Indian Economy -2

  1. CURRENCY
  • Rupee was first minted in India during the reign of Sher Shah Suri around 1542.
  • India became a member of International Monetary Fund (IMF) IN 1947, & exchange value of rupee came to be fixed by IMF standards.
  • All coins and one rupee notes are issued by the Govt. of India. That’s why one rupee not doesn’t bear the signature of Governor of RBI. It bears the signature of Finance Secretary, Government of India.
  • Demonetization Of Currency refers to the withdrawal of currency from circulation which is done to ambush black market.
  • Devaluation of Currency refers to reducing value of the Indian rupee in comparison to the leading currencies in the world market.
  1. First Devaluation – In June 1949 (by 30.5%)

(Finance Minister – Dr. John Mathai)

  1. Second Devolution – In June 1966 (by 57%)

(Finance Minister – Sachindra Chaudhry)

  1. Third devaluation – On July 1, 1991 (by 9%) &
  2. Fourth devaluation – On July 3, 1991 (by 11%)

(Finance Minister – Dr. Manmohan Singh)

  • The basic objective of devaluation is to reduce deficits in balance of trade by making exports relatively cheap & imports costly.
  1. BANKING SYSTEM OF INDIA
  • Bank of Hindustan (1770) was the first bank to be established in India (Alexander and Co.) at Calcutta under European management. Other banks set-up were Bank of Bengal (1806), Bank of Bombay (1840) and the Bank of Madras (1843) – these were called Presidency Banks.
  • First bank with limited liability managed by an Indian board was Oudh Commercial Bank, founded in 1881. The first purely Indian bank was the Punjab National bank (1894).
  1. RESERVE BANK OF INDIA
  • It was established on April 1, 1935 with a capital of Rs. 5 crore.
  • It is the Central Bank of the country.
  • It was nationalized on Jan 1, 1949 as govt-acquired the private share holdings.
  • Administration – 14 directors in Central Board of Directors besides the Governor, 4 Deputy Governors and one Government official. The Governor is the Chairman of the board & Chief Executive of the Bank.
  • Governors :- 1st Governor – Sir Smith (1935 – 37)
  • 1st Indian Governor – C.D. Deshmukh (1948-49)
  • IMPERIAL BANK OF INDIA
  • It was created in Jan, by amalgamation of presidency banks – Bank of Bengal, Bank of Bombay & Bank of Madras.
  • After nationalization in 1955, its name was changed to State Bank of India.
  • STATE BANK OF INDIA (SBI)
  • It is the biggest commercial bank in the public sector of India.
  • It has the largest no of branches (more than 13,000) in the world.
  • Presently, SBI has 6 subsidiaries. These are :
  1. St. Bank of Bikaner & Jipur
  2. St. Bank of Hyderabad
  3. St. Bank of Indore
  4. St. Bank of Mysore
  5. St. Bank of Patiala
  6. St. Bank of Travancore.
  • NATIONALISATION OF BANKS
  • In order to have more control over the banks. 14 large commercial banks whose reserves were more than Rs. 50 crore each, were nationalized on July 19, 1969. On April 15, 1980, those 6 private sector banks whose reserves were more than Rs. 200 crore each were nationalized.
  1. OTHER FINANCIAL INSTITUTIONS
  • Industrial Credit & Investment Corporation of India Bank (ICICI Bank)
  • Established in 1955 as a public limited company to encourage and assist industrial units of the nation. It has been converted into a bank with effect from May +3, 2002.
  • Small Industries Development Bank of India (SIDBI)
  • Established in 1990; promotes small scale sector.
  • National Bank of Agriculture & Rural Development (NABARD)
  • Established on Nov 5, 1982; grants deferred credit to Indian exporters in order to operate in the International market.
  • Export-Import Bank of India (EXIM)
  • Set-up on Jan 1, 1982; grants deferred credit to Indian exporters in order to operate in the International market.
  • Indian Development Bank of India (IDBI)
  • Established in 1964; to provide financial assistance to industrial enterprises.
  • Industrial Reconstruction Bank of India (IRBI)
  • Set-up in 1971 with the objective of reviving and revitalizing sick industrial units in public and private sectors.
  • Non-Banking Financial Companies (NBFCs)
  • Non-Banking Financial entities comprise NBFCs, mutual benefit Financial companies, and mutual benefit companies. Department of Company Affairs regulates the mutual benefit financial companies and mutual benefit companies leaving the regulation of NBFCs with the RBI.
  1. STOCK EXCHANGE
  • There are 24 stock exchanges in the country:

1.

