ECONOMIC DEVELOPMENT OF INDIA AFTER 1947

Presented By : - Dewesh Kumar

TOPIC TO DISCUSS
Facts of Indian Economy Development Phase

ABOUT INDIAN ECONOMY

Tenth largest in the world by nominal GDP Third largest by PPP G-20 major economies Member of BRICS 19th largest exporter 10th largest importer

ECONOMIC DEVELOPMENT PHASE

First Phase Pre-liberalization period ( 1947-1991) Second Phase Post liberalization period( Since 1991 )

PRE-LIBERALIZATION PERIOD ( 1947-1991)

Planned Industrial Development Industry Licensing and Quotas Dominance of Public Sector Restriction on Private Investment

Socialism
Mixed Economy

CONT.
Never talk to me about profit, Jeh, it is a dirty word. Nehru, India's Fabian Socialism inspired first prime minister to industrialist J.R.D. Tata, when Tata suggested state-owned companies should be profitable (In the current Indian regulatory system,) I cannot decide how much to borrow, what shares to issue, at what price, what wages and bonus to pay, and what dividend to give. I even need the government's permission for the salary I pay to a senior executive. J. R. D. Tata in 1969

POST LIBERALIZATION PERIOD( SINCE 1991 )

Approval of FDI
Liberalization of Industrial Licensing
De-licensing De-regulation De-control

Liberalization of technology import

INDIAN LIBERALIZATION STAGE

Governments role changed to Regulator from Licensor

All Licenses Rationalized

Active participation of private sector FDI being Welcomed (100%) - Automatic Route

Barriers Dismantled & Procedures Simplified

Indian Industries Actively Investing Abroad Bureaucracy - Less Government is Good Governance

Allowing Market Forces to Govern the Efficient Allocation of Resources with Minimum State Intervention
Reducing and rationalising foreign trade barriers

AGRICULTURE (1951-2014)

Agriculture is the main sector of Indian economy which is amply powered by the following points:Share in National Income: 55.1% in 1950-51 , 37.6% in 1981-82, 18.5% in 2006-07 But agriculture still continues to be the main sector because it provides livelihood to a majority of the people. Largest Employment Providing Sector: in 1951, 69.5% of the working population was engaged in agriculture, fell to 66.9% in 1991 & to 56.7% in 2001. However, with rapid increase in population the absolute number of people engaged in agriculture has become exceedingly large. Provision of Food Surplus to the Expanding Population: Because of the heavy pressure of population in labor-surplus economies like India & its rapid increase the demand for food increases at a fast rate. Therefore, unless agriculture is able to continuously increase its surplus of food-grains, a crisis is likely to emerge.

CONT.
Providing Raw Material to industries: Agriculture provides raw materials to various industries of national importance. Sugar industry, Jute industry, Cotton textile industry, Vanaspati industry are examples of some such industries which depend on agriculture for their development. Market for Industrial Products: Since more than two-thirds of the population of India lives in rural areas, increased rural purchasing power is a valuable stimulus to industrial development. Importance in International Trade: Agriculture constitutes about 75% of the total exports of the country. Such is the importance of agriculture as far as earnings of foreign exchange are concerned.

MARKET DYNAMICS

India has emerged as a major player in the global agriculture market. In the last five years, the countrys agriculture exports have tripled from around Rs 80,000 crore (US$ 12.75 billion) to Rs 2.32 trillion (US$ 33.99 billion), said Mr Sharad Pawar, Union Minister for Agriculture, Government of India. Total exports of Indian agri and processed food products from April to August 2013 stood at US$ 9,711.09 million as compared to US$ 8,806.41 million during the same period last year, according to the data released by the Agricultural and Processed Food Products Export Development Authority (APEDA). Indias tea production rose by 12.59 per cent to 156.70 million kg in September 2013 on account of higher output in southern regions and West Bengal (WB). The output was 144.11 million kg in the same month last year, as per the data released by Tea Board of India. The Coffee Board of India has estimated coffee consumption in India to be around 125,000 tonnes for 2013, registering a growth of 5-6 per cent annually since 2010. The foreign direct investment (FDI) inflows in agricultural services and machinery sector during April 2000 to August 2013 stood at US$ 1,629.19 million and US$ 337.35 million respectively, as per the data released by Department of Industrial Policy and Promotion (DIPP).

SERVICES

13th in services output Provided employment to 27% of the work force Largest share in the GDP, 60% in nov.2013, up from 15% in 1950 IT and business process outsourcing are among the fastest growing sectors

SERVICES SECTORS INCLUDED IN THE NATIONAL INDUSTRIAL CLASSIFICATION 2008

Wholesale and retail trade; repair of motor vehicles and motorcycles Transportation and storage Accommodation and food service activities Information and communication Financial and insurance activities Real estate activities Professional, scientific and technical activities Administrative and support service activities Public administration and defence; compulsory social security Education Human health and social work activities Arts, entertainment and recreation Other service activities Activities of households as employers; undifferentiated goods and services producing activities of households for own use Activities of extraterritorial organisations and bodies

CURRENT KEY STATS

The services sector received foreign direct investment (FDI) equity inflows worth Rs 179,150.49 crore (US$ 28.78 billion) in the period April 2000August 2013, according to Department of Industrial Policy and Promotion (DIPP). About 80 per cent of India's total exports are dominated by high-skilled services, such as software business services, financial services and communication services. The expenditure of Indian banking and securities companies on IT products and services is expected to be around US$ 422 billion in 2013, a 13 per cent increase from 2012.

