Indian Economy Opportunities Unlimited Indian Economy Opportunities Unlimited.
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INDIAN ECONOMY AND TRENDS
For updated information, please visit www.ibef.org
JANUARY 2015
22For updated information, please visit www.ibef.org
Strengths………………………….3
Trends…………………………….11
Reforms……………………………22
Outlook…………………………….36
INDIAN ECONOMY AND TRENDS
JANUARY 2015
STRENGTHS
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LARGE & SKILLED LABOUR FORCE SUPPORTS INDIAN ECONOMY
INDIAN ECONOMY AND TRENDS
JANUARY 2015
National Skill Development Corporation (NSDC) to provide training to 3.3 million students this yearIt currently provides training in 33 sectorsAbout USD200 million proposed for NSDC in the 2014-15 budget
Second largest number of engineers and scientists
Second largest English-speaking population in the world
Home to educational institutes of global repute – IITs and IIMs
Low average salary of USD5,000–10,000 p.a.
Working age population* expected to increase from 58 per cent in 2001 to 64 per cent by 2021
The average age predicted to be 29 years in 2020, lower than China and the US
Expected to be home to 25 per cent of the world’s skilled workforce by 2025
1.5 million graduates pass out every year
250 million people expected to join the Indian workforce by 2030
Number of engineering colleges has increased from 1,511 in 2006-07 to 3,345 in 2014-15
Skilled labour force
Large pool
Source: *Working age refers to age group of 18-65
The NSDC initiative
High competency
Age demographics
Expanding workforce
Large & Skilled Labour Force
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CHEAP AND SKILLED LABOUR MAKES INDIA MOST FAVOURED DESTINATION FOR OUTSOURCING
JANUARY 2015
1980sAirline companies, such as, British Airways set up back offices in India
1990sLiberalisation in 1991GE sets up office in India
• Private industries allowed in the telecom sector (National Telecom Policy)Multiple liberalisation reforms set up the foundation for strong growth
2000sEntry of IT majorsBPO becomes the mainstream industry in IndiaAll big Indian IT companies, such as Infosys and HCL, entered the BPO segmentIndia emerges as one of the biggest players in the outsourcing industryThe decade of unprecedented growth in the services sector
In 2008, India claimed ~65 per cent of all offshored IT business and ~43 per cent of business process work India leads the outsourcing marketIndian outsourcing market stood at USD20.8 billion in 2013The global outsourcing market expected to hit USD233 billion by 2020
Seeding stage
Policy push
Growth stage
India has more than 20 CMM (Capability Maturity Model) level 5 companies
Indian outsourcing market expected to grow to USD50 billion by 2020 from its current worth of
USD20.8 billion Indian BPOs handle 56 per cent of
the world’s business process outsourcing
Service sector constitutes ~60 per cent of Indian
GDP
Top destination
INDIAN ECONOMY AND TRENDS
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SPENDING BY MIDDLE CLASS POPULATION DRIVING GROWTH
JANUARY 2015
INDIAN ECONOMY AND TRENDS
USD21.3 trillion
USD35.0 trillion
USD55.7 trillion
2009 2020 20301% 1% 1%
4% 4% 4%
7% 7% 6%
26%17%
10%
4%13%
18%
19% 19%18%
38%
29%
20%
0%11%
23%
India
Europe
Asia Pacific (exclud-ing China & India)
China
North America
Cenrtal & South America
Middle East & North Africa
Sub-Saharan Africa
Source: “The Emerging Middle Class in Developing Countries”, Homi Kharas, OECD
India has a very dynamic consumer market driven largely by the huge middle class population
The household consumption expenditure levels grew at a CAGR of 12.5 per cent to USD1.1 trillion in 2011
Rising per capita consumption and population will further boost the aggregate consumption
By 2020, India projected to be the world’s third largest middle class consumer market behind China and the US
By 2030, India likely to surpass both countries with an aggregated consumer spending of nearly USD13 trillion
Increasing young population, rise in disposable income and change in lifestyle is driving the consumer market
Sophisticated and innovative public and private services launched to cater to rising customer needs. For example, private cab services such as Uber, Ola Cabs and e-commerce websites like Flipkart, Myntra, Snapdeal, etc
The consumer service industry is emerging as a sunrise industry and attracting investments
The e-commerce sector is one of the sectors which has witnessed large investments
Spending by global middle class
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DIVERSIFIED ECONOMY PROVIDING VARIOUS INVESTMENT OPPORTUNITIES
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Planning Commission
India has a diversified economy with no individual sector accounting for more than 25 per cent shareVarious major sectors, such as consumers, infrastructure and automobile, are poised for strong growthAvailability of a large number of investment avenues mitigates the risk of being exposed to a limited number of sectors, which can be adversely impacted during a downturn
Sector-wise GDP share in 2013-14 ( per cent of GDP)
Hyundai and Honda export cars from India to
