JOURNEY OF INDIAN ECONOMY

How economy Travelled?Accepted concept of Planning as a tool for economic development

For implementing Plan we followed Russian Model of Economics Development

(Socialistic Model)

Why Russian Model?

Started Travelling on Public Sector Track

Economy Journey

1991 0nwords

1981-1990

1980

Phase I

Phase II

Phase III

Limitations and Abuses of Private sector

Nationisation of RBI – 1st April 1935

Nationisation of Imperial Back of India -1st July 1955

Subsidiaries of SBI – 1958

Nationisation of 14 Commercial Banks – Feb 1969

Nationisation 6 Commercial Banks - 1980

Majority of the Industries were owned & managed by Government

Phase I

Sellers Market

Supply

Demand

No Competition

No Choice

Seller Centric Market

Customer has to wait

Restriction on consumers

MRTP ACT• Limited

Expansion

Industrial Licensing

Act

• Restricted Production

• Restricted Distribution

• Restricted Diversification

FERA

• Foreign companies -No Entry

Phase IILiberalization and Privatization

Minor Changes – MRTP Act

FERA Act

Technology Awareness & Knowledge about the products

– Customers

Phase III (Globalization)

Before

Tradition Trading

Cost Based Pricing

Sellers Choice

Sellers Market

Mass Communication

After

E-Commerce

Adding Value

Need Base product

Buyers Market

Digital Communication

Social Marketing

TRA

SFO

RM

ATI

ON

PH

ASE

After 1991 what happenedGrowth Rate

Foreign Exchange Reserve (FER)

Foreign direct Investment (FDI)

Revolution in Information Technology (IT)

Contribution of Service sector

Human Resource Development (Skilled Manpower)

Change in the Share of different sectors in GDP

Bharat – Rural Economy India - Urban

Economy

Obstacles in the Journey

South East Asian - Recession (1997)

Melt down in 2008

Recession in America (Lamon Brothers )

• European crises & Decline of America’s rating from AAA to AA

Policies Initiated by the GovernmentMonitory Policy

Fiscal Policy

As RBI Governer Dr. Subba Rao quoted – Government and RBI by filling the stones tried to cross the river these stones are in the form of fiscal policy and monetary policy announced by the Government of India and RBI

Indian Companies started buying foreign companies

As published in London’s The Sunday Times Mr. Mukesh Ambani of Reliance Group is leading in Buying Foreign companies.

Mr. Vijay Mallaya purchased White & Monkey company in Schotland and one French Whisky company

Hinduja’s HTMT in IT purchased three big companies in America

Tata purchased Incant British Car Company and Aviation Design Company

Dr. Reddy’s Laboratories purchased Betaform a big German Company

Videocon purchased Devoo Electronics in South Koria

Flag Company purchased by Anil Ambani group

January 2006 to September 2006 Indian Companies purchased 112 Foreign Companies