...Eurozone crisis: A Brief Assessment In his recent statement before leaving the seventh summit of the G-20, Prime Minister Manmohan Singh expressed his worries over the gloomy Eurozone outlook and the way it could further dampen global markets and adversely impact India’s economic growth. The Eurozone jitters have quite recently shown their impact on the country’s currency and caused it to downgrade and touch the lowest level of Rs.56.23 against the $ as on May 30, 2012. The situation in Europe is of particular concern as it accounts for a significant share of the global economy and is also India’s major trade and investment partner. Clearly, the situation in Europe needs major policy attention not just for Europe but for all major global economies, be it the emerging nations or the major developed economies. Eurozone Sovereign Debt Crisis: Background The Eurozone crisis is a term used to describe the soaring debt levels of five of the major Eurozone nations and their inability to pay off a part or whole of this debt that they have accumulated over the recent decades. These five nations including Greece, Portugal, Ireland , Italy and Spain have failed to generate enough growth for their economies to retain the bondholder’s confidence in their ability to hold the guarantee that they promised to deliver. The crisis that blew up has far reaching consequences extending beyond the national boundaries of these five nations painting a gloomy picture for all the major global economies...
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...INTRODUCTION ―The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States.‖ - Article 6, Treaty on European Union The European Union is not a federation like the United States. Nor is it simply an organization for cooperation between governments, like the United Nations. Neither is it a State intended to replace existing states, but it is much more than any other international organization. The EU is, in fact, unique. Never before have countries voluntarily agreed to set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at a higher, in this case European, level. All EU decisions and procedures are based on the treaties agreed to by all EU countries, under which sovereignty is shared in specified areas. The result is a union of 27 Member States covering 1.6 million square miles with roughly half a billion people producing almost a third of the world‘s gross national product and speaking more than 23 1 languages, bound together by a desire to promote peace, democracy, prosperity, stability, and the rule of law. The EU embraces the fundamental values shared by its Member States across a multitude of cultures, languages, and traditions. The Member States agree that democracy is the best form of government. They believe in societies that encourage...
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...2011 is far more open to the external sector than it was in 2006 07. India's total trade in goods (exports plus imports) as a percentage of GDP increased from 32.9% in 2006 07 to 39.7% in 2008 09, though it came down to 33.7% the next year as a fallout of the global economic crisis (see Table 3). This increased openness has enhanced productivity and competitiveness, as reflected in India's export performance in recent years. Table 3 Merchandise trade: exports, imports, trade balance, and trade openness (US$ billion, unless otherwise specified) Year Exports Imports Trade balance Trade openness Exports as % of GDP % growth Imports as % of GDP % growth Trade balance as % of GDP Trade as a % of GDP 2004 05 83.5 11.6 30.8 111.5 15.5 42.7 ( ) 28.0 3.9 27.1 2005 06 103.1 12.4 23.4 149.2 17.9 33.8 ( ) 46.1 5.5 30.2 2006 07 126.4 13.3 22.6 185.7 19.6 24.5 ( ) 59.3 6.3 32.9 2007 08 163.1 13.1 29.0 251.6 20.3 35.5 ( ) 88.5 7.2 33.4 2008 09 185.3 15.1 13.6 303.7 24.6 20.7 ( ) 118.4 9.5 39.7 2009 10 178.8 12.9 3.5 288.4 20.8 5.0 ( ) 109.6 7.9 33.7 2010 11 245.9 14.2 37.5 350.7 20.3 21.6 ( ) 104.8 6.1 34.5 Source: India's Trade at a Glance, Department of Commerce, May 2011. (i) Merchandise exports 12. The growth of India's exports has been robust at over 20% since 2002 03. The global recession only slightly moderated this growth, to 13.6% in 2008 09. The compound annual growth rate (CAGR) of India's merchandise exports during the five year period 2004 05 to 2008 09 was...
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...3 Measures for Promoting Exports in the Short and Medium Terms Mainstream India has emerged victorious in the recent recession, which started in the US and engulfed the whole world in a short span of time. India could be able to secure respectable rates of growth even post-crisis years (except last two years 2012-13 and 2013-14), which were the second highest in world after China. The recent revision has improved the GDP growth rates of the last three years as well, though it raises the suspicion about its accuracy owing to opposite evidences at other fronts. This was mainly because of the domestic-led demand of the Indian economy and stimulus measures initiated by the government at the fiscal and monetary policy levels. However, the exports of India suffered a great deal as a result of the sagging demand in the world economy in general and its main trading partners’ economies in particular. During 2015-16, India's exports of goods shrank by nearly a quarter in September from a year ago, falling for a 10th straight month and threatening Prime Minister Narendra Modi's goal of boosting economic growth through manufacturing. "We see no signs of revival in exports in the near future," said Ajay Sahai, director general of the Federation of Indian Export Organisations. "We will be lucky if exports could even touch $265 billion to $270 billion for the whole year." This is in-spite of the slew of measures to boost up the exports. The last measure to promote the exports...
