BBA-MBA Integrated Program

Term – IV

Division – A

Individual Assignment

Indian Economy

Submitted to:

Prof. Kalkikumar Soni

Submitted On:

10-10-2022

Submitted by:

Aastha Dave- 217103

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 ACKNOWLEDGMENT
This fills me with immense pleasure in presenting the result of a project related to Indian
Economy. I would like to thank Prof. Kalkikumar Soni, who gave me the opportunity to work
and prepare for such an interesting project. I would like to express my gratitude to everyone
who has contributed to the project.

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Contents
Acknowledgement......................................................................................................................2

Article 1: Government to Launch Oilseed Mission...................................................................4

Article 2: Government imposes ban on export of broken rice...................................................8

Article 3: Ukraine crisis: Russian oil and gas turn to Asia......................................................11

Article 4: India's unemployment rate drops to 6.43% in September........................................14

Article 5: Govt raises import duty on gold to 15% from 10.75% to curtail CAD...................17

Bibliography.............................................................................................................................20

Undertaking..............................................................................................................................22

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 Article 1: Government to Launch Oilseed Mission
(https://www.livemint.com/industry/agriculture/government-to-launch-oilseed-mission-
11664124340866.html)

The Indian Government is all set to launch an oilseed mission to boost domestic production
of oilseed in India for two reasons, to become more self-sufficient and to reduce import
dependence on countries like Indonesia, Saudi Arabia, Russia, UAE, Iraq, etc.

Figure 1

Analysis:

Currently India imports $1trillion worth of edible oil every year. This makes up for half of
the country’s demand. The oilseed mission was introduced by the government for two
reasons:

 To achieve self-sufficiency in the edible oils market, and

 There is a need for diversification in the agriculture sector.

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What might the scheme include?

The programme is anticipated to include components including giving farmers subsidies for
purchasing high-quality seeds, having the government intervene in the market to support
prices when necessary, and working with the business sector to make high-quality seeds
accessible.

"There may be some seed subsidies. To guarantee that the farmer receives quality seeds, the
commercial sector may be involved. Some experts also contend that good quality germplasm
should be imported for high output.

Pricing assurance is the second factor. The area of land used for producing mustard has
increased during the past two to three years, when prices for the crop were higher. An
excellent motivator is price.” The need of an equitable oil seed pricing was stressed by
Chand, NITI Aayog member, Agriculture.

Additionally, rice-growing land that is idle for eight to nine months following paddy harvest
might be converted to an oilseed farm. After the rice is harvested, nothing else is sown on ten
million hectares of land in eastern India; this area is suitable for cultivating oilseeds.

Why do we need this scheme?

 Due to variation in the oil prices in the global market in the past few years leads
to an increase in the import prices. When lockdowns caused the price to go below
zero for the first time in history owing to a significant decline in economic activity in
2020 during the pandemic, demand for oil plummeted.
Following a solid economic rebound after the lockdowns, oil prices have recently
increased to almost $100 per barrel. Oil demand rises along with the economy.
Concerns over the supply are also being fueled by escalating geopolitical tensions in
the Middle East and between Russia and Ukraine. Rising prices and worries about an
economic recovery are being exacerbated by this. (White, 2022)

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 Figure 2

(White, 2022)

 Declining Forex reserves- Due to the decline in Forex reserves of the country, the
value of Indian Rupee has declined. This calls for the need to control the imports.

Figure 3

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 Figure 4

(Anup Roy, 2022)

 The important exporters of Edible Oils in the international market have imposed
restrictions on their exports which has affected India’s imports.

Figure 5

(Reuters, 2022)

The planned mission would encompass oilseeds such mustard, peanut, sunflower,
safflower, and coconut and will put an emphasis on increasing oilseed yields, making
sure that the seeds are of high quality, and expanding the area used for oilseed
farming.

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 Article 2: Government imposes ban on export of broken
rice
(https://www.livemint.com/industry/agriculture/government-to-launch-oilseed-mission-
11664124340866.html)

Figure 6

(India’s Rice Exports May Fall by 4-5 Million Tonnes Post Ban on Broken Rice, 20 Pc Duty, 2022)

The Union government banned the export of broken rice from India. The decision was taken
because due to an ‘abnormal’ increase in the exports of broken rice, there might be a shortage
in supply for domestic requirements which might further lead to increase in price.

Figure 7

(India’s Rice Exports May Fall by 4-5 Million Tonnes Post Ban on Broken Rice, 20 Pc Duty, 2022)

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Analysis:
Before announcing the ban on export of broken rice, the government had announced an
export duty of 20% on all non-basmati rice. It did so because the rice exports that were
happening from India to the world has increased significantly as shown above. The
government realised that this would create scarcity of broken rice in India which would lead
to inflation as a result of high prices.

