1、ARTI NANAVATI PROF. OF ECONOMICS DIRECTOR, CENTRE FOR CANADIAN STUDIES MAHARAJA SAYAJIRAO UNIVERSITY OF BARODA VADODARA- 390002 GUJARAT-INDIADEPT. OF ECONOMICS, SIMON FRASER UNIVERSITY BURNABY, BC, CANADA 18 JUNE, 2009,Indian Economy : A Comparative Overview with China,Some General Facts,India is th
2、e worlds second most populous country of over 1 billion people after China. Urban population 28% of total. (China 39%)More than half of its population is 25 years of age. Demographic dividend.Measured in USD exchange rate terms, 12th largest in the world, with a GDP of $3.32 trillion (PPP) , China r
3、anked 2nd largest with GDP of $7.8 trillion. (2008)PCI $2,900 at PPP and that of China $6100 (2008)Population below poverty line is 27.5% (2008 est.) China 10%World Bank classifies India as a low income economy,The contribution of Agriculture, industrial and service sector (2007-8) in GDP has been 2
4、1,24 and 55%. ( In China the corresponding percentages are 11.3, 48.6 and 40 % in GDP 2008)Agriculture is the predominant occupation in India, accounting for about 60% of employment ( China 43%) . The service sector makes up a further 28% (China 32%) , and industrial sector around 12% (China 25%).Or
5、ganized sector employs 8% of workforce (two thirds of which are in public sector), and produces about 40% of GDP. Rest in informal sector -with predominance of women. Urban informal sector is a fast growing sector.30% of total labour is constituted by casual labour and only 10% are in regular employ
6、ment.Major problem not of open unemployment but of underemployment and disguised unemployment.Unemployment rate 6.8% (2008 est., in China 4.3% is official and 17% unofficial UR).,Why India?,GDP growth rate 9% in 2007-2008, slowed down to 7.3% in 2008-9.Major industries are Textiles, chemicals, food
7、processing, steel, transportation equipment, cement, mining, petroleum, machinery, software.Services are a growing sector and play an important role in Indian economy. India is an imp. back office destination for global outsourcing of customer services and technical support.Major exporter of highly
8、skilled workers in financial, software, software eng.Potentials are in , manufacturing, pharmaceuticals, biotechnology, nanotechnology, telecommunication, shipbuilding, aviation, tourism and retailing.,Composition of Indias GDP (at Factor Cost by Economic Activity at 1999-2000 prices, in%),2000-01 2
9、007-081)Agriculture etc 23.89 20.55 2)Industry 25.80 24.71*2.1 Manufacturing 15.30 2.2 Construction 05.81 3) Services 50.30 54.743.1 Trade, hotel, Restaurants 14.34 26.80* 3.2 Transport, storage & communica. 07.96 3.2 Finance, insurance, etc 13.04 14.323.3 Community, social and per. 14.98 13.62servi
10、ce* Inclusive of2.1, 2.2, * of 3.2. Source : EPW 14TH June , 2008 and Economic Survey of India 2007-8 Source: EPW June 14, 2008,India- Structural Transformation-?,Economic policy: Approachi) Since independence (1947) till almost late eighties followed a socialist inspired approach- strict govt. cont
11、rol over -private sector participation, foreign trade and FDI (Approach-import substituting rather than export promoting) .ii) Indias low average growth rate ( 3%) from 1947-80 was referred as Hindu rate of growth, because of the unfavorable comparison with the other Asia countries, especially the E
12、ast Asian Tigers.,A period of import tariff, export taxes, quantitative restrictions , approvals needed for 60% of new FDI in the industrial sector.FDI averaged only $200M between 1985-1991. In 2004, net FDI inflow was about 7-8 USD bn. ( China, 52 USD bn)A large percentage of the capital flows cons
13、isted of foreign aid, commercial borrowing and deposits of non resident Indians.Largely and intentionally isolated from world markets.,Late eighties: the govt. led by Rajiv Gandhi eased restrictions on capacity expansion for incumbents, removed price control and reduced corporate taxes. Phase of hig
14、h growth with high fiscal deficit and worsening current account Collapse of soviet union a major trading partner, first Gulf war causing spike in oil prices led to major balance of payment crisis with the prospects of defaulting on its loan. Prime Minister Narasimha Rao with Finance Minister Manmoha
