Description
This report contains the details about GDP of INDIA , methods to calculate GDP and year wise comparison of indian GDP
“GDP OF INDIA
A project report submitted for the partial fulfillment of the degree
Submitted To:
Dr. ASHOK PANIGRAHI
Associate professor
NMIMS College
SCHOOL OF PHARMACY TECHNOLOGY AND MANAGEMENT
A REPORT ON
OF INDIAN ECONOMY
A project report submitted for the partial fulfillment of the degree
MBA (Pharma Tech)
Satyajeet Kashyap
Associate professor Vaibhav Vaidya (A023)
SVKM’S
SCHOOL OF PHARMACY TECHNOLOGY AND MANAGEMENT
1
N ECONOMY”
A project report submitted for the partial fulfillment of the degree
Submitted by:
Satyajeet Kashyap (A012)
Vaibhav Vaidya (A023)
SCHOOL OF PHARMACY TECHNOLOGY AND MANAGEMENT
2
CERTIFICATE
This is certify that Mr. Satyajeet Kashyap & Mr. Vaibhav Vaidya worked during the
period w.e.f. 10.03.2014 to 21.03.2014 on the development of the project “ GDP of Indian
Economy”, in the partial fulfilment of the requirement for the degree of MBA Pharma Tech
under my guidance & supervision. To the best of my knowledge, the matter represented in
this project is a bonafide & genuine piece of work.
During his association with the project I found him to be sincere & motivated individual. He
has shown keen interest in this project & him conduct was excellent.
I wish him all success in his career.
Place:
Date: 2-4-2014 D! ASHOK PAN"GRAH"
Associate professor
SVKM’S NMIMS
3
Guided by
D! ASHOK PAN"GRAH"
Associate professor
SVKM’s
NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES
DECLARATION
We Satyajeet Kashyap and Vaibhav Vaidya are bonafied students of M.B.A.Pharma
Tech at NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES.
Our enrollmentnumber are A012 &A023. I hereby declare that present summer internship
report titled Indian banking system is my original work. I conducted this study of “GDP of
INDIA”during 10 March to 21March, 2014. This report has not been submitted earlier
either with NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES and any other
educational organization as an essential requirement for the award of any Diploma/Degree.
PREFACE
Someone has rightly said that practical knowledge is far better than classroom
teaching. During this project I fully realized this and I came to know about how a
retailer chooses among a varied range of products available to him.
The subject of my study is “GDP of INDIAN Economy”, which has slowly but
steadily evolved from a beginner to a giant earning laurels and kudos throughout.
The report contains first of all brief introduction about the system. Finally there
comes data presentation and analysis in the end of my project report. I also put
forward some of my suggestion hoping that they will help INDIA’s GDP move a
step forward to being the very best.
!
ACKNOWLEDGEMENT
I acknowledge my deep sense of gratitude for giving me this opportunity to
undergo my project on “Gross Domestic Production Of INDIA” At this
moment of successful completion of the project, I would like to express my
sincere thankfulness and indebtedness to all those who extended their kind help
by spending their precious time in explaining the various intricacies of the
subject and suggesting the correct approach to me.
I would like to thank not once but twice Dr. ASHOK PANIGRAHI Guide for
providing insights about performing our work. This Project has been a great
learning outcome for me and without his help it would not have possible for me
to this project. whose contribution to the project is beyond my capacity of
expression.
"
Contents
Abstract
Introduction
Basic concepts in National Income
Method of Calculating National Income
Overview of Indian GDP
GDP of India
Growth Rate of Indian GDP
GDP Per Capital
GDP Per Capital of Indian States
GDP of Indian States
Inflation and it’s Effect on GDP
Export-Import analysis
Effect of Export-Import on GDP
GDP growth in various sectors
Post Liberalisation period
Challenges before Indian Ecnomy
Conclusion
#
Abstract
With the advent of WTO , India eneterd into new era of trade reforms after liberalization
being removed gradually after 1991. Growth of the economy in developing countries
provides the link between trade and output growth to adress the export import-led growth
and growth driven export/import hypothesis of India.A growth accounting analysis
disaggregatesby major sector, and highlights implications for aggregate productivity growth
of the reallocation ofresources out of agriculture to more productive activities in industry and
services. But concerns areraised that growth in services may be overstated. India will need to
broaden its current expansionto provide manufactured goods for the world market and jobs
for its large pool of low-skilled workers.
This paper seeks to examine the relationship between inflation and GDP growth in India
The result shows that there is a long-run negative relationship between inflation and GDP
growth rate in India. Inflation is harmful rather than helpful to growth. These results have
important policy implications. Exports have played an increasingly important role in India’s
economic growth in the last two decades. This paper analyses the performance of India’s
exports and the various economic factors which have contributed to its growth. This paper
provides an overview of the Indian services sector. It shows that services is the fastest
growing sector in India, contributing significantly to GDP, GDP growth, employment, trade
and investment.
$
INTRODUCTION
In the recent years considerable attempts have been made to understand the regional
dimensions of economic growth in India. Understanding the causes and nature of differences
in levels and growth of income across the regions (countries) is very important because even
small differences in the growth rates, if cumulated over a long period of time, may have
substantial impact on the on subsequent growth and development, and worsens economic,
social, and political tension among regions leading to misallocation of resources.
Despite five and half decades of development planning in India aiming to reduce the income
disparities amongregions, inequality in income and growth between the regions has been
rising over the time. In spite of considerable research made on the subject, much more
remains to be understood to explore the nature and causes of differences in growth rates in
order to calibrate appropriate policies and institutions to achieve balanced regional growth
and hence, regional convergence in terms of per capita income, and to combat poverty by
spreading the benefits of growth processes in different regions of India.
Also that China and India have become the powerhouses of the current global economy.
Their remarkable economic performance has led the world to not only look closely at their
overall economic development strategy, but also to try to understand how their success could
help enhance economic opportunities for the rest of the world. It is therefore of great interest
for
Academicians and policymakers to learn from these countries, even though their institutional
structures and organizations differ considerably. Although China has experienced
unprecedented economic growth over the past three decades, many concerns remain that
would need careful attention. This also applies to the Indian context. In this paper, we posit
the critical importance of other social, health and infrastructural indicators rather than
focusing on gross domestic product (GDP) alone.
%
National Income
National Income is the money value of all the final goods and services produced by a
country during a period of one year.national income consist of a collection of different of
goods and services of different types.
National income accounting is a set of rules and definitions for measuring economic activity
in the aggregate economy i.e. in the economy as a whole.
Basic concepts in National Income :-
Gross domestic Product
GDP at current Prices
GDP at constant Prices
GDP at factor cost
GDP at market price
Gross National Product
Net Domestic Product
Net National Product
NNP at factor cost
1&
1. Gross Domestic Product:- Gross domestic product (GDP) is the current market
value of the total final goods and services produced within a given period by factors of
production located within a country.
2. GDP at Current Prices:- GDp can be estimated at current prices and at constant
prices. If the domestic product is estimated on the basis of prevailing prices it is called
GDP at current prices.
3. GDP at Constant Prices :-If GDP is measured on the basis of some fixed prices ,
thet is price prevailing at a point of time or in some base year it is known as GDP at
contant price.
4. GDP at Factor cost:- The contribution of each producing unit to the current flow
of goods and services is known as the net value added . GDP at factor cost is estimated
as the sum of net value added by the different producing units and the consumption of
fixed capital.
GDP F.C.= GDP market price – Indirect taxes + Subsidies
5. GDP at Market prices:-
GDP at M.P. = GDP at factor cost + Indirect Taxes – subsidies
6. Gross National Product:- GNP is definede as the sum of the gross domestic
product and net factor incomes from abroad. Thus in order to estimate the gross
national product of India we have to add net factor income from abroad-income earned
by non resident in India to form the gross domestic product of India.
In brief GNP = GDp +NFIA
11
7. Net Domestic Product:- While calculating GDP no provision is made for
depriciation allowance. In such situation gross domestic product will not reveal
complete flow of goods and services through various sectors.
