FINANCIAL RISK MANAGEMENT
By: NIKITA SAXENA
V “C” FINANCE
Submitted To: MR.ANUJ KUMAR
QUESTION: Briefly explain the impact of Globalization
on Indian economy post 1991?
The economy of India is
the sixth largest in the world measured by nominal GDP and third largest by
purchasing power parity (PPP). The Growth rate is 7% in India in 2017-18 and
GDP is US$ 2.45 trillion in nominal and $ 9.49 trillion in PPP. The exports are $262.3 billion and imports
are $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 finance
is Rs35.41 trillion and Rs46.25 trillion in 2017. The GDP growth rate has been
declined for last quarter of 2016-17 i.e. 6.1% due to demonetization.
In the 1991, When
Manmohan Singh became the finance minister; he was the man who conducts the reforms
that liberalized India’s economy. He had extensive background in Business,
Economics, and Globalization. Economy of India had undergone various changes in
beginning of 1990s. The new model of financial changes was regularly known as
During 1990-91, India
was facing various economic problems such as market barriers, providing relief
or fiscal help to private sector in order to encourage them to participate in
national economy, reducing economic deficit, encouraging exports and reducing
In 1990-91 India had to
take a huge amount of loan of $7 Billion from international bank for
reconstruction and development, i.e., the World Bank and the International
Monetary Fund as its foreign exchange stock was decreasing. The loan would
compensate financial facility and next was increase of import cost and decrease
in rate of currency exchange.
Globalization is a
process of interaction and integration among the people, companies, and
government of different nations, a process driven by international trade and
investment. Globalization means to
trade with other countries without much taxes and restrictions. It creates
interaction among the different countries to trade in. It persuades integration
of the economy of the country with the world economy. It is the process by
which the experience of everyday life, marked by the diffusion of commodities and
ideas is becoming standardized around the world Globalization makes the world
more accessible to all the people in the world.
INDICATORS OF INDIAN
The Indian economy expanded 6.3 percent year-on-year in the third
quarter of 2017, above a 5.7 percent in the previous quarter which was the
lowest in near three years, but below market expectations of a 6.4 percent. India’s
GDP 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.
1991, foreign investment was small Savings have gradually risen between 1997 to
2000. As of 31 March 2016, the country has
established total FDI of $371 billion. The year 2008 recorded the highest FDI
inflow of $43.40 billion. Gross FDI from April 2016 to January 2017, had totalled $53.3 billion, compared with $47.2 billion in
the same period a year earlier and $55.6 billion in the entire fiscal
Rate 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, reaching
an all time high of 8.30 percent in 1991 and a record low of 3.46 percent in
Purchasing power parity (PPP) gives a comprehensive idea on the standard
of living and the cost of living in a particular country. When per capita
income of Indians is calculated in terms of PPP, the standard of living has
improved for sure. However, the cost of living has risen too. In 1991, per
capita PPP was $1,173. In 2014, it rose nearly five-fold to $5,701.
Nevertheless, when compared with developed countries, India’s standard of
living as well as cost of living is quite low.