Economic development of India after liberalisation Dr.C.Pratheep Mulamana V & HSS, Anakudy

India: 1947 to 2012 India has achieved growth in various sectors 1947 2005/06 2009/10 2011-12 Literacy Rate(%) 18 60 74 Life Expectancy (Years) 32 63 65 Investment Rate (%GDP) 9 30 38 39 Annual GDP growth rate (%) 3 8.4 8 6.9 Annual Population growth rate (%) 1.25 1.5 1.0

Economic development since 1950 Year GDP Growth rate (%) Investment Rate (%GDP) 1951/2-1955/6 3.6 13.64 2000/1- 2004/5 6.0 33.04 1960/1- 1964/5 5.0 15.26 2004/5-2005/06 9.5 34.9 1970/1-1974/5 2.3 18.28 2005/6-2006/7 9.6 36.2 1980/1-1984/5 5.6 22.16 2006/7-2007/8 9.3 39.0 1990/1-1994/5 28.72 2007/8-2008/9 6.8 35.1 1995/6-1999/0 6.5 28.43 2008/9-2009/10 8.0 38.2 2010/11- 2011/12 6.9 NA

Growth rate in India Chart

Population, GDP, and GDP per capita at market prices, selected years 1960 Population(in Millions) GDP (millions constant 2000 USD) GDP per capita (constant 2000 USD) 435 76283 175 1965 487 91054 187 1970 548 113606 207 1975 613 130913 213 1980 687 152621 222 1985 765 198167 259 1990 850 268023 316 1995 932 345394 371 2000 1016 457377 450 2005 1095 641926 586

GDP per capita (constant 2000 US$), selected comparisons 1965 1980 1995 2004 India 187 222 371 538 Sub-Saharan Africa 485 577 484 537 South Asia 197 234 377 522 E Asia and Pacific 145 273 735 1254 Latin America and Caribbean 2276 3568 3555 3906 World 2843 3974 4748 5516

Contributions to growth (in annual percentage rate of change) Selected Periods Output Employment Output per worker Contribution of Physical capital Land Education Factor Productivity 1960–73 3.3 2.0 1.3 1.1 -0.2 0.1 0.2 1973–83 4.2 2.4 1.8 0.9 0.3 0.6 1983–93 5.0 2.1 2.9 -0.1 1.7 1993–99 7.0 1.2 5.8 0.4 2.8 1999–2004 6.0 3.6 1960–2004 4.7 2.6 1960–80 3.4 2.2 1.0 1980–2004 1.9 3.8 1.4 0.0

Percentage of GDP (at factor costs) by industry of origin Year Agriculture forestry, fishing, mining, and quarrying Manufacturing construction, and electricity, gas, and water supply Trade, hotel, transport, and communication Financing, insurance, real estate, and business services Public administration and defence and other 1950/1 59 13 12 7 9 1960/1 55 17 14 6 1970/1 48 20 16 11 1980/1 40 22 18 1990/1 35 24 19 10 2000/1 27 15 2005/6 23 25

Indian Industry

Growth performance of the manufacturing sector Growth performance has two dimensions: (i) rate of growth of the industrial and manufacturing sectors; and (ii) rate of growth of employment Three sources of data: (i) Index of Industrial Production; (ii) National Accounts Statistics; and (iii) Annual Survey of Industry

Rate of growth of the industrial and manufacturing sectors Much of the discussion on growth performance is on the basis of Index of Industrial Production (IIP) The IIP has three base years: 1980-81 (1980-81 through 1993-94); 1993-94 (1993-94 through 2004-05) and 2004-05(2004-05 through 2011-12). We could then splice the three separate series into one with the base year 2004-05.

Rate of growth of industrial and manufacturing sectors over the period, 1980-8 1 through 2011-12

Growth performance: Pre and Post Liberalization Industry Manufacturing Pre Liberalization 7.69 7.58 Post Liberalization 6.72 7.24

Industry-wide growth performance of the Manufacturing Sector (average annual growth rates per annum)

Labour

Trends in Employment (in Millions) Number of persons engaged Rate of growth 1981-82 7.89 1982-83 8.17 3.44 1983-84 7.99 -2.10 1984-85 7.98 -0.16 1985-86 7.58 -4.98 1986-87 7.55 -0.46 1987-88 7.90 4.70 1988-89 7.86 -0.58 1989-90 8.26 5.07 1990-91 8.28 0.27 1991-92 8.32 0.49 Average- pre liberalization period 0.57 1992-93 8.84 10.72 1993-94 0.02 1994-95 9.23 4.41 1995-96 10.22 10.78 1996-97 9.54 -6.71 1997-98 10.07 5.63 1998-99 0.00 -100.00 1999-00 2000-01 -2.26 2001-02 7.75 -2.97 2002-03 7.94 2.39 2003-04 7.87 -0.83 2004-05 8.45 7.41 2005-06 9.11 7.78 2006-07 10.33 13.35 2007-08 10.45 1.20 Average-post liberalization period 8.42 -3.07

Growth of PCSDP by States 1960-61 to 1980-81 1980-81 to 1990-91 1991-92 to 2006-07 AP 0.87 2.98 4.54 Karnataka 1.53 3.13 5.05 Maharashtra 1.75 3.16 4.15 TN 1.02 3.40 4.61 Punjab 2.94 3.43 2.48 Haryana 2.51 3.65 4.07 Kerala 1.23 1.14 4.35 Gujarat 1.10 2.73 5.58 India 1.01 2.80 4.55 4/26/2017

Growth of PCSDP by States 1960-61 to 1980-81 1980-81 to 1990-91 1991-92 to 2006-07 Assam 0.47 1.09 1.49 Bihar 0.45 2.50 2.66 MP 0.24 1.16 2.20 Orissa 0.31 2.88 3.75 Rajasthan 0.62 3.17 2.40 UP 0.58 2.37 1.77 West Bengal 0.34 2.31 4.99 India 1.01 2.80 4.55 4/26/2017

Foreign Direct Investment Inward and Outward FDI Definitional issues Changes in Government Policies Magnitude of inward and outward FDI inflows Country wide and industry-wide distribution Effect of inward FDI: (i) Overall economic growth; (ii) exports from India; (iii) non-debt creating way of financing BoP; (iv) technology spillovers

Trends in Net Inward FDI (Millions of US $)

Trends in Net Inward and Outward FDI (Millions of US $) Net FDI (in Millions of US $) Net Outward FDI Ratio of inward to outward 1990-91 97 6 0.06 1991-92 129 4 0.03 1992-93 315 242 0.77 1993-94 586 3647 6.22 1994-95 1343 3579 2.66 1995-96 2143 2660 1.24 1996-97 2842 3312 1.17 1997-98 3562 1828 0.51 1998-99 2480 -68 -0.03 1999-00 2167 3024 1.40 2000-01 4031 -759 -0.19 2001-02 6125 -1391 -0.23 2002-03 5036 -1819 -0.36 2003-04 4322 -1934 -0.45 2004-05 5987 -2274 -0.38 2005-06 8901 -5867 -0.66 2006-07 22739 -15046 2007-08 34728 -18835 -0.54 2008-09 37672 -17855 -0.47 2009-10 33124 -14353 -0.43 2010-11 23364 -16222 -0.69

Country-wide distribution of inward FDI

Industry-wide distribution of outward FDI

Direction of India’s Outward FDI

Industry-wide distribution of Outward FDI

World Bank prediction on Indian Economic Development

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