A . Economy
India had a booming economy under Atal Bihari
Vajpayee-led NDA. The National Democratic Alliance (NDA) regime efficiently
overcame economic sanctions imposed due to Pokhran tests and the Kargil war.
UPA inherited from NDA an economy with growth oriented policies, reforms and
environment, which reaped benefits during the first few years of UPA-I.
Yet, the UPA couldn't capitalise
much and extend growth throughout their regime owing to their own economic
sins. The misgovernance, maladministration, policy paralysis, decision deficit
and galaxy of scams have resulted in jobless growth, declining GDP, increasing
current account deficit, rising interest rates, rocketing inflation, mounting
external debt and a depreciating rupee, which has resulted in the economic
gloom and doom. The United Progressive Alliance’s (UPA) growth story is far
from truth and is mere a statistical jugglery. The UPA Govt. has manipulated
inflation and GDP Data to show higher growths. Industries , Services and
Agriculture the main source of growth for the country has all suffered due to
lack of vision, faulty planning, procedural and official wrangles and
corruption. The Govt. plan to increase non- productive expenditures, social
spending (not conducive for promoting human resources to self-reliance) and cheap
vote bank (class, religion & caste) appeasement expenses, at the cost of
infrastructural, developmental and production increasing expenditures have
costed the country dearly. The UPA Govt. has resorted to deficit financing and
borrowed heavily from India and abroad to meet these non- productive Expenses
(Subsidies, MNREGA, RKVY, MDM, NSAP, Food Security etc. ) and in
these expenses there was heavy loot and corruption. In fact the Decade of UPA
rule has promoted Economic Crimes and Black Economy. All of these were
instrumental in promoting and infusing un-controllable inflation in the Indian
Economy and eventual the increase in production cost of goods and services in
the country resulting in the slow growth of the economy. The diversion of Funds allotted for the
ambitious NDA plan to link all Major rivers of India has adversely affected
agriculture, farm and allied sectors production and Hydro- electricity
generation had a catastrophic effect on overall Indian economic growth.
The reforms process started by the previous
NDA govt. was not only stopped but reversed by this UPA govt. The UPA
government has failed to employ the natural, human and economic resources of
the nation to its potential and has in fact instrumental in wasting and
mis-utilising the same by way of corruption, non-performance, under employment
and faulty planning and its implementation. Instead of utilizing cheap
rain-water for irrigation, farm use, human-use and hydro-electricity generation
the central Govt. is guilty of using scarce and expensive petroleum products
and coal for the same. This has also resulted in reduction in ground water
level and eventually the countries current balance of payment. The use of renewable recycled natural & human
waste as a source for energy and non –conventional energy as solar power, wind
energy etc. have been overlooked. Water a source of cheap power and as a
catalyst and agent to make organic fertiliser has been totally over-looked. The
UPA Govt’s economic policies have discouraged countries self-reliance,
independence and sovereignty policy and have forced the nation to be dependent
on foreign countries for its needs. The UPA has been instrumental in turning
the Indian Economy from production & investment based to consumption
dominant economy. The current growth is currently driven by the efforts and entrepreneurship
of the people (mainly service industries) and private sectors.
The Indian
Gross Domestic Product - GDPs today is US$ 1,972.84 Billion (2013). In terms of percentage contribution to GDP
Agriculture: 16.9%, industry: 17%, services: 66.1% (2013 est. Data CIA fact
book). The Central Statistical Office,
CRISIL Research Data for GDP (% y –o-y) FY -12 – 6.2 , FY-13- 5 , FY-14- 4.8. The
CIA data of GDP growth on an annual basis adjusted for inflation and expressed
as a percent is 3.8% (2013 est.) 3.2% (2012 est.) 6.3% (2011 est.). India has restored macroeconomic and financial
stability, but structural impediments to growth and persistently high inflation
remain key concerns, the IMF says in its annual report on the state of the
Indian economy. Inflation remains elevated. The report noted that persistently
high inflation is a key macroeconomic challenge for India. Over the past
several years it has induced double-digit inflation expectations, and given
rise to a high demand for gold. The
report also highlighted the need to use headline consumer price index inflation
as the principal nominal anchor for monetary policy. “Food and fuel price
shocks propagate rapidly into core inflation, and inflation expectations and
wage formation are closely linked to CPI inflation. According to the IMF’s
assessment, India’s financial system remains well capitalized and supervised,
but slowing growth is highlighting corporate vulnerabilities and leading to
deteriorating bank asset quality. We've seen in India 10 percent CPI inflation
for several years, with inflation expectations even higher than that. So
inflation in many ways is reaching its tentacles right throughout the economy
and has many consequences. One of which is driving Indians out of saving in
financial assets into saving through gold, and of course inflation adversely
affects the poor most of all. The economic growth has been driven by the
expansion of services that have been growing consistently faster than other
sectors. The World Bank suggests that the most
important priorities are public sector reform, infrastructure, agricultural and
rural development, removal of labour regulations and reforms in lagging states.