RECENT INVESTMENTS/ DEVELOPMENTS

For the fourth consecutive year, Wipro has been ranked as the number one organization in the global R&D service provider survey conducted by leading management and advisory firm, Zinnov Management Consulting. Mr Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is looking to open an exclusive chicken restaurant chain in India in collaboration with 2 Sisters Food Group (2SFG), a UK-based company. Hardcastle Restaurants Pvt Ltd (HRPL), the master franchisee of the operations of McDonalds restaurants in west and south India, is bringing its coffee retail format McCaf to the country. McCaf will be launched within the existing McDonalds restaurants, with the first opening slated to be at So Bo Central outlet in Mumbai Tech Mahindra Ltd has bagged an outsourcing deal from Australian financial services firm, Perpetual, to deliver registry services. As part of the deal, the Indian company will give technology support for various superannuation and pension products of Perpetual. Alvarez & Marsal (A&M), a global professional services organisation focusing on performance improvement and turnaround management, is seeking to expand its business in the country with the inception of a dedicated transaction advisory practice

FUTURE GROWTH

The Planning Commission estimates that the economy will grow at 9.5% in the XIIth Five Year Plan (2012-2017). The services sector is projected to grow at the rate of 10% during 2012-2017. Certain services like trade, hotels and restaurants and transport, storage and communications and financing, insurance, real estate are expected to grow faster than overall services growth while others like community social and person services may grow at a slower pace.

MANUFACTURING

Set of activities leading to and including transformation of materials into physical products needed by end-users or intermediaries, using productivity-enhancing tools, machines and methods.

Classification

Product type: food, textile, chemical, electrical, medical, automobile... Activity: design, manufacture, marketing, sales, customer support Technology level: material/labour/skill/engineering/capital intensive

At present sharing 9th largest manufacturing nation and expected to be 5th in position

Contributes one-fourth of total GDP Employs 30% of non-agricultural workforce According to a study by global management consulting firm McKinsey and Company, the manufacturing sector in India could grow six-fold to US$ 1 trillion, by 2025. The rising demand in the country and the aspirations of multinational companies (MNCs) to establish low-cost plants in India, are seen as reasons for this possible growth. Up to 90 million domestic jobs could be created by that time, with the sector generating about 2530 per cent of the countrys gross domestic product (GDP). Indias rapidly expanding economy gives domestic entrepreneurs and international players vast opportunities to invest and grow.

CONT.

Today, Indias attractiveness as a manufacturing centre for foreign companies is all too apparent. Overseas mobile phone and automobile companies already have manufacturing plants in India. Luxury brands such as Frette and Louis Vuitton are looking to do the same, as is major aircraft maker Airbus. Growth Trend Deloittes global index for 38 nations (2013) ranked India as the fourth most competitive manufacturing nation. The countrys economy saw massive expansion in the period 20062011, attaining a five-year Compound Annual Growth Rate (CAGR) of 7.8 per cent.

KEY DEVELOPMENT AND INVESTMENTS

Saudi Arabia-based Sabic, a manufacturer of fertilisers, polymers and raw materials used in polyester fibres, has started a technology centre in Bangalore. The company has invested US $100 million in the centre with the aim to double its headcount in the next few years. Manufacturing companies in Japan view India as the top destination for investments for the next three years, as per Mr Masanori Nakano, Consul General of Japan. India is among the least affected by the global economic slowdown and continues to grow at about 5 per cent. Cadbury India has signed a memorandum of understanding (MoU) with the Andhra Pradesh Government that will see the company establish its largest manufacturing plant in the AsiaPacific region. The Rs 1,000-crore (US$ 161.61 million) plant will be built on a 134-acre site in SriCity, Chittoor, and will be operational by mid-2015. India is rated among the top 10 markets in Cadburys global business.

CONT.

About 150 plastics manufacturers are expected to invest nearly Rs 3,000 crore (US$ 484.82 million) in the proposed plastics park at Dahej in the Bharuch district of Gujarat. Some small-scale sector firms have already booked plots to establish their units in the 200 acres allocated by the state government, as per Mr Raju Desai, Chairman, Plastivision India. Each of these units will invest in the range of Rs 1025 crore (US$ 1.61-4.04 million). PepsiCo Inc and its partners will invest US$ 5.5 billion to double its manufacturing capacity in the country by 2020, as per Ms Indra Nooyi, chairperson and CEO of the food and beverage giant. With rival Coca-Cola also planning to invest US $5 billion in India by 2020, the country will have received US $10.5 billion in investments from the two biggest global players in the field by the end of this decade. US-based General Electric Co is planning to make India a major global manufacturing hub. The company believes it can achieve this aim with the help of the countrys massive talent pool and lower manufacturing costs. The Rs 1,000-crore (US$ 161.61 million) plant will manufacture diversified equipment for the energy, aviation, oil and gas, and transportation sectors.

CONCLUSION

Quiz

Thank you