Major Challenges Before Indian Economy Essay

This reporthas been an h angiotensin-converting enzymest and dedicated examine to make the analysis on marketing material as true(p) as it could. And I earnestly hope that it provides useful and workable learning and knowledge to any soulfulness reading it. During this period, I had the pleasure of work closely with accomplished organization stack who sh atomic number 18d with me their experience and financial aided me in completion of my research. I express my sincere thanks to my project occur Mr. Pranav Nagpurkar Lastly I am g set upful to my parents who been my mentors and motivators.I am withal thankful to all my batch mates who have been directly or indirectly involved in successful completion of this project. Indian preservation is the tenth magnanimousst economic system in the earth by nominal gross domestic product and third largest by purchasing power. India is one of the G-20 major economies and member of BRICS. check to IMF India ranked 134th by nominal gros s domestic product on the basis of per capita income in 2012. Its GDP is abtaboo $1. 824 trillion and per capita income is about $1491. Its GDP contri plainlyion by sector wise is agriculture 17. %, industry 26. 4% and services 56. 4% in 2011. Its tribe is about 1. 2 jillion and labour issue is 498. 4 million in 2012. Labour force by chore agriculture 52%, industry 14% and services 34%. Unemployement value in India is 9. 9%. Its investing is about 30% of GDP. Revenue of India is $171. 5 billion and expenditure over $281 billion. It has dearth budget of 5. 6% of the GDP. principal(prenominal) industries are textiles, chemicals, food processing, steel, point equipment, cement, mining, petroleum, machinery, software, and pharmaceuticals.Its export is about 309. 1 billion and import is about 500. 3 billion. The independence-era Indian delivery (from 1947 to 1991) was based on a mixed economy combining features of capitalism and socialism, resulting in an inward-looking, interv entionist policies and import-substituting economy that failed to take advantage of the post-war expansion of trade. This model contri hardlyed to widespread inefficiencies and corruption, and the failings of this system were collectable largely to its poor executeation.In 1991, India adopted liberal and free-market oriented principles and liberalized its economy to international trade under the guidance of Manmohan Singh, who then was the Finance look of India under the leadership of P. V. Narasimha Rao the then Prime Minister who eliminated License Raj a pre- and post-British Era mechanism of strict government control on circumstance up new industry. By 2008, India had established itself as one of the worlds fastest growing economies. Growth significantly slowed to 6. % in 200809, but subsequently recovered to 7. 4% in 200910, while the fiscal shortage rose from 5. 9% to a luxuriously 6. 5% during the same period. Indias flow rate account deficit urged to 4. 1% of GDP durin g Q2 FY11 against 3. 2% the old quarter. Indias public debt stood at 68. 05% of GDP which is highest among the emerging economies. However, inflation rest stubbornly high with 7. 55% in August 2012, the highest amotrade (counting exports and imports) stands at $ 606. 7 billion and is latestly the 9th largest in the world.During 201112, Indias conflicting trade grew by an impressive 30. 6% to reach $ 792. 3 billion (Exports-38. 33% & Imports-61. 67%). India has the worlds third largest road network, covering more than 4. 3 million kilometers and carrying 60% of freight and 87% of passenger traffic. Indian Railways is the tail largest rail network in the world, with a track length of 114,500 kilometers. India has 13 major ports, handling a cargo volume of 850 million tonnes in 2010. India has a national teledensity rate of 74. 15% with 926. 3 million sound subscribers, two-thirds of them in urban areas. But Internet use is rare, with around 13. 3 million broadband lines in India in December 2011. However, this is growing and is expect to boom following the expansion of 3G. * Indias current account deficit- The deficit has affixd to a record 5. 6 per centum of GDP in 2011-12, far above what the Reserve Bank of India considers to be a sustainable level, namely 2. 5 percent of GDP.The key reason for the large current account deficit is the trade deficit increasing overdue to Indias relatively poor competitiveness and high dependence on embrocate and gold imports, which alone account for virtually half of fall imports. Boosting production exports through greater diversification across destinations and products are essential to brace the trade deficit but this cannot be achieved without boosting labour productivity and enhancing transportation infrastructure, especially ports. With regards to gold, dematerialization, and introduction of inflation linked bonds would help reduce its strong-arm imports of gold.Meanwhile, for oil, achieving greater energy eff iciency, aligning domestic oil prices to international ones are a key or to find out different choice/ substitute for it. * Qualitative and quantitative fiscal consolidation Together with the current account deficit, the stubbornly high fiscal deficit (5. 