MINOR PROJECT REPORT

On

Impact of Recession on Indian Economy: Sectorial Analysis

Submitted by:

Ankit Verma

09MB62

MBA - IIIrd SEM

Under the Guidance of:

Dr. Piyali Ghosh

Asst. Professor

School of Management Studies

(NOV-2010)

SCHOOL OF MANAGEMENT STUDIES

MOTILAL NEHRU NATIONAL INSTITUTE OF TECHNOLOGY

ALLAHABAD

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 Preface

The topic of minor project was to study the “Impact of Recession on Indian
Economy: Sectorial Analysis”.

The objectives of study were:

1. To study about all the sectors of Indian economy, their evolution, respective
industries in each sector and their contribution to Indian economy.
2. To study about recession and its impact on all the sectors of economy.
3. To study about a company that was able to survive during the recession
successfully.

The class was divided into 3 groups and each group was given a sector to study
about. The organization to study was selected by all the students individually and
the project proceeded further.

1. Study was conducted on the basis of research papers.

2. The other sources of data used were journals and authentic government
websites.

The collected data was analyzed on the basis of following factors used to analyze
the economy:

a. GDP Growth
b. Investment Rate, Savings Rate and Consumption Rate
c. Balance of Payment
d. Inflationary Pressure

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 Acknowledgement

It is needed a moment of great pleasure to express my sense of profound gratitude

& indebtness to all the people who have been instrumental in making this project a
rich experience. It gives me a great privilege and honor to offer thanks to all those
who helped me in the project, I would like to extend my sincere thanks and
gratitude to our project guides and mentors Dr. Piyali Ghosh, Dr. Tripti Singh and
Dr. Vibhuti Tripathi for acting as a catalyst during entire duration of the project. I
also thank them for providing continuous support and expert guidance throughout
the project, whenever needed.

Heartfelt thanks to all the people whose ideas, critical insights and suggestions
have been valuable during the project.

Ankit Verma

09MB62

MBA- IIIrd SEM

SMS, MNNIT

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 CONTENTS

Topic Page Number

1. Executive Summary……………………………………………….5
2. Economy of India- Introduction……………………………….…..7
3. Sectors of an Economy…………………………..………………...8
4. Definition in Indian Context…………………………...…………..8
5. Historical Evolution of each Sector………………..………………9
6. Evolution of Economy from Primary to Tertiary……..………......13
7. Interdependency of Sectors……………..........................................13
8. Major Industries in Primary Sector……………………………….14
9. Major Industries in Secondary Sector ………...……………….....18
10. Major Industries in Tertiary Sector ……..………………………..19
11. Contribution of each Sector towards Economy…………………..20
12. Structural Factors………………………………………………....23
13. Impact of Recession on Indian Economy………………………...25
14. Industries that survived well during Recession…………………...29
15. Recession and its effects on Agriculture………………………....31
16. Response of Indian Economy towards Recession………………..33
17. Outlook for India………………………………………………....36
18. Volatility in Growth since 1950………………………………….38
19. Neyveli Lignite Corporation Limited- Introduction……………...40
20. Vision and Mission of the Organization………………………….42
21. Organization Structure of NLC Limited………………………….42
22. Details of Clients/Customers……………………………………..45
23. Key Competitors..………………………………………………...46
24. Core Competency of NLC Limited………………………………47
25. SWOT Analysis of Mining Industry……………………………..48
26. SWOT Analysis of NLC Limited………………………………...52
27. Product Profile…………………………………………………....53
28. Performance………………………………………………………55
29. Prospects………………………………………………………….56
30. Findings and Suggestions for NLC Limited……………………...57
31. Summing Up of the Project…………..………….……………….57
32. Concluding Summary……………………………………………..58
33. References………………………………………………………...59

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 Executive Summary

This report discusses about the Indian Economy and the three sectors of economy in
detail. Historical evolution of all the sectors beginning with the pre-colonial period lasting up to
the 18th century, the advent of British colonization which started the colonial period in the early
19th century and ended with independence in 1947, to the third period stretched from
independence in 1947 until now are explained in the report. Also the interdependency of these
sectors with the major industries which come under these sectors and their contribution to the
economy is discussed in the report.

In the second part of the report, recession and its impact on Indian economy, basically on
the primary sector is studied. The impact is studied on the basis of basic factors like demand.
Effects of recession on various industries of the sector are explained in details. After this, the
measures taken by Indian Government and the Central Bank are explained. Also, the effects of
Global meltdown on agriculture, and, the industries which survived well during recession are
studied. Outlook for India is also discussed.

In the last part of the report, an organization which survived the recession well from
primary sector was to be studied. The organization discussed in this report is Neyveli Lignite
Corporation Limited, which is a Mini-Ratna state owned organization.

The organization is studied in detail including its organization structure, hierarchy

followed, its clients/customers, key competitors etc. With this, the core competency of Neyveli
Lignite Corporation Limited, its HR policies are discussed. At last, the SWOT analysis of both
the mining industry and the organization NLC limited is done to study about the organization
properly.

Findings and suggestions are presented at the end of the report for Neyveli Lignite
Corporation Limited. The report ends with the concluding summary of the whole project.

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 Part- 1
Introduction
Sectors of Indian Economy: Primary, Secondary, Tertiary
General definition
Definition in Indian context
Historical evolution of each sector
Major industries in each sector
Contribution of individual sector to the economy

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 Economy of India- An Introduction

The economy of India is the eleventh largest economy in the world by nominal GDP and
the fourth largest by purchasing power parity (PPP). Following strong economic reforms from
the socialist inspired economy of a post-independence Indian nation, the country began to
develop a fast-paced economic growth, as free market principles were initiated in 1990 for
international competition and foreign investment. India is an emerging economic power with a
very large pool of human and natural resources, and a growing large pool of skilled
professionals. Economists predict that by 2020, India will be among the leading economies of the
world.

India was under social democratic-based policies from 1947 to 1991. The economy was
characterized by extensive regulation, protectionism, public ownership, pervasive corruption and
slow growth. Since 1991, continuing economic liberalization has moved the country toward a
market-based economy. A revival of economic reforms and better economic policy in first
decade of the 21st century accelerated India's economic growth rate. In recent years, Indian cities
have continued to liberalize business regulations. By 2008, India had established itself as the
world's second-fastest growing major economy. However, as a result of the financial crisis of
2007–2010, coupled with a poor monsoon, India's gross domestic product (GDP) growth rate
significantly slowed to 6.7% in 2008-09, but subsequently recovered to 7.2% in 2009-10 and is
expected to grow at a rate of above 8% in 2010-2012.

India's large service industry accounts for 57.2% of the country's GDP while the
industrial and agricultural sector contribute 28% and 14.6% respectively. Agriculture is the
predominant occupation in India, accounting for about 52% of employment. The service sector
makes up a further 34% and industrial sector around 14%. The labour force totals half a billion
workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane,
potatoes, cattle, water buffalo, sheep, goats, poultry and fish. Major industries include
telecommunications, textiles, chemicals, food processing, steel, transportation equipment,
cement, mining, petroleum, machinery, information technology enabled services and
pharmaceuticals.

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 Sectors of an Economy

An economic sector is a certain type of business activity within an economy. Economics

is part of the social structure of a society and is concerned with how people produce and
consume good and services. What types of goods and services are produced and consumed in a
society depend on geography and social customs. The three major economic sectors are: primary,
secondary and tertiary.

The primary economic sector includes obtaining and refining raw materials such as
wood, steel and coal. Primary economic sector workers include loggers, steelworkers and
coalminers. All types of natural resources industries such as fishing, farming, forestry and
mining are a part of the primary economic sector.

The secondary economic sector deals with the processing of raw materials into finished
goods. Builders and potters are examples of secondary economic sector workers. Lumber from
trees is made into homes and clay from the earth is made into pottery. Brewing, engineering and
all types of processing plants are part of the secondary economic sector.

The tertiary economic sector has to do with services to businesses and consumers. Dry
cleaners, real estate agents and loan officers fall into the category of tertiary economic sector
workers. Transportation, banking, tourism and retail stores are all part of the tertiary economic
sector.

The movement of goods and services through the primary, secondary and tertiary sectors
is referred to as the "chain of production."

Definitions in Indian context

Primary Sector

When the economic activity depends mainly on exploitation of natural resources then that
activity comes under the primary sector. Agriculture and agriculture related activities are the
primary sectors of economy.

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Secondary Sector

When the main activity involves manufacturing then it is the secondary sector. All industrial
production where physical goods are produced come under the secondary sector.

Tertiary Sector

When the activity involves providing intangible goods like services then this is part of the
tertiary sector. Financial services, management consultancy, telephony and IT are good examples
of service sector.

Historical Evolution of Each Sector

India's economic history can be broadly divided into three eras, beginning with the pre-colonial
period lasting up to the 18th century. The advent of British colonization started the colonial
period in the early 19th century, which ended with independence in 1947. The third period
stretches from independence in 1947 until now.

Pre-colonial

The citizens of the Indus Valley civilization, a permanent settlement that flourished
between 2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform
weights and measures, made tools and weapons, and traded with other cities. Evidence of well
planned streets, a drainage system and water supply reveals their knowledge of urban planning,
which included the world's first urban sanitation systems and the existence of a form of
municipal government.

The 1872 census revealed that 91.3% of the population of the region constituting present-
day India resided in villages, whose economies were largely isolated and self-sustaining, with
agriculture the predominant occupation. This satisfied the food requirements of the village and
provided raw materials for hand-based industries, such as textiles, food processing and crafts.
Although many kingdoms and rulers issued coins, barter was prevalent. Villages paid a portion

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of their agricultural produce as revenue to the rulers, while its craftsmen received a part of the
crops at harvest time for their services.

