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Trade and Economy > Indian Economy Overview

Indian Economy Indian Economy Overview India - Economy

Overview and Trends
Last Updated: December 2010
Trade and External Related News
Sector

FDI The Centre for Monitoring Indian Economy (CMIE) has Construction wor
estimated India’s gross domestic product (GDP) to expand of 4 MW solar
at 9.2 per cent in 2010-11 as compared to the growth of project all set to
FII 7.4 per cent in 2009-10. Overall growth in industrial begin
output was 10.8 per cent year-on-year (y-o-y) in October Campco in pact
2010. The growth in the industrial sector is expected to with Cadbury
increase at 9.4 per cent in 2010-11, as compared to 9.2 per NALCO titanium
Domestic Investments cent in 2009-10. According to a survey by the project MoU with
Confederation of Indian Industry (CII) and ASCON, IREL
around 50 segments (out of 127) in the manufacturing Feedback Ventur
Indian Investments sector grew by 39 per cent, entering the 'excellent growth' ties up with
Abroad category, during April-December 2010-11 compared to 29 Portuguese road
sectors (22.9 per cent) in April-December 2009 which Govt plans 50
shows a marked improvement. Also, services sector is centres of
Agriculture projected to expand by 10 per cent as compared to 8.6 per excellence for
cent last year, led by the trade and transport segment. The science & tech
major turnaround is expected from the agriculture and India set to get
Manufacturing
allied sector, which is being projected to grow by 5.7 per Asia's first tidal
cent in 2010-11. power plant
Infrastructure As per Use-based classification, the Sectoral growth rates Government
in October 2010 over October 2009 are 7.7 per cent in approves 19 FDI
Ports Basic goods, 22 per cent in Capital goods and 9.5 per cent proposals worth
in Intermediate goods. The Consumer durables and US$ 958.71 milli
 Consumer non-durables have expanded by 31 per cent and Mor
Power 0.1 per cent respectively in the reported month.
The industrial output registered a robust growth of 10.8
Railways per cent year-on-year (y-o-y) in October 2010. Among the
three major constituents of the IIP, manufacturing and
electricity recorded higher growth rates of 11.3 per cent
Roads and 8.8 per cent in October as against their corresponding Related Resource
levels of 10.8 per cent and 4 per cent for the
corresponding month in 2009. The third constituent Monthly Econom
Services mining index registered 6.5 per cent in October 2010. Report
The Economic scenario Monthly Econom
Report: October
Consumer Markets Foreign injections amounted to US$ 6.4 billion in October 2010
2010, which was almost 25 per cent of the total inflows in
Reliance Brands
Marketing and the stock market registered so far in 2010. The net foreign
make first PE
Strategy fund investment crossed the US$ 100 billion mark on
investment
November 8 2010, since the liberalization policy was
implemented in 1992. As per the data given by SEBI, the MoU for integrat
Rural Market total figure stood at US$100.9 billion, wherein US$ 4.78 fuel facility at
billion were infused in November itself. The humungous Mumbai airport
increase in investment mirrors the foreign investors’ faith Monthly Econom
Urban Market in the Indian markets. FIIs have made investments worth Report: Septemb
US$ 4.11 billion in equities and poured US$ 667.71 2010
million into the debt market. Manpower
Union Budget 2010-11 Employment
Data sourced from SEBI shows that the number of Outlook Survey
registered FIIs stood at 1,738 and number of registered (Q4/2010)
Railway Budget 2010-11 sub-accounts rose to 5,592 as of November 10, 2010. Monthly Econom
As on December 17, 2010, India's foreign exchange Report: August
reserves totalled US$ 294.60 billion, an increase of US$ 2010
Economic Survey 2009- 11.13 billion over the same period last year, according to
10 Mor
the Reserve Bank of India's (RBI) Weekly Statistical
Supplement.
Moreover, India received foreign direct investment (FDI)
equity worth US$ 12.39 billion during April-October,
2010-11, taking the cumulative amount of FDI inflows
during April 2000 - October 2010 to US$ 179.45 billion, Related Websites
according to the Department of Industrial Policy and
Promotion (DIPP).
Ministry of Finan
The services sector comprising financial and non-financial
services attracted 21 per cent of the total FDI equity Mint
inflow into India, with FDI worth US$ 2,163 million
The Financial
during April-October 2010, while telecommunications
Express
including radio paging, cellular mobile and basic
telephone services attracted second largest amount of FDI Business Standar
worth US$ 1,062 million during the same period. The Hindu Busin
Metallurgical industries were the third highest sector Line
attracting FDI worth US$ 920 million followed by power The Economic
sector which garnered US$ 729 million during the Times
financial year April-October 2010.
• Exports from India have increased by 26.8 per cent
 year-on-year (y-o-y) to touch US$ 18.9 billion in
November 2010, urging the Government to exude
confidence that overall shipments in 2010-11 may
touch US$ 215 billion. For the April-November
2010 period, exports have grown by 26.7 per cent
to US$ 140.3 billion, while imports totaled up to
US$ 222 billion, expanding 24 per cent.
• India's logistics sector is witnessing increased
activity. According to the Indian Shipping
ministry, the country's major ports handled 44.4
million tones of cargo during September 2010, 4.5
per cent higher as compared to 5.9 per cent growth
in September 2009. Leading consultants
Frost&Sullivan, as cited by The Economic Times,
are expecting traffic to boost at Indian ports from
814.1 million tones (MT) to 1,373.1 MT from
2010 to 2015 at a CAGR of 11 per cent. The study
group has underlined three key trends in the sector,
namely, increase in containerized cargo, increased
private sector participation and traffic diversion
toward minor ports.
• Foreign Tourist Arrivals (FTA) in India during the
period of January- November 2010 were 4.93
million as compared to the FTAs of 4.46 million
during the same period of 2009, showing a growth
of 10.4 per cent. The Foreign Exchange Earnings
(FEE) during the period of January-November
2010 were US$ 12.88 billion as compared to US$
10.67 billion during the same period of 2009,
registering a growth rate of 20.7 per cent,
according to data released by the Ministry of
Tourism.
• The total telephone subscriber base in the country
reached 742.12 million as on October 31, 2010,
taking the overall tele-density to 62.51, according
to the figures released by the Telecom Regulatory
Authority of India (TRAI). Also the wireless
subscriber base increased to 706.69 million.
• The average assets under management of the
mutual fund industry stood at US$ 160.44 billion
for the month of September 2010, according to the
data released by Association of Mutual Funds in
India (AMFI).
• As per NASSCOM’s Strategic Review 2010, the
Indian IT-BPO sector continues to be the fastest
growing segment of the industry and is estimated
to aggregate revenues of USD 73.1 billion in
FY2010, with the IT software and services
industry accounting for USD 63.7 billion of
 revenues.
• The cumulative production of vehicles in India
grew by 32.4 per cent upto August 2010 as
compared to the same period in 2009, Mr B S
Meena, Secretary, Ministry of Heavy Industry,
reported. Passenger vehicles, commercial vehicles
and two-wheeler segments had all recorded
impressive growth rates of 32 per cent, 49 per cent
and 31 per cent, respectively during the period
upto August 2010.
• According to the Gem and Jewellery Export
Promotion Council, jewellery shipments were
worth US$ 23.57 billion in April-November 2010,
registering a rise of 38.25 per cent as compared to
US$ 17.05 billion in the corresponding period of
2009.
• According to the Ministry of Civil Aviation,
passengers carried by domestic airlines from
January-November, 2010 were 46.81 million as
against 39.35 million in the corresponding period
of year 2009, thereby registering a growth of 18.9
per cent.
• According to Ernst & Young (E&Y), a global
consultancy firm, India is expected to receive more
than US$ 7 billion in private equity (PE)
investments in 2010, on the back of robust
economic growth. According to research firm
VCCEdge, mergers and acquisition (M&A) deals
worth US$ 54.6 billion have been signed till
December 15, 2010, significantly more than the
previous high of US$ 42 billion achieved in 2007.
• The HSBC Markit Business Activity Index, which
measures business activity among Indian services
companies, based on a survey of 400 firms, rose to
60.1 in November 2010 from 56.2 in October
2010.

