India: Agro Industry Scenario - Assignment Example

India General Info With a population of 2 billion people, India a rapidly emerging economic super power and is the world’s fourth-largest economy (Kurian, 375). The country’s recent developments and growth are considered to be a significant achievement of our time. Over six and a half decades since it was able to attain independence, the country has been able to undergo a transformation that in its agricultural industry from a nation that was primarily dependent on grain import to one that is now a global net exporter of food. The life average life-expectancy in the country has achieved double digit growth and in some instances it is estimated to more than double while its literacy rates have been able to quadruple over the same period. India now boasts of being home to a number of globally recognized companies in steel, pharmaceuticals, space technology as well as information technology (Worldbank.org, 2014). A. GDP and GDP Growth Over the years, a considerable degree of concern over a net fall in India’s GDP has been noted. This concerns have primarily been focused on the belief that the period of impressive high growth rates might actually be coming to an end. In the years 2013, the country’s growth in GDP fell to a low of 4.4%. This fall contrasted in light of the country’s rising population is seen to mean that the country’s per capita is currently less impressive than just real GDP growth. B. Per Capita GDP The per capita GDP PP according to the same 2012 estimates stands at $3,800 this puts the country’s per Capita GDP at 168th globally. C. Inflation The problem of inflation has proven to be a rather stubborn problem for the country’s economy. India has consistently been attempting to try and keep its rate of inflation at low levels. In November 2013, the inflation was able to reach 11.34%, this is the highest rate of inflation that the country has experienced for years. This development is greatly hurting the already low living standards o the country’s poor who happen to be particularly vulnerable to food prices. Investor confidence in the country is also facing some degree of harm from the high inflation. The Reserve Bank of India (RBI) has moved to quickly respond to the rise in the rate of inflation by making the control of inflation in the country its highest priority. However, there are considerable concerns that the use of various monetary policies might be limited in their effect on inflation as inflation pressures often tend to be as a result of various supply side factors (Pettiger, 2014). D. Unemployment Despite the declining growth in GDP, and its perennially increasing rate of inflation, the Unemployment rate in India is currently at only 8.5% (Pettiger, 2014). E. Natural Resources India has a wealth of various natural resources, these include: 1. Land Resources: In respect to its land area, India is ranked as seventh in the world with a total land area of 87.263 sq. km. This land area is noted to account for an estimated 2.42% of the total land area in the world. Despite this impressive land mass, the land man ration is largely unfavorable due to its huge population size. Out of a land area of 304.2 million hectares, the country has been able to put about 170.0 million hectares under cultivation (Chand, 2014). 2. Forests Resources: As at 2007, India’s land cover was at 69.09 million hectares, this is calculated to be about 21.012 percent of its total geographical area. 8.35 million hectares of this forest cover consists of very dense forest cover while 31.90 million hectares comprises of moderately dense forest cover. The rest of the cover, 28.84 million hectares is open forest. The 0.5 hectare per capita forest cover in India is less than the global average of 1.9 hectares. Estimates by the National policy on Forests suggest that ideally one-third (33%) of the country’s land area should be covered by forests so as to maintain ecological balance. 3. Mineral Resources: India is fortunate to have a variety of mineral resources that include Iron-ore: The country happens to possess an abundant quantity of high quality iron ore. It is estimated that its current total iron-ore reserves stand at 14.630 million tonnes of haematite and a further 10,619 million tones of magnetite. In the period ranging 2007-2008, India’s iron-ore production is estimated to have attained a high of 2.06,939 thousand tonnes. Lignite and Coal: Coal is considered to be the largest available mineral resource in India an the country ranks third in the production of this mineral after China and the United States. The total amount of currently known geographical reserves of all the different types of coal in the country is estimated at 264.54 billion tonnes as at January 2008. In the period ranging between 2009-2010, the total export and import of the mineral was about 67.744 MT and 2.171 MT respectively. India possesses limited amounts of gold reserves and its total gold metal orre reserves as at April 1, 2009 were estimated to be at bout 390.29 million tonnes, having a primary metal content of 490.81 tonnes. Its diamond reserves are estimated to be at 4582 thousand carats. Oil exploration continues to be conducted across different parts across the country. Other mineral produced by the country include bauxite, manganese, limestone, copper, chromite, barytes, fluorspar and nickel among a range of other mineral resources (Chand, 2014). F. Agriculture 1. Products: India produces a large variety of agricultural products that variously include rice, cotton, sugar, jute, fish, livestock, coffee, tea, sauce, honey, poultry and meat. 2. Industries: India’s agro-industry has been responsible for the stabilization and marketing of agriculture in the country. The agro-industry in India mainly comprises of various post-harvest activities of preserving and processing agricultural products for either final and intermediate consumption. In India, the agro-industry is broadly categorized into three main types, the first category consists of the village industries that are run and owned by the rural households. The industries in this category are characterized by having little capital investment and high levels of manual labor. The second category