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...1. Indian currency (INR) has depreciated close to 22% in the last 1 year. In the article we will try to study the concerns of a country facing depreciating currency, the factors that led to this depreciation and the measures government can take to stabilize the situation. Most importantly we will see if global economic uncertainty rides over all the other domestic factors to determine strength of a currency especially in developing economies. Why don’t we need a depreciating INR? The persistent decline in rupee is a cause of concern. Depreciation leads to imports becoming costlier which is a worry for India as it meets most of its oil demand via imports. Apart from oil, prices of other imported commodities like metals, gold etc will also rise pushing overall inflation higher. Even if prices of global oil and commodities decline, the Indian consumers might not benefit as depreciation will negate the impact. The depreciating rupee will add further pressure on the overall domestic inflation and since India is structurally an import intensive country, as reflected in the high and persistent current account deficits month after month, the domestic costs will rise on account of rupee depreciation. Exchange rate risk also drives away foreign investors which in turn depreciates the local currency. Indian Rupee is currently caught in this vicious cycle; it will have to find a stable level to regain investors’ confidence. The depreciating rupee has serious effects on the external debt...
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...Government will continue to pursue a sound policy framework encompassing encouragement of entrepreneurship, development of indigenous technology through investment in research and development, bringing in new technology, dismantling of the regulatory system, development of the capital markets and increased competitiveness for the benefit of common man". It further added that "the spread of industrialization to backward areas of the country will be actively promoted through appropriate incentives, institutions and infrastructure investments”. WHY THE POST-1990 REFORMS? It is well known that from 1951 to 1991, Indian policy-makers stuck to a path of centralized economic planning accompanied by extensive regulatory controls over the economy. The strategy was based on an ‘inward-looking import substitution’ model of development. This was evident from the design of the country’s Second Five-Year Plan (1956-61), which had been heavily influenced by the Soviet model of development. Several official and expert reviews undertaken by the government recommended incremental liberalization of the economy in different areas, but these did not address the fundamental issues facing the economy. India’s economy went through several episodes of economic liberalization in the 1970s and the 1980s under Prime Minsters Indira Gandhi and, later, Rajiv Gandhi. However, these attempts at economic liberalization were half- hearted, self-contradictory, and often self-reversing in parts. In contrast, the economic...
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...Trade Policy Reforms in India Geethanjali Nataraj NCAER, New Delhi For the ICRIER-SABER workshop, 29-30 June p, 2009, New Delhi. Trade Policy in India • Trade Reforms form the crux of the economic reforms in India. • Export Promotion has been and continues to be a major thrust of India’s trade policy • Accordingly, policies have been aimed at creating a friendly environment by eliminating redundant procedures, increasing transparency by simplifying the processes involved in the export sector and moving away from quantitative restrictions, thereby improving the competitiveness of Indian industry and g p reducing the anti-export bias. • Steps have also been taken to promote exports through g g multilateral and bilateral initiatives and giving several incentives to exports to cope with all uncertainties at the global level. Features of Trade Policy Reform in India • • • • • Free imports and Exports Rationalization of tariff structure/reducing tariffs Decanalisation Liberalization of the exchange rate regime. Setting up of trading houses, SEZ’s and Export houses SEZ s promotion industrial parks. • Various exemptions under the EXIM policies to boost exports and imports and make the trade policy regime transparent and less cumbersome. p Towards a more open economy 1990 91 1990-91 Peak Import duties ( Manufactures ) Import Controls Trade goods)/GDP ratio ( %) Software exports ( & billion) Worker remittances ( $ billion) FDI ($ billion) g y Foreign currency reserves ($...
