hitesh chaudhari for management

•WELCOME

INTRODUCTION15TH AUGEST, 1947 Is a red letter day in the

history of india. India attained independence on this day. After the attainment of independence , india made progress in economic, social cultural

, educational , technological , and political fields and solved many problems. But many problems like poverty , unemployment and

inflation etc… are yet to be solved.Economy means a major framework in which all

the economics activites of a country are explained . Indian economy is a mixed economy

Migration-cobweb

Migration

Stretching of overburdened

systems

Overcrowding Unemployment

Crimes

Poverty

Illiteracy

Communicable diseases

Unhygienic conditions

Slums

Injuries

Mentalillness

StressLife style

modification

Non-Communicable diseases

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Problem in India in all filed• Dowry death• Poverty • Health • Suicide • Domestic violence • Sexism• Rape • Debt bondage • Environmental issues• Women problem• Unemployment • Corruption• Population• Migration• Religious violence

TerrorismNaxalite Maoist insurgencyCaste related violence

• Starvation• Conflict over Kashmir India & Pakistan

– Irrigation – Pride

• Nuclear Weapons – India & Pakistan• Flood control – India & Bangladesh• Humanitarian Aid – India & Bangladesh• Inflation• sickness• Slums• Economic issues• Poverty• Sanitation• Corruption • Overpopulation• Opportunity for youth

PRIVATE SECTOR

PUBLICSECTOR

MIXEDECONOMY

Incidence of Poverty

Interventions - Program,

Technology

Natural Resources

Institutional/ Social Factor

Labour & Capital Flow/Mobility

Spatial Integration of Economic activities

New Lively hood opportunities

ECOLOGICAL AND INCOME POVERTY - DYNAMICS

Databases on relationship to examine

the direction of policies/interventions?

Powerlessness of poor to gain access

or use available natural resources

Role of economic policies and

interventions in altering the relationship

Inequitable access land, Information, market and credit

Overpopulation 1 billion & climbing.

Economic development. Hindu-Muslim tensions. Gender issues dowry killings. Caste bias discrimination against untouchables continues.

The Kashmir dispute and nuclear weapons.

Political assassinations.

Major problems & Issues

in India today

Major problems & Issues

in India today

Daily Life• About 7 out of 10 Indians live in villages and farm for a living.

• Houses belonging to more prosperous families in a village are made of better materials than those of poorer villagers, most of which include only a charpoy, or wooden bed frame with knotted string in place of a mattress.

• For religious and economic reasons, Indians follow a mostly vegetarian diet, and most Indians eat some form of rice every day.

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Four of every ten people in India struggle to live on the equivalent of less than $1.25 /day

The Government of India says that 24% of India’s population is below the poverty line

Poverty is a tremendous problem in South Asia

70% Rural 600,000 villages

Dharavi is the largest ‘slum’ in Asia

Location: Mumbai, India

• Dharavi is described as a “slum of hope”

• Dharavi is described as a “slum of despair”

Factors Affecting Health in Slums• Economic conditions

• Social conditions

• Living environment

• Access and use of public health care services

• Hidden/Unlisted slums

• Rapid mobility

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Why a [grow]ing population?

• United States• Increased Immigration

Rates• Better health care• Higher living standards• Abortion Laws• Unintended Pregnancies

~ 40% births– Teenage Pregnancies

• India• Lack of Migration• Lack of Education• Desire for Male children• Fertility rate declining

– Younger women having children

Taken from: http://www.tashian.com/carl/archives/us-1896.gif Taken from: http://wwp.greenwichmeantime.com/time-zone/asia/india/images/india-flag.jpg

Indians in the USA.

Of the 1.5M Indians living in the USA, 1/5th of them live in the Silicon Valley.

35% of Silicon Valley start-ups are by Indians.

Indian students are the largest in number among foreign students in USA.

Statistics that show:

38% of doctors in the USA,12% of scientists in the

USA,36% of NASA scientists,34% of Microsoft

employees,28% of IBM employees,17% of INTEL scientists,13% of XEROX employees,

… are Indians.