The negative
effects of the industrial slowdown in 2013-14 are likely to spill over into
services such as trade, transport and banking. The linkages between industries
and services have strengthened over time; industry/manufacturing is extending
its weak performance to service sector as well. Input –output data suggest that
producing one unit of industrial output required 0.44 units of services in
2007-2008. The depreciation of the rupee and slowing growth are also resulting
in an increase in the non-performing assets of banks, which are already
suffering a decline in profitability on account of rising borrowing cost and
mark-to market losses on bond portfolios. Hence the growth of financial
services is expected to be lower than expected.
Economic Growth is projected to be further weakened the lowest since
2002-03. Growth/demand slowdown (business risk) emerges as the important
vulnerability factor for Indian Companies. The investment climate remains weak
the slowdown in demand made worse by lack of affordable credit.
1.
GDP:- IMF Data for GDP Growth 2013
(Constant Prices, National Currency) 5.676 %, GDP (Current Prices, National Currency) INR 110,701.95 Billion,
compared to 2004 GDP Growth (Constant Prices, National Currency) 7.662 %, GDP
(Current Prices, National Currency) INR 31,224.40 Billion US$ 689.028 Billion.
2.
Inflation: - As per RBI data NDA
Govt. in 2003-2004 had recorded an
Inflation Overall WPI of 5.5 % with food articles inflation of 1.3 % ( base
year 1993-94) which has now increased to 8.9 in 2013-14 with food Inflation
increasing to 9.9 % (base year 2004-2005) Ministry of Commerce Data. However
this data has been manipulated by base years Index price data and article
inclusion and exclusion to show lower inflation and higher GDP growth. Inflation for 2013 (Average Consumer Price
Change %) as per IMF calculations is 10.816 % (base year 2000) compared to 2004
Inflation (Average Consumer Price Change %) 3.767 %.
3.
International Trade and Balance of Payments
– IMF data Indicators- Current Account Balance 2013 (US dollars) US$ -97.617
Billion, Current Account Balance (% GDP)
-4.948 % compared to 2004 Current Account Balance (US Dollars) US$ 0.781
Billion, Current Account Balance (% GDP) + 0.113 %. India's balance of payments on its current
account has been negative. India's
exports rose consistently, covering 80.3% of its imports in 2002–03, up from
66.2% in 1990–91. The then RBI study
establishes that the inflows are clearly sustainable. Turning first to the
current account, which encompasses the difference between total exports and
imports, it is creditable that it has turned into a surplus, thanks mainly to
rising exports of goods and invisibles, viz. services. This has happened in
spite of the global slowdown and the appreciation of the rupee, which affects
both exports of goods and services.
4. Rupee
Devaluation:- The rupee devaluation
along with the Govt. infused persistent
two digit inflation has hit the common man and the Industries hard. The common
man’s pocket is being robbed due to this and he has to pull all his ends to
maintain his family’s budget. For Companies mark-to-market losses and higher debt servicing costs are
likely to be key pressure points in the near term. According to Mr Mukesh Agarwal,
President, CRISIL (A standard & Poor Company) Research, “For
companies in the CNX Nifty share Index (excluding banking and financial
services), around 40 per cent of debt is denominated in foreign currency. In
total, corporate India had forex debt outstanding of over $200 billion as of
March 2013, of which close to 45 per cent is short-term debt. Moreover, only
half their forex exposure is hedged. Persistent weakness in the rupee and
heightened volatility has reduced the benefits of borrowing overseas.” From the
growth and profitability perspective, sectors that will be negatively impacted
by the rupee’s depreciation include automobiles, auto components, airlines,
consumer durables, oil marketing companies (OMCs), and fertilisers. The
increase in fuel costs will hurt demand for automobiles, especially small cars,
as fuel alone accounts for nearly 25-30 per cent of the ownership cost of a
small car in the year of purchase. Airlines with a high proportion of revenues
accruing from domestic operations will also be hurt as 70 per cent of their operating
costs are incurred in dollars.