When depriciation allowance is subtracted from gross domestic product we get net
domestic prroduct.
NDP = GDP- Depriciation
8. Net National Product:- It can be derived from subtracting allowance from GNP.
It can also be found out by adding the net factor income from abroad to the net
domestic product.
NNP = GNP – Depriciation
If the net factor income from abroad is positive then NNP will be more than NDP , if
the net factor income from abroad is neagative then NNP will be less than NDP and it
would be equal when net factor income from abroad is zero.
9. NNP at Factor Cost:- NNp at factor cost is the volume of commodities
and services turned out during an accounting year , countes without
duplication. It can also be defined as the net value added at factor cost in
the economy during an accounting year.
NNP at FC. = FID + NFIA
FID = Factor income earned in the domestic territory of country.
NFIA = Net factor income from abroad.
12
Method for Calculating National Income
1. Production method:
This method is popular in USA and is called product method or Goods Flow Method.
In India , it is known as inventory or product method . In this method, the economy is
classified into three transaction sectors like industrial , services andforeign transaction
sector where international payments are considered.
We calculate the money value of all the final goods and services produced in an
economy during a year. The mony value of these goods and services is calculated at
market price . The sum-toal is called the GDP at market price.
2. Income method:-
We estimate the income earned by various factor services engaged in the process of
production. The sum of these income provide us the measure of gross national income
at factor cost.
GNP = Wages+Rent+Interest+Dividends+Undistributed corporate profits+ Mixed
Incomes +direct Taxes+Indirect taxes+Depriciation+Net income from abroad.
3. Expenditure method:-
Prof. Samuelson calls this as”Flow of Product Approach”. In India. It is known as
outlay meethod. GNP is the sum of expenditure incurred on goods and services during
one year in a country.
We sum up the flow of expenditure in an economy to arrive at national income
estimates, If we add the value of expenditure on all these items we get the value of
gross national expenditure at market prices.
13
Overview of Indian GDP
Overview of the Economy The Indian economy is estimated to have registered a growth rate
of 5.0 % per cent in 2012-13 in terms of gross domestic product at factor cost at constant
2004-05 prices, following a growth of 6.2 per cent in 2011-12. Growth in 2011-12 and
2012-13 is on the lower side, in the context of the decadal average of 7.9 per cent during
2003-04 to 2012-13. This is attributable mainly to weakening industrial growth in the
context of tight monetary policy followed by the Reserve Bank of India (RBI) through most
of 2011-12, and continued uncertainty in the global economy. With some moderation in
headline WPI inflation, there has been a reduction in the repo rate by the RBI by 50 basis
points in April, 2012 and by 25 basis points in January 2013. The impact of tight monetary
policy has been reflected in the quarterly growth rates of GDP. Quarterly GDP growth
declined in each of the successive quarters between the fourth quarter of 2010-11, and the
fourth quarter of 2011-12. The slowdown in the economy, particularly in the industry sector
has entailed a lower-than budgeted growth in government revenues. However, measures
undertaken as part of mid-course correction have helped in improving the expenditure
outcome in 2012-13. Measures including the increase in the price of diesel by ` 5 per litre,
allowing oil marketing companies (OMCs) to raise diesel prices by small amounts regularly,
and a cap on the number of subsidized LPG cylinders are expected to rein in the fiscal
deficit. Growth of exports for most of the current year remained in negative territory, and
with imports picking up in recent months, the trade deficit increased to US$ 147 billion
during April-December 2012. The current account deficit (CAD) at 4.6 per cent of GDP in
the first half of 2012-13 is a cause for concern. The widening of the trade and current
account deficits has been accompanied by a decline in the value of the Rupee since August
2011. After attaining an all-time low of ` 57.22 per US$ on June 27, 2012 the Rupee
rebounded and was in the range of 53-55 per US$ in the month of January 2013.
1
GDP of India
The Gross Domestic Product (GDP) in India was worth 1841.70 billion US dollars in 2012.
The GDP value of India represents 2.97 per cent of the world economy. GDP in India is
reported by the World Bank Group. From 1970 until 2012, India GDP averaged 485.7 USD
Billion reaching an all-time high of 1872.9 USD Billion in December of 2011 and a record
low of 63.5 USD Billion in December of 1970. The gross domestic product (GDP) measures
of national income and output for a given country's economy. The gross domestic product
(GDP) is equal to the total expenditures for all final goods and services produced within the
country in a stipulated period of time .
1!
1"
The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures
of national income and output. GDP can be defined in three ways, which should give
identical results. First, it is equal to the total expenditures for all final goods and services
produced within the country in a specified period of time (usually a 365-day year). Second, it
is equal to the sum of the value added at every stage of production by all the industries, plus
taxes and minus subsidies on products. Third, it is equal to the sum of the income generated
by production like compensation of employees, taxes on production and imports less
subsidies, and gross operating surplus.
The economy of India is the tenth largest economy in the world by nominal GDP and
the third-largest by purchasing power parity (PPP).The country is one of the G-20 major
economies and a member of BRICS. On a per-capita-income basis, India ranked 141st by
nominal GDP and130th by GDP in 2012, according to the IMF India is the 19
th
largest
exporter and the 10th largest importer in the world. The economy slowed to around 5.0% for
the 2012–13 fiscal year compared with 6.2% in the previous fiscal. According to Moody’s,
the Economic Growth Rate of India would be 5.5% in 2014-15. On 28 August 2013
the Indian rupee hit an all-time low of 68.80 against the US dollar In order to control the fall
in rupee, the government introduced capital controls on outward investment by both
corporates and individuals. India's GDP grew by 9.3% in 2010–11; thus, the growth rate has
nearly halved in just three years. GDP growth rose marginally to 4.8% during the quarter
through March 2013, from about 4.7% in the previous quarter. The government has forecast
a growth rate of 6.1%–6.7% for the year 2013–14, whilst the RBI expects the same to be at
5.7%. Besides this, India suffered a very high fiscal deficit of US$ 88 billion (4.8% of GDP)
in the year 2012–13. The Indian Government aims to cut the fiscal deficit to US$ 70 billion
or 3.7% of GDP by 2013–14.
1#
Growth rate of Indian GDP
The economy of India is the tenth-largest in the world by nominal GDP and the third-
largest by purchasing power parity (PPP). The country is one of the G-20 major economies
and a member of BRICS. On a per-capita-income basis, India ranked 141st by nominal GDP
and 130th by GDP (PPP) in 2012, according to theIMF. India is the 19th-largest exporter
and the 10th-largest importer in the world. The economy slowed to around 5.0% for the
2012–13 fiscal year compared with 6.2% in the previous fiscal.
According to Moody's, the
Economic Growth Rate of India would be 5.5% in 2014-15.
On 28 August 2013 the Indian
rupee hit an all time low of 68.80 against the US dollar. In order to control the fall in rupee,
the government introduced capital controls on outward investment by both corporates and
individuals.
India's GDP grew by 9.3% in 2010–11; thus, the growth rate has nearly halved in
just three years. GDP growth rose marginally to 4.8% during the quarter through March
2013, from about 4.7% in the previous quarter. The government has forecast a growth rate of
6.1%–6.7% for the year 2013–14, whilst the RBI expects the same to be at 5.7%. Besides
this, India suffered a very high fiscal deficit of US$ 88 billion (4.8% of GDP) in the year
2012–13. The Indian Government aims to cut the fiscal deficit to US$ 70 billion or 3.7% of
GDP by 2013–14.
1$
1%
GDP Per Capital (ppp)
India's nominal GDP per capita has steadily increased from US$329 in 1991, when
economic liberalisation began, to US$1,265 in 2010, and is estimated to increase to
US$2,110 by 2016; however, it has remained lower than those of other Asian developing
countries such as Indonesia, Iran, Malaysia, Philippines, Sri Lanka, and Thailand, and is
expected to remain so in the near future. While it is currently higher than Pakistan, Nepal,
Bangladesh and others.
