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Course code:-RAWECourse title:-Rural Agriculture Work Experience Credit hour:-(0+4)

Submitted to:-PROF. SHREE RAM

SINGH.

Submitted by:-ABHINAV VIVEK

ID No.- R-13001

PRESENTATION ON

“INDIAN ECONOMIC OVERVIEW:CHALLENGES & STRATEGIC IMPLICATIONS

OF SOCIAL, ECONOMIC & LEGAL INSTITUTIONSFOR ENTREPRENEURSHIP”

B.Sc.(Ag.) 4th Yr., INSTITUTE OF AGRICULTURE SCIENCES, BHU

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Contents: Indian economic overview: a) Introduction. b) Salient

features. Challenges before Indian economy.Sectors of Indian economy : a) Agriculture. b) Industry. c) Services.

Strategic implications of Social, Economic & Legal institutions for entrepreneurship.

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INTRODUCTION:-For over a century, the United States has been the largest

economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the United States (US) and the rich countries of Europe to the two Asian giants, India and China.

The share of the US in world GDP is expected to fall (from 21 percent to 18 percent) and that of India to rise (from 6 percent to 11 percent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China.

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SALIENT FEATURES:-India is the 10th largest economy in the world by nominal GDP.

In terms of Purchasing power parity(PPP), it is the 3rd largest economy after US & China.

The country is one of the G-20 major economies, a member of BRICS and a developing economy among the top 20 global traders according to the WTO.

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….The per capita GDP contribution was 1623 USD in 2014.

The average GDP growth rate of India for the decade 2006-16 has been 8.5%.

As of 2015, the GDP growth rate was 7.2%.

Unemployment has dropped by 2% annually, and illiteracy and mortality rates have also been falling, indicating that India is not only growing but developing too.

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Challenges Before Indian Economy & ways to overcome them:-

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….Implementing appropriate tax reforms to remove

indirect taxes.

Policy interventions in terms of simplifying procedures and relaxing entry barriers for business activities.

Checking the growth of population. Due to a high population growth, per capita remains very poor. It was only $ 2880 in 2003 (World Bank figures).

Transforming the booming youth population into human capital. As per Global human capital index 2016, India has been placed 105th out of 130 countries.

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….

Creating jobs and meaningful employment opportunities.

Building infrastructure, particularly in the backward states & in the agriculture sector.

Access to finance for farmers & enterprises at competitive rates and for all credit worthy projects.

Pursuing the objective of food security through productivity increase and agriculture marketing reforms.

Luring higher foreign direct investment (FDI) which trigger technology upgradation, assists human capital formation & improves the efficiency of resource use.

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Agricultural Sector

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….Agriculture and allied sectors like forestry& animal husbandry

accounts for 16.3% of total GDP at 2015-16 prices in 2013-14(CSO).

It employs 49.7 per cent of the total work force as in 2013.

The index of agricultural production(IAP) for the year 2012-13 was 124.2.(Dept of ag. & co.).

It is the largest economic sector of India. Due to steady improvement in irrigation, technology, modern agricultural practices, the yield per unit area of all crops have increased tremendously since independence, but significant research is still sought to negate the effect of monsoon woes which make it an unreliable sector in our economy.

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Food grain production over the years:-

257.1

265.6

257.4

Production(in million tonnes)

2012-13 2013-14

2014-15

Source: Economic survey 2015-16(GOI). 

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Agricultural development:-Despite the substantial decline in the share of agriculture sector in the

GDP over the years, the fact that almost half of the total workforce being dependent on agriculture and allied activities for their livelihood, underscores the significance of the sector to sustain growth in the country.

The 12th Five-year plan (2009-2010 to 2014-15) has set a target of 3.1 per cent growth in agriculture sector to achieve a target of 8.7 per cent GDP growth.

With the rising and substantial increase in income, especially of non-agricultural workforce, there is a huge demand potential for agriculture and agro-processing industries.