5.
Under Employment
and Unemployment of Human Resources :- With a total of 18.2% of Indian population in
the age group of 15-24 years and total
of 40.4% population under 25-54 years age group, the Unemployed
youth ages 15-24: is 10.7% as per 2012 estimates CIA fact Book . Official unemployment exceeds 9%. Regulation
and other obstacles have discouraged the emergence of formal businesses and
jobs. Almost 30% of workers are casual workers who work only when they are able
to get jobs and remain unpaid for the rest of the time. Only 10% of the
workforce is in regular employment. From the overall stock of an estimated 458
million workers, 394 million (86%) operate in the unorganised sector (of which
63% are self-employed) mostly as informal workers. There is a strong
relationship between the quality of employment and social and poverty
characteristics. The relative growth of informal employment was more rapid
within the organised rather than the unorganised sector. This informalisation
is also related to the flexibilisation of employment in the organised sector
that is suggested by the increasing use of contract labour by employers in
order to benefit from more flexible labour practices. According to the ILO
report, it has been argued that India was experiencing 'jobless growth' due to
the fact that total employment grew by only 1.1 million from 2004/05 to 2009/10
(based on the National Sample Survey), representing an employment elasticity of
almost zero. India's biggest worry and
centre of all debates essentially needs to be the growing informal employment
which counts for 94 per cent of the workforce and is growing faster than formal
employment," Indian Staffing Federation Vice-President Rituparna
Chakraborty said. CRISIL Research, India’s largest independent and integrated
research house, in a study estimates incremental non-farm employment will
decrease more than 25% to 38 million in FY 2013-19 compared with 52 million
seen in FY 2005-12. That’s because fewer jobs are being created with the
economy treading a lower-growth path and labour intensity is declining across
industry and services. As a consequence, an additional 12 million people will
be redirected to the farms in FY 2013-19. During FY 2005-12, there was a decline
of 37 million in agriculture employment. Says Dharmakirti Joshi, chief
economist, CRISIL: “We expect the Indian economy to expand at slower pace of 6%
per year in FY 2013-19 from 8.5% in FY 2005-12. Further, GDP growth is driven
increasingly by less labour-intensive services such as financial, real estate
and business services (including IT-ITES). For example, in FY 2012, these
services, with nearly 19% share in GDP, employed only 3 out of 100 workers in
the economy. Employment generation in evolving scenario will therefore pose a
severe test for Indian policy makers.”
6.
Under utilization and misuse of Natural
resources: Natural resources are
generally defined as all those things given by nature on, above and under the
surface of the earth. In this broad sense natural resources include land,
water, forests, fisheries and animals, mineral ores and sources of energy like
coal, petroleum, gas and uranium, etc. Natural resources of a country influence
not only economic growth but also its economic structure. In fact, for the
economic development of a country, optimum exploitation of natural resources is
more important than their availability. The total cultivable area in India is
1,269,219 km² (56.78% of its total land area), which is shrinking due to
population pressures and rapid urbanisation. India has a total water surface
area of 360,400 km² and receives an average annual rainfall of 1,100 mm.
