Condition for Emerging Economies Finance Essay

Emerging market is used to depict a nations Social or business movement in the procedure of speedy growth and industrialization. Currently there are approximately 28 emerging markets in the world, within that India and China is considered being the largest.

Whenever we are talking of emerging economies, there are major five areas on which we need to focus. These relate to macro-economy, external sector management, regulation of the financial sector, corporate sector and transparency in the system. Now-a-days these sector are in specific concerns and differ from which they are talking years ago.

The emerging economy is a governing power in global economic, environmental and social affairs. It's showing the potential market, huge manpower resources, able to accept the challenges and innovation. There are some the issues in the both developed and emerging economies. The only difference is that how they tackle the issues. Issues like poverty, capital, inequality and corruption.But at the same time, victory of emerging economies requires an understanding of the expectation of government, investors, society and customers.

Indian Economy:

From the 1950s to the 1980s, India goes behind communist policies. The economy was fetter by extensive regulation, protectionism, and public ownership, leading to persistent corruption and slow growth. Since 1991, economy has turn towards a market based Economy. The policy is being changed in 1991. It came because of balance of payment crisis and then it has been use foreign trade and foreign investment as fundamental part of India's economy.

India is having 6% GDP growth rate for the past two decades and is one if the fastest growing in the world. Indian economy is having world's second largest labour force with 516.3 million people. There are different sector which is contributing in the overall GDP. In that agricultural sector is contributing 28% of GDP, Service and industrial sector contributing 54% and 18% respectively. Agriculture product contains rice, wheat, cotton, cattle, and potatoes. Major industries include textiles, steel, cement, mining, and software. India's trade has reached a share of 24% of GDP in 2006 from its 6% in 1985. In world trade has reached 1%. Major exports are gems and jewelry, engineering goods, petroleum products. Major imports include crude oil, machinery and chemicals.

There is an impressive growth over recent past; it still contains the largest focus of poor people in the world. There are number of people living under the below poverty line and it's decided that a person must get $2. India has avoided food crisis problem but still half of children are underweight.

On the other side, India is a most energy efficient among emerging economies like China, Brazil and South Africa. Emerging economies can play a vital roles in the reducing the growing environment worries.

Condition for Emerging Economies:

If any emerging economy is satisfying two condition than it is be eligible for emerging sector.

• The Economy established its presence but not very big currently.
• It is currently growing fast and going to become imperative sector of the economy in the near future.

According to the above point, following sector qualify as emerging sector in Indian economy.

• Medical Sector
• Knowledge Process Outsourcing
• Retail Sector
• Finance Sector

For a long time the United States had been the largest and strongest economy in the world. But lots of changes have taken places in the last two decades. All the weight is being transfer from US and Europe to china And INDIA. In the current scenario, India is becoming the emerging economy and will be super power in the near future. India is going to become third largest economy after china and USA. India is viewing remarkable development over a period of time. As India is growing like leaps and bounce, all the other country are making good relationship with the India.

The latest CIA report says that Indian economy is the fourth largest economy in the world in terms of GDP following USA, China and Japan, and second fastest growing economy with an annual growth rate above 6-7%. All the wealthy country showed the major drawback in global GDP by 4.9 percentages. Even in the Asian country Japan's share of world GDP is decrease by 1 percentage but at the same time India's share is increase by 2.2 percentages.

Economy Review:

• India's GDP for second quarter of 2010 came at 7.9% y-o-y basis. It's because of strong growth in mining and manufacturing sector which grew by 9.5% and 9.2% y-o-y respectively.
• India's trade deficit in September 2009 came in $7.8 billion decline in y-o-y basis.
• The Index of Industrial Production (IIP) for September 2009 registered a growth of 9.1% y-o-y basis.
• Macro economic data shows the economic recovery, due to these central banks need to think about over the withdrawal of various stimulus actions announced earlier. Emerging economy is showing positive sign with their leading indicators.
• At the same time there are some events like deferral in the repayment of debt by dubai world have caused concepts relating to the global financial crisis.
• In October 2009, the gross premium underwritten for the general insurance industry grew by 16% y-o-y basis. The public players posted a healthy growth of 13.4%. While the private sector players registered a growth of 19.8% y-o-y higher than the public players.
• The Sensex has grown 2.14% from its previous month. It's because of improvement in macro fundamentals such as improving in IIP data, additional capital into the public sector banks by the government that will lead to healthy balance sheet.

Stock Exchange:

It's a platform where buying and selling of the securities is possible. Both the buyer and seller get the benefit of price changes of the securities. Ups and downs of the stock will help to decide or help to make the assumption on return on Investment. Stock market helps the company to raise the capital from the market. The company which is listed in the exchanges are eligible to raise money from the primary market.

There are some the rules made by the regulator which has to be follow by the companies. Its main aim is to defend buyers and sellers. There are some of the limits made in the transaction. It's decided by the authority. No one can make the transaction above the limit. There are some of the rules made by the exchanges to enter in particular market and for the trading perspective.

For the any market, lucidity and rapidity is essential. The company which is listed in the market need to provide the guidance, performance and business plan for short term as well as long term. All the investors will make the investment in the data provided by the company.

How Stock Exchanges Operate

Buyers and sellers will make their transaction with the help of stock brokers. The broker represents the selling party's order to the stock exchange and will fine the brokers who are willing to buy same stocks. If both are agree, than after transaction tale place.

Finance Sector:

Indian finance sector is a key driver of the economic growth. Indian economy is fourth largest in terms of GDP. India adopted the independence thinking for growing its economy in 1947. There are some of the problem arise in the beginning but in 1991, it's open the door of opportunity. Lots of MNC came into Indian market. From the 2003-04 to fiscal 2007-08, India record a continuous single digit GDP growth rate, but India's growth rate shown reverse in 2008 due to global recession.

Currency:

The official currency is the INR (Indian National Rupee). The reserve bank of India regulates the foreign exchange in the economy. But there is not any kind of currency conversation limits of Indian rupees. The entire local firm can take the money from the anywhere to expand the business globally. The Indian rupee is linked with the Dollar from 1982. Person can also make the transaction in the currency future for the hedging perspective or to take the benefit of ups and downs.

Stock Market:

There are two major exchanges in Indian market Bombay stock exchange (BSE) and National stock exchange (NSE). BSE Includes 30 stocks and NSE includes 50 stocks. Security and exchange board of India (SEBI) is regulatory body which regulates market trading, stock exchange, investors, portfolio managers and brokers.

India is the second largest after USA in terms of number of companies listed in the stock exchange. India is become the hot favorite location after the LPG policy. Also middle class people are investing in the market which helps to increase in the volume.

Commodity Market:

There is not much volume in the commodity market early 1990s due to several restrictions forced by the government. But then after it takes several steps which includes 21 regional exchanges and 4 commodity exchanges which increase the efficiency in the commodity market. Major online exchange is National commodity and derivatives exchange limited. All the future trading in the commodity market is regulated by the Forward market commission.

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