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Agriculture
Agriculture is one of the strongholds of the Indian economy and accounts for 14.6 per cent of
the country's gross domestic product (GDP) in 2009-10, and 10.23 per cent (provisional) of
the total exports. Furthermore, the sector provided employment to 55 per cent of the work
force.
India's agriculture and allied sector grew by 3.8 per cent in the first six months of the current
fiscal (2010-11). Capital investment in agriculture has increased from US$ 1.2 billion in
2007-08 to US$ 3.26 billion in 2010-11 (inclusive of State Plan Scheme Rashtriya Krishi
Vikas Yojana), as per a Ministry of Agriculture press release dated August 3, 2010.
In the Union Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee made the
following announcements for the agriculture sector.
• US$ 86.89 million is provided to increase the Green Revolution to the eastern region
of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern up, West Bengal
and Orissa.
• US$ 65.17 million has been provided to organise 60,000 pulses and oil-seed villages
in rain-fed areas in 2010-11 and provide an integrated intervention for water
harvesting, watershed management and soil health to improve productivitiy of the dry
land farming areas.
 • Banks have been consistently meeting the targets set for agricultural credit flow in the
past few years. For the year 2010-11, the target has been set at US$ 81.47 billion.
• In addition to the 10 mega food park projects already being set up, the government
has decided to set up five more such parks.
• External commercial borrowings are available for cold storage for preservation or
storage of agricultural and allied products, marine products and meat.
Growth potential story
• The data centre services market in the country is forecast to grow at a compound
annual growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to
US$ 2.2 billion by the end of 2011, according to research firm IDC India’s report
published in March 2010. The report further stated that the overall India data centre
services market in 2009 was estimated at US$ 1.39 billion.
• According to a report by research and advisory firm Gartner published in March 2010,
the domestic BPO market is expected to grow at 25 per cent in 2010 to touch US$ 1.2
billion by 2011. Further, the BPO market in India is estimated to grow 19 per cent
through 2013 and grow to US$ 1.8 billion by 2013. According to the report, the
domestic India BPO services market grew by 7.3 per cent year-on-year in 2009.
• The BMI India Retail Report Quarter 3, 2010 released in May 2010, forecasts that
total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by
2014.
• According to a report titled 'India 2020: Seeing, Beyond', published by domestic
broking major, Edelweiss Capital in March 2010, stated that India's GDP is set to
quadruple over the next ten years and the country is likely to become an over US$ 4
trillion economy by 2020.
• India will overtake China to become the world's fastest growing economy by 2018,
according to the Economist Intelligence Unit (EIU), the research arm of London-
based Economist magazine.