Irrigation accounts for 92% of the water utilisation, comprising an area of 380
km² in 1974. It is expected to rise to 1,050 km² by 2025, with the balance
accounted for by industrial and domestic consumers. India's inland water
resources include rivers, canals, ponds and lakes, coupled with the east and
west coasts of the Indian ocean and other gulfs and bays. These provide
employment to nearly 6 million people in the fisheries sector. In 2008, India
had the world's third largest fishing industry. India produces 4 fuels, 11
metallic, 52 non-metallic and 22 minor minerals. India's major mineral
resources include Coal (4th largest reserves in the world), Iron ore, Manganese
ore (7th largest reserve in the world as in 2013), Mica, Bauxite (5th largest
reserve in the world as in 2013), Chromite, Natural gas, Diamonds, Limestone
and Thorium (world's largest along Tamil Nadus shores). India's oil reserves,
found in Bombay High off the coast of Maharashtra, Gujarat, Rajasthan and in
eastern Assam meet 25% of the country's demand Coal, iron ore, manganese, mica, bauxite, rare
earth elements, titanium ore, chromite, natural gas, diamonds, petroleum,
limestone, arable land
Says Mukesh Agarwal, President,
CRISIL Research: “It is desirable to pull more and more people out of
agriculture since it is a low-productivity sector, with only a 14% share in
GDP, but around 49% share in employment. The old trend of migration from
agriculture will reverse with fewer non-farm job opportunities coming in the
way of achieving this.” “Apart from GDP growth, India needs to raise the demand
for labour, especially in the manufacturing sector, by simplifying labour laws
and debottlenecking labour-intensive industries such as textiles, gems and
jewellery and leather. Policymakers should also focus on expanding the health,
education, construction sectors. This will not only raise India’s growth
potential, but also generate a significant number of jobs,’’ added Agarwal.
B . Black market and money
or Underground economy: - This UPA Govt. has promoted “Economic Crimes” such as corruption,
tax-evasion and graft, which has resulted into creation of black market or
underground economy a market in which money, goods services are traded
illegally. This Govt. has surpassed all
corruption records and has robbed or caused to rob the nation of its natural,
mineral, scientific and human resources.
The key distinction of a black market trade is that the transaction
itself is illegal. The goods or services may or may not themselves be illegal
to own, or to trade through other, legal channels. Because the transactions are
illegal, the market itself is forced to operate outside the formal economy,
supported by the established state power. Money itself is traded on the black
market i.e. the currency is counterfeit. The currency has been acquired
illegally and needs to be laundered before the money can be used. Economic
crimes cause significant damage to the general economy of the country,
adversely affecting the growth and development of the nation. Internationally
it erodes confidence in the financial credibility and stability of the nation,
thus weakening its global competitiveness and further, becoming unattractive to
investments from within as well as outside. Where there is a high incidence
level of economic crime, the government and bureaucracy are also viewed as
being corrupt and weak. The major impacts that the economic crimes has created on the Indian economy is that it has caused : Increase in inflationary pressure, Uneven
distribution of resources and creation of elitism, Marginalisation of tax base,
Generation of abundant black money, Creation of parallel economy, Undermining
of developmental works/efforts, Becomes a breeding ground for corruption,
Illicit businesses thrive affecting licit business, Resources of financial and
commercial institutions are diverted and distorted, Weakens morale and commitment of citizens,
Poor/weakest continue to be at risk,
Countries economic equilibrium is at stake. The black money market
situation in India is epidemic. India currently tops the list for illegal
monies in the entire world, estimated to be almost ₹ 90,54,136 Crores stored in Swiss banks in the form of
unaccounted money as per the data
provided by the Swiss Banking Association.
India has more black money than the rest of the world combined.
C. Infrastructure: - Infrastructure is basic physical
and organizational structures needed for the operation of a society or
enterprise or the services and facilities necessary for an economy to function.
