Before: fixed exchange rate, started having balance of payment problem, gov't. was going to default
-After: increased competition, only slowed by coalition politics and vested interests GDP (PPP): $4.421 trillion, 5th in world
GDP Per Capita (PPP): $3,700, 165th in the world
Growth rate: 6.8%
Composition of GDP
Labor force: 487.6 million persons, 2nd in world
29.8% of population below poverty line
Public debt: 50.5% of GDP -The currency is called the rupee
-Controlled by reserve bank of India
-As 0f 2011 only 50-paise coins are a legal subdivision Agriculture products:
rice, wheat, oilseed, cotton, jute, tea, sugarcane, lentils, onions, potatoes; dairy products, sheep, goats, poultry; fish Bollywood Despite the uncertainty of the success of other aspects of India's economy, Bollywood has always thrived.
It contributed 6.2 billion to the Indian economy in 2010.
9% growth -> Rs137 billion by 2014
Overseas market has grown 40% in 04-06 = increased international demand
Average 300 films produced a year.
Leads to higher employment, better infrastructure, development
Indian tourism contributed US$1.7 trillion Universal healthcare system run by the states and territories.
The Constitution of India gives the states the duty of making sure that the healthcare system and subsequent quality of life is up to par.
The National Health Policy was endorsed by the Parliament of India in 1983 and renewed in 2002.
Both urban and rural citizens tend to prefer the private sector of medical care in India as opposed to the public because of all of its problems.
High Infant Mortality Rate
Inadequate Safe Drinking Water
Health in general in Rural Areas Problems: Statistics Life expectancy at birth m/f (years): 63/66
Probability of dying under five (per 1 000 live births): 61
Probability of dying between 15 and 60 years m/f (per 1 000 population): 250/169
Total expenditure on health per capita (Intl $, 2010): 132
Total expenditure on health as % of GDP (2010): 4.0 In the 1970’s the government promoted the success of small industries in large numbers so they eased price controls and reduced corporate taxes.
The government policy of Fabian Socialism did not prove to be good for the economy.
This led to high fiscal deficits and worsening accounts.
The Soviet Union (India’s main trading partner) collapsing also negatively influenced the economy of India.
India asked for a $1.8 billion bailout loan from the IMF which called for reforms.
Prime Minister Narasimha Rao and his finance minister Manmohan Singh started the economic liberalization of 1991.
Reduced tariffs and interest rates and ended many public monopolies.
This allowed for foreign investment to become more important and results were seen.
Since then the idea behind liberalization has remained the same.
India has even been progressing toward a free market economy by the turn of the 20th century.
Substantial reduction of state control in the economy. -Expectancy 10years
-Expenditures: 3.1% of GDP
-7% graduate high school
-'Brain train' -Federal Republic
-28 states and 7 union territories
-Based on English model of common law
-Different in that separate laws apply to different religions
-Suffrage at age 18
-Constitution January 26th, 1950, changed many times
-President and Vice-President: 5-year terms •Real GDP growth has slowed to a nine year low of 6.5 percent for FY2011-12, from 8.4 percent in the two previous years. •The current account deficit reached a record 4.2 percent of GDP in FY2011-12, because of decelerating export growth and high crude prices. •Merchandise exports grew by 41 percent in September 2011, but their growth slowed to 2 percent by August 2012 (measured as 12-months cumulative exports compared with the same 12 months of the previous year) • Uptick in food prices in recent months. Also, higher domestic prices for fuel, which are necessary to rein in spending on subsidies, will contribute to inflationary pressure. Inflation is therefore expected to reach 8 percent at end-March 2013. Largest trading partners include the European Union, the United Arab Emirites, China, and the United States of America Foreign Direct Investment India is a preferred destination for FDI. In 2011, FDI inflow into India stood at $ 36.5 billion, 51.1% higher than 2010 figure of $ 24.15 billion. Growing population
Lack of infrastructure
Large population living in extreme poverty
Undocumented population Taxes: