Indian Financial and Business Models Dr. Varadraj Bapat Indian - PowerPoint PPT Presentation

Indian Financial and Business Models Dr. Varadraj Bapat Indian Institute of Technology, Mumbai varadraj@som.iitb.ac.in 9892413119

Indian Financial and Business Models How did the course evolve CA. S. Gurumurthy Avenues 2010 with Adi Godrej Study of Business Clusters Perspective building course Assignment - Exam - Is there any “Indian” Business Model ? Economic Model – Financial and Business Model 2

What is GDP ? How much is GDP of India 3

• Indian Economy - GDP • $.... Tn (nominal), … ; Oct. 2014 • $.... trillion (Nominal, Dec 2015) [3] • $ … trillion (Nominal, ..; Apr 2016) • $..... trillion (Nominal, ….; Jan 2017) • $.... trillion (PPP: …; Oct. 2014) [1] • $..... trillion (PPP, December 2015) • $.... trillion (PPP, Apr 2016) • $..... trillion (PPP,3, Jan 2017) 4

• Indian Economy - GDP • $2.05 Tn (nominal) 10th; Oct. 2014 • $2.22 trillion (Nominal, Dec 2015) [3] • $2.25 trillion (Nominal, 7 th ; Apr 2016) • $2.46 trillion (Nominal, 6 th ; Jan 2017) • $7.277 trillion (PPP: 3rd; Oct. 2014) [1] • $8.52 trillion (PPP, December 2015) • $8.72 trillion (PPP, Apr 2016) • $9.59 trillion (PPP,3, Jan 2017) 5

• Indian Economy - GDP • GDP growth • 3.986% (2012 – 13) • 7.4% (2014-15) 7.6% (2015-16) [4] • 7.0% (2016e), 7.6% (2017f) 6

• Indian Economy • Inflation (CPI) • CPI: … WPI: …… [2] • (2016) • CPI: …., WPI: …. % (April 2013) 7

• Public Finances • Public debt • …. of GDP • Budget deficit …% of GDP • Credit rating • ……… • Foreign reserves • $ … billion 8

• Public Finances • Public debt • 66.5% of GDP (2016) • 66.7% of GDP (2013) • Budget deficit • 3.9% of GDP (2015 – 16) • 4.1% of GDP (2014 – 15) 9

• Credit rating • BBB- (Domestic/ Foreign) • (Standard & Poor's) • Foreign reserves • $366.77 billion (as of 26 August 2016) • $352.5 billion (as of 11 Dec 2015) (9th) • $338.08 billion (as of 27 Feb 2015) • Main data source: CIA World Fact Book 10

Western Vs. Bharatiya Economic Thoughts

• Capitalism भाःडवलशाही • Vs. Communism मार्ख्सवाद • Consumerism 12

Capitalism भाःडवलशाही • 1770 13

Capitalism भाःडवलशाही • 14

• Communism मार्ख्सवाद • शोषण मुकॎती • समानता 15

Marxism • Marx and Engels studied the history of the Communism Socialism world’s !!!! economies Capitalism • They believed they Feudalism discovered an inevitable Basic Communism pattern

• Communism • First Country ? 17

USSR • USSR stands for: Union of Soviet Socialist Republics. • The USSR was formed in December 1922. • USSR a.k.a. Russia. • The USSR is a Communist party.

Communist control of the World • Moscow

माकॎसस वाद शोषण मुकॎती / समानता • धमस / परंपरा नषॎट करा • मानवी मुलॎय पायदळी

माकॎसस वाद • हुक ु मशाही • हतॎया • खून • गररबी

माकॎसस वाद १० कोटी हतॎया

माकॎसस वाद • हुक ु मशाही • हतॎया • खून • गररबी

• Capitalism भाःडवलशाही • Vs. Communism मार्ख्सवाद • • १९९० • Consumerism 25

• Capitalism भाःडवलशाही • Consumerism अनिर्भंध उपभोग 26

• Capitalism भाःडवलशाही • Consumerism अनिर्भंध उपभोग • Bush urged the U.S. public to go shopping and take vacations (2001 -9/11) • (http://consortiumnews.com/2011/09/11/chronicling-americas-911-descent/) 27

• Capitalism भाःडवलशाही • Consumerism अनिर्भंध उपभोग 28

ववषमता 29

ववषमता 30

• Capitalism भाःडवलशाही • Consumerism अनिर्भंध उपभोग • Market Economy • Market Society • Market Family 31