It can be generally defined as the set of interconnected structural elements
that provide framework supporting an entire structure of development. It is an
important term for judging a country's development. The term typically refers
to the technical structures that support a society, such as roads, bridges,
means of transportation, ports, water supply, sewers, electricity, telecommunications,
and so forth, and can be defined as "the physical components of
interrelated systems providing commodities and services essential to enable,
sustain, or enhance societal living conditions." Viewed functionally,
infrastructure facilitates the production of goods and services, and also the
distribution of finished products to markets, as well as basic social services
such as schools and hospitals; for example, roads enable the transport of raw
materials to a factory. In the World Economic Forum’s Global
Competitiveness Report for 2011-2012, India ranked 89th out of 142 countries
for its infrastructure. The report criticized its transport, ICT and energy
infrastructure as “largely insufficient and ill adapted to the needs of
business,” adding: “The Indian business community continues to cite
infrastructure as the single biggest hindrance to doing business in the
country.” Global trade is placing acute
pressure on India’s inefficient ports. Rapid industrialization is intensifying
the strain on the nation’s unreliable networks for electricity and water. The
railway system — already infamously overcrowded — faces rising demand for freight
capacity. And the government has fallen far short of its plans to build 20 km
of roads each day — an urgent requirement in a nation where 65% of all freight
is transported by road, and where traffic is so severe that the maximum highway
speed for trucks and buses is only 30-40 km per hour. The
Government of India has been consistently increasing its spending on the
development of infrastructure capabilities to attain sustainable economic
growth. The nation's infrastructure spending is expected to grow to 9.9 per
cent of gross domestic product (GDP) during the 12th Five-Year Plan from 7.5
per cent during the 11th plan. However corruption and lack of political will to
enforce reforms and economic development on time has forced the projects worth
17 lakhs Crores delayed and uncompleted in this UPA Govt. The UPA Government on July 1, 2013 accepted
before Supreme Court that NDA National Democratic Alliance Government lead by
Vajpayee has developed half the roads in last 32 years in their 5 year term. The
12th plan emphasises on the need for expanding infrastructure and increasing
investments by the government, private and forms of public-private
partnerships. The growth rate of Indian real estate has been at par with the
growth in population, but, still a house remains a dream for about 78 millions.
·
Power Sector:- The power sector consists
of generation, transmission and distribution utilities and is a crucial
component of India's infrastructure. As
per Wikipedia, the electricity sector in India had an installed capacity of
233.929 GW as of December 2013, the world's fourth largest. Captive power
plants generate an additional 34.444 GW. Non Renewable Power Plants constitute
87.55% of the installed capacity, and Renewable Power Plants constitute the
remaining 12.45% of total installed Capacity. India generated around 911 BU
(911,652 MU i.e. 911 TWh) of electricity. (excluding electricity generated from
renewable and captive power plants) during the 2012–13 fiscal. The total annual
generation of electricity from all types of sources was 1053.9 TeraWatt-hours
(TWh) in 2012. In terms of fuel, coal-fired plants account for 59% of India's
installed electricity capacity. After coal, renewable hydropower accounts for
17%, renewable energy for 12% and natural gas for about 9%. In December 2011,
over 300 million Indian citizens had no access to frequent electricity. Over
one third of India's rural population lacked electricity, as did 6% of the
urban population. Of those who did have access to electricity in India, the
supply was intermittent and unreliable. In 2010, blackouts and power shedding
interrupted irrigation and manufacturing across the country. States such as
Gujarat, Madhya Pradesh and others provide continuous power supply. The per
capita average annual domestic electricity consumption in India in 2009 was 96
kWh in rural areas and 288 kWh in urban areas for those with access to
electricity, in contrast to the worldwide per capita annual average of 2600 kWh
and 6200 kWh in the European Union. India's total domestic, agricultural and
industrial per capita energy consumption estimate vary depending on the source.
Two sources place it between 400 to 700 kWh in 2008–2009. As of January 2012,
one report found the per capita total consumption in India to be 778 kWh. India
currently suffers from a major shortage of electricity generation capacity,
even though it is the world's fourth largest energy consumer. India's network
technical losses is 23.65% in 2013,compared to world average of less than 15%. The
growth of the economy is expected to boost electricity demand in coming years. Ensuring
availability of fuel quantities and qualities, lack of initiative to develop
large coal and natural gas resources present in India, new project management
and execution, environmental issues and the lack of funds for investing into
new projects have been responsible for low electricity generation and holding
up the expansion plans in the power sector even as the demand has steadily been
growing. SENIOR officials point out that while the government is pinning high
hopes on the private sector to meet a significant portion of the $ 1 trillion
investment required to give a fillip to the country's sluggish infrastructure,
the power sector seems to be in the doldrums at this point.
·
The Indian Oil and Gas Sector: - The oil
and gas sector in India is a critical component of the country’s economy,
accounting for 15 per cent of the country’s gross domestic product (GDP).
