ASSIGNMENT OF INTERNATIONAL FINANCEANDFINANCIAL RISK MANAGEMENT SubmittedBy: NIKITA SAXENABBAV “C” FINANCE0151BBA100 Submitted To: MR.ANUJ KUMARQUESTION: Briefly explain the impact of Globalizationon Indian economy post 1991?IntroductionThe economy of India isthe sixth largest in the world measured by nominal GDP and third largest bypurchasing power parity (PPP). The Growth rate is 7% in India in 2017-18 andGDP is US$ 2.45 trillion in nominal and $ 9.49 trillion in PPP.
The exports are $262.3 billion and importsare $381 billion in 2016. India exports goods like software, agriculture,leather, chemicals etc.
and Indian import goods like crude oil, gold, iron& steel, vehicles etc. The revenues and expenses incurred in public financeis Rs35.41 trillion and Rs46.25 trillion in 2017. The GDP growth rate has beendeclined for last quarter of 2016-17 i.e.
6.1% due to demonetization.In the 1991, WhenManmohan Singh became the finance minister; he was the man who conducts the reformsthat liberalized India’s economy. He had extensive background in Business,Economics, and Globalization. Economy of India had undergone various changes inbeginning of 1990s. The new model of financial changes was regularly known asthe LPG.
During 1990-91, Indiawas facing various economic problems such as market barriers, providing reliefor fiscal help to private sector in order to encourage them to participate innational economy, reducing economic deficit, encouraging exports and reducingimports etc.In 1990-91 India had totake a huge amount of loan of $7 Billion from international bank forreconstruction and development, i.e., the World Bank and the InternationalMonetary Fund as its foreign exchange stock was decreasing. The loan wouldcompensate financial facility and next was increase of import cost and decreasein rate of currency exchange. GlobalizationGlobalization is aprocess of interaction and integration among the people, companies, andgovernment of different nations, a process driven by international trade andinvestment.
Globalization means totrade with other countries without much taxes and restrictions. It createsinteraction among the different countries to trade in. It persuades integrationof the economy of the country with the world economy.
It is the process bywhich the experience of everyday life, marked by the diffusion of commodities andideas is becoming standardized around the world Globalization makes the worldmore accessible to all the people in the world. INDICATORS OF INDIANECONOMY 1. GrossDomestic ProductThe Indian economy expanded 6.3 percent year-on-year in the thirdquarter of 2017, above a 5.
7 percent in the previous quarter which was thelowest in near three years, but below market expectations of a 6.4 percent. India’sGDP was Rs. 5,86,212 crore in 1991 and about 25 years later it stands at Rs.1,35,76,086 crore. In dollars, India’s GDP crossed $2 trillion in 2015-2016.
Currently the country is ranked ninth in the world in terms of nominal GDP. 2. ForeignDirect Investment Before1991, foreign investment was small Savings have gradually risen between 1997 to2000. As of 31 March 2016, the country hasestablished total FDI of $371 billion. The year 2008 recorded the highest FDIinflow of $43.40 billion. Gross FDI from April 2016 to January 2017, had totalled $53.
3 billion, compared with $47.2 billion inthe same period a year earlier and $55.6 billion in the entire fiscal2016. 3) UnemploymentRate UnemploymentRate in India decreased to 3.
46 percent in 2016 from 3.49 percent in 2015.Unemployment Rate in India averaged 4.
08 percent from 1991 until 2016, reachingan all time high of 8.30 percent in 1991 and a record low of 3.46 percent in2016. 4) Purchasingpower parity Purchasing power parity (PPP) gives a comprehensive idea on the standardof living and the cost of living in a particular country. When per capitaincome of Indians is calculated in terms of PPP, the standard of living hasimproved for sure. However, the cost of living has risen too. In 1991, percapita PPP was $1,173.
In 2014, it rose nearly five-fold to $5,701.Nevertheless, when compared with developed countries, India’s standard ofliving as well as cost of living is quite low.