The economic boom that is being experienced in India is largely attributed to the globalization and liberalization of the Indian economy. The era prior to the 1990s was quite averse to the concept of an open market policy and the Indian markets were predominantly closed in nature.
The government of India, however, ruled and regulated Indian markets but with the globalization and liberalization of the Indian economy, the whole market scenario changed in no time. The economic policy drafted in early 1990s by the government of India facilitated huge inflow of Foreign Direct Investment (FDI) and Foreign Institutional Investors (FII) in to the much insulated Indian markets. Prime economic factors like Industrial Growth, Balance-of-Payments, Merchandise Exports, Invisible Accounts and Foreign-Exchange-Reserves witnessed positive growth and effected tremendous growth of Indian Economy.
The positive effects of globalization and liberalization of Indian economy can be corroborated from the following facts -
Industrial Growth - for the first time has exceeded 10%. Manufacturing growth rate has exceeded 12% in 6 months (April-September, 2006). The mining and quarrying sector has registered a growth of 4%. The electricity sector recorded a double-digit growth of 12% during September, 2006 as compared to September, 2005. Consumer durables and non-durables have also recorded upswings. The use-base economic sub-groups and intermediate goods have registered an impressive growth of almost 15% during September, 2006 over September, 2005. Consumer goods have recorded a high growth of 13%. The National Manufacturing Competitiveness Council has targeted 12 to 14% growth in the 11th Plan period
Foreign Institutional Investors (FIIs) - net investments in equities crossed US$ 7 billion in calendar 2006. FII net investment till 6 November 2006 has been US$ 7.08 billion, according to the Securities and Exchange Board of India. 151 new FIIs have opened their offices in India during first 10 months of 2006. The total number of FIIs in India stands at 974 as on November, 2006 Foreign Direct Investment (FDI) - India envisage of attracting $10 billion of foreign direct investment (FDI) this year as inflows have nearly doubled to US$ 4.4 billion in April-September 2006. In September 2006, FDI inflows grew 225% to US$ 916 million as compared to US$ 282 million in the same month last year. Services attracted maximum investment of US$ 1.5 billion recording growth of 350%. Telecommunication sector with inflows of US$ 405 million has registered the maximum growth of 950%. Corporate India has recorded its highest rise in salaries at 22% in the first half of 2006-07 against increase of 17% in 2005-06
India's Balance of Payments - is expected to remain comfortable
Merchandise Exports - recorded strong growth
The Invisibles Account - remained positive during last financial year and financed 2/3 of the trade deficit
India's Foreign Exchange Reserves - were US$ 166.2 billion as on October 2006, showing increment of US$ 14.5 billion over end-March 2006
India's economy grew at 9.3% in quarter April-June and it was driven by manufacturing, construction and services sector and agriculture sector
GDP factor for the first quarter of 2007-08 was at Rs 7,23,132 crore, registering a growth rate of 9.3% over the corresponding quarter of previous year
Manufacturing industry registered 11.9% growth
The passenger vehicles sector grew by 11.61% during April-May 2007
Electricity, gas, and water supply performed well and recorded an impressive growth rate of 8.3%
Construction growth rate rose to 10.7%
Trade, hotels, transport and communication registered a growth rate of 12%
Financing, insurance, real estate and business services recorded an impressive growth rate of at 11% during the 1st quarter of this fiscal
Community, social and personal services maintained a decent growth rate of 7.6%
The growth rate of agriculture, forestry & fishing' and 'mining & quarrying' are estimated at 3.8 per cent, and 3.2 per cent, respectively during the 1st quarter of 2007-2008
Exports grew by 18.11% during the 1st quarter of 2007-2008 and the imports shoot up by 34.30% during the same period
India's FOREX reserves (excluding Gold and SDRs) stood at $219.75 billion at the end of July ' 07
The food sector is estimated to be of US$ 200 billion and it is expected to grow to $310 billion by 2015
Stocks of food-grains grew by 13.1% to 17.73 million tons
The annual inflation rate was 4.45% for the week ended July 28, 2007
India's Balance of Payments is expected to remain comfortable
Merchandise Exports recorded strong growth
These upswings of indicators are the result of globalization and liberalization of Indian economy introduced and implemented in the early 1990s. With consistent rise of the manufacturing and service sector activities together with bullish stock market the growth story of the Indian economy is expected to rise further and help India achieve its economic goals.