Economic growth is directly linked with energy demand, and a conservative
estimate of 7 per cent growth is expected to double India’s per capita energy
consumption from 560 kilograms of oil equivalent (kgoe) in FY10 to 1,124
kilograms of oil equivalent (kgoe) by FY32.4 .
As oil and gas is one of the main sources to meet the required demand
for energy in India, its demand is forecast to rise further. In 2011,natural
gas accounted for 10 per cent of the country’s total energy requirements,
whereas estimates suggest that this figure will reach 20 per cent by 2025, with
oil and gas together accounting for approximately 45 per cent of the total
demand. Market reports estimate that this growth is expected to take the size
of the Indian gas market to that of the gas market in Japan, the largest
consumer of liquefied natural gas (LNG) in Asia, by the end of 2015. Despite
having significant reserves in India, the increase in demand is expected to be
primarily met through imports. India had about 5.6 billion barrels (890,000,000
m3) of proven oil reserves as of January 2007, which is the second-largest
amount in the Asia-Pacific region behind China. The combination of rising oil
consumption and fairly unwavering production levels leaves India highly
dependent on imports to meet the consumption needs. The Energy Information
Administration (EIA) estimates that India registered oil demand growth of
100,000 bbl/d (16,000 m3/d) during 2006. As per the Oil and Gas Journal, India
had 38 trillion cubic feet (1.1×1012 m3) of confirmed natural gas reserves as
of January 2007. A huge mass of India’s natural gas production comes from the
western offshore regions, particularly the Mumbai High complex. The onshore fields
in Assam, Andhra Pradesh, and Gujarat states are also major producers of
natural gas. As per EIA data, India produced 996 billion cubic feet (2.82×1010
m3) of natural gas in 2004. India imports small amounts of natural gas. In
2004, India consumed about 1,089×109 cu ft (3.08×1010 m3) of natural gas, the
first year in which the country showed net natural gas imports. During 2004,
India imported 93×109 cu ft (2.6×109 m3) of liquefied natural gas (LNG) from
Qatar.
D. Agriculture: -- India holds the
second largest agricultural land (179.9 million hectares) in the world. With 20
agri-climatic regions, all 15 major climates in the world exist in India. The country also possesses 46 of the 60 soil
types in the world. India ranks second worldwide in farm output. However,
international comparisons reveal the average yield in India is generally 30% to
50% of the highest average yield in the world.
To feed the Indian population (2014) of 126 Crores it needs heavy
production of Agri-foods and grains. India roughly represents 18% of the total
world populace. It means that every 1 out of 6 people live in India. However
Indian agriculture is marred by non- foresight and faulty planning, where raw food grains and
farm products are exported instead of processed and value added products
un-like USA which does just the reverse. This has led to under nutrition,
malnutrition and hunger to its own citizens and high food articles inflation in
the country. India is among the 10 leading exporters of agricultural products
in the world; the country accounted for 2.07 percent of global agricultural
trade in 2012. Agriculture and allied sectors like forestry and fisheries
accounted for 16.6% of the GDP in 2009, about 50% of the total workforce and
despite a steady decline of its share in the GDP, is still the largest economic
sector and plays a significant role in the overall socio-economic development
of India. Improvement in yield, which is the key to the long-term growth,
depends on efficient use of quality seeds, fertilizers, pesticides, micronutrients,
and irrigation. Each of these plays a role in determining yield level and in
turn augmentation in level of production.
