Indian Economy

Indian economy has shown a drastic changes since 1991 , after the
liberalisation policies the nation has to compete with international
markets and survive. The Indian economy was less affected by the 2008
financial crisis because of the brilliant policies and scheme adopted by
our nation. Our economy had its ups and downs but it was most
affected at the time of demonetisation of 2006.

Importance of economy analysis

Economic analysis is a process whereby the strengths and weaknesses
of an economy are analysed . Economic analysis is important in order to
understand the exact condition of an economy. There are economy
analysis at different levels :
1. Microeconomics analysis
2. Macroeconomics analysis
3. World economy analysis

The economy analysis are required to identify the problems in our

economy and correct them . The analysis study gets closer look at the
economy and specifies each economy impacts.

Factors affecting the growth of economy

Economic growth is an increase in real GDP; it means an increase in the
value of goods and services produced in an economy. The rate of
economic growth is the annual percentage increase in real GDP.
1. Aggregate demand is the rise in Consumption, Investment,
Government spending or exports can lead to higher AD and higher
 economic growth. Therefore a rise in Consumption, Investment,
Government spending or exports can lead to higher AD and higher
economic growth.
2. Commodity prices is rise in commodity prices such as a rise in oil
prices can cause a shock to growth.
3. Sustainable economic growth is defined as the expansion of the
productive potentials of an industry in the long run. It should
result in higher standards of living, giving rise to employment and
an increase in the real GDP of a country. Below are some factors
that influence the economic growth and development of an
industry.
4. Political instability has a major impact on our economy.

GDP

Gross Domestic Product (GDP) is a broad measurement of a nation’s

overall economic activity. GDP is the monetary value of all the finished
goods and services produced within a country's borders in a specific
time period.

GDP includes all private and public consumption, government outlays,

investments, additions to private inventories, paid-in construction costs
and the foreign balance of trade (exports are added, imports are
subtracted). It may be contrasted with Gross National Product (GNP),
which measures the overall production of an economy's citizens,
including those living abroad, while domestic production by foreigners
is excluded.
Inflation

Inflation is a quantitative measure of the rate at which the average

price level of a basket of selected goods and services in an economy
increases over a period of time. It is the constant rise in the general
level of prices where a unit of currency buys less than it did in prior
periods. Often expressed as a percentage, inflation indicates a decrease
in the purchasing power of a nation’s currency.

IIP

Index of Industrial Production (IIP) is an index that shows the

performance of different industrial sectors of the Indian economy.
The IIP is estimated and published on a monthly basis by the Central
Statistical Organisation (CSO) . As an all India index, it gives general
level of industrial activity in the economy.
Industrial output growth stood at 1.7 per cent in January against the
2.6% growth recorded in December 2018. The CSO has revised the
industrial production growth for December 2018 has been revised
upwards from 2.4% to 2.6% .
PMI
Private mortgage insurance, also called PMI, is a type of mortgage insurance,
it is arranged by the lender and provided by private insurance
companies. PMI is usually required when you have a conventional
loan and make a down payment of less than 20 percent of the home’s
purchase price. If you’re refinancing with a conventional loan and your
equity is less than 20 percent of the value of your home, PMI is also
usually required.
Balance of payment

The balance of payments is the record of all international trade and

financial transactions made by a country's residents.

The balance of payments has three components. They are the current
account, the financial account, and the capital account. The current
account measures international trade, net income on investments, and
direct payments. The financial account describes the change in
international ownership of assets. The capital account includes any
other financial transactions that don't affect the nation's economic
output.

The balance of payment statement provides a clear picture of the

economic relations between different countries. It is an integral aspect
of international financial management .
Fiscal Deficit
A fiscal deficit occurs when a government's total expenditures exceed
the revenue that it generates, excluding money from
borrowings. Deficits differs from debt, which is an accumulation of
yearly deficits.
India's fiscal deficit was at Rs 8.51 lakh crore in February-end touching
4.52 per cent of GDP, a senior Finance Ministry source told a news
agency.
Current account Deficits
The current account deficit is a measurement of a country’s trade
where the value of the goods and services it imports exceeds the value
of the products it exports. The current account includes net income,
such as interest and dividends, and transfers, such as foreign aid,
although these components make up only a small percentage of the
total current account. The current account represents a country’s
foreign transactions and, like the capital account, is a component of a
country’s balance of payments (BOP).

A current account deficit indicates that a country is importing more

than it is exporting.
Emerging economies often run surpluses, and developed countries tend
to run deficits.
A current account deficit is not always detrimental to a nation's
economy—external debt may be used to finance lucrative investments.

