INDIA FASTEST GROWING FREE MARKET DEMOCRACY IN A GLOBAL ECONOMY

1947 : Year of Indian Independence

Todays India is one of the fastest growing Democratic Market Economy, well on its way to be integrated with the world economy The famous Goldman Sachs report ( Dreaming with BRICs: The Path to 2050 ) states that, among Brazil, Russia, India and China, India will grow the fastest over the next 30 to 50 years by leveraging its demographic advantages and through continued development Indias GDP will exceed Italys in 2016, Frances in 2019, Germanys in 2023 and Japans in 2032 INDIA TO BECOME THE 3RD LARGEST ECONOMY IN THE WORLD BY 2032 AND THE STORY BEGAN IN 1947

Economic Scenario :
India - One of the fastest growing economies in the world Average GDP growth : 6.2 % per annum Average annual growth (1995 - 2005) Agriculture & Allied Industry Services : : : + 2.1 % per annum + 6.6 % per annum + 7.8 % per annum

Average Per Capita Income growth (1995 - 2005): 3.8 % per annum

Inflation down to a single digit level continuously for the last ten years
Foreign exchange reserves increased from US $ 2 b (March 1991) to US $ 145 b (September 2005)

Exports : +20 % average rate of growth in last three years

Economic Scenario :
Balance of Payments deficit (US $ 12.8 billion in 2011) External Debt Service Ratio down from 26.2 % in 1995 to 6.2 % in 2005 Foreign Direct Investment (FDI) : Average +US $ 5 b pa in the last five years. Reforms continuing and have unleashed dynamic forces putting the economy on a trajectory of unparalleled economic growth in the future The Indian Government is working in close co-operation with industry and trade to mitigate the remaining problems and constraints Broad consensus across the political spectrum on the need for and direction of the reforms. Some issues still need to be resolved

Indian MNCs - Globalizing

Number of foreign firms acquired by Indian companies during 2001 - 03

120

Total worth
India - 8th largest investor in the UK No of investments No of Indian companies with operations in Singapore

US $ 1.6 b

440 1,441

India Leading The World

Hero Honda - Largest producer of motorbikes in the world Moser Baer - Worlds 3rd largest producer of optical media Hero Cycles - Worlds largest bicycle producer Bharat Forge - Worlds top 3 forgings manufacturers

UB Group - Worlds 2nd largest producer of alcoholic beverages

Paharpur Cooling Towers - Worlds 2nd largest manufacturer Cooling Towers

Share Of Services Sector In GDP On The Rise (%)

60 50 40 30 20 10 0

32.2

40.6

27.2

43.9 28.1 28.0

48.9 27.2 23.8

52.4 27.1 20.5

1990-91

1995-96
Agriculture

2000-01
Industry Services

2004-05

Agriculture
India the worlds most irrigated land mass worlds 2nd largest exporter of rice & 5th largest exporter of wheat Food production: Indias Ranking in the World

1st
2nd

Tea, Milk
Rice, wheat, sugar

Average GDP growth - India & the World

Average GDP Growth (2011)

Rising share of Indias external trade in GDP

Target : To double share of exports from 0.7 % to 1.5 % of world trade

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Macro Economic Indicators (2004 - 05)

Land Area: 3.29 m sq. km.

Population:
GDP: Gross Domestic Savings: Gross Domestic Investment: Inflation Rate:

1,210,193,422 b
1847.98 billion US $ 30.31 % (2011) 36 % (2011) 7.81 %

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Macro Economic Indicators

Exchange Rate: Merchandise Exports: Merchandise Imports: Services Exports: Foreign Direct Investment: Direct Investment Abroad: US $ 1 = 53.47 US $ 80b US $ 106b US $ 51b US $ 5.5b US $ 1.5b

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India : Per Capita Income of States(2009-10)

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India Leading The World

Apollo Hospitals - Single largest hospital chain in South Asia TISCO - worlds cheapest producer of steel Reliance Industries - Worlds largest producer of PTA, a chemical used in textile production Mahindra & Mahindra - Amongst top 3 tractor manufacturers in the world Telco - Amongst top 3 truck manufacturers in the world Welspun - Worlds largest producer of terry-towels Gujarat Ambuja - Amongst top 5 cement producers in the world

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Growing Knowledge Pool

Source: UN, Morgan Stanley

Source: IMD Competitiveness Yearbook 2003

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Social and Economic Development in India

Developmental Issues
AID grass root development projects: Health , education , women empowerment, livelihood generation Micro level Development of Country/society at Macro level: Social development : Literacy rate, Health, Human Development, Human rights Economic development: GDP per capita, Poverty level, Income inequality, Urbanization Macro Sum(Micro)- More is different! Link between Micro and Macro level of development Interconnections between Social and Economic development

Understanding Development
Questions:
GDP better life? Better Health+good education rich Country +Low poverty? Social progress economic progress? Literacy low population growth? Role of political systems in social and economic growth?

