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    Indian Economy

    Uploaded by

    Praval Sai
    The document discusses India's economic reforms over the past 25 years that have led to it becoming one of the fastest growing economies in the world. It notes that India opened up its economy in 1991 in response to a balance of payments crisis through reforms like liberalization, privatization and globalization. As a result of these reforms, macroeconomic indicators like GDP growth, inflation, fiscal deficit, and foreign exchange reserves have significantly improved. However, it also points out some lingering weaknesses in the economy like non-performing bank assets and implementation of GST, and uncertainties around maintaining sustainable growth.

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    © All Rights Reserved
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    Indian Economy

    Uploaded by

    Praval Sai
    132 views13 pages
    The document discusses India's economic reforms over the past 25 years that have led to it becoming one of the fastest growing economies in the world. It notes that India opened up its economy in 1991 in response to a balance of payments crisis through reforms like liberalization, privatization and globalization. As a result of these reforms, macroeconomic indicators like GDP growth, inflation, fiscal deficit, and foreign exchange reserves have significantly improved. However, it also points out some lingering weaknesses in the economy like non-performing bank assets and implementation of GST, and uncertainties around maintaining sustainable growth.

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    INDIAN ECONOMY

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    The document discusses India's economic reforms over the past 25 years that have led to it becoming one of the fastest growing economies in the world. It notes that India opened up its economy in 1991 in response to a balance of payments crisis through reforms like liberalization, privatization and globalization. As a result of these reforms, macroeconomic indicators like GDP growth, inflation, fiscal deficit, and foreign exchange reserves have significantly improved. However, it also points out some lingering weaknesses in the economy like non-performing bank assets and implementation of GST, and uncertainties around maintaining sustainable growth.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    132 views13 pages

    Indian Economy

    Uploaded by

    Praval Sai
    The document discusses India's economic reforms over the past 25 years that have led to it becoming one of the fastest growing economies in the world. It notes that India opened up its economy in 1991 in response to a balance of payments crisis through reforms like liberalization, privatization and globalization. As a result of these reforms, macroeconomic indicators like GDP growth, inflation, fiscal deficit, and foreign exchange reserves have significantly improved. However, it also points out some lingering weaknesses in the economy like non-performing bank assets and implementation of GST, and uncertainties around maintaining sustainable growth.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13

    INDIAN

    ECONOMY
    MACRO-ECONOMIC
    TURNAROUND
    GROUP - 07
    So, What
    is
    this
    all about?
    SUMMARY:

     The Case details about the economic reforms that India went through over the
    past 25 years and how it has claimed to become one of the fastest growing
    economies in the world .

     What elements constituted this turnaround ?

     How strong was the turnaround story ?

     How internal and external factors affected the positive growth and attain
    sustainability?
    SUMMARY:
     India has remained closed economy till 1990/91. Balance payment
    (BOP) crisis – 1991 had reduced India’s foreign exchange reserves to
    less than US$1 billion in July 1991 and brought India to its knees. To
    stabilize this crisis, Government has taken 3 pillars : Liberalization,
    Privatization and Globalization. The Government of India took major
    policy to address the BOP problem: Fiscal correction, Trade policy
    reforms, Industrial policy reforms and public sector reforms. Also they
    had taken $2.3 billion from IMF and including loan of $500 million from
    world bank. This reduced rupee valuation to 18 %. By making the right
    reforms, the government managed to reach annual growth rate of India
    7.6 % in 2016. The Indian economy emerged as the fastest economy in
    the world, outpacing China’s 6.9% Annual growth rate. In April 2016,
    India’s finance minister addressed that India can achieve 8.5% annual
    growth in 2016/17. The country’s macroeconomic indicator in the past
    25 year pointed to macroeconomic turn-around.
    STRENGTHS:

     Rate of inflation is around 4 to 5 per cent, which is in declining path.

     CAD of the balance of payments is less than 1 % of GDP along with the dollar-
    rupee exchange rates convincingly stable.

     Forex reserves have registered a growth of $360 billion by December 2016.

     Increasing GDP Rate

     Increasing FDI investments.


    WEAKNESS:
     Goods and Service Tax (GST) implementation.

     Societalideology, mind-set and opinions about redistribution of


    wealth and income.
     Banksare unable to lend because they have accumulated huge Non-
    Performing Assets (NPAs)
     Ratioof the working - age population of non-working age population
    in India will reach its maximum value of around 1.7 by 2020.
     Privateinvestment is low and exports are not in good shape, growing
    at a very low rate, which are significant sources of growth but has
    slackened considerably of late in India.
    OPPORTUNITIES:

     The reform in the bankruptcy laws for exits of various corporations to


    release locked up resources.
     Digitalization of payments for the efficient functioning of government
    schemes.
     Government should be on competitive and cooperative federalism
    which presents a great potential to attract skills, investment and
    technology.
     Higher growth prospects in developed countries like the US and
    Germany can generate a new avenue for exports from developing
    countries including India.
    THREATS:

     The competitive populism in the federal democracy can damage


    fiscal discipline and governance standards.
     Challenges arising out of pay revisions and UDAY bonds are
    significant concerns for states to maintain their fiscal discipline
    targets.
     International oil prices are on the rise and so also the commodity
    prices.
     As a consequence of developments in the US economy, global interest
    rates and inflation rates in advanced countries are on the way to
    strengthen.
    Were the macro-economic indicators strong
    enough to be sustainable?
     Although All the traditional indicators

    show us a rosy picture we are a long

    way from a sustainable economy

     Power difference( Appr. 3% of rich

    contain 75% wealth )

     The population of India focused on

    agriculture.

     Environmental hazards

     Unorganized sectors
    How should one interpret the increase in GDP growth
    rates, the reduction in the CAD, and the reduction in
    the fiscal deficit?
     Production of goods and services at better value
     India has become a manufacturing and revenue centre for foreign investors and
    companies
     CAD is basically the difference in the values of exports and imports from India. Exports
    have increased. Self sufficiency has also brought about reduction in imports
     Fiscal deficit is the difference between government revenues (chiefly taxes) and
    government expenditures
     Privatisation has allowed the government to reduce its expenditures and hand things
    over to the private sector
     The increased GDP has brought greater personal and corporate fortunes which has also
    allowed the government to collect greater magnitude of taxes
    Should investors be confident about India’s
    growth story in 2016?
     Investors love growth. As Indian markets take-off again, investors should not be
    dazzled by the economic prospects alone. Rather it must look for other links that
    affect the earning of these emerging markets(CSR).
     Due to the belief that GDP growth in emerging countries like INDIA
    automatically lead to fast growth in the profits of the firms.
     Over the last 10 years, real GDP growth has been noticeably faster in the
    developing countries than the developed countries with annual growth of 4.2%
    which is nearly four times the 1.1% recorded in the developed countries

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