Faculty Of Management

Sciences & Liberal Arts

MASTER OF BUSINESS ADMINISTRATION

Comparative study:
Economies Of India and
United Kingdom
Submitted To: Dr. Kesari Singh

Session 2018-2020

Registration No 1 8 7 1 4 0 1 0 1 6

Due Date Of Assignment 1 5 / 1 2 / 2 0 1 8

 Contents

Sr. No. Particular Page Number

1. Introduction 1

2. Annual GDP 2

3. Inflation 3

4. Unemployment 4

5. Bank Rate 5

6. Exports 5

7. Imports 6

8. Exchange rate 6

9. Comparison Table 7
❖ Introduction

Under this project we were asked to compare any two economies of the world. For this I have
chosen the world’s fastest growing economy i.e. India and United Kingdom. The comparison
is done on the basis of some Macroeconomic factors.

❖ India Economic Outlook

As of Nov 2018, Economic growth likely slowed in the second quarter of this fiscal year, which
runs from April 2018 to March 2019. In Q2, the merchandise trade deficit increased by nearly
50% compared to the same quarter a year earlier, primarily due to surging oil imports. More
positively, business activity in the private sector increased in Q2 at a faster rate than in Q1.
Meanwhile, assembly elections are scheduled to take place across five states. Possibly with this
in mind, the BJP government has been pressuring the autonomously-run Reserve Bank of India
for more accommodative monetary policy in recent weeks. This has sparked rare public
rebukes from leading central bank officials.

❖ United Kingdom Economic Outlook

As of Nov 2018, The economy grew strongly in the third quarter according to recent figures,
supported by private consumption, public spending and net exports. Moreover, real earnings
growth accelerated notably, as the tight labour market fed wage pressures. Employment
growth, however, softened in quarter-on-quarter terms, possibly on rising Brexit uncertainty.
Looking to Q4, signs are less positive. In October, both the services and manufacturing PMIs
fell, while annual retail sales growth slowed considerably and consumer sentiment worsened.
On the fiscal front, the government recently presented an expansionary budget, which should
support growth next year thanks to higher spending and tax cuts.

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Comparative Study: Economy Of India and United Kingdom
➢ The following is the comparison of these economies on the basis of various macroeconomics
factors:
1. Annual GDP:
INDIA
Year 2017
Gross Domestic Product of India grew 6.7% in 2017 compared to last year. This rate is 4 -
tenths of one percent less than the figure of 7.1% published in 2016. The GDP in 2017 was
amounted to $2,600,000 million. The absolute value of GDP in India rose $326,444 million
with respect to 2016.
The GDP per capita of India in 2017 was $1,941, $224 higher than in 2016, it was $1,717.
To view the evolution of the GDP per capita, it is interesting to look back a few years and
compare these data with those of 2007 when the GDP per capita in India was $1,077.
Year 2018
Gross Domestic Product of India grew 1.9% in the second quarter of 2018 compared to the
previous quarter. This rate is less than the figure of 2% published in the first quarter of 2018.
The year-on-year change in GDP was 8%, which is more than the 7.5% recorded in the first
quarter of 2018. The GDP figure in the second quarter of 2018 was $474,560 million.
India has a quarterly GDP per capita, of $422, less than the same period last year, when it
was $426.

UNITED KINGDOM
Year 2017
Gross Domestic Product of United Kingdom grew 1.7% in 2017 compared to last year. This
rate is 1 -tenth of one percent less than the figure of 1.8% published in 2016. The GDP figure
in 2017 was $2,600,000 million. The absolute value of GDP in United Kingdom
dropped $60,687 million with respect to 2016.
The GDP per capita of United Kingdom in 2017 was $39,252, $1,278 less than in 2016,
when it was $40,530. To view the evolution of the GDP per capita, it is interesting to look back
a few years and compare these data with those of 2007 when the GDP per capita in United
Kingdom was $50,316.
Year 2018
Gross Domestic Product of United Kingdom grew 0.6% in the third quarter of 2018 compared
to the previous quarter. This rate is higher than the figure of 0.4% published in the second
quarter of 2018. The year-on-year change in GDP was 1.5%, more than the 1.2% recorded in
the second quarter of 2018. The GDP figure in the third quarter of 2018 was $511,309 million.
United Kingdom has a quarterly GDP per capita, of $8,977, $305 higher than the same
quarter last year

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Comparative Study: Economy Of India and United Kingdom
2. Inflation:
Inflation can be explained as the sudden increase in the general price index of goods and
services in the economy. During inflation the value of money tends to decrease as a result the
purchasing power of money decrease.

INDIA
Year 2017
In October, consumer prices rose 0.29% from the previous month, contrasting the 0.07% fall
in September. Higher prices for pan, tobacco and intoxicants; housing; and fuel and light all
contributed to the uptick in October, whereas lower prices for food and beverages, and clothing
and footwear had the opposite effect.
Inflation moderated to 3.3% in October, down from 3.8% in September and below market
analysts’ expectations of 3.6%. This was primarily because prices for food and beverages
declined. Core inflation, which excludes food and energy products, ticked up to 6.1% in
October from 5.8% in September. The rate of inflation was seen at 3.7% for year 2017.
Year 2018
The annual variation rate of the CPI in India in May of 2018 was 4.9%, 2 tenths higher than
the month before. The monthly variation rate of the CPI (Consumer Price Index) has been 0.5%
Forecast panellists expect consumer price inflation to average 4.7% in FY 2018. In FY 2019,
the panel expects consumer price inflation to average 4.7%. The current inflation rate as of
October 2018 is 3.85%.