Religion, especially Hinduism, and the caste and the joint family systems, played an
influential role in shaping economic activities. The caste system functioned much like medieval
European guilds, ensuring the division of labour, providing for the training of apprentices and, in
some cases, allowing manufacturers to achieve narrow specialization. For instance, in certain
regions, producing each variety of cloth was the specialty of a particular sub-caste.

Textiles such as muslin, Calicos, shawls, and agricultural products such as pepper,
cinnamon, opium and indigo were exported to Europe, the Middle East and South East Asia in
return for gold and silver.

Assessment of India's pre-colonial economy is mostly qualitative, owing to the lack of

quantitative information. India had approximately 32.33% of the GDP of the whole world at that
time. One estimate puts the revenue of Akbar's Mughal Empire in 1600 at £17.5 million, in
contrast with the total revenue of Great Britain in 1800, which totaled £16 million. India, by the
time of the arrival of the British, was a largely traditional agrarian economy with a dominant
subsistence sector dependent on primitive technology. It existed alongside a competitively
developed network of commerce, manufacturing and credit.

Colonial

Company rule in India brought a major change in the taxation and agricultural policies, which
tended to promote commercialization of agriculture with a focus on trade, resulting in decreased
production of food crops, mass impoverishment and destitution of farmers, and in the short term,
led to numerous famines. The economic policies of the British Raj effectively bankrupted India's
large handicrafts industry and caused a massive drain of India's resources. Indian nationalists
employed the successful Swadeshi movement, as strategy to diminish British economic
superiority by boycotting British products and the reviving the market for domestic-made
products and production techniques. India had become a strong market for superior finished
European goods. This was because of vast gains made by the Industrial revolution in Europe, the
effects of which was deprived to Colonial India.

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 An estimate by Cambridge University historian Angus Maddison reveals that "India's
share of the world income fell from 22.6% in 1700, comparable to Europe's share of 23.3%, to a
low of 3.8% in 1952". It also created an institutional environment that, on paper, guaranteed
property rights among the colonizers, encouraged free trade, and created a single currency with
fixed exchange rates, standardized weights and measures, capital markets. It also established a
well developed system of railways and telegraphs, a civil service that aimed to be free from
political interference, a common-law and an adversarial legal system. India's colonization by the
British coincided with major changes in the world economy—industrialization, and significant
growth in production and trade. However, at the end of colonial rule, India inherited an economy
that was one of the poorest in the developing world, with industrial development stalled,
agriculture unable to feed a rapidly growing population, a largely illiterate and unskilled labour
force, and extremely inadequate infrastructure.

Independence to 1991

Indian economic policy after independence was influenced by the colonial experience, which
was seen by Indian leaders as exploitative, and by those leaders' exposure to democratic
socialism as well as the progress achieved by the economy of the Soviet Union. Domestic policy
tended towards protectionism, with a strong emphasis on import substitution, industrialization,
state intervention, a large public sector, business regulation, and central planning, while trade
and foreign investment policies were relatively liberal. Five-Year Plans of India resembled
central planning in the Soviet Union. Steel, mining, machine tools, water, telecommunications,
insurance, and electrical plants, among other industries, were effectively nationalized in the mid-
1950s.

Jawaharlal Nehru, the first prime minister of India, along with the statistician Prasanta
Chandra Mahalanobis, formulated and oversaw economic policy during the initial years of the
country's existence. They expected favorable outcomes from their strategy, involving the rapid
development of heavy industry by both public and private sectors, and based on direct and
indirect state intervention, rather than the more extreme Soviet-style central command system.
The policy of concentrating simultaneously on capital- and technology-intensive heavy industry
and subsidizing manual, low-skill cottage industries was criticized by economist Milton

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Friedman, who thought it would waste capital and labour, and retard the development of small
manufacturers.

Since 1965, the use of high-yielding varieties of seeds, increased fertilizers and improved
irrigation facilities collectively contributed to the Green Revolution in India, which improved the
condition of agriculture in India by increasing productivity of food as well as commercial crops,
improving crop patterns and strengthening forward and backward linkages between agriculture
and industry. However, it has also been criticized as an unsustainable effort, resulting in the
growth of capitalistic farming, ignoring institutional reforms and widening income disparities.

Since 1991

In the late 70s, the government led by Morarji Desai eased restrictions on capacity expansion for
incumbents, removed price controls and reduced corporate taxes and small scale industries are
created in large numbers. However the subsequent government policy of Fabian socialism
hampered the benefits of the economy leading to high fiscal deficits and a worsening current
account. The collapse of the Soviet Union, which was India's major trading partner, and the first
Gulf War, which caused a spike in oil prices, caused a major balance-of-payments crisis for
India, which found itself facing the prospect of defaulting on its loans. India asked for a $1.8
billion bailout loan from IMF, which in return demanded reforms.

In response, Prime Minister Narasimha Rao along with his finance minister Dr.
Manmohan Singh initiated the economic liberalization of 1991. The reforms did away with the
Licence Raj (investment, industrial and import licensing) and ended many public monopolies,
allowing automatic approval of foreign direct investment in many sectors. Since then, the overall
direction of liberalization has remained the same, irrespective of the ruling party, although no
party has tried to take on powerful lobbies such as the trade unions and farmers, or contentious
issues such as reforming labour laws and reducing agricultural subsidies. Since 1990 India has a
free-market economy and emerged as one of the fastest-growing economies in the developing
world; during this period, the economy has grown constantly, but with a few major setbacks.
This has been accompanied by increases in life expectancy, literacy rates and food security.

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 While the credit rating of India was hit by its nuclear tests in 1998, it has been raised to
investment level in 2007 by S&P and Moody's. In 2003, Goldman Sachs predicted that India's
GDP in current prices will overtake France and Italy by 2020, Germany, UK and Russia by 2025
and Japan by 2035. By 2035, it was projected to be the third largest economy of the world,
behind US and China. India is often seen by most economists as a rising economic superpower
and is believed to play a major role in the global economy in the 21st century. In 2009 India
purchased 200 tons of gold for $6.7 billion from the IMF.

Evolution of Economy from Primary Sector Based to Tertiary

Sector Based

During early civilization all economic activity was in primary sector. When the food
production became surplus, people’s need for other products increased. This led to the
development of secondary sector. The growth of secondary sector spread its influence during
industrial revolution in nineteenth century.

After growth of economic activity, a support system was the need to facilitate the
industrial activity. Certain sectors like transport and finance play an important role in supporting
the industrial activity. Moreover, more shops were needed to provide goods in people’s
neighborhood. Ultimately, other services like tuition, administrative support developed.

Interdependency of Sectors

To understand this interdependency, let us take an example of a cold drink. A cold drink contains
water, sugar and artificial flavor. Suppose if there is no sugarcane production then procuring
sugar will become difficult and costly for the cold drink manufacturer. Now to transport
sugarcane to sugar mills and sugar to the cold drink plant needs the services of a transporter. A
person or system of persons is required to maintain and monitor all these movements of goods
from farm to factory to shop in different locations. That is where role of administrative staffs
comes. Let us go back to the farmer. He also needs fertilizers and seeds which is processed in
some factory and which will be delivered to his doorstep by some means of transportation. To

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top it all at every step of these activities we require the proper monetary and banking system. So,
in a nutshell this describes how all sectors of an economy are interrelated.

Major Industries in Primary Sector of Indian Economy

Agriculture including crop and animal husbandry, fisheries, forestry and agro processing
provides the underpinnings of our food and livelihood security. Agriculture provides significant
support for economic growth and social transformation of the country. As one of the world’s
largest agrarian economies, the agriculture sector (including allied activities) in India accounted
for 15.7 per cent of the GDP (at constant 2004-05 prices), in 2008-09, compared to 18.9% in
2004-05, and contributed approximately 10.2% of total exports during 2008-09. Notwithstanding
the fact that the share of this sector in the GDP has been declining over the years, its role remains
critical as it provides employment to around 52% of the workforce.

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Agriculture

More than 52% of country's population depends on agriculture, a sector contributing only 17.5%
of the GDP. Food grain production in 2010/11 is expected at 216.9mt, which is 17.6mt lower
than the output in 2008/09. The Kharif season is the largest contributor to this shortfall, with total
production of only 99.9mt, a decline in production of nearly 18mt. The rice output in the kharif
season amounted to 12mt less than that in 2008. However, this shortfall is expected to be
compensated to an extent by the Rabi harvest. Wheat production in the Rabi season is expected
to be almost flat with the previous year’s levels and rice production, currently at 14.7mt, may
eventually turn out to be higher than 2008 production. Taking this into consideration, the
shortfall in rice production for the year as a whole may be restricted to 11mt.

While looking at some of the agricultural products, one finds that India is the largest
producer of tea, jute and jute like fiber. India is not only the largest producer but also the largest
consumer of tea in the world. India accounts for more than 15% of the global tea trade. Indian tea
is exported in various forms, such as tea bags and instant tea, to more than 80 countries of the
world. The total milk production in India is the highest in the world. India also has the largest
irrigated land area in the world. India is placed third in the world in cereal production, with the
second largest production capacity for wheat and rice, and the largest production capacity for
pulses.

