ASSINGMENT NO:1
ECONOMIC ENVIROMENT OF INDIA
REHAN ASLAM KHAN
VIDYASAGAR UNIVERSITY
MBA DEPARTMENT (3rd sem)
ROLL NO:46
STRUCTURE AND NATURE OF THE ECONOMY
LEVEL OF DEVLOPMENT:
The Indian economy advanced 5.8 percent year-on-year in the first quarter of 2019, slowing
from a 6.6 percent expansion in the previous period and missing market expectations of 6.3
percent. It was the weakest growth rate since the first quarter of 2014, amid weaker consumer
demand and fixed investment.
SECTURAL COMPOSITION:
Services sector is the largest sector of India. Gross Value Added (GVA) at current
prices for Services sector is estimated at 92.26 lakh crore INR in 2018-19. Services
sector accounts for 54.40% of total India's GVA of 169.61 lakh crore Indian rupees.
With GVA of Rs. 50.43 lakh crore, Industry sector contributes 29.73%. While,
Agriculture and allied sector shares 15.87%.
INTER SECTOR LINKAGE:
In 2018, 43.86 percent of the workforce in India were employed in agriculture, while the other
half was almost evenly distributed among the two other sectors, industry and services. While
the share of Indians working in agriculture is declining, it is still the main sector of employment.
ECONOMIC CONDITION
INCOME LEVEL:(GDP)
India is expected to grow by 7% in 2019 and 7.2% in 2020, slightly slower than projected in
April because the fiscal 2018 outturn fell short,” the Manila-based multilateral institution said on
Thursday in its supplement to the Asian Development Outlook 2019.
NDP:
The per-capita income is a crude indicator of the prosperity of a country. The grossnational
income (GNI) at current prices is estimated at ₹188.17 lakh crore during 2018-19, as compared
to ₹169.10 lakh crore during 2017-18, rising by 11.3%.
NI:
India's per-capita income rises 10% to Rs 10,534 a month in FY19. The country'sper-capita
income is estimated to have risen by 10% to Rs 10,534 a month during the financial year ended
March 2019, government data on national income showed on Friday.
DISTRIBUTION OF INCOME:
India is no stranger to income inequality, but the gap is widening further. ... India's top 1% of
the population now holds 73% of the wealth while 67 crore citizens, comprising the country's
poorest half, saw their wealth rise by just 1%
GDP TREND:
Nominal GDP per capita or GDP per capita at current prices in the year 2018-19 is
estimated at ₹ 1,42,719 against ₹ 1,29,901 for 2017-18. At constant (2011-12) prices,
GDP per capita is 1,05,688 INR for year year 2018-19.
INFLATION TREND:
The all-India general CPI inflation rose to 3.05% in May 2019 (new base 2012=100),
compared with 2.99% in April 2019. The corresponding provisional inflation rate for rural area
was 1.86% and urban area 4.51% in May 2019 as against 1.87% and 4.30% in April 2019.
BALANCE OF PAYMENT TREND:
India's BoP: Current Account data was reported at -4.628 USD bn in Mar 2019. This records an
increase from the previous number of -17.738 USD bn for Dec 2018.India's BoP: Current
Account data is updated quarterly, averaging -10.532 USD bn from Jun 2009 to Mar 2019, with
40 observations.
FOREIGN EXCHANGE RESERVE:
India's total foreign exchange (Forex) reservesstand at US$429.0508 billion as on 23
August 2019highest ever with foreign exchange assets (FCA) component at US$397.1285
billion, gold reserves at US$26.8674 billion, SDRs (Special Drawing Rights with the IMF) of
US$ 1.4335 billion and US$3.6214 billion reserve position.
ECONOMIC POLICY
INDUSTRIAL POLICY:
The industrial policy will include incentives to make India a manufacturing and exports hub
at a time global manufacturers, troubled by the US-China trade war, are looking beyond
Asia’s biggest economy, a government official aware of the development said on condition
of anonymity.
TRADE POLICY:
The new Foreign Trade Policy 2015-2020 (FTP 2015-20) is made product wise and
location wise and tried to maximize the foreign trade from the country. Although some
exporters could not make benefit out of Foreign Trade Policy of 2009 -14, those exporters
can contact local office of Director General of Foreign Trade DGFT to get assistance.
MONETARY POLICY:
RBI said it will make NEFT system available on a 24x7 basis from December 2019. 12:04
pm: RBI said the decisions are in consonance with the objective of achieving the medium-term
target for consumer price index (CPI) inflation of 4% within a band of +/- 2 per cent, while
supporting growth.
FISCAL POLICY:
Fiscal deficit pegged at 3.4% of GDP for 2019-20 In 2019-20 be, total expenditure
rises by 13.30% over 2018-19 RE 35.6% increase in allocation for welfare of SCs,
28% for STs Disinvestment target of Rs. 90,000 Crore set for 2019-20.