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...India and the Global Financial Crisis What Have We Learnt? 1 - Duvvuri Subbarao _________________________________________________________ Thank you for inviting me to deliver the 2011 K R Narayanan Oration. It is an honour to which I attach a lot of value. President Narayanan 2. Late President Narayanan was a distinguished diplomat, a reputed parliamentarian, a capable minister and above all an erudite scholar. Born at the very bottom of India’s social pyramid, he rose on to occupy the highest office in the country with no assets other than hard work, integrity and humility. ‘A working President’, as he described himself, he never allowed dogma to overwhelm his beliefs and convictions. 3. President Narayanan was in office from 1997 to 2002, a time when globalization, as we are experiencing it in the current times, was taking root. At the banquet he hosted for the visiting US President Bill Clinton in New Delhi in March 2000, President Narayanan remarked: “Mr. President, we do recognise and welcome the fact that the world has been moving inevitably towards a one-world... But, for us, globalization does not mean the end of history and geography, and of the lively and exciting diversities of the world.” This was a thoughtful remark. As much as globalization may be inevitable, history and geography need not be destiny. If we learn the lessons of experience, we will not repeat the same mistakes. This indeed is the topic for my 1 K.R. Narayanan Oration by Dr. Duvvuri...
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...Session 7 Emerging Markets: India July 11, 2016 IIM-K PGP 19 IB 2016-17 S7: Emerging Markets: India 1 Emerging Economies Location: Asia, Americas, Africa, Europe Features: Rising income/skills; large markets; cheaper factor resources Prospect: Fast developing (e.g., BRICS) July 11, 2016 IIM-K PGP 19 IB 2016-17 S7: Emerging Markets: India 2 Prospective Economies Asia: Indonesia, India, China Europe: Poland, Russia North America: Mexico South America: Brazil Africa July 11, 2016 Kenya, Nigeria, South Africa IIM-K PGP 19 IB 2016-17 S7: Emerging Markets: India 3 India as Global Business Destination: Perceptions* Democracy is vibrant, govt. is highly bureaucratic; corruption is rampant in state & local governments A dynamic press & vigilant NGOs act as checks on politicians & companies Restrictions on green-field investments & acquisitions in some sectors make joint ventures necessity Red tape hinders companies in sectors where the govt. allows foreign investment Some local design capability is available in product markets; IPR problems exist with US in some sectors; regulatory bodies monitor product quality & fraud Suppliers are available; but their quality & dependability varies greatly * Strategies That Fit Emerging Markets, HBR, June 2005, pp.9-10 July 11, 2016 IIM-K PGP 19 IB 2016-17 S7: Emerging Markets: India 4 India as Global Business Destination: Perceptions* Roads...
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...India’s Trade in 2020: A Mapping of Relevant Factors Nagesh Kumar A paper prepared for the Committee on Vision 2020 for India, Planning Commission, Government of India Revised Version: 22 May 2001 Research and Information System for the Non-aligned and Other Developing Countries, Zone 4B, India Habitat Centre, Lodi Road, New Delhi-110003. Tel.: 468 2175, Fax: 468 2174; Email: nagesh@ndf.vsnl.net.in An earlier version of the paper was presented at the Fifth Meeting of the Committee on Vision 2020 for India, Planning Commission, on 8 February 2001. I benefited from discussions with Dr V.R. Panchamukhi, and from comments of Dr S.P. Gupta and other participants at the Meeting The usual disclaimer applies. India’s Trade in 2020: A Mapping of Relevant Factors Introduction India's trade has generally grown at a faster rate compared to the growth of GDP over the past two decades. With the liberalization since 1991 in particular, the importance of international trade in India’s economy has grown considerably. As a result the ratio of international trade to GDP has gone up from 14 per cent in 1980 to nearly 20 per cent towards the end of the decade of 1990s. Given the trends of globalization and liberalization, the openness of Indian economy is expected to grow further in the coming two decades. The more exact magnitude of India's trade in 2020 and its proportion to India's national income...
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...India begins with the Indus Valley civilization. The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity. During this1500 period, India is estimated to have had the largest economy of the ancient and medieval world between the 1st and 17th centuries AD, controlling between one third and one fourth of the world's wealth . India has followed central planning for most of its independent history, which have included extensive public ownership, regulation, red tape, and trade barriers. After the 1991 economic crisis, the central government launched economic liberalization. India has turned towards a more capitalist system and has emerged as one of the fastest growing large economies of the world. CURRENT INDIAN ECONOMY: The Indian economy has continuously recorded high growth rates and has become an attractive destination for investments. A. Indian economy is expected to grow at around 7.5 per cent B. The overall growth of gross domestic product (GDP) at factor cost at constant prices was 8.5 per cent in 2010-11 representing an increase from the revised growth of 8 per cent during 2009-10. C. Growth in the Index of Industrial Production (IIP) was 4.1 per cent during August 2011. D. The eight core Infrastructure industries grew by...