India's per capita income is projected to soar by 10.4 per cent to Rs 74,920 in 2013-14 as the
country becomes a $1.7 trillion economy.
2&
21
GDP per capital of Indian States
22
India’s average Per Capita Income is Rs. 60,972/-, which is one of the lowest in the world.
Some European Countries have over 50 times per capita income as compared to India!
The Government of India has just released the per capita Income numbers for 2012-2013 and
India’s capital city Delhi has come out to have the highest per capita income in the country.
Interestingly the PCI of Delhi is over 7 times higher than state of Bihar and 4 times more
than 9 other states. Given that Delhi is a Union Territory, it may not be a right comparison,
even then the difference is too large to take notice.
Delhi’s per capita income for 2012-13 stood at Rs. 2,01,083 as compared to Bihar’s 22,890.
PCI for 6 Indian states is not available, including Gujarat, Kerala, Mizoram, Chandigarh,
Rajasthan and Goa.
23
According to the latest figures released by Government – Goa leads the country with per
capita income of Rs. 1,92,652/-, while Bihar has the lowest with a per capita income of only
Rs. 24,681/-. An average Goan earns 6 times more than an average Bihari!
As per latest 2012 figures, Delhi comes in second after Goa with PCI of Rs. 1,75,812
followed by Chandigarh (1,28,634 – 2011) & Haryana (1,09,227).
2
Gross National Product
Gross National Product in India increased to 99965.15 INR Billion in 2013 from 89328.92
INR Billion in 2012. Gross National Product in India is reported by the Ministry of Statistics
and Programme Implementation (MOSPI). Gross National Product in India averaged
13945.09 INR Billion from 1950 until 2013, reaching an all time high of 99965.15 INR
Billion in 2013 and a record low of 103.60 INR Billion in 1951.
2!
2"
GDP of Indian States
The results are revealing. There is a pronounced negative effect (catch-up) of initial growth
i.e. states that grew slower in the initial period, 1993-2002, grew faster in the higher growth
post 2003 years. The correlation for this simple model is a high 88 percent for all the states
and 74 percent for just the big states of India. From a base level of 5 percent, each lower
growth of 1 per cent in the 1993-2002 period meant that the growth rate 2003 to 2009 was
0.8 percentage points faster.
The first conclusion on observing the pattern in Chart 1 is that initial higher growth is
followed by subsequent slower growth. At first glance it does not appear to be the case that
poorer states grow faster and hence involve inclusive growth at a regional level. However,
the first impressions are misleading. The acceleration in growth model is a transformation of
the basic catch-up model; an econometric transformation which controls for several state
level fixed effects. If catch-up exists, then it is an indicator of growth spreading to and faster
in, poorer states. Note the recent high growth performance in poorer states like Chhattisgarh,
Jharkhand, Orissa, Uttaranchal, and Rajasthan, and the “on the line prediction” of the poor
state of Bihar.
2#
2$
State Total GDP in INR
(Ten Mn)
GDP in
USD (Bn)
Growth
Rate
Share of
India's
GDP
Per-
capita
GDP
Maharashtra 1248452.80 $233.89 16.86% 14.95% 101314
Uttar Pradesh 687836.28 $128.86 13.85% 8.23% 30051
Andhra Pradesh 675798.00 $126.61 14.74% 8.09% 68970
Tamil Nadu 639024.60 $119.72 12.82% 7.65% 84496
Gujarat 513172.84 $96.14 15.33% 6.14% 89668
West Bengal 541585.56 $101.46 14.55% 6.48% 55222
Karnataka 458902.74 $85.97 13.97% 5.49% 69051
Rajasthan 368319.52 $69.00 21.91% 4.41% 53735
Kerala 326692.89 $61.20 16.97% 3.91% 80924
Haryana 308943.26 $57.88 16.06% 3.70% 109064
Madhya Pradesh 315386.66 $59.09 19.02% 3.78% 37994
Punjab 248300.95 $46.52 14.26% 2.97% 78594
Bihar 252694.00 $47.34 24.40% 3.03% 22691
Orissa 226236.14 $42.38 11.02% 2.71% 41896
Chhattisgarh 135536.34 $25.39 18.26% 1.62% 46743
Jharkhand 130505.32 $24.45 12.96% 1.56% 35652
Assam 115407.64 $21.62 12.52% 1.38% 37250
Uttrakhand 95200.83 $17.84 12.35% 1.14% 79940
Himachal Pradesh 63331.33 $11.86 13.23% 0.76% 74694
Jammu & Kashmir 63589.47 $11.91 15.80% 0.76% 44533
Goa 44460.32 $8.33 7.06% 0.53% 167838
Tripura 19730.96 $3.70 13.48% 0.24% 50175
Meghalaya 15895.16 $2.98 11.32% 0.19% 53542
Nagaland 12134.31 $2.27 8.46% 0.15% 56461
Manipur 10187.85 $1.91 14.30% 0.12% 32865
Arunachal Pradesh 9357.05 $1.75 27.53% 0.11% 74059
Mizoram 6057.70 $1.13 15.40% 0.07% 54689
Sikkim 8399.87 $1.57 17.56% 0.10% 121440
Delhi 313933.51 $58.81 18.69% 3.76% 175812
Chandigarh 23367.64 $4.38 14.03% 0.28% 140073
A&N Islands 5025.96 $0.94 10.25% 0.06% 93075
Puducherry 13724.03 $2.57 3.03% 0.16% 98055
Total GSDP 7897191.53 $1,479.47
Total GDP 8353495.00 $1,564.96 61564
2%
GDP and Inflation
High output growth and low inflation are among the most important objectives of
macroeconomic policy. But there are perceived trade-offs between lowering inflation and
achieving high growth. Empirical evidence emphasizes that the growth-inflation relationship
depends on the level of inflation—at some low levels, inflation may be positively correlated
with growth, but at higher levels inflation is likely to be harmful to growth. In other words,
the relationship between inflation and output growth is non-linear. If such a non-linear
relationship exists, then it should be possible to estimate the inflexion point, or threshold,
beyond which output growth becomes costly. In this context, several studies have examined
the relationship between inflation and long-run growth in a non-linear framework.
3&
The empirical results presented in the paper, strongly suggest the existence of a threshold
beyond which inflation exerts a negative effect on growth. Inflation levels below the
threshold levels of inflation have no effect on growth, while inflation rates above the
threshold have a significant negative effect on growth.
the threshold is lower for industrialised countries than it is for developing countries (the
estimates are 1-3 percent and 11-12 percent for industrial and developing countries
respectively, depending on the estimation method used). The thresholds were statistically
significant at 1 percent or less, implying that the threshold estimates are very precise. The
negative and significant relationship between inflation and growth above the threshold level
is argued to be robust with respect to type of estimation method used.
The estimated relationship between inflation and growth does not provide the precise
channel through which inflation affects growth, beyond the fact that, because investment and
employment are controlled for, the effect is primarily through productivity. This also implies
that the total negative effect may be understated. The results in this paper provide strong
evidence for supporting the view of low inflation for sustainable growth.
31
Export Import Analysis
32
India’s Exports, Imports and Balance of Trade
The global slowdown had its impact on the economy of almost all the countries, including
India.The trade deficit abruptly increased from 356448 crores in 2007-08 to 533681 crores in
2008-09, an increase by almost 50 %. However, it was less by 2.9 % in 2009-10, to be
increased again by 4.3 % in 2010-11. As such India’s trade deficit stood at Rs. 518202 crores
during 2009-10 with values of exports and imports at Rs. 845534 crores and Rs. 1363736
crores respectively..
India’s Import performance
India’s imports in 2010-11 was Rs. 1683467 crores compared to Rs. 1363736 crores in 2009-
10, resulting in a positive growth of import (23.45%), although it was negative growth
(– .78%) during 2009-10. Along with this positive growth in imports, the exports also grew
significantly (35.17%) during 2010-11 compared to insignificant growth of 0.57% in 2009-
10.
