Unpredictable Prediction: Current Indian Economy


By

Prof. (Dr.) Dinesh Sharma
Professor
Punit Kumar Dwivedi
Research Scholar
Department of Commerce
University of Lucknow
 


Introduction: The Quote "change is permanent" is the permanent quote which one can use for the global economy. This is the time to think about our mixed economy. Where we were? Where we are now? What are the reasons for current situation? Whose fault it is? Economists are searching for some tools, which can be easily, employ to attain the past glory of Indian economy. Yes, it's true we are facing inflation because of consumerism, globalization, corporate fraud or failure of corporate governance in country. While comparing world economy, Indian economy is not much affected because India is not fully globalize and is a mixed economy. The result of inflation what we are seeing now is going to become more dangerous in future and more than 3 lakhs employees are to be removed from their jobs within few months and afterwards we will see the actual picture of Indian economy with full of unemployment & other related problems. The traditional supporters of globalization are now saying that globalization is very dangerous for mixed economy like India and we have to take care.

Stock market is completely under pressure. Bulls and bears are fighting for their own survive; resulting investors are loosing their money and confidence in Stock Markets.

Agriculture Based Economy vs Globalization: Indian economy is agriculture-based economy. While framing the policies and procedures we have to verify the nature and applicability of those policies as per Indian context. Globalization may be good for the capitalistic countries but it is injurious to the mixed economy. Current problem is totally associated with the Globalization and Consumerism. Economists and specialists are searching for recoverable alternatives to safe the country and to solve this burning problem but it proves very hard nut to crake. The decisions taken by Govt. of India in the year 1991 for economic reform is now showing its impact after 17 years and we are in economic crisis. The prediction made by Narsimha Rao govt. regarding required business flow, capital flow, labor flow is still incomplete dreams, though we have good achievements in information technology. As compare to technological development the rate of employment generation is too low which is another reason for current situation.

Share of different Industries in Employment:

Industry

                              Employment in Millions

 

            2004-2005

           1999-2000

1993-1994

Agriculture

268.57

110.77

237.56

97.97

242.46

Community socials services

35.81

111.45

33.2

103.33

32.13

Construction

25.71

220.12

17.62

150.85

11.68

Electricity, Gas water

1.38

102.22

1.28

94.8

1.35

Financial Services

6.89

195.7

5.05

143.46

3.52

Manufacturing

53.71

126.35

48.01

112.94

42.5

Mining & Quarrying

2.75

101.85

2.27

84.0

2.7

Trade

47.29

170.23

37.32

134.34

27.78

Transportation, Storage, Communication

17.45

168.92

14.69

142.2

10.33

GRAND TOTAL

459.1

 

397.0

 

374.45

      (Sources : Ministry of Labor, 93-94 as base 100)

While discussing the share of different sectors in employment and considering above mentioned table and taking 1993-94 as base we find that the most employment generating sector among various sectors which have maximum growth rate as compare to other sectors is Construction with 120.12% growth in the year 2004-05. Financial services with 95.7% growth, and trade with 70.23% growth for the same period are at 2nd and 3rd position.  The share of other sectors in employment likes transportation, manufacturing, community social services, electricity and gas and water services, mining and quarries are 68.92%, 26.35%. 11.45%, 2.22% & 1.85% respectively.

Unemployment Rate (per1000) year 1993-94 to 2004

 

             Rural Male

         Rural Female

       Urban Male

               Urban Female

Gen. Status

Weekly

Daily

Gen. Status

Weekly

Daily

Gen. Status

Weekly

Daily

Gen.Status

Weekly

Daily

1993-94

20

30

56

14

30

56

45

52

67

83

84

105

2004

24

47

90

22

45

93

46

57

81

89

90

117

         Source: NSSO 60 Round Survey on employment and unemployment conducted in Jan- June 2004.

As per above table when we are analyzing the current overall growth in unemployment taking year 1993-94 as base we are getting that after the period of ten year the rate of unemployment is 247% increased. Out of 1000 people in urban and rural areas (male/female) in the year 1993-94, 642 people were unemployed and after 10 years the rate increased and 801 people were unemployed in the year 2003-04

As per above table there is much unemployment in rural female and growth rate in the year 2003-04 was 60%. Rural male population is at second stage and share in unemployment was 51.9%. While considering the urban female share in unemployment there is 12.2% growth in above-mentioned ten-year period.

And share of male unemployment was 8%. 

Despite of this dangerous growth govt. has no proper plans and procedures, policies to stop this and generate employment especially in rural areas. When there is essential need for employment generation govt and companies are engaged in lay-off. The current lay-off rate has crossed 350%. Though there is requirement in govt offices and enterprises for manpower but there is no proper recruitment and selection system. 

