IFFCO-TOKIO GENERAL INSURANCE CO. LTD
UNDER THE GUIDANCE OF:
MR. RAJESH KANNAN
Asst. Vice President
Iffco-Tokio General Insurance Co. ltd.
BATCH: PGP/FW, 2005-2007
TABLE OF CONTENTS
➢ RESEARCH METHODOLOGY
➢ LITERATURE REVIEW
➢ DATA ANALYSIS
PREVAILING STATE OF INDIAN ECONOMY
A text can be well understood only within a context. Similarly, one sector of the economy, be it insurance sector or any other, can be understood only within the context of the prevailing economic conditions of a State. The World Bank, in its World Development Report 2005, placed India as the fourth largest economy in terms of purchasing power parity. India has become the fourth largest economy in the world after the US, China and Japan, in that order. As a result of liberalization of the economy, private investment, as share of GDP, has grown from less than 9.0 per cent in 1981 to more than 15 per cent in 2000. Growth increased from an average of 2.9 per cent a year in the 1970s to 5.8 per cent in the 1980s and 6.7 per cent in mid 1990s. The main driver of Indian economy's strong performance during 2003-04 was the resurgence of agricultural production with the simultaneous and well distributed firming up of activity in industry and services. Exports contributed significantly to higher growth in a wide range of manufacturing industries, such as machinery, transport equipment, automobiles, iron and steel, chemicals and chemical products, attesting to the rising international competitiveness of Indian industry. A robust expansion of activity in trade, hotels, transport and communication paved the way for strong growth of the services sector, well above the average for the period 1993-2003. Significant gains were posted in the external sector, indicative of a growing resilience of the economy to cushion domestic activity against external and internal shocks. The run of current account surpluses that began in 2001-02 was extended into 2003-04, a steady rise from 0.2 per cent of GDP to 1.4 per cent. The foreign exchange reserves rose to US $ 113 billion by end-March 2004 and further to US$ 119.3 billion as on August 13, 2004. India's real GDP grew at 8.2 per cent during 2003-04. In the post-Independence history, India's real GDP grew by over 8.0 per cent only on three occasions [i.e., 1967-68 (8.1 per cent), 1975-76 (9.0 per cent) and 1988-89 (10.5 per cent). Growth prospects during the year were aided by a generally stable inflation situation. With orderly and easy conditions in the financial markets engendered by domestic and international sources of liquidity, interest rates continued to rule at low levels.
Real GDP originating in 'agriculture and allied activities' is estimated to have recorded a growth of 9.1 per cent in 2003- 04 - the highest in seven years. Notwithstanding the progress made since the 1980s, Indian agriculture continues to depend significantly on the monsoon. Real GDP growth originating in industry gathered strength in every successive quarter of 2003-04. Industrial production steadily accelerated to reach a peak of 8.3 per cent in February 2004. The rise in the index of industrial production (IIP) in 2003-04 was the highest after 1995-96. The services sector continued to be the mainstay of the expansion during 2003-04, contributing 57.6 per cent to real GDP growth. Leading the upsurge were trade, hotels, transport and communication. This was in consonance with the improved performance of the commodity producing sectors; a record increase in tourist inflows, lower tariffs in the cellular phone segment increased penetration. The services sector has emerged as the engine of growth of the Indian economy. The global market for the new drivers of service sector growth Information Technology Enabled...