India’s Export performance
India’s merchandise exports stood at Rs. 1142922 crores in 2010-11 as compared to
Rs.845534 crores during 2009-10, resulting in a growth of 35.17% in 2010-11.The
corresponding growth of 0.57% in 2009-10 indicating that there was more impact of global
recess/slowdown on India’s economy in the initial year.
33
Effect of Export-Import on GDP
When a country exports goods, it sells them to a foreign market, that is, to consumers,
businesses, or governments in another country. Those exports bring money into the country,
which increases the exporting nation's GDP. When a country imports goods, it buys them
from foreign producers. The money spent on imports leaves the economy, and that decreases
the importing nation's GDP.
Net exports can be either positive or negative. When exports are greater than imports, net
exports are positive. When exports are lower than imports, net exports are negative. If a
nation exports, say, $100 billion dollars worth of goods and imports $80 billion, it has net
exports of $20 billion. That amount gets added to the country's GDP. If a nation exports $80
billion of goods and imports $100 billion, it has net exports of minus $20 billion, and that
amount is subtracted from the nation's GDP.
Conceivably, net exports could be zero, with exports equal to imports and in fact this does
occasionally happen in the United States.
If net exports are positive, the nation has a positive balance of trade. If they are negative, the
nation has a negative trade balance. Virtually every nation in the world wants its economy to
be bigger rather than smaller. That means that no nation wants a negative trade balance.
3
GDP growth in various sectors
3!
Industry
I'()str* acco)'ts for 2"+ of GD, a'( e-p.o*s 22+ of t/e tota. 0or1force2 I'(ia is 11
t/
i'
t/e 0or.( i' ter- of 'o-i'a. factor* o)tp)t accor(i'3 to (ata co-pi.e( t/ro)3/ 4IA 5or.(
Fact6oo1 fi3)res2 T/e I'(ia' i'()stria. sector )'(er0e't si3'ifica't c/a'3es as a res).t of
t/e eco'o-ic .i6era.isatio' i' I'(ia eco'o-ic refor-s of 1%%17 0/ic/ re-o8e( i-port
restrictio's7 6ro)3/t i' forei3' co-petitio'7 .e( to t/e pri8atisatio' of certai' p)6.ic sector
i'()stries7 .i6era.ise( t/e FDI re3i-e7 i-pro8e( i'frastr)ct)re a'( .e( to a' e9pa'sio' i'
t/e pro()ctio' of fast -o8i'3 co's)-er 3oo(s2
Services
India is 13
th
in services output. The services sector provides employment to 27% of the work
force and is growing quickly, with a growth rate of 7.5% in 1991–2000, up from 4.5% in
1950. Information technology and business process outsourcing are among the fastest
growing sectors, having a cumulative growth rate of revenue 33.6% between 1997 and 1998
and 2002–03 and contributing to 25% of the country's total exports in 2007–08. . The share
of the Indian IT industry in the country's GDP increased from 4.8% in 2005–06 to 7% in
2008.
Agriculture
India ranks secondworldwide in farm output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 17% of the GDP in 2012, employed 51% of the total
workforce, and despite a steady decline of its share in the GDP, is still the largest economic
sector and a significant piece of the overall socio-economic development of India.India
receives an average annual rainfall of 1,208 millimetres (47.6 in) and a total
annual precipitation of 4000 billion cubic metres, with the total utilisable water resources,
including surface and groundwater , amounting to 1123 billion cubic metres. 546,820 square
kilometres (211,130 sq mi) of the land area, or about 39% of the total cultivated area, is
irrigated.India's inland water resources including rivers, canals, ponds and lakes and marine
resources comprising the east and west coasts of the Indian ocean and other gulfs and bays
provide employment to nearly six million.
3"
Post-liberalisation period (since 1991)
In the late 1970s, the government led by Morarji Desai eased restrictions on capacity
expansion forincumbent companies, removed price controls, reduced corporate taxes and
promoted the creation of small scale industries in large numbers. However, the subsequent
government policy of Fabian socialism hampered the benefits of the economy, leading to
high fiscal deficits and a worsening current account. The collapse of the Soviet Union, which
was India's major trading partner, and the Gulf War , which caused a spike in oil prices,
resulted in a major balance-of-payments crisis for India, which found itself facing the
prospect of defaulting on its loans. India asked for a $1.8 billion bailout loan from
the International Monetary Fund (IMF), which in return demanded de-regulation.
3#
In response, Prime Minister NarasimhaRao , along with his finance minister Manmohan
Singh , initiated the economic liberalisation of 1991. The reforms did away with the Licence
Raj , reduced tariffs and interest rates and ended many public monopolies, allowing
automatic approval of foreign direct investment in many sectors.
Since then, the overall
thrust of liberalisation has remained the same, although no government has tried to take on
powerful lobbies such as trade unions and farmers, on contentious issues such as reforming
labour laws and reducing agricultural subsidies. By the turn of the 21st century, India had
progressed towards a free-market economy, with a substantial reduction in state control of
the economy and increased financial liberalisation.This has been accompanied by increases
in life expectancy, literacy rates and food security, although urban residents have benefited
more than agricultural residents.
While the credit rating of India was hit by its nuclear weapons tests in 1998 , it has since
been raised to investment level in 2003 by S&P and Moody's.India enjoyed high growth
rates for a period from 2003 to 2007 with growth averaging 9% during this period.
Growth
then moderated due to the global financial crisis starting in 2008. In 2003, Goldman Sachs
predicted that India's GDP in current prices would overtake France and Italy by 2020,
Germany, UK and Russia by 2025 and Japan by 2035, making it the third largest economy of
the world, behind the US and China. India is often seen by most economists as a rising
economic superpower and is believed to play a major role in the global economy in the 21st
century.
Starting in 2012, India entered a period of more anemic growth, with growth slowing down
to 4.4%. Other economic problems also became apparent: a plunging Indian rupee , a
persistent high current account deficit and slow industrial growth. Hit by the U.S. Federal
Reserve’s decision to taper quantitative easing , foreign investors have been rapidly pulling
out money from India.
3$
Challenges before Indian economy:
Population explosion:The rising population is eating into the success of India.
According to 2011 census of India, the population of India has crossed one billion and
isgrowing at a rate of 2.11% approx. Such a vast population puts lots of stress on
economic infrastructure of the nation. Thus India has to control its population.
Poverty:As per records of National Planning Commission, 36 crore people are living
below the poverty line in India in 2012.
Unemployment:The increasing population is pressing hard on economic resources as
well as job opportunities. Indian government has started various schemes such as Jawahar
Rozgar Yojna, and Self Employment Scheme for Educated Unemployed Youth (SEUY).
But these are proving to be a drop in an ocean.
Rural Urban Divide:It is said that India lies in villages, even today when there is lots of
talk going about migration to cities, 70% of the Indian population still lives in villages.
There is a very stark difference in pace of rural and urban growth. Unless there isn't a
balanced development Indian economy cannot grow.
These challenges can be overcome by the sustained and planned economic reforms.
These include:
Maintaining fiscal discipline
Orientation of public expenditure towards sectors in which India is faring badly such as
health and education.
Introduction of reforms in labour laws to generate more employment opportunities for the
growing population of India.
Reorganization of agricultural sector, introduction of new technology, reducing agriculture's
dependence on monsoon by developing means of irrigation.
3%
Conclusion
In conclusion, the case study proves that factors besides education contribute to economic
growth.India is expected to increase its purchasing power, and thus its GDP, in the future.
While education has increased in India, unequal literacy rates continue to exist and account
for the lower GDP of India as compared to the United States. Therefore, gender equality is a
factor that is proven to contribute to economic prosperity.
From above one can find that trade liberalization has both the positive and negative effect on
the Indian economy. Both the trade direction and composition has changed in favour of
developing economy. Net factor income has been worsened by liberalization and trade
policy.