European and other Asian countries
The telecom sector attracted USD1.3 billion
foreign investment in 2013-14
Since the liberalisation in the telecom sector, the sector witnessed huge
investments
Indian e-commerce industry expected to grow from USD11 billion in 2014 to USD20 billion in 2015
Indian textile exports in 2013 are estimated to be around
USD40 billion, with garments accounting for 40 per cent
India overtook Germany and Italy to become the
second largest exporter of textiles in 2013
All major auto companies have their factories in India
Indian pharmaceuticals industry expected to
expand at a CAGR of 23.9 per cent to USD55 billion
by 2020
26%
21%15%
13%
7%
2% 2%
Mining & quarrying
Community, social & personal services
Manufacturing
Electricity, gas & water supply
Trade, hotels, transport& communication
Financing, insurance, Real Estate & Business services
Construction
Key snapshots of some sectors
88For updated information, please visit www.ibef.org
Strong financial
regulatory system
RBI is among the best central banks in the world
It controls the monetary policy of India and acts as a watchdog over the banking system
SEBI acts as the regulator of the twin stock exchanges – the BSE and NSE
Indian regulatory system was applauded for its strong mechanisms that weathered the 2008 global crisis
Robust Indian banking system
Indian banking system is a huge network of 151 commercial banks with more than 100,000 branches
Seventeen Indian banks rank in the top 500 global banks list, with SBI at the top among the Indian banks
In line with the recent ‘Jan Dhan Yojna’ initiative, more than 110 million new bank accounts were opened
A strong banking system creates a strong investment environment and increases liquidity
CONDUCIVE ENVIRONMENT FOR INVESTMENT
INDIAN ECONOMY AND TRENDS
JANUARY 2015
Prominent stock exchange
BSE is the world’s largest stock exchange in terms of number of listed companies; NSE takes the third spot in terms
of number of transactions
India entered the elite club of world’s 10 largest stock markets
In 2014, net foreign investment in equity and debt markets was USD16.1 billion and USD26.3 billion, respectively
Ease of doing business
India currently ranks 142 on the Ease of Doing Business list
The new government has set up a mandate to rise to the 50th place on this list in the next two years
New measures taken by the government to facilitate business like digitisation and a one-stop licensing system
would significantly boost India’s ranking
Rise in investment interests from global companies is a sign of improvement in the economy and the process
99For updated information, please visit www.ibef.org
SPIRIT OF ENTREPRENEURSHIP
JANUARY 2015
INDIAN ECONOMY AND TRENDS
The year 2014 saw a spurt of start-ups in India, with more than 1,200 new ventures being set up
Over USD5 billion were invested in Indian start-ups in 2014 with more than 300 deals
Innovation in education, affordable healthcare and competitiveness of small businesses are seen as important trends in the emerging entrepreneurial activity
Dynamic entrepreneurs are launching new businesses across the country, selling products online, providing healthcare, education, communication to the growing aspiring population of the Indian middle class
E-commerce and the service industry saw highest investments in 2014
Rapid growth in the use of the Internet, and mobile and online shopping as well as the success of online retailers, such as Flipkart and Snapdeal, has made the Indian start-up space a favoured destination for investors across the world
Government has taken initiatives to boost entrepreneurship in the countryUSD1.6 billion start-up fund set by the Government of IndiaOne stop e-portal for all licenses set up by the governmentProcess of applying for Industrial License & Industrial Entrepreneur Memorandum made online on a 24×7 basis through eBiz portalValidity of industrial licence extended to three yearsThe Technology Incubation and Development of Entrepreneurs (TIDE) scheme was launched and revised, and extended to 2017 to assist institutions of higher learning to strengthen their technology incubation centres and enable young entrepreneurs to initiate technology start-up companies for commercial exploitation of technologies developed by them
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RISING INVESTMENTS IN THE INDIAN MARKET
JANUARY 2015
INDIAN ECONOMY AND TRENDS
L Capital Asia, the private equity fund sponsored by the LVMH Group, will make a couple of investments worth
around USD50 million each in India this year
Ratan Tata invested in Snapdeal, Bluestone and UrbanLadder.com in 2014, signalling huge potential in the
Indian online retail industry
Amazon has pledged USD2 billion of investment in its Indian arm
Venture capital investors are expected to raise USD2 billion in 2015
The company was valued at USD11 billion after the recent money raising
Flipkart raised USD1.7 billion in 2014The company was valued at USD11 billion after the recent
money raisingIn two rounds of funding in 2014, Flipkart raised around
USD2 billion
SoftBank pumped in USD627 million in e-commerce company Snapdeal