Irrigation facilities are inadequate, as revealed by the fact that only
52.6% of the land was irrigated in 2003–04, which result in farmers still being
dependent on rainfall, specifically the Monsoon season. A good monsoon results
in a robust growth for the economy as a whole, while a poor monsoon leads to a
sluggish growth. There can be no Green
Revolution without adequate irrigation and fertilizer, which is consistently
deteriorating due to the faulty policies of the Government. India receives an
average annual rainfall of 1,208 millimetres (47.6 in) and a total annual
precipitation of 4000 billion cubic metres, with the total utilisable water
resources, including surface and groundwater, amounting to 1123 billion cubic
metres with Total utilizable ground water resources 433 BCM . 546,820 square kilometres (211,130
sq mi) of the land area, or about 39% of the total cultivated area, is
irrigated. The balance of water runs down through the rivers to the Ocean hence
under utilisation of precious natural resource. Current agricultural practices
are neither economically nor environmentally sustainable and India's yields for
many agricultural commodities are low. Poorly maintained irrigation systems and
almost universal lack of good extension services are among the factors
responsible. Farmers' access to markets is hampered by poor roads, rudimentary
market infrastructure, and excessive regulation."World Bank: "India
Country Overview 2008. Total exports of
Indian agri and processed food products from April to August 2013 stood at US$
9,711.09 million as compared to US$ 8,806.41 million during the same period
last year, according to the data released by the Agricultural and Processed
Food Products Export Development Authority (APEDA). India has emerged as a major player in the
global agriculture market. In the last five years, the country’s agriculture
exports have tripled from around Rs 80,000 crore (US$ 12.75 billion) to Rs 2.32
trillion (US$ 33.99 billion). India is principally an agricultural country.
Agriculture, with its allied sectors, is unquestionably the largest livelihood
provider in India. Most of the industries also depend upon the sector for their
raw materials. Steady investments in technology development, irrigation
infrastructure, emphasis on modern agricultural practices and provision of
agricultural credit and subsidies are the major factors contributed to
agriculture growth. Indian agriculture has undergone rapid transformation in
the past two decades. The policy of globalisation and liberalisation has opened
up new avenues for agricultural modernisation. This has not only lead to
commercialisation and diversification, but also triggered various technological
and institutional innovations owing to investments from corporate entities.
E. Industrial Growth
Industry accounts for 26% of
GDP and employs 22% of the total workforce. India is 11th in the world in terms
of nominal factory output according to data compiled through CIA World Factbook
figures. The CRSIL data of GDP Share of Industries (y-o-y%) shows a
consistent decline from FY -13-2.1 to
FY-14- 1%. The growth of Industries is
the story of growth (where input output ratio is high ) is the story of growth for most of the developed nations in
the world. Textile manufacturing is the
2nd largest source of employment after agriculture and accounts for 20% of
manufacturing output, providing employment to over 2 Crores people. The
previous NDA Govt. had started
the transformation of the textile industry from a declining to a rapidly
developing one , after freeing the industry from a number of limitations,
primarily financial and gave a green
light to massive investment inflows – both domestic and foreign. However,
demand for Indian textiles in world markets continues to fall due to policy
negligence of the govt. According to the
official Economic Survey for 2012-13, the moderation in growth is primarily attributed
to weakness in industry which has registered a growth rate of 3.5 per cent and
3.1 per cent in 2011-12 and 2012-13, respectively. This has come down even
further during the current fiscal with the manufacturing sector contracting as
investment has declined due to the uncertainty created by a government weakened
by a spate of scams. While the government has been claiming that it is
expediting project clearances through the Cabinet Committee on Investment (CCI)
headed by the Prime Minister, official numbers tell a different story. Figures compiled by the Ministry of Statistics
and Programme Implementation (MOSPI) reveal that as many as 301 central sector
projects, each involving an investment of more than Rs.150 crore, have been
delayed resulting in cost overruns to the tune of a whopping Rs.1.74 lakh
crore. The original cost of 738 big projects being monitored by the MOSPI was
Rs.9.05 lakh crore. The anticipated cost of these projects has now risen to
Rs.10.79 lakh crore due to inflation. Apart from this massive investment not
being made available to rev up the economy and create jobs, the cost of
implementing these projects has shot up due to inflation. The Indian private
sector was faced with increasing domestic as well as foreign competition, including
the threat of cheaper Chinese imports.