Up Stock Exchange, Kanpur

2.

Vadodara Stock Exchange, Vadodara

3.

Coimbatour Stock Exchange, Coimbatore

4.

Meerut Stock Exchange, Meerut

5.

Bombay stock Exchange, Mumbai

6.

Over the Counter Exchange of India, Mumbai

7.

National Stock Exchange, Mumbai

8.

Ahmedabad Stock Exchange, Ahmedabad

9.

Banglore Stock Exchange, Bangalore

10.

Bhubaneshwar stock Exchange, Bhubaneshwar

11.

Calcutta Stock Exchange, Kolkata

12.

Cochin Stock Exchange, Cochin

13.

Delhi Stock Exchange, Delhi

14.

Guwahati Stock Exchange, Guwahati

15.

Hyderabad Stock Exchange, Hyderabad

16.

Jaipur Stock Exchange, Jaipur

17.

Canara Stock Exchange, Mangalore

18.

Ludhiana Stock Exchange, Ludhiana

19.

Chennai Stock Exchange, Chennai

20.

MP Stock Exchange, Indore

21.

Magadh Stock Exchange, Patna

22.

Pune Stock Exchange, Pune

23.

Saurashtra Stock Exchange, Rajkot

24.

Capital Stock Exchange Kerala Ltd. Thiruvananthapuram

  1. LIFE INSURANCE CORPORATION (LIC)
  • Established on Sept 1, 1956.
  • Head office: Mumbai: Zonal offices: 7 (Mumbai, Kolkata, Delhi, Chennai, Kanpur, Hyderabad and Bhopal)
  1. GENERAL INSURANCE CORPORATION (GIC)
  • Established: Jan 1, 1973; It has four subsidiary companies
  1. National Insurance Company Ltd, Kolkata.
  2. The New India Assurance Co. Ltd, Mumbai.
  3. The Oriental Fire and General Insurance Co. Ltd, New Delhi.
  4. United India Fire and General Insurance Co. Ltd, Chennai.
  1. DIRECT TAXES
  • Include taxes on income and property, the important ones being personal income tax, corporate tax, estate duty and wealth tax.
  • Income tax is progressive in India, i.e., the rate of tax is not uniform but rises progressively with the rise in money income.
  • During the last two decades, there has been a continuous reduction in the tax rate because high rates of income tax had merely encouraged tax evasion and growth in black money.
  1. 2. INDIRECT TAXES
  • Include Sales Tax, Excise Duties, Custom Duties, etc.
  • The Government of India earns maximum from Union Excise Duty.
  1. INTERNATIONAL ORGANISATIONS
  • INTERNATIONAL MONETARY FUND (IMF)
  • Established on Dec. 27, 1945, in Washington DC on the recommendations of Bretton Woods Conference. But it started its operations on March 1, 1947.
  • At present, 184 nations are members of the IMF.
  • WORLD BANK GROUP
  • The World Bank Group constitutes the following institutions:
  1. International Bank Group constitutes the following Institutions:
  2. International Development Association (IDA)
  3. International Finance Commission (IFC)
  4. Multilateral Investment Guarantee Agency (MIGA)
  5. International Centre for Settlement of Investment Disputes (ICSID)
  • The IDA and the IBRD constitute the World Bank.
  • WORLD TRADE ORGANISATION (WTO)
  • It was constituted on January 1, 1995 and took the place of GATT (General Agreement on Tariffs and Trade) as an effective formal organization. GATT was an informal organization, which regulated world trade since 1948.
  • Its headquarter is at Geneva.
  • The present membership of WTO is 148 (latest to enter are Nepal and Cambodia).
  • ASIAN DEVELOPMENT BANK (ADB)
  • It was established in Dec. 1966 on the recommendations of ECAFE (Economic Commission for Asia and Far East).
  • The aim of this bank is to accelerate economic and social development in Asia and Pacific region.
  • The head office of the bank is located in Manila, Philippines.
  1. CENSUS-2001
  • Total Population : 1,02,70,15,247

