Analysis of Indian Economy - A SWOT Analysis
Strengths
Huge pool of labour force
High percentage of cultivable land
Diversified nature of the economy
Huge English speaking population, availability of skilled manpower
Stable economy, does not get affected by external changes
Extensive higher education system, third largest reservoir of engineers
High growth rate of economy
Rapid growth of IT and BPO sector bringing valuable foreign exchange
Abundance of natural resources
Weakness
Very high percentage of workforce involved in agriculture which contributes only 23% of GDP
Arround a quarter of a population below the poverty line
High unemployment rate
Stark inequality in prevailing socio economic conditions
Poor infrastructural facilities
Low productivity
Huge population leading to scarcity of resources
Low level of mechanization
Red tapism, bureaucracy
Low literacy rates
Unequal distribution of wealth
Rural-urban divide, leading to inequality in living standards
Opportunities
Scope for entry of private firms in various sectors for business
Inflow of Foreign Direct Investment is likely to increase in many sectors
Huge foreign exchange earning prospect in IT and ITES sector
Investment in R&D, engineering design
Area of biotechnology
Huge population of Indian Diaspora in foreign countries (NRIs)
Area of Infrastructure
Huge domestic market: Opportunity for MNCs for sales
Huge matural gas deposits found in India, natural gas as a fuel has tremendous opportunities
Vast forest area and diverse wildlife
Huge agricultural resources, fishing, plantation crops, livestock
Threats
Global economy recession/slowdown
High fiscal deficit
Threat of government intervention in some states
Volatility in crude oil prices across the world
Growing Import bill
Population explosion, rate of growth of pobulation still high
Agriculture excessively dependent on monsoons
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Business Enviornment - Indian Economy Overview
However, the service sector is greatly expanding and has started to assume an increasingly important role. The fact that the English speaking population in India is growing by the day means that India has become a hub of outsourcing activities for some of the major economies of the world including the United Kingdom and the United States. Outsourcing to India has been primarily in the areas of technical support and customer services.
In general, the Indian economy is controlled by the government, and there remains a great disparity between the rich and the poor. Ranked by the exchange rate of the United States Dollar, the Indian economy is the twelfth largest in the world.
In Purchasing Power Parity GDP, the figure for India was 1.5 trillion US Dollars in 2008. The per capita income of India is 4,542 US Dollars in the context of Purchasing Power Parity. This is primarily due to the 1.1 billion population of India, the second largest in the world after China. In nominal terms, the figure comes down to 1,089 US Dollars, based on 2007 figures. According to the World Bank, India is classed as a low-income economy.
Recent trends have seen India exporting the services of a numerous information technology (IT) professionals. IT professionals have been sought for their expertise in software, software engineering and other financial services. This has been possible as a result of the high skill levels of Indian IT professionals.
Other areas where India is expected to make progress include manufacturing, construction of ships, pharmaceuticals, aviation, biotechnology, tourism, nanotechnology, retailing and telecommunications. Growth rates in these sectors are expected to increase dramatically.
Over the years the Indian government has taken an economic approach that has been influenced, in part, by the Socialist movements. The Indian national government has maintained a high and authoritative level of control over certain areas of the Indian economy like the participation of the private sector, foreign direct investment, and foreign trade.
It may be observed that in spite of the tremendous debate about the justification of the privatization of industries traditionally owned by the government, the process of privatization has still continued at a steady pace.
One of the major challenges before the Indian economy, or those who are responsible for operating it, is to remove the economic inequalities that are still persistent in India after its independence in 1947. Poverty is still one of the major issues although these levels have dropped significantly in recent years. As per official surveys, it has been observed that in the 2004, almost 27% of the working Indian populace was living below the poverty line.
Poverty is a challenge that’s becoming increasingly important in relationship to the alarming rate of new births. This implies that ever more rapid change, or birth control policies like the ‘One Child’ policy in China, are needed to reduce the numbers affected by poverty in the vast Indian economy.
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