Why is Broken Rice so important?

Broken rice is used as poultry feed and in the making of Ethanol. Brewers utilise extremely
finely broken rice to make beer. The pet food business employs it. Aquaculture and cattle are
also fed with it. Starch made from broken rice is used in the production of textiles, food,
cosmetics, and laundry detergent.

Why did the government impose the ban?

There has been sudden increase in the export of broken rice in the past couple of years.
In Year 2019-20, 12 lakh metric tonnes of broken rice were exported.
In Year 2021-22, 39 lakh metric tonnes of broken rice were exported.
For the current financial year 2022-23, in the months from April to August, the amount of
broken rice export has exceeded 21 lakh metric tonnes while in the previous financial year of
2021-22 during the same time period, the export was 0.5 lakh metric tonnes. There has been a
jump of more than 40 times.

Why is this concerning?

This year, many rice cultivating states like Bihar, West Bengal, Uttar Pradesh did not receive
enough rainfall because of which the cultivation of rice has fallen down. As a result, the
overall supply of rice has declined. If the government does not control this supply, there will
be scarcity of rice in the economy giving rise to inflationary trends.
In the beginning of the year 2022, the price of broken rice was Rupees 15/kg which has now
increased to Rupees 22/kg.

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Why is China a major importer from India?
China is one of the largest producers and contributors of rice to the international market yet
most of the exports of rice is made to China. This is because, the rice cultivating regions of
China are facing conditions of drought as a result of which the cultivation has come down.

Also, because of the Ukraine-Russia War, and the concern over global food shortage and high
prices is looming over the world, the government is either imposing restrictions or is now
banning the export of food grains to the global market which is why it is facing criticisms
from many countries.

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 Article 3: Ukraine crisis: Russian oil and gas turn to Asia
(https://www.bbc.com/news/world-asia-india-60783874)

As energy costs continue to rise globally and Western countries try to reduce their
dependency on Russian energy, India and China have been buying more and more
inexpensive Russian oil.

However, India is under criticism from Western countries for its oil purchases from Russia.
S. Jaishankar, the foreign minister of India, stated that his nation was left with few options
"when the price of oil is breaking our back."

Figure 8

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Analysis:
What happens to Russian oil?

Today, more than half of Russia's seaborne oil exports go to India and China. After Saudi
Arabia lost its position as China's top oil supplier in 2022, Russia has supplanted it. China
and India's total oil imports from Russia surpassed those of the 27 EU members in March of
this year.

Figure 9- Russian oil Imports by India and China

(Menon, 2022)

From a relatively low foundation at the beginning of the year, India's imports of Russian oil
have skyrocketed, hitting a peak in June and July, and essentially holding these levels through
to September.

The influx to India is being fuelled by cheaper oil.

As a result of its invasion of Ukraine, Russia lost certain international governments and
businesses as clients for its Ural crude oil, which caused its price to drop.

Russian Urals petroleum formerly cost more than $30 less per barrel than Brent crude (the
global benchmark). It was around $20 less expensive per barrel at the end of September.

The Russian oil is cheaper there, thus the Indian government has justified its imports of
Russian oil.

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What effect do sanctions have on the oil market?

Even if the price of Russian crude oil is competitive, India's refineries are having trouble
financing these imports since Russian bank restrictions are impairing payment exchanges.

One of the possibilities India is considering is a local currency-based system, where imports
would be paid for in rupees and exports would be paid for in roubles rather than dollars or
euros.

Russia has not historically been a significant supplier of fossil fuel for India, but imports of
cheap Russian crude oil have skyrocketed recently, despite growing unease in many Western
capitals.

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 Article 4: India's unemployment rate drops to 6.43% in
September
(https://www.thehindu.com/business/Economy/indias-unemployment-rate-drops-to-643-in-
september-cmie/article65959726.ece)

According to statistics from the Centre for Monitoring Indian Economy, India's
unemployment rate sharply decreased to 6.43% in September as a result of a rise in labor
force participation in both urban and rural areas (CMIE).

Figure 10

(The Hindu, 2022)

Analysis:
India's unemployment rate increased to a one-year high of 8.3% in August as employment
decreased by two million to 394.6 million during the course of the month. In the previous 18
months, this is the lowest unemployment rate.

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Additionally, the employment rate increased from 37.5 percent in August to 38 percent, its
highest level since the lockdown. "It has more than made up for the little decline it
experienced last month. These are significant, positive benefits "Mahesh Vyas, CEO of
CMIE, stated in an article.

According to the report, the unemployment rate in urban areas decreased to 7.7% from 9.57%
in the previous month while it decreased to 5.84% in rural regions in September from 7.68%
in August.

