India's Economy and Infrastructure
OVERVIEW
India is rich in natural resources and manpower and has made significant economic progress since attaining independence in 1947. India's economy encompasses traditional village farming, forestry, fishing, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of support services.
Economy transformed from primarily agriculture, forestry, fishing, and textile manufacturing in 1947 to major heavy industry, transportation, and telecommunications industries by late 1970s. Central government planning in 1950 through late 1970s giving way to economic reforms and more private-sector initiatives in 1980s and 1990s. A sophisticated industrial base has been created and a large pool of skilled manpower has emerged. Nevertheless, 67% of India's labor force (nearly 400 million) works in agriculture, which contributes 30% of the country's GDP.
Production, trade, and investment reforms since 1991 have provided new opportunities for Indian businesspersons and an estimated 300 million middle class consumers. New Delhi has avoided debt rescheduling, attracted foreign investment, and revived confidence in India's economic prospects since 1991. Many of the country's fundamentals - including savings rates (26% of GDP) and reserves (now about $24 billion) - are healthy. Inflation eased to 7% in 1997, and interest rates dropped to between 10% and 13%. Even so, the Indian Government needs to restore the early momentum of reform, especially by continuing reductions in the extensive remaining government regulations. Moreover, economic policy changes have not yet significantly increased jobs or reduced the risk that international financial strains will reemerge within the next few years. Nearly 40% of the Indian population remains too poor to afford an adequate diet.
India's exports, currency, and foreign institutional investment were affected by the East Asian crisis in late 1997 and early 1998, but capital account controls, a low ratio of short-term debt to reserves, and enhanced supervision of the financial sector helped insulate it from near term balance-of-payments problems. Export growth, has been slipping in 1996-97, averaging only about 4% to 5%a large drop from the more than 20% increases it was experiencing over the prior three yearsmainly because of the fall in Asian currencies relative to the rupee. Energy, telecommunications, and transportation shortages and the legacy of inefficient factories constrain industrial growth, which expanded only 6.7% in 1997down from more than 11% in 1996. Growth of the agricultural sector is still fairly slow rebounding to only 5.7% in 1997 from a fall of 0.1% in 1996. Agricultural investment has slowed, while costly subsidies on fertilizer, food distribution, and rural electricity remain.
India has a Mixed Market Economy structure whereby the government’s intervention is active but economy functions predominantly on market forces (Morrison 2011). The government had recently used interest rates – the monetary tool as an instrument to tackle high inflation and stimulate economic growth (Times of India 2014). However, as businesses are sensitive towards the directional change in interest rates, an increase in interest rates would lead to increase in financial burden for GSK India (Park 2013).
The Gross Domestic Product is to expand up to 6.7% in 2014; it warned that inflation and a high current account deficit (CAD) are the two major concerns in this year. This study states positive impact in the recovery of the global economy and the recent government policies including the steps to open-up foreign investment in various sectors like aviation and retail and others. According to the study India is on the track to meet its fiscal deficit target of 5.3% of Gross Domestic Product in current year, and to narrow it down to 4.8% of Gross Domestic Product in next year which is 2015.
Subramanian, Arvind. India’s Economy is stumbling? The New York Times. August 31, 2013: A19. Print.
India, the second highest populated country in the world after China, with 1.27 billion people currently recorded to be living there and equates for 17.31% (India Online Pages 2014) of the world's population, but is still considered a developing country due to it’s poverty and illiteracy rates. As these nations continue to grow at rates that are too fast for resources to remain sustainable, the government’s in these areas wi...
success of the green revolution that began in 1975, India has also become self-sufficient in food grains.
Commodities form almost 58 percent of India's Gross Domestic Product out of which 22 percent is agriculture, and two third of the population depend up on agriculture for livelihood.
...uture well-being, are often reluctant to give away their lands for industrialisation. There are also the problems of corruption and lethargy in the corporate work culture that pervades the Indian industries. There is also a lack of investment on research and development in all sectors of industries.
Has reduced poverty greatly even though the economy has not grown much (Territories and States of India, 2002).
From April to June 2005, India’s GDP grew at 8.1 per cent, compared with 7.6 per cent in the same period the year before. More impressively, India is achieving this result with just half of China’s level of domestic investment in new factories and equipment, and only 10 per cent of China’s foreign direct investment…
Wilson, Beth Anne, & Keim, Geoffrey N. (2006). India and the Global Economy. Business Economics, 41(1), 28-36.
With a GDP of $1.842 trillion in 2012, India is one of the fastest growing economies (The World Bank Group). Another determinant of a country’s competiveness level is its exchange rate; the Indian Rupee decreased to 60.92 this March from 62.10 in February 2014 per USD. The Indian Rupee averaged 32.51 since 1973, with a maximum rea...
It has been 66 years since India has gained Independence by driving away the colonial forces. From 1947 till date, India as a nation has successfully tackled and surpassed most of its hindrances to walk down the path of modernization, advancement and prosperity. But we shouldn't get disillusioned just by the rosy picture India projects on global forum as the other side of the coin highlights the gloomy portrayal of widespread corruption, mass unemployment, casteism, poverty and illiteracy which is steadily crippling the nation's identity. Despite many measures taken to eradicate i...
British colonialism brought this quest of modern industrial development to India in early 19th century. India being the second largest populated country in the world; industrial revelation was must for her. The business class of India identifies this requirement first and acted as the change was needed. With the help of western machinery they stated the industrialization with home grown agricultural product. Jute, Cotton, Metal (especially steel), and Tea were the first few product that came out in the initial phase of this development process. Along with the independence, India started ...
The domestic businesses as well as international businesses face cut throat competition to enter and survive in the Indian market. They can survive only through customer satisfaction and providing high quality products. The increased foreign direct investment in India has supplemented the domestic capital formation and has improved the balance of payment. Banking, Insurance, communication, transportation, telecommunication, tourism, healthcare, education, consultancy, BPO and other service sectors contribute more than half of the national income in India. As a member of WTO India will reduce the tariff and non-tariff barriers and reduce and repay the foreign debt. Indian business environment is committed to the Indian economy through promoting increased living standards of the people in India. The world economy witnessed recession in the year 2008-09. The stability of the banks and financial institutions was questioned. India’s export sector, inflow of foreign investment, employment opportunities, capital markets, domestic demand of capital and consumer goods were affected due to economic slowdown. But the Indian private and public houses have struggled a lot to bring the Indian economy in the better position again. It is a fact that the Indian business environment is in much better position now and the Indian economy is growing at pace now.
Export- oriented growth model will improve India’s Balance of Payment and help in accumulating foreign exchange reserves (which is very important given the