Question

Present the economy of one of the following countries:

India

Vietnam

Canada

France

South Africa

Brazil

US

UAE

Topics discussed in the project should including all of the following points and any additional information that sparks your interest:

GDP & Growth Rate

Main industries that contribute to the GDP

Employment and Unemployment rate, Labour Force Participation Rate

Inflation or Deflation rate - is it a healthy rate?

Fiscal Policy

Monetary Policy

Answer 1

Indian economy - GDP and Growth rate

India is the fastest-growing trillion-dollar economy in the world and the fifth-largest overall, with a nominal GDP of $2.94 trillion. India has become the fifth-largest economy in 2019, overtaking the United Kingdom and France. The country ranks third when GDP is compared in terms of purchasing power parity at $11.33 trillion. When it comes to calculating GDP per capita, India's high population drags its nominal GDP per capita down to $2,170. The Indian economy was just $189.438 billion in 1980, ranking 13th on the list globally. India's growth rate is expected to rise from 7.3% in 2018 to 7.5% in 2019 as drags from the currency exchange initiative and the introduction of the goods and services tax fade, according to the IMF.

Main industries that contribute to GDP:

In 2018, almost half of India’s GDP was generated by the services sector, a slight and steady increase over the last 10 years. Among the leading services industries in the country are telecommunications, IT, and software.
The IT industry is a vital part of India’s economy, and in the fiscal year of 2016/2017, it generated about 8 percent of India's GDP alone – a slight decrease from previous years, when it made up about 10 percent of the country’s economy. Nevertheless, the IT industry is growing, as is evident by its quickly increasing revenue and employment figures. IT includes software development, consulting, software management, and online services, and business process management (BPM).

Unemployment Rate in India

Unemployment rate largely remained under 8 per cent from April 2019 till February 2020, except in July and October when it surpassed the 8 per cent mark.

In the week ended March 29 2020, the unemployment rate in India shot up to 23.8 percent.

India's employment rate plunged to a record low of 38.2 percent in March 2020. This could be one of the significant impacts of COVID-19 leading to a sharp decline in the rates.

Labour Force Participation Rate

The Labour Force Participation Rate measures the number of persons aged 15 and over who are employed and unemployed but looking for a job divided by the total working-age population.

The Labour Force Participation Rate in India stood at 49.8 percent in the 2017-18 fiscal year, the Periodic Labour Force Survey (PLFS) of the National Sample Survey Office (NSSO), showed.

India's Inflation Rate

Inflation is generally defined as the increase of prices of goods and services over a certain period of time, as opposed to deflation, which describes a decrease of these prices. Inflation is a significant economic indicator for a country. The inflation rate is the rate at which the general rise in the level of prices, goods and services in an economy occurs and how it affects the cost of living of those living in a particular country.
India’s inflation rate has been on the rise over the last decade. However, it has been decreasing slightly since 2010. India’s economy, however, has been doing quite well, with its GDP increasing steadily for years, and its National debt decreasing. The budget balance in relation to GDP is not looking too good, with the state deficit amounting to more than 9 percent of GDP.
Consumer price inflation in India increased to 7.59% in January of 2020 from 7.35% in December, above expectations of 7.4%. The inflation accelerated for the 6th straight month to the highest since May of 2014.

Fiscal and Monetary policy in India

The government uses both monetary and fiscal policy to meet the county’s economic objectives. The central bank of a country mainly administers monetary policy. In India, the Monetary Policy is under the Reserve Bank of India or RBI. Monetary policy majorly deals with money, currency, and interest rates. On the other hand, under the fiscal policy, the government deals with taxation and spending by the Centre.

Importance of Fiscal Policy in India:
1.In a country like India, fiscal policy plays a key role in elevating the rate of capital formation both in the public and private sectors.
2. Through taxation, the fiscal policy helps mobilise considerable amount of resources for financing its numerous projects.
3. Fiscal policy also helps in providing stimulus to elevate the savings rate.
4.The policy gives adequate incentives to the private sector to expand its activities.Fiscal policy aims to minimise the imbalance in the dispersal of income and wealth.

Following are the main elements of the monetary policy of India:

1. It regulates the stocks and the growth rate of money supply.

2. It regulates the entire banking system of the economy.

3. It determines the allocation of loans among different sectors.

4. It provides incentives to promote savings and to raise the savings-income ratio.

5. It ensures adequate availability of credit for growth and tries to achieve price stability.