Invested USD210 million in taxi service provider Ola Cabs
Source: News articles
TRENDS
1212
2006-07 2007-08 2008-09 2009-10PE
2010-11 2011-12 2012-13(1R)
2013-14(AE)
2015E
9.79.2
6.8
8.49.3
6.7
4.5 4.7
6.4
For updated information, please visit www.ibef.org
INDIA ON GROWTH PATH SUPPORTED BY KEY REFORMS AND HIGHER INVESTMENTS
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Monthly Economic Report, Ministry of Finance, Aranca Research; PE: preliminary estimates ;1R: First Revision; AE: Advanced Estimates
According to the World Bank, Indian economy is estimated to expand 6.4 per cent during FY15Higher investment in the infrastructure sector, key reforms in taxation, coal mining auctions, among others would boost the economyCurrent decrease in crude prices would support narrow deficitsThe government plans to spend USD1 trillion on infrastructure during FY12–17
GDP growth at factor cost ( per cent)
2006-07 2007-08 2008-09 2009-10PE
2010-11 2011-12 2012-13(1R)
2013-14(AE)-2
0
2
4
6
8
10
12
14
GDP at factor cost Agriculture, forestry & fishingIndustry Services
GDP and components – growth ( per cent)
Growth in the Indian economy is mainly supported by growth in the service and industry sectorsThe government would introduce Goods and Services Tax (GST), which would create substantial savings for companies on logistics. This would positively affect on industrial productionMajor contributors were the finance and real estate sectors, which witnessed double-digit growth in the last 7–8 years
1313For updated information, please visit www.ibef.org
COUNTRY TO RECORD HIGHEST FOODGRAIN PRODUCTION IN FY 2014
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Monthly Economic Report, Ministry of Finance, Aranca Research
Scanty rainfall in FY10 affected foodgrain production. Orissa, Jharkhand and Bihar faced a deficit of 55 per cent, 47 per cent and 28 per cent, respectivelyFoodgrain production increased at a CAGR of 2.4 per cent from 234 million tonnes in FY09 to an estimated 264 million tonnes in FY14Major growth was observed in production of pulses, which rose at CAGR of 6.1 per cent from 15 million tonnes in FY09 to an estimated 20 million tonnes in FY14India ranks second in the production of rice, sugarcane, potatoes, wheat, garlic and tomatoesDuring FY13, Indian household spent USD20.3 billion on food, indicating good business opportunityThe country has estimated highest ever foodgrain production of 264 million tonnes during FY14
Production of major agricultural crops (in Million Tonnes)
FY09 FY10 FY11 FY12 FY13 FY14*0
20
40
60
80
100
120
0
50
100
150
200
250
300
9989 96
105 105 106
81 81 87 95 94 96
15 15 18 17 18 20
234218
244259 257 264
Rice Wheat Total Pulses Total Foodgrains (RHS)
1414For updated information, please visit www.ibef.org
IMPROVING TRADE BALANCE (1/2)
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Provisional data as per the Press Note of the Ministry of Commerce and Industry, Aranca Research
Lower demand in the US and Europe affected exports negatively, widening trade deficits in FY13
During FY09–14, exports rose at a CAGR of 11 per cent, while imports rose at a CAGR of 8.2 per cent
India’s trade balance reached a negative USD190 billion in FY13, which improved 27.8 per cent to a negative USD137 billion in
FY14
Decreasing crude prices by more than half in six months would support India to narrow trade deficit as oil imports comprise ~37 per
cent of the total imports
Export-import and trade balance (USD Billion) Oil and non-oil imports (USD Billion)
FY09 FY10 FY11 FY12 FY13 FY140
100
200
300
400
500
600 -200
-180
-160
-140
-120
-100
-80
-60
-40
-20
0
185 179251
306 300 313304 288370
489 491 450
-118-110
-119
-183 -190
-137
Exports Imports Trade balance (RHS)
FY09 FY10 FY11 FY12 FY13 FY14
94 87 106155 164 165
210 201264
334 327 285
Oil imports Non-Oil imports
1515For updated information, please visit www.ibef.org
IMPROVING TRADE BALANCE (2/2)
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Department of Commerce, EIA, Aranca Research
During 2013, India’s petroleum imports comprised 20 per cent from Saudi Arabia, 22 per cent from other Middle East countries and
14 per cent from Iraq
Of the total exports, oil contributes ~21 per cent
During FY14 export of oil and minerals increased to USD64.7 billion from USD62.1 billion a year earlier
The automobile industry contributed 4.1 per cent to total exports. India is the seventh largest producer of automobiles in the world
Top five Importing commodities ( per cent) (FY 2014) Top five exporting commodities ( per cent) (FY 2014)
40.3
13.06.8
6.5
3.8
29.7
Oil and MineralsPrecious or semi-precious StonesNuclear reactorsElectrical MachineryOrganic ChemicalsOthers
20.6
13.3
4.1
3.83.8
54.4
Oil and MineralsPrecious or semi-precious StonesVehicles and parts other than railNuclear reactorsOrganic ChemicalsOthers
1616For updated information, please visit www.ibef.org
INCREASING FOREIGN CURRENCY ASSETS
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Monthly Economic Report, Ministry of Finance, Aranca Research
The fall in oil prices from USD113 per barrel in January 2013 to USD51 per barrel as of January 2015 has helped India to increase
