Analysis of Indian Economy: A Comprehensive Study

This assignment provides an in-depth analysis of the Indian economy, covering topics such as energy policy, financial development, income, energy, and trade on carbon emissions. It also includes studies on the impact of climate change on food grain yields, oil price shocks, and their effects on the Indian economy. The assignment draws from various research papers and publications to provide a comprehensive understanding of the Indian economy's growth rate and statistics.

RESEARCH PROJECT

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................1
Background.................................................................................................................................1
Overview.....................................................................................................................................1
Aim and Objectives.....................................................................................................................1
Rationale.....................................................................................................................................1
Research question........................................................................................................................2
LITERATURE REVIEW................................................................................................................3
General overview of India...........................................................................................................3
PEST Analysis of India...............................................................................................................3
National Resource and factor endowments that create competitive advantages.........................4
Foreign currency and exchange influences.................................................................................4
India existing trade policies, systems, barriers and incentives....................................................5
Existing levels of Foreign Direct Investment..............................................................................5
Summary and conclusion............................................................................................................5
RESEARCH METHODOLOGY.....................................................................................................7
Research approach......................................................................................................................7
Research Philosophy...................................................................................................................7
Research Design..........................................................................................................................7
Data sources................................................................................................................................7
Research Hypotheses..................................................................................................................7
Ethical consideration...................................................................................................................8
Reliability and validity................................................................................................................8
Research Limitations...................................................................................................................8
DATA ANALYSIS/ INTERPRETATION.....................................................................................9
CONCLUSION AND RECOMMENDATION.............................................................................12
Conclusion.................................................................................................................................12
Recommendations.....................................................................................................................12
REFERENCES..............................................................................................................................14

EXECUTIVE SUMMARY
The research study focused on international expansion in India. India's foreign trade
policies and systems are effective enough to attract more and more foreign organisations to
increase the investment in the country. There are rules, laws, policies and regulations that
monitors and governs the foreign trade practices of the country.

INTRODUCTION
Background
To ascertain the economic growth of India in comparison with the other nations. It can be
said that this nation has Gross Domestic Production rate of 7.4% which is on favourable state in
accordance with the RBI's assumptions. Therefore, they believe that, the GDP per capita needed
to be in between 7-7.5%. Moreover, to state a business in India will be very profitable and
beneficial to retain the appropriate returns. Moreover, investing in this country will be profitable
and adequate in terms of retaining the appropriate gains.
Overview
India is the rapidly growing economy in the world, which stands on 6th position in
relation with nominal GDP rates. It states the 3rd position in relation with purchasing power
parity. Thus, indicates that, to make investment in India will be beneficial as the labour cost of
this nation is comparatively lower and the adequate GDP ration will reduce the dependency for
resource requirements (About Indian Economy Growth Rate & Statistics, 2018). Similarly, the
research is comprises with analysing the internal economic environment of the nation as well as
the governmental plans of policies which has influences in the growth and wealth maximisation.
Aim and Objectives
Aim: “To ascertain economic stability, financial strength as well as currency volume of India for
investment purpose”.
Objective:
 To determine the internal economic control in India.
 To ascertain the liquidity and ability to meet debts.
 To assess governmental plans and policies for growth in GDP rate as well as improving
currency rates.
Rationale
In relation with analysing the macro and micro level environment of India for investment
purpose the research has proposed to choose this research analysis (Jayakumar, Kumar and
Tucci, 2018). There are various reasons which will be assistive for having appropriate
information regarding growth of Indian economy. India is one of the most stable and fastest
1

growing economy which is consisted of various economical plans such as Make in India on
which the National Development Council has insists of making the 9% rise in Growth rate per
year. Therefore, the aim of government is the make the appropriate development of domestic
market which will be assistive to Foreign investors in terms of availability of large varieties of
resources, better climate conditions as well as favourable exchange rates. Similarly, it will be
helpful in selecting the research study over India as it is the most satisfactorily emerging
economy in the world.
Research question
 What are the internal economic control in India?
 How to develop the liquidity and ability to meet debts?
 How to assess governmental plans and policies for growth in GDP rate as well as
improving currency rates?
2