8 percent of GDP in 2011-12) makes the Indian economy more vulnerable to shocks than closely emerging markets. Indias twin deficits have adversely affected macro instruction stability by pushing up inflation, undermining increment and leaving check room for monetary accommodation.Indias fiscal policy has been too candid for too long. The government must focus on quality disbursement by channeling resources towards infrastructure and human capital investments while reduce unprofitable spending, particularly on food, fertilizer and fuel subsidies. Furthermore, the government must implement revenue enhancing reforms by making the tax system more in effect(p) and improving compliance. * Lowering high and sticky inflation- Indi as persistently high inflation is fallout of myriad factors that are both cyclical and morphological in nature.These include supply side bottlenecks, very high confidence on imported energy and lax fiscal policy. While a loose fiscal policy has boosted aggregate demand, particularly across pastoral areas, an enabling environment to enhance supply response is missing, thus vexing inflation pressures. Containing inflation adjoining the RBIs comfort govern of 4 to 5 percent is crucial to facilitate sustainable harvest-home. * Rebalancing the growth mix in favor of investment Indias GDP growth is mainly manipulation driven in good part due to consumption subsidies.Eliminating such subsidies entrust, thus, actually have three positive outcomes reducing the fiscal deficit as well as excessive consumption which should also help reignite a virtuous savings investment cycle. In fact, since the global financial crisis of 2008-09, Indias savings rate has declined (to near 29 percent f rom a peak of 37 percent in 2009) amid high inflation and fiscal slippages. Given that Indias investment upturn during the roaring years between 2004-2008 was largely financed by domestic savings, a revitalization in Indias domestic savings is critical for aiding a sustainable upturn in investment.In this regard, the Indian government needs to improve set ahead on reforms execution and policy clarity so as to back foreign investor confidence. * Manufacturing sector- Being a primarily services driven economy, the piece of land of manufacturing has been stagnant at a mere 16 percent of total GDP. Indias Asian peers, such as mainland China, South Korea and Taiwan, have vastly benefited from a strong manufacturing sector, which enables greater employment creation, attracts higher and stable foreign direct investment and bolsters infrastructure development.However, bottlenecks in land acquisition, archaic elbow grease laws, poor physical infrastructure, less favorable tax rules an d tight regulations dissuade manufacturing sector growth in India. Reassuringly, the Indian government has approved a national manufacturing policy engageed to increase the manufacturings share in GDP from the current 16 to 22 percent in a ten-spot and in turn create millions of jobs and add capacity to sustain the pacing of economic growth. That said, effective implementation of such policy drive will clearly prove difficult given past records.Population- Indias cosmos is about 1. 2 billion in 2012 which is a major altercate for the economy of India. For the developing countries like India, population explosion is a fellow and is damaging to the development of the country and its society. The developing countries already approach a lack in their resources, and with the rapidly increasing population, the resources available per person are reduced further, leading to increased poorness, lack of food, malnutrition, and other large population-related problems.The literal centr e of population is the whole number of nation or inhabitants in a country or region , and the literal meaning of population explosion is a gaining of numbers of a biological population. As the number of people in a pyramid increases, so do the problems related to the increased population. The main factors affecting the population change are the bear rate, remainder rate and migration. The birth rate is the ratio between births and individuals in a undertake population and time. The close rate is the ratio between the number of deaths and individuals in a specified population and time.Migration is the number of people moving in (immigration) or out (emigration) of a country, place or locality. Immigration from the neighboring countries of Bangladesh and Nepal is also one of the causes of increasing population in India. The Population density (people per sq. km) in India was go bad reported at 411. 89 in 2010, according to a area Bank report published in 2012 which is very hig h. Measures to overcome from it. For alteration the population increase and we have to spend money on arbitrary the birth rate.Some of the programs have been successful, and the rate of increase has also reduced, but has still to reach the sustainable rate. The major factors affecting the population increase of India are the rapidly increasing birth rate and decreasing death rates. We can follow strict birth control measures like China to simplification the birth rate, but we cannot go and decrease our technological advancements to decrease the death rate. Thus, our main emphasis falls on decreasing the birth rate. Several government-funded agencies like the Family Planning Association of India spend hundreds of thousands of dollars on promoting family cooking.These organizations aim to promote family planning as a basic human duty and the norm of a two-child family on a voluntary basis, to achieve a balance between the population size and resources, to prepare young people for responsible attitudes in human sexuality, and to provide education and services to all. The family planning methods provided by the family planning program are vasectomy, tubectomy, IUD, conventional contraceptives(that is condoms, diaphragms, jelly/ bat tubes, foam tables) and oral pills.In addition, induced abortion is available, free of charge, in institutions recognized by the government for this purpose. However, the success of the family planning program in India depends on several factors like literacy, religion and the region where the couple live. * Poverty- It is a situation in which a person is unable to get stripped-down basic necessities of life, i. e.. food, clothing and shelter for his or her living. In economic scathe they are called poverty ridden and are people living below poverty line (BPL).MASS POVERTY When a large section of the people in an economy is deprived of the basic necessities, that economy is said to be in mass poverty. Since it is the responsibili ty of the state to remove poverty, it has to take original steps. -Developing an appropriate mechanism to identify the poverty ridden people. -Estimate the total number of poverty-ridden persons with the help of that mechanism. In the first approach, expenditure incurred by a family on various(a) items is used. In the second, the income earned by a family is used.