Family Destroyed - Marriage In US, More than 50 % of children born to under 30 women are out of wedlock - Marriage is Luxury Good http://parenting.blogs.nytimes.com/2012/02/19/for-younger- mothers-out-of-wedlock-births-are-the-new-normal/ http://www.nytimes.com/2012/02/18/us/for-women-under-30- most-births-occur-outside-marriage.html?pagewanted=all 32

Family Destroyed - Marriage In US, More than 50 % of children born to under 30 women are out of wedlock - Marriage is Luxury Good http://parenting.blogs.nytimes.com/2012/02/19/for-younger- mothers-out-of-wedlock-births-are-the-new-normal/ http://www.nytimes.com/2012/02/18/us/for-women-under-30- most-births-occur-outside-marriage.html?pagewanted=all 33

Family Destroyed - Marriage In US, More than 50 % of children born to under 30 women are out of wedlock - Marriage is Luxury Good http://parenting.blogs.nytimes.com/2012/02/19/for-younger- mothers-out-of-wedlock-births-are-the-new-normal/ http://www.nytimes.com/2012/02/18/us/for-women-under-30- most-births-occur-outside-marriage.html?pagewanted=all 34

Family Destroyed - Marriage A million children growing up without fathers in UK In UK there are more households with TV’s than fathers http://www.bbc.co.uk/news/education-22820829 (9 June 2013) 35

Marriage or divorce in US or Europe Year Marriages per 1000 unmarried women 1970 63.4 2008 37.4 Year Households with children less than 18 1960 49 percent 2008 31 percent ‘;k Children living with single parents 1960 9 percent 2008 26 percent

Society and Family • Warnings came true sooner than later Year Average persons per house 1930 4.5 1950 3.5 2010 2.6 • This cost 88 million additional houses, valued at $16 trillion at current prices.

Avg persons per house in us • Pic

3/21/2017 Dr. Varadraj Bapat, IIT Mumbai 39

High rate of crime प्ऱचंड गुनॎहेगारी . भ्ऱषॎटाचार खून मारामारी बलातॎकार 40

High rate of crime India is 79th on that list with a rate of 1.8 rapes reported per 100,000 population 41

High rate of crime The dataset includes figures for 126 countries. No of prisoners 42

्ृषॎटीचे शोषण नैसरॎगसक संपतॎती चा ववधॎवंस प्ऱचंड प्ऱदूषण 43

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Impact ? • Saving Rates ? 3/21/2017 Dr. Varadraj Bapat, IIT Mumbai 45 45

US on a binge

US personal savings U.S. personal savings rate has been on its way down. In other words, consumers have been spending more than they have been earning. Some economists warn that this is troubling and unsustainable. http://www.businessinsider.in/CHART-OF-THE-DAY-Why-The-Personal-Savings- Rate-Is-Tumbling/articleshow/21189234.cms 9 Apr 2013 3/21/2017 Dr. Varadraj Bapat, IIT Mumbai 47 47

US • Foreign investments made in the US total almost $2.4 trillion, which is more than twice that of any other country. (2012) • Wiki CIA World jgf 48

US • What made USA to borrow so much and reduce savings ? • Alan Greenspan - 49

Greenspan • Alan Greenspan served as Chairman of the Federal Reserve of the United States from 1987 to 2006. • Directed the very course of US economy and of the globe for two decades. • God of Money • Sparing the Americans from the need to save. Enticing them to spend.

Current situation • Home loans of households top $10 trillion. • More than 1/3 rd weren’t incurred to buy houses. • According to Greenspan himself, household borrowed $3.2 trillion against security of appreciation in their home values (called ‘home equity cashed out’) during 2002-2007, and splurged into consumption.

Current situation • 111 million US households use 1.2 billion credit cards, on which they owe $2.5 trillion. • Not just families, their finances too are broken, thanks to the financial networks of the US praised by Greenspan, having ‘enticed’ and made the US families profligate. • The state-provided social security that has replaced the families and made them state- dependent is stressed and potentially bankrupt.

Overall Debt % of GDP CANADA= 276 % RUSSIA= 72% UNITED STATES=280 % CHINA= 184 % BRAZIL = 148% INDIA= 122 % BRITAIN = 507 % JAPAN= 512 % GERMANY= 278 % SOUTH KOREA=314% FRANCE= 346 % SWITZ= 314 % SPAIN= 363 % ITALY = 314 % http://www.economist.com/blogs/graphicdetail/2012/01/daily-chart-8 53 @Prof R.Vaidyanathan,IIMB,2012