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2011-12

2012-13

2013-14

12 12.5 13 13.5 14 14.5

12.8

14.1

14.17

Export earnings from agriculture sector(%)

Export earnings from agriculture sector(%)

Source: Economic survey 2015-16(GOI).

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….As per the ‘Agriculture policy vision 2020’, there would be

around 2.5 million tonnes of extra demand for food grains annually, while significant increases are being needed in the supply of livestock, fish & horticulture products as well.

The 12th Five-year plan (2009-2010 to 2014-15) has set a target of 3.1 per cent growth in agriculture sector to achieve a target of 8.7 per cent GDP growth.

If Indian economy has to achieve an annual average GDP growth of around 9.5-10% in the next five years, agriculture sector has to grow by around 4.5-5.0%.

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2014-15

2013-14

2012-13

0 0.5 1 1.5 2 2.5 3 3.5 4

1.1

3.7

1.2

Agriculture growth(%)

Agriculture growth(%)

Source: Economic survey 2015-16(GOI).

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….Given that modern technologies for agricultural sector require

increased use of water, there should be significant rise in area covered under irrigation facilities. This will also help in unleashing the agriculture sector from the vagaries of monsoon.

Measures such as increasing power supply to the sector, improving credit facilities for farmers, establishing competitive seed markets & ensuring attractive prices for seeds, improving terms of trade for agriculture and strengthening of agriculture-industry linkages should remain high in the policy framework for the sector.

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….Given that post- harvest losses generally range from 5-10%

for non-perishables and about 30% for perishable farm output, an emphasis should be placed on the development of post-harvest handling & agro-processing in order to minimize the post-harvest losses.

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…….Index of industrial production which measures the overall

industrial growth rate was 3.1 per cent in 2015-16.

. The sector accounted for 31.0% of the total GDP(2015-16).

The sector has 24.4 per cent share in total employment as in 2011-12.

The largest sector here holds the textile industry. Automobile sector has also demonstrated the inherent strength of Indian labour & capital.

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2013-14 2014-15 2015-160

1

2

3

4

5

6

2.4

4.55.1

Growth rate(%)

Growth rate(%)

Source: Economic survey 2015-16(GOI).

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Sub-sectors of Industry:-

Mining & quarrying Manufacturing & electricity

Gas & water supply0123456789

10

5

8.87.1

Growth % (2009-10)

Growth % (2009-10)

Source: Economic survey 2015-16(GOI).

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RECENT INITIATIVES TO BOOST INDUSTRIAL GROWTH:-Ease of Doing Business.

Make in India.

E-Biz Project.

Skill development.

Streamlining environment and forest clearances.

Labour- sector reforms.

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….The services sector is the fastest growing sector with its growth

rate being 10.8 per cent in 2015-16.

The sector has contributed 52.7 per cent in India’s GDP (2015-16).

It’s share in employment is 28.5 per cent (2011-12).

The growth of it’s labour productivity in the decade 2000-2010 was 6.5 per cent.

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0

1

2

3

4

5

6

7

8

9

10

8.6

5.7 5.6

Service sector’s growth (pp) in share to GDP (2001-13)

Growth (pp) in share to GDP (2001-13)

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SUB-SECTORS:-

45.8

18.8

7.80.8

11.8

11.5

5.8

EXPORT(%)

Computer services

Other business services

Technical & trade related services

R & D services

Travel services

Transport services

Finance, insurance & pension services

Source: Economic survey 2015-16(GOI).

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SOCIAL INSTITUTIONS

A social institution is a complex of positions, roles, norms, and values lodged in particular types of social structures and organizing relatively stable patterns of human resources with respect to fundamental problems in sustaining viable societal structures within a given environment.

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It’s relevance:-An understanding of a country’s business environment is not

complete without an appropriate understanding of social institutions such as the economic system and the legal and religious environment.

