group ass eco121 team 3

TheIndianeconomyisa developingnewindustrial marketeconomy,the sixthlargestintheworld, aftertheUnited States,China,Japan,Germanyand theUnited Kingdom.Thisrapidrate ofeconomicexpansionwill

Class:MKT1708

Group3

Instructors:Mr.PhamThanhVinh

Submissiondue:13thJuly,2022

FORTEACHERONLY MARK MARKEDBY

(NAMEANDSIGNATURE)

2.GDP……….3-5

3.FDI……… 5-7

4.Standardofliving………7-9

5.Budgetdeficit………9-10

6.Tradedeficit………11-12

7.Bankingsystem……… 12-14

8.Financialmarket……… 14-15

9.Inflationrate……… … 15-16

10.Unemploymentrate……… 16-17

11.Exchangerate……….18

12.Realestatemarket……….18-19

13.Bondsmarket……….….20

14.Conclusion……… 20

TABLEOFCONTENT

TheIndianeconomyisa developingnewindustrial marketeconomy,the sixthlargest

intheworld, aftertheUnited States,China,Japan,Germanyand theUnited Kingdom

Thisrapidrate ofeconomicexpansionwillresult inthesizeofIndia's GDP.India will

exceedJapan'sGDPby2030,makingitthesecondlargesteconomyintheAsia-Pacificregion

TheIndianeconomyisdiverseandincludessectorsandsectors:agriculture,

handicrafts,textiles,manufacturingandmanyservicessectors.Advancementtoa

digitalageandalargepopulationandeducation,fluentEnglishareyoung turning

Indiaintoan importantdestinationfor businessoperations(back office)ofglobal

companiesastheyconductoutsourcingtheircustomerservicesand technicalsupport

Indiaisa majorexporter ofskilledworkers insoftwareand financialservicesand

softwareengineering.Othersectorssuchasmanufacturing,pharmaceuticals,

biotechnology,nanotechnology,telecommunications,shipbuildingandaviationare

showingstrongpotentialandareseeinghigherandhighergrowthrates

2.GDP

-Indiaisin3rdpositionafterChinaandJapanamongAsianCountries.Indiashares

around9%ofthetotalofAsia'sGDP (nominal)

-BasedonPPP,India'seconomyin2021isprojectedat10,207billioninternational

dollars,3rdhighestintheworld,behind theUnitedStatesandChina.India

contributes7.19%oftheentireworld's GDP(ppp).Indiasharesover16percent ofthe

totalofAsia'sGDP (PPP).Thegross domesticproduct(GDP) ofIndiaat purchasing

powerparity (PPP)is3.35 timesof GDPat nominal

-TheIndianeconomycrossedthe$1billionmarkin2007andthe$2billionmarkin

2014innominalterms.In PPPmethods,Indiacrossedtheonebillionmarkin1990

Estimatesbytheworldbankareavailablesince1960whenthecountry'sGDPwas37

mnUSD.2002-19isthebestperiodfortheIndianeconomyasIndia's economyhas

expandedby458%in17years

-The GrossDomesticProduct(GDP) inIndia wasworth3173.40 billionUSdollars

in2021,according toofficialdata fromtheWorld

Bank

quarterof2022overthepreviousquarter, accordingtoOECDestimatesTheGDP

valueofIndiarepresents0.21percentoftheworldeconomy

-InIndia,thegrowthrateinGDPmeasuresthechangeintheseasonallyadjusted

valueofthegoodsandservicesproducedbytheIndian economyduringthequarter

Indiaistheworld’stenthlargesteconomyandthe secondmostpopulous Themost

importantandthefastestgrowingsectorof theIndianeconomyisservices Trade,

hotels,transportandcommunication;financing,insurance,realestateandbusiness

servicesandcommunity,socialandpersonalservicesaccountformorethan60

percentof GDP.Agriculture,forestry and fishingconstitutearound 12percent ofthe

output,butemploysmorethan50 percentofthelabourforce.Manufacturing accounts

for15percentofGDP,constructionforanother8percentandmining,quarrying,

electricity,gasandwatersupplyfortheremaining5

percent

IndiaGDPAnnualGrowthRate

-The Indianeconomyexpanded 4.1%year-on-yearinthe firstthree monthsof2022,

slightlyhigherthanmarketforecastsof4%,buttheleastinayear, duetorising

Omicroninfections,elevatedenergyprices,andongoingsupplychain

constraints

-TheGrossDomesticProductpercapitainIndia waslastrecordedat1817.82US

dollarsin2020.TheGDPperCapitainIndiaisequivalentto14percentoftheworld's

average

IndiaGDPpercapitaPPP

-TheGrossDomesticProductpercapitainIndia waslastrecordedat7333.51US

dollarsin2021,whenadjustedbypurchasingpowerparity(PPP).TheGDPper

Capita,inIndia,whenadjustedbyPurchasingPowerParityisequivalentto41

percentoftheworld's

average

IndiaFiscalYear GDPGrowth

-TheIndianeconomy expanded8.7%inthe 2021-2022fiscalyear,reboundingfrom

a6.6%contractioninthe2020-2021year

3.FDI

-Apartfrombeingacriticaldriverofeconomic growth,ForeignDirectInvestment

(FDI)hasbeenamajornon-debtfinancialresource fortheeconomic developmentof

India.ForeigncompaniesinvestinIndiatotakeadvantageoftherelativelylower

investmentisbeingmadeinIndia,italsohelpsthecountryachievetechnicalknow-howandgenerateemployment