Irrigation

Irrigation is one of the most important critical inputs for enhancing the productivity that is
required at different critical stages of plant growth of various crops for optimum production. The
Government of India has taken up irrigation potential creation through public funding and is
assisting farmers to create potential on their own farms. Substantial irrigation potential has been
created through major and medium irrigation schemes. The total irrigation potential in the
country has increased from 81.1 million ha in 1991-92 to 102.77 million ha by March 2009.
Horticulture
India is a major producer of fruits and vegetables in the world. For the holistic development of
the horticulture sector, a centrally sponsored scheme called the National Horticulture Mission

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(NHM) was launched in 2005-06. The objectives of the Mission are to enhance horticulture
production and improve nutritional security and income support to farm households and others
through area-based regionally differentiated strategies. All States and two Union Territories
(Andaman & Nicobar Islands and Lakshadweep) are covered under the Mission except the eight
north-eastern States including Sikkim and the States of Jammu & Kashmir, Himachal Pradesh
and Uttarakhand which are covered under the Technology Mission for Integrated Development
of Horticulture in the North Eastern States (TMNE). At present, 344 districts have been included
under the NHM. Crops such as fruits, spices, flowers, medicinal and aromatic plants, plantation
crops of cashew and cocoa are included for area expansion, whereas vegetables are covered
through seed production, protected cultivation, integrated nutrient management/ integrated pest
management (INM/ IPM) and organic farming. Under the scheme, 1,710 new nurseries have
been set up, an additional area of 8.26 lakh ha has been brought under various horticultural crops
and an area of 1.2 lakh ha of old and senile plantations have been rejuvenated. Further, organic
farming and Integrated Pest Management programs have been taken up in 0.76 lakh ha and 4.0
lakh ha respectively. Under the post harvest management component, 898 pack houses, 46 cold
storages, 14 refrigerated vans, 7 wholesale markets and 45 rural markets have been set up. The
impact of the Mission can be seen in the increasing area and production of fruits and vegetables.

Animal Husbandry, Dairying and Fisheries

The livestock and fisheries sector contributed over 4.07 per cent of the total GDP during 2009-10
and about 26.84 per cent value of output from total agriculture and allied activities. The Eleventh
Five Year Plan envisages an overall growth of 6-7 per cent per annum for the sector. In 2009-10,
this sector contributed 108.5 million tons of milk, 55.6 billion eggs, 42.7 million kg wool and 3.8
million tons of meat. The 17th Livestock Census (2003) has placed the total livestock population
at 485 million and total of poultry birds at 489 million.
India ranks first in world milk production, its production having increased from 17
million tons in 1950-51 to 108.5 million tons by 2009-10. The per capita availability of milk has
increased from 112 grams per day in 1968-69 to 258 grams per day in 2009-10, but is still low
compared to the world average of 265 grams per day. About 80 per cent of milk produced in the
country is handled in the unorganized sector and the remaining 20 per cent is equally shared by
cooperatives and private dairies. Over 1.33 lakh village-level dairy cooperative societies, spread

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over 265 districts in the country, collect about 25.1 million litres of milk per day and market
about 20 million litres. The efforts of the Government in the dairy sector are concentrated in
promotion of dairy activities in non-Operation Flood areas with emphasis on building
cooperative infrastructure, revitalization of sick dairy cooperatives and federations and creation
of infrastructure in the States.
Fish breeding has increased almost five times since India got independence and is a prime
industry in coastal regions. The economic zone of India runs up to Indian ocean (370 Km)
covering an area more than 2 million square kilometers. Approximately 4.5 million ton catches
are expected from that area. India has about 14000 Kmsq brackish water for aquaculture, out of
which 600 Kmsq were being farmed in early 1990s; about 16,000 Kmsq of freshwater lakes,
ponds and swamps; and nearly 64,000 kilometers of rivers and streams.

Livestock Insurance
A Centrally sponsored scheme for livestock insurance is being implemented in all the States with
the twin objectives of providing a protection mechanism to farmers and cattle rearers against loss
of their animals due to death and to demonstrate the benefit of livestock insurance to the people.
The scheme benefits farmers (large, small and marginal) and cattle rearers having
indigenous/crossbred milch cattle and buffaloes. In 2009-10, Rs 23.28 crore has been released up
to December 2010 and 13.16 lakh animals have been insured up to 2009-2010. The scheme has
been extended from 100 districts to 300 districts from December 2010, covering all States.

Poultry
Poultry continues to play an important role in providing livelihood support and food security,
especially to the rural population. India produces more than 55.6 billion eggs per year, with per
capita availability of 47 eggs per annum. As per the estimate provided by the Food and
Agriculture Organization (FAO) for 2008, the annual chicken meat production in India is around
2.49 million tons. The value of exports was around Rs 422 crore during 2009-10. Eggs and
poultry are among the cheaper source of animal protein. During 2009-10, a new centrally
sponsored Poultry Development Scheme with an outlay of Rs 150 crore was launched. The
scheme, through its Rural Backyard Poultry Development component is expected to cover below
poverty line (BPL) sections of the society to help them gain supplementary income and

17
nutritional support. In order to encourage entrepreneurship skills of individuals, a Poultry
Venture Capital Fund is also being implemented covering various poultry activities.

Natural Resources and Mining

India has the world's fifth largest wind power industry, with an installed wind power capacity of
9,587 MW. India's inland water resources comprising rivers, canals, ponds and lakes and marine
resources provide employment to nearly 6 million people in the fisheries sector. In 2008, India
had the world's third largest fishing industry. India meets most of its domestic energy demand
through its 92 billion tons of coal reserves (about 10% of world's coal reserves).
Mining is the term used for the extraction of useful material from the treatment of ore,
vein or coal seam. Materials obtained from extraction may be base metals, precious metals, iron,
uranium, coal, diamonds, limestone, oil shale, rock salt and potash.

Major Industries in Secondary Sector of Indian Economy

Index of industrial production, which measures the overall industrial growth rate, stood at 5.2%
in 2009 and is expected at 7.5% in 2010.

The textile industry is the largest industry in terms of employment and is expected to
generate $85 billion by 2010 and create 12 million new jobs in the sector, and also pave the way
for modernization & consolidation in order to create a globally competitive textile industry.

The automobile sector has demonstrated the inherent strengths of Indian labor and
capital. The pharma and IT industries are the sectors that have performed exceedingly well in
recent years for India. Among the sectors that have experienced the greatest transformation in
India, the pharmaceutical sector is the most significant.

India's WTO involvement during the last decade has encouraged the country’s pharma
firms to adopt a strategy of R&D based growth. Apart from manufacturing of drugs, the pharma
industry offers a huge market for outsourcing of clinical research. A vast pool of scientific and
technical manpower in medical treatment & health care are India's strength. India can leverage

18
its strength once patent protection is enforced to the result of the researches. By participating in
the international system of intellectual property protection, India can unlock vast opportunities in
both exports as well as become a global hub in the area of R&D based clinical research
outsourcing, particularly in the area of bio-technology.

Apart from infrastructure, particularly adequate and reliable power supply at reasonable
costs and transportation facilities, there is need for stepped up investment in manufacturing.
Industry needs to grow rapidly not only to boost the overall growth rate in the economy but also
to generate gainful employment for the existing unemployed, as well as the new entrants. In a
diverse range of industrial activities, several Indian firms have succeeded in getting integrated
into global production chains and realized rapid growth of exports. This experience suggests that
with appropriate scale, investment and technology, rapid industrial growth is indeed possible. 

Major Industries in Tertiary Sector of Indian Economy

The services sector has maintained a steady growth pattern since 1996-97, except for the fall in
2000-01. Trade hotels, transport & communications have witnessed growth, followed by
financial services. The services sector accounted for 62.6% of India’s total GDP in 2009.

While in most parts of the developed world, the services sector's share of employment
rose faster than its share of output, India witnessed a relatively slow growth of jobs in the service
sector. This is primarily because of the rise in labor productivity in sectors such as information
technology, which is dependent on skilled labor. Growth in tourism and tourism-related
services, such as hotels, holds a large potential for employment generation.

IT enabled services, such as Business Process Outsourcing, have grown rapidly in the
recent past and will continue to rise. India's large English speaking skilled work force has made
the nation a major exporter of software services and skilled manpower.

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 Contribution of Each Sector to the Economy

Economic Performance and Growth Outlook

The performance of the Indian economy in 2009/10 greatly exceeded expectations. In October
2009, in the shadow of the weak South West (SW) monsoon, which had a record 24 per cent
shortfall in rainfall, the Council had projected a 6.5 per cent growth for the Indian economy in its
Economic Outlook. This was built on the expectation that the farm sector would see a
contraction of 2 per cent and the non-farm sector an expansion of 8.2 per cent. By the time of the
Review in February 2010, it had become clear that the Indian farm sector was much more
resilient to shortfall in precipitation than previously anticipated. It was felt that the Advance
Estimate released in early February was a fairly accurate assessment, with a likelihood that on
account of strong performance in manufacturing the aggregate growth rate may be revised
marginally upwards. The Revised Estimate released by the Central Statistical Organization
(CSO) at the end of May 2010 has indeed revised upward its estimate of growth for 2009/10
from 7.2 to 7.4 per cent. In large measure this was due to an upward revision of growth in the
industrial sector from 8.6 to 9.3 per cent and to a lesser extent, a revision in farm GDP growth
from a negative 0.2 to a positive 0.2 per cent as it can be seen in the table below.

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International Economic Conditions
The IMF in its World Economic Outlook of April 2010 has projected that the advanced
economies would grow by 2.3 per cent, compared to a contraction of 3.2 per cent in 2009. This
projection is a slight improvement from its January 2010 forecast. In the update to the WEO
released on 7 July 2010, the IMF has generally increased its projection of growth in 2010, while
slightly scaling down its previous projections for 2011. The strongest rebound is projected for
USA which is expected to grow 3.3 per cent in 2010 as compared to a decline of 2.4 per cent in
2009. The Euro-zone is expected to be more sluggish, growing by only 1 per cent in 2010 and up
to 1.3 per cent in 2011, compared to a contraction of 4.1 per cent in 2009. Canada, Australia,
Korea and other developed East Asian nations are expected to continue to do fairly well in 2010.

