Indian Economy Since 1991 0.1 Group 2
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Transcript of Indian Economy Since 1991 0.1 Group 2
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Indian Economic growth
since 1990
- Presented by
Vijay Jagwani
- Akshay Kriplani
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From FY 1980 to FY 1989, the economy grew at an annual rate of 5.5 percent, or 3.3
percent on a per capita basis
Industry grew at an annual rate of 6.6 percent and agriculture at a rate of 3.6 percent
A high rate of investment was a major factor in improved economic growth
Investment went from about 19 percent of GDP in the early 1970s to nearly 25
percent in the early 1980s
Long-gestating, capital-intensive projects, such as electric power, irrigation, and
infrastructure. Also, delayed completions, cost overruns, and under-use of capacity
were contributing factor to low rate of return on Huge Investments
Economy before 1990
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Economy before 1990
Private savings financed most of India's investment until mid-1980s
Further growth in private savings was difficult because they were already at quite a
high level
India relied increasingly on borrowing from foreign sources from mid-1980s
This led to Balance of payments crisis in 1990
To receive fresh loans and for further economic development the Government had to
agree on economic Liberalisation pioneered by Dr. Manmohan Singh
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The steady increase in the proportion of services in the national economy reflectsincreased market-determined processes contribution of various Industries and PrimeSector towards the GDP in 1991
Sector Percentage Contribution to GDP
Trade / Transportation / Communication /Finance / Public & Private Sector Services
39.8%
Agriculture / Mining / Fishing 32.8%
Manufacturing / Construction / Utilites 27.4%
Contribution of Industries
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The greatest disappointment of economic development for any nation is the failure toreduce more substantially widespread poverty
Population v/s Poverty
Period Population (in million) underPoverty
Percentage
1970 1980 300 50%
1980 1990 220 26%
1990 1991 332 38%
Slower economic growth and higher inflation in FY 1990 and FY 1991 reversed thetrend.
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Liberalisation refers to a relaxation of previous government restrictions, usually in
areas of social or economic policy. Liberalization of autocratic regimes may precededemocratization
Increased borrowing from foreign sources in the late 1980s, which helped fueleconomic growth, led to pressure on the balance of payments.
The central government fell in November 1990 and was succeeded by a minoritygovernment
India made various agreements with the International Monetary Fund (IMF) andother organizations that included commitments to speed up liberalization
In the early 1990s, considerable progress was made in loosening governmentregulations, especially in the area of foreign trade
The balance of payments crisis of 1990 and subsequent policy changes led to atemporary decline in the GDP growth rate :
Liberalization in the Early 1990s
Year GDP growth rate
1989 6.9%
1990 4.9%
1991 1.3%
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Overall, Indias per capita income remains very low as compared to economicallydeveloped countries. India's per capita income of US$2,077 per year is 121 percentthat of neighboring Pakistan. Yet, India's per capita income is still 67 percent that ofChina's, 9 percent that of Canada's, and only 7 percent that of the United States.
Annual Growth in per capita Income
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GDP from 1991 - 2007
GDP Grow th Rate
1.3
5.1
5.9
7.3 7.37.8
4.8
6.56.1
4.4
5.8
4
8.5
7.3
9 9.29.7
0
2
4
6
8
10
12
Year
No
'sin%
GDP 1.3 5.1 5.9 7.3 7.3 7.8 4.8 6.5 6.1 4.4 5.8 4 8.5 7.3 9 9.2 9.7
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
India GDP is the culmination of all the differential factors that contributes to theeconomy of India. India GDP reflects a consolidated report of the performance of theIndian economy. The Indian Gross Domestic Product is determined either by 'costfactor' or 'actual price' method.
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Inflation from 1991 - 2007
Inflation
13.5
9.6
7.5
10.3 10.2
9.2
7.2
13.2
4.74 3.9 4.1 3.8 3.8
4.3
5.8 6.4
0
2
4
6
8
10
12
14
16
Year
No
'sin%
Inflation 13.5 9.6 7.5 10.3 10.2 9.2 7.2 13.2 4.7 4 3.9 4.1 3.8 3.8 4.3 5.8 6.4
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
In economics, inflation is a rise in the general level of prises of goods and services inan economy over a period of time. Inflation can also be described as a decline in thereal value of moneya loss of purchasing power in the medium of exchange whichis also the monetary unit of account.
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The period after the 1990s witnessed sudden incremental growth of the annual
average gross domestic product of the Indian economy and till then it used to be
around 4.5% to 5%.
Rise of Indian Information Technology, Indian service industry and the Indian BPO
sector, the average Indian GDP skyrocketed to around 6%, during the period from
1988 to 2003.
From the financial year 2004 onwards the average gross domestic product of India
'at cost factor' reflected a stable growth.
The Indian GDP registered an impressive growth rate of 8.5% during this period and
the present growth target is secured at 9.5% to 10 %.
Gross Domestic Product - GDP
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The foreign direct investment in the India market amounted to US$12.5 billion andsurpassed portfolio investment of US$ 6.8 billion
Foreign trade and merchandise exports expected to cross US$125 billion by the endof the current fiscal
Provision for national highway development programme to be increased to Rs.9, 945crore
Farm credit target of Rs.225, 000 crore for 2007-08 has been set with an addition of50 lakh new farmers to the banking system
35 projects have been completed in 2006-07 and additional irrigation potential of900,000 hectares to be created and training of farmers arranged
A pilot programme for delivering subsidy directly to farmers have been arranged
Loan facilitation through Agricultural Insurance and NABARD has also been
facilitated
Current Economy at a Snapshot
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162 new production sharing contracts awarded to Petroleum and Natural Gas sector
Bank's differential rate of interest scheme providing finance at the rate of 4% toweaker sections
Defense expenditure allocation to increased to Rs.96, 000 crore
IT allocation for e-governance to increased from Rs.395 crore to Rs.719 crore
Exclusive health insurance scheme for senior citizens
Corpus of Rural Infrastructure Development Fund raised substantially
Provision for tourist infrastructure increased to Rs.423 crore
Current Economy at a Snapshot
The latest scenario of Indian gross domestic product factor is much higher than
the world's annual average GDP of 5.5%. With such rate of economic growth,
the Indian economy is poised to become the second largest economy after
China in the year 2050.
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