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...consumer preferences, comparable per capita income, and often complementarities of resource endowment, the intra-regional trade among BRICS nations isn't even 10 per cent of their total trade. INDIA'S TRADE When it comes to India's trade (export and import taken together) with the BRICS, it has grown from roughly US$ 9 billion in 2000-01 to US$ 106 billion in 2010-11. As a result, its share in India's merchandise trade has almost doubled (from 9.4 per cent to 17.1 per cent) in this period. This is quite in contrast to the share of India's traditional trading partners — EU-27 and North America — which has declined from 36.5 per cent in 2000-01 to 22.6 per cent in 2010-11. When it comes to India's export, this decline (in the share of EU-27 and North America) is sharper i.e. 29.3 per cent in 2010-11 from 46.3 per cent in 2000-01. This underlines the growing importance of the BRICS region as a key export market vis-à-vis the developed markets. However, growth in India-BRICS trade isn't homogeneous across all member countries. A deeper analysis of the trade data shows that (i) roughly three-fourth of India's trade with BRICS is accounted for by China & Hong Kong (ii) trade with Russia hasn't kept pace with the growth of either India's overall trade or trade with the BRICS region; India's export to Russia has increased by...
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...Padmashree Dr. D. Y. Patil university Department of business management SubjecT: - INTERNATIONAL FINANCE Assignment ON:-BALANCE OF PAYMENT Submmited TO:-prof. NEETU SHARMA Submmietd by YASHWANT MULUK ROLL No: 25 Definition of 'Balance Of Payments - BOP' A record of all transactions made between one particular country and all other countries during a specified period of time. BOP compares the dollar difference of the amount of exports and imports, including all financial exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in, and vice versa. Balance of payments may be used as an indicator of economic and political stability. For example, if a country has a consistently positive BOP, this could mean that there is significant foreign investment within that country. It may also mean that the country does not export much of its currency. This is just another economic indicator of a country's relative value and, along with all other indicators, should be used with caution. The BOP includes the trade balance, foreign investments and investments by foreigners. COMPARATIVE ANALYSIS OF BALANCE OF INDIAN PERSPECTIVE Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items. When all components of the BOP accounts are included they must sum to zero with no overall surplus or deficit. For example, if a country is importing more...
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...Studies, Dehradun. (Uttarakhand), INDIA __________________________________________________________________________ Abstract India’s rapid economic growth has made it the second fastest growing energy market in the world. Its domestic and international strategies has produced foreign policy differences with the United States that will require careful management on both sides. India’s basic approach to energy diplomacy has been to develop its supply potential and neutralize its potential competitors, principally China. India’s strategic interest in Iran as its energy partner and then the Iraq crisis are having a negative consequence on its economic prosperity, placing it on crossroads with the US. There is a divide between US and EU about the wisdom and desirability of imposing harsh economic sanctions on Russia. In any such confrontation, EU stands to lose much more than the US, though it can be argued that Russia will be the worst loser. In future, Russia may try to find new potential market for its gas and that could be India. So it is important for India to take its stand on Ukraine crisis carefully without tarnishing its relation with USA. India’s long-term prosperity hinges to some degree on a conflict free neighborhood; that an economically integrated region is in India’s overall security interests. Keywords: oil crisis, energy diplomacy, Ukraine Crisis, trade agreement, SAARC Nations Literature Review Indian foreign policy has always concentrated around major powerful nations...
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...Trying to solve them is the main objective of the minister of finance Jaswant Singh that has to craft a budget to achieve the 10th five years plan, which constitutes an economic, and social growth project for 2002-2007. Among its main objectives is achieving, a growth rate of 8% (Exhibit 2), removing interstate barriers to trade and commerce, implementing a more efficient fiscal management, creating jobs, reducing poverty, illiteracy and solving the social, politic and religious conflicts within the country. What were the reforms that led to this new plan? Is this developing India attractive for foreign direct investment? To answer to this question, we will start by analyzing India’s Background and we will finish by studying its process towards globalization I. India’s Background India’s population in 2002 knew a continuous growth of 1,5% and is estimated to keep and on growing. Live expectancy had reached 62 in 2002 and the literacy rate was 65% in 2001. Having a very diversified population, the country has 18 official languages, Hindu being the most prevalent. Many religion try to cohabite, not always successfully, inside the territory. Hindu-Muslim frictions represent a major problem for the country; indeed, they have been taking thousands of lives during many violent episodes between the two religions, as the Ayodha temple dispute that resulted on the death of more than 2000 people. The insecurity of this national war has been leading many Muslims and Hindus to...
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