21
At market exchange rates, the IMF projects that the world economic output will grow by 3.6 per
cent in 2010 and 3.4 per cent in 2011, compared to a contraction of 2.0 per cent in 2009. A
summary of some of these projections is placed in the table below.

Structural Factors
There is a decline in the investment rate to 34.9 per cent, in 2008/09 compared to the previous
year’s 37.7 per cent. The ratio of increase in stocks to GDP fell from about 3.5 per cent in each
of the two previous years to 1.3 per cent. Provisional estimates report that the ratio of fixed
investment to GDP has fallen from 33 per cent in 2007/08 and 2008/09 to 32.4 per cent in
2009/10 at current prices and to 32.8 per cent at constant prices. A notable element has been the
robustness of the fixed investment rate through the period of the crisis. It is expected that in a
down-turn, inventory buildup slows down or even turns negative for a short span of time.

22
Provisional estimates of Gross Domestic Capital Formation (before errors & omissions) for
2009/10 place it at 35.0 per cent of GDP, comparable to the previous year. Inventory buildup is
expected to gain steam during 2010/11 and in the subsequent year maintaining pace with higher
levels of activity, while the fixed investment rate would also show a gradual improvement. As a
result of these two factors, the overall investment rate is projected to be around 37 per cent in
2010/11, rising to over 38 per cent of GDP in 2011/12.

23
 Part- 2
Impact of Recession
Recession and its effects
Effect on various aspects of each sector

24
 Impact of Recession on India
Indian companies have major outsourcing deals from the US. India's exports to the US
have also grown substantially over the years. Indian companies with big tickets deals in the US
saw their profit margins shrinking. The worries for exporters grew as rupee is strengthening
further against the dollar. But experts note that the long-term prospects for India are stable. A
weak dollar could bring more foreign money to Indian markets. Oil may get cheaper bringing
down inflation.
Even though domestic demand and diversification of trade in the Asian region partly
countered the drop in the US demand, one simply couldn't escape a downturn in the world's
largest economy. The US economy accounts for 30 per cent of the world's GDP.
The IT sector was the worst hit as 75 per cent of its revenues come from the US. Low
demand for services forced most Indian Fortune 500 companies to slash their IT budgets.
Measures Taken by the Government to Lift the Economy
To lift the economy out of the recession the Government announced a package of Rs 35,000
crores in the first instance on December 7, 2008. The main areas to benefit were the following:

(a) Housing- A refinance facility of Rs 4000 crores was provided to the National Housing Bank.
Following this, public sector banks announced to provide small home loans seekers loans at
reduced rates to step up demand in retail housing sector.

(i) Loans up to Rs 5 lakhs: Maximum interest rate fixed at 8.5 per cent.

(ii) Loans from Rs 5-20 lakhs: Maximum interest rate at 9.25 per cent.

(iii) No processing charges to be levied on borrowers.

(iv) No penalty to be charged in case of pre-payment.

(v) Free life insurance cover for the entire outstanding amount.

25
 This means a borrower can get a loan up to 90 per cent of the value of the house. The
government hopes to disburse Rs 15,000 to 20,000 crores under the new package.

The housing package is the core of the government’s new fiscal policy. It will give a
fillip to other sectors such as steel, cement, brick kilns etc. Besides, the small and medium
industries (SMEs) too get a boost by manufacturing all kinds of fittings and furnishings.

The success of the housing package will, however, depend on the State governments
efforts to free up surplus land so that land prices come down and the cost of housing becomes
reasonable.

(b) Textiles- Due to declining orders from the world’s largest market the United States, the
textile sector has been seriously affected. An allocation of Rs 1400 crores has been made to clear
the entire backlog in the Technology Up gradation Fund (TUF) scheme.

(c) Infrastructure- The government has been proclaiming that infrastructure is the engine of
growth. To boost the infrastructure, the India Infrastructure Finance Company Ltd. (IIFCL) has
been authorized to raise Rs 14,000 crores through tax-free bonds. These funds will be used to
finance infrastructure, more especially highways and ports. It may be mentioned that ‘refinance’
refers to the replacement of an existing debt obligation with a debt obligation bearing better
terms, meaning thereby at lower rates or a changed repayment schedule. The IIFCL will be
permitted to raise further resources by the issue of such bonds so that a public-private partnership
(PPP) program of Rs 1,00,000 crores in the highway sector is promoted.

(d) Exports- Exports which accounted for 22 per cent of the GDP are expected to fall by 12 per
cent. The government’s fiscal package provides an interest rate subsidy of two per cent on
exports for the labour–intensive sectors such as textiles, handicrafts, leather, gems and jewellery,
but the Federation of Indian Export Organization (FIEO) felt the measures are not enough as
they will not make the exports price-competitive and, therefore, will not boost exports. G.K.
Pillai, the Commerce Secretary, has estimated a loss of 1.5 million jobs in the export sector alone
during 2008-09 on account of the $15 billion decline in the expected exports.

26
(e) Small and Medium Enterprises (SMEs)- The government has announced a guarantee cover
of 50 per cent for loans between Rs 50 lakhs to Rs 1 crore for SMEs. The locking period for
loans covered under the existing schemes will be reduced from 24 months to 18 months to
encourage banks to cover more loans under the scheme. Besides, the government will instruct
state-owned companies to ensure prompt payment of bills of SMEs so that they do not suffer on
account of delay in the payment of their bills.

In short, the fiscal package was aimed at boosting growth in exports, real estate, auto,
textiles and small and medium enterprises. The aim was to encourage growth and boost
employment which has been threatened by the recession in the world economy, more especially
in the United States.

Just within a month, the government announced another package to bail out the Indian
economy. Dr Montek Singh Ahluwalia said: “We should expect, from all global projections that
the next year (2009) is going to be a very difficult year for the global economy.”

The purpose of the new package announced on January 1, 2009 was to minimize the pain.
With this end in view, the new package included the following measures:-

1. To boost investment and spending to revive growth, the RBI cut the repo rate, which it
charges on short-term loans to banks from 6.5 per cent to 5.5 per cent and also reduced the Cash
Reserve Ratio (CRR)—the share of deposits which has to be kept with the RBI from 5.5 per cent
to five per cent.

2. To revive exports which have resulted in a contraction of industrial output, drawback

benefits have been enhanced for some exporters. Export-Import Bank also gets Rs. 5000 crores
as credit from the RBI.

3. To help the realty sector, realty companies have been allowed to borrow from overseas
to develop “integrated townships”.

4. To boost infrastructure, the India Infrastructure Finance Company Ltd. (IIFCL) has
been allowed to raise Rs 30,000 crores from tax-free bonds. Besides, Non-Banking Finance

27
Companies (NBFCs) need no government approval to borrow from overseas for infrastructure
projects. This will sustain the growth momentum on infrastructure.

5. To make more funds available, ceiling on foreign institutional investments (FIIs) in

corporate bonds has been increased to $ 15 billion from $ 6 billion. The purpose is to seek much
bigger FII investment.

6. To stimulate the Commercial Vehicles (CVs) sector, depreciation benefit on

commercial vehicles has been increased from 15 per cent to 50 per cent on purchases. Besides,
the States will get one-time funding from the Centre to buy buses for urban transport. In addition,
public sector banks would provide finance firms funds for commercial vehicles. It is hoped that
Tata Motors and Ashok Leyland’s sales would revive.

On February 24, 2009, the government announced a slashing down of excise duty from
10 per cent to eight per cent—a reduction by two per cent. Since 90 per cent of the manufactured
goods attract 10 per cent excise duty, this measure is designed to reduce the prices of color TV
sets, washing machines, refrigerators, soap, detergents, colas, cars and commercial vehicles.
Cement prices are likely to drop Rs 4-5 per bag of 50 kg while steel prices may cost Rs 500-600
per ton less. In addition to this, the government decided to cut service tax form 12 per cent to 10
per cent—a reduction by two per cent. As a consequence, phone bills, airline tickets, credit card
charges, tour packages etc. would cost less. A two per cent reduction in service tax will directly
touch the lives of over 500 million persons by reducing monthly expenses. Commerce and
Industry Minister Kamal Nath announced a small relief package of Rs 325 crores for leather,
textiles, gems and jewellery on February 26, 2009.

Industries which Survived the Recession Well

The global financial crisis which started last year, following the famous sub-prime crisis in the
United States, has adversely affected most businesses, industries and institutions across the
world, leading to massive job losses and decrease in payroll across industries. However in midst
of this mayhem there have been a few sectors which have not only been able to survive the scare
of recession but even leverage it to its advantage.

28
 We have compiled a list of 5 sectors which have been successful in beating the recession
blues. Here goes the list (In no particular order)

Second Hand Retailers

Though the retail sector has been severely affected the world over during this financial crisis
with many big retail chains/outlets, shopping malls, multiplexes opting for closure after finding it
difficult to feed their lavish expensive resources (large pool of highly
skilled/groomed/professional staff, huge inventories, capital intensive infrastructure and an up
market property), smaller 2nd hand retail players (books, clothes, DVDs) have not only managed
to stay afloat some of them have in fact managed a higher growth rate than previous years.

“In August the National Association of Resale & Thrift Shops (NARTS), which claims to
be the world’s largest resale trade association, said a survey of its membership about second
quarter sales in 2009 compared to the same period in 2008 showed increasing turnover in the
second-hand sector.”

With job losses and accompanied reduction in purchasing power of consumers the
concepts of “bargain” and “recycling” is fast catching up aiding the secondhand retail sector to
bloom and prosper.

Telecom

Telecom has been yet another sector which has managed to grow at a healthy rate during
the past year thanks to emerging and fast growing economies like India and China.

