Indian Economy in 2009

Joseph Anbarasu, Visiting Professor, Department of Finance, Banking & Insurance, Appalachian State University

Objectives

To make a general account of national statistics

To identify the effects of financial crisis on Indian economy

To understand the importance of human resource as an edge over other factors

To evaluate the present scenario

INDIA BY THE NUMBERS 2008 [January 2009]

Population: 1.140.3 billion

Yearly increase: 17 million

Median age: 25.1 years Average life expectancy:

68.6 years Average fertility rate: 2.7

children per woman Literacy rate: 61 per cent Population in rural areas:

700 million Homes without

electricity: 30 per cent

INDIA BY THE NUMBERS 2008 [January 2009]

Population living on less than $1 a day: 300 million

Internet users: 80 million Mobile phone subscribers:

200 million Telephone landlines: 38.76

million GDP: $2.966 trillion US Unemployment rate: 7.2

per cent Inflation: 7.2 per cent

(around 4%) Exports: $155 billion US Officially recognized

languages: 18

Impact of Crisis on Indian Economy - bad

Economic growth at 7.1 per cent (2% down). They say it is “Still higher”.

Country is feeling some pain of financial crisis

Tourism, textiles and the crucial information technology sectors are all suffering as demand from western countries dries up.

Foreign investment is withering badly too.

Impact of Crisis on Indian Economy - Good

The country's banks seem stable compared to their counterparts in richer countries.

Bollywood is thriving as the stuff of dreams continues to sell even in hard times.

That people in India love to save money

Most Indians typically spend their entire lives saving for a house even if it takes them 20 years to do that. Seldom do they take loans [just] to finance their lifestyle.

That domestic demand doesn't slump

Impact of Crisis on Indian Economy - Good

"“A lot of what India produces is for domestic consumption given the large home-based market. So it kind of hedges the slow down.”- Murtaza Haider, Ryerson University

Indians use their savings in troubled times as a kind of informal social safety net.

It fuels consumer demand and can ease some of the worst effects of the downturn.

Impact of Crisis on Indian Economy - Ugly

The current account deficit is widening.

Foreign exchange reserves are depleting.

The rupee is depreciating. Huge outflow of foreign

institutional investment from the equity market.

In 2007-08, net FII inflows into India amounted to $20.3 billion. As compared with this, they pulled out $11.1 billion during the first nine-and-a-half months of calendar year 2008, of which $8.3 billion occurred over the first six-and-a-half months of financial year 2008-09 (April 1 to October 16).

Indian Economy – Ugly side

Rural poverty has been starkly highlighted in recent years by a horrible wave of suicides by indebted farmers (16,632) in 2007.

India's political leadership and officials are highly corruptive and selfish, excepting few economists turned politicians.

It can be said that India lives in the modern world with 14th-century infrastructure.

India desperately has name-sake roads, dungeon airports, and stinking seaports, even sanitation projects are subject to cutbacks.

Some Findings – For your introspection

There are 600 million children in China and India whose future buying power will grow at least as fast as their rapidly improving educations.

As the BRICs accumulate wealth, they will want to diversify their holdings globally. America stands to benefit as richly from that diversification as it did from European investment in the 19th century.

China and India combined to produce nearly half the world's economic output in 1820 compared to just 1.8% for the U.S.

It seems that extrapolation is possible with this chart

MICHAEL MILKEN in Wall Street Journal “SEPTEMBER 19, 2006”

Some Findings – For your introspection

Goldman Sachs did some extrapolation and came out with some results “the economic leaders will be in the future - notice China as #1 and India as #3 by 2040”.

Michael's graph estimated the trend that from 1973 to 2001 the US share was diminishing as India and China were growing rapidly.

Some Findings – For your introspection

India and China have over us in terms  of college graduates in science and math is overwhelming. Michael's graph estimated the trend that from 1973 to 2001 the US share was diminishing as India and China were growing rapidly.

Not every one of those graduates according to the McKinsey Global Institute is up to par with the standards that we have in the U.S. (10% in China and 25% in India) but that is clearly changing.

Some findings - Human Development Index

The Human Development Report for 2007-08 has been released by the UNDP and there are few surprises.

# India’s human development index (HDI) of 0.619 puts it just below Equatorial Guinea (0.642) and Solomon Islands (0.602).

# India’s life expectancy of 63.7 years is sandwiched between Comoros (64.1) and Mauritania (63.2), while Malawi and Rwanda have higher adult literacy than India.

India was ranked 126 by the HDR 2006, a rung higher than the previous year’s 127.

This year, it continues to be dubbed a country at medium level of human development.

Some findings - The human development index gives a more complete picture than income

Where are we?

The human development index trends tell an important story in that aspect.

The mid-1970s almost all regions have been progressively increasing their HDI score .

East Asia and South Asia have accelerated progress since 1990.

Central and Eastern Europe and the Commonwealth of Independent States (CIS), following a catastrophic decline in the first half of the 1990s, has also recovered to the level before the reversal.

The major exception is sub-Saharan Africa.

Thank YouMy own Perception based on some facts