UNITED KINGDOM
Year 2017
Consumer prices rose 0.1% in September over the previous month, down from August’s 0.7%
rise. September’s figure was underpinned by higher prices for clothing and footwear; and
education, which were partially offset by lower prices for food and non-alcoholic beverages;
and transport.
Inflation in September fell to 2.4% from 2.7% in August, moving back towards the Bank of
England’s (BoE) 2.0% target and undershooting analysts’ expectations of a decline to 2.6%.
Core inflation—which excludes food and energy costs—also decreased.
Year 2018
According to the August Inflation Report, the Bank of England sees inflation dipping to 2.3%
in Q4 2018 and 2.2% in Q4 2019. Forecast panellists expect inflation to average 2.1% in 2019
and 2.0% in 2020

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Comparative Study: Economy Of India and United Kingdom
3. Unemployment:
Unemployment measures people without a job who have been actively seeking work within
the last 4 weeks and are available to start work within the next 2 weeks.
The unemployment rate is not the proportion of the total population who are unemployed. It is
the proportion of the economically active population (those in work plus those seeking and
available to work) who are unemployed. This follows guidelines specified by the International
Labour Organisation and it ensures that unemployment rates of each country are broadly
comparable with those published by other countries.

INDIA
Year 2017
The rate of unemployment according to the World Factbook was 8.8% in 2017.
Year 2018
The rate of unemployment according to CMIE on November 2018 was 6.62% which has
comparatively decreased from 2017.

UNITED KINGDOM
Year 2017
The rate of unemployment according to the World Factbook was 4.4% (2017 est.)
Year 2018

The rate of unemployment according to Office of National Statistics on June 2018 was 4.0%
which has comparatively decreased from 2017.

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Comparative Study: Economy Of India and United Kingdom
4. Bank Rate’s:
Bank rate is part of a country’s monetary policy which deals with the cash flow in an economy.
Bank rate is the rate at which the central bank gives loans to various commercial bank.

INDIA
Year 2017
The Reserve Bank of India decreased the bank rate from 6.25% in October to 6.00%.
Year 2018
India has increased its interest rates by 0.25 percentage points, from 6.25% to an annual rate of
6.5% at its monetary policy meeting on 3–5 December by RBI. The key rates a tool used by
Central Banks to implement monetary policy. This change is the first to have taken place since
on June 6th 2018, when the Central Bank increased interest rates by 0.25 percentage points to
6.25%.

UNITED KINGDOM
Year 2017
The bank rate was 0.50% in financial year 2017.
Year 2018
At its meeting ending on 31 October, the Monetary Policy Committee (MPC) of the Bank of
England voted unanimously to keep the Bank Rate unchanged at 0.75%

5. Exports:
Exports being one of the most important sources of income for various countries, it is one of
the an important element to talk when we compare the economies of two different countries as
it helps to understand the balance of trade of these countries with the rest of the world.

INDIA
Year 2017
In the year of 2017, the total exports of the country was about $ 298,376.2 billion which
covered about 11.58% of the total GDP of the country. The export mainly consisted of
manufactured goods about 70.5%, fuel and mining products about 13.8% and agriculture
products about 12.8%.

UNITED KINGDOM
Year 2017
The export of United kingdom was about $ 444,981.6 billion in the financial year of 2017.
The main exports of the country included manufactured goods, chemicals, food and beverage
goods and fuels. The exports increased from $412.1 billion in financial year 2016. The total
16.76% was covered by exports in financial year of 2017.

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Comparative Study: Economy Of India and United Kingdom
6. Imports:
The second part of the balance of trade consist of imports. The imports for some countries are
very important as it fulfils the demand of the goods and services that are required in the
country, but the country does not have the resources to fulfil it. Hence it can be a major part
of the expenditure for many countries.

INDIA
Year 2017
In year of 2017, the total imports made by the country costed about $ 447,241 billion mainly
consisting of agricultural products about 8.1% , fuel and mining products about 30%
manufactured products about 51.7%. The imports were about 17.36% of the total GDP that
year.

UNITED KINGDOM
Year 2017
The total imports of U.K. costed about $644,055.1 billion in year of 2017. The main
components of the imports were manufactured goods , machinery and fuel. The imports were
more than that of FY 2016 at 636,365 billion. The imports contributed about 24.42% of the
total GDP.

7. Exchange Rate:
One of the components of international trade is the exchange rate. It can be explained as the
value of one currency for the purpose of conversion into another.

INDIA
Year 2018
The exchange rate on 11 Dec 2018 was 1$ = 72.26 INR

UNITED KINGDOM
Year 2017
The exchange rate on 11 Dec 2018 was 1$ = 0.80 £

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Comparative Study: Economy Of India and United Kingdom
 ❖ Comparison Table:

Sr. Macroeconomic India United Kingdom

No. Factor 2017 2018 2017 2018
$474,560 $511,309
Annual GDP $2,600,000 $2,600,000
1. million in million in
(Amount) million million
Q2 Q3

2. GDP Growth Rate 6.7% 7.5% in Q1 1.7% 1.5% in Q3

4.7%
3. Inflation 3.7 % 2.4% 2.3% In Q4
(Forecasted)

4. Unemployment 8.8% 6.62% 4.4% 4.0%

5. Bank Rate 6.00% 6.50% 0.50% 0.75%

$298,376.2 $444,981.6
6. Export - -
billion billion
Export contribution
7. 11.58% - 16.67% -
to GDP
$447,241
8. Import - $644,055.1 -
billion
Import contribution
9. 17.36% - 24.42% -
to GDP
Exchange Rate in
10. - 72.26 INR - 0.80£
terms of 1 U.S.D

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