LITERATURE REVIEW
General overview of India
India or Republic of India is seventh largest country by area located in South Asia. With over 1.2
billion population, India is considered as second most populous country in the world. According
to Agrawal, (2015) due to abundant resources, rich culture, traditions, and possibilities of
growth, India is considered as optimum country to establish business organisation. With agile
economic policies, cheap labour, easy availability of raw materials, and large amount of young
and talented manpower, organisations all around the world establish their businesses in India.
The Indian economy in 2017 was the world's largest by nominal GDP and third largest by
purchasing power parity. Following market based economic reforms in 1991, India become one
of the fastest growing major economic reforms and is considered as newly industrialised country.
Boutabba, (2014) argued that despite of rising economic rates, the country faces several issues
like increasing poverty, corruption, conflicts, chaos, regional disputes, inadequate public health
care facilities and unstable political conditions. With enriched resources and ample of skilled
people, the country still failed to enhance its reputation in terms of economy. The result was that
the country ranks 141 in per capita GDP with $2,134 and 123rd in per capita GDP (PPP) with
$7,783 as of 2018 (Kaushal and Pathak, 2015).
PEST Analysis of India
According to Hooda, (2018) PEST stands for political, economic, socio cultural and
technological factors that affects the external environment of the organisation. In this context, to
establish a business empire in India, it is essential to analyse the environment of the country. The
Indian is one of the biggest democratic country in the world which runs federal forms of
government. The political environment in India is stable due to efficient laws and legislation.
The business policies and practices greatly influenced by the political decision in India. Ahmad
and et.al., (2016) said that since the inception of national economic reforms in 1991, the
economic conditions in India has been significantly stable. According to the policy,
liberalisation, industrial licensing, formation of Foreign Investment Promotion Board (FIBP)
results in subsequent improvement in the national economy of India. Malhotra, (2014) elucidated
that social factors refers to the transformation in taste, preferences and trends in society of the
country. India is developing country and majority of the population lies between age group of 15
to 65. This implies that youth influence is more in the country which can be beneficial for the
3

organisation by introducing their products and services in the country. Mehrotra and et.al.,
(2014) enunciated that technological factors plays significant role in the growth and development
of the country. Technology influences the product development of the organisation operating in
India. With the introduction of new technologies such as 4G servers and hybrid mechanism,
technological development is rapidly growing in India.
National Resource and factor endowments that create competitive advantages
According to Perdikis, (2018) availability of resources are major factors that affects the
productivity and profitability of the organisation. In order to expand the business in any country,
the analysts needs to analyse country's environment and availability of resources. India enriched
with natural resources that helps the business organisation to thrives. India produces 4 types of
fuels. 11 metallic, 52 non metallic and 22 minor minerals. Furthermore, India has world's largest
rail and road network thus there will be no difficulty in transportation. With increase in
sustainable developmental activities, many public and private organisations in India uses
renewable source of energy. Therefore, it can be understandable that establishing organisation in
India will not only benefit the organisation but also helps in generating competitive advantages.
With billions of people living in the country, it will be easy for the business organisation to
establish ample amount of customer base by providing unique, efficient, quality and effective
products and services to the people. Gupta, Sen and Srinivasan, (2014) argued that despite of
having ample of amount of resources, India has been facing scarcity of resources in many of its
important areas such as Bangalore and Mumbai. The national capital i.e. Delhi has been
suffering from high air pollution level which can increase number of respiratory disease in
human being.
Foreign currency and exchange influences
The national currency of India has been denoted by Indian Rupee. According to Singh,
Gupta and Kumawat., (2017) India follows floating exchange rate system where the national
currency has been highly influenced from international market and currencies. India had robust
financial system and efficient monetary policy that regulates the fiscal position of the country.
Boutabba, (2014) said that the government of country is determined to transform the status of
India from developing to developed country by year 2025. With increase in global trade and
agile internation trade policies, import and export rate of India greatly impact on the national
economy of country. As per Hooda, (2018) foreign currency and foreign exchange rate influence
4