Scientific measure of Measuring development?

Demography and developmental economics
Poverty level and Income Inequality Literacy rate Human developmental Index Fertility rate Life expectancy Gender ratio and female literacy

Poverty and Income Inequality

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Poverty and Income Inequality

Measure of people with low purchasing power and poor access to basic amenities: food, drinking water, healthcare, education etc.. Levels: Extreme Poverty: Living on less than US$ 1 (PPP) per day-1.1bn ppl Moderate Poverty: less than $2 (PPP) a day- 2.7 billion ppl Strongly Correlated (negatively) with Economic development, Industrialization,, fertility rate, Human development Correlated (negatively) with Education and health opportunities, Life expectancy

Proximate determinants of inequality

Economic growth is the most potent determinant of income distribution; its distributive implication depends on whether the growth was pro-poor or pro-rich. Growth performance of priority sectors become the second most potent determinant. It tells us where the growth occur and whether it excludes some sectors and communities. Employment generation is the third variable. If free trade serves unskilled labour better, naturally that should be pro-poor.

the status of infrastructure including roads, markets, storage, irrigation canals, extension services etc undermines the distribution of economic opportunities.
Education is considered an equalizer of income distribution; This depends on considerations of access and equity. So does health!

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World: Extreme Poverty Level

India: GDP: $4 trillion (4th) GDP per capita(PPP): $3800 (122th) Extreme Poverty level: 23% Income Inequality Gini Index: 0.32 (moderate)

India: Poverty comparison

INDIA- Basic Facts
Population Population Density 1.2 billion(approx) 339/km2(10 times US)
$4.457 trillion (3rd) $3,693 (129th)

GDP GDP per capita Literacy: Men: Women: Education Spending

65.4% 75% 54% 4.1% GDP

Poverty Measures
How do we measure poverty?
Poverty can be both absolute and relative. Absolute Poverty: Those people who do not have adequate nutritional intake per day, or do not have adequate shelter or clothing in order to survive are deemed to be in absolute poverty. Is traditionally measured by introducing largely ad hoc poverty lines. E.g. the World Bank reports the number of people in countries below a $1 or $2 a day as a proportion of the total population. Better but more expensive method is to calculate nutritionally based poverty lines World Health Organization.

Poverty Measures
Relative Poverty: The relative position of some economic unit (e.g. individual, household, racial group) compared to another economic unit. A person can be relatively poor but not absolutely poor is really to do with distribution of income in a country.
E.g. Economic growth will generally result in a reduction of absolute poverty but will only change relative poverty if there is a change in distribution of income.

Literacy and social development

Literacy is the ability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contexts Literacy rates are a measure of a region's human capital. Increases in literacy (alone) do not necessarily cause increases in wealth in a given region Literacy correlates more with the quality of life and human development than economic development Higher literacy implies: less infant and female mortality, lower fertility rate, greater participation in political process

Why heterogeneity?
Diverse socio, economic and political conditions across states
States bear greater responsibility of education, health care etc than center Political stability varies widely across states. Started with different initial conditions

World: Literacy rates

2001 Average: World ave: 80% India: 66%

India: Literacy rate

Literacy 65.7% (2001), Increasing ~1% /year

Fertility rate and population growth

Total Fertility Rate (TFR): Average no of children born per women over her lifetime Determines population growth rate in a region Replacement level fertility rate- 2.1, population stabilizes Higher the Per-capita income and education level, lower the TFR People without access to sex education and contraceptives tend to have more children.

World: Fertility rate

World: 2.62 (2007 est) India : 2.81 Kerala: 1.7

World: Life Expectancy at Birth

India Average: 69 years Male : 66 years Female : 71 years (2007 est.)

Journey so far
Succeeded to large extent in increasing life expectancy To a good extent we have reduced fertility rate. Enrollment in primarily schools has substantially increased

Road ahead

Stupendous problem of Malnutrition Highest incidence of child labor, child abuse (physical and sexual) Quality and equity in elementary education. Make sure every child is learning well.

Total Fertility rate

THANK YOU

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