In particular India has seen a mini revolution of sorts in the telecom landscape during the
last couple of years with subscriber base growing exponentially. Purely in terms of growth rate
Telecom has outperformed most other segments of the industry if not all. Check this chart.

In spite of the size of the Indian telecom market the overall rate of mobile penetration is
still far lower than most developed world economies and therein lays the opportunity for this
sector to keep growing.

29
Healthcare

Healthcare or Pharmaceuticals is another sector which is recession proof because people can’t
really get away from their share of medical expenditure on drugs, hospitalization and general
health and disease management activities even in times of recession.

Hospital chains like Apollo, TMH, HCG and pharmaceutical companies like Dabur,
Zandu, Biocon, Glaxo, Pfizer, Ranbaxy have not only being doing well in terms of turnover or
revenue but have actually been investing in clinical research to develop new
drugs/vaccines/treatments for modern day diseases.

Higher Education

In times of lower available job opportunities people seek for higher and professional education to
improve their resume and enhance their job prospects.

Around 8 lakh students appeared for AIEEE (CBSE Engineering) exams in 2008 and the
number is expected to rise to 10 lakh this year. In fact enrolment in all professional higher
education courses like engineering and management have been growing at a phenomenal rate for
quite some time now, the current recession being no exception.

FMCG

Fast Moving Consumer Goods (FMCG) sector which caters mainly to perishable consumer
products (like soaps, shampoos, detergents, biscuits, confectionary, chips, toffee, battery,
torches, tea, ice cream, cosmetics etc) doesn’t get too affected with recession.

Although demand in cosmetics and other lifestyle products may decrease a little but no
real impact comes in the overall demand of food items (like biscuits and confectionaries);
batteries and torches; tea, coffee and other beverages; toiletries (soap, shampoo, detergents) etc,
which comprises essential commodities of day to day use.

It’s the diverse product portfolio which keeps these FMCG companies going even in a
slowdown.

30
 Global Meltdown and its Effects on Indian Agriculture

Now the question arises what does this crisis mean for the agricultural sector? As the
economic crisis engulfs the entire economy, agricultural sector cannot remain immune to the fall
out of the slow down. The following is a description of some possible routes through which
agriculture is likely to be affected.

1. Liquidity crisis and excess demand for credit of the non-agricultural sector may lead to
credit crunch for the agricultural sector. When financial sector and the commercial banks
are under stress, they may shy away from lending to agricultural sector. This may lead to
recession, spreading to the agricultural sector as well.
2. Since government is forced to go for bail out for many ailing sectors, usually government
budget goes into deficit during recession. Indian economy for example has already
registered a sharp increase in fiscal deficit this year (2008 -09). In view of this fiscal
deficit government may find it difficult to sustain the level of subsidies to the agricultural
sector. This may turn out to be a serious problem for the agricultural sector. Distribution
of government largesse becomes a major issue of political economy during recession.
3. As international trade is impacted by recession, consequent fall–out also affects the
agriculture. For example, in USA the appreciation of US dollar has led to decline in
agricultural export and sharp fall in revenue from agricultural export in 2008. How the
impact of recession on international trade and likelihood of protectionism will affect
agricultural sector is a major topic of serious enquiry.
4. When recession affects an economy, a major fall out is job loss in various sectors. In a
developing country like India, quite a few persons who lose their job in the non-
agricultural sector may go back to the agricultural sector for their livelihood. For example
in India, construction sector has been badly affected by the recession. Since construction
sector is an unorganized sector where workers do not get social security support, any
debacle in that sector forces the workers to go back to the traditional sectors. This
increases overcrowding in agriculture and causes oversupply in the labour market. All
these have the potent of increasing poverty in the rural areas.
5. Current recession has originated out of a situation of hefty rise in food grain prices and
shortage of food grains. Once the recession sets in there has been substantial drop in food

31
 grain prices, resulting in sudden drop in income in the agricultural sector. It has been
estimated by FAO that on account of this drop, poverty in the global agricultural sector
has gone up by 40 million people. There is also a growing concern about the food
security at various quarters. Seriousness of the issue has reached a new height on account
of the recession.

In view of the above problem the following issues come up in the context of the Indian
economy-
(a) Has the agricultural sector been already subjected to credit shortage in the post
recession situation and if so how will the Indian agriculture likely to suffer on account of credit
crunch? Current recession in India and the farm loan waiver policy of the Government of India
have come up almost at the same point of time. As a result, the present approach of the banking
sector with regard to agricultural lending may be an outcome of these two overlapping events
and it needs a careful research study to separate the impact of these events on future credit
availability in Indian agriculture.

(b) For the last five years government has been able to pump in a good amount of money
in the agricultural sector on account of good increase in tax collection. NREGA scheme and loan
waiver policy, inter alia, have injected good amount of money into rural economy. But now as
the economic slow-down has set in, it may be difficult to sustain the allocation for social security
measures in the rural sector. So how has the increased allocation affected the rural economy and
what will be the impact if money allocation is slashed? This is a very important question so far as
Indian economy is concerned.

(c) Indian economy has been affected by recession mainly through the external trade.
Indian agriculture is not that integrated with the foreign sector. But still Indian has made major
inroads into the external market. If properly nurtured Indian agriculture has good potentiality to
make significant headway in export. How far this recession has unfolded an opportunity for the
agricultural sector to make inroad into global market may be explored. There is a view that in a
period of recession when industry and services are languishing, it is agriculture that should take
the responsibility of maintaining tempo of growth of the Indian economy.

32
 (d) As job loss is taking place in the non- agricultural sector it is necessary to study that
how many persons are really switching over to agricultural sector? Is the number really
significant? If so what is its impact on the wage rate and unemployment in the rural areas? This
can be an area of micro level study, which can be illuminating to understand the inter-sectoral
labour movement in the Indian economy.

(e) Food security is an important consideration for the world at large and Indian economy
in particular. There has been a surge in global production of cereals in 2008 -09 but there is a
question mark over the sustainability of this production level in view of likely credit crunch and
price fall. FAO notes that there are serious long term issues facing world agriculture. A recent
study by the International Food Policy Research Institute estimates that if world economic
growth declines by 2 to 3 points and investment in pro- agricultural growth is neglected, the
number of malnourished children will increase by 16 million in 2020, with Sub-Saharan Africa’s
share of malnourished children increasing to 25 per cent of the world’s total. 2 This is the
challenge, we face. It has become more daunting in a recessionary condition and need to be
urgently addressed. Appropriate policy suggestions, emanated from serious research work are
warranted in this regard.

How Have We Responded to the Challenge?

The failure of Lehman Brothers in mid-September was followed in quick succession by

several other large financial institutions coming under severe stress.  This made financial markets
around the world uncertain and unsettled.  This contagion, spread to emerging economies, and to
India too. Both the government and the Reserve Bank of India responded to the challenge in
close coordination and consultation. The main plank of the government response was fiscal
stimulus while the Reserve Bank's action comprised monetary accommodation and counter
cyclical regulatory forbearance.

Monetary Policy Response  

The Reserve Bank's policy response was aimed at containing the contagion from the outside - to
keep the domestic money and credit markets functioning normally and see that the liquidity
stress did not trigger solvency cascades. In particular, RBI targeted three objectives: first, to
maintain a comfortable rupee liquidity position; second, to augment foreign exchange liquidity;
33
and third, to maintain a policy framework that would keep credit delivery on track so as to arrest
the moderation in growth. This marked a reversal of Reserve Bank's policy stance from monetary
tightening in response to heightened inflationary pressures of the previous period to monetary
easing in response to easing inflationary pressures and moderation in growth in the current cycle.
Government’s measures to meet the above objectives came in several policy packages starting
mid-September 2008, on occasion in response to unanticipated global developments and at other
times in anticipation of the impact of potential global developments on the Indian markets.

RBI policy packages included both conventional and unconventional measures. On the
conventional side, we reduced the policy interest rates aggressively and rapidly, reduced the
quantum of bank reserves impounded by the central bank and expanded and liberalized the
refinance facilities for export credit. Measures aimed at managing forex liquidity included an
upward adjustment of the interest rate ceiling on the foreign currency deposits by non-resident
Indians, substantially relaxing the external commercial borrowings (ECB) regime for corporates,
and allowing non-banking financial companies and housing finance companies access to foreign
borrowing.

The important among the many unconventional measures taken by the Reserve Bank of
India are a rupee-dollar swap facility for Indian banks to give them comfort in managing their
short-term foreign funding requirements, an exclusive refinance window as also a special
purpose vehicle for supporting non-banking financial companies, and expanding the lendable
resources available to apex finance institutions for refinancing credit extended to small
industries, housing and exports.

Government's Fiscal Stimulus

Over the last five years, both the central and state governments in India have made a
serious effort to reverse the fiscal excesses of the past.  At the heart of these efforts was the
Fiscal Responsibility and Budget Management (FRBM) Act which mandated a calibrated road
map to fiscal sustainability. However, recognizing the depth and extraordinary impact of this
crisis, the central government invoked the emergency provisions of the FRBM Act to seek
relaxation from the fiscal targets and launched two fiscal stimulus packages in December 2008

34
and January 2009.  These fiscal stimulus packages, together amounting to about 3 per cent of
GDP, included additional public spending, particularly capital expenditure, government
guaranteed funds for infrastructure spending, cuts in indirect taxes, expanded guarantee cover for
credit to micro and small enterprises, and additional support to exporters. These stimulus
packages came on top of an already announced expanded safety-net for rural poor, a farm loan
waiver package and salary increases for government staff, all of which too should stimulate
demand.

