The Economy of India Analysis

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Currency System of India
Contribution of Agriculture to India Economy
The Role of RBI
The contribution of Mumbai towards the Indian Economy
Role of India in Middle East
References

India is a diverse country located in Asia. Many languages are spoken in the country and the country is very rapidly coming up as far as the economy is concerned. The population of the country is the second largest in the world, some people look at this as a negative but the people in the country often make the most of it by providing man power which is require to carry out numerous important tasks. There are certain factors which hamper the growth of India like corruption; corruption is one of the biggest issues which hamper the economic growth of the country. This paper will throw light upon the Economy of India and the paper will provide a comprehensive analysis on its role played in the Middle East.

In addition to being placed at no second population wise, the economy of India is also the second fastest growing only behind China. The growth which the country showed in the year 2007-2008 was very surprising; it surprised many people in terms of GDP growth which was 9.1 %. The outsourcing jobs are constantly on the rise in the country, it serves as a perfect destination for foreign companies to establish back offices in the country and this is because the country has many educated people who are fluent in English. There are two sides of every coin and this case is no different, the country has serious issues to think about, some of the most important are poverty, inequality etc. These factors hinder the economic growth of the country; in addition to this corruption is another major problem which is constantly on the rise in India.

Currency System of India

India strictly follows one currency which is the INR, better known as the Indian Rupees. The currency is divided into 100 Paise. 100 Paise make a rupee, the highest denomination as approves by the Reserve Bank is 1000 Rupees. Reserve bank is the central bank of India. It carries our various important tasks. It is the note issuing authority, it controls the exchange rate, it is responsible for the circulation of money in the country and in addition to this the bank carries out many other important processes. The Rupee in recent days has fallen when compared to the US dollar, this has happened because the foreign investors have sold the Indian Stocks and have invested in the US treasury Bonds.

Contribution of Agriculture to India Economy

Agriculture is the back bone of the Indian Economy; the country is ranked second in the world when it comes to output in the field of Agriculture. “Agriculture employs (with forestry and fishing) about two-thirds of India’s workforce. Most farms are small, averaging about 1.5 hectares (about 3.7 acres). About 40 percent of the land in India is cultivated by farmers owning more than 4 hectares (10 acres), but few farms are larger than 20 hectares (50 acres) due to land reforms that imposed ceilings (maximum limits) on holdings. Most Indian farmers, particularly those who own smaller farms, cultivate their land by hand or by using oxen.” (Agriculture, 2008).

The Role of RBI

RBI stands for the Reserve Bank of India; it is the central bank of India. “It was established in April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the beginning. The Government held shares of nominal value of Rs. 2, 20,000.” (Reserve Bank of India, 2008). The year 1949 saw the RBI being nationalized. The RBI is headed by the governor, who acts like a managing director when compared with the case of a private company. The most significant function of the RBI is to regulate the money in the country. This is an extremely important function as the economic growth of a country largely depends upon the money which the country possesses. Whenever there is a shortage of money in the country only RBI has the authority to issue money in the country, no other authority can take over and issue currency in the country. Another important function of the RBI is to ensure monetary stability in the country. The bank also makes sure that the credit and the currency system works in favor of the country. It also serves as the banker to the last resort, this means if a bank in the country falls short of money, it can approach the RBI and borrow money from it. So it comes to the rescue of banks that fall short of money.

The contribution of Mumbai towards the Indian Economy

Mumbai is a state located in India. It is the commercial capital of India. NSE and BSE both are located in Mumbai. NSE stands for the National Stock Exchange and BSE stands for the Bombay Stock Exchange. Mumbai was formerly known as Bombay, the NSE and the BSE are the Stock Exchanges of India. All the share market trading activities take place in these stock exchanges. A country’s stock exchange over a period of time gives a good picture of how well that particular country’s economy is doing. Recently the NSE and the BSE was bullish and many people made the most of the same by earning money from buying and selling of shares but off late the bearish trend in the Indian Market has triggered off and the results have been devastating.

In addition to being the commercial capital of India, Mumbai also provides a good opportunity to all the export companies. There are numerous export companies which are based out of Mumbai. The export is carried out very easily through sea because of the harbor located in Mumbai and hence it provides ideal conditions to all the export companies in India. Seven of the best and top Indian companies have their head quarters in Mumbai. These seven companies are as follow: Tata Group, Reliance Industries, Aditya Birla Group, Hindustan Petroleum, Bharat Petroleum, State Bank of India, ICICI Bank, Larsen and Turbo, Reliance Communication and the Essar Group. All these companies are the biggest Indian Companies and contribute immensely towards the Indian Economy. These companies provide employment to countless people; in addition to this these companies help the Indian Economy by earning foreign income which also contributed to the GDP.

