Joseph Anbarasu, Visiting Professor, Department of Finance, Banking & Insurance,

Appalachian State University

Indian Economy in
2009
Objectives

 To make a general account of

national statistics
 To identify the effects of financial
crisis on Indian economy
 To understand the importance of
human resource as an edge over
other factors
 To evaluate the present scenario
INDIA BY THE NUMBERS
2008 [January 2009]
 Population: 1.140.3
billion
 Yearly increase: 17
million
 Median age: 25.1
years
 Average life
expectancy: 68.6
years
 Average fertility
rate: 2.7 children per
woman
 Literacy rate: 61 per
cent
 Population in rural
INDIA BY THE NUMBERS
2008 [January 2009]
 Population living on
less than $1 a day:
300 million
 Internet users: 80
million
 Mobile phone
subscribers: 200
million
 Telephone landlines:
38.76 million
 GDP: $2.966 trillion US
 Unemployment rate:
7.2 per cent
 Inflation: 7.2 per cent
(around 4%)
 Exports: $155 billion
Impact of Crisis on Indian
Economy - bad
 Economic growth at
7.1 per cent (2%
down). They say it is
“Still higher”.
 Country is feeling
some pain of
financial crisis
 Tourism, textiles and
the crucial
information
technology sectors
are all suffering as
demand from
western countries
dries up.
Impact of Crisis on Indian
Economy - Good
 The country's banks seem
stable compared to their
counterparts in richer
countries.
 Bollywood is thriving as
the stuff of dreams
continues to sell even in
hard times.
 That people in India love to
save money
 Most Indians typically
spend their entire lives
saving for a house even if
it takes them 20 years to
do that. Seldom do they
take loans [just] to finance
their lifestyle.
 That domestic demand
doesn't slump
Impact of Crisis on Indian
Economy - Good
 "“A lot of what India
produces is for
domestic consumption
given the large home-
based market. So it
kind of hedges the
slow down.”- Murtaza
Haider, Ryerson
University
 Indians use their
savings in troubled
times as a kind of
informal social
safety net.
 It fuels consumer
demand and can ease
Impact of Crisis on Indian
Economy - Ugly
 The current account deficit
is widening.
 Foreign exchange reserves
are depleting.
 The rupee is depreciating.
 Huge outflow of foreign
institutional investment
from the equity market.
 In 2007-08, net FII inflows
into India amounted to
$20.3 billion. As compared
with this, they pulled out
$11.1 billion during the
first nine-and-a-half
months of calendar year
2008, of which $8.3 billion
occurred over the first six-
and-a-half months of
financial year 2008-09
Indian Economy – Ugly
side
 Rural poverty has been
starkly highlighted in
recent years by a horrible
wave of suicides by
indebted farmers (16,632)
in 2007.
 India's political leadership
and officials are highly
corruptive and selfish,
excepting few economists
turned politicians.
 It can be said that India
lives in the modern world
with 14th-century
infrastructure.
 India desperately has
name-sake roads, dungeon
airports, and stinking
seaports, even sanitation
Some Findings – For your
introspection
 There are 600 million children in
China and India whose future
buying power will grow at least as
fast as their rapidly improving
educations.
 As the BRICs accumulate wealth,
they will want to diversify their
holdings globally. America stands
to benefit as richly from that
diversification as it did from
European investment in the 19th
century.
 China and India combined to
produce nearly half the world's
economic output in 1820
compared to just 1.8% for the U.S.
 It seems that extrapolation is
possible with this chart

MICHAEL MILKEN in Wall Street Journal

Some Findings – For your
introspection

 Goldman Sachs did some extrapolation and came out

with some results “the economic leaders will be in the
future - notice China as #1 and India as #3 by 2040”.
 Michael's graph estimated the trend that from 1973 to
2001 the US share was diminishing as India and China
were growing rapidly.
Some Findings – For your
introspection

 India and China have over us in terms  of college

graduates in science and math is overwhelming.
Michael's graph estimated the trend that from 1973 to
2001 the US share was diminishing as India and China
were growing rapidly.
 Not every one of those graduates according to the
McKinsey Global Institute is up to par with the standards
that we have in the U.S. (10% in China and 25% in India)
Some findings - Human
Development Index
The Human Development Report
for 2007-08 has been
released by the UNDP and
there are few surprises.
 # India’s human development
index (HDI) of 0.619 puts it
just below Equatorial Guinea
(0.642) and Solomon Islands
(0.602).
 # India’s life expectancy of
63.7 years is sandwiched
between Comoros (64.1) and
Mauritania (63.2), while
Malawi and Rwanda have
higher adult literacy than
India.
 India was ranked 126 by the
HDR 2006, a rung higher than
the previous year’s 127.
 This year, it continues to be
dubbed a country at medium
level of human development.
Some findings - The human
development index gives a more
complete picture than income
Where are we?
 The human development
index trends tell an
important story in that
aspect.
 The mid-1970s almost all
regions have been
progressively increasing
their HDI score .
 East Asia and South Asia
have accelerated progress
since 1990.
 Central and Eastern
Europe and the
Commonwealth of
Independent States (CIS),
following a catastrophic
decline in the first half of
the 1990s, has also
recovered to the level
My own Perception based on some facts

Thank You