Impact of Monetary Measures

Taken together, the measures put in place since mid-September 2008 have ensured that the
Indian financial markets continue to function in an orderly manner. The cumulative amount of
primary liquidity potentially available to the financial system through these measures is over
US$ 75 bln or 7 per cent of GDP. This sizeable easing has ensured a comfortable liquidity
position starting mid-November 2008 as evidenced by a number of indicators including the
weighted-average call money rate, the overnight money market rate and the yield on the 10-year
benchmark government security.  Taking the signal from the policy rate cut, many of the big
banks have reduced their benchmark prime lending rates. Bank credit has expanded too, faster
than it did last year. However, Reserve Bank’s rough calculations show that the overall flow of
resources to the commercial sector is less than what it was last year. This is because, even though
bank credit has expanded, it has not fully offset the decline in non-bank flow of resources to the
commercial sector.

Evaluating the Response

In evaluating the response to the crisis, it is important to remember that although the origins of
the crisis are common around the world, the crisis has impacted different economies differently.
Importantly, in advanced economies where it originated, the crisis spread from the financial
sector to the real sector. In emerging economies, the transmission of external shocks to domestic

35
vulnerabilities has typically been from the real sector to the financial sector. Countries have
accordingly responded to the crisis depending on their specific country circumstances. Thus,
even as policy responses across countries are broadly similar, their precise design, quantum,
sequencing and timing have varied. In particular, while policy responses in advanced economies
have had to contend with both the unfolding financial crisis and deepening recession, in India,
our response has been predominantly driven by the need to arrest moderation in economic
growth. 

Outlook for India

The outlook for India going forward is mixed. There is evidence of economic activity
slowing down. Real GDP growth has moderated in the first half of 2008/09. The services sector
too, which has been our prime growth engine for the last five years, is slowing, mainly in
construction, transport and communication, trade, hotels and restaurants sub-sectors. For the first
time in seven years, exports have declined in absolute terms for three months in a row during
October-December 2008. Recent data indicate that the demand for bank credit is slackening
despite comfortable liquidity in the system. Higher input costs and dampened demand have
dented corporate margins while the uncertainty surrounding the crisis has affected business
confidence. The index of industrial production has shown negative growth for two recent months
and investment demand is decelerating. All these factors suggest that growth moderation may be
steeper and more extended than earlier projected.

In addressing the fall out of the crisis, India has several advantages. Some of these are
recent developments. Most notably, headline inflation, as measured by the wholesale price index,
has fallen sharply, and recent trends suggest a faster-than-expected reduction in inflation.
Clearly, falling commodity prices have been the key drivers behind the disinflation; however,
some contribution has also come from slowing domestic demand. The decline in inflation should
support consumption demand and reduce input costs for corporates. Furthermore, the decline in
global crude prices and naphtha prices will reduce the size of subsidies to oil and fertilizer
companies, opening up fiscal space for infrastructure spending. From the external sector
perspective, it is projected that imports will shrink more than exports keeping the current account
deficit modest.

36
 There are also several structural factors that have come to India's aid. First,
notwithstanding the severity and multiplicity of the adverse shocks, India's financial markets
have shown admirable resilience. This is in large part because India's banking system remains
sound, healthy, well capitalized and prudently regulated. Second, our comfortable reserve
position provides confidence to overseas investors. Third, since a large majority of Indians do
not participate in equity and asset markets, the negative impact of the wealth loss effect that is
plaguing the advanced economies should be quite muted. Consequently, consumption demand
should hold up well. Fourth, because of India's mandated priority sector lending, institutional
credit for agriculture will be unaffected by the credit squeeze. The farm loan waiver package
implemented by the Government should further insulate the agriculture sector from the crisis.

RBI's Policy Stance

Going forward, the Reserve Bank's policy stance will continue to be to maintain comfortable
rupee and forex liquidity positions. There are indications that pressures on mutual funds have
eased and that NBFCs too are making the necessary adjustments to balance their assets and
liabilities. Despite the contraction in export demand, we will be able to manage our balance of
payments. It is the Reserve Bank's expectation that commercial banks will take the signal from
the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing
to productive sectors. In particular, the special refinance windows opened by the Reserve Bank
for the MSME (micro, small and medium enterprises) sector, housing sector and export sector
should see credit flowing to these sectors. Also the SPV set up for extending assistance to
NBFCs should enable NBFC lending to pick up steam once again. The government's fiscal
stimulus should be able to supplement these efforts from both supply and demand sides.

37
 Volatility in Growth after 1950 till the time recession existed

Table 3: Volatility in Growth as measured by Coefficient of Variation

(Per cent)

  1950s@ 1960s 1970s 1980s 1990s* 2000-01

to 2007-08

1 2 3 4 5 6 7

Agriculture, 168.2 286.3 643.0 142.1 99.2 180.6

forestry & fishing

Industry 64.7 41.1 103.3 39.1 44.3 34.2

Mining & 72.2 78.2 154.4 58.5 81.7 58.3

Quarrying

Manufacturing 33.4 65.3 96.8 55.4 74.9 34.1

Electricity, Gas & 32.9 27.3 62.8 20.9 16.8 42.5

Water Supply

Construction 172.3 57.7 363.6 92.5 62.3 41.7

Services 22.9 23.8 31.7 20.1 23.0 22.6

Trade, Hotels, 36.7 37.4 59.1 16.8 29.9 18.2

Transport and
Communication

Financing, 34.4 30.8 62.2 33.3 33.7 37.4

Insurance, Real
Estate & Business
Services

Community, 22.1 21.9 35.9 34.1 42.2 22.4

Social & Personal
Services

GDP at factor cost 73.2 92.5 142.0 40.9 18.2 32.1

Excluding the crisis year 1991-92.

Average for the growth during the 1950s is the average of nine years, i.e., from 1951-52 to 1959-60.
Source: Central Statistical Organization, Government of India.

38
 Part- 3
Strategies during Recession
Introduction: Neyveli Lignite Corporation
Study of Organization Structure
Key Competitors and Market Share
Core Competence
SWOT Analysis
Product Profile
Performance of the Organization
Future Prospects

Neyveli Lignite Corporation – An Introduction

39
The Neyveli Lignite Corporation Limited is engaged with mining and exploration of lignite in
India. It also offers special consultancy services for mining industry and power generation
industry.

Neyveli Lignite Corporation Limited is a government of India undertaking and is in

service of the nation for the last 4 decades. The Neyveli Lignite Corporation Limited is under the
guardianship of Department of Coal under the Ministry of Mines and Minerals, India. The
Neyveli Lignite Corporation Limited is one of the main sources that contributing positively to
the growing need of India's national development. It caters to India’s power generation needs and
complements the nourishing process of the green revolution for food sufficiency in India.

NLC’s net current assets stand at Rs 3744.81 crore as on FY 2009-2010. It is located

approximately 200 km south-west of Chennai. Neyveli is well connected with Chennai and can
be reached by road, railways, or by airplane. The followings are the main business activities of
Neyveli Lignite Corporation Limited -

 Explores lignite deposits in and around Neyveli region in the state of Tamil Nadu
 Use of lignite for power generation
 Offers Consultancy Services to other industry players
 Expert in revamping and renovation of old thermal power stations
 Regeneration of old mining equipments
 Reclamation of exhausted mines for afforestation
 Environment care and management along with in waste disposal management
 Rehabilitation of displaced persons

The core business activity of Neyveli Lignite Corporation Limited involves lignite
excavation and power generation. The lignite excavated is further used for the said power
generation business. It also sells raw lignite to small-scale industries to use it as fuel in their
production activities. It has aggressive expansion plans in lignite mine excavation and power
generation business in the near future.
NLC Limited owns 3 lignite mines: Mine I, Mine II, and Mine IA. The mine capacity of
each of them is as under:

40
Mine I - 10.5 Metric ton per annum
Mine IA - 3 Metric ton per annum
Mine II - 10.5 Metric ton per annum

Neyveli Lignite Corporation Limited power generation units provide power to 4 southern
states of India. Further, it is planning to expand its power generation capacity considerably to
meet the ever rising power demand. It generates power from its 2 thermal power generation
stations namely -

 Thermal power station I – with generation capacity of 600 MW and with additional
capacity of 420 MW
 Thermal power station II - with generation capacity of 1470 MW

NLC now expanded its project to Rajasthan also in mining and thermal stations. NLC
Neyveli, covers an area of about 54 square km, including Neyveli Township and temporary
colonies such as Mandarakuppam, Thedirkuppam, Thandavankuppam, and Block-21'. Neyveli
Township has about 32 blocks.

Neyveli Lignite Corporation Limited Key Recent Developments

Apr 04, 2010: BHEL To Commission Neyveli Lignite's 2x250MW CFBC Power Plant
Mar 23, 2010: NLCL Plans To Enter Uttar Pradesh With 2,000MW Thermal Power Project
Feb 22, 2010: Neyveli Lignite To Establish 4,000MW Thermal Power Project In Tamil Nadu,
India
Feb 22, 2010: Neyveli Lignite And TNEB To Establish INR49.1 Billion Coal-Fired Power
Project In Tamil Nadu, India

Feb 16, 2010: Neyveli Lignite Appoints Alok Perti As Additional Director To Board

The company is listed on the Bombay Stock Exchange and National Stock Exchange of
India.

Vision and Mission of Neyveli Lignite Corporation

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Vision: To emerge as an environment friendly and socially responsible leading Mining & Power
Company and strive for operational excellence in Mining & Exploration and Power generation.

Mission
 To continually imbibe best practices from the best Indian and International
organizations engaged in Power generation and Mining.
 To strive towards greater cost competitiveness and work towards continued financial
strength.
 To be a preferred employer by offering attractive avenues of career growth and
excellent work environment and development of human resources.
 To play an active role in society and be sensitive to emerging environmental issues.