TheIndianGovernment’sfavourablepolicyregimeandrobust businessenvironment

hasensuredthatforeigncapitalkeepsflowing intothecountry.TheGovernment has

takenmanyinitiativesinrecentyearssuchasrelaxingFDInormsacrosssectorssuch

asdefence,PSUoilrefineries,telecom,powerexchanges,andstockexchanges,

amongothers

AccordingtotheDepartmentforPromotionof IndustryandInternal Trade(DPIIT),

FDIequityinflowinIndiastoodatUS$572.81billionbetweenApril2000-December

2021,indicatingthatthegovernment'seffortstoimproveeaseofdoingbusinessand

relaxingFDI normshaveyielded results

-TotalFDIinflowintoIndiainthethirdquarterofFY22stoodatUS$17.93billion,

whiletheFDI equityinflowfor thesameperiod stoodat US$12.02billion

DatabetweenApril-December2021indicatesthatthecomputersoftwareand

hardwareindustryattractedthehighestFDIequityinflowofUS$10.25billion,

followedbytheautomobilesectoratUS$5.96billion,servicessectoratUS$5.35

billion,tradingsectoratUS$2.99billion,constructionactivitiesatUS$1.59billion,

anddrugsandpharmaceuticalsatUS$1.21billion

-BetweenApril-December2021,Indiarecordedthehighest FDIequityinflowfrom

Singapore(US$11.69billion),followedbytheUS(US$7.52billion),Mauritius

(US$6.58billion),theCaymanIslands(US$2.74billion),theNetherlands(US$2.66

billion),andtheUK(US$ 1.44billion)

Inthesameperiod,KarnatakaregisteredthehighestFDIequityinflowofUS$17.25

billion,followedbyMaharashtra(US$9.69billion),Delhi(US$6.39billion),Tamil

Nadu(US$2.38billion),Gujarat(US$2.06billion),andHaryana(US$2.03billion)

-DuringthethirdquarterofFY22,foreignownedassetsinIndiastoodatUS$926.2

billion,upfromUS$852.4billioninthethirdquarterofFY21

Someof therecentinvestmentsand developmentsinthe FDI spaceareas follows:

-InJanuary2022,GoogleannouncedaninvestmentofUS$1billioninIndian

telecomcompanyBhartiAirtel,whichincludesanequityinvestment ofUS$700

investmentinareas likesmartphoneaccess, networks,and thecloud

-Canada’spensionfundinvestmentboardinvestedRs.1,200crore(US$160.49

million)asananchorinvestorintheIPOofmultipleIndiancompanies-One97

communication(Paytm), Zomato,FSNE-CommerceVentures(Nykaa),and PB

Fintech

-The FDIinIndia’srenewable energysector stoodatUS$ 1.03billion forthefirst

halfofthefinancialyear2021-22

→IndiaisexpectedtoattractFDIworthUS$120-160billionperyearby2025,

according toaCIIandEY report.Intermsofattractiveness,investors ranked India #3;

~80%investorshaveplanstoinvestinIndiainthenext2-3years, while~25%

reportedinvestmentsworthmorethanUS$500million,theEconomicTimesreported

Further,asperaDeloittereportpublishedinSeptember2021,Indiaremainsan

attractivemarketforinternationalinvestorsbothintermsofshort-termandlong-term

prospects.Indiaranked43rdontheInstituteforManagementDevelopment’s(IMD)

annualWorldCompetitivenessIndex2021.AccordingtotheIMD,India's

developmentsingovernmentefficiencyareprimarilyduetorelativelystablepublic

finances(despiteCOVID-19-inducedchallenges),andoptimisticsentimentsamong

Indianbusinessstakeholderswithrespecttothefunding,andsubsidiesofferedbythe

governmenttoprivatefirms

4 STANDARDOFLIVINGININDIA

-ThestandardoflivinginIndiavariesfromstatetostate.By2021,extremepoverty

hasbeencompletelyeliminatedtoaslowas0.8%andIndia isnolongerthecountry

withthelargestpoorpopulation

-Thereisconsiderable incomeinequalityin India,asitisalso hometosome ofthe

richestpeopleintheworld.Average wagesareestimatedtoquadruplebetween 2013

and2030

-ThestandardoflivinginIndiaalsoshowslargegeographicaldisparities.For

example,ontheonehand,mostmetropolitancitiesandothermetropolitanand

suburbanareasboast world-classmedicalfacilities, luxuryhotels,sportsfacilitiesand

