Embed Size (px)
Citation preview
PROJECT ON ECONOMIC REFORM AND ITS IMPACT
PRESENTED BY –ARIJEET DUTTADY PATIL UNIVERSITY
Indian Economic policy India’s economic integration with the rest of the world was
very limited because of the restrictive economic policies followed until 1991. Indian firms confined themselves, by and large, to the home market. Foreign investment by Indian firms was very insignificant.
With the new economic policy ushered in 1991, there has, however, been a change. Globalisation has in fact become a buzz-word with Indian firms now, and many are expanding their overseas business by different strategies
Major Economic Reforms
1. New Industrial Policy2. New trade policy3. Fiscal reforms4. Monetary reform5. Capital market reform6. Phasing out subsidies7. Dismantling price control
New Industrial Policy
a. Abolition of Licensingb. Freedom to Import Technologyc. Contraction of Public Sectord. Free Entry of Foreign Investmente. MRTP Restrictions Removedf. FERA Restrictions Removedg. Increase in the Importance of Small Industries
New Trade Policy
a. Reduction in Restrictions of Export-Importb. Reduction in Export-Import Taxc. Easy Procedure of Export-Importd. Establishment of Foreign Capital Markete. Full Convertibility on Current Accountf. Current Accountg. Full Convertibility
Fiscal Reforms
a. Fiscal Deficitb. Gross Domestic Product (GDP)
Monetary Reforms
Quantitative credit control method
a. Bank rate policyb. Open market operationc. Cash reserve ratiod. Statutory Liquidity
Ratio e. Repo and reverse repo
rate
Qualitative credit control method
a. Ceiling on creditb. Margin requirementc. Discriminatory Interest
Rate d. Directives:-e. Direct Actionf. Moral Suasion
Capital market Reform
Phasing out subsidies
The various alternative modes of administering a subsidy are:
a. Subsidy to producersb. Subsidy to consumersc. Subsidy to producers of inputsd. Providing Incentives Instead of Subsidizinge. Production/sales through public enterprisesf. Cross subsidisation
Dismantling price control
Business Forecasting
BUSINESS FORECASTING is an estimate or prediction of future developments in business such as sales, expenditures, and profits. Given the wide swings in economic activity and the drastic effects these fluctuations can have on profit margins, it is not surprising that business forecasting has emerged as one of the most important aspects of corporate planning.
Features of Business Forecasting
SpecificClearReliable/UniformAppropriateSimpleInclusive/ComprehensiveFlexibleStable
It’s Impacts on Indian economy
Gross Domestic ProductIndia's GDP, in absolute numbers, has grown from a mere Rs2.7 lakh croreto Rs 57 lakh crore in 67 years of independence.
1950-51
1950-57
1950-63
1950-6974-75
80-8186-87
92-9398-99
05-0611-12
0
1000000
2000000
3000000
4000000
5000000
6000000
GDP at Factor cost
India’s GDP at Factor costIn Rupees crore
Food grain productionIndia's food grain production has more than doubled over the decades that followed colonial rule to a record 264 million tonnes in the fiscal year 2014. But, to feed the fast growing population, with more than a quarter of them still estimated to be below the poverty line, the country needs to produce more.India’s Food grain ProductionIn million tonnes
1950-5154-55
58-5962-63
66-6770-71
74-7578-79
82-8386-87
90-9194-95
98-99
02-Mar06-Ju
l
10-Nov
0
50
100
150
200
250
300
RoadsPost independence, the country has progressed significantly in building roads to connect its cities with its hinterland, but given that poor infrastructure is a major concern for India, the country needs a wider road network to carry the fruits of growth to far-flung villages.
Length of India's roadsIn thousand km
1950-51
60-61
70-71
80-81
90-91
2000-01
02-03
03-06
06-10
2010-14
0500
100015002000250030003500400045005000
TotalSurfaced
Forex reservesThe nation's foreign exchange reserves have grown to over $ 300 billions from a mere $ 2 billion at the time of independence. Strong foreign exchange reserves have given the economy more fire power to withstand external shocks compared. In January 1991, India had to pledge 67 tonnes of gold to International Monetary Fund after the country's forex reserves plunged to a mere $ 1.2 billion, just enough to finance three weeks of essential imports.India's foreign exchange reservesIn US$ million
1950-5154-55
58-5962-63
66-6770-71
74-7578-79
82-8386-87
90-9194-95
98-9903-04
07-0811-12
050000
100000150000200000250000300000350000
Import/exportIndia's imports have shot up at a faster pace than exports over the decades resulting in a widening gap in the trade balance. India's current account deficit widened to a record 4.8 percent of the GDP in the fiscal year 2013, before falling to 1.7 percent in fiscal year 2014 after the government clamped down on gold imports.
India's exports and importsIn US$ million
1949-5053-54
57-5861-62
65-6669-70
73-7477-78
81-8285-86
89-9093-94
97-9801-02
05-0609-10
13-140
100000200000300000400000500000600000700000800000900000
ImportsExports
India's external debtThe country's external debt has surged to $440 billion in the fiscal year ending March 2014. The external debt, which comprises of government and non-government borrowings, has risen mainly because of increase in the non-government debt. At end March, 2014, total government debt stood at $82 billion and that of non-government debt at $359 billion.
India's external debtIn US$ billion
1991-9293-94
95-0697-98
2001-0203-04
05-0607-08
09-1011-12
13-140
100
200
300
400
500
$billion
A Balance sheet of Economic Reform
PERIODS(AVERAGE) GROWTH RATE WPI INFLATION RATE
1960-61 TO 1969-70 4.0 6.3
1970-71 TO 1979-80 2.9 9.0
1980-81 TO 1990-91 5.6 3.2
1991-1992(CRISIS YEAR) 1.4 13.7
1992-93 TO 1999-00’ 6.3 7.2
2001 TO 2006 6.9 5.1
2008 TO 2009 6.7 8.4
Case study on business forecasting• In this case, the client was the Australian federal government who needed to
forecast the annual budget for the Pharmaceutical Benefit Scheme (PBS). The PBS provides a subsidy for many pharmaceutical products sold in Australia, and the expenditure depends on what people purchase during the year. The total expenditure was around A$7 billion in 2009 and had been underestimated by nearly $1 billion in each of the two years before we were asked to assist with developing a more accurate forecasting approach.
• In order to forecast the total expenditure, it is necessary to forecast the sales volumes of hundreds of groups of pharmaceutical products using monthly data. Almost all of the groups have trends and seasonal patterns. The sales volumes for many groups have sudden jumps up or down due to changes in what drugs are subsidized. The expenditures for many groups also have sudden changes due to cheaper competitor drugs becoming available.
• Thus we needed to find a forecasting method that allowed for trend and seasonality if they were present, and at the same time was robust to sudden changes in the underlying patterns. It also needed to be able to be applied automatically to a large number of time series.
