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Presented by:1.Bijayananda Sahoo 2.Jibesh Kumar Mohapatra 3.Naresh Kumar Sahoo 4.

Soumya Surajit Biswal


History Of Indian Economic Reform

Statistics And Data Of Indian Economy Foreign Direct Investment Different Types Of FDI Methods For FDI FDI In India Fascinating Data Of Indian Economy Due To FDI Sectors Of FDI Impact Of FDI And Liberalization On Bop Impact Of FDI On Employment And Poverty Retail FDI In India: A Win-win Move

History Of Indian Economic Reform

Indian economy In Colonial era (1773-1947)

Pre Liberalization (After independence 1947-1991) Post Liberalization (1991-till today)

Pre-liberalization period (19471991) Indian economic policy after independence was influenced by the colonial experience, which was seen by Indian leaders as exploitative . Influenced by planned economy of the soviet union. Domestic policy tended towards protectionism. With a strong emphasis on import substitution industrialist, economic interventionism, a large public sector, business regulation, and central planning. Trade and foreign investment policies were relatively liberal.

Post-liberalization period (since 1991)

India asked for a $1.8 billion bailout loan from the

international monetary fund(IMF), which in return demanded reforms. In response, prime minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalization of 1991 . The reforms did away with the license raj, reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of foreign direct investment. Reforming labour laws and reducing agricultural subsidies. By the turn of the 20th century. India had progressed towards a free-market economy. Increased financial liberalization.

The Economy of India is the ninth largest in the world by nominal GDP .
The third largest by purchasing power parity (PPP).

The country is one of the G-20 major economies and a member of BRICS.
In 2011, the country's GDP PPP per capita was $3,703 . According to IMF, 127th in the world, thus making a lower-middle income economy.

Statistics GDP $1.846 trillion (nominal: 9th; 2011) $4.469 trillion (PPP: 3rd; 2011) GDP growth 8.5% (2009-10) GDP per capita $1,527 (nominal: 135th; 2011) $3,703 (PPP: 127th; 2011) GDP by sector Agriculture: 18.1%, industry: 26.3%, services: 55.6% (2011 est.) Inflation(CPI) 6.95% (February 2012) Population below poverty line 37% (2010) (Note:42% live less than $1.25 a day)

Labour force 487.6 million (2011 est.) Labour force by occupation Agriculture: 52%, industry: 14%, services: 34% (2009 est.) Unemployment 9.8% (2011 est.) Average gross salary $1,330 yearly (2010) Main industries Telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals Ease of Doing Business Rank 132nd (2011)

External Exports $298.2 billion (2011 est.) Export goods Petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel Main export partners US 12.6%, UAE 12.2%, China 8.1%, Hong Kong 4.1% (2010) Imports $451 billion (2011 est.) Import goods Crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals Main import partners China 12.4%, UAE 6.5%, Saudi Arabia 5.8%, US 5.7%, Australia 4.5% (2010) FDI stock $19.42 billion (2010-11) Gross external debt $267.1 billion (31 December 2011 est.)

Foreign direct investment

Foreign direct investment (FDI) refers to the net

inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, other longterm capital, and short-term capital as shown the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise.



Inward foreign direct investment Outward foreign direct investment, resulting in a net FDI inflow (positive or negative) Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI. Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country. Whereas Horizontal FDI decrease international trade as the product of them is usually aimed at host country, the two other types generally act as a stimulus for it.


By incorporating a wholly owned subsidiary or company By acquiring shares in an associated enterprise Through a merger or an acquisition of an unrelated

enterprise Participating in an equity joint venture with another investor or enterprise... Foreign direct investment incentives may take the following forms Low corporate tax and individual income tax rates Tax holidays Other types of tax concessions Preferential tariffs Special economic zones EPZ export processing zones

Foreign direct investment in India Starting from a baseline of less than $1 billion in 1990,


a recent UNCTAD survey projected India as the second most important FDI destination (after China) . Mauritius, Singapore, the US and the UK were among the leading sources of FDI. In the first two months of 201011 fiscal, FDI inflow into India was at an all-time high of $7.78 billion up 77% from $4.4 billion during the corresponding period in the previous year. The worlds largest retailer WalMart has termed Indias decision to allow 51% FDI in multi-brand retail as a first important step




Share Of Top Five Nation On FDI Investment

1 2 3 4 5

Mauritius Singapore USA UK Netherland

Inflow in million us $ 50164 11275 8914 6158 4968

Inflow in %
42.00 9.00 7.00 5.00 4.00


India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging

and fishing accounted for 15.7% of the GDP in 2009 10. Employed 52.1% of the total workforce, and despite a steady decline of its share in the GDP, is still the largest economic sector and a significant piece of the overall socio-economic development of India. Steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies since the green revolution in India.