“Telephone connections in the country crossed the 200 million mark and an addition of about 67 million phones was made during the year 2006-07. Today the total telephone connections in the country stand at 206.8 million, of which 139.8 million come from mobile phones and the remaining 40.7 million connections from the landline connections. March 2007 saw mobile phones making lowest ever addition during the year; additions of just 3.53 million phone connections due to insistence by the Government to ensure verification of subscribers.” (Current State of Indian Economy, 2008).

The Indian economy has grown in more areas than one; the telecom industry in India has come up with in no time. There are varieties of service providers that a person in India can choose from. For instance there is BSNL which is in the hands of the government; it stands for Bharat sanchar nigam limited. It is one of the leading telecom authorities in India. The network of BSNL is incredibly strong and reliable. In addition to this there are many private companies which provide the Indian with top notch service. Some of the leading companies are Airtel, Aircel, and Vodafone.

Since 1979 the Indian Economy has steadily increased, it averages an annual growth of 5.7%, which is quite outstanding. But there are many challenges which still haunt the future growth of the Indian Economy. The biggest of them all is illiteracy and the rising rate of population. Even till date there are so many people in India who are uneducated; an uneducated person contributes nothing in the development of a country’s economy. But luckily there states like Kerala in India where the literacy rate is almost 100%. Population is another issue which hampers the growth of the Indian economy. There are many awareness programs which are funded by the Indian government, these programs help in spreading awareness in the rural areas of India. Once if these two problems get sorted out, India will emerge as a global leader in almost all the fields.

“The Indian economy moved to a high growth path in the 1980s, with economic growth averaging 5.5% per annum through the decade. This was possible because of a high investment rate of over 22% of the GDP, financed mainly (over 90%) by domestic savings. Annual increase in employment was estimated at 4.3 million in the 1980s. Industrial growth averaged over 7% annually. Population growth, which is continually decelerating had come down to 2.1% per annum. India’s major achievements are: advances in agriculture, making India one of the largest food grain producers in the world; a broad-based and diversified industrial sector; a modern financial sector spread across the country; a well developed market infrastructure; and an educational system that produces a large pool of high quality human resources. While the state played an active role in guiding industrial activity, private enterprise and market mechanisms developed well in agriculture, manufacturing, trading and in the services sector. The economy was, however, largely shielded from foreign competition, both in production and trade.” (The Indian Economy, 24 October 2008). The rules and regulations on production and investment in India is very relaxed, the same has given a lot of encouragement to all the exporters and to all the other people who like to work in a liberal environment. There are private players in almost all the industries in India, like any other developed country. The government does not follow strict rules in this regard. This has contributed immensely in the economic growth of India.

Role of India in Middle East

“Not surprisingly, perhaps, the focal point of India’s energy diplomacy has been Middle East as around 65 percent of its energy requirements are met by this region. It is in this context that India’s relationship with Iran has come under global scrutiny in recent years. India’s large and growing energy demand and Iran’s pool of energy resources make the two nations natural economic partners.” (India Expands role in Middle East, 24 October 2008). India has volunteered an open approach with regard to its participation in the Middle East. The county is more open towards its participation in the Middle East. In a few years time India will directly compete with China in this regard. China is very active in the Middle East, the goods exported from China target the countries located in the Middle East.

“India’s crude oil imports from the volatile Middle East region increased 11 per cent to 89.73 million tons in 2007-08 with Saudi Arabia being the single largest supplier to Asia’s third largest oil consumer.” (Indian Oil Imports from Middle East). India spends lot of money on Oil Imports and the majority of imports come from the Middle East countries. The Oil imported from Kuwait saw a decrease of 10.3 million tons on the other hand the Oil imported from the UAE increased to 24.11% when compared to the last year. This goes to show that India is very active in Oil imports from the countries located in the Middle East.

References

Agriculture. In MSN Encarta. 2008. Web.

India Expands Role in Middle East. In ISN. 2008. Web.

Indian Oil Imports from Middle East. In The Financial Express. 2008. Web.

India Expands role in Middle East. In ISN. 2008. Web.

Reserve Bank of India. In India Finance and Investment Guide. 2008. Web.

The Indian Economy. In Handbook for Asian Indians. 2008. Web.

Click Here To Order Now!