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India’s External Engagement a
Whopping 500 Billion
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02. TRADE AND ECONOMY |
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India’s
External Engagement Pegged at Whopping 500 Billion Dollar: Study |
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Reaching
a high level of integration with the global economy, India‚s
External Engagement will reach a whopping figure of 500 billion dollar
accounting for a dominant 66 per cent of the country‚s GDP in
fiscal 2006-07, an ASSOCHAM ECO Pulse Study has revealed. |
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The AEP study pegged the minimum export figure of 125 billion
dollar, imports of 190 billion dollar taking the total merchandise
foreign trade to 315 billion dollar in 2006-07. Besides, the
inflows plus outflows of invisible transactions, including activities
like travel, transport, software and services would add up to
170 billion dollar, assuming a 25 per cent growth on top of
the fiscal 2005-06.
Given that the capital flows maintain the 2005-06 level in the
current year, we get another 14 billion dollar into the External
Engagement, taking the total EE to just about 500 billion dollar.
The estimated size of the Indian economy is about 750 billion
dollar and with External Engagement reaching a figure of 500
billion dollar, it would amount to over 66 per cent of the GDP
in 2006-07, a big leap from 20 per cent in 1990-91.
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"India is gaining
strength in the global economy as is evident by a robust progress
in the merchandise as well services trade. Global capital has
been pouring into the economy by way of portfolio, foreign direct
investment and ADRs/GDRs".
The merchandise exports in 2005-06 were 100.7 billion dollar
with a growth rate of 25 per cent, maintaining the same growth
rate the merchandise exports will cross the figure of 125 billion
dollar in the current year.
For the year 2005-06 the merchandise imports were 140.22 billion
dollar, registering a growth rate of 36.2 per cent .With growing
Indian economy the industrial and consumer demand is also rising.
Assuming a similar growth trend for the current fiscal the country‚s
import bill would be about 190 billion dollar in 2006-07. The
total of Merchandise exports and imports add up to an enormous
figure of 315 billion dollar for the current fiscal.
A look at the invisibles transactions including services like
travel, transport, software services etc would show that the
inflows were around 85 billion dollar whereas there was an outflow
of around 50 billion dollar, during 2005-06 .Thus, the total
of transfers and income of invisibles amounted to 135 billion
dollar in the previous financial year. |
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This figure is expected
to increase by 25 per cent to 170 billion dollar by the end
of FY 2006-07.
India has emerged as one of the fastest growing exporters of
services. Our share in the world service exports has gone up
to 2.8 per cent in 2005 from 1.9 per cent in 2004.The share
of services in India‚s total trade also rose from 29.1
per cent in 2004-05 to 35 per cent in 2005-06.
After factoring in the market uncertainties, it is assumed,
this year the capital flows into the country will be at least
at the same level of 14 billion dollar as last year. It includes
FDI of 5.8 billion dollar and FII of 8.2 billion dollar.
Summing up all the figures, merchandise exports and imports
worth 315 billion dollar, invisible transactions of 170 billion
dollar and total capital flow of 14 billion dollar give us a
massive figure of 500 billion dollar worth of India‚s External
Engagement. The rapidly expanding service sector is emerging
as a major contributor to the economic growth. Software and
ITES segments remain the key drivers of the growth of this sector.
During 2005-06 IT and ITES recorded a 35.5 per cent growth in
exports with revenues of 23.49 billion dollar as compared with
export revenues of 17.2 billion dollar in the previous year.
With the prevailing growth rate India‚s software service
exports will easily cross the mark of 30 billion dollar by the
end of 2006-07, the AEP study said. |
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INDIA’S
STAND AT World Trade Organisation (WTO) Meet
India has walked out of World Trade Organisation mini-ministerial
meet being held in Geneva. The meet has been called to thrash
out agriculture and industrial tariff issues, with the United
States refusing to agree for wider cuts in farm subsidies. Union
commerce and industry minister Kamal Nath said: "I am going
home. There is no need to pretend that this round of talks is
not a failure (as the WTO members failed to reach any agreement)."
"We came here to negotiate, but there is no space for negotiations.
We are on 8 to 9% growth. I've come here looking for a trade
deal which helps me to reach 10 to 11%," Nath said. "I
haven't come here to get a trade deal which makes me go to 4
or 5%." What is being offered "might be free trade
but it is not fair trade." Agriculture is the most controversial
issue and it difficult to see how the WTO mini-ministerial could
make any progress without India, Kamal Nath said. Trade ministers
from about 60 countries began their talks to make a last-ditch
effort to formulate ways for cutting agricultural subsidies
and industrial tariffs in a bid to revive the stalled WTO negotiations
after the Hong Kong ministerial conference in December last
year. The WTO's 149 divided members, who have repeatedly missed
their targets for a deal, are under mounting pressure to complete
the round by December 2006 as per the deadline fixed in Hong
Kong last year.
