Current State of the Indian Economy - Research Paper Example

? Indian Economy Supervisor] Introduction This paper is going to conduct an analysis on the economic conditions of India. The reason this paper focuses on India is due to the rapid economic progress the country has made in the past few years. India is one of the emerging economies of the world. The Indian economy encompasses a number of sectors which range from traditional farming to modern day industries (CIA, 2013). India is one of the major exporters of services and components related to the information and technology sector. The country has profited from the advancements made by its citizens in the field of software development (CIA, 2013). GDP, CPI and unemployment rate GDP (Gross Domestic Product): Year GDP in Billions Dollars 1970 61 1971 66 1972 72 1973 86 1974 97 1975 100 1976 101 1977 117 1978 136 1979 150 1980 185 1981 197 1982 201 1983 220 1984 217 1985 226 1986 248 1987 275 1989 304 1990 301 1991 327 1992 290 1993 291 1994 284 1995 325 1996 369 1997 423 1998 425 1999 453 2000 468 2001 483 2002 505 2003 591 2004 715 2005 837 2006 948 2007 1206 2008 1294 2009 1334 2010 1678 (Ivan Kushnir's Research Center, 2013) India as mentioned before is a country with an emerging economy. The graph above shows how the country’s GDP has increased between the years of 1970 and 2010. Initially showed a steady increase with time however after 2003 the country’s GDP started to increase at a much higher rate than in any other part of the country’s timeline. There is a slight decrease in the country’s GDP in 1990 and 1992. The main reason for this decrease was the introduction of new measures taken by the government towards the liberalization of the country’s economy (CIA, 2013). The country privatized a number of government owned industries and introduced new laws that monitored and controlled foreign investment and trade within the country. The measures proved to be beneficial for the country’s economy as they accelerated the country’s growth from 1997 onwards. Upon further analysis one could also note the significant increase in the GDP of the country from the years 2009-2010 (CIA, 2013). In 2010 India was able to recover from the financial crises that had an adverse effect on the economies of a number of countries across the globe. The country focused on fulfilling the local demand and through the process was able to recover from the economic crises (CIA, 2013). CPI (Cost Price Index): Year Average CPI 1970 5.09% 1971 3.07% 1972 6.43% 1973 16.79% 1974 28.52% 1975 6.62% 1976 -7.57% 1977 8.31% 1978 2.54% 1979 6.23% 1980 11.38% 1981 13.11% 1982 7.93% 1983 11.83% 1984 8.43% 1985 5.55% 1986 8.72% 1987 8.79% 1988 9.39% 1989 7.11% 1990 8.92% 1991 13.88% 1992 11.88% 1993 6.31% 1994 10.24% 1995 10.22% 1996 8.98% 1997 7.25% 1998 13.17% 1999 4.84% 2000 4.02% 2001 3.77% 2002 4.31% 2003 3.81% 2004 3.77% 2005 4.25% 2006 5.79% 2007 6.39% 2008 8.32% 2009 10.83% 2010 12.11% (Inflation.eu, 2013) Inflation rate of the country has varied since 1970s. As seen in the graph the CPI value was the highest in the year of 1974 and was the lowest in 1976. The reason for such a dramatic increase in the country’s CPI value was mainly due to the 1971 conflict of the country with its neighboring country Pakistan. As a result of the war inflation rate in the two countries significantly increased. The same reason can be given for the dramatic decrease in the inflation rate during the time period of May 1976 (The Economist, 2012). The country’s CPI is considered one of the highest in the world and is also considered as the second highest amongst the major economic countries. Inflation has been one of the major concerns of the country with the government trying to develop reforms to manage inflation rates within the country. Prices of goods consumed on a daily basis have significantly increased over the years. With the continuous rise in inflation of the country many experts fear that high inflation rates within the country might lead to a wage spiral within the country (The Economist, 2012). Unemployment Rates in India: Year Unemployment rates in India 1970 4.90% 1971 5.90% 1972 5.60% 1973 4.90% 1974 5.60% 1975 8.50% 1976 7.70% 1977 7.10% 1978 6.10% 1979 5.80% 1980 7.10% 1981 7.60% 1982 9.70% 1983 9.60% 1984 7.50% 1985 7.20% 1986 7.00% 1987 6.20% 1988 5.50% 1989 5.30% 1990 5.60% 1991 6.80% 