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    5.economic Trends 5 June 2012

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    Amita Bissa
    The document provides information on savings and investment in India. It defines savings as the portion of income not spent and investment as expenditures that add to the stock of capital goods. Savings and investment are related as higher savings leads to higher investment and capital formation in an economy. The savings performance in India has increased over time, with gross domestic savings rising from around 9% of GDP in the 1950s to over 32% in 2005-2006. Investment trends in India also increased from the 1950s, with public investment initially higher but private investment growing significantly after economic liberalization in the 1990s. Total investment rose from around 15% to over 33% of GDP between 1990-1991 and 2005-2006.

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    5.economic Trends 5 June 2012

    Uploaded by

    Amita Bissa
    31 views28 pages
    The document provides information on savings and investment in India. It defines savings as the portion of income not spent and investment as expenditures that add to the stock of capital goods. Savings and investment are related as higher savings leads to higher investment and capital formation in an economy. The savings performance in India has increased over time, with gross domestic savings rising from around 9% of GDP in the 1950s to over 32% in 2005-2006. Investment trends in India also increased from the 1950s, with public investment initially higher but private investment growing significantly after economic liberalization in the 1990s. Total investment rose from around 15% to over 33% of GDP between 1990-1991 and 2005-2006.

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    savings and investment

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    5.Economic Trends 5 June 2012

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    The document provides information on savings and investment in India. It defines savings as the portion of income not spent and investment as expenditures that add to the stock of capital goods. Savings and investment are related as higher savings leads to higher investment and capital formation in an economy. The savings performance in India has increased over time, with gross domestic savings rising from around 9% of GDP in the 1950s to over 32% in 2005-2006. Investment trends in India also increased from the 1950s, with public investment initially higher but private investment growing significantly after economic liberalization in the 1990s. Total investment rose from around 15% to over 33% of GDP between 1990-1991 and 2005-2006.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    31 views28 pages

    5.economic Trends 5 June 2012

    Uploaded by

    Amita Bissa
    The document provides information on savings and investment in India. It defines savings as the portion of income not spent and investment as expenditures that add to the stock of capital goods. Savings and investment are related as higher savings leads to higher investment and capital formation in an economy. The savings performance in India has increased over time, with gross domestic savings rising from around 9% of GDP in the 1950s to over 32% in 2005-2006. Investment trends in India also increased from the 1950s, with public investment initially higher but private investment growing significantly after economic liberalization in the 1990s. Total investment rose from around 15% to over 33% of GDP between 1990-1991 and 2005-2006.

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    Download as pptx, pdf, or txt
    of 28

    BUSINESS ENVIRONMENT

    UNIT II SAVINGS AND INVESTMENT


    SUBJECT EXPERT CA. AMITA BISSA

    OBJECTIVE OF THE LECTURE


    Meaning and concept of saving and investment Saving performance in India Investment Trends

    Investment performance in India

    SAVINGS
    SAVINGS Savings refer to the part of ones income which is not spent. It is a fact that most of the individuals

    do not spend the whole of the income earned by


    them. Therefore, the amount which is not spent

    by them becomes savings and Sources of


    Investment.

    INVESTMENT
    Investment : DEFINTION
    A Investment is an expenditure on

    increasing the Nations Stock of Capital


    goods like Building, Machines, Tools, Dams, Rail, Road etc.

    INVESTMENT
    Investment refers to what has been added
    to the stock of capital goods in a year. Investment does not include the purchase of existing paper securities, bonds, debentures or equities etc, because they are only the

    mere transfer and do not add to the stock of


    capital goods.

    Difference between Saving and Investment

    Difference between Saving and Investment


    Capital means the total stock of capital goods in
    existence while on the other hand investment refers to what has been added to the Stock of Capital goods in a year. As such investment is the amount by which Stock of capital of an Economy increases and it does not include the purchase of existing paper securities , bonds, debentures or equities etc.

    Relationship Between Saving and Investment

    Relationship between Saving and Investment


    Savings and investment both make a
    singular process that is known as Capital

    Formation. Higher is the level of savings,


    higher will be the level of investment in the economy.

    Relationship between Saving and Investment


    When the savings are used in the further
    production, that is the investment it is known as Capital Formation. In this same way, when the consumption in a country is less than the production, (both in aggregates) the surplus of

    production i.e, savings , than it is used in


    further production as Investment .

    Relationship between Saving and Investment


    Let us represent the following terms
    symbolically, Y C = = INCOME CONSUMPTION

    S
    I

    =
    =

    SAVINGS
    INVESTMENT

    Relationship between Saving and Investment


    It is a fact that in an economy, the total
    income will be equal to consumption plus savings and in this way the first equation may be Y = C + S

    Relationship between Saving and Investment


    The income will be equal to the expenditure
    made on consumption goods and the

    expenditure made on investment. So the second equation will be Y = C + I

    Relationship between Saving and Investment


    Y
    Y

    =
    =

    C
    C

    +
    +

    S
    I

    (I)
    (II)

    In the above two equation C is the common factor therefore it can be said that
    S = I

    Relationship between Saving and Investment


    It can be concluded that if the savings are
    higher then there will be higher level of investment in the economy and vice versa. Each and every country particularly developing , try to raise its level of savings so

    that there must be higher level of investment to


    build up its capital sector.