F. Service Sector: - Services
are the major source of economic growth, accounting for nearly two-thirds of
India's output, with less than one-third ( 27% ) of its labor force. India has
capitalized on its large educated English-speaking population to become a major
exporter of information technology services and software workers. The services sector covers a wide array of activities
ranging from services provided by the most sophisticated sectors like telecommunications,
satellite mapping, and computer software to simple services like those
performed by the barber, the carpenter, and the plumber; highly
capital-intensive activities like civil aviation and shipping to employment-oriented
activities like tourism, real estate, and housing; infrastructure-related
activities like railways, roadways, and ports to social sector related activities
like health and education. The National Accounts classification of the services
sector incorporates trade, hotels, and restaurants; transport, storage, and
communication; financing, insurance, real estate, and business services; and
community, social, and personal services. In the World Trade Organization (WTO)
list of services and the Reserve Bank of India (RBI) classification,
construction is also included. Among
the top 15 countries with highest overall GDP in 2011, India ranked 9th in
overall GDP and 10th in services GDP. A comparison of the services performance
of the top 15 countries in the eleven-year period from 2001 to 2011 shows that the
increase in share of services in GDP is the highest for India (8.1 percentage
points). India’s services sector has
emerged as a prominent sector in terms of its contribution to national and
states incomes, trade flows, FDI inflows, and employment. The growth story overall and services of
world and India in the 2000s began from almost the same level of around 4-5 per
cent in 2000. But over the years, India’s overall and services growth rates
have outpaced those of the world. Interestingly, unlike world services growth,
which has been moving in tandem with its overall growth with mild see-saw movements
over the years, India’s services growth has been consistently above its overall
growth in the last decade except for 2003 (when the former was marginally lower
than the latter). Thus, for more than a decade, this sector has been pulling up
the growth of the Indian economy with a great amount of stability. The share of
services in India’s GDP at factor cost (at current prices) increased from 33.3
per cent in 1950-1 to 56.5 per cent in 2012-13 as per Advance Estimates (AE).
Including construction, the share would increase to 64.8 per cent in 2012-13.
With an 18.0 per cent share, trade, hotels, and restaurants as a group is the
largest contributor to GDP among the various services sub-sectors, followed by financing,
insurance, real estate, and business services with a 16.6 per cent share. Both
these services showed perceptible improvement in their shares over the years.
Community, social, and personal services with a share of 14.0 per cent is in third
place. Construction, a borderline services inclusion, is at fourth place with
an 8.2 per cent share.
The services sector has been a key force
driving growth in the Indian economy for more than a decade. The economy has
successfully managed to pass through the turbulent years of the recent global
economic crisis primarily due to the vitality of this sector in the domestic
economy and its prominent role in India's external economic interactions. The services
sector in India comprises a wide range of activities from the most
sophisticated information technology (IT) to simple and basic services provided
by the unorganised sector, such as the services of the barber and plumber. Information
technology and business process outsourcing are among the fastest growing
sectors, having a cumulative growth rate of revenue 33.6% between 1997 and 1998
and 2002–03 and contributing to 25% of the country's total exports in 2007–08. India's IT industry, despite contributing
significantly to its balance of payments, accounts for only about 1%
of the total GDP or 1/50th of the total services. The Indian IT services industry is expected to
reach US$ 100 billion in revenues in 2012, with exports contributing to about
US$ 69 billion. The industry contributes to India's GDP by around 7.5 per cent
and employs close to 2.8 million employees, with an additional 2,30,000
employees expected to be added in fiscal 2012. The indirect employment created
in the economy is expected to be four to five times that of the direct
employment generated. Taken together, the IT services industry in India is one
of the biggest employment creators in the country and has put the country on
the global map.
Retail Trade: Retail
industry is one of the pillars of Indian economy and accounts for 14–15% of its
GDP. The Indian retail market is estimated to be US$ 450 billion and one of the
top five retail markets in the world by economic value. India is one of the
fastest growing retail market in the world. India's retailing industry
essentially consists of the local mom and pop store, owner manned general
stores, convenience stores, hand cart and pavement vendors, etc. It is estimated that there are around India's
retail organized industry, employs directly about 4 Crores people with around 1.3 lakhs retails organized outlets in India. If we
include the unorganized sector and the employees of organized sector and their
dependents this figure will sour to above 30 Crores peoples. Organised retail supermarkets account for 4%
of the market as of 2008. In 2012
government permitted 51% FDI in multi brand retail and 100% FDI in single brand
retail putting the life’s of Indian retail traders at stake. Economist Mohan Guruswamy of the Centre for
Policy Alternatives warns that FDI companies like Wal-Mart, Tesco and Carrefour
will serve only to elite Indians. The average Wal-Mart store will displace
11,200 people and replace them with 285 people. Small Traders will be routed
out of trade and will be unemployed.