is the small scale industry and this is primarily characterized by having a degree of semi-automation and medium investment levels. The third category is the large scale industry and this involves high levels of automation and large capital investments (Agriculturalproductsindia.com, 2014). The agro-industry in India aids in the processing of a range of various agricultural products such as tree crops, field crops, fisheries and livestock. India is currently ranked as the world’s second largest producer of food. Regardless of whether it is food grains, canned food, meat, poultry, processed food, frozen food, or dairy products, the Indian agro-industry is definitely noted to have a huge potential and the significance of its uninhibited growth can never be underestimated (Agriculturalproductsindia.com, 2014). G. Major Industries India has a number of major industries supporting its economy. These include: 1. Retail and Wholesale Trade: The retail industry is noted to currently be the chief pillar responsible for supporting India’s economy. It is noted to contribute a healthy 23% of the total national GDP. The country’s retail market is ranked as being among the top five global retail markets in respect to its economic value. It is also the fastest growing retail market in the world in relation to its economic value. In 2013, the Indian government permitted 51% FDI in multi brand retail as well as 100% FDI in single brand retail. This measures is expected to result in the further increase in investments in the retail sector in addition to taking it to relatively new levels of economic heights (Rawaat, 2014). 2. Agriculture: India is currently the second-largest farm produce producer (Mahadevan, 58). The industry is noted to employ an estimated 50% of the country’s population in addition to contributing 15/7% of the GDP. However, the industry has been experiencing a steady decline over the years. 3. Real Estate: The country’s real estate industry has been able to undergo a great deal of development that has cause it to emerge as one of the fastest growing markets across the world. It has attracted domestic and foreign real estate developer and investors. Currently, the industry contributes about 13.5% of the country’s GDP. Since the professionalization and corporatization of real estate in the country, the sector has been identified as being a key industry in securing the country’s economic development (Rawaat, 2014). 4. Tourism: Tourism remains an underdeveloped but high potential sector in respect to the country’s national economic growth. It is estimated as providing about 6.23% of the GDP in addition to accounting for an estimated 8.7% of the total national employment. H. Imports and Exports India is currently engaged in a number of trade agreements such as the India-Sri Lanka CEPA, India-Thailand CECA, the India-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA) negotiations, the MERCOSUR PTA, the GSTP, and the APTA (Ministry of Commerce and industry, 2014). I. Currency A. Currency Policy: The current monetary policy of the RBI attempts to try and mange the quantity of money circulation in the economy with the aim of increasing the overall pace of economic growth and meeting the requirements of different sectors. To this end, it has used measures such as bank rate policy, credit control policies, reserve system, and other instruments (India Times, 2014). B. Relation to US Currency: There have been increasing periods of significant volatility between in the USD-INR relationship. The dollar has been considerably strengthening against the Rupee in both the long- medium- short- term. Although its current volume is unsatisfactory, the dollar is in a strong uptrend with good momentum. 1$ is currently exchanging at 61.15INR (Earnometer, 2014). India’s Economy During the post-independence era ranging form 1947-1991, India was a highly mixed economy with a relatively high degree of state intervention measures that included price controls and nationalization. However, since 1991, the country’s economy has been able to successfully pursue what has been a largely mixed approach to free market liberalization. This has led to the economy becoming more open and caused it to experience rapid rates of economic development and growth. India’s economic growth was predicted to be at around 5% as at March 2014 (Pettiger, 2014). Conclusion Although by European standards India’s economic growth of 5% can be deemed as sounding to be quite impressive, it is nevertheless much lower than the nearly 10% growth rates that the country was able to achieve over the recent decade. India GDP PPP according to 2012 estimates is thought to be at $4.716 trillion, this is 4th in the world (Pettiger, 2014). The country needs to introduce a raft of measures designed to stimulate its reducing economic growth. The country’s economy is quite open as it is possible for private and foreign investors to easily make investments in the country. Works Cited Agriculturalproductsindia.com. Agro Industry Scenario. 2014. Web. Accessed at Chand Smriti. What are the Different Types of Natural Resources Produced in India?. 2014. Web. Accessed at < http://www.yourarticlelibrary.com/economics/what-are-the-different -types-of-natural-resources-produced-in-india/2683/> Earnometer. Dollar Trends with Rupee and Intraday Levels. 2014. Web. Accessed at < http://earnometer.com/currency/Dollar-trend.html> India Times. Monetary Policy. 2014. Web. Accessed at Kurian, N. J. "Widening economic & social disparities: Implications for India."Indian journal of medical research 126.4 (2007): 374. Mahadevan, Renuka. "Productivity growth in Indian agriculture: the role of globalization and economic reform." Asia Pacific Development Journal 10.2 (2003): 57-72. Ministry of commerce and Industry. Trade Agreements. 2014. Web. Accessed at < http://commerce.nic.in/trade/international_ta_current_details.asp> Pettiger, Tejvan. Indian Economy in 2014. Accessed at < http://www.economicshelp.org/blog/9712/development/indian-economy-2014/> Rawat, Deeksha. Top 10 Industries that Contribute to India’s Economy. 2014. Web. Accessed at Worldbank.org. India Overview. 2014. Web. Accessed at < http://www.worldbank.org/en/country/india/overview> Read More