INDIA V/S US ECONOMY

The Indian Population – An overview

India's estimated population to be 1.2 billion by 2010India became only the second country in the world after China to cross the one billion mark.The sex ratio (i.e. number of females per thousand males) of population was 933Although India occupies only 2.4% of the world's land area, it supports over 15% of the world's population.

Cont…..• Two other categories of India's population

that are closely scrutinized by the national census are the Scheduled Castes and Scheduled Tribes

• The greatest concentrations of Scheduled Caste members in 1991 lived in the states of Andhra Pradesh ,Tamil Nadu, West Bengal and Uttar Pradesh

• The government has recognized 18 languages as official; Hindi is the most widely spoken

• Refugees from Bangladesh, Burma, and Sri Lanka contributed substantially to population growth

State wise distribution

Traditional Religion system

Modern Religion System

The USA Population – An Overview

• The U.S. population growth rate is slowing• The U.S. population will be older than it is

now• The U.S. population is becoming more

diverse by race and Hispanic origin. • Growth of the Hispanic-origin population

will probably be a major element of the total population growth.

• Future fertility and immigration may play major roles in the nation's growth

Race Distribution

India v/s Usa

USA’s Population Estimated

India’s Population Estimated

India &USA-Future

20082020

20302040

2050

0

200

400

600

800

1000

1200

1400

1600

USA

India

USAIndia

Indian Economy• Agriculture provides livelihood for 60% of Indians. The

service sector makes up a further 28% of employment, and industrial sector around 12%.

• One estimate says that only one in five job-seekers has had any sort of vocational training. The labor force totals half a billion workers.

• Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish.

• Major industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery and software design.

INDIAN GDP

• The 2007 GDP figure stood at around $2.966 trillion.

• In Purchasing Power Parity GDP, the figure for India was 1.5 trillion US Dollars in 2008.

• Manufacturing sector growth has dropped down to about 5.8 percent in three months.

• Farm production has also been affected, registering a figure of about 2.9 percent.

• India's gross domestic product (GDP) has increased by 7.5 per cent, 9.5 per cent, 9.7 per cent and 9 per cent in the first four years from fiscal year 2004-05 to 2007-08 recording a sustained growth of over 9 per cent for three consecutive years for the first time.

• India is the second fastest growing economy in the world with 7.1 per cent GDP expansion in 2008-09

• In 2007, India's GDP was $1.237 trillion, which makes it the twelfth-largest economy in the world or fourth largest by purchasing power adjusted exchange rates.

• The growth drivers for the period were agriculture, services, manufacturing along with trade and construction.

• The food grain production recorded an increase of 10 million tonnes each year during this period and touched an all time high of 230 million tonnes in 2007-08.

• The manufacturing sector recorded a growth of 9.5 per cent per annum in the period 2004-05 to 2007-08.

GDP Figures

1997

-199

8

1998

-199

9

1999

-200

0

2000

-200

1

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

2006

-200

7

2007

-200

80

2

4

6

8

10

12

GDP %

GDP %

Year GDP %

1997-1998 4.315

1998-1999 6.768

1999-2000 6.45

2000-2001 4.49

2001-2002 5.753

2002-2003 3.943

2003-2004 8.46

2004-2005 7.475

2005-2006 9.358

2006-2007 9.635

US GDP• As of 2007, US GDP (purchasing power parity)

was $13.78 trillion. US GDP (official exchange rate) was about $13.84 trillion.

• Real growth rate of US GDP in 2007 was 2 percent. In 2007, per capita GDP of USA was nearly $45,800.

• Going by GDP per capita figures, US is ranked #10 in world.

• In 2007, 1.2 percent of total US GDP was contributed by agricultural sector.

• Industrial sector made up 19.8 percent of US GDP in 2007. Services sector made up 79 percent of US GDP in that same period.

US GDP GROWTH RATE

• According to US economic statistics major industrial products are petroleum, electronics, steel, food processing, motor vehicles, consumer goods, aerospace, lumber, telecommunications, mining and chemicals.

• Downswing of real GDP of US has been caused, to

a large extent, due to decreasing contributions of personal consumption expenditures sector, equipment and software sector and residential fixed investment scenario

• USA economic data for fiscal 2008 revealed that rate of inflation with regard to consumer prices was 4.2 percent.

Human Development Index

INDIA AND US

Table 1: India's human development index 2006 and underlying indicators in comparison with selected countries.