1992 7.50% 1993 6.90% 1994 6.10% 1995 5.60% 1996 5.40% 1997 4.90% 1998 4.50% 1999 4.20% 2000 4.00% 2001 4.70% 2002 5.80% 2003 6.00% 2004 5.50% 2005 5.10% 2006 4.60% 2007 4.60% 2008 5.80% 2009 9.30% 2010 9.60% (Index mandi, 2011) Unemployment has been one of the major challenges of the country since its independence in 1947. There has been a constant fluctuation in the unemployment rates of the country. India classifies the unemployment rate into two categories urban and rural (IIFL, 2013). Difference in infrastructure and availability of jobs is one of the reasons for the partition of unemployment rates into two parts. The job market in India, like in all other countries, suffered a great deal. Unemployment rates in 2007 and 2008 increased dramatically and little has improved since then (IIFL, 2013). The country expects the rate to further increase with time unless investment lost in the early years of the economic crises within the country is brought back. Job creation rate within the country has also taken a significant downturn. Only 2.7 million jobs were created between the years of 2004-2008 compared to 60 million jobs created in 2000-2004 (IIFL, 2013). Discrimination against certain communities and corruption within the government heads of the country has also played a significant role in the country’s unemployment rate (Singh, 2013). Conclusion The GDP of the country has remained constant over the years with little or no fluctuations occurring. The GDP of the country has seen a sharp increase in recent times mainly due to the measures taken by the government of the country. These measures helped India overcome the economic crises that started in 2007 and 2008. CPI of the country has varied over the years with the highest and lowest CPI rates occurring within two years of each other. Inflation has been one of the greatest challenges that the country has to face. With a constant rise in the inflation rates basic commodities within the country are becoming more and more expensive. The government of the country is trying to implement measures that would control inflation rate within the country. Unemployment is another hurdle in the country’s progress. The recent financial crises of 2007 and 2008 have left a large population of the country unemployed. Job opportunities within the country are hard to come by and the job creation rate is also on the decline. The government is trying to bring investment back into the country to help job creation within the country. India is rising as one of the strongest economies of the world. The country has excelled in a number of fields especially in agriculture and Information technology. It is also considered to be one of the economic superpowers of the future. However to get there the country has to overcome a number of hurdles to become one of the leading economic superpowers. These obstacles are complicated and initiatives are needed by the government, industrialists and people alike to work for the progress of the country. Reference List CIA. (2013, July 10). The World Fact Book. Retrieved from www.cia.gov: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html IIFL. (2013, June 21). Unemployment in India rises 10.2% in two years. Retrieved from http://www.indiainfoline.com/: http://www.indiainfoline.com/Markets/News/Indias-job-growth-is-disappointing-Reports/5713139740 Index mandi. (2011, January 1). Historical Data graphs per year. Retrieved from Indexmandi.com: http://www.indexmundi.com/g/g.aspx?c=in&v=74 Inflation.eu. (2013, March 31). Historic inflation India - CPI inflation. Retrieved from http://www.inflation.eu/: http://www.inflation.eu/inflation-rates/india/historic-inflation/cpi-inflation-india.aspx Ivan Kushnir's Research Center. (2013, Jnauary 14). Gross Domestic Product (GDP) of India, 1970-2011. Retrieved from http://kushnirs.org/: http://kushnirs.org/macroeconomics/gdp/gdp_india.html#2 Singh, M. (2013, July 29). Urban Sikhs face highest unemployment. Retrieved from thetimesofindia.com: http://articles.timesofindia.indiatimes.com/2013-07-29/india/40870985_1_highest-unemployment-unemployment-rate-muslims The Economist. (2012, December 8). Just a phase I was going through. Retrieved from http://www.economist.com/: http://www.economist.com/news/finance-and-economics/21567946-central-bank-flinches-fight-against-high-prices-just-phase-i-was-going Read More