Organization Structure

The number of employees in various categories in the company are

Executives 4031
Non-executives 7899
Labor 6504
Total 18434

Board of Directors

CMD - Shri. A.R. ANSARI

DIRECTOR (Mines) - Shri. B.SURENDER MOHAN

DIRECTOR (Planning & Projects) - Shri. R.KANDASAMY

DIRECTOR (Finance) - Shri. K.SEKAR

DIRECTOR (Power) - Shri. J.MAHIL SELVAN

OTHER DIRECTORS –

Shri. ALOK PERTI, I.A.S

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Shri. RAJEEV RANJAN, I.A.S

Dr. SANJAY GOVIND DHANDE

Shri. S.K. ROONGTA

Shri. L.N. VIJAYARAGHAVAN

Shri. A.P.V.N. SARMA

Shri. M.B.N. RAO

Shri. M.M. SHARMA

Shri. V. MURALI

Organization Hierarchy

The Company gives high priority towards training of executives, supervisors and
workers. Apart from utilizing the training facilities available in the Training Complex of the

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Company, the employees are also deputed to other training centers within India. Training
facilities provided by the equipment manufacturers within the country/abroad are also utilized.

Industrial Relations

NLC continues to maintain cordial industrial relations. The Joint Council of Unions and
Associations of Engineers and Officers are functioning in NLC effectively. The Management has
a regular system of discussions on common matters which help to maintain good industrial
relations and to create mutual trust and belief among the employees.

Welfare

The Company as a model employer lays great stress on the welfare of its employees and
peripheral villages. Some of the salient features are:

Welfare to Employees

 Township with over 21000 houses

 Subsidized transport
 Medicare with 369 bed hospital (being expanded to 500) supported by 5 peripheral
dispensaries.
 Canteens - 8 Industrial Canteens
 Family welfare
 Special Incentive Schemes for small family norm.
 Education - 34 schools and 1 college in Neyveli Campus.
 Recreation facilities - 3 clubs
 Sports with all infrastructural facilities.
 Post retirement medical assistance.
 A crèche for children.
 Health care programs for school children.

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Social Welfare - Peripheral Development:

 Drinking water to surrounding villages

 Irrigation water to 20,000 acres in nearby villages
 Facilities for mentally handicapped children, destitute women and aged people `Sneha'.
 A Centre for making Jaipur type artificial limb for handicapped
 Free Medical Camps for surrounding villages; Sterilizations.
 A school for the speech and hearing impaired "Shravanee".

Details of Clients / Customers

Lignite, being considered as a versatile fuel, especially for power generation, without creating
much technological problems and environmental hazards, contributes about 4 per cent of the
energy needs of our country. As regards Raw Lignite, the customers are: (1) Cement Companies
(2) Paper & Boards and (3) Paint Companies in addition to Small Sectors / Brick Industries.

The major customers for Lignite are as under:

a. M/s Chettinad Cements Ltd.,

b. Seshasayee Paper & Boards Ltd.,
c. Dalmia Cement (Bharat) Ltd.,
d. Madras Cements Ltd.,
e. Asian Paints (India) Ltd.,
f. Tamil Nadu Cement Corporation Ltd.,
g. E.I.D Parry (India) Ltd.,
h. The Associated Cement Companies Ltd.,
i. Tamil Nadu News Print & Papers Ltd.,
j. The Mysore paper Mills Ltd.,
k. The Pondicherry papers Ltd.,
l. Terra Energy Ltd., Grasim Industries Ltd
m. The India Cements Ltd.
n. M/s CMS Energy Company

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Statement of Services provided to each Citizen/Client group separately by NLC

Group Services rendered

Supply of power at the rated frequency and in any case of disturbance in

the Grid immediately informing the EBs concerned for taking appropriate
Electricity Boards measures.
Planning maintenance schedule in consultation with the EBs and in line
with the demand for Power.

In co-ordination with the State Govt. authorities carrying out Land

Land Displaced
acquisition process after making ground work in order to expand the
Persons
projects and the areas to be acquired among the Project affected persons.

Release of periodical press notes of company regarding Expansion

Share Holders Projects, Financial position etc. setting / adhering to the grievances of
shareholders.

Key Competitors

Major Players in the Mining Sector:

The major players in the mining sector are classified on the basis of the minerals produced by
them namely,

 Exploration and production of coal/lignite: Coal India Ltd, Neyveli Lignite

Corporation, Singareni Collieries Company Ltd.

 Exploration of metals (copper, bauxite, iron ore, chromite, lead - zinc): National
Aluminium Company Limited (NALCO), Bharat Aluminium Company Limited
(BALCO), Mineral Exploration Corporation Ltd, Bharat Gold Mines Ltd (BGML), Oil
and natural gas Corporation (ONGC), Hindustan Zinc Ltd, Hindustan Copper Ltd (HCL),
etc.

 Iron Ore Sector: National Mineral Development Corporation, Kudremukh Iron Ore
Company, Steel Authority of India Ltd, Orissa Mining Corporation.

 Bauxite mining and aluminium production: National Aluminium Company.

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  Copper-ore mining: Hindustan Copper Ltd.

 Rock-phosphate and barites mining: Rajasthan State Mines and Minerals Ltd, Andhra
Pradesh Mining Development Corporation.

Major Power Generation Companies in India:

1. NTPC 4. NHPC 7. Neyveli Lignite Corp.

2. Power Grid Corp. 5. Tata Power 8. Reliance Infra

3. Reliance Power 6. Adani Power 9. JSW Energy

A Comparison with major power generation companies in India

Balance Sheet Comparison

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 Core Competency of Neyveli Lignite Corporation

For the growth of the industry and to make power available at affordable cost to all the people
the government has taken up various steps for augmenting power generation. For instance to
bridge the supply-demand gap it has evolved the National Electricity Policy to focus on
generation, transmission and distribution to meet the requirements of each and every household.

According to the Government of India, NLC is endowed with the core competence of
mining and power generation. NLC has taken up a lignite-based power project at Rajasthan and a
coal-based power project with the Tamil Nadu Electricity Board on the cards.

Neyveli Lignite Corporation Limited has core competency in Modern Technology.

To reduce the impact of mining on environment the NLC has adopted modern
technology. As part of this endeavor, the NLC has also raised 17 million saplings since its
inception. It is also planning to tap renewable sources of energy such as wind.

According to Union Ministry of Coal, NLC always performs well above the target and
the credit goes to the entire workforce.

SWOT Analysis of Mining Industry in India

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Strengths:
1. The government offers a wide range of concessions to investors in India, engaged in mining
activity. The main concessions include, inter alia:

* Mining in specified backward districts is eligible for a complete tax holiday for a period of 5
years from commencement of production and a 30 percent tax holiday for 5 years thereafter.

* Environment protection equipment, pollution control equipment, energy saving equipment and
certain other equipment eligible for 100 percent depreciation.

* Export profits from specified minerals and ores are eligible for certain concessions under the
Income tax Act.

* Minerals in their finished form exempt from excise duty.

* Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron, unwrought
aluminum.

* Capital goods imported for mining under EPCG scheme qualify for concessional customs duty
subject to certain export obligation.

2. World's largest producer of mica; third largest producer of coal and lignite & barytes; ranks
among the top producers of iron ore, bauxite, manganese ore and aluminum.

3. Labors easily available

4. Low labour and conversion costs

5. Large quantity of high quality reserves

6. Exports iron-ore to China and Japan on a large scale

Weaknesses

1. Historically, opencast mining has been favored over underground mining. This has led to
land degradation, environmental pollution and reduced quality of coal as it tends to get
mixed with other matter;
2. Poor infrastructure facilities

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 3. Mining technology is outdated
4. Low innovation capabilities
5. Labor force is highly un-skilled and inexperienced
6. High rate of accidents
7. Lack of R&D programs and training and development
8. Most of the Indian mining companies do not have access to Indian capital market
9. There is a lack of respect for the mining industry and it suffers from the incorrect
perception that ore deposits are depleted.
10. There is limited access to capital, and mines are increasingly more costly to find, acquire,
develop and produce.
11. There are long lead times on production decisions.
12. The Indian mining industry suffers from an out-dated, unattractive approach to mining
education that is partly to blame for insufficient human resources.
13. Improvement in operational efficiency of the mining companies - Mining companies
are in need of an organizational transformation to gradually align its operating costs to
international standards. Mining costs of Indian companies are at least 35 percent higher
than those of leading other countries such as Australia, Indonesia, and South Africa. To
match productivity, they will need to invest in new technologies, improve processes in
planning and execution of projects, and institutionalize a comprehensive risk
management framework.
14. Mining operations are not environment friendly. Least importance is given to
environment concerns.
15. High rate of illegal mining

Opportunities:

India has an estimated 85 billion tons of mineral reserves remaining to be exploited. Besides
coal, oil and gas reserves, the mineral inventory in India includes 13,000 deposits/ prospects of
61 non-fuel minerals. Expenditure outlay on mining is a meager sum when compared to other
competing emerging mining markets and the investment gap is most likely to be covered by the
private sector. India welcomes joint ventures between foreign and domestic partners to mobilize
finances and technology and secure access to global markets.

