COMMERCIAL POLICY

AND ECONOMIC GROWTH

BY
KAVYA .K
AKASH. A
APOORVA. J
 INTRODUCTION

• The economic condition of the people is the crux of

Indian politics. Here is a country of ancient
civilization, with rich and varied resources, that has
been in intimate contact with the most materially
advanced countries of the West , but which is still
essentially mediaeval in outlook and organization,
and which is a byword throughout the world for the
poverty of its people.
 COMMERCIAL POLICY

• Commercial policy means the regulations and

policies that determine how a country conducts trade
with other countries. A country’s commercial policy
includes the use of tariffs and other trade barriers,
such as restrictions on what goods can be imported or
exported, and which countries are allowed to import
or export goods to the home country.
 POLICY DEVELOPMENT

• Indian leaders believed that industrialization was the

key to economic development . The Industrial policy
resolution of 1980 was based on the policies like
optimum utilization of installed capacity, correction
of regional imbalances and promotion of economic
federalism through equitable spread of investment
and dispersal of returns.
 INDIAN POLICY RESOLUTION 1991

• Govt is pledged to launching a reinvigorated struggle

for social and economic justice, to end poverty and
unemployment and to build a modern, democratic,
socialist, prosperous and forward-looking India. It
Endeavour's to abolish the monopoly of any sector in
any field of manufacture, except on strategic or
military considerations
 INDUSTRIAL LICENSING
• The obtaining of INDUSTRIAL licensee
for manufacturing activities, now it has
been limited. In order to have control over
industries.
• Now a days growth rate has increased due
to industrialization.
• The rate of industrial growth rate in
current financial year was 9.7%
 INDUSTRIAL LICENSING

Limited to the following industries

• Cigars and cigarettes of tobacco
• Electronics Aerospace & defense equipnt
• Distillation & brewing of alcoholic drinks
• Industrial explosives
• Hazardous chemicals
• Industries reserved for the public sector
• Units having foreign equity more than 24%
 INDIA facing Agricultural problems

• First and foremost come all the problems due to the

concentration of an excessive population upon the
soil, which results in sub-division, indebtedness and
underemployment.
• Secondly there are the problems arising out of a
whole series of interconnected social institutions,
such as caste, which tend to perpetuate the existing
lack of the ‘economic motive’.
• Agriculture growth rate- 4.5%
 Global Trade Relations

• India’s economy is mostly dependent on its large internal

market with external trade accounting for just 20% of the
country GDP.
• India’s major trading partners are the European union,
China, the United States and the United Arab Emirates.
• India’s gross national income per capita in 2008 was $1040.
• Indian official estimates of the extent of poverty have been
subject to debate with concerns being raised about the
methodology for determination of the poverty line.
 ECONOMIC PROSPECTS FOR 2010

• The Global Economy seems to be recovering after the recent

economic shock.
• The Indian Economy, however, was hit in the latter part of the
global recession and the real economic growth witnessed a sharp
fall, followed by lower exports, lower capital outflow and
corporate restructuring.
• It is expected that the global economies will continue to sustain
in the short term , as the effect of stimulus programs is yet to bear
fruit and tax cuts are working their way through the system in
2010.
• Indian economic growth (2010-11) 8.5%
• Indian economic growth (2011-12) 9.0%
 INDIAN ECONOMY 2010

• In order to sustain economic growth during the time

of worst recession, government authorities in India
have announced the stimulus packages to prop up
economic growth. To finance the stimulus packages,
the Indian government has raised over $100 billion
over the last four quarters in a way to finance the
stimulus package. The country’s public debt,
according to the RBI has surged to over 50% of the
total GDP.
 CENTRAL GOVT DEBT

In Rs Corers Q3 2008 Q3 2009

(10 million)

External debt 237351.77 294941.67

Internal debt 1861934.46 2210509.07

 Long Term Growth Perspective

–Phase I: 1950‐1 to 1979‐80Two sub‐phases (50to 65; 66 to

79)

–Phase II: 1980‐81 to 1993‐4Start: Policy regime change

–End (a) Crises year(1990‐91). (b) Reform initiation 1991‐2
(c) Adjustment/recovery (1992‐3 to 1993‐4)

–Phase III: ?1991‐2 reforms: Growth Puzzle ‐J curve

–1992‐3/1994‐5: Rising trend growth
–2003‐4: Statistical significant growth shift
Growth Acceleration‐GDP
 Aggregate Demand Growth Dynamics:
Investment Led growth

• Growth of Demand Investment growth rate doubled

• Pvt consumption & imports accelerated
• Govt. Consumption‐slowed
• Role of private Consumption important but declined below
that of Investment for first time
• External : Short period of positive contribution (low oil
prices) over
• Govt Consumption: Lower contribution