Another year passes by, and another story of the “aam aadmi” and his fight to survive in the economy. Every penny, or say every paise that we spend today now suffers either in inflation when in the hands of the middle classes or enjoys the benefits of post-globalisation period when in the hands of those few well-off people. Indian economy and its growth rate have not always been very proportional to each other. The graph rises, dips and then it rises again. Inflation however has stood by us since the last few years like a loyal friend. The recent not-so-good times for the King of Good Times, the strikes all over the country against the proposed 51% FDI and most importantly the economic crisis that the whole of Europe is going through definitely pushes us to take a look on what actually the year 2011 had been like for the nation, and especially on the sectors that have been in the light during different times and situations.
The Indian economy in the year 2010 had been characterized by robust economic growth and steady fiscal consolidation. Inflation continued to be high even though it had come down markedly from where it was at the start of the fiscal year. There are structural challenges that were faced, concerning economic governance, efficiency in delivery of subsidies and building up infrastructure. According to the Economic Survey 2010-11, tabled in Parliament on February 25, 2011 by the Union Finance Minister, Mr Pranab Mukherjee, the economy is expected to grow at 8.6 per cent in 2010-11 and is expected to be around 9 per cent in the next fiscal year. The growth has been broad based with a rebound in the Agriculture sector which is expected to grow around 5.4 per cent. Manufacturing and Services sector have registered impressive gains. The Survey reports that the industrial output growth rate was 8.6 per cent while the manufacturing sector registered a growth rate of 9.1 per cent in 2010-11. The Indian economy has continuously recorded high growth rates and has become an attractive destination for investments, according to Ms Pratibha Patil, the Indian President. “India’s growth offers many opportunities for mutually beneficial cooperation,” added Ms Patil. “Today India is among the most attractive destinations globally, for investments and business and FDI had increased over the last few years,” said Ms Patil.
India is the second-largest producer of food in the world and holds the potential of being the biggest on global food and agriculture canvas, according to a Corporate Catalyst India (CCI) survey. The food processing industry is one of the largest in India – ranking fifth in terms of production, consumption, export and expected growth. The Indian food industry is projected to reach US$ 300 billion by 2015. The growth of the agriculture and allied sectors is expected to be around 5.4 per cent during 2010-11, according to the Economic Survey 2010-11. India targets to achieve 9.5 per cent average economic growth in the 12th Five Year Plan (2012-17), on back of an estimated agriculture growth rate of 4.2 per cent. Food grain production has reached a record level of 241.6 million tonne (MT) in 2010-11. We have also achieved the highest ever production of wheat, pulses, oil seeds and cotton. Overall farm output has also achieved an impressive growth rate of 7.5 per cent during the last quarter of 2010-11 thus helping agriculture gross domestic product (GDP) to register a growth of 6.6 per cent during the year, as per Mr. Sharad Pawar, Agriculture and Food Processing Industries Minister. However, the social sights point towards other grave issues. At all-India level, an estimated 60.4% of rural households were farmer households and of them 48.6% were reported to be indebted. The incidence of indebtedness was highest in Andhra Pradesh (82.0%) to be followed by Tamilnadu (74.5%), Punjab (65.4%), Kerala (64.4%) , Karnataka (61.6%) and Maharashtra (54.8%). Going by principal source of income, 57% farmer house holds are cultivators. Among them 48% were indebted. The Union Government’s move to reduce the duty on import of raw silk from 30 per cent to 5 per cent, as announced in 2011-2012 budget has come as a rude shock for the sericulture farmers who are already agitated over the steep fall in cocoon prices. The same open market policy followed by India, which has foreign investors coming into IT industry in India and benefiting Indian IT engineers, is immensely killing farmers.It is important that the Government and the society evolve a farmer centric and agriculture supportive policy and approach accepting the reality that it is the farmers who have all along tended the land for the sustenance for living . The rural employment scheme should be made more local friendly employment accordingly there is also an urgent need of ensuring food security for the distressed farmers.
