India - Macroeconomic Indicators (2006-07 to Present)

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INDIA – MACROECONOMIC INDICATORS

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Macroeconomics Project

INDIA - Macroeconomic Indicators (2006-07 to present)

Course Instructor Prof. Leena Mary Eapen

Project Team PGP/15/13 Devanand Prasad PGP/15/36 Priyanka ruttala PGP/15/49 Shashikant Bapatla PGP/15/55 Sri K Srinivas PGP/15/61 Vijeta Shrivastava FPM/05/05 Janardan K Yadav FPM/05/04 Chacko Jacob

INDIA – MACROECONOMIC INDICATORS

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EXECUTIVE SUMMARY -------------------------------------------------------------------------------------------------------------------An Economic Indicator (or business indicator) is a statistic about the economy. They allow analysis of economic performance and predictions of future performance. In this paper, we evaluate the Macro Economic indicators from 2006 to the present and comment on the trends observed. The indicators we have used for the study of the Indian economy are GDP, Per Capita Income, Inflation, Savings, Investment, Balance of payments and Fiscal deficit. Even though each indicator tells us only the partial truths, as in there are inherent shortcomings in using each criterion, we still try to evaluate the economic position of the company using the same. A few of the shortcomings of each indicator is also mentioned in the paper.

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1. GROSS DOMESTIC PRODUCT -----------------------------------------------------------------------------------------------------------------GDP at factor cost and GNP – trend analysis & sectorial analysis Despite several problems faced by the Indian economy many economists point to potential strengths of the Indian economy which could enable it to continue to benefit from high levels of economic growth in the future.

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Demographics of India are favourable India still has a positive birth rate meaning that the size of the workforce will continue to grow for the foreseeable future. It also enables increased productivity.

2. There is much scope for increases in efficiency the infrastructure of India is so bad in places that even moderate improvements could lead to significant improvements in the productive capacity of the economy. 3. India is well placed to benefit from globalisation and outsourcing India has one of the largest English speaking populations in the world. For labour intensive industries like call centres India is an obvious target for outsourcing. This is an economic development likely to continue in the future.

Indian economy was growing at a promising rate above 9 and approaching close to 10 during 2006, 2007 before the global recession happened in 2008. At present global economy seems to be expanding after 2008 recession. Indian Economy, felt the blow of the global economic recession and the real economic growth have seen a sharp fall followed by the lower exports, capital outflow and corporate restructuring. It is expected that the global economies continue to stay strong in the short-term as the effect of stimulus is still strong and the tax cuts are working. Due to strong position of liquidity in the market, large corporations now have access to capital in corporate credit markets.

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Table 1: India’s economic outlook in terms of GDP and GNP, 2006-2011 India’s Economic Outlook 2006-2007 GDP GNP 9.6 9.8 2007-08 9.3 9.8 2008-09 6.8 6.6 2009-10 8.0 7.9 2010-11 8.6 8.5

Source: Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation

Year 2009 started on the gloomy note, however the trend reversed from the first quarter of the year, financial markets posted strong gains fuelled by huge amount of capital inflows which was set-aside during the economic downturn in search of a higher yield. Number of companies jumped into the equity markets to raise funds to de-leverage them, corporate risk have declined. Before the beginning of the economic recession, several companies betted on the better economic future and blindly raised funds largely...
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