the domestic market of India greatly. India is expected to be the fastest growing economy in Asia
and will reverse two years of declining growth to clock 7.3 per cent rise in GDP in the current
fiscal and further accelerate to 7.6 per cent.
India existing trade policies, systems, barriers and incentives
India's foreign trade policies and systems are effective enough to attract more and more foreign
organisations to increase the investment in the country. There are rules, laws, policies and
regulations that monitors and governs the foreign trade practices of the country. According to
Kaushal and Pathak, (2015) India's existing trade policy announced for 2015-2020 majorly
focused on exporting goods to raise the national economy of the country. The new government
of India, has been focusing on promoting 'Make in India' in order to enhance the economy of the
country. Due to agile foreign trade policies, conducting trade in India is easy and efficient.
According to Ahmad and et.al., (2016) the major trade barrier import licensing has been
eliminated by Indian Government for most of the consumer goods. For the purpose of entry
required, India has distinguished between goods that are new and refurbished. India allows
refurbished goods without an import license. Thus, it implies that the foreign trade policies and
legislations are agile and flexible which allows foreign traders to increase their investment in the
country.
Existing levels of Foreign Direct Investment
According to Perdikis, (2018) India received US $532.6 billion between years 2000 to
2017 as total foreign direct investment from various countries. India became one of the leading
destination for foreign direct investment inflows from Asian Countries. Due to effective
governmental policies regarding foreign trade and efficient governmental support to foreign
investors, the levels of FDI has been increasing rapidly. In new government regime the foreign
direct investment has been increased from $36 billion to $60 billion in 2016-2017.
Summary and conclusion
From the above literature review it can be understood that India can be appropriate
country for establishing international business. Abundant resources, rich culture, traditions, and
possibilities of growth, India is considered as optimum country to establish business
organisation. With agile economic policies, cheap labour, easy availability of raw materials, and
5

large amount of young and talented manpower, organisations all around the world establish their
businesses in India.
6

RESEARCH METHODOLOGY
Research approach
The present research is comprises with the qualitative research on which the research will
be able to gain the adequate resources from the environment as to analyse the human behaviour
as well as analysis over the consumer needs (Kumar, 2017). Therefore, it consists with
Positivists paradigm, which involves collection of numerical data and that will be analysed on
the basis of statistical measurements.
Research Philosophy
It comprises with the technique of collecting and analysing the data set for the better
development of operations. Therefore, it comprises with the positivism research on which the
data will be collected, observed as well as adequate discussion will be made over it.
Research Design
The use of fundamental study which will be helpful in the collection of adequate data and
analysing the appropriate outcomes which in turn reflect the accurate solutions to the proposed
issues (Gangwar and Tiwari, 2018).
Data sources
To analyse the requirements of the operations there will be study based on evaluating the
secondary sources. Therefore, to determine the adequate information relevant with the GDP and
FDI rates of India (Kalirajan and Bhide, 2017). Moreover, these are the main issues will be
helpful in determining the profitability regarding making the adequate investment in India.
Similarly, the data has been collected from the past records by selecting the period of 2000-2016.
Research Hypotheses
In relation with analysing the research outcomes and the relaivility of te facts there has
been consideration of the data set and records of India's GDP and FDO rates. Therefore, there
will be analysis is on the basis of determining various hypotheses such as:
H0: There is no significant relationship in between FDI and GDP rate of India
H1: There is a significant relationship in between FDI and GDP rate of India.
7

Ethical consideration
To form a successive research which must consists of all the adequate sources to be cited
in as well as have the appropriate references to all the resources which were used in this research
study (Murphy, 2018). Similarly, all the literature and opinions of various authors has been
considered to have the legal constraint over the research study.
Reliability and validity
To bring the reliable outcomes over the consisted research there will be appropriate
analysis through all the requirements (Yegidis, Weinbach and Myers, 2017). Similarly, this study
comprises with concerning all the valid and authenticated information.
Research Limitations
To ascertain the accurate analysis over the profitability as well as benefits of having
appropriate research study there are a lot many resources which were left due to improper time.
The main aim of researchers is to analyse the economic growth and ability of nation in making
the debt payments.
8