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 Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, nickel,
cobalt, molybdenum, lithium, tin, tungsten, silver, platinum group of metals and other
rare metals, chromite and manganese ore, and fertilizer minerals.
 The main opportunities in the mining sector (excluding coal and industrial minerals) are
in the development and production of surplus commodities such as iron ore and bauxite,
mica, potash, few low-grade ores, mining of small gold deposits, development of placer
gold resources located on the frontal belt of the Himalayas, mining known deposits of
economic and marginal categories such as base metals in Bihar and Rajasthan and
exploitation of laterite for nickels in Orissa, molybdenum in Tamil Nadu and tin in
Haryana.
 Considerable potential exists for setting up manufacturing units for value added products.
 There exists considerable opportunities for future discoveries of sub-surface deposits with
the application of modern techniques.
 Current economic mining practices are generally limited to depths of 300 meters and 25
percent of the reserves of the country are beyond this depth
 Strengthening of logistics in coal distribution - In India, the logistics infrastructure
such as ports and railways are overburdened and costly and act as bottlenecks in
development of free market. Privatization of ports may bring the needed efficiencies and
capacities. In addition, capacity addition by the Indian Railways is necessary to increase
freight capacity from the coal producing regions to demand centers in the northern and
central parts of the country. On the Indian rail network, freight trains get a lower priority
than passenger trains, a problem that promotes delays and inefficiency. Special freight
corridors would raise speeds, cut costs, and increase the system's reliability.
 Focusing on technology for future - India's numerous technology research institutes are
working on energy related R&D. However, there is a possibility that they are operating in
a fragmented fashion. The Government may get improved recoveries on its investment by
concentrating on few important technology areas. To start with focus may be applied for
tighter emission standards and development of inexpensive clean-coal technologies viz.
extraction of methane from coal deposits.
 Estimated 82 billion tons of reserves of various metals yet to be tapped

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  While India has 7.5% of the world's total bauxite deposits, aluminum production capacity
is only 3% of world capacity, indicating the scope and need for new capacities

Threats:

1. Foreign Investment in the Mining Sector

During 1999, the Government had cleared 7 more proposals of leading international
mining companies for prospecting and exploration in the mineral sector to the tune of
US$ 62.5 million. 65 licenses have been issued till date for prospecting an area of
around 90,142 sqkms in the states of Rajasthan, Maharashtra, Gujarat, Bihar, Haryana
and Madhya Pradesh. Prospecting licenses have been granted in favor of Indian
subsidiaries of well-known mining companies.

2. Large integrated international metal manufacturers including POSCO, Mittal Steel and
Alcan have announced plans for expansion in India
3. Mining companies and equipment suppliers are under the constant threat of being taken
over by foreign companies.
4. A heavy tax burden discourages further investment.
5. Politicians undervalue the industry's contributions to the economy.
6. Stricter environment rules restricting mining activities

SWOT Analysis of Neyveli Lignite Corporation Limited

Strengths:

 India ranks, 3rd in production of coal & lignite

 Wide market network
 Very strong R&D facilities
 Customer Satisfaction

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  India is the world's fifth largest energy consumer accounting for about 4.1% of the
world's total annual energy consumption
 Low labour and conversion costs
 Large quantity of high quality reserves

Weaknesses:

 Peak demand shortage of around 14.8% and an energy deficit of 8.4% in the country
 High cost of production
 Casual Employees dissatisfaction
 Labor force is highly un-skilled and inexperienced
 High rate of accidents
 Mines are increasingly more costly to acquire, develop and produce.

Opportunities:

 Coal and Lignite requirement for the power utility will grow at a CAGR of around 10%
during 2007-08 to 2011-12.
 Access for latest technology
 The demand shortage has the potential to turn into big time business opportunities for the
players like NLC
 The Eleventh Five Year Plan estimates the energy requirement to go up to the level of
1140 Billion Units by the year 2012
 Strengthening of logistics

Threats:

 Foreign imports
 Extinction of reserves
 Increase in costs by improvement in technology
 Strict environment rules
 Illegal mining

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  Mining is a riskier process

Product Profile

The main core activity of NLC is Lignite Excavation and power generation using lignite
excavated. NLC is having three lignite mines named as Mine I, Mine II and Mine IA. Also raw
lignite is being sold to small scale industries to use it as fuel in their production activities.

MINES CAPACITY OF MINES

MINE I      10.5 MT / A
MINE I A        3 MT / A
MINE II      10.5 MT / A

NLC is generating power in its Thermal Power Station I, Thermal Power Station -II and in
Thermal Power Station I Expansion. All the southern states are beneficiaries of this power
generation project.

THERMAL POWER STATION I THERMAL POWER STATION II

Power Generation : 600 MW Power Generation : 1470 MW

       ( 6 * 50 MW + 3 * 100 MW) in 9 units         ( 7 * 210 MW ) in 7 units

Power Allocation : Power Allocation :

ALLOTED TO % ALLOTED TO  %  ACTUAL

TNEB Export 79% Andhra Pradesh 19 277 MW
Station Consumption 12% Karnataka 14 199 MW
NLC schemes Kerala 10 153 MW
(Mines, Township & 9% Tamil Nadu 30 441 MW
others)
Pondicherry 5 80 MW
THERMAL POWER STATION I
NLC (Aux & Internal
Expansion 7 100 MW
consumption)
Unallocated share 15 220 MW
Power Generation : 420 MW

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        ( 2 * 210 MW ) in 2 units

Power Allocation :

ALLOTED TO ACTUAL
KPTCL 22.00
KSEB 14.00
TNEB 46.00
PONDY 3.00
Unallocated power 15.00
Performance
Production

Financial

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Physical

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 Future Prospects of NLC Limited

Findings about Neyveli Lignite Corporation Limited

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 NLC Limited has a well-versed and well-experienced man power to produce quality
lignite and render good services
 NLC Limited is able to deliver its goods and services to the customers on time and it
always aims at timely delivery
 Scrap and rejected items are dumped properly
 The techniques adopted for inventory management and supply chain management are
efficient
 The technology adopted for extraction process is not out dated and the company upgrades
the technology used time-to-time
 Coal and Lignite demand from the Indian cement industry looks bright and it is expected
that coal requirement by the industry will rise steadily from 2007-08 to 2011-12

Suggestions for NLC Limited

 The average per capita consumption of energy in India is very low at 631 kWh as
compared to world consumption of 2873 kWh which needs to be increased to bring
economic and social development in India.
 Miners and employees should be educated and informed about the safety measures and
equipments to be used, and it should be implemented strictly
 Steps should be taken to follow new technique for controlling inventory like just-in-time
method, it can save the cost and time in dispatching the materials
 Modern technology can be used for more production

Summing Up of the Project

 Recovery in the industrial sector became evident in June 2009 and the pace of output
expansion gained strength from August 2009 with growth in the General Index of
Industrial Production (IIP) going into double digits.
 Mining activity also recorded double digit growth in the second half of 2009/10, in part
because of the increased availability of natural gas.

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 The service sector has also shown strong recovery with GDP originating in the important
sub-sector of “trade, hotels, restaurant, transport & communication” surging to record
double digit growth in the second half of 2009/10.
 It is noteworthy that 2009/10 was the first year in some time when the growth of GDP
arising in the industrial sector (9.3 per cent) was greater than in the service sector (8.5 per
cent).

Summary

 It is expected that the Indian economy would grow at 8.5 per cent in 2010/11.
 There will be a substantial jump in the growth rate of agriculture and allied activities.
 Given the present trends in the South West monsoon, it is reasonable to expect
agriculture to grow at 4.5 per cent.
 Both industry and services will grow at a rate which is higher than the previous year.

 Strengthening of global economic recovery will help to sustain the higher growth rate.
 India has plenty of natural resources to provide many of the minerals that are critical raw
material for the country’s infrastructure as well as other major industries. It is only
natural that mining is integrated with the economic development of the nation. And like
all other industries, the mining industry too has been influenced by the dynamic global
economic situation. However, steady economic growth and continuous encouragement to
infrastructure development presents a positive outlook for this industry.
 Although the international demand for minerals may have gone down, the domestic
demand and the demand for natural resources like coal and lignite continues to fuel
growth. Our country has huge coal reserves to cater to the power industry. India is a
power hungry economy and hence our power plants have not been hit by the recession.
There has been, therefore, no substantial negative impact on the mining industry as well.
 According to government statistics, the domestic production for coal and lignite is
expected to touch 501 million tons this fiscal. Incidentally, the demand in the same time
frame is expected to be around 553 million tons. Some experts feel this demand-supply
gap may increase further in the forthcoming fiscal due to rise in consumption from the
power sector.

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 References

(2008, August 13). India’s contribution to the world’s mineral production. Ministry of Mines.
Retrieved from http://mines.nic.in/imsene.html

(2009, Feb 18). Impact of the Global Financial Crisis on India Collateral Damage and
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Economic Advisory Council (2010, July 22). Economic Outlook for 2010/11: A Report
Submitted to the Prime Minister. New Delhi.

Indian Economic Structure: Indian Industry Sectors & Industries. Economy Watch. Retrieved
from http://www.economywatch.com/

Mining Companies in India. Retrieved from http://www.amritt.com/

Neyveli Lignite Corporation: Competition. Retrieved from

http://www.moneycontrol.com/competition/neyvelilignitecorporation/comparison/NLC

Niranjan Mudholkar. (2009, February 16). Demand will grow. Construction week online.
Retrieved from http://www.constructionweekonline.in/

Prashant C. Trikannad. (2010, November 1). We expect 30% growth in mining and construction
equipment in FY11. Project Monitor. Retrieved from http://www.projectsmonitor.com/

Raju, S. (2008, February). Indian Coal Industry Outlook till 2012. RNCOS Industry Research
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Research Team. (2010, October). Top 9 Indian Power Company Profiles And SWOT Analysis.
TechSci Research. Retrieved from http://www.techsciresearch.com/

Ruddar Datt. (2009, March 28). Global Meltdown and its Impact on the Indian Economy.
Mainstream, Vol XLVII(15).

Venkatachalapathy, C.(2010, April 6). Production at NLC Mine-II to touch 15 million tons. The
Hindu. p. 7. 

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