Moving onto another widening industry, that is of automobiles, car sales in September 2011 stood at 165,925 cars. Sales of commercial vehicles, a key indicator of the country’s economic activity, increased by 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 of them in September. Overall automobile exports registered a growth rate of 32.31 per cent during April-December 2011. Passenger Vehicles registered growth at 21.01 percent in this period while two-wheelers, commercial vehicles and three wheelers segments recorded growth of 32.34 per cent, 35.91 per cent and 49.55 per cent respectively. The country has become a hot destination for automobile manufacturers due to its robust economic growth, favourable demographics, higher disposable income, changing lifestyle and positive industrial eco-system. So the next time you get the headache of looking for some space to park your car, say thanks to the fact that India is the world’s second-fastest growing auto market.
The aviation industry’s profit and crisis are no more hidden facts. Only Indigo and Spicejet have made profits, while the rest are suffering the burden of a very “price-conscious” population and “never-so-supportive” government policies. Flamboyant Kingfisher with a debt of Rs.7,057.08 crores is still not in the worst conditions when compared with the rusted PSU Air India, which stands with worth Rs.67,000 crores loss and debts.
The worst hits on the population actually came with the petrol price hikes that went on throughout the year. Here is the list that shows various petrol hike figures that had been carried out within this year itself,
January – 2.5 Rs/ltr
May – 5 Rs/ltr
July -0.33 paisa/ltr
September – 3.14 Rs/ltr
November – 1.8 Rs/ltr
When asked about this fuel hike issue to oil companies they claimed that they were losing Rs.1.50 and after revising the tax rates they increased Rs.1.82/lit in petrol price. This means Fuel prices have been upped by 23 per cent in the last 10 months. Interest rates have shot up by 4 per cent in the last 10 months and food inflation has also gone up by 5 per cent in the last two months alone
Other key statistics of the year are presented below:
Services grew at 9.4% in 2009-10. Projected to grow at 10.0% in 2011-12
Investment rate projected at 36.4% in 2010-11 and 36.7% in 2011-12
Domestic savings rate as ratio of GDP projected at 33.8% in 2010-11 & 34.0% in 2011-12
Current Account deficit is $44.3 billion (2.6% of GDP) in 2010-11 and projected at $54.0 billion (2.7% of GDP) in 2011-12
Merchandise trade deficit is $ 130.5 billion or 7.59% of the GDP in 2010-11 and projected at $154.0 billion or 7.7% of GDP in 2011-12
Invisibles trade surplus is $ 86.2 billion or 5.0% of the GDP in 2010-11 and projected at $100.0 billion or 5.0% in 2011-12
Capital flows at $61.9 billion in 2010-11 and projected at $72.0 billion in 2011-12
FDI inflows projected at $35 billion in 2011/12 against the level of $23.4 billion in 2010-11
FII inflows projected to be $14 billion which is less than half that of the last year i.e $30.3 billion
Accretion to reserves was $15.2 billion in 2010-11. Projected at $18.0 billion in 2011-12
(Courtesy: The Economic Outlook)
The year ends with nation-wide protests against the proposed 51% FDI, which finally has been dismissed by the government. The depreciation of the Indian Rupee has however made mixed impacts, with the exporters being happy as their turn over might increase on conversion and it is vice verse for the importers who have to eke out more rupees to get dollars to make imports.
The Human Development Index(HDI) 2011 ranks India in 134th position out of 169 other nations. Economic development has always influenced HDI, and for India, the Multidimensional Poverty Index value is 0.283. Rural Development Minister Jairam Ramesh has to say that “Economic growth does not guarantee human and social development”, but no curve however rising in economic sectors can be justified if its population suffers in problems of sanitation, nutrition and even sex ratio. All that can be said for a conclusion is that 2012 as is expected to bring in higher GDP and better economic conditions, social statistics should be helped to gain an impetus too. No nation’s progress ever gets validated with its population suffering from issues of basic personal standards. India continues to be at a state of majority in the ‘have-nots’ section. This has to be fought with all the better “common-man friendly” policies and a breaking down of all ties with the tree of corruption. A capitalist economy that actually India is, should never ignore the social issues that plague it. Or else, no time can be counted for an ANDOLAN!
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