HDI value2006

Life expectancy at

birth (years)2006

Adult literacy rate 

(% ages 15 and above)2006

Combined primary,

secondary and tertiary gross

enrolment ratio (%)

2006

GDP per capita(PPP US$)

2006

1. Iceland (0.968)

1. Japan (82.4) 1. Georgia (100.0)

1. Australia (114.2)

1. Luxembourg (77,089)

130. Congo (0.619)

125. Pakistan (64.9)

116. Angola (67.4)

132. Lesotho (61.5)

124. Cape Verde (2,833)

131. Bhutan (0.613)

126. Comoros (64.5)

117. Congo (Democratic Republic of the) (67.2)

133. Trinidad and Tobago (61.1)

125. Guyana (2,782)

132. India (0.609)

127. India (64.1)

118. India (65.2)

134. India (61.0)

126. India (2,489)

133. Lao People's Democratic Republic (0.608)

128. Lao People's Democratic Republic (63.7)

119. Rwanda (64.9)

135. Nepal (60.8)

127. Nicaragua (2,441)

134. Solomon Islands (0.591)

129. Mauritania (63.6)

120. Ghana (64.2)

136. Swaziland (60.1)

128. Moldova (2,396)

179. Sierra Leone (0.329)

179. Swaziland (40.2)

147. Mali (22.9)

179. Djibouti (25.5)

178. Congo (Democratic Republic of the) (281)

able 1: United States's human development index 2006 and underlying indicators in comparison with selected countries.

HDI value2006

Life expectancy at birth (years)2006

Combined primary,

secondary and tertiary gross

enrolment ratio (%)

2006

GDP per capita(PPP US$)

2006

1. Iceland (0.968)

1. Japan (82.4)1. Australia (114.2)

1. Luxembourg (77,089)

13. Denmark (0.952)

29. Korea (Republic of) (78.2)

18. Sweden (94.3)

6. Singapore (47,426)

14. Austria (0.951)

30. Denmark (78.1)

19. Slovenia (92.8)

7. Kuwait (46,638)

15. United States (0.950)

31. United States (78.0)

20. United States (92.4)

8. United States (43,968)

16. Spain (0.949) 32. Cuba (77.9)21. Lithuania (92.3)

9. Ireland (40,823)

17. Belgium (0.948)

33. Portugal (77.9)

22. Italy (91.8)10. Hong Kong, China (SAR) (39,146)

179. Sierra Leone (0.329)

179. Swaziland (40.2)

179. Djibouti (25.5)

178. Congo (Democratic Republic of the) (281)

INDIA V/S US – EXPORT AND IMPORTS

INDIA’S IMPORTS/EXPORTS

• 26th largest export economy in the world

• 2009-2010 estimated export growth at 3%

• Import of Chinese toys in India banned since Feb 09

• Imports contracted 18.2% in Jan 09

• Imports decline due to slowdown in Industrial Production, slippage in domestic demand and dip in international commodity prices

TRADE POSITIONS OF INDIA & USA

Shifts in the contribution of agriculture, industrial

and services sector

Indian Sectoral contribution towards GDP

agriculture; 17%

industry; 29%

services; 54%

Indian Sectoral contribution to GDP as of 2007

agricultureindustryservices

Agriculture• Agriculture is the predominant occupation in India,

accounting for about 60% of employment.

• The service sector makes up a further 28%, and industrial sector around 12%.

• Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish.

• India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper.

• It is the second largest producer of wheat, rice, sugar, groundnut and inland fish. It is the third largest producer of tobacco. India accounts for 10% of the world fruit production with first rank in the production of banana and sapota.

Agriculture sector growth

1991-92

1998-99

2002-03

2004-05

2005-06

00.5

11.5

22.5

33.5

44.5

5

Agriculture

year

Gro

wth

rate

Industry

• Major industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery and software design

• Investment in Indian companies reached record levels by 1994 and many multinationals decided to set up shop in India

• Over the period 1992-93 to 1999-2000, the manufacturing sector has recorded an average annual growth rate of 6.3 per cent and in 2001-02; it recorded a growth of 2.8 per cent.

Industrial sector growth

Year Growth %

1992-99 6.30%

1999-2000 4.20%

2000-01 6.70%

2001-02 2.80%

2002-08 9.50%

Indian Services growth

The software industry was one of the fastest growing sectors in the last decade with a compound annual growth rate exceeding 50 per cent.

Software service exports increased from US$ 4.02 billion in 1999-2000 to US$ 6.3 billion in 2000-01, thereby registering a growth of 57 per cent.

• India's success in the software sector can be largely attributed to the industry's ability to cultivate superior knowledge through intensive R&D efforts

• expertise in applying the knowledge in commercially viable technologies

Services sector growth

1991-1992 1999-20000

100

200

300

400

500

600

Services

year

US

doll

ars

( m

illi

on

)

US sectoral contribution towards GDP

agriculture, 1.20%

industry; 19.80%

services; 79.00%

US Sectoral contribution towards GDP as on 2007

agricultureindustryservices

US Services sector

US Service economy

US services sector• Eight of every 10 U.S. jobs are in the services sector.

