International Eco Presentation1

8/13/2019 International Eco Presentation1

1/15

Trilok Yadav 2010ee10487

Kailash Kumar 2010ee10452


2/15

GDP growth rate went down from 8.4% in 2010-11 to6.1% in 2011-12.

IIP growth rate down to 3.6 % down from 8.3 % lastyear.

Service sectors growth rate has also come down to8.8% compared to 11.1% last year.

Agriculture sectors growth slumped to 3.2% duringfirst 3 quarters in 2011-12, more than half way down

from 7% in 2010-11. As per the Household Consumer Expenditure Survey

for 2009-10, 29.9% of the population were under BPLfrom 37.2% in 2004-05.


3/15


4/15


5/15

Keynesian Approach basically targets 5 aspects:

1) Government Policy & Stimulus Packages2) Infrastructure Spending to generate Employment

opportunities3) Circular relationship between Spending and Earnings4) Aggregate Demand for Goods & Services5) Revival of Economy from the worsening business cycle.


6/15

A benefit given by the government to groups or individuals usually in theform of a cash payment or tax reduction. The subsidy is usually given toremove some type of burden and is often considered to be in the interestof the public.

Total govt. expenditure on subsidies in 2011-12 was

Keynes argues that the careful introduction of subsidies actually leads tothe economic revival.

They can be actually lead to the employment growth in the economy.

One of the main purpose of the subsidies is also the social, one should notforget that.

It is also considered as the redistribution of wealth from rich to the poor,

which may lead to the increase in demand, consumption and increasedoutput.

Two major point of arguments today about the subsidy is in MNERGAand PDS.


7/15

The Mahatma Gandhi National Rural Employment Guarantee Act aims at

enhancing the livelihood security of people in rural areas by guaranteeing

hundred days of wage-employment in a financial year to a rural household

whose adult members volunteer to do unskilled manual work.

71.9% of Indian population reside in rural areas(2002) and and given thatthe majority of Indias poor also resides in rural areas, the NREGA can be

thought of as a policy to boost rural income which in turn would increase

the rural expenditure and the cycle would continue.

Although it has put a considerable pressure on government accounts but

on the better side it has increased the employment levels in the villages

and the infrastructural development also.

It also leads to better agriculture opportunities for the farmers also andreduction in disguised employment.


8/15

A network of more than 4.62 lakh fair price shops (FPS)distributing commodities worth more than Rs 30,000 croreannually to about 160 million families, the PDS in India is perhapsthe largest distribution network of its kind in the world.

Lately there has been a lot of debate about reducing this foodsubsidy to reduce the government expenditure.

But since the food is the most basic necessity for the survival thesubsidy on it is justified, no government can make its citizens tostarve.

Economically speaking : minimal loss to GDP due tomicronutrient deficiences per year is Rs. 27,720 crores in terms ofproductivity , illness, increased health care cost and death.


9/15

Occurs when a country's total imports of goods, services andtransfers is greater than the country's total export of goods,services and transfers. This situation makes a country a net debtorto the rest of the world.

Stood at 4.2 per cent of GDP at USD 78.2 billion-- again the all-

time high level. CAD is countercyclical in India, it suggests dominance of external

supply shocks rather than excess demand factors.

Theoretically speaking depreciation in rupee can reduce importsand increase exports.

Diversification of the export basket and the destinations theygo it, improvements in domestic supply conditions, and overallglobal demand conditions are more reliable export boostersthan depreciation.


10/15

As regards reduction in imports, it is possible to achieve that by

just raising the relative prices of the major imported commodities.

Forex reserves cut by central bank can lead to sudden reduction inCAD.

But for the long term the solution is to increase the exports and

reduce imports, which is possible if government interfere

sufficiently to ensure the amenities needed for industrial and

agricultural output are available round the clock.


11/15


12/15


13/15

"Tax changes have very large effects: an exogenous tax increase of 1percent of GDP lowers real GDP by roughly 2 to 3 percent." cited inRomar and Romar report.

Increased taxes would mean less net incomes of people and hence

the reduction in investment and gradual decrease in GDP. If the tax increases are deficit driven then it may have important

expansionary effects through expectations and long term interestrates or through confidence.


14/15

RBI Deputy Governor K. C. Chakrabarty recently saidthat Instead of saying that RBI should bring downinflation, we must increase productivity and bringdown the cost of services and that will only bringdown inflation. Otherwise, it will not come down.

But the share of manufacturing sector in Indias GDPwas 16.1 % in 2009 compared to Chinas 34% (2007).Why?

The unorganized sector accounts for about 80% of theemployment generated in manufacturing sector but

the share of unorganized sector in real GDP ofmanufacturing sector is decreasing and it was only33.2% in 2008-09.

Stagnancy of per capita real wages


15/15

One major concern of manufacturing sector growth isthat it has been material resource intensive.

Total value added is only 20% of the value of theoutput in India's organized manufacturing sector

compared to about 50% in US. The high ratio of material inputs to total value of

output is 58-67%(~30% in US) and 6-7%(2% in US) forfuel inputs.

Need to add more intermediate value to goods.

Besides these factors some of the main challengesbefore Manufacturing sector are under utilization oftechnology, poor infrastructure, overstaffed operationsand hurdles in investment.

International Eco Presentation1

Documents

Transcript of International Eco Presentation1