 1.  India 44% 2.  China 9% 3.  Britain 5% 4.  Philippines 3% 5.  Canada 3% 6.  Taiwan 2% 7.  Japan 2% 8.  Germany 2% 9.  Pakistan 2% 10. France 2%

US H1-B Visaapplicants country of origin

Reasons for migration to cities:

•Higher salaries

•Business opportunities

•Anonymity and individualism

•Rise in caste status

•Agricultural modernization (reduces rural incomes and jobs)

•Population pressures

•Refugees of drought or floodingIncreased family size-limited agricultural property

-Land use Pattern -Irrigation facilities

Better income prospects Better educational facilitiesBetter “Life style”Basic amenities – health, transport,water, electricity.Victims of natural/manmade calamities-Refugees

[Water] and [Forest] Factor

• Freshwater Availability• Misconception of Oceans

as freshwater• Human Bodies – 60% water• Sewage deposited in water• Health problems• Per Capita Water Use

• Forests Area• Urbanization – more

paved areas• Less parks and nature• Lack of Oxygen

production• Increase Quantity of

Carbon Dioxide (Greenhouse Gases)• Global Warming

Taken from: http://static.flickr.com/33/38490644_41f946c4f2_b.jpg Taken from: http://pantransit.reptiles.org/images/1996-07-28/washington-rain-forest.png

Clothing requirement &The right to education

• Calculating the basic need of clothing is difficult, as requirements vary considerably according to region, gender, age

and culture.• We calculated the minimum amount of cloth required and its cost for

persons by age and gender living in the plains.• The weighted average of the total costs came to Rs 207 per annum on

clothing.

• About 71.16% of the people in the 15-19 year age group had not completed a secondary education(1999-00)*.

• It should be the minimum responsibility of the State to ensure that each young citizen has access to cost-free schooling with adequate infrastructure and qualified teachers.

• Moreover, such an institution should lie within a 2 km radius of each person’s home so as to ensure not more than 30 minutes are spent walking to school.

METHODS TO MEASURE

WPI

CPI

GNP DEFLATOR

MEASURING

1.Change in price indexa)Consumer Price Index(CPI)

b) Wholesale Price: A chief measure of price inflation is the inflation rate. It is measured by:

Index (WPI)2. Gross National Product Deflator

(GNP Deflator).

POwer

Housing

Irrigation

EDUCATION:

Transport

Poverty due to Population

• Rural population• Urban population

Antipoverty Programmes

• National Rural Employment

• Rural Labour Employment Generation Programme

• Jawahr Rozgar Yojana

Measures to promote Employment

• Rural works programme• Marginal farmers and

Agricultural Labourers

Ten problem

• 1. Inflation• 2.Poor educational standards• 3. Poor Infrastructure• 4.Balance of Payments deterioration• 5 . High levels of private debt • 6.Inequality has risen rather than decreased• 7. Large Budget Deficit • 8.Rigid labour Laws • 9.Inefficient agriculture • 10. Slowdown in growth

1. Inflation• Fuelled by rising wages, property prices and food prices inflation

in India is an increasing problem. Inflation is currently between 8-10%. This inflation has been a problem despite periods of economic slowdown. For example in late 2013, Indian inflation reached 11%, despite growth falling to 4.8%. This suggests that inflation is not just due to excess demand, but is also related to cost push inflationary factors. For example, supply constraints in agriculture have caused rising food prices. This causes inflation and is also a major factor reducing living standards of the poor who are sensitive to food prices. The Central Bank of India have made reducing inflation a top priority and have been willing to raise interest rates, but cost push inflation is more difficult to solve and it may cause a fall in growth as they try to reduce inflation.

2.Poor educational standards

• Although India has benefited from a high % of English speakers. (important for call centre industry) there is still high levels of illiteracy amongst the population. It is worse in rural areas and amongst women. Over 50% of Indian women are illiterate. This limits economic development and a more skilled workforce.

“IIT = Harvard + MIT + Princeton”“IIT = Harvard + MIT + Princeton” , says CBS ‘60 Minutes’.

CBS' highly-regarded ‘60 Minutes’, the most widely watched news programme in the US, told its audience of more than 10 Million viewers that “IIT may be the most important university you've never heard

of."