Stock Exchange is Taking Revenge: -The organized market where securities issued by govt, semi-govt.bodies, public sector undertakings and companies are available for borrowing funds and raising resources are traded. Aid in financing the industry share market is a continuous market for shares provides a favorable favor for raising capital. In this global crisis FII'S withdrawn back their amount invested in Indian stock market and because of that the Indian economy is facing inflation, rupee value is decreasing day by day. On one hand where FDI is lifeblood for economy another hand it is becoming very danger aspect when foreign investors are withdrawing their monies. As per RBI's report more than $12 billion worth of investment have already withdrawn by the foreign institutional investors.

The black Friday in the history of Indian economy when sensex losses 1071 points on 24 th October 2008. SEBI has given advice to FII's to reverse position of educamp and reliance petro. On that day the market opens with a negative gap tracking other asian market which were trading down. The Nikky and Hang Sen  stock exchanges were fall down 9.6 % and 4.66 %  respectively. In the European market FTSE and Dow were also fall down 7% and 500 points respectively.

While going through the Union Budget-08 there is great provision made by the govt. for exemption to pay loan especially for farmers. Govt. has also reduced

25% loan burden of farmers, shows that the govt. is exempting but loosing Rs.60, 000 cr revenue, a very big amount that can be helpful in the current financial crisis.

Infrastructure Development : It is another measurement of of country's growth. In the year 1995-96the govt. of India had setup a Rural Infrastructure Development Fund (RIDF) with the initial amount f Rs. 2,000 crore . Every year the union finance minister sanctions some revenue for the fund for the rural development purpose, the following data table reflects the State-wise sanctions and disbursements of fund as on 31 march 2008 .

        Sorces: RBI

State

Sanctioned

Disbursement

% Disbursement

Andhra Pradesh

9,401

5,991

63

Gujrat

6,317

4,406

69.75

Uttar Pradesh

6,219

3,864

62

Tamilnadu

5,467

3,724

68

M.P

5,487

3,379

61.50

Maharashtra

4,597

2,967

64.54

West Bengal

4,540

2,730

60

Rajasthan

4,298

2,647

61.58

Karnataka

4,248

2,427

57.13

Punjaab

2,938

2,015

68.58

Orrissa

3,261

1,648

50.53

Kerala

2,108

1,322

62.70

Haryana

1,875

1,260

67.20

J&K

2,160

1,243

57.54

Himanchal Pradesh

1,813

1,195

65.9

Chattisgarh

1,398

970

69.38

Assam

1,433

764

53.31

Bihar

2,396

747

31.17

Uttarakhand

969

683

70.48

Jharkhand

1,284

608

47.35

Arunanchal Pradesh

543

296

54.51

Meghalaya

252

160

63.49

Tripura

469

147

31.34

Nagaland

201

143

71.14

Mizoram

140

117

83.57

Sikkim

121

76

62.80

Goa

94

50

53.19

Manipur

45

15

33.33



Crude petroleum

Petroleum refinery product

Coal

Power

Cement

Finished steel


The overall performance of all above-mentioned six sectors was 5.9%, which reduced in the year 2008 and stands on 3.6% with 2.6%reduction in their performance.

Coming to industrial growth and considering sectoral appraisal like; manufacturing mining, electricity, and general and comparing basis of annual performance. Firstly, the share of manufacturing industry in the growth in the year 200was 7.1%which reduced in the year 2001 and was 2.7%, 4% in 2002, 4.3%in 2003,8.8% in 2004 which was higher % growth in 2000 was 8.8%and then in the year 2005 the growth rate was 9.2% in the year 2006 it increased ton 11%, in 2007,12.4 % but it losses nearly 5% and stands on 7.5% of growth in the year 2008.

Conclusion: Coming to the end, though we have not gone through the unpredictable prediction in information technology sector of world and Indian economy respectively we can assume that in current conditions when we are facing the financial crisis there is unpredictable loss in IT sector. Companies are not getting projects due to failure of US economy. And China has captured maximum projects at cheap cost. So here we have to change our current policies regarding all theses thing even there is need to make changes in the export and import policy of country. The phrase "small makes big difference" is also to be consider and we have to think about the industrial policy for small scale sector especially in export of SSI products for that we have to change our industrial policy and policies regarding technology up gradation to maintain international quality standard of Indian products. Many more essential changes are required to attain past glory of Indian business.
 


Prof. (Dr.) Dinesh Sharma
Professor
Punit Kumar Dwivedi
Research Scholar
Department of Commerce
University of Lucknow
 

Source: E-mail February 28, 2009

          

Articles No. 1-99 / Articles No. 100-199 / Articles No. 200-299 / Articles No. 300-399
Articles No. 400-499 / Articles No. 500-599 / Articles No. 600-699 / Articles No. 700-799
Articles No. 800 to 899 / Back to Articles 900 Onward / Faculty Column Main Page