foreign currency assets to USD293 billion as of November 2014
Moreover, Indian currency got strengthened against USD in FY14 compared to FY13 when it was trading at all time high of ~INR69
per 1USD
Rapidly rising exports compared with imports has supported a rise in foreign assets. Exports rose at a CAGR of 11 per cent during
FY09–14, while imports increased at a CAGR of 8.2 per cent for the corresponding period
Foreign Currency Assets (USD Billion)
FY08 FY09 FY10 FY11 FY12 FY13 FY14 Nov'14
299
242255
275261 261
278293
1717For updated information, please visit www.ibef.org
IIP GEARING TOWARD THE RIGHT AND POSITIVE DIRECTION
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Monthly Economic Report, Ministry of Finance, Aranca Research
Industrial Production – General Index ( per cent) Index of Industrial Production (IIP) strengthened 1.9 per
cent for the period of April to October 2014
Electricity grew the most (10.7 per cent) for April to
October 2014, followed by basic goods (7.6 per cent)
Although there are small positive changes in IIP, heavy
positive changes are expected due to key reforms under
approval and increasing investment in infrastructure
IIP for the month of November, 2014 increased
drastically by 3.8 per cent
Index of Industrial Production four out of nine components ( per cent)
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Apr to Oct'14
-4
-2
0
2
4
6
8
10
12
General index Mining Manufacturing Electricity Basic goods
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Apr to Nov'14
8.5
2.8
10.4 10.5
8.2
2.9
1.1
-0.1
2.2
1818For updated information, please visit www.ibef.org
GROWTH OF EIGHT CORE SECTOR NECESSARY FOR OVERALL GROWTH IN INDUSTRIAL PRODUCTION
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Monthly Economic Report, Ministry of Finance, Aranca Research
Total production growth (per cent) in core infrastructure commodities Eight core infrastructure industries reported a growth
of 4.3 per cent during April to October 2015
The highest growth was reported by Electricity (10.5 per
cent), followed by Coal of (8.5 per cent)
These eight industries contribute ~38 per cent to the
industrial production
The thermal power sector witnessed increased
investment as India targeted capacity addition of 174.9
GW by 2022
Production growth ( per cent) in eight core infrastructure commodities
FY11 FY12 FY13 FY14 Apr to Oct'14-20
-10
0
10
20
30
40
Coal Crude oil Natural Gas Refinery Products Fertilizers Steel Cement Electricity
FY09 FY10 FY11 FY12 FY13 FY14 Apr to Nov'14
3
5.5
6.6
5
6.5
2.6
9.4
1919For updated information, please visit www.ibef.org
Road and Highways
Outlay of USD3.8 billion is planned for highways for the current year
Infrastructure development worth USD19 billion is planned during 2012–17
Completed 100 public private partnership projects (PPPs) and 165 more PPPs are under construction
Investment of USD31 billion in national highways is expected in the next five years
Railways
Indian Railways plans to award projects worth USD1 trillion through the PPP model
Budget 2015 lays emphasis on diamond quadrilateral network of high-speed rails to connect major metro cities and
business centres
Projects worth USD40 billion have been approved for establishing rail connectivity between major ports
RISING INVESTMENTS IN INFRASTRUCTURE AND DEVELOPMENT PROJECTS
INDIAN ECONOMY AND TRENDS
JANUARY 2015
Construction
Investment worth USD1 trillion is planned for the infrastructure sector during FY2012–17
Investment worth USD650 billion is estimated in the urban infrastructure over the next 20 years
The government is under process to launch urban development mission to develop 500 cities with a population of
more than 100,000
Thermal Power and Renewable Energy
The government is targeting a capacity addition of 88.5 GW by 2017 and 86.4 GW during 2017–22 in the thermal
power sector
The government aims to have 20,000 MW of solar power by 2022
Source: Make in India, Aranca Research
2020For updated information, please visit www.ibef.org
INFLATION MEETING THE CENTRAL BANK’S TARGET
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Monthly Economic Report, Ministry of Finance, Aranca Research
RBI has targeted a 6 per cent inflation by January 2016Inflation for November 2014 came down to 0.0 per cent supported by easing of fuel and food prices as these two components are substantial part of the Consumer Price IndexThe government curbed exports of some of the foodgrains (potatoes and onions). In July 2014, the government sold five million tonnes of rice in the open marketThe government restricted gold imports from time to time to control the FX rateSeeing inflation under control, RBI on January 15, 2015 decreased Repo Rate by 25 bps
All commodity Inflation and repo rate (per cent) Inflation components (per cent)
April'10 April'11 April'12 April'13 April'14 Nov'14 Jan'150
2
4
6
8
10
12
0
1
2
3
4
5
6
7
8
9
1.3 10.9 9.7 7.5 4.8 0.0
5.3
6.8
8.07.5
8.0 8.0 7.8
All Commodities Repo Rate
April'11 April'12 April'13 April'14 Nov'14
21
15
10
5
-1
20
11 11
6
1
14 13 12
8
-5
6 75
42
Primary Articles Food articles Fuel and Power Manufactured Product
REFORMS
