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CLASS ASSIGNMENT
ON
”AUTOPISTA CENTRAL, S.A.
THE VALUATION OF A TOLL ROAD PROJECT IN CHILE”

UNDER THE GUIDANCE OF: SUBMITTED BY: GROUP 2

PROF. A. NATESHA PRASAD SUDHIR KUMAR (ROLL NO 67) RISHABH BATRA (ROLL-NO-58)
IMRAN QASIM (ROLL-NO-33)
MUKUL MALHOTRA (ROLL-NO-42)
DEEPAK CHAUHAN (ROLL-NO-22)

EPGDIB

SESSION: 2011 - 2013

INDIAN INSTITUTE OF FOREIGN TRADE (IIFT), NEW DELHI

TABLE OF CONTENTS
1.INTRODUCTION:4
2.EVOLUTION OF INDIAN FDI:5
3.INDIAN ECONOMY:CURRENT STATUS AND FUTURE PROSPECTS:6
4.FOREIGN DIRECT INVESTMENT IN INDIA SINCE 1991:7
5.FOREIGN DIRECT INVESTMENT BY AN INDIAN COMPANY:8
5.1AUTOMATIC ROUTE8
5.2GOVERNMENT ROUTE9
6SECTORAL FDI FLOW:9
6.1CHANGING DYNAMICS OF INVESTMENT:9
7CONCLUSIONS:10
8REASONS TO INVEST IN INDIA:12
9CHALLENGES FOR LOCAL PLAYERS AND FOREIGN COMPANIES12
LOOKING TO ENTER THE MARKET:12
10PROJECTED SPENDING FROM FY07-FY12 IN SELECTED INFRASTRUCTURE SEGMENTS:13 11STRUCTURAL CHANGES IN INDIA’S FOREIGN TRADE:15
11.1HISTORICAL BACKDROP:15
11.2FOREIGN TRADE IN 2ND AND 3RD PLAN:16
12INDIA IN TWIN DEFICIT CLUB – IMPLICATIONS AND ISSUES:25 13TWIN DEFICITS – BASICS25
1426
15FISCAL/BUDGET DEFICIT: FISCAL DEFICIT MEANS GOVERNMENT EXPENDITURE IS MORE THAN ITS REVENUES. THE GOVERNMENT HAS TO BORROW TO MEET ITS EXCESSIVE EXPENDITURE LEADING TO GOVERNMENT ABSORBING HIGHER PORTION OF DOMESTIC SAVINGS AND HIGHER INTEREST RATES. THIS IN TURN LEADS TO CROWDING OUT OF PRIVATE SECTOR INVESTMENT IN THE ECONOMY. HIGHER INTEREST RATES, IN TURN LOWERS THE PRIVATE SECTOR INVESTMENT AND CONSUMPTION LEVELS. IN MANY ECONOMIC HISTORY CASES, WE HAVE SEEN GOVERNMENTS RESORTING TO PRINTING PRESS TO MANAGE THEIR DEFICITS LEADING TO HYPERINFLATION AS SEEN IN CASES OF GERMANY, HUNGARY AND ZIMBABWE.26 16CURRENT ACCOUNT DEFICIT:26

1726
18TWIN DEFICITS IN INDIA - TRENDS AND 1991 CRISIS26
19TWIN DEFICITS- CURRENT DEBATE:28
2029
21SUMMING UP:29
22A CONDITIONAL PROJECTION AT THE 2025 HORIZON:30
23KEY FEATURES OF BUDGET 2012-2013 FOR INVESTMENT :32
2433
25SUMMARY OF POLICY RECOMMENDATIONS:33
26REFERENCES34

1.INTRODUCTION:

India is widely recognized as an emerging global economic power. Indian economy recorded rate of economic growth 8.4 per cent in the current fiscal year 2005-06. This is evidence enough for an economy to be called as high performing economy. The sustained high rate of economic growth in the first half of the first decade of the 21st century has allowed India to join the club of high growth performing economies of East Asia and China. Indian policy makers have been encouraged to pursue more vigorously the ongoing reform program because of the fact that it is their firm belief that high growth is the result of liberal economic policy. Therefore, Indian policy makers are preparing through their painstaking endeavors to achieve double digit rate of growth in the coming years.

Foreign direct investment has been seen as a dominant determinant to achieve high rate of economic growth because it brings in scarce capital resource, raise technological capability and increase efficiency through enhancing domestic competition. Structure of the Indian economy is such that it is highly rural oriented and large section of population is still very poor and lacking essential capabilities to participate in the modern process of economic growth. There is growing evidence of marginalization of the large section of the rural population and increasing unemployment in the rural areas.

The Indian economy is booming, with rates of Gross Domestic Product (GDP) growth exceeding 8% every year since 2003/04. This ongoing growth is due to rapidly developing services and manufacturing sectors, increasing consumer demand (largely driven by increased spending by India’s middle class) and government commitments to rejuvenate the...
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