"The United States imports oil from Saudi Arabia, cars from Japan, TVs from Korea and Whiskey from Scotland. So what do we import from India? We import people, really smart people," co-host Leslie Stahl

began while introducing the segment on IIT.

“…the smartest, the most successful, most influential Indians who've migrated to the US seem to share a common credential: They are

graduates of the IIT.”“…in science and technology, IIT undergraduates leave their American counterparts in the dust.”

“Think about that for a minute: A kid from India using an Ivy League university as a safety school. That's how smart these guys are.”

There are “cases where students who couldn't get into computer science at IIT, they have gotten scholarships at MIT, at Princeton, at Caltech.”

“Brain Drain”• Young talent leaving India seems to be slowing

down.• Average starting salary for an IT engineer in India

today is approximately $10-12,000.• Many are graduates of the Indian Institute of

Technology– Several campuses located throughout the

country• This salary provides a comfortable lifestyle in

modern India for the privileged few.

3. Poor Infrastructure

• Many Indians lack basic amenities lack access to running water. Indian public services are creaking under the strain of bureaucracy and inefficiency. Over 40% of Indian fruit rots before it reaches the market; this is one example of the supply constraints and inefficiency’s facing the Indian economy.

4.Balance of Payments deterioration.

• Although India has built up large amounts of foreign currency reserves the high rates of economic growth have been at the cost of a persistent current account deficit. In late 2012, the current account reached a peak of 6% of GDP. Since then there has been an improvement in the current account. But, the Indian economy has seen imports growth faster than exports. This means India needs to attract capital flows to finance the deficit. Also, the large deficit caused the depreciation in the Rupee between 2012 and 2014. Whilst the deficit remains, there is always the fear of a further devaluation in the Rupee. There is a need to rebalance the economy and improve competitiveness of exports.

5. High levels of private debt

• Buoyed by a property boom the amount of lending in India has grown by 30% in the past year. However there are concerns about the risk of such loans. If they are dependent on rising property prices it could be problematic. Furthermore if inflation increases further it may force the RBI to increase interest rates. If interest rates rise substantially it will leave those indebted facing rising interest payments and potentially reducing consumer spending in the future

6.Inequality has risen rather than decreased.

• It is hoped that economic growth would help drag the Indian poor above the poverty line. However so far economic growth has been highly uneven benefiting the skilled and wealthy disproportionately. Many of India’s rural poor are yet to receive any tangible benefit from the India’s economic growth. More than 78 million homes do not have electricity. 33% (268million) of the population live on less than $1 per day. Furthermore with the spread of television in Indian villages the poor are increasingly aware of the disparity between rich and poor. (3)

7. Large Budget Deficit

• India has one of the largest budget deficits in the developing world. Excluding subsidies it amounts to nearly 8% of GDP. Although it is fallen a little in the past year. It still allows little scope for increasing investment in public services like health and education.

8. Rigid labour Laws

• As an example Firms employing more than 100 people cannot fire workers without government permission. The effect of this is to discourage firms from expanding to over 100 people. It also discourages foreign investment. Trades Unions have an important political power base and governments often shy away from tackling potentially politically sensitive labour laws.

9.Inefficient agriculture

• Agriculture produces 17.4% of economic output but, over 51% of the work force are employed in agriculture. This is the most inefficient sector of the economy and reform has proved slow.

SUSTAINABLE AGRICULTURE IN INDIA – A HOPE OR HYPE ???

1990s 2000Poor 320 260% Population 36 19

0 20 40 60

South

West

East

North

Central

1999-001983-84

% of population below poverty line

Poverty in India

Millions of poor, malnourished and food insecure population cannot be the foot soldiers fighting the cause of sustainable agriculture

(in Million)

Strategy: • Combating poverty• Empowering people• Using core competence in science

& technology – including space applications

• Setting ecological integrity

Who will feed India ? – small and marginal farmers

(FAO/RAP- 2001)

Poverty- geographical profile

10. Slowdown in growth

• 2013/14 has seen a slowdown in the rate of economic growth to 4-5%. Real GDP per capita growth is even lower. This is a cause for concern as India needs a high growth rate to see rising living standards, lower unemployment and encouraging investment. India has fallen behind China, which is a comparable developing economy

Definition of Inflation

• Inflation can be defined as the rise in overall price level in the economy, i.e. rise in prices of all the goods and services.