Services industries provide more new jobs than the rest of the U.S. economy combined.

• Over the past two decades, the services sector has created almost 40 million new jobs across the full range of services: software engineers, nurses, mortgage specialists, lawyers, instructors, mutual fund managers, film and television technicians, insurance agents, tour operators, and many others.

• The service sector -- including everything from restaurants and hotels to banks and airlines -- represents about 80 percent of economic activity in the United States.

US-agriculture sector• Productivity growth was much more important for agriculture

than for the overall economy

• More than 70 percent of growth was caused by additions of labor, capital, and material inputs.

• Because of the large number of producers and the dispersed nature of production, public investments have been a very important source of productivity growth for agriculture.

• Public agricultural R&D and infrastructure accounted for 75 percent of the growth in agricultural productivity between 1949 and 1991.

US-Industry/manufacturing sector• USA is the leading manufacturer in the world with a 2007

industrial output of US$2,696,880 millions. Main industries are petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining.

• Industrial production slipped by 0.5% in January 2009 despite stimulus packages declared by the administration to defend against the impact of worldwide slump.

• IIP grew by 6.2% during the corresponding period a year ago. • Manufacturing, which declined 0.8%, led the reduction in

industrial production, which was being followed by mining output, which declined by 0.4%.

• According to official projection, industrial growth is figured at 4.8% for 2008-09.

A comparison among the 3 sectors in US

• The growth of the services sector has benefited most from favorable changes in relative prices.

• While manufacturing, agriculture, and food processing have suffered negative terms of trade.

• An increase in the price of manufacturing leads to a small increase in the supply of agricultural output.

• This result is explained, in part, by agriculture’s

being a supplier of primary inputs to the manufacturing sector.

US Real GDP Growth

BUSINESS CYCLES –INDIA V/S US

BUSINESS CYCLE CHRONOLOGY FOR INDIA

INDIA

Attributes US ECONOMY

Trade organizations NAFTA, WTO, OECD and others

GDP (PPP) $13.81 trillion (2007)

GDP ranking 1st in GDP

GDP growth 2.1% (II quarter 2008, from year ago)

GDP per capita (real GDP) $45,850 (2008)

GDP by sector agriculture (0.9%), industry (20.6%), services (78.5%)

Inflation 5.6%(Jun 2007 to Jun 2008)

Population below poverty line 12.5% (2007)

Labour force 154.5 million (includes unemployed) (May 2008)

Unemployment 6.1% (August 2008)

Main industries

petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, timber,

mining, defense

Exports $1.149 trillion f.o.b. (2007 est.)

Main Export partnersCanada 21%, Mexico 12%, China 6%, Japan 5%, United Kingdom

4%, Germany 4%

Imports $1.985 trillion c.i.f. (2007 est.)

Main Import Partners China 17%, Canada 16%, Mexico 11%, Japan 7%, Germany 5%

Revenues $2.568 trillion (2007)

Expenses $2.896 trillion (2007)

Economic aid $19 billion, 0.2% of GDP (2004)

Prospects of India-USA cooperation

• There are several areas where economic cooperation between India and the US can progress further. These include infrastructure, IT, Telecom sector, energy and other knowledge industries such as pharmaceuticals and biotechnology. 

• The Government of India is continuously reviewing its policies to create an investor friendly environment in sectors such as roads, ports and airports. Private sector participation in management, BOT projects, green-field airports, terminals and shipping berths and capacity augmentation has been initiated. 

• The IT sector is India’s fastest growing sectors with over 50 percent average annual compounded growth since 1991. Today, nearly two in five of the Fortune 500 companies outsource their software requirements to India. 

• Abundant investment opportunities exist for further strengthening Indo-US economic ties in the IT sector, especially, in areas like communication infrastructure, satellite-based communication wireless, IT-enabled services, and so on

• Defense cooperation between Indian and American armed forces builds military capacities on both sides for combined operations.

• With about 20 million people entering the middle class, India's growth is in the domestic market. India is not merely an exporter but a big importer. India presents a huge market opportunity to other countries.

• India’s energy sector has been an important destination for US investment. The sector offers for exploitation a vast untapped potential to investors in hydro electricity, oil & natural gas and coal

• In order to promote bilateral trade and investment in the knowledge- based industries, the US India Business Council (USIBC), along with FICCI, has launched a Knowledge Trade Initiative (KTI). KTI aims to solidify Indo-US leadership in the knowledge economy by harmonizing bilateral positions on key issues affecting knowledge trade. 

• The US investor community is today increasingly sharing confidence in the future of the Indian economy. The growing synergy between the two countries in the technology sectors and mutually shared respect for democracy, rule of law and well established business practices make the two countries natural business partners.

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