Industry accounts for 28% of the GDP . Employ 14% of the total workforce. In absolute terms, India is 12th in the world in terms of nominal

factory output. The Indian industrial sector underwent significant changes as a result of the economic reforms of 1991. Import restrictions. Foreign competition. Led to privatization of certain public sector industries. Liberalized the FDI regime. Improved infrastructure production of post-liberalization, the Indian private sector was faced with increasing competition. It has since handled the change by squeezing costs, revamping management, and relying on cheap labour and new technology

India is 13th in services output. The services sector provides employment to 23% of the work

force. Growth rate is 7.5% in 19912000, up from 4.5% in 195180. It has the largest share in the GDP I.E 57.3%. Information technology and business process outsourcing are among the fastest growing sectors, having a cumulative growth rate of revenue 33.6% between 199798 and 200203 . Contribute to 25% of the country's total exports in 200708. The growth in the it sector is attributed to increased specialization, and an availability of a large pool of low cost, highly skilled, educated and fluent english-speaking workers. The share of the Indian it industry in the country's gdp increased from 4.8 % in 200506 to 7% in 2008. In 2009, seven Indian firms were listed among the top 15 technology outsourcing companies in the world.

Banking And Finance

The indian money market is classified into. The organized sector, comprising private, public and

foreign owned commercial banks and cooperative banks, together known as scheduled banks, . The unorganized sector, which includes individual or family owned indigenous bankers. Prime minister indira gandhi nationalised 14 banks in 1969, followed by six others in 1980, and made it mandatory for banks to provide 40% of their net credit to priority sectors like agriculture, small-scale industry, retail trade, small business.

Since liberalization, the government has approved significant banking reforms. India's gross domestic saving in 200607 as a percentage of gdp stood at a high 32.7%. The public sector banks hold over 75% of total assets of the banking industry, with the private

and foreign banks holding 18.2% and 6.5% respectively. Other reforms have opened up the banking and insurance sectors to private and foreign players.


Since independence, India's balance of payments on its

current account has been negative Since economic liberalization in the 1990s, precipitated by a balance of payment crisis, India's exports rose consistently, covering 80.3% of its imports in 200203, up from 66.2% in 199091 However, the global economic slump followed by a general deceleration in world trade saw the exports as a percentage of imports drop to 61.4% in 200809. India's reliance on external assistance and concessional debt has decreased since liberalization of the economy.

The debt service ratio decreased from 35.3% in 199091 to 4.4% in 200809.

Under the foreign exchange management act of 1999.India's foreign exchange reserves have steadily risen from $5.8 billion in march 1991 to $283.5 billion in December 2009.
Attracted 178 billion $ through FDI FDI policy 2005 allows 100% FDI in venture capital

Through the liberalized regime of FDI equity inflow into India in 2008-09 is 24.52 billion $
Growth of Indian currency is about 25%


FDI promote growth and poverty reduction and

generate employment in host countries in four ways. (i) MNE employment has a direct and indirect impact on domestic employment: FDI often generates new employment (direct employment is higher in green filed investments) and creates jobs (indirectly) through forward and backward linkages with domestic firms.

(ii) MNE employment boosts wages in host countries

(iii) MNE employment fosters technological transfers: One of the most common and least expensive ways by which foreign technology diffusion. (iv) MNE employment enhances the productivity of the labor force in host country: Several studies have shown that workers in foreign owned enterprises (FOEs) are more productive than workers in domestic owned enterprises.

Retail FDI in India: A win-win move

Permitting FDI in multi brand retail has been one of

the most debated issues over the last few years at the policy level. It has been placed on the back burner by successive governments in response to fears about its impact on small retailers, who are large generators of employment. But gradual penetration is highly appreciated among the think-tank and policy makers. Allow of FDI in Multi brand retail sector under single banner will depict the future repercussion on employment generation and domestic production.

It Helps To Relax The Domestic Constraints It Helps To Overcome The Foreign Exchange

Barrier Thereby Increases Capital Flow It Provides Access To The Superior Technology, superior Managerial Skills & Bigger Markets It Provides Risk Sharing Capital Financing It Furnishes The Funds Needed For The Full Utilization Of The Exiting Production Capacities It Promotes Efficiency & Productivity Through International Competition Of Superior Quality Products


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