15、n Singh initiated the economic liberalization of 1991. Reforms did away with license Raj in investment, industrial and import licensing-ended many public monopolies, introduced automatic approvals of FDI in many sectors.,Agriculture,India ranks second world wide in farm output. In 2007, accounted fo
16、r 17% in GDP employing 60% of the total workforce. After having growth rate of 2% for many years- now the growth rate is about 4.5%.Two thirds of Indias workforce still earn their livelihood directly or indirectly through agriculture. High level of disguised unemployment.Despite improvements, averag
17、e yield in India ranges from 30-50% of the highest average yield in the world. Major agricultural products include rice, wheat, oilseed, cotton jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep goats, poultry and fish. India is the largest producer in the world of milk cashew nuts coconut
18、s tea, gingerturmericand black pepper.It also has the worlds largest cattle population (193 million).It is the second largest producer of wheat rice sugar groundnutand inland fishIt is the third largest producer of tobacco India accounts for 10% of the world fruit production with first rank in the p
19、roduction of banana and sapota.,Industry,India ranks 14th in the world in factory output.Industry accounts for 27.6% of the GDP and employs 17% of the work force.Manufacturing growth rate 8.4%. high-skill sectors account for almost 40 percent of the manufacturing output of India. Textile manufacturi
20、ng is the second largest source for employment after agriculture and accounts for 26% of manufacturing output One third of industrial labour force is engaged in simple household manufacturing only.Economic reforms led to more private sector participation, an expansion in the production of consumer g
21、oods and both domestic and foreign competition.,Services,India is fifteenth in services output. With largest share in GDP of 55%, it employs 23% of workforce.The growth rate which was 4.5% in 1951-80 increased to 7.5% in 1991-2000. Recent growth rate 10.7%.Fastest growing services are business servi
22、ces, information technology enabled services, business process outsourcing contributing about one third of total output of services in 2000.Indias IT industry an important contributor to BOP, accounts for only about 1% of total GDP and 1/50th of the total services.India leads the market in offshored
23、 back-office services, but as a manufacturing center it lags behind China, Thailand, and the rest of Asia.,External Sector,Almost stagnant export for the first 15 years after independence. Dominated by products like tea, jute and cotton manufacturers having generally inelastic demand.Since liberaliz
24、ation ex-im have become much broad based.Indias exports are consistently rising, covering about 80% of its imports.Merchandise trade of India about 31% of GDP in 2007 (China 68%) High technology exports as % of total manufacturing exports are 5% in case of India and 30% in case of China.FDI in India
25、 has reached 2% of GDP (China 3%, 2006), compared with 0.1% in 1990 The top five countries in FDI inflows (2000-2007) are Mauritius (44%),United States(9.4%), UK( 8%), Netherlands(6%)and Singapore(5%).,Sectoral Employment Share by Current Daily Status,Industry Division 1993-4 2004-5Agriculture and a
26、llied activities 61.03 52.06Mining & Quarrying 0.78 0.63Manufacturing 11.10 12.90Electricity, gas and water supply 0.41 0.35 Construction 3.63 5.57Trade , hotels and restaurants 8.26 12.62Transport, Storage & communication 3.22 4.61Finance, insurance, real estate and 1.08 2.00 business servicesSocia
27、l, community and personal services 10.50 9.24Source: Economic Survey of India 2007-08,Employment Share: Economically Active Adult population (%) 2004-2005,1993 2005 - Agriculture 74.8 68.5Labour 34.4 30.3Cultivator 39.3 37.3Farm regular 1.1 0.9Non Farm Sector 25.2 31.5Casual 6.3 7.3Regular 7.0 9.3Se
28、lf employed 11.9 14.9 -100 100Source: NSSO, 62th Round,Structure of Employment,Growth of working class,Rural workers,Workers in the countryside have also increased in numbers. There were 144 million rural workers in 2005-06. There is a high proportion of casualisation in rural areas.,Urban workers,T
29、here were nearly 63 million urban workers in 2005-06. Proportion of regular workers is more among urban workers when compared to rural areas,Wages,Wage rates defer between rural and urban areas and between males and females,Working age population,A big majority of Indias population is in the working
