Syed Azharuddin M.Com , M.Phil , Ph.D., B.J., PGDHRD, PGDBM Associate Professor

1. SyedAzharuddin M.Com, M.Phil, Ph.D., B.J., PGDHRD, PGDBM Associate Professor Department of Commerce, Dr. Babasaheb Ambedkar Marathwada University, Aurangabad

2. All is Not Well • Global Economy is still not out of the Woods • Pace of recovery frustratingly slow • Federal reserves mulls over another Quantitative Easing • RBI lists concern, likely impact on global recovery • Sovereign Credit Crisis could spook Global Market • Trouble of Greece could spread to neighbors • Including Advanced Economies in European Union

3. Rising Debts and Deficit Levels of bigger • Advanced Economies like U.S., U.K. & Japan • Inviting attention of rating agencies • Concerned expressed is still not rubbed off • Rising commodity prices stress on economies • Gyration in commodity market, early indicator • Changing prospects of Global economy • Genuine Hedgers are crowding out • Stress Indicator, severity of stress on financial market

4. Equities, Forex, Bond Market, Banking Sector continue • To remain under Duress, as Interest Rates keep Rising • Banks with Capital Adequacy of 14% above mandated 9% • If demands for loans recede, then markets • Could enter into a crisis like they did in 2008-09 • Borrowing, Foreign currency convertible bonds • Haunting many companies may struggle to repay back • Assets-Liability Mismatch: - Banks credit grew • Deposits lagged behind, banks resorted to CD’s • Reduction in share of liquid Assets, concerns Liquidity Position

5. Global Economic Growth may be slowing • Govts. In west withdrawing fiscal stimulus • International Trade could be under pressure • Japans GDP decline due to Tsunami • Disturbances in Mid-East & North African States • Structured causes of Global imbalance not addressed • Negative Trade Balance of US continues • Resurfacing of stagflation risks, owing to oil supply • Arab unrest spreading to bigger oil-exporters

6. Euro Zone Recession? Rising • 70 economist surveyed, 60% chance of return recession • Due to weak economic condition, uncertain financial market • Purchases in Pvt Sector Blocks contracted, lowest last 2 Yrs • Euro zone economy expanded 0.2% in II, III, IV, Ist quarter • Compared last year expanded 1 & 1.3% • Forecast for Germany Euro’s largest economy backbone slashed • France to follow, Europe struggling to prevent debt crisis • European Central Bank(ECB) threw lifeline • Commercial Banks to renew one year funding

7. None of Central Banks of US / Japan / Britain • Expected to raise rates before 2013 • In contrast India’s growth expected 8% or more, China 7.5% or more • US Pressuring WTO • Doha round fundamental disagreement • US & developing economies at Loggerheads on Tariff cuts • Developed & developing fighting on cuts in Mnf Trade barriers • US representing developed countries • Complaining unlevelled playing field in multilateral trade system

8. US & developed economies pressurizing to relax • Tariff cuts in sensitive goods, Textiles, Trucks • Automobile Mnf, Chemicals, Industrial Machines, Electronics • US congress may not approve if not in US favour • Especially Agriculture, Manufacture & Services • Brazil, China, India, refuse to compromise • US negotiating, Tariff cut in Health Care, Pharma • Medical Equipment, Green Technologies • Trade facilitation agreement will reduce cost of Moving goods

9. Signs of US Collapse • Unemployment and Inflation highest in 28 years • World class jobs in US continue to disappear • 1967- 97% people between 30 to 50 years had jobs, today only 76% • All indications of US slow down eg: - Last Christmas orders • Survey US workers 9 out of 10, do not expect wages is sufficient • Rising cost, consumer confidence lowest in 30 years • All time record 45.8 million Americans on food stamps • Collapse of Economic Impact on society, mob crimes rising daily • Americans started stealing, dog thefts up 32% this year

10. Small Business all over US difficult to take loan • Federal reserves not paying banks to make loans • US national debt increasing billions of dollars per day • Gone to 4 trillion dollars since last 3 years • S & P already stripped AAA credit rating • Call for New Global Currency • Federal reserves desperate, declared zero interest rate up to 2013 • Central Banks of world preparing themselves, world gold council • Latest survey, 48% believe another depression ahead within a year

11. Inclusive Growth – A Giant Leap • Development of agriculture, Education, Health, Social Welfare • Create Employment (with development of) Manufacturing Sector • Take Nation Higher up in value chain • Maintaining Fiscal discipline • Commission targeted growth Industry-11%, farm produce 4% • Increase Health expenditure from 1.3 to 2 % of GDP • Nations growth to be around 8 to 9% • Increase 100% literacy in 12 plan period