Asian games overview

The largest-ever 16th Asian Games concludes in the Chinese city of Guangzhou on 27
November. The closing ceremony too was a colorful one. The opening ceremony had been
held on the banks of the Pearl River in Guangzhou on 12 November. The skies lit up with
dazzling fireworks as an emotional China brought the curtains down on the biggest Asian
Games in a riot of color, foot-tapping music and a cultural extravaganza at the Haixinsha
Island on the Pearl River. If the opening ceremony held at the same riverside venue on 12
November was high on technical wizardry, the closing was a heart-touching display of
warmth by the people of this South China city whose infrastructure has improved
remendously as a result of hosting the Games.

With the theme of "Thrilling Games, Harmonious Asia, the Guangzhou Games had the most
sports ever contested in the games' 59-year history, as it included 28 Olympic sports and 14
non-Olympic which featured 476 events. The games witnessed the debuts of cricket, dance
sport, dragon boat, roller sport and go chess.

On a continent inhabited by nearly two thirds of the world's population, the Asian Games
have become Asia's largest sports event and a symbol of unity between different cultures,
politics and religions. Guangdong built and renovated 70 stadiums and gymnasiums,
including 53 competition and 17 training venues. Twelve of the 70 were built from scratch.
Over two-plus weeks of the 16th Asian Games, South Korea discovered a new rival in the
field of continental athletic competition -- itself. South Korea accomplished both of its much-
publicized goals. It won 76 gold medals, more than the projected total of 65, and it out dueled
Japan's 48 in the gold medal count.

With China expected to run away on home soil, South Korea had from the beginning set out
to be the second-best by edging its rival Japan for the fourth straight Asian Games. Four
years ago at Doha, South Korea beat Japan 58-50 in gold medals, but Japan actually won
more medals overall, 198-193.