FOREIGN EXCHANGE POLICY:
India’s foreign exchange reserves increased by $1.686 billion to
$423.554 billion for the week ending on 7 June. As per the RBI’s latest
data, foreign currency assets rose by $1.666 billion to reach $395.801
billion. Meanwhile, gold reserves were unchanged at $22.958 billion.
The SDRs with the IMF rose $6.1 million to $1.449 billion. The country's
reserve position with the IMF also rose $14 million to $3.3345 billion.
GLOBAL LINKAGES
Magnitude of cross border trade flows:
The Reserve Bank of India today placed on its website a Working Paper titled “Cross-border Trade Credit: A Post-
Crisis Empirical Analysis for India” under the Reserve Bank of India Working Paper Series*. The Paper is authored by
Rajeev Jain, Dhirendra Gajbhiye and Soumasree Tewari.
The paper profiles trade credit extended by domestic and foreign banks to Indian importers by focusing on its size,
composition and cost pattern. Using a panel data of 55 banks for 2007-08:Q1 to 2016-17:Q4, the paper finds that
both demand and supply-side factors influence the flow of trade credit. The paper suggests that higher imports –
whether due to high prices or volumes – lead to an increase in trade credit. From the supply-side perspective,
financial health of banks, cost of trade credit and size of their overseas network seem to influence their trade credit
operations. The empirical findings of the paper suggest that the banks need to expand their global banking
relationship and shift towards the use of globally accepted trade finance instruments instead of indigenous
instruments (i.e., LoUs /LoCs) which, however, may push up the cost
Financial flows: India recorded a capital and financial account deficit
of 83.26 USD Million in the first quarter of 2019. Capital Flows in
India averaged 2.43 USD Million from 2010 until 2019, reaching
an all time high of 766.97 USD Million in the second quarter of
2013 and a record low of -271.47 USD Million in the second
quarter of 2011
MEMBERSHIP: organisations in which India is a member –
Names of Organizations
AALCO Asian-African Legal Consultative Organization
ADB Asian Development Bank
AfDB African Development Bank (non-regional members)
AG Australia Group
ASEAN
The Association of Southeast Asian Nations
Regional Forum
Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
BIMSTEC
Cooperation
BIS Bank for International Settlements
BRICS Brazil, Russia, India, China and South Africa
CoN Commonwealth of Nations
CERN European Organization for Nuclear Research [457]
CP Colombo Plan
EAS East Asia Summit
FAO Food and Agriculture Organization of the United Nations
G-15 Group of 15
G-20 Group of 20
Intergovernmental Group of Twenty-Four on International Monetary Affairs
G-24
and Development
G-77 Group of 77
IAEA International Atomic Energy Agency
IBRD International Bank for Reconstruction and Development (World Bank)
ICAO International Civil Aviation Organization
ICC International Chamber of Commerce
ICRM International Red Cross and Red Crescent Movement
IDA International Development Association
IEA International Energy Agency
IFAD International Fund for Agricultural Development
IFC International Finance Corporation
IFRCS International Federation of Red Cross and Red Crescent Societies
IHO International Hydrographic Organisation
ILO International Labour Organization
IMF International Monetary Fund
IMO International Maritime Organization
IMSO International Mobile Satellite Organization
Interpol International Criminal Police Organization
IOC International Olympic Committee
IOM International Organization for Migration (observer)
IPEEC International Partnership for Energy Efficiency Cooperation
Names of Organizations
IPU Inter-Parliamentary Union
ISO International Organization for Standardization
ITSO International Telecommunications Satellite Organization
ITU International Telecommunication Union
International Trade Union Confederation (the successor to ICFTU
ITUC (International Confederation of Free Trade Unions) and the WCL (World
Confederation of Labour))
LAS League of Arab States (observer)
MIGA Multilateral Investment Guarantee Agency
MTCR Missile Technology Control Regime
NAM Non-Aligned Movement
OAS Organization of American States (observer)
OPCW Organisation for the Prohibition of Chemical Weapons
PCA Permanent Court of Arbitration
PIF Pacific Islands Forum (partner)
SAARC South Asian Association for Regional Cooperation
SACEP South Asia Co-operative Environment Programme
SCO Shanghai Cooperation Organisation (member)
UN United Nations
UNAIDS United Nations Programme on HIV/AIDS
UNCTAD United Nations Conference on Trade and Development
UNDOF United Nations Disengagement Observer Force
UNESCO United Nations Educational, Scientific and Cultural Organisation
UNHCR United Nations High Commissioner for Refugees
UNIDO United Nations Industrial Development Organization
UNIFIL United Nations Interim Force in Lebanon
UNMEE United Nations Mission in Ethiopia and Eritrea
UNMIS United Nations Mission in Sudan
UNOCI United Nations Operation in Côte d’Ivoire
MONUSCO United Nations Organization Mission in the Democratic Republic of the Congo
UNWTO World Tourism Organization
UPU Universal Postal Union
WA Wassenaar Arrangement
WCL World Confederation of Labour
WCO World Customs Organization
WFTU World Federation of Trade Unions
WHO World Health Organization
WIPO World Intellectual Property Organization
WMO World Meteorological Organization
WTO World Trade Organization