30、 age group. Share of working age population (15-59) will increase from 58% in 2001 to 63% in 2011.In 2005-06, about 60% of the population was in the working age group. Of the working age group population, roughly 460 million people were in the workforce in 2005-06.Of these about 206 million (45%) we
31、re regular/casual workers.,Youth workers,India has among the largest number of youth workers in the world.In 2005-06, in the 15-34 age group there were 390 million youth (35% of population)Of these 40.4% were engaged in gainful activity i.e, nearly 160 million.Nearly half of them were workers.,Rate
32、of growth of employment in Organized Sector (% per annum),1983-1994 1994-2005Public Sector 1.53 -0.70 Private Sector 0.44 0.58Total Organized 1.20 -0.31Source: Eleventh Plan Document.,Public-Private organized sector,Total no. of public and private sector workers stagnated between 1991-2001 and sligh
33、tly decreased in recent times.,Public sector workers,Private sector workers,Is development inclusive?,Labour Market,Growing employment but poor in qualitative terms with low regular employment, underemployment and mismatch between education and employment.A huge section of the working class lives in
34、 rural areas, is unskilled and condemned to low wages. In non-agriculture sector growth in employment is in informal sector.Even in the urban areas there is a high degree of casualisation, contract labour working in deplorable conditions with no security of work.Although regular employment has risen
35、, its growth has been almost exclusively in the smaller, least productive enterprises. About 87% of manufacturing employment taking place in micro enterprises(10 persons) producing just a third of manufacturing output.,Employment in firms with more than ten employees accounts for only around 3.75 pe
36、r cent of total employment (one quarter of regular employment) and has been falling. Indeed, India has a much smaller proportion of employment in enterprises with ten or more employees than any OECD country. 70% of Indians(800million), lived on less than 20 rupees( slightly less than C50 cents) per
37、day with most working in informal sector with no social security. (2007 Report on National Commission for Enterprises in the unorganized sector),Sex Ratio in Population with Rural-Urban break up,Source : Office of the Registrar General, India Sex Ratio 1901-91 (Total, Rural and Urban) from Brief Ana
38、lysis of PCA paper-2 of 1992 1961 Population from PCA 1961 1971 Population from Social and Cultural Tables 1981 figures from Series Part-II A(I), General Population Tables Census of India 1981. Figures of 1991 (including interpolated data for JK-1991 based on 2001 census) and 2001 from PCA census of
39、 India -2001,Trends in Gender Disparity in Literacy Rate,Source: Census of India various years,Area and Gender based Labor and Work Force Participation Rate (%),Labor force Work forceparticipation rates participation rates1993-94 2004-05 1993-94 2004-05Rural male 53.4 53.1 50.4 48.8Rural female 23.2
40、 23.7 21.9 21.6 Urban male 53.2 56.1 49.6 51.9Urban female 13.2 15.0 12.0 13.3Source: Economic Survey of India: 2007-08,Area and Gender based Structure of Employment 2004-2005,Particulars Rural UrbanMale Female Male Female Labour Force 56% 31% 57% 15%Self empl. 57% 62% 42% 44%Regular Wage and Salari
41、ed 10% 4% 42% 40%Unempl. Rate 3% 2% 5% 8%Source: NSSO 62 Round,Gender based Distribution of Occupation in Rural India (%) 2004,Sector Male Female - Agriculture 54.7 30.4Casual 21.8 15.5Cultivators 31.8 14.7Regular 1.1 0.2 Non Farm 31.3 7.7Casual 9.6 2.0Self empl. 14.4 4.1Regular 7.3 1.6 - Total 86.0
42、 38.1 -Not working 14.3 62.0 -Casual 31.4 17.5Self emp/cultivators 46.2 18.8Regular 8.4 1.4-,Share of women employment out of total employment in organized sector in India,Source : Quarterly Employment Review, Directorate General of Employment & Training, Ministry of Labor,Women wage lower than men by 33-40 points. Women-men wage differential is 0.75:1.The gender based wage differential though has narrowed down with increase in education level. It is still high. Urban wage differential persists but narrower than in rural area.,
