Macroeconomic Analysis of the Indian Economy Assignment

Macroeconomic Analysis of the Indian Economy - Assignment Example 8). Gross domestic product Gross domestic product indicates an economy’s productivity and possible investment advantages from the economy. High gross domestic product shows positive prospects and increasing trend implies a growing economy with investment opportunities and high demand for utilities among its citizens (Dwivedi 2012, p. 55). India’s gross domestic product is relatively high; it has been estimated at about $ 1867 billion and its possible implications on the proposed investment can be explored from its trend. Trend in the country’s economic data for the past eight years identifies an increasing gross domestic product and this shows an increasing productivity level. The economy reported gross domestic product at about $ 834 billion in 2006, a value that increased to about $ 949 billion in the fiscal year ended in 2007, and $ 1238.6 billion in the fiscal year ended 2008. The economy’s gross domestic product recorded $ 1867.4 billion by the year. This trend identifies the economy’s growth potentials and it is therefore suitable for the proposed investment. The increasing trend also means availability of utilities and employment opportunities (Exim Bank 2013, p. 1). Service industry is the most active in the economy followed by the industrial sector. The service industry contributes more than half of the economy’s gross domestic product with the industrial and agricultural sector as the other major contributors. A review of the gross domestic product by sectors over the past eight years further identifies a decline in significance of the agricultural sector to the economy and an increase in significance of the service industry’s significance. Significance of the industrial sector has however been constant. The agricultural sector and its... This paper makes a conclusion that consumer price index is another significant indicator for evaluation. Consumers prices have been gaining stability over the past years and this further ascertain stability in money value. The country’s consumer index is however high and this communicates high living standards besides high ability to spend. Further, the high propensity to spend communicates high local demand for the investment should it be done in India. Foreign direct investment into the economy has been increasing and the trend identifies recognition of the country’s investment potentials by global investors. The macroeconomic indicators therefore identify positive investment prospects with the Indian economy because the indicators have been improving in the past years. The economy’s gross domestic product, exchange rate, current account balance, foreign direct investment, and consumer price index indicate increasing stability. In addition, the country’s political environment, accessibility to the global economy, and its investment oriented fiscal and monetary policies identify its suitability to the company’s proposed investment. Its inflation rate and the low unemployment rate, however, raise concerns of potential economic challenges. Poor technology may further challenge the investment, but technology can be imported. This report therefore recommends the Indian economy for the proposed investments because of the diverse economic advantages that outweighs the possible disadvantages.