IMPACT OF SEPT. 11, 2001 ON INDIAN ECONOMY

  By Prof. Dr. Khawaja Amjad Saeed
 FCMA, FCA
Email:
emba@pgcnet.com
Feb 25 - Mar 10, 2002

On September 11, 2001, the two towers of the World Trade Centre (WTC), New York were raised to ground. This incident is attributed to zero level place. USA economy alongwith many countries were badly affected. This piece looks at the impact on Indian Economy.

Fiscal Deficit

India has produced fiscal deficits for the last several years. Every year announcement is made to reduce budget deficit. During 2001-2002, budget deficit was estimated to be restricted to 4.7%. Later it was revised to 5.8% but by the end of January, 2002, it has been revised to 6.5%. It is, therefore, apparent that there has been unfavorable impact of budget deficit on the Indian Economy.

Exports

Despite a vast economic base of India, her exports never exceeded $ 50 billion. During 2001-2002, a target of 20% increase in exports was fixed but it has now been revised to 0.6%.

Agriculture

Monsoon was expected to have healthy impact on agriculture. However, in reality monsoon was less than satisfactory. Consequently agricultural production is also registering declining trend.

Industrial Output

As against a projected increase of 5.8% in the industrial output of mining and manufacturing sector, the revised projection is 4.8%.

Moreover, IT, tourism and aviation sectors have been adversely affected.

Business Confidence Index

Business Confidence Index for a period of three months (October - December, 2001) has registered a drop of 11%.

Investment Climate

There is a growing worsening perception of investment climate in India. Consequently, there is a poor demand on consumer durables. Major constraint identified is demand.

Services Sector

The largest fall in Business Confidence Index is in Services Sector. Software exports have been affected by declining global prospects.

Financial Service

Financial Services have been adversely affected by the poor growth of other factors.

The above Indian scene is based on Research conducted by the National Council of Applied Economic Research, New Delhi (NCAR) and was extracted from the Times of India, New Delhi, December 28, 2001.

*Member Governing Council, IFAC (1997-2000), President, SAFA (1997), President, ICMAP (1997-2000) Dean: Executive Programs, The Punjab College of Business Administration (PCBA), Lahore.