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gitally and to increase the digital literacy. Finance Minister MrArunJaitley stated that the government is looking at a number of reforms and resolution of pending tax disputes to attract investments. Currently, the manufacturing sector in India contributes over 15 per cent of the GDP. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP. Based on the recommendations of the Foreign Investment Promotion Board (FIPB), FDI inflows have increased 40 per cent during April-December 2015 to reach US$ 29.44 billion. The Government of India has launched an initiative to create 100 smart cities as well as Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities with an outlay of Rs 48,000 crore (US$ 7.47 billion) and Rs 50,000 crore (US$ 7.34 billion) crore respectively. Smart Cities are satellite towns of larger cities which will consist of modern infrastructure and will be digitally connected. 🙏🙏

market prices paid by consumers. [] More data from manufacturing sector: The new GDP has incorporated more comprehensive data on corporate activity and has brought more factories under its umbrella. Now, selling and marketing expenses are also reckoned, and not just production costs. [] Government’s earnings, ie tax – subsidies : Previously, in India what government received was not included in the headline GDP. Now what it earns by the indirect taxes (such as sales tax and excise duty) after deducting subsidy is also included in headline GDP. ie GDP at constant market price. [] Criticism: The objection to this method is that the GDP figure can be manipulated by changing subsidy disbursal or by raising taxes.   Steps towards becoming 3rd largest Economy (Nominal GDP Terms) [] Fiscal Consolidation: A target of fiscal deficit of 3 percent of GDP must be achieved by 2016-17  and must always be kept below that level. [] Current Account Deficit: Since the economy will run a Current Account Deficit every year for some more years, it can be financed only by foreign investment, whether it is FDI or FII or ECB or any other kind of foreign inflow. Therefore, foreign investment must be encouraged. [] Price Stability and Growth:  In a developing economy where the aim is high growth, a moderate level of inflation will have to be accepted.  RBI must strike a balance between price stability and growth while formulating monetary policy. [] Financial Sector Reforms:  The recommendations of the Financial Sector Legislative Reforms Commission must be implemented immediately as they do not require any change in legislation.  Also, a timetable must be drawn for other recommendations that require  legislation. [] Infrastructure:  The country must rebuild its infrastructure and add a huge quantity of new infrastructure.  Every proven model must be adopted but the  PPP model must be more widely used.  New financing structures must be created for long term funds and pooling of investments. [] Manufacturing:  The Government  must focus on manufacturing and especially on manufacturing for export.  All taxes, Central and State, that go into an exported product should be waived or rebated.  There should be a minimum tariff protection so that there is an incentive to manufacture goods in India rather than import them into India. [] Subsidies:  Given the limited resources, and the many claims on the resources, the Government must choose the subsidies that are absolutely necessary and give them only to the absolutely deserving. [] Urbanization:  The country’s cities will become ungovernable, and perhaps unlivable, if attention is not paid  to  the decay in these cities.  Cities have wealth and also create wealth.  But that wealth should be tapped for resources to rebuild the cities with a new model of governance. [] Skill Development:  Skill development must rank alongside secondary education, university education, total sanitation and universal health care in the priorities of the Government. [] Sharing responsibility between States & Centre: States have the fiscal space to bear a reasonable proportion of the financial costs of implementing flagship programmes and must willingly do so, so that the Central Government can allocate more resources for subjects such as defense, railways national highways and telecommunications that are its exclusive responsibility.   Government Initiatives Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India & Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy. This initiative is expected to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services di

🦋Indian Economy: Basic Concepts & Overview🦋 India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) & International Monetary Fund (IMF). According to the Economic Survey 2015-16, the Indian economy will continue to grow more than 7 per cent in 2016-17. National Income Gross Domestic Product: GDP is the total money value of final goods and services produced in the economic territories of a country in a given year. Total value of goods and services produced in India for 2015-16 is around 100 lakh crore Indian rupees or around 2 trillion US dollars at current market prices. This is the value of Indian GDP when expressed at current market price. GDP stands for total value of goods and services produced inside the territory of India irrespective of whom produced it – whether by Indians or foreigners. Gross National Product: GNP is the total value of goods and services produced by the people of a country in a given year. It is not territory specific. If we consider the GNP of India, it can be seen that GNP is lesser than GDP. Relationship between Factor Cost & Market Price: Factor Cost + Indirect Tax – Subsidies = Market Price. Relationship between Factor Cost & Basic Price: Factor cost + production tax – production subsidies = Basic prices. Relationship between Basic Price & Market Price:Basic Price + Product tax – Product Subsidy = Market Price. Fiscal Policy Fiscal policy refers to the policy actions of the Government. Budget, tax, subsidies, expenditure etc. forms part of the fiscal policy. You might need to understand various deficits like Fiscal Deficit and Primary Deficit as part of Fiscal Policy. Fiscal Deficit (FD):  The fiscal deficit is the difference between the government’s total expenditure and its total receipts (excluding borrowing). In layman’s term FD corresponds to borrowings and other liabilities. Balance of Payments Current Account Deficit (CAD): Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). Current account deficit in simple terms is dollars flowing in minus dollars flowing out. Capital Account Deficit: Capital account Deficit occurs when payments made by a country for purchasing foreign assets exceed payments received by that country for selling domestic assets. (For example, if Indians are buying a lot of properties in US, but if Americans are not buying any properties or buildings in India, India will have Capital Account Deficit.) A deficit in the capital account means money is flowing out the country, but it also suggests the nation is increasing its claims on foreign assets. In other words at times of Capital Account Deficit, foreign investment in domestic assets is less and investment by the domestic economy in foreign assets is more. Sectors of Indian Economy [] Three sectors – Primary, Secondary and Tertiary. [] Primary = Agriculture related. [] Secondary = Industry related. [] Tertiary = Service related. [] Sector share towards GDP : Tertiary (60%) > Secondary (28%) > Primary(12%). [] Sector share by Working Force : Primary (51%) > Tertiary (27%) > Secondary (22%)   Indian GDP -- India is the third biggest economy in the world in terms of GDP measured at purchasing power parity (PPP), according to a World Bank report. India is also projected to become the third largest economy (Nominal GDP) in the world by 2043. Indian new GDP series – Base Year @ 2011-12 [] Headline GDP: Headline GDP is now GDP at market prices as per the new GDP series. [] GVA at basic prices: GDP at market prices is derived from a new quantity ie. Gross Value Added (GVA) at basic prices. [] Relation between GVA & GDP: GVA at basic prices + (product taxes) – (product subsides) gives GDP at market price. [] Consumer-end given importance: Earlier, domestic GDP was calculated at factor cost, which took into account prices of products received by producers. The new formula takes into account

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