recreationalactivities similartothat infirstworld developedcountries,whilepoverty

issignificantin ruralareasofIndia,wheremedicalcaretends tobeverybasicor

unavailablebecauseofashortageofdoctors.Similarly,thelatestmachinerycanbe

usedinmostconstructionprojects,butsomeconstructionworkersworkwithout

mechanizationonsomeprojects,mostlyinruralareas.However,aruralmiddleclass

isnowemerging inIndia, withsomeruralareas increasinglyprosperous

-AccordingtotheIMF'sWorldEconomicOutlookfor2020,India'sPPPadjusted

GDPpercapitaisestimatedatUS$9,027

Poverty

24.3%ofthe populationearned lessthanUS$1 (PPP,aboutUS$0.25 innominalterms)

perdayin2005,downfrom42.1%in1981.41.6%ofthepopulation(about540

millionpeople)are livingbelowthe newinternationalpoverty lineof$1.25 perday

(PPP)perday,downfrom59.8%in1981.India,in2019hadabout2.7%ofthe

populationbelowthe povertyline andisnolonger thelargest populationbelowthe

povertyline

Sinceindependence,India hasallocatedalmost halfofitstotalfive-yearplanto

infrastructuredevelopment.Mostof thetotal fundingisspentonlarge projectsin the

fieldsofirrigation,energy,transportation,communication,andsocialcosts

Infrastructuredevelopmentisentirelyinthehands ofthepublicsectorand is

hamperedbycorruption,bureaucraticinefficiencies,urbanbias,andaninabilityto

investatscale.Kolkataisthefirst cityinIndiatoboasta metrosystem.The

governmenthaspartially openedtheinfrastructuretothe privatesectortoallow

foreigninvestment.Indiaholdssecondplaceintheworldintermsofroad

construction

Asof2018,thereareanestimated18,170,000broadbandlinesinIndia.Thecountry

boaststhesecond-highestnumberofInternet userswith446.75millionpeople,about

35%ofthecountry'spopulation

A2007studybytheAsianDevelopmentBankfoundthatin20cities,theaverage

watersupplytimewasonly4.3hoursperday Nocityhasaconstantsupplyofwater

Thelongestsupplytimeis12hoursperdayinChandigarhandthelowestis0.3hours

perdayinRajkot

AstudybyWaterAidestimatesthatupto157millionIndianslivewithoutadequate

sanitation.Indiaisatthetopbecauseithasthemostsignificantnumberofurban

dwellerslivingin unsanitaryconditions

OneofthekeyproblemsfacingtheIndian economyisthewideningdisparity among

Indianstates andterritoriesinterms ofpercapitaincome,poverty,availabilityof

facilities,etc.infrastructure,andsocio-economicdevelopment.Forexample,the

differenceingrowthratesbetweenforwardandbackwardcountrieswas0.3%(5.2%

&4.9%)between1980–81and1990–91,butincreasedto3.3%(6.3%&3.0%)for

theperiod1990–91to1997–98

5.BUDGETDEFICIT

Inthepast,Indiahadaperiodoffiscaldeficitformorethan40years Finallysurplus

inthe1970s

In2003,theFRBM(FiscalResponsibilityandBudgetManagement)actwasenacted,

settingthegoalofthegovernmenttoreducethefiscaldeficitto3%ofgrossdomestic

product(GDP)andkeepthebudget deficitlowforaperiodof time

butitchangeddrastically afterCOVID-19,thebudgetdeficit increasedsharplyafter

that

ThefinanceministryinFebruaryhadestimatedthedeficitatRs15.91,089croreor

6.9percentofGDP.However,inrealityintheperiodof2021-2022,thebudget

deficitinabsolutetermsisRs15,86,537(provisional),ie6.71%ofGDP,whichis

consideredimproved,mainlyduetohigh taximplementation

AlsoaccordingtotheGeneralControl ofAccounts(CGA)taxrevenuefor the

financialyearwasRs18.2trillion-comparedwitharevisedestimate(RE)ofRs

17.65trillion

TotalspendingwasalsohigheratRs37.94trillioncomparedto-REofRs37.7

trillionpresentedtotheNationalAssemblyon1February2021.Thatmeansrevenue

deficitattheendofthefiscalyearwas 4.37%

2022

Thebudgetdeficitforthefirstmonthof2022-23is4.5%oftheBudgetEstimatefor

thecurrentfiscal (Thedeficitwas 5.2%inthe sameperiodlast year.)