2222For updated information, please visit www.ibef.org
INCLUSIVE INDIA – THE GROWTH AGENDA
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Economic Survey 2013-14 *RE: Revised Estimates BE: Budget Estimates
India has renewed its growth strategies to target rising inequality as well as overall well-being of IndiansInequality as measured by the Gini coefficient, a measure of statistical dispersion, dropped from 36.8 in 2010-11 to 33.4 in 2011-12Inequality in India is not as much as in other emerging economies. Among the BRICS (Brazil, Russia, India, China and South Africa) nations, the Gini coefficient in South Africa was the highest at 0.63, followed by Brazil (0.55 in 2012), China (0.43) and Russia (0.40)The new government has launched various new schemes such as Jan Dhan Yojna, Pradhan Mantri Aadarsh Gram Yojna and Direct Benefit Transfer Scheme
Central government’s expenditure on social services (% of total expenditure)Item 2008-09 2009-10 2010-11 2011-12 2012-13 RE 2013-14 BE
1. Social service
a. Education,sports,youth affairs 4.3% 4.2% 4.6% 4.7% 4.4% 4.4%
b. Health & family welfare 2.1% 2.0% 2.0% 2.0% 1.8% 2.0%
c. Water supply, housing, etc. 2.5% 2.4% 2.4% 2.1% 1.9% 2.2%
d. Information & broadcasting 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
e. Welfare of SCs/STs and OBCs 0.4% 0.4% 0.6% 0.6% 0.5% 0.6%
f. Labour & employment 0.3% 0.2% 0.2% 0.3% 0.3% 0.3%
g. Social welfare & nutrition 1.2% 0.9% 1.0% 1.3% 1.1% 1.2%
h. North-eastern areas 0.0% 0.0% 0.0% 0.0% 1.6% 1.8%
i. Other social services 1.6% 1.7% 1.7% 0.2% 0.2% 0.2%
Total 12.5% 11.9% 12.6% 11.4% 11.9% 12.8%2. Rural development 4.6% 3.8% 3.5% 2.9% 2.5% 2.6%
3. PMGSY 0.9% 1.1% 1.9% 1.5% 0.7% 1.3%
4. Social services, rural development, and PMGSY 18.0% 16.8% 18.0% 15.8% 15.1% 16.7%
2323For updated information, please visit www.ibef.org
PRADHAN MANTRI JAN DHAN YOJANA (PMJDY) – A SCHEME FOR FINANCIAL INCLUSION (1/2)
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Pradhan Mantri Jan Dhan Yojana Website, Aranca Research
PMJDY was launched in August 2014 under the supervision of the Finance MinistryThis scheme was launched to make available basic financial services to the weaker sections (income wise) of the societyThe government aims to ensure that low income society takes the benefit of savings bank account, need-based credit, remittance facility, insurance and pensionThe government aims to achieve at least one saving banks account for every household, financial literacy, and access to credit, insurance and pension facilities
AboutTo Account Holder:
By opening an account a beneficiary would get a RuPay debit card and an in-built accident insurance coverage of nearly USD1,650All government benefits would be transferred to the account of beneficiary to avoid unnecessary delayAn Indian citizen above the age of 10 years can open an account with zero balance, which would enhance awareness regarding financial servicesAn account holder can take a loan of nearly USD80 after six months of opening of an accountBanking facilities, such as checking account balance and transferring funds, are available even on mobile phones
To Economy:Cash inflow to the banking sector and, in turn, to the economyMore people would become aware of financial servicesGovernment benefits would be transferred without unnecessary delay and transfer would be made to the concerned individual/s
Benefits
As of January 12, 2015, there were 111.6 million bank accountsTotal account balance was USD1,438 millionA total of 94.1 million RuPay debit cards have been issuedThe target was to achieve 100 million accounts by January 26, 2015, which was achieved well before the set date
Key Statistics
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PRADHAN MANTRI JAN DHAN YOJANA (PMJDY) – KEY STATISTICS (2/2)
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Pradhan Mantri Jan Dhan Yojana Website, Aranca Research All data as on January 12, 2015
Rural vs. urban bank accounts (in million) Bank type wise accounts (in million)
88.5
19.7
3.5
Public Sector banks
Regional Rural banks
Private Banks
1,128
226
84Public Sector banks
Regional Rural banks
Private Banks
66.5
45.1Rural
Urban
80.2
11.22.7
Public Sector banks
Regional Rural banks
Private Banks
Bank type wise account balance (in million) Bank type wise number of RuPay debit cards (in million)
2525For updated information, please visit www.ibef.org
PRADHAN MANTRI SANSAD ADARSH GRAM YOJANA (PMSAGY) – A SCHEME FOR RURAL DEVELOPMENT
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: PM India Website, Department of Rural Development, Aranca Research
The scheme was launched in October 2014 under the
supervision of the Department of Rural Development
PMSAGY is an Indian government initiative to open the door
for good politics and develop a demand-driven rather than
supply-driven village
Main objective of the scheme is to improve basic amenities,
productivity, human development, and holistic development of
gram panchayats
Sansad (MP) is free to select any village except their own and
in-law’s village
About
Developing a process for the development of gram
panchayats
To improve the standard of living and quality of life of all the