    SAVING PERFORMANCE IN INDIA

    SAVING PERFORMANCE IN INDIA


    Gross Domestic Savings : Overall Trend
    The Gross domestic savings (GDS) rate rose from around 9% in early 50s to 22% by end of 80s. The GDPs has continued to rise after liberalization. It rose from above 20% of GDP in the late 1980s to above

    24% in recent years, it has further increased to 32.4%


    in 2005-06, as it is clear from the following table.

    GROSS DOMESTIC SAVINGS (AS % OF GDP AT CURRENT MARKET PRICES)


    YEAR HOUSEHOLD SECTOR (2) 1950-51 1960-61 1970-71 1980-81 1990-91 1999-00 2000-01 6.2 7.3 10.1 13.8 19.3 21.1 21.0 PRIVATE CORPORATE SECTOR (3) 0.9 1.6 1.5 1.6 2.7 4.5 4.3 1.8 2.6 2.9 3.4 1.1 -0.8 -1.9 PUBLIC SECTOR (4) 8.9 11.6 14.6 18.9 23.1 24.8 23.4

    GROSS DOMESTIC SAVINGS SAVING PERFORMANCE IN INDIA TOTAL

    (2+3+4)

    2001-02
    2002-03 2003-04 2004-05

    21.8
    22.7 23.8 21.6

    3.7
    4.2 4.7 7.1

    -2.0
    -0.6 1.2 2.4

    23.5
    26.4 29.7 31.1

    2005-06

    22.3

    8.1

    2.0

    32.4

    GROSS DOMESTIC SAVINGS (AS % OF GDP AT CURRENT MARKET PRICES)


    YEAR HOUSEHOLD SECTOR (2) 1950-51 1960-61 1970-71 1980-81 1990-91 1999-00 2000-01 6.2 7.3 10.1 13.8 19.3 21.1 21.0 PRIVATE CORPORATE SECTOR (3) 0.9 1.6 1.5 1.6 2.7 4.5 4.3 1.8 2.6 2.9 3.4 1.1 -0.8 -1.9 PUBLIC SECTOR (4) 8.9 11.6 14.6 18.9 23.1 24.8 23.4

    GROSS DOMESTIC SAVINGS SAVING PERFORMANCE IN INDIA TOTAL

    (2+3+4)

    2001-02
    2002-03 2003-04 2004-05

    21.8
    22.7 23.8 21.6

    3.7
    4.2 4.7 7.1

    -2.0
    -0.6 1.2 2.4

    23.5
    26.4 29.7 31.1

    2005-06

    22.3

    8.1

    2.0

    32.4

    INVESTMENT TRENDS
    Investment Trend
    The investment is divided into Private and Public . Private investment is further separated into corporate investment and Household investment. Most of the infrastructure investment is pubic

    investment because this is either a natural or legal


    public monopoly.

    INVESTMENT TRENDS
    The public infrastructure investment include
    Agriculture Construction Electricity And Gas Communication, Railways Transport

    INVESTMENT TRENDS
    The relationship between
    private investment is

    public and

    complementary.

    Infrastructure deficiencies hold back both


    private production and private investment.

    INVESTMENT TRENDS
    Public investment :
    Pubic Investment is different economic activities is expected to yield differential rate of return. Investment

    on health, education, nutrition etc. are not expected to


    generate any return in the immediate future. The benefits of these investment would be felt on the

    overall productivity of economy in the long run.

    INVESTMENT PERFORMANCE IN INDIA

    INVESTMENT TRENDS IN INDIA


    THE PUBLIC INVESTMENT (GROSS DOMESTIC CAPITAL FORMATION IN PUBLIC SECTOR) AS A PERCENT OF GDP AT CURRENT MARKET PRICES INCREASED FROM 2.8% IN 1950-51 TO 8.2% IN 1965-66.
    PUBLIC INVESTMENT SLUMPED IN 1999-00 TILL ABOUT 2003-04 BUT PRIVATE INVESTMENT CONTINUED TO BOOM STABLIZING THE TOTAL. AFTER LIBERALIZATION TOTAL INVESTMENT INCREASED FROM 26.3% IN 199091 TO 33.8% IN 2005-06

    INVESTMENT TRENDS IN INDIA


    PRIVATE INVESTMENT INCREASED IN THE

    SAME PERIOD FROM 14.7% TO 23.6%

    GROSS DOMESTIC CAPITAL FORMATION(AS % OF GDP AT CURRENT MARKET PRICES)

    SAVING PERFORMANCE IN INDIA


    GROSS DOMESTIC CAPITAL FORMATION PUBLIC SECTOR PRIVATE SECTOR ADJUSTED TOTAL

    YEAR

    1950-51
    1960-61 1970-71 1980-81 1990-91 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

    2.8
    6.9 6.4 8.4 9.3 7.1 7.1 6.3 5.4 6.5 7.1 7.4

    7.7
    7.8 9.4 10.3 14.7 16.1 15.8 16.1 17.3 18.9 21.3 23.6

    8.7
    14.4 15.4 20.3 26.3 24.3 24.0 23.7 24.8 27.2 31.5 33.8

    SUMMARY

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