Monetary policy
Monetary policy is the process by which the monetary authority of a
country, typically the central bank or currency board, controls either
the cost of very short-term borrowing or the money supply, often
targeting inflation rate or interest rate to ensure price stability and
general trust in the currency.
Monetary policy is referred to as being either expansionary or
contractionary. Expansionary policy occurs when a monetary authority
uses its tools to stimulate the economy. An expansionary policy
maintains short-term interest rates at a lower than usual rate or
increases the total supply of money in the economy more rapidly than
usual. It is traditionally used to try to combat unemployment in
a recession by lowering interest rates in the hope that less expensive
credit will entice businesses into expanding. This increases aggregate
demand (the overall demand for all goods and services in an economy),
which boosts short-term growth as measured by gross domestic
product (GDP) growth. Expansionary monetary policy usually
diminishes the value of the currency relative to other currencies
(the exchange rate).
Unemployment
Unemployment is a situation in which able-bodied people who are
looking for a job cannot find a job.
The causes of unemployment are heavily debated. Classical
economics, new classical economics, and the Austrian School of
economics argued that market mechanisms are reliable means of
resolving unemployment. These theories argue against interventions
on the labour market from the outside, such as unionization,
bureaucratic work rules, minimum wage laws, taxes, and other
regulations that they claim discourage the hiring of
workers. emphasizes the cyclical nature of unemployment and
recommends government interventions in the economy that it claims
will reduce unemployment during recessions. This theory focuses on
recurrent shocks that suddenly reduce aggregate demand for goods
and services and thus reduce demand for workers. Keynesian models
recommend government interventions designed to increase demand
for workers; these can include financial stimuli, publicly funded job
creation, and expansionist monetary policies. Its namesake
economist, John Maynard Keynes, believed that the root cause of
unemployment is the desire of investors to receive more money rather
than produce more products, which is not possible without public
bodies producing new money. A third group of theories emphasize the
need for a stable supply of capital and investment to maintain full
employment.
Government policy
A government policy statement is a declaration of a
government's political activities, plans and intentions relating to a
concrete cause or, at the assumption of office, an entire legislative
session. In certain countries they are announced by the head of
government or a minister of the parliament.
Different types of Government policy :

 Central government administration

 Children’s rights
 Civil society
 Combating terrorism
 Consumer affairs
 Culture
 Defence
 Democracy and human rights
 Digital policy
 Disabilities
 Economic policy
 Education and research
 Emergency preparedness
 Energy
 Enterprise and industry
 Environment and climate
 Family law
 Financial markets
 Foreign and security policy
 Gambling policy
 Gender equality
 Health care
 Housing and community planning
 Innovation
 International development cooperation
 International law
 Introduction of new arrivals
 Judicial system
 Labour law and work environment
 Labour market
 Media
  Migration and asylum
 Municipalities and county councils
 Public health and sport
 Public procurement
 Regional growth
 Rural affairs
 Social insurance
 Social services including care for older people
 State-owned enterprises
 Taxes and tariffs
 The Constitution of Sweden and personal privacy
 Trade and investment promotion
 Transport and infrastructure
 Youth policy

Election
An election is a formal group decision-making process by which a
population chooses an individual to hold public office. Elections have
been the usual mechanism by which modern representative
democracy has operated since the 17th century. Elections may fill
offices in the legislature, sometimes in the executive and judiciary, and
for regional and local government. This process is also used in many
other private and business organizations, from clubs to voluntary
associations and corporations.
GST
The goods and services tax (GST) is a value-added tax levied on most
goods and services sold for domestic consumption. The GST is paid by
consumers, but it is remitted to the government by the businesses
selling the goods and services. In effect, GST provides revenue for the
government. The goods and services tax (GST) is an indirect federal
sales tax that is applied to the cost of certain goods and services. The
business adds the GST to the price of the product, and a customer who
buys the product pays the sales price plus GST. The GST portion is
collected by the business or seller and forwarded to the government. It
is also referred to as Value-Added Tax (VAT) in some countries.
Crude oil Price
Crude oil is a liquid fuel source located underground. It is extracted
through drilling. Oil is used for transportation, petroleum products, and
plastics. Crude oil is the base for lots of products. These include
transportation fuels such as gasoline, diesel, and jet fuel. They also
include fuel oils used for heating and electricity generation. In 2017, the
United States consumed 7.3 billion barrels of crude oil. Of that, 47
percent went to motor gasoline, 20 went to heating oil and diesel fuel,
and 8 percent to jet fuel.

BREXIT
It is an abbreviation for "British exit," referring to the U.K.'s decision in
a June 23, 2016 referendum to leave the European Union (EU). The
vote's result defied expectations and roiled global markets, causing
the British pound to fall to its lowest level against the dollar in 30 years.
Former Prime Minister David Cameron, who called the referendum and
campaigned for Britain to remain in the EU, announced his resignation
the following day. Home Secretary Theresa May replaced him as leader
of the Conservative party and as Prime Minister. Following a snap
election on June 8, 2017, she remains Prime Minister.
The Conservatives lost their outright majority in Parliament, though,
and with it – May's critics argue – a mandate for a "hard Brexit," in
which Britain leaves the EU's single market and customs union.
Trade wars
A trade war occurs when one country (Country A) raises tariffs (a tax or
duty) on another country’s (Country B) imports in retaliation for
Country B raising tariffs on Country A's imports.
Trade wars are a side effect of protectionism, government actions and
policies that restrict international trade, generally with the intent of
shielding local businesses and jobs from foreign competition, or of
righting trade deficits (a country's imports exceeding its exports).