Centralgovernmentbudget deficitat theendofMay stoodat 12.3%(Rs2,03,921)

mainlyduetohigherspending(Deficitwas8.2%inthesameperiodlastyear)

Accordingtothedata,thetotalgovernment incomeattheendofMaywas Rs3.81

lakhcroreor16.7%BEfor2022-23 Earningswerearound18%BEfor2021-22over

thelastfinancialperiod

AsofMay,(net)taxrevenuewasat15.9% ofBE2022-23.(Itwas15.1%of

BE2021-22foraone-yearperiodago.)Real-time,nettaxrevenuestoodatRs3,07,589crore

duringApril-May

Expected22-23

Thegovernmentprojectsthefiscaldeficit forthecurrentfinancialyearat 6.4%of

GDPorRs16.61trillion.asthereissomerisktotheRs16.6trillionfiscaldeficit

targetfor 2022-23,stemming fromrevenueloss forthe Centerdue toexcisetax cuts,

under-budgettransfers.surplusofRBIandadditionalspendingneedsforfood,

fertilizerandLPGsubsidiesduringtheyear

Inaddition,the GovernmentinitsrevisedBudget estimatefor2022-23forecasts a

higherfiscaldeficitof6.9%ofGDPorRs 15.91,089forthefiscalyearending March

6.TRADEDEFICIT

NetFPIrecordedanoutflowof$15.2bnmainlyfromequitymarket

Indiarecordedacurrentaccountdeficit(CAD)of1.2% ofGDPin2021-22 againsta

surplusof0.9%in2020-21asthetradedeficitwidenedto$189.5billionfrom$102.2

billionayear earlier

Thecurrentaccountbalancerecordedadeficitof1.2%ofGDPin2021-22asagainst

asurplusof0.9%in2020-21asthetradedeficitwidenedto$189.5billionfrom

$102.2billiona year ago,”the RBIsaidin arelease

Netinvisiblereceiptswerehigherin2021-22onaccountofanincreaseinnetexports

ofservicesandnetprivatetransfer receiptsthoughnetincomeoutgowashigher than

ayearago

NetForeignDirectInvestment(FDI)inflowsat$38.6billionin2021-22werelower

than$44billionin2020-21.NetForeignPortfolioInvestment(FPI)recordedan

outflowof$16.8billionin2021-22asagainstaninflowof$36.1billionayearearlier

FortheJanuary-March2022quarter,theCADnarrowedonasequentialbasisto

$13.4billion,or1.5%ofGDP,against$22.2billion,or2.6%ofGDP,inthe

December2021quarter

Themerchandisetradedeficitnarrowedto$54.5billionintheMarchquarter

comparedwitha deficitof$60.4 billionin thepreviousquarter Thedeficit inthe

samequarterayear earlier,however,hadstoodat$41.7billion

Asperthedata,netExternalCommercialBorrowingstoIndiarecordedaninflowof

$7.4billionin2021-22comparedwith$0.2billionin2020-21.In2021-22,therewas

anaccretionof$47.5billiontoforeignexchangereservesonaBalanceofPayment

(BoP)basis,theRBIdatashowed

AsperpreliminarydataonIndia’sBoPforthefourthquarter(JanuarytoMarch),

currentaccountdeficit(CAD)decreasedto$13.4billion(1.5%ofGDP)inQ42021-22from$22.2 billion(2.6 %ofGDP) inQ3:2021-22.“The sequentialdecline inCAD

outgoofprimaryincome,”theRBIsaid

Netservicesreceiptsincreased,bothsequentiallyandonayear-on-year(y-o-y)basis,

ontheback ofarise innet earningsfromcomputer andbusinessservices Private

transferreceipts,mainlyrepresentingremittancesbyIndiansemployedoverseas,

increasedto$23.7billion,upby13.4%fromtheirlevelayearearlier

Netoutgofromtheprimaryincome account,largelyreflectingnetincomepayments

onforeigninvestment,decreasedsequentiallyaswellasonay-o-y basis.Inthe

financialaccount,netforeigndirectinvestment(FDI)at$13.8billionwashigherthan

$2.7billioninQ42020-21

Netforeignportfolioinvestmentrecordedanoutflowof$15.2billion–mainlyfrom

theequitymarket.NetECBstoIndiawerelowerat$3.3billioninQ42021-22as

comparedwith$6.1billionayear earlier

Therewasa drawdownof$16 billionintheforeignexchangereserves(on aBoP

basis)asagainstanaccretionof$3.4billioninQ42020-21

7.BANKINGSYSTEM

AspertheReserveBank ofIndia(RBI), India’sbankingsector issufficiently

capitalisedandwell-regulated.Thefinancialandeconomicconditionsinthe

countryarefarsuperiortoanyothercountryintheworld.Credit,marketand

liquidityriskstudies suggestthatIndianbanks aregenerallyresilientand have

withstoodtheglobal downturnwell