But it was a different story in Guangzhou. South Korea nearly doubled up Japan in gold
medals, and only the last-minute spurt by Japan in athletics, kayak and karate kept the margin
respectab
India’s Biggest Asiad Haul
India created history by recording their best-ever performance in the Asian Games with 64
medals, including a record 14 gold. With the addition of 11 more medals, India’s tally
climbed to a record 14 gold, 17 silver and 33 bronze (total 64), the biggest ever haul in the
Asian Games so far, to jump to the sixth place.

India’s best medal haul was recorded in the 1982 Games in New Delhi when they had won 13
gold, 19 silver and 25 bronze for an overall tally of 57. India had finished 10th in the last
edition of the Games in Doha with a tally of 10-17-26. The sixth spot on the medal rostrum
by India is the best it has attained since 1986 at Seoul, where the country ended fifth with a
more modest haul of 5-9-23.

Historic Boxing Gold: World number one Vijender Singh (75kg) clinched an unprecedented
second boxing gold for India at the ongoing Asian Games while two others settled for silver
to round off the best ever campaign by the country’s pugilists at the quadrennial mega-event.

It was sweet revenge for Olympic and World Championship bronze-medallist Vijender when
he blanked reigning world champion Abbos Atoev of Uzbekistan 7-0 at the Foshan
Gymnasium. Atoev had beaten the 25-year-old Indian at the World Championship semifinals
last year but this time Vijender plugged the loopholes which led to that loss and emerged a
clear winner.
However, V. Santhosh Kumar (64kg) and Manpreet Singh (91kg) settled for silver medals
after losing in the finals. While Santhosh lost 1-16 to Kazakhstan's Daniyar Yeleussinov in
finals, Manpreet went down 1-8 to Mohammad Ghossoun of Syria to take India's silver tally
to three in boxing after Dinesh Kumar (81kg) had finished second.

Indian boxers thus ended their campaign with two gold — the first coming through Vikas
Krishan (60kg), three silver and two bronze medals — Suranjoy Singh (52kg) and Paramjeet
Samota (+91kg). Santhosh opened the proceedings for India and found himself on the
backfoot from the very start. Too defensive and somewhat intimidated, the Indian could
neither prevent his rival from connecting punches nor create any noteworthy attacking
chance.

Dominance in Kabaddi: Barely hours after Indian women’s kabaddi team made a
memorable Asian Games debut by clinching the gold, their male counterparts recorded their
sixth consecutive yellow metal in the quadrennial event with a comfortable victory over Iran.
The Indian men’s team, who clinched the gold in every edition of the quadrennial event since
the game’s introduction in 1990, managed to prevail over Iran 37-20 at the Nansha
Gymnasium.
India led 24-3 at half-time after Iran failed to secure a single lona against India’s four. The
Indians also got a couple of bonus points in the opening half.

However, after the crossover, Iran was the better side on display and managed to dominate
the proceedings, bagging 17 points as against India’s 13.

But it was not enough to earn them a gold as overall India proved to be a better side with six
lonas against two of their opponents and 28 outs to stamp their supremacy in the sport.

Golden Track: India ended their athletics campaign in the Asian Games with a bagful of
medals with the women's 4x400m relay quartet winning the gold to bring down curtains with
a bang on the penultimate day of the competitions.

India emerged from the track and field events with five gold, two silver and four bronze
medals, one of their best efforts in Asian Games history, though below their performance in
2002 Busan Asian Games where they had a 7-6-5 medal haul. Having started their campaign
with a golden double in the women's 10,000m and 3,000m steeplechase through Preeja
Sreedharan and Sudha Singh on the first day, the 4x400m relay team of Manjeet Kaur, Sini
Jose, AC Ashwini and Mandeep Kaur ended the campaign by clinching the gold in 3 minutes,
29.02 secs at the Aoti Main Stadium.

Mandeep staved off a determined challenge from Kazakhstan's last runner Olga Tereshkova,
the individual 400m gold medalist, to finish strongly after her teammates Sini and Ashwini,
the 400m hurdles gold medalist, had given India a sizeable lead from the second stage of the
race. Kazakhstan, with two 40m individual medalists running for them, were edged out to the
second spot despite clocking a national best time of 3:30.03 while hosts China took the
bronze in 3:30.89.