Without an understanding of these social institutions, it is difficult to have a complete understanding of the entrepreneurial environment.

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Definition: The economic system is the structures and

processes that guide the conduct of business activities

that lead to the production of goods and services

consumed by the members of a society.

Economic system:-

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The allocation of resources.

The organization of production.

The distribution of finished goods and services.

The promotion of economic progress.

The maintenance of economic stabilility.

Functions:-

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Types of economy:-

Capitalist/ Market /Free economy.

Socialist/ Command economy.

Mixed economy.

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Market / Capitalist/Free Economy

It is marked by the production activities which are “decentralized to

private-property-rights holders (or their agents) who carry out these

activities for the purpose of making profits in a competitive

market.” It is characterized by economic freedom.

Examples:

The U.S.A.

Japan.

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Command/Socialist / Communist Economy

It is one where production resources are owned by the state and

production decisions are centrally coordinated. It is marked by the

dominance of public sector and its commitment for social good

(social welfare).

Examples:CubaChina

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Mixed Economy:-Economic System that incorporates some Governmental

involvement into a Market Based Economy.It combines aspects of both, the capitalist & socialist economic systems.

Examples:INDIAMost “Modern” Economies

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Difference..

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Implications of economic systems on entrepreneurship:-Privatization- a new powerful incentive to turn around formerly

state-run businesses namely profits.

In market economies, government interference & labour regulation is minimal. However, that’s not the case for many of the mixed economies.

 Another aspect of economic systems applies to TRANSITION

ECONOMIES which are those societies that are moving from socialism to a more market-based system. Understanding the after-effects of communism on workers & companies are a challenge to most of the MNCs.

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….One other important component of the economic system is the

degree of governmental interference in the conduct of business. In that context, MNCs may consider the index of economic freedom, which refers to “the absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself.”

Representative countries are listed for each of the five categories of economic freedom, namely those nations that are: 1)free, 2) mostly free, 3)moderately free, 4)mostly ‘unfree’ and 5) repressed.

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….FREE MOSTLY FREE MODERATELY

FREEMOSTLY UNFREE

REPRESSED

Hong KongSingaporeAustraliaUSAUKNew Zealand

CanadaChileJapanNetherlandsTaiwanSpainNorwayFinlandBahamasLuxembourg

MauritiusSouth KoreaFranceThailandNamibiaPeruSwitzerlandTunisiaLebanonCzech Republic

IndiaChinaRussiaNigeriaAlgeriaVietnamGhanaPolandFijiSenegal

CubaLibyaAngolaBelarusBangladeshBurundiVenezuelaTurkmenistanSierra LeoneTogo

Source: Based on heritage foundation index of economic freedom, www.heritage.org

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POLITICO-LEGAL SYSTEMS:-The politico-legal system is the unique system of regulations,

laws & rules formulated by the political establishment of the country that affect the choices made by individuals in any society and that govern the ways these individuals are responsible for their decisions and actions.

A widely accepted parameter indicating the degree of concern of a government to facilitate acts of entrepreneurship is “the ease of doing business index” created by the World Bank Group. India has been ranked 130th out of a total of 189 countries measured on the index as on June 2015.

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Variables determining political & legal business environment of a country:-

Political stability.

Government’s support to economic development.

Labour and environment laws.

Special policies, schemes and programmes.

Entry barriers.

Ease of doing business.

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Types of legal systems:-Common law: based on the concept of precedent, whereby the

law is applied after an examination of past cases. Example: India, Australia, Japan, US.

Civil law: based on a very detailed set of rules and regulations that form part of a country’s legal code.

Example: France, Russia, Azerbaijan, Belarus.

Islamic law: based on the Shari’ah,the law taken from the Qur’an, Islam’s sacred texts.

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Environment of entrepreneurship.

Environmental influence (Social, Cultural, Economic, Political & Legal)

Input Business organisation & processes Output Marketing &

consumption

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Welcome Queries…

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