sections of the people by:
Improving basic amenities
Higher productivity
Better standard of living
Enhancing livelihood opportunities
Reducing disparities
Widening social mobilisation
To develop local governance in a way that motivates and
inspires neighbouring gram panchayats
To present identified Adarsh Grams as schools of local
development to train other gram panchayats
Main objectives
Scheme targets to cover 2,500 villages by 2019
Apart from MPs, many influential and famous personalities
and companies have adopted villages under this scheme
Sachin Tendulkar adopted a village in Andra Pradesh
ICICI Bank adopted a village in Gujarat
Key Insights
2626For updated information, please visit www.ibef.org
SMART CITIES AND BULLET TRAINS – BUILDING A NEW INDIA
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: PM India Website, Department of Rural Development, Aranca Research
Government of India plans to build 100 smart cities and modern satellite towns near the existing citiesNeed for new smart cities arose due to increasing number of people in the urban areas wanting a better livelihood and lifestyleAccording to United Nations, Indian urban population is expected to touch 843 million by 2050
In Budget 2015; USD1.2 billion has been allocated for smart citiesUSD83 million has been allocated for the digital India initiativeFDI norms have been relaxedThe PPP model to be used to upgrade infrastructure in 500 urban areas
India aims to invest USD1.2 trillion over the next 20 years in transportation, energy and public security to build smart citiesEmployment is expected to rise 10–15 per centSeven new smart cities and a 1,500 km industrial corridor across six states have been planned with an investment of USD100 billionRelaxation in FDI norms for construction is expected to improve the government’s efforts in developing smart cities
Smart CitiesThe Indian rail system is the world’s largest passenger carrierConsidering the importance of Railways in India, the government announced a diamond quadrilateral network of high-speed rail in Budget 2015A diamond quadrilateral rail line would cover major metro cities and growth centres of the countryThe objective of this high-speed rail network is to reduce journey hours and take the rail system to international standardsThis project would comprise seven routes, including Mumbai-Ahmedabad, Howrah-Haldia, New Delhi-Patna, and Hyderabad-ChennaiThe government is considering to implement this project through the PPP modelAt present, the Mumbai-Ahmedabad route is under feasibility study by experts from France and Japan and is expected to be completed by 2015Apart from the bullet trains to be run at a speed of 350 km per hour, national transporter is also considering a semi-high speed rail between Delhi and AgraSemi-high speed trains would run at a speed of 160 to 200 km per hour
Bullet trains – A diamond quadrilateral rail project
2727For updated information, please visit www.ibef.org
MAKE IN INDIA – SHAPING UP INDIAN MANUFACTURING (1/2)
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Make in India Website, News Articles, Aranca Research
The Make in India campaign was launched in September 2014The campaign is set of plans to cut red tape, develop infrastructure and create a business-friendly environmentAt present, manufacturing share in the GDP is 15 per cent and the government aims to reach 25 per centThe objective of the campaign is to make India a better place to do business and create employment opportunities which would result in better purchasing power
AboutThis campaign would boost up manufacturing activity. Key reforms would support the decrease in the cost. For example, Goods and Service Tax (GST) would create substantial savings for a company operating in the logistics segmentBoost in manufacturing activity would lead to increased employment, thus improving the purchasing powerSelf-reliability on indigenous products would control trade deficitsIndian products would enter international markets due to improved cost structure
Main objectives
eBiz portal has been made available 24*7 for online application of Industrial License and Industrial Entrepreneur MemorandumValidity of the Industrial License has been extended to three yearsIndustrial licensing has been removed for most of the components of defence productsState government has been asked to launch self-certification and third-party certification under the Boilers ActAll returns are turned into online filling in unified formItems having dual use in military and civilian applications have been deregulatedClearance process turned onlineSelf-certification has been introduced for all non-risky and non-hazardous businesses
New process: New de-licensing and deregulation measures
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Defense
Policy on defence sector has been liberalised
FDI cap raised from 26 per cent to 49 per cent
Portfolio investment in the defence sector has been permitted up to 24 per cent under the automatic route
100 per cent FDI is allowed in the defence sector for modern and state-of-the-art technology on a case-by-case
basis