Males : 531,277,078

      Females : 495,738,169

  • Population Growth : 21.34%

Males : 20.93%

      Females : 21.70%

  • Average Yearly Growth Rate: 1.93%
  • Density of population: 324
  • Sex Ratio: 933
  • Literacy Rate: 65.38

Males : 75.85

Females: 54.16

  • Life Expectancy: 62 years
  • Child Population: 15.42%
  • Scheduled Caste Population : 166,636,000

Percentage of Scheduled Caste Population in Total Population: 16.20

  • Scheduled Tribe Population: 84,326,000

Percentage of Scheduled Tribe Population in Total Population: 8.20

  • Percentage of Urban Population in Total Population: 27.78
  1. INDIAN ECONOMY IN THE YEAR 2008-09
  • Indian economy has been witnessing a phenomenal growth since the last decade. After seeing a growth rate in excess of 9 per cent for the last 3 years, it is still holding its ground in the midst of the current global financial crisis.
  • Pegging India’s growth rate in the current year at between 7 and 8 per cent, economists have reiterated that India would continue being the second fastest growing economy in the world despite the ongoing global economic slowdown. Though the global financial crisis has affected the Indian equity and foreign exchange markets, the macro economic brunt of the meltdown is not much due to the overall strength of the domestic demand and the largely domestic nature of its investment financing.
  • Further, according to the International Monetary Fund’s (IMF) prediction in October 2008, India is likely to grow at 7.8 per cent in 2008, and 6.3 per cent in 2009.
  • In spite of the global financial crisis, companies from developed economies such as Germany have shown confidence in India’s economic future and are interested in growing their business in the country. Showing faith in India’s robust future, around 94 per cent German companies plan to increase their businesses with the subcontinent.
  • After the signing of the US-India civil nuclear deal, India will now be partnering several countries for nuclear fuel technology projects, and this will further boost the economy. India and Russia signed 10 agreements in Dec. 2008, including a pact on civil nuclear cooperation.
  • In 2007-08, India’s per capita income is estimated to be around US$ 740. Further, India’s per capita income is expected to increase to US$ 2,000 by 2016-17 and US$ 4,000 by 2025. This growth rate will, consequently propel India into the middle income category.
  • Foreign institutional investments (Fll) in India became positive in November 2008, after net selling by them in September and October 2008 due to redemption pressures from abroad.
  • In 2007-28, India’s FDI touched US$ 25 billion, up 56 per cent against US$ 15.7 billion in 2006-07. FDI equity inflows between April-September 2008 were US$ 17.21 billion, a growth of 137 per cent over the same period last year.
  • In the first half of the current fiscal, the money supply increased by 6.6 per cent against 8.2 per cent last year (from end of March 2008 end to end of September 2008).
  • The growth in the gross tax collection was 25 per cent till September 2008, against 24.5 per cent in September 2007.
  • Total foreign investment inflow during the first half of 2008-09 was US$ 13.8 billion in September 2008.
  • Exports during 2007-08 grew by 23.02 per cent to total US$ 155.51 billion as against US$ 126.41 billion in the corresponding period last year. The cumulative value of exports for the period between April-September, 2008 was US$ 94973 million compared to US$ 72556 million.
  • The Indian growth story is spreading to the rural and semi-urban areas as well. In 2008, the rural market has grown at an impressive rate of 25 per cent compared to the 7-10 per cent growth rate of the urban consumer retail market. Further, the rural market will grow to a potential of US$ 1.9 billion by 2015 from the current US$ 487 million.