India's Growth Potential

India's Growth Potential

Budget 2011-2012 also reflected on the challenges and opportunities in different sectors

The Indian economy has emerged from the slowdown caused by the global financial crisis with remarkable rapidity. The Economic Survey 2010-11 reports the estimated GDP growth for this year at 8.6 percent as against 8 percent in 2009-10. Further, it is estimated that India’s GDP will grow by 9 percent during 2011-12. We are here estimating the key performance indicators and key challenges and outlook of the Economic Survey 2010-11 in three different sectors – agriculture, industry and service:

Agriculture: The sector is estimated to have grown at 5.4 percent in 2010-11 as against 0.4 percent in 2009-10. The agriculture sector in India is at a crossroads with rising demand for food items and relatively slower supply response in many commodities resulting in frequent spikes in food inflation. A holistic approach, simultaneously working on agricultural research, development, dissemination of technology, provision of agricultural inputs such as quality seeds, fertilizers, pesticides and irrigation would help improve productivity levels. Increased capital investment both by public and private sector in a sustained way is required. The set up of an efficient supply chain is important to prevent the volatility in food prices and ensuring adequate compensation for farmers. Investment in horticulture products is essential to enhance the per capita availability of food items and cater to a growing population with increasing incomes. Investments in food processing, cold chains, handling and packaging of processed food need to be encouraged.

Industry: Growth in the industrial sector was buoyant during the first two quarters of the year and moderate for the rest of the year. The IIP data for 2010-11 has exhibited volatility in the current fiscal with growth ranging from 2.7 percent to 16.6 percent on a month-on-month basis. Manufacturing registered a growth of 8.8 percent in 2010-11; similar to the growth in 2009-10. Mining registered a growth of 6.2 percent in 2010-11 as against 6.9 percent in 2009-10 while electricity registered a growth of 5.1 percent in 2010-11 as against 6.4 percent in 2009-10. Looking at the IIP data for past few months, the short term industrial sector is likely to grow at moderate but sustainable rates. Over medium to long term, to sustain double digit output growth, there is need for multifaceted reforms to reduce the vulnerabilities in the sector. Neglect of R&D in new technology and skill development continues to impact the growth in the manufacturing sector. High technology base, skilled manpower availability and ease of credit flow is crucial for growth and enhancing manufacturing competitiveness in the global markets. Further, while manufacturing inflation has so far been benign, persistent high average inflation is leading to increase in input costs and a rise in average wages. Most importantly, capacity addition in core sectors and removal of infrastructure bottlenecks would encourage industrial sector output in the medium to long term.

Services: The services sector registered a growth of 9.6 percent in 2010-11 as against 10.1 percent in 2009-10. This marginal deceleration in growth is mainly due to the slowdown in growth in community services to 5.7 percent in 2010-11 as against 11.8 percent in 2009-10. Trade, hotels, restaurants, transport and communication (together) registered a growth of 11 percent in 2010-11 as against 9.7 percent in 2009-10. Likewise, financing, insurance, real estate and business services registered a growth of 10.6 percent in 2010-11 as against 9.2 percent in 2009-10. Given the myriad activities in services, supporting its growth will require careful and differentiated strategies. It is very important to address the challenge of maintaining India’s competitiveness in sectors like IT/ ITeS and broadening the domestic market for these sectors to increase efficiency. Additionally, increased efforts are required to make forays in globally traded services like financial services, health care, education and accountancy. Further, traditional sectors like tourism and shipping continue to be slow movers. On the regulations front, a more conducive environment for services trade can be created by rationalization of taxes, tantalization agreements, streamlining domestic regulations, technical standards and regulatory transparency.

Further, a portal for services, a services data system and a more focused and coordinated policy approach could help services sector to grow at a consistent rate.

Organic Food

The new cult of Organic Food!

Organic Food is not just a luxury but a medicinal marvel too: no wonder the industry is trying to match steps with its increasing demand.

Organic food is invariably catching up fast with the Indian Retailers more so with the niche retailers for teh simple reason that there is an awakening in Indian consumers to eat healthy so the natural bent towards food which do not include foreign material that are added to traditional foods which tend to be toxic.

Indian Market

Out of total food business that is around 10 lakh crores per annum, only 1500 crores make the organic share. It is still nascent, and makes only .001 per cent of the total food markets share. But there seems to be a large opportunity for this category as demand is increasing day by day.

Target customers

This is niche retailing and organic food is expensive than the traditional food. Therefore, it caters to the rich and more so the higher middle class people because the latter is the working class that believes in staying fit for that promotion and in becoming more productive.

 People with 50,000 as their monthly income can afford it. Moreover, people with medical needs are main target. For example, Brown Rice is ideal for obese people and Wheat Grass for detoxification, One Organic food company spokesperson said.

Product categories

Cereals, pulses, spices, condiments, masala mixes, fruits, vegetables, oils, dairy products, ready-to-eat snacks, cookies, pickles, eggs, meat, fish, wheat grass, baby food, honey etc.

Price factor

With the low number of organic foods and the high demand for them on the market the prices hitch up. Here the laws of economics are put into play, where sellers see that a product is high in demand and the amount is low, they will increase the prices because they know that buyers are willing to pay anything to buy quality products. In comparison to traditional food, price is high by 30 to 70 per cent.

Conclusion 

Due to lack of accurate report, it is difficult to know exactly what the future holds for this business. Chennai and Hyderabad seems to be doing pretty well with store numbers increasing day by day. As most of them say that the demand will definitely increase in the coming 6 months to 1 year, they also advice that specialty stores still haven’t caught up that much in comparison to food chains and departmental store. The market will surely grow but how fast, is still uncertain unless there is an organic revolution in India and people are more dedicated to come back to the organic way.Moreover, there is a need for government support also in terms of subsidy and land so that there is an increase in  production and subsequent supply.

World cup viewers: Insight

World cup draws record no of viewers..

The Cricket World Cup 2011 is setting new benchmarks in viewership ratings in India.

According to the latest figures issued by rating agency TAM, more than 127 million people tuned into the first 10 matches on the official broadcaster ESPN Star's channels, a record for cricket World Cups so far.

The number of viewers account for more than 64 per cent of the cable and satellite homes in the country. The matches have also recorded high viewership numbers on Doordarshan. The national channel and ESPN Star's bouquet account for 115 million viewers, of which 106 million viewers were on the ESPN Star bouquet.

The average television rating (TVR) for the first 10 matches stood at 3.1, much higher than the 2007 edition. Amongst non-India matches, the Pakistan and Sri Lanka match delivered the highest average rating of 4.6, while The Netherlands and England game notched up a TVR of 2.5. Pakistan and Sri Lanka also delivered an impressive peak TVR of 11.7, slightly lower than 12.48 TVR peak rating for the opening match between India and Bangladesh.

According to aMap ratings, the India-England match delivered average ratings of 6.44 TVR. The encounter played on a Sunday also got a strong response on the online stream with 1.45 million viewers.

The live streaming on www.espnstar.com/cwclive has served 6.9 million video streams as of March 1. Of the total, over 5 million have been unique visitors.

The ratings for the non-India matches are healthy and point towards increasing viewer interest in the tournament as a whole. Credit must also be given to the teams who are dishing out such exciting fare and ESPN advertisers are lapping it up.