Railways 100 per cent FDI under automatic route is permitted in construction, operation and maintenance for specified
infrastructure projects in railways
MAKE IN INDIA - GIVING NEW SHAPE TO INDIAN MANUFACTURING (2/2)
INDIAN ECONOMY AND TRENDS
JANUARY 2015
Construction For construction sector, norms easing are underway
Insurance and Mining Ordinance
Insurance: Increase in the FDI limit from 26 per cent to 49 per cent
Foreign companies are permitted to open branches in India to write reinsurance business
Mining: Ordinance has been issued for auctioning of mines containing minerals
Source: Make in India Website, News Articles, Aranca Research
2929For updated information, please visit www.ibef.org
CLEAN GANGA AND ECO-FRIENDLY REFORMS
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: Clean Ganga Mission Website, News Articles, Aranca Research
Initially India launched Ganga Action Plan (GAP) in 1986 covering Uttar Pradesh, Bihar and West BengalThis was followed by National Ganga River Basin Authority, which was formed in 2009 with the objective to reduce pollutionNational Mission of Clean Ganga (NMCG) was formed in 2011 with following main objectives:
To promote inter sectoral co-ordination for effective planning and management for controlling pollution in Ganga and rejuvenation of the river by adopting river basin approachTo ensure minimum ecological flows in to the river to maintain the quality
In the last three decades, India has spent nearly USD8.4* billion on cleaning GangaInitiatives:Ganga Guard Corps has been set up to prevent people from polluting GangaIn Budget 2015, Government has allocated USD334 million for cleaning 2,525 km long Ganga river
Clean GangaTo maintain the quality of Yamuna river following initiatives are done:
Fine of USD82 for throwing Puja offerings into the riverFine of USD820 for dumping wastesReal Estate and Construction activities are banned on the banks of the river Yamuna
Major Initiatives
The campaign was launched on October 02, 2014India’s biggest cleanliness campaign as 3 million government employees, schools and college students had participatedThe objective of the campaign is to make India clean place to live by providing sanitation to all places in next five years
Target:Making all towns, villages and cities clean and providing them with good sanitationSafe drinking water, establishing waste disposal system, and clean roads & lanes
Cost:USD32.2 billion of expenditure is estimatedOf this, USD22 billion would be spent on building toilets in villages
Swachh Bharat
3030For updated information, please visit www.ibef.org
BETI BACHAO BETI PADHAO SCHEME
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Source: vikaspedia.in, news articles, Aranca Research
The government to launch `Beti Bachao, Beti Padhao' (BBBP) scheme on January 22, 2015The scheme was issued to address the issue of declining sex ratioThe government has set out USD16 million for this scheme for 2014-15USD7.4 million and USD6.6 million will be allocated in 2016 and 2017It will be under the Ministry of Women and Child Development (WCD)
AboutThe child sex ratio in India dropped from 927 girl children for every 1,000 boys in 2001 to 919 girls for every 1,000 boys in 2011This brought to the fore the need to bring in steps to improve the sex ratioThe main objectives of the scheme are
Prevent gender biased, sex selective eliminationEnsure survival & protection of the girl childEnsure education of the girl child
Strengthening the implementation of Preconception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 (PC&PNDT Act) with strict punishments in case of violations
Main objectives
Scheme targets to cover 2,500 villages by 2019A toilet in every girls’ school in 100 vulnerable districtsA state-level innovation fund to promote best practices in improving child sex ratio and gender inequitiesThe 2014-15 Budget also proposed that the Ministry of Road Transport and Highways will spend USD8 billion on pilot testing a scheme for safety of women on Public Road TransportSetting up "Crisis Management Centres" in all the districts of Delhi in all government and private hospitals in 2015
Key Insights
3131For updated information, please visit www.ibef.org
STATES BOOSTING GROWTH BY INNOVATIVE METHODS
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Over the years, many Indian states have come up with reforms at the state level Developing states, such as Sikkim, Bihar, Gujarat, Goa, have shown higher growth during 2004–13 compared with developed states like Maharashtra and Karnataka
Innovative initiatives by states
Seminars/ Summits
Vibrant Gujarat: The biennial investors’ summit held in Gujarat witnessed a huge success in 2015. The summit saw participants from over 100 countries. The summit provides enormous prospects to the State to display its strengths, growth potential, initiatives taken to improve governance, investor friendly climate and art & culture of Gujarat. More than USD400 billion worth of MoUs were signed in the summit
Single Window Clearance Mechanism
Telangana: Implementation of Single Window Act with deemed clearancesRajasthan: Implementation of Single Window Act with time- bound clearancesMadhya Pradesh: Madhya Pradesh Investment Facilitation Act passed in 2008 set up a single window clearance secretariat for investment facilitation