• When prices rise, it erodes the purchasing power of money.

• Inflation is a situation in which there is a persistent and appreciable increase in general level of prices.

Causes of Inflation

1. Cost push inflation.

2. Rising imported raw materials costs.

3. Rising labor costs.

4. Higher indirect taxes imposed by the government.

5. Demand pull inflation.

Effect of Inflation

Rupee Depreciation Reasons and Effects

REASONS FOR RUPEE DEPRECIATION

WITHDRAWAL OF INVESTMENTSRecession in developed economies like US made big institutions to pull out their money from India

• Institutional investors investing in India are directly impacted by the global market uncertainty. In 2008 India had a net outflow of $14billion of FIIs and INR drastically. A volatile currency is never good for a foreign investor as it increases the transaction risk. Though RBI has intervened through open market operations to arrest the downfall of INR (managed float) but the reserves of $290billion don’t provide enough room to make a significant impact.

EUROZONE CRISIS

Default concerns of European nations has resulted in loss of confidence in the Euro and appreciation of dollar

• Owing to uncertainty prevailing in Europe and slump in international market, investors prefer to stay away from risky investments. This has significantly affected the portfolio investment in India. Credit rating agency’s downgrade of India to BBB- has not helped the cause. Any outward flow of currency or decrease in investment will put a downward pressure on exchange rate.

TRADE DEFICIT• Trade deficit has widened by 40,000 crores in

the last quarter. This has resulted in increased imports and spike in dollar demand

HIGHER IMPORT BILLS

Expecting current account deficit to settle at 3.0-3.1% of GDP by March 2012

IMPACT OF RUPEE DEPRECIATION

• Economic recovery will get delayed as...• The Reserve Bank of India will not be able to cut

rates for fear of causing more outflow..• Weaker rupee will make capital imports expensive,

forcing companies to delay investments..• Impact on inflation and higher fuel prices will

affect consumer sentiment..• Foreign investors will postpone investments till

things stabilise

% Arable Land

Pop. Density/km

GDP PPP % Literate Life Exp. Poverty Rate

India 49% 392 $2,800 61% 70 yrs 25%

Pakistan 24% 199 $2,600 50% 65 yrs 24%

Nepal 16% 226 $1,700 49% 65 yrs 31%

Bangladesh 55% 1165 $1,500 43% 60 yrs 45%

Comparative Statistics for Selected Countries in South Asia

[Environ]mental Impacts

• Pollution – increase in cars and emission of greenhouse gases into atmosphere

• Deforestation – increase in paved areas to house increasing population

• Freshwater Availability – increase in waste production and contamination of water

• Natural Resources – increase burning of fossil fuels, excessive use of coal

• Global Warming – overall increase in temperature and chances of natural disasters

• Habitat Loss – change in ecosystems affecting trophic levels

However, we also know that…• 80% of India does not have access to public health facilities. (Dr.

Anbumani Ramadoss, Minister for Health and Family Welfare)

• 47% of Indian children under the age of 5 years are undernourished. (Human Development Report 2005, UNDP)

• 71% of the children in 15-19 age group have not completed a secondary education, their fundamental right. (National Sample Survey on Education, 1999-00, NSSO)

• 57% of India does not have access to electricity. (World Development Indicators 2005, World Bank)

• 70% of India does not have access to a suitable toilet. (National Sample Survey on Housing, 2004, NSSO)

• 49% of India does not have proper shelter. (National Sample Survey on Housing, 2004, NSSO)

• 38% of India does not have access to a nearby water source. (National Family Health Survey, 1998-99, IIPS)

CONCLUSION

Hence, poverty, unemployment and inflation are the three major issues facing Indian economy. The main

cause of all these issues are population explosion. In order to

remove these problems we have to take care of educated society .