INDIAN ECONOMY

Indian Economy India is the seventh largest and second most populous country in the world. A new spirit of economic freedom is now stirring in the country, bringing sweeping changes in its wake. A series of ambitious economic reforms aimed at deregulating the country and stimulating foreign investment has moved India firmly into the front ranks of the rapidly growing Asia Pacific region and unleashed the latent strengths of a complex and rapidly changing nation. GE Capital terms the Indian Economy unique, PepsiCo finds it one of the fastest growing and Motorola is sure it will turn into a major sourcing center. Indian operations have occupied center stage in these giants' global networks. India's process of economic reform is firmly rooted in a political consensus that spans her diverse political parties. India's democracy is a a transparent environment that guarantees the security of their long-term investments. These known and stable factor, which has taken deep roots over nearly half a century. Importantly, India has no fundamental conflict between its political and economic systems. Its political institutions have fostered an open society with strong collective and individual rights and an environment supportive of free economic enterprise. India's time-tested institutions offer foreign investors include a free and vibrant press, a judiciary that can and does overrule the government, a sophisticated legal and accounting system, and a user-friendly intellectual infrastructure. India's dynamic and highly competitive private sector has long been the backbone of its economic activity. It accounts for over 75 per cent of its Gross Domestic Product and of the services sector, particularly of the information technology sector, the Indian economy offers considerable scope for in the world. Skilled managerial and technical manpower that match the best available in the world and a middle class whose size exceeds the population of the USA or the European Union, provide India with a distinct cutting edge in global competition. Economic indicators The solidity of the Indian economy is evident from its stability in the backdrop of a recessive Asian market. The latest estimates of the Central Statistical joint ventures and collaborations. Today, India is one of the most exciting emerging markets Organization (CSO) project Gross Domestic Product (GDP) growth of 5.4 per cent during 2001-02.

India has entered the new millennium with a strong and robust financial outlook. Average annual real GDP accelerated from 5.4 per cent during the 12-year period ending 1991-92 to 6.4 per cent during 1992-1993 through 2000-2001. The overall growth performance of the industrial sector during 2001-02 is expected to be somewhat lower than that of the previous year. However combined with the continued performance is expected to achieve a healthy growth of
6 per cent.

India's Economy in 2010

India is an emerging economy which has witnessed unprecedented levels of economic expansion, alongside China, Russia, Mexico and Brazil. India is a cost effective and labor intensive economy, and has benefited immensely from outsourcing of work from developed countries, and has a strong manufacturing and export oriented industrial framework.
With India's economic pace picking up, global commodity prices have staged a comeback from their lows and global trade has also seen healthy growth over the last two years.

Economic Prospects for 2010

The global economy seems to be recovering after the recent financial crisis in 2008. The Indian economy, however, was hit in the latter part of the global recession as real economic growth witnessed a sharp fall, followed by lower exports, capital outflow and corporate restructuring. It's expected global economies will continue to be sustained in the short-term, as the effect of stimulus programs is

India economy, the third largest economy in the world, in terms of purchasing power, is going to touch new heights in coming years. As predicted by Goldman Sachs, the Global Investment Bank, by 2035 India would be the third largest economy of the world just after US and China. It will grow to 60% of size of the US economy. This booming economy of today has to pass through many phases before it can achieve the current milestone of 9% GDP. The history of Indian economy can be broadly divided into three phases: Pre- Colonial, Colonial and Post Colonial. Pre Colonial: The economic history of India since Indus Valley Civilization to 1700 AD can be categorized under this phase. During Indus Valley Civilization Indian economy was very well developed. It had very good trade relations with other parts of world, which is evident from the coins of various civilizations found at the site of Indus valley. Before the advent of East India Company, each village in India was a self sufficient entity. Each village was economically independent as all the economic needs were fulfilled with in the village. Then came the phase of Colonization. The arrival of East India Company in India ruined the

Indian economy. There was a two-way depletion of resources. British used to buy raw materials from India at cheaper rates and finished goods were sold at higher than normal price in Indian markets. During this phase India's share of world income declined from 22.3% in 1700 AD to 3.8% in 1952. After India got independence from this colonial rule in 1947, the process of rebuilding the economy started. For this various policies and schemes were formulated. First five year plan for the development of Indian economy came into implementation in 1952. These Five Year Plans, started by Indian government, focused on the needs of Indian economy. If on one hand agriculture received the immediate attention on the other side industrial sector was developed at a fast pace to provide employment opportunities to the growing population and to keep pace with the developments in the world. Since then Indian economy has come a long way. The Gross Domestic Product (GDP) at factor cost, which was 2.3 % in 1951-52 reached 9% in financial year 2005-06 Trade liberalization, financial liberalization, tax reforms and opening up to foreign investments were some of the important steps, which helped Indian economy to gain momentum. The Economic Liberalization introduced by Man Mohan Singh in 1991, then Finance Minister in the government of P V Narsimha Rao, proved to be the stepping-stone for Indian economic reform movements. To maintain its current status and to achieve the target GDP of 10% for financial year 2006-07, Indian economy has to overcome many challenges. Challenges before Indian economy:
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Population explosion: This monster is eating up into the success of India. According to 2001 census of India, population of India in 2001 was 1,028,610,328, growing 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 burgeoning population. Poverty: As per records of National Planning Commission, 36% of the Indian population was living Below Poverty Line in 1993-94. Though this figure has decreased in recent times but some major steps are needed to be taken to eliminate poverty from India. 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 (SEEUY). 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:

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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. Introd GDP of India at factor cost (in percent) 2.3 2.8 6.1 4.2 2.6 5.7 -1.2 7.6 2.2 7.1 3.1 2.1 5.1 7.6 -3.7 1 8.1 2.6 6.5 5 1 -0.3 4.6 1.2 9 1.2 7.5 5.5 -5.2 7.2 6 3.1 7.7 4.3 4.5

Financial year 1951-52 1952-53 1953-54 1954-55 1955-56 1956-57 1957-58 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86

1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2005-06 2004-05 2005-06 .

4.3 3.8 10.5 6.7 5.6 1.3 5.1 5.9 7.3 7.3 7.8 4.8 6.5 6.1 4.4 5.8 3.8 8.5 7.5 9