Overall india’s experience of liberalisation agriculture,manufacturing and finance shows that
liberalisation has been gradual,voluntary and tailored according to the needs of the
economy.the role of the state has been to use markets to not only maximize commercial
objectives but also seek to galvanize attempts to attain social objectives.
doc_380406176.pdf
This report contains the details about GDP of INDIA , methods to calculate GDP and year wise comparison of indian GDP
“GDP OF INDIA
A project report submitted for the partial fulfillment of the degree
Submitted To:
Dr. ASHOK PANIGRAHI
Associate professor
NMIMS College
SCHOOL OF PHARMACY TECHNOLOGY AND MANAGEMENT
A REPORT ON
OF INDIAN ECONOMY
A project report submitted for the partial fulfillment of the degree
MBA (Pharma Tech)
Satyajeet Kashyap
Associate professor Vaibhav Vaidya (A023)
SVKM’S
SCHOOL OF PHARMACY TECHNOLOGY AND MANAGEMENT
1
N ECONOMY”
A project report submitted for the partial fulfillment of the degree
Submitted by:
Satyajeet Kashyap (A012)
Vaibhav Vaidya (A023)
SCHOOL OF PHARMACY TECHNOLOGY AND MANAGEMENT
2
CERTIFICATE
This is certify that Mr. Satyajeet Kashyap & Mr. Vaibhav Vaidya worked during the
period w.e.f. 10.03.2014 to 21.03.2014 on the development of the project “ GDP of Indian
Economy”, in the partial fulfilment of the requirement for the degree of MBA Pharma Tech
under my guidance & supervision. To the best of my knowledge, the matter represented in
this project is a bonafide & genuine piece of work.
During his association with the project I found him to be sincere & motivated individual. He
has shown keen interest in this project & him conduct was excellent.
I wish him all success in his career.
Place:
Date: 2-4-2014 D! ASHOK PAN"GRAH"
Associate professor
SVKM’S NMIMS
3
Guided by
D! ASHOK PAN"GRAH"
Associate professor
SVKM’s
NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES
DECLARATION
We Satyajeet Kashyap and Vaibhav Vaidya are bonafied students of M.B.A.Pharma
Tech at NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES.
Our enrollmentnumber are A012 &A023. I hereby declare that present summer internship
report titled Indian banking system is my original work. I conducted this study of “GDP of
INDIA”during 10 March to 21March, 2014. This report has not been submitted earlier
either with NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES and any other
educational organization as an essential requirement for the award of any Diploma/Degree.
PREFACE
Someone has rightly said that practical knowledge is far better than classroom
teaching. During this project I fully realized this and I came to know about how a
retailer chooses among a varied range of products available to him.
The subject of my study is “GDP of INDIAN Economy”, which has slowly but
steadily evolved from a beginner to a giant earning laurels and kudos throughout.
The report contains first of all brief introduction about the system. Finally there
comes data presentation and analysis in the end of my project report. I also put
forward some of my suggestion hoping that they will help INDIA’s GDP move a
step forward to being the very best.
!
ACKNOWLEDGEMENT
I acknowledge my deep sense of gratitude for giving me this opportunity to
undergo my project on “Gross Domestic Production Of INDIA” At this
moment of successful completion of the project, I would like to express my
sincere thankfulness and indebtedness to all those who extended their kind help
by spending their precious time in explaining the various intricacies of the
subject and suggesting the correct approach to me.
I would like to thank not once but twice Dr. ASHOK PANIGRAHI Guide for
providing insights about performing our work. This Project has been a great
learning outcome for me and without his help it would not have possible for me
to this project. whose contribution to the project is beyond my capacity of
expression.
"
Contents
Abstract
Introduction
Basic concepts in National Income
Method of Calculating National Income
Overview of Indian GDP
GDP of India
Growth Rate of Indian GDP
GDP Per Capital
GDP Per Capital of Indian States
GDP of Indian States
Inflation and it’s Effect on GDP
Export-Import analysis
Effect of Export-Import on GDP
GDP growth in various sectors
Post Liberalisation period
Challenges before Indian Ecnomy
Conclusion
#
Abstract
With the advent of WTO , India eneterd into new era of trade reforms after liberalization
being removed gradually after 1991. Growth of the economy in developing countries
provides the link between trade and output growth to adress the export import-led growth
and growth driven export/import hypothesis of India.A growth accounting analysis
disaggregatesby major sector, and highlights implications for aggregate productivity growth
of the reallocation ofresources out of agriculture to more productive activities in industry and
services. But concerns areraised that growth in services may be overstated. India will need to
broaden its current expansionto provide manufactured goods for the world market and jobs
for its large pool of low-skilled workers.
This paper seeks to examine the relationship between inflation and GDP growth in India
The result shows that there is a long-run negative relationship between inflation and GDP
growth rate in India. Inflation is harmful rather than helpful to growth. These results have
important policy implications. Exports have played an increasingly important role in India’s
economic growth in the last two decades. This paper analyses the performance of India’s
exports and the various economic factors which have contributed to its growth. This paper
provides an overview of the Indian services sector. It shows that services is the fastest
growing sector in India, contributing significantly to GDP, GDP growth, employment, trade
and investment.
$
INTRODUCTION
In the recent years considerable attempts have been made to understand the regional
dimensions of economic growth in India. Understanding the causes and nature of differences
in levels and growth of income across the regions (countries) is very important because even
small differences in the growth rates, if cumulated over a long period of time, may have
substantial impact on the on subsequent growth and development, and worsens economic,
social, and political tension among regions leading to misallocation of resources.
Despite five and half decades of development planning in India aiming to reduce the income
disparities amongregions, inequality in income and growth between the regions has been
rising over the time. In spite of considerable research made on the subject, much more
remains to be understood to explore the nature and causes of differences in growth rates in
order to calibrate appropriate policies and institutions to achieve balanced regional growth
and hence, regional convergence in terms of per capita income, and to combat poverty by
spreading the benefits of growth processes in different regions of India.
Also that China and India have become the powerhouses of the current global economy.
Their remarkable economic performance has led the world to not only look closely at their
overall economic development strategy, but also to try to understand how their success could
help enhance economic opportunities for the rest of the world. It is therefore of great interest
for
Academicians and policymakers to learn from these countries, even though their institutional
structures and organizations differ considerably. Although China has experienced
unprecedented economic growth over the past three decades, many concerns remain that
would need careful attention. This also applies to the Indian context. In this paper, we posit
the critical importance of other social, health and infrastructural indicators rather than
focusing on gross domestic product (GDP) alone.
%
National Income
National Income is the money value of all the final goods and services produced by a
country during a period of one year.national income consist of a collection of different of
goods and services of different types.
National income accounting is a set of rules and definitions for measuring economic activity
in the aggregate economy i.e. in the economy as a whole.
Basic concepts in National Income :-
Gross domestic Product
GDP at current Prices
GDP at constant Prices
GDP at factor cost
GDP at market price
Gross National Product
Net Domestic Product
Net National Product
NNP at factor cost
1&
1. Gross Domestic Product:- Gross domestic product (GDP) is the current market
value of the total final goods and services produced within a given period by factors of
production located within a country.
2. GDP at Current Prices:- GDp can be estimated at current prices and at constant
prices. If the domestic product is estimated on the basis of prevailing prices it is called
GDP at current prices.
3. GDP at Constant Prices :-If GDP is measured on the basis of some fixed prices ,
thet is price prevailing at a point of time or in some base year it is known as GDP at
contant price.
4. GDP at Factor cost:- The contribution of each producing unit to the current flow
of goods and services is known as the net value added . GDP at factor cost is estimated
as the sum of net value added by the different producing units and the consumption of
fixed capital.
GDP F.C.= GDP market price – Indirect taxes + Subsidies
5. GDP at Market prices:-
GDP at M.P. = GDP at factor cost + Indirect Taxes – subsidies
6. Gross National Product:- GNP is definede as the sum of the gross domestic
product and net factor incomes from abroad. Thus in order to estimate the gross
national product of India we have to add net factor income from abroad-income earned
by non resident in India to form the gross domestic product of India.