Industrial clusters Tamil Nadu: Creation of large scale automotive hubGujarat: Creation of Pharmaceutical hub, automotive hub
Labour reforms Maharashtra: Online labour management system to administer labour laws and provide range of labour management services onlineGujarat: Strong skill development initiatives through industry participation
Environment related compliances
Gujarat: Implementation of e- governance by the Gujarat Pollution Control Board
Decentralised Planning
Madhya Pradesh: Madhya Pradesh will be the first state to have Master Plans for all its villages by 2015-16. This is in the direction of state’s plan of decentralised planning
3232For updated information, please visit www.ibef.org
Labor law
New labour laws issued to end ‘Inspector Raaj’
Single window compliance window for companies
Schemes like Shram Suvidha Portal, a new web-based labour inspection system, unique account numbers for
members of Employees Provident Fund Organisation, new skill development and apprenticeship scheme launched
FDI
FDI limit in insurance sector raised to 49 per cent from 26 per cent
FDI in defence sector raised to 49 per cent, and to 100 per cent in railway infrastructure
These initiatives along with ‘Make in India’ campaign will bring in investments
BIG TICKET REFORMS BY THE NEW GOVERNMENT TO TRANSFORM THE ECONOMY
INDIAN ECONOMY AND TRENDS
JANUARY 2015
Deregulation of diesel
The government deregulated diesel in October 2014
Will reduce the government subsidies as subsidy on diesel cost was USD10 billion in FY2014
Others
Direct Benefits transfer (DBT) scheme started to reduce delays and losses in the transfer of benefits
DBT expected to control misuse of LPG subsidy by ~15 per cent
Government approved USD7.1 billion rural electrification scheme, USD0.9 billion for strengthening of power
distribution and transmission in six North Eastern states and many other power sector reforms to achieve the target
of 24 x 7 electricity to all Indians by 2019
GST
Goods and Service Tax is the new tax system to be implemented to replace all indirect taxes
The government expects to implement GST by next year
GST is expected to add as much as two percentage points to the country’s GDP growth
Source: government websites, Make in India website, news articles, Aranca Research
3333For updated information, please visit www.ibef.org
BUILDING UP THE FOREIGN RELATIONS
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Mending foreign relations along with the growing India story has led to huge investment plans proposed by many countries
Prime Minister visited the neighbouring countries like Myanmar, Bhutan, Nepal that were taken for granted for many years
The neighbouring countries are vital for the safety of the country
The new government has realised the importance of building relationships with the world, especially neighbouring countries, for fostering development and stabilitySince the formation of the new government, the Prime Minister has engaged with many foreign countries such as the US, China, Japan, Australia
PM Narendra Modi visits Japan and US in first few months of
his tenure as PM
US has shown its willingness to invest US 41 billion in India in
next 3-4 years
Japan and China have pledged to invest USD30 and 25 billion
in India, respectively
Indian companies ink USD2.1 trillion pact to buy diamonds
from Russia
India and Australia sign civil nuclear deal – an important measure for India’s energy
prospects
India’s Prime Minister visits Australia after 28 years
US President Barack Obama to be the Chief Guest for the
Republic Day
Indian Prime Minister visits Nepal after 17 years
Visited all the SAARC countries and proposed strengthening of
SAARC
Had heads of all big economies visiting India in 2014 - US,
China, Russia, UK
BRICS bank to be set up, with an Indian to head it for the first
five years
India proposed investments in Myanmar and Bhutan to help
them in their development path
Source: News articles, Aranca Research
OUTLOOK
3535For updated information, please visit www.ibef.org
INDIA – TO LEAD THE GLOBAL GROWTH WAGON
JANUARY 2015
INDIAN ECONOMY AND TRENDS
Pace of reformsDeregulating diesel prices
Ordinance on Insurance
Ordinances on mines
Make in India campaign
Labor reforms
Increasing FDI caps
Improving Business sentiments
One stop online portal for business clearances
Reduction in repo rate by 25 bps to boost economic activities
Increasing investment in start-ups shows the confidence in economy
Macro-economic factorsInflation dropping below the RBI’s target of 6 per cent before scheduled
As per World Bank, GDP growth rate of India is estimated to out pace China
IIP growth of 3.8 per cent beats the estimate in November’14
Increased InvestmentUSD1 trillion investment in infra
USD1 trillion worth of projects to be awarded by the Indian Railway
Investment worth USD101 billion pledged by US, China and Japan
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Source: Economic Times, Aranca Research
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