12. Initiatives: - GDP base to be shifted to 2011-12 • Dilemma to focus on GDP growth with Food prices, Inflation • Hence to give more accurate reading of economy's structure • New GDP base will be revised from 2004-05 • Currently 3 most followed macro economic data • Gross Domestic Product, Index of Industrial Production, Wholesale Price Index • Change in base year is a step in right direction • Closer the base year to current year, better the results • Economists say high inflation current year means lower inflation later on • Present spell of slow down could mean higher growth rates later

13. Focus on Manufacturing Sector Exports • Target of 400 Billion $ export of Manufacturing products by 2014 • Focus on Engg, Leather, Gems & Jewelry , Textiles, sports goods • Manufacturing goods account for 80% of country's total exports • Exports Exceeded by 25.9 billion $ last year alone • Target of government to boost manufacturing to 25% contribution • Against 16% current contribution to india’s Gross Domestic Product • Change in land acquisition policy/compensation policy • Delayed billions of $ investment in India • Export competitiveness for higher level of sustainable growth

14. Diversify Hiring in Services • High growth in service sector needs to absorb workers • Highest contributor to GDP 52% service sector • Govt. banging on making services sector Pro-Poor • Effect of Trade in services on employment is important • In terms of employment services sector is next to agriculture • Sustainable growth in subsectors, Transport, Communication • Finance, Retail outlet, IT, BPOS have become value added • Potential to absorb workforce, unskilled, semi skilled & skilled ones

15. Based on Elasticity of organized & formal service sector • Plan envisages 4 groups • Trade & Hotels • Finance, Business Services • 3) Transport, Storage, Communication • 4) Community, Social & Personal Services • Policy aims to earn revenue & provide services & employment • Health Sector • Education- Exploit educational infrastructure • Skill up gradation Programs • Spread of Quality & Technical Education in rural areas & for foreign students

16. Social Development Zones (SDZ’s) • New approach to creating Education & Health institutions • Connecting Emerging opportunities in policy • Govt surging in taking constraints of Pvt sector investment • 2 critical sectors of development directly impact unlocking • Human Potential, Initiative taken with Rajiv Awas Yogna • March towards slum free India • Collectively these provides a canvas of reconfiguring • Select urban locations as Social Development Zones • RAY aims with upgrading housing, Economic & Social Infrastructure of people • in slums, constituting 25% of total urban population

17. Govt. in process also provided opportunity for PPP • In order to facilitate plan implication, a suitable urban land will be given in lieu of social infrastructure in areas mentioned • To convert slums into SDZ’s with property rights & facilities • All global centre of Excellence such as Columbia & New York Universities • London School of Economics are located in Central Locations • Similarly Dharavi will be home of New Bombay School of Economics • If state govts. More proactively hundreds of Good Institutions for Education, Health & Skill training can be nucleated through proposed SDZ model

18. Delivering Subsidies through DCT • Conditional Direct Cash Transfer • Best method to reduce the vulnerabilities of the poor • Identify /Deliver, “Real” beneficiaries • Nandan Nilekini committee, deliberates on subsidies with DCT • Cash Transfer Program is based on Sen’s entitlement Theory • Lack of access to food rather failure of Food Supply leads to famines • DCT as central core (Pay Rs. 500/- ) to all poor • Surrounded by alterable conditions ( Addl Rs. 300/-) for children • Going to School regularly is useful to collapse all development programs

19. An India specific development doctrine • Core of doctrine of DCT have conditions with specific objectives • Reducing specific types of poverty & disadvantage • Dealing with different types of risk • Incentivizing desirable types of consumption & promoting positive spending • Developing markets for products & services • Remove social, market, Administrative discrimination that prevent the poor to engage more fully in development processes • Achieving goals emanating from wider public interest

20. Advantages Apprehensions reduced on outflow of capital DCT is less costly to administer, less prone to corruption DCT makes life of poor dignified, no longer Queue Additional women & children empowered with aged people DCT creases choice available to poor also preferences for goods Empirical evidence of shifting bedrock of all development programs on DCT Opportunidades (Mexico) BolsaEscola & PETI (Brazil) Chile Solidario(Chile), family assignment program (PRAF-Hondurus) DCT will remove complain of Devptprog’s “One size Fits All Approach”

21. Do you know: - • Largest economy in the world US • It is at 15 Trillion dollar size • Struggling since 2007-08 till now • China’s economy is at 7.2 Trillion dollar • Growth rate 8% • Indian economy – 1.7 Trillion dollar size • Growth rate (6 to 7.5%)

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