DATA ANALYSIS/ INTERPRETATION
By considering appropriate analysis over the national economy and the growth of GDP
ratios in comparison with the Foreign Direct investments the researchers concerning about
implicating the statistical measurements. Moreover, there has been adequate development of
plans and policies after analyse the profitability as well as validity of the research which in turn
will be assistive in terms of revenue gains. Similarly, to fetch the reliable data there has been use
of Secondary method of data collection (Glaser and Strauss, 2017). It comprises with the records
of India's FDI and Gdp rates for the period 2000-2016. There has been huge changes in the
economic conditions of the nation during such period on which this analysis will be helpful in
presenting the appropriate discussion.
Date FDI GDP Employed
2000 3584217307.18756 6771.458984375
2001 5128093561.62688 6903.2451171875
2002 5208967106.27894 6975.41796875
2003 3681984671.43429 7306.4360351563
2004 5429250989.85717 7673.8442382813
2005 7269407225.61438 8160.796875
2006 20029119267.1396 8882.623046875
2007 25227740886.6819 9715.4072265625
2008 43406277075.8109 10080.453125
2009 35581372929.6642 10874.654296875
2010 27396885033.7838 11944.2724609375
2011 36498654597.8589 12653.107421875
2012 23995685014.2142 13268.958984375
2013 28153031270.3203 13829.193359375
2014 34576643694.1383 14587.58203125
2015 44009492129.5319 15490.7978515625
2016 44458571545.798 16305.2431640625
Regression analysis
9

SUMMARY OUTPUT
Regression Statistics
Multiple R 0.8526981541
R Square 0.7270941419
Adjusted R Square 0.7089004181
Standard Error 1741.802799576
Observations 17
ANOVA
df SS MS F Significance F
Regression 1 121245887.012652
121245887.0126
52
39.9640088
599
1.3702525369254
7E-005
Residual 15 45508154.8891632
3033876.992610
88
Total 16 166754041.901815
Coeffici
ents
Standard
Error t Stat P-value Lower 95%
Upper
95%
Lower
95.0%
Upper
95.0%
Interce
pt
6533.3
673126
673
779.134017
426
8.3854217
202
4.8009
308034
052E-
007
4872.68246
52944
8194.0521
600402
4872.6824
652944
8194.0521
600402
X
Variabl
e 1
1.7873
455713
0031E-
007
2.82731374
988012E-
008
6.3217093
305
1.3702
525369
2547E-
005
1.18471791
056662E-
007
0.0000002
39
1.1847179
1056662E
-007
0.0000002
39
Correlation:
10

FDI GDP Employed
Column 1 1
Column 2 0.8526981541 1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-0.5
0
0.5
1
1.5
2
FDI
GDP employed
Interpretation:
In relation with analysing the statistical analysis over the proposed data set, the regression
value of the analysis comprises with the significant value of 1.370. Thus, such significant value
determines that this analysis satisfies the alternative hypotheses which ascertains that there will
be a significant relationship in between GDP rates and FDI rates. Thus, it can be said that as if
the rate of foreign investments has bull in records than which will results in a rise in the rates of
GDP as well. On the other side, the correlation of such variable which insists that FDI rates as
0.85 while GDP Employed as 1. Therefore, both the analysis approaches to the succession of
Alternative hypotheses which indicates that as there is a rise in the foreign investments which
will improve the GDP rate of India.
However, after analysing such variables and outcomes derived from such observations
which will be helpful in decision making that investing in India which will have positive results
in improving the domestic production of nation. Thus, it will be a great opportunity for the
Indian government as per achieving the balanced GDP rates as well as employment rates.
11