India
Asia's top outsourcing destination: Survey
PricewaterhouseCoopers (PwC) and the Economist Intelligence
Unit surveyed 130 senior executives in the financial services
industry. Forty per cent picked India as the country where their
firms are most likely to set up outsourcing arrangements. Thirty-two
per cent selected China and 11 per cent Singapore.
Manufacturing set to reach
25% Of GDP, Ashwani Kumar tells US Audiences
The manufacturing sector in India is poised to contribute 25
percent of Indian GDP with a manufacturing growth of 12 percent
to be achieved in 5 to 6 years by 2012, Dr. Ashwani |
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Kumar,
Minister of Industry, told audiences in the US while addressing
a conference on “Competitiveness in India’s growing
Manufacturing Sector” hosted by the Asia Society in New
York on Saturday. Hence he urged US investors to invest in the
manufacturing sector in India which was witnessing a resurgence
and was at the core of the transformation of the Indian economy.
“The Indian manufacturing sector has acquired global competitiveness
through the assimilation of global best practices in manufacturing
and India‚s leadership in the IT sector will be used to
give a competitive edge to its manufacturing processes. More
than 100 of the Fortune 500 companies have set up R&D centres
in India”, he said, adding that job creation in the hinterland
of India is the foremost priority of UPA government, which can
only be done by boosting manufacturing which currently accounts
for 45 million jobs and 53% of the India‚s total exports.
Chairing a session on Indian Economy at the conference organized
by CII-Aspen Institute in Washington, as part of US-India Strategic
Dialogue, Dr. Kumar stated that the UPA Government was committed
to an economic policy initiative that would ensure growth with
jobs to the rural and urban poor. “India is now a serious
actor on the global scene and that its demographic profile gives
it an unbeatable advantage as compared to China. India has been
able to achieve its current economic status on account of the
proven competitiveness in the skill intensive sectors of our
economy,” Dr. Kumar said. Citing statistics he stated that
in 1991 India had 56000 knowledge workers, which have increased
to 1.3 million in 2005 and are likely to increase to 2 million
in 2008. India‚s commitment of 6% of its GDP to Education
and 3.5% to Health Care demonstrates a clear policy of the government
to invest in its social sectors thereby ensuring the resilience
of India‚s economy on a long term basis. He said that the
Prime Minister‚s stated priority of economic engagement
with India‚s neighbours on the East and West would ensure
an effective regional |
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and global integration of Indian Economy in the global economic
order.
An inclusivist agenda and India‚s soft power in the form
of its commitment to the Rule of Law, Democracy and Secularism
defined the distinction of India amongst the emerging economy
of the world, he added.
The High Powered strategic dialogue was attended by a galaxy
of leaders on the American side including Mr. Joseph Nye, former
Deputy Secretary of State, Strobe Talbot, President of the Brookings
Institution, Sandy Berger former National Security Advisor,
Carla Robbins, Deputy editor New York Times, Sylvia Mathews,
President Bill and Melinda Gates Foundation and General Brent
Scow croft.
India's Economic Growth Ratchets
Up to 9.3 per cent - Pace Rivals China's Gains
India's economy grew 9.3 percent
in the quarter ended March 31 from a year earlier, marking a
broad display of momentum on par with China's red-hot growth.
Growth in India's fiscal fourth-quarter - fueled by surprisingly
strong farm production and vibrant consumer spending -- beat
the forecasts of most analysts as well as the official estimate.
Based on the buoyant quarterly result, the government's Central
Statistical Organization lifted its figure of gross-domestic-product
growth in the fiscal year that ended in March to 8.4 per cent,
up from an 8.1per cent estimate. India's solid recent economic
performance has raised the prospect of two Asian giants expanding
at double-digit rates, spinning off new jobs and buying more
of what the world grows and produces. Finance Minister P. Chidambaram
said the Indian government would need to speed up market overhauls
and the construction of infrastructure to keep up the current
economic pace. "While 8.4% is satisfactory growth, more
reforms are necessary to sustain this growth," Mr. Chidambaram
said after the latest economic figures were released. He added
that he would be talking with the prime minister about ways
to spur lagging sectors, such as mining, which grew only 0.9
per cent in the fiscal year, down sharply from 5.8 per cent
the previous year. |
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