In brief GNP = GDp +NFIA
11
7. Net Domestic Product:- While calculating GDP no provision is made for
depriciation allowance. In such situation gross domestic product will not reveal
complete flow of goods and services through various sectors.
When depriciation allowance is subtracted from gross domestic product we get net
domestic prroduct.
NDP = GDP- Depriciation
8. Net National Product:- It can be derived from subtracting allowance from GNP.
It can also be found out by adding the net factor income from abroad to the net
domestic product.
NNP = GNP – Depriciation
If the net factor income from abroad is positive then NNP will be more than NDP , if
the net factor income from abroad is neagative then NNP will be less than NDP and it
would be equal when net factor income from abroad is zero.
9. NNP at Factor Cost:- NNp at factor cost is the volume of commodities
and services turned out during an accounting year , countes without
duplication. It can also be defined as the net value added at factor cost in
the economy during an accounting year.
NNP at FC. = FID + NFIA
FID = Factor income earned in the domestic territory of country.
NFIA = Net factor income from abroad.
12
Method for Calculating National Income
1. Production method:
This method is popular in USA and is called product method or Goods Flow Method.
In India , it is known as inventory or product method . In this method, the economy is
classified into three transaction sectors like industrial , services andforeign transaction
sector where international payments are considered.
We calculate the money value of all the final goods and services produced in an
economy during a year. The mony value of these goods and services is calculated at
market price . The sum-toal is called the GDP at market price.
2. Income method:-
We estimate the income earned by various factor services engaged in the process of
production. The sum of these income provide us the measure of gross national income
at factor cost.
GNP = Wages+Rent+Interest+Dividends+Undistributed corporate profits+ Mixed
Incomes +direct Taxes+Indirect taxes+Depriciation+Net income from abroad.
3. Expenditure method:-
Prof. Samuelson calls this as”Flow of Product Approach”. In India. It is known as
outlay meethod. GNP is the sum of expenditure incurred on goods and services during
one year in a country.
We sum up the flow of expenditure in an economy to arrive at national income
estimates, If we add the value of expenditure on all these items we get the value of
gross national expenditure at market prices.
13
Overview of Indian GDP
Overview of the Economy The Indian economy is estimated to have registered a growth rate
of 5.0 % per cent in 2012-13 in terms of gross domestic product at factor cost at constant
2004-05 prices, following a growth of 6.2 per cent in 2011-12. Growth in 2011-12 and
2012-13 is on the lower side, in the context of the decadal average of 7.9 per cent during
2003-04 to 2012-13. This is attributable mainly to weakening industrial growth in the
context of tight monetary policy followed by the Reserve Bank of India (RBI) through most
of 2011-12, and continued uncertainty in the global economy. With some moderation in
headline WPI inflation, there has been a reduction in the repo rate by the RBI by 50 basis
points in April, 2012 and by 25 basis points in January 2013. The impact of tight monetary
policy has been reflected in the quarterly growth rates of GDP. Quarterly GDP growth
declined in each of the successive quarters between the fourth quarter of 2010-11, and the
fourth quarter of 2011-12. The slowdown in the economy, particularly in the industry sector
has entailed a lower-than budgeted growth in government revenues. However, measures
undertaken as part of mid-course correction have helped in improving the expenditure
outcome in 2012-13. Measures including the increase in the price of diesel by ` 5 per litre,
allowing oil marketing companies (OMCs) to raise diesel prices by small amounts regularly,
and a cap on the number of subsidized LPG cylinders are expected to rein in the fiscal
deficit. Growth of exports for most of the current year remained in negative territory, and
with imports picking up in recent months, the trade deficit increased to US$ 147 billion
during April-December 2012. The current account deficit (CAD) at 4.6 per cent of GDP in
the first half of 2012-13 is a cause for concern. The widening of the trade and current
account deficits has been accompanied by a decline in the value of the Rupee since August
2011. After attaining an all-time low of ` 57.22 per US$ on June 27, 2012 the Rupee
rebounded and was in the range of 53-55 per US$ in the month of January 2013.
1
GDP of India
The Gross Domestic Product (GDP) in India was worth 1841.70 billion US dollars in 2012.
The GDP value of India represents 2.97 per cent of the world economy. GDP in India is
reported by the World Bank Group. From 1970 until 2012, India GDP averaged 485.7 USD
Billion reaching an all-time high of 1872.9 USD Billion in December of 2011 and a record
low of 63.5 USD Billion in December of 1970. The gross domestic product (GDP) measures
of national income and output for a given country's economy. The gross domestic product
(GDP) is equal to the total expenditures for all final goods and services produced within the
country in a stipulated period of time .
1!
1"
The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures
of national income and output. GDP can be defined in three ways, which should give
identical results. First, it is equal to the total expenditures for all final goods and services
produced within the country in a specified period of time (usually a 365-day year). Second, it
is equal to the sum of the value added at every stage of production by all the industries, plus
taxes and minus subsidies on products. Third, it is equal to the sum of the income generated
by production like compensation of employees, taxes on production and imports less
subsidies, and gross operating surplus.
The economy of India is the tenth largest economy in the world by nominal GDP and
the third-largest by purchasing power parity (PPP).The country is one of the G-20 major
economies and a member of BRICS. On a per-capita-income basis, India ranked 141st by
nominal GDP and130th by GDP in 2012, according to the IMF India is the 19
th
largest
exporter and the 10th largest importer in the world. The economy slowed to around 5.0% for
the 2012–13 fiscal year compared with 6.2% in the previous fiscal. According to Moody’s,
the Economic Growth Rate of India would be 5.5% in 2014-15. On 28 August 2013
the Indian rupee hit an all-time low of 68.80 against the US dollar In order to control the fall
in rupee, the government introduced capital controls on outward investment by both
corporates and individuals. India's GDP grew by 9.3% in 2010–11; thus, the growth rate has
nearly halved in just three years. GDP growth rose marginally to 4.8% during the quarter
through March 2013, from about 4.7% in the previous quarter. The government has forecast
a growth rate of 6.1%–6.7% for the year 2013–14, whilst the RBI expects the same to be at
5.7%. Besides this, India suffered a very high fiscal deficit of US$ 88 billion (4.8% of GDP)
in the year 2012–13. The Indian Government aims to cut the fiscal deficit to US$ 70 billion
or 3.7% of GDP by 2013–14.
1#
Growth rate of Indian GDP
The economy of India is the tenth-largest in the world by nominal GDP and the third-
largest by purchasing power parity (PPP). The country is one of the G-20 major economies
and a member of BRICS. On a per-capita-income basis, India ranked 141st by nominal GDP
and 130th by GDP (PPP) in 2012, according to theIMF. India is the 19th-largest exporter
and the 10th-largest importer in the world. The economy slowed to around 5.0% for the
2012–13 fiscal year compared with 6.2% in the previous fiscal.
According to Moody's, the
Economic Growth Rate of India would be 5.5% in 2014-15.
On 28 August 2013 the Indian
rupee hit an all time low of 68.80 against the US dollar. In order to control the fall in rupee,
the government introduced capital controls on outward investment by both corporates and
individuals.
India's GDP grew by 9.3% in 2010–11; thus, the growth rate has nearly halved in
just three years. GDP growth rose marginally to 4.8% during the quarter through March
2013, from about 4.7% in the previous quarter. The government has forecast a growth rate of
6.1%–6.7% for the year 2013–14, whilst the RBI expects the same to be at 5.7%. Besides
this, India suffered a very high fiscal deficit of US$ 88 billion (4.8% of GDP) in the year
2012–13. The Indian Government aims to cut the fiscal deficit to US$ 70 billion or 3.7% of
GDP by 2013–14.