CONCLUSION AND RECOMMENDATION
Conclusion
From the above study, it can be concluded that in order to establish organisation in
different country, it is rudimentary for management to analyse the environment of the country
thoroughly so that adequate knowledge can be gain. In this context, it can be understood that
India is appropriate country with adequate resources and efficient economic condition for global
expansion. Through reviewing articles written by senior authors, literature review has been
conducted in the research study. With precise research methodology and approaches, researcher
was able to accomplish the aim and objectives of the study.
Recommendations
Going global is not easy, as it requires enormous efforts, analysis, team work and huge
amount of capital. In order to expand business in India, it is recommended to the organisation to
focus on country's culture, trends and purchase behaviour of customers in order to enhance their
sales and profits. Conducting market analysis: Before going global, it is important for the organisation to
conduct in-depth market analysis (Agrawal, 2015). As customer taste and other macro
factors differ in different countries, it is rudimentary for the management to conduct in-
depth market analysis. Developing precise strategy and business plan: It is recommended to the management of
business organisation to formulate precise strategies by analysing all the macro and micro
factors that can affect the productivity and profitability of the organisation (Boutabba,
2014). Here, the management has to devise precise strategies which define short, medium
and long term strategy.
 Data analysis: To analyse the economic environment of nation there are various
operations which will be assistive in gaining appropriate information and knowledge
relevant with the national economic conditions. Thus, in relation with the same the
researchers has proposed to make analysis over GDP rates and FDI rates of India.
However, after analysing such variables and outcomes derived from such observations
which will be helpful in decision making that investing in India which will have positive
results in improving the domestic production of nation. Thus, it will be a great
12

opportunity for the Indian government as per achieving the balanced GDP rates as well as
employment rates. Similarly, it can be said that there is significant relationship in
between FDI and GDP rate of India. However, it can be said that India will be
appropriate nation for making the investment and expansion of the business.
13

REFERENCES
Books and Journals
Agrawal, A. N., 2015. Indian economy. New Age International Pvt.
Ahmad, A., and et.al., 2016. Carbon emissions, energy consumption and economic growth: An
aggregate and disaggregate analysis of the Indian economy. Energy Policy. 96. pp.131-
143.
Boutabba, M. A., 2014. The impact of financial development, income, energy and trade on
carbon emissions: Evidence from the Indian economy. Economic Modelling, 40, pp.33-41.
Gangwar, R. and Tiwari, M. K., 2018. Is Goods and Services Tax A Milestone In Indian
Economy. GST Simplified Tax System: Challenges and Remedies. 1(1). pp.45-48.
Glaser, B. G. and Strauss, A. L., 2017. Discovery of grounded theory: Strategies for qualitative
research. Routledge.
Gupta, S., Sen, P. and Srinivasan, S., 2014. Impact of climate change on the Indian economy:
Evidence from food grain yields. Climate Change Economics. 5(02). p.1450001.
Hooda, S., 2018. A study of FDI and Indian Economy.
Jayakumar, C., Kumar, A. S. and Tucci, M. P., 2018. Oil Price Shocks and Their Impact on the
Indian Economy: Evidence from Sign Restricted SVAR Model. IUP Journal of Applied
Economics. 17(1). pp.58-65.
Kalirajan, K. and Bhide, S., 2017. Revival: A Disequilibrium Macroeconometric Model for the
Indian Economy (2003). Routledge.
Kaushal, L .A. and Pathak, N., 2015. The causal relationship among economic growth, financial
development and trade openess in Indian economy. International Journal of Economic
Perspectives. 9(2). p.5.
Kumar, G., 2017. Foreign Direct Investment and Indian Economy. Journal of Commerce,
Economics & Management. 1(1). pp.10-15.
Malhotra, B., 2014. Foreign Direct Investment: Impact on Indian Economy. Global Journal of
Business Management and Information Technology. 4(1). pp.17-23.
Mehrotra, S., and et.al., 2014. Explaining employment trends in the Indian economy: 1993-94 to
2011-12. Economic and Political Weekly. 49(32). pp.49-57.
Murphy, E., 2018. The eighteenth-century southeastern American Indian economy: Subsistence
versus trade and growth. In The Other Side Of The Frontier (pp. 150-159). Routledge.
14

Perdikis, N. ed., 2018. The Indian economy: contemporary issues. Routledge.
Singh, U., Gupta, H. and Kumawat, S., 2017. Fiscal deficit, public debt and economic growth
relationship: An empirical investigation on indian economy. Research Journal of
Humanities and Social Sciences. 8(1). pp.21-26.
Yegidis, B. L., Weinbach, R. W. and Myers, L. L., 2017. Research methods for social workers.
Pearson.
Online
About Indian Economy Growth Rate & Statistics. 2018. [Online]. Available through
:<https://www.ibef.org/economy/indian-economy-overview>.
15