Preeja, however, could only get a silver despite making a great effort to catch Bahrain's
eventual gold winner Mimi Belete in the women's 5000m while compatriot Kavita Raut got
the bronze as India won one gold, a silver and a bronze from the last day action for the
country.No Indian is competing in the men's and women's marathon, the last athletics event
to be held tomorrow. Preeja who led a 1-2 of Indians with Kavita in the women's 10,000m on
day one, was in the lead bunch of six runners led by Japan's Kayoko Furushi, silver medalist
in 2006 Doha Games, along with her teammate as the two kept up the challenge with easy
strides.

Introduction To Indian Economy:

Since the last two decades Indian economy is on a rise and has proved its mettle to the indian.
India is one of the fastest growing economies and is often considered as one of the major
super powers. India is an Asian nation with seventh largest land base and second largest in
term of population. The economy of India is the largest economy in the indian by nominal
GDP and the fourth largest by purchasing power parity (PPP).
Understanding Indian Economy:
Indian economy stands today as one of the influential and attractive economy. The
liberalization move by the Indian Government in 1990s has given a boost to the Indian
economy and put her into a fast track economic growth route. With the beginning of the new
millennium, India was considered as an emerging super power. In 2009, Indian GDP based
on purchasing power parity (PPP) stood at USD 3.5 trillion making it the fourth largest
economy. India’s service industry accounts for 62.5% of the GDP while the industrial sector
contributes 20% to the GDP. The agricultural sector which was the back bone of Indian
economy post-independence took a back seat in 21st century and contributed only 17.5% to
the GDP. India growth rate has been an average of 7% since 1997 and has maintained a
growth rate above 5% even in times of global recession. The Information Technology and IT
outsourcing services has been the biggest contributor to India’s growth. India’s per capital
income (PPP) is not too attractive and stands at USD 4542. India currently accounts for 1.5%
of the total indian trade as per WTO, 2007 publications.
Indian Sector Analysis:
Indian Economy VS Industry:
Industrial activities accounts for 20% of the economy. India is characterized by small and
medium manufacturing units with few major players. 14% of the total workforce is engaged
in manufacturing activities. Liberalization has brought in many private players and multi
national organizations into manufacturing foray.
Services - Service Providers & Services Sector contribution in Indian Economy:
India is one of the leading service providers and services sector contributed 62.5% to the
GDP and employ 34% of the work force. With large base of English speaking educated
people, India has become a preferred destination for business services.
Agriculture Indian Economy:
Though agricultural activities employ 52% of the total work force yet it contributes only
17.5% to the total GDP. Mostly, agriculture is carried out using traditional methods and
farmers are dependent on heavily on monsoons. Green revolution and white revolution has
given a boost to this sector but it is yet embrace technology on a large scale.
Banking and Finance - Indian Economy:
India has one the largest network of bank branches and most of the people in India enjoy
banking facilities. India has a robust banking economy which was proved by the fact that it
remained largely unaffected by the global recessions.
External Trade and Investments:
Balance of Payments:
India’s balance of payment has been in RED since independent and though growing exports
in post-liberalization era is expected to bring it down, the current rising oil bill is making it
look difficult.
Foreign Direct Investments (FDI):
India is the preferred destination for FDI since liberalization. Industrial reforms have made
the scenario more attractive and with growing economy it looks promising in terms of
return.
Global Trade Relations:
Since liberalization India’s contribution to total global trade has increased to 5%. China, UK,
The US, Japan, Russia and EU are the major trading partners to India. Both imports and
exports have taken a leap by 20% on an average.
Concerns:
Though India is considered as a major economic power but it faces many challenges.
Indian Economy VS Agriculture:
Agriculture sector in India lacks innovation and investment. It still uses the traditional
methods of farming giving less produce per hectare of cultivated land as compared to global
standards. The total area under farming is also reduced due to growing industrialization and
urbanization. India has to strike a balance between industrial growth and agricultural growth.
Effect of Poverty on Indian Economy:
24% of the Indian population lives below the poverty line (USD 1.25 per day). There is a
large regional income disparity in India where six low income states are home to more than
one third of population. According to Indian Bank, India is classified as low income
economy.
Effect Corruption on Indian Economy:
Corruption has been a wide spread problem in India. Liberalization has reduced the red tape
and bureaucracy but still it never lost it ground. Most of the government spending fail to
reach the general public and government initiative are marked by large scale corruption.