1$
1%
GDP Per Capital (ppp)
India's nominal GDP per capita has steadily increased from US$329 in 1991, when
economic liberalisation began, to US$1,265 in 2010, and is estimated to increase to
US$2,110 by 2016; however, it has remained lower than those of other Asian developing
countries such as Indonesia, Iran, Malaysia, Philippines, Sri Lanka, and Thailand, and is
expected to remain so in the near future. While it is currently higher than Pakistan, Nepal,
Bangladesh and others.
India's per capita income is projected to soar by 10.4 per cent to Rs 74,920 in 2013-14 as the
country becomes a $1.7 trillion economy.
2&
21
GDP per capital of Indian States
22
India’s average Per Capita Income is Rs. 60,972/-, which is one of the lowest in the world.
Some European Countries have over 50 times per capita income as compared to India!
The Government of India has just released the per capita Income numbers for 2012-2013 and
India’s capital city Delhi has come out to have the highest per capita income in the country.
Interestingly the PCI of Delhi is over 7 times higher than state of Bihar and 4 times more
than 9 other states. Given that Delhi is a Union Territory, it may not be a right comparison,
even then the difference is too large to take notice.
Delhi’s per capita income for 2012-13 stood at Rs. 2,01,083 as compared to Bihar’s 22,890.
PCI for 6 Indian states is not available, including Gujarat, Kerala, Mizoram, Chandigarh,
Rajasthan and Goa.
23
According to the latest figures released by Government – Goa leads the country with per
capita income of Rs. 1,92,652/-, while Bihar has the lowest with a per capita income of only
Rs. 24,681/-. An average Goan earns 6 times more than an average Bihari!
As per latest 2012 figures, Delhi comes in second after Goa with PCI of Rs. 1,75,812
followed by Chandigarh (1,28,634 – 2011) & Haryana (1,09,227).
2
Gross National Product
Gross National Product in India increased to 99965.15 INR Billion in 2013 from 89328.92
INR Billion in 2012. Gross National Product in India is reported by the Ministry of Statistics
and Programme Implementation (MOSPI). Gross National Product in India averaged
13945.09 INR Billion from 1950 until 2013, reaching an all time high of 99965.15 INR
Billion in 2013 and a record low of 103.60 INR Billion in 1951.
2!
2"
GDP of Indian States
The results are revealing. There is a pronounced negative effect (catch-up) of initial growth
i.e. states that grew slower in the initial period, 1993-2002, grew faster in the higher growth
post 2003 years. The correlation for this simple model is a high 88 percent for all the states
and 74 percent for just the big states of India. From a base level of 5 percent, each lower
growth of 1 per cent in the 1993-2002 period meant that the growth rate 2003 to 2009 was
0.8 percentage points faster.
The first conclusion on observing the pattern in Chart 1 is that initial higher growth is
followed by subsequent slower growth. At first glance it does not appear to be the case that
poorer states grow faster and hence involve inclusive growth at a regional level. However,
the first impressions are misleading. The acceleration in growth model is a transformation of
the basic catch-up model; an econometric transformation which controls for several state
level fixed effects. If catch-up exists, then it is an indicator of growth spreading to and faster
in, poorer states. Note the recent high growth performance in poorer states like Chhattisgarh,
Jharkhand, Orissa, Uttaranchal, and Rajasthan, and the “on the line prediction” of the poor
state of Bihar.
2#
2$
State Total GDP in INR
(Ten Mn)
GDP in
USD (Bn)
Growth
Rate
Share of
India's
GDP
Per-
capita
GDP
Maharashtra 1248452.80 $233.89 16.86% 14.95% 101314
Uttar Pradesh 687836.28 $128.86 13.85% 8.23% 30051
Andhra Pradesh 675798.00 $126.61 14.74% 8.09% 68970
Tamil Nadu 639024.60 $119.72 12.82% 7.65% 84496
Gujarat 513172.84 $96.14 15.33% 6.14% 89668
West Bengal 541585.56 $101.46 14.55% 6.48% 55222
Karnataka 458902.74 $85.97 13.97% 5.49% 69051
Rajasthan 368319.52 $69.00 21.91% 4.41% 53735
Kerala 326692.89 $61.20 16.97% 3.91% 80924
Haryana 308943.26 $57.88 16.06% 3.70% 109064
Madhya Pradesh 315386.66 $59.09 19.02% 3.78% 37994
Punjab 248300.95 $46.52 14.26% 2.97% 78594
Bihar 252694.00 $47.34 24.40% 3.03% 22691
Orissa 226236.14 $42.38 11.02% 2.71% 41896
Chhattisgarh 135536.34 $25.39 18.26% 1.62% 46743
Jharkhand 130505.32 $24.45 12.96% 1.56% 35652
Assam 115407.64 $21.62 12.52% 1.38% 37250
Uttrakhand 95200.83 $17.84 12.35% 1.14% 79940
Himachal Pradesh 63331.33 $11.86 13.23% 0.76% 74694
Jammu & Kashmir 63589.47 $11.91 15.80% 0.76% 44533
Goa 44460.32 $8.33 7.06% 0.53% 167838
Tripura 19730.96 $3.70 13.48% 0.24% 50175
Meghalaya 15895.16 $2.98 11.32% 0.19% 53542
Nagaland 12134.31 $2.27 8.46% 0.15% 56461
Manipur 10187.85 $1.91 14.30% 0.12% 32865
Arunachal Pradesh 9357.05 $1.75 27.53% 0.11% 74059
Mizoram 6057.70 $1.13 15.40% 0.07% 54689
Sikkim 8399.87 $1.57 17.56% 0.10% 121440
Delhi 313933.51 $58.81 18.69% 3.76% 175812
Chandigarh 23367.64 $4.38 14.03% 0.28% 140073
A&N Islands 5025.96 $0.94 10.25% 0.06% 93075
Puducherry 13724.03 $2.57 3.03% 0.16% 98055
Total GSDP 7897191.53 $1,479.47
Total GDP 8353495.00 $1,564.96 61564
2%
GDP and Inflation
High output growth and low inflation are among the most important objectives of
macroeconomic policy. But there are perceived trade-offs between lowering inflation and
achieving high growth. Empirical evidence emphasizes that the growth-inflation relationship
depends on the level of inflation—at some low levels, inflation may be positively correlated
with growth, but at higher levels inflation is likely to be harmful to growth. In other words,
the relationship between inflation and output growth is non-linear. If such a non-linear
relationship exists, then it should be possible to estimate the inflexion point, or threshold,
beyond which output growth becomes costly. In this context, several studies have examined
the relationship between inflation and long-run growth in a non-linear framework.
3&
The empirical results presented in the paper, strongly suggest the existence of a threshold
beyond which inflation exerts a negative effect on growth. Inflation levels below the
threshold levels of inflation have no effect on growth, while inflation rates above the
threshold have a significant negative effect on growth.
the threshold is lower for industrialised countries than it is for developing countries (the
estimates are 1-3 percent and 11-12 percent for industrial and developing countries
respectively, depending on the estimation method used). The thresholds were statistically
significant at 1 percent or less, implying that the threshold estimates are very precise. The
negative and significant relationship between inflation and growth above the threshold level
is argued to be robust with respect to type of estimation method used.
The estimated relationship between inflation and growth does not provide the precise
channel through which inflation affects growth, beyond the fact that, because investment and
employment are controlled for, the effect is primarily through productivity. This also implies
that the total negative effect may be understated. The results in this paper provide strong
evidence for supporting the view of low inflation for sustainable growth.
31
Export Import Analysis
32
India’s Exports, Imports and Balance of Trade
The global slowdown had its impact on the economy of almost all the countries, including
India.The trade deficit abruptly increased from 356448 crores in 2007-08 to 533681 crores in
2008-09, an increase by almost 50 %. However, it was less by 2.9 % in 2009-10, to be
increased again by 4.3 % in 2010-11. As such India’s trade deficit stood at Rs. 518202 crores
during 2009-10 with values of exports and imports at Rs. 845534 crores and Rs. 1363736
crores respectively..
