Overview of Economic Factors

March 28, 2011 By Leave a Comment

India is believed to have one of the best economies in this century. There are many factors that go into why India has such a great economy. Here is a look at those factors and how they play a role in the economy.

Population. India’s population is growing at an alarming rate. It is believed that there will be 310 million people by 2030. This is a huge amount of growth and a large portion of why the economy is growing.

Savings Rates. India has a high personal savings record. In fact, 36% of the population saves a large portion of their money. This leads to banks being able to do very well. However, it causes a problem as personal spending can be stalled.

Poverty. There is a lot of poverty in India. A research showed that over 40% live in poverty conditions. This can lead to a down side of the economy in the country.

Corruption of Officials. There is a large mistrust of officials in India. Many people believe that they can personally bribe government or state officials. In fact over 25% of India believes that this happens on a regular daily basis.

Debts. India has taken a lot of personal debts from other countries to help them get to where they are. In fact the debt has reached a high by raising 6.8% in one year. Many Indians are fearful that their country will be lead into poverty and debt that they could never successful get out of.

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Challenges of the current Indian economy

December 8, 2010 By Leave a Comment
Indian Money
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The year 2010 showed an optimistic beginning for the Indian economy. 2009 ended with 18.5% growth rate in the manufacturing sector, which was the highest in the last twenty years. The anti-crisis measures that India took as a counter step for the financial downturn proved her resilience. The economic forecast for the current year and future is promising. But this optimism is halted by the challenges that are imposing on the Indian economy.

In the budget of 2010-11, the financial minister has outlined three main challenges that the present Indian economy faces. The first challenge is to get India back on the right track of growing GDP. The target is to reach at least the 9% growth rate, so that achieving double-digit number GDP will seem real and feasible. The second concern that India has to tackle is to bring about a more inclusive government wherein no individual or community is denied an opportunity for growth, and where everyone gets the growth benefits. The third challenge, and the most difficult one perhaps is to address government loopholes at different strata, to improve public services, and to perk up delivery mechanisms.

Other than these challenges, of course there is inflation always threatening to bring the Indian economy down. Food price rise due to failed monsoon, gas, petrol and diesel price hike result in an economic spiraling effect.

All these challenges call for a change in the reform policies. The immediate step that India has to take in order to fight these challenges is to consolidate its growth. There is an urgent need for appraisal of public spending, and to mobilize resources so that it can bring about economic productivity. The stable government and its continued steady performance, and the high domestic savings and investments in the recent years are indications of the growing Indian economy.

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Indian Economics: Changing Beliefs

November 30, 2010 By Leave a Comment

It’s an assumption of failure, a belief of faltering funds and ever dwindling profits – the slow decline of a nation and its people. India summons images of a shattered economy, cities lacking all market sensibilities and bureaucratic needs. The world believes a country to be little more than a collection of colonial history and modern mistakes. There can be no revenue generated within it, it’s thought. There can only be the inevitable fall. And all worry of the future.

Such worry is unneeded, however.

Indian economics is not shaped to the expectations of foreign dismissals. It is instead defined to the strength of the masses – throughout the recent decades, this nation has leapt beyond its former failings and has transformed itself into a new world power. With the aid of its ever growing public (it now stands as the second most populated country, as well as the most populated democracy), it has created a workforce that cannot be denied. The numbers are staggering and the potential is without refute.

And such potential has led India to propel itself through the international markets and become the eleventh largest domestic exporter – as well as the fourth largest purchasing power parity. It stand behind only such economic giants as the United States, the People’s Republic of China and Japan.

This change is remarkable and often disbelieved by those unfamiliar with the political and social reforms of the recent years. The belief that India remains a weakened nation is all too common within the world. The unfortunate cliche of a broken infrastructure lingers always – but the progress that has been made has marked India as a defier of such notions. It has instead become a challenger of the once accepted financial leaders. And it is predicted that the decades will reveal it to be a formidable player in the economic game.

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The Slow Growth: Indian Economics

October 26, 2010 By Leave a Comment
A representation of the Lion Capital of Ashoka...
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It was the most unfortunate of truths, the proof of a stale economy: after independence had been achieved (a victory earned from a century of fighting) and India had been claimed once again from British rule, the process of rebuilding the fallen market began. Such a process seemed impossible, however. The years had decimated trade. Natural resources had been exported to staggering amounts, leaving little for the country itself. Former taxes had crippled entire cities. There seemed no hope.

There was, however, a choice.

Indian economics was to be defined by regimented policies. Through government control, careful regulation and insulated exchanges, the country was to transform itself. No longer would it share its wares with the world. It would instead hoard them, offering them only to the population. It would be a protected trade.

It would also be the cause of the dreaded slow growth.

Defined simply: slow growth is when a market is unable to increase throughout the years. There is no stimulation. There is instead the barely recognized profits (seen in single percentages and offering no impact). This occurred in India due to the isolation that was imposed from 1947 to 1991. During this time there was a halt on exporting and importing alike, forcing the nation to supply all products on its own. This – coupled with complicated business laws and new labor enforcements – left the economy stagnant.

After seizing power from the British in 1857, India was forced to reexamine itself; determining what could be done to relieve the burdens forced by colonial rule. The initial decades were revivals of government, religion and social reform. It was only after these had been established that the economy could be addressed – and, when it was, the impulse was one of fear. There was a terrible distrust of outside influences and their possible invasions.

But the slow growth proved that India needed the world. And now its market has leapt toward success.

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The Indian economy as it is today

August 15, 2010 By Leave a Comment
An Old one... Cropped a little to remove tree ...

The first decade of the 21st century has been an eventful 10 years for India, in terms of economic growth. While the developed countries of the world suffered major financial setback during these years, India survived the global downturn better than expected. At the end of 2009, India showed over 7% GDP, more than what was predicted and by the end of 2010, it is expected to show 8% growth. This growth in economic trends has made India an attractive place for investors.

India has come through the worst global crisis with a few bruises, no doubt, but in large part undefeated. Positive trends are seen in many sectors like transport, communications, and most importantly agriculture. India has always been the land of the farmer, and yet come rain or drought, they are the first and worst hit and in turn bring the economy down. But the recent development in better connectivity with rural areas through good road network, better education, better credits for farmers, higher support prices, capital flow from foreign investors etc have stabilized to a great extent the rural incomes. Also the fact that rural households have branched into various streams of earning have also stabilized their purchase power. This greater and easier connectivity between urban and rural areas has opened wide vistas for establishing better markets.

Rapid growth predicts rapid inflation for the current growing Indian economy. Food price rise is the main culprit that threatens to widen the gap between the haves and the have-nots. Prices of lentils and rice are constantly increasing with no sign of coming down. In fact the 18% food inflation is expected to continue to remain through the year. Adding to the woes is the inflation in gas, petrol and diesel prices that hits every section of the society.

Another drawback that India faces is that it is does not have great domestic savings to back up. So if the budget deficit increases, the dependence on foreign money will increase, both for debt and equity. But, as long as the growth is steady, this deficit can be controlled.

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