India’s Import performance
India’s imports in 2010-11 was Rs. 1683467 crores compared to Rs. 1363736 crores in 2009-
10, resulting in a positive growth of import (23.45%), although it was negative growth
(– .78%) during 2009-10. Along with this positive growth in imports, the exports also grew
significantly (35.17%) during 2010-11 compared to insignificant growth of 0.57% in 2009-
10.
India’s Export performance
India’s merchandise exports stood at Rs. 1142922 crores in 2010-11 as compared to
Rs.845534 crores during 2009-10, resulting in a growth of 35.17% in 2010-11.The
corresponding growth of 0.57% in 2009-10 indicating that there was more impact of global
recess/slowdown on India’s economy in the initial year.
33
Effect of Export-Import on GDP
When a country exports goods, it sells them to a foreign market, that is, to consumers,
businesses, or governments in another country. Those exports bring money into the country,
which increases the exporting nation's GDP. When a country imports goods, it buys them
from foreign producers. The money spent on imports leaves the economy, and that decreases
the importing nation's GDP.
Net exports can be either positive or negative. When exports are greater than imports, net
exports are positive. When exports are lower than imports, net exports are negative. If a
nation exports, say, $100 billion dollars worth of goods and imports $80 billion, it has net
exports of $20 billion. That amount gets added to the country's GDP. If a nation exports $80
billion of goods and imports $100 billion, it has net exports of minus $20 billion, and that
amount is subtracted from the nation's GDP.
Conceivably, net exports could be zero, with exports equal to imports and in fact this does
occasionally happen in the United States.
If net exports are positive, the nation has a positive balance of trade. If they are negative, the
nation has a negative trade balance. Virtually every nation in the world wants its economy to
be bigger rather than smaller. That means that no nation wants a negative trade balance.
3
GDP growth in various sectors
3!
Industry
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t/
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t/e 0or.( i' ter- of 'o-i'a. factor* o)tp)t accor(i'3 to (ata co-pi.e( t/ro)3/ 4IA 5or.(
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restrictio's7 6ro)3/t i' forei3' co-petitio'7 .e( to t/e pri8atisatio' of certai' p)6.ic sector
i'()stries7 .i6era.ise( t/e FDI re3i-e7 i-pro8e( i'frastr)ct)re a'( .e( to a' e9pa'sio' i'
t/e pro()ctio' of fast -o8i'3 co's)-er 3oo(s2
Services
India is 13
th
in services output. The services sector provides employment to 27% of the work
force and is growing quickly, with a growth rate of 7.5% in 1991–2000, up from 4.5% in
1950. Information technology and business process outsourcing are among the fastest
growing sectors, having a cumulative growth rate of revenue 33.6% between 1997 and 1998
and 2002–03 and contributing to 25% of the country's total exports in 2007–08. . The share
of the Indian IT industry in the country's GDP increased from 4.8% in 2005–06 to 7% in
2008.
Agriculture
India ranks secondworldwide in farm output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 17% of the GDP in 2012, employed 51% of the total
workforce, and despite a steady decline of its share in the GDP, is still the largest economic
sector and a significant piece of the overall socio-economic development of India.India
receives an average annual rainfall of 1,208 millimetres (47.6 in) and a total
annual precipitation of 4000 billion cubic metres, with the total utilisable water resources,
including surface and groundwater , amounting to 1123 billion cubic metres. 546,820 square
kilometres (211,130 sq mi) of the land area, or about 39% of the total cultivated area, is
irrigated.India's inland water resources including rivers, canals, ponds and lakes and marine
resources comprising the east and west coasts of the Indian ocean and other gulfs and bays
provide employment to nearly six million.
3"
Post-liberalisation period (since 1991)
In the late 1970s, the government led by Morarji Desai eased restrictions on capacity
expansion forincumbent companies, removed price controls, reduced corporate taxes and
promoted the creation of small scale industries in large numbers. However, the subsequent
government policy of Fabian socialism hampered the benefits of the economy, leading to
high fiscal deficits and a worsening current account. The collapse of the Soviet Union, which
was India's major trading partner, and the Gulf War , which caused a spike in oil prices,
resulted in a major balance-of-payments crisis for India, which found itself facing the
prospect of defaulting on its loans. India asked for a $1.8 billion bailout loan from
the International Monetary Fund (IMF), which in return demanded de-regulation.
3#
In response, Prime Minister NarasimhaRao , along with his finance minister Manmohan
Singh , initiated the economic liberalisation of 1991. The reforms did away with the Licence
Raj , reduced tariffs and interest rates and ended many public monopolies, allowing
automatic approval of foreign direct investment in many sectors.
Since then, the overall
thrust of liberalisation has remained the same, although no government has tried to take on
powerful lobbies such as trade unions and farmers, on contentious issues such as reforming
labour laws and reducing agricultural subsidies. By the turn of the 21st century, India had
progressed towards a free-market economy, with a substantial reduction in state control of
the economy and increased financial liberalisation.This has been accompanied by increases
in life expectancy, literacy rates and food security, although urban residents have benefited
more than agricultural residents.
While the credit rating of India was hit by its nuclear weapons tests in 1998 , it has since
been raised to investment level in 2003 by S&P and Moody's.India enjoyed high growth
rates for a period from 2003 to 2007 with growth averaging 9% during this period.
Growth
then moderated due to the global financial crisis starting in 2008. In 2003, Goldman Sachs
predicted that India's GDP in current prices would overtake France and Italy by 2020,
Germany, UK and Russia by 2025 and Japan by 2035, making it the third largest economy of
the world, behind the US and China. India is often seen by most economists as a rising
economic superpower and is believed to play a major role in the global economy in the 21st
century.
Starting in 2012, India entered a period of more anemic growth, with growth slowing down
to 4.4%. Other economic problems also became apparent: a plunging Indian rupee , a
persistent high current account deficit and slow industrial growth. Hit by the U.S. Federal
Reserve’s decision to taper quantitative easing , foreign investors have been rapidly pulling
out money from India.
3$
Challenges before Indian economy:
Population explosion:The rising population is eating into the success of India.
According to 2011 census of India, the population of India has crossed one billion and
isgrowing at a rate of 2.11% approx. Such a vast population puts lots of stress on
economic infrastructure of the nation. Thus India has to control its population.
Poverty:As per records of National Planning Commission, 36 crore people are living
below the poverty line in India in 2012.
Unemployment:The increasing population is pressing hard on economic resources as
well as job opportunities. Indian government has started various schemes such as Jawahar
Rozgar Yojna, and Self Employment Scheme for Educated Unemployed Youth (SEUY).
But these are proving to be a drop in an ocean.
Rural Urban Divide:It is said that India lies in villages, even today when there is lots of
talk going about migration to cities, 70% of the Indian population still lives in villages.
There is a very stark difference in pace of rural and urban growth. Unless there isn't a
balanced development Indian economy cannot grow.
These challenges can be overcome by the sustained and planned economic reforms.
These include:
Maintaining fiscal discipline
Orientation of public expenditure towards sectors in which India is faring badly such as
health and education.
Introduction of reforms in labour laws to generate more employment opportunities for the
growing population of India.
Reorganization of agricultural sector, introduction of new technology, reducing agriculture's
dependence on monsoon by developing means of irrigation.
3%
Conclusion
In conclusion, the case study proves that factors besides education contribute to economic
growth.India is expected to increase its purchasing power, and thus its GDP, in the future.
While education has increased in India, unequal literacy rates continue to exist and account
for the lower GDP of India as compared to the United States. Therefore, gender equality is a
factor that is proven to contribute to economic prosperity.
From above one can find that trade liberalization has both the positive and negative effect on
the Indian economy. Both the trade direction and composition has changed in favour of
developing economy. Net factor income has been worsened by liberalization and trade
policy.
Overall india’s experience of liberalisation agriculture,manufacturing and finance shows that
liberalisation has been gradual,voluntary and tailored according to the needs of the
economy.the role of the state has been to use markets to not only maximize commercial
objectives but also seek to galvanize attempts to attain social objectives.
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