Figure 11

(Unemployment, n.d.)

The country's economy is performing well, as seen by the growth in labor force participation
of approximately eight million people.

The unemployment rate increased to its highest level in a year in August as irregular rains,
which had an impact on sowing operations, reduced employment in rural India. Urban
unemployment soared to 9.6% in that month, while rural unemployment rose to 7.7%.

Labor Participation Rate

The labor participation rate (LPR), which is an indication of concern for the economy, is
oddly dropping in September, according to the CMIE, which made this observation.

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"This decreased from 41% in August to 40.7% in September. This is strange since a declining
unemployment rate and rising employment rate allow for an increase of the labor force,
which raises the rate of labor force participation.

The LPR illustrates how many people of working age are eager to find employment.

At 40.7% in September, the labor force participation rate was 199 basis points lower than the
average rate for 2019–20, which was 42.7%.

Since 2016–17, when it was 46.1%, the labor force participation rate has been steadily
declining, he added. The full effects of the November 2016 demonetization and the July 2018
implementation of GST became seen in 2017–18, the year in which the LPR decreased by
256 basis points. In 2018–19 it dropped by 77 basis points, and in 2019–20 it dropped once
more by 14 basis points.

It is not encouraging for India's economic narrative if this share continues to decline, as it
clearly is. It makes all claims of an economic recovery into a fantasy.

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 Article 5: Govt raises import duty on gold to 15% from
10.75% to curtail CAD
(https://www.business-standard.com/article/markets/govt-raises-import-duty-on-gold-to-12-
5-from-7-5-122070100292_1.html)

The government reduced the import tax on gold to 7.5% in the Union Budget last year, and it
has since increased the basic import tax on gold from 10.75 to 15%. The majority of India's
gold needs are met by imports, which placed pressure on the rupee earlier this year when it
touched a record low. According to a recent report, the central government has increased its
level of caution as a result of May's record-breaking $24.3 billion trade imbalance.

Figure 12

(Agencies, 2022)

Analysis:
In the Union Budget last year, the government reduced the tax to 7.5%. In India, gold is
subject to a 3% Goods and Services Tax (GST).

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Friday saw an almost 3% increase in gold prices on the Multi Commodity Exchange (MCX),
reaching Rs 51,900 for a 10 gramme piece. On the world market, gold prices were down
today.

This increase in import taxes coincides with the World Gold Council's (WGC) prediction that
India will rank fourth among all countries in terms of gold recycled in 2021 with 75 tonnes,
or 6.5% of the total amount recycled globally.

Why was the import tax on gold increased?

India's imports of gold increased significantly in the months of May and June, according to a
statement from the Finance Ministry. India imported 107 tonnes of gold in May. Given that it
imports the majority of the gold it uses, India is particularly troubled by this. In 2021, India
imported the most gold in the previous 10 years.

The rupee has been periodically reaching record low levels for the last month. The Centre and
the Reserve Bank of India (RBI) have been attempting to stop the decline of the rupee. Many
rules allowing the influx of funds from NRIs have been loosened by the RBI. The increase in
the gold import rate is one of the phases, according to the Center.

How will the increase in import taxes on gold affect Indian consumers?

Figure 13

(Retail, 2022)

The country's cost of gold jewelry would increase as a result of the increase in import duties.
Jewelry will become more expensive as a result of the GST rate increase on cut and polished
diamonds from 0.25 to 1.5 percent beginning on July 18.

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Prices of gold fluctuate every day since it is traded like a commodity. In Indian cities,
however, there exist societies for jewelry that set the daily local gold pricing.

To get the current prices, the price of gold and import duty are often included. For Indian
purchasers, gold is anticipated to increase in price due to the increased import charge.

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Bibliography
1. Agencies, T. W. B. S. &. (2022, July 1). Govt raises import duty on gold to 15% from
10.75% to curtail CAD. www.business-standard.com. Retrieved October 10, 2022,
from https://www.business-standard.com/article/markets/govt-raises-import-duty-on-
gold-to-12-5-from-7-5-122070100292_1.html
2. Anup Roy. (2022, September 9). India’s Forex Reserves Fall to Lowest in More Than
23 Months. Bloomberg.com. Retrieved October 10, 2022, from
https://www.bloomberg.com/news/articles/2022-09-09/india-s-forex-reserves-fall-to-
lowest-in-more-than-23-months?leadSource=uverify%20wall
3. India’s rice exports may fall by 4-5 million tonnes post ban on broken rice, 20 pc
duty. (2022, September 10). The Economic Times. Retrieved October 10, 2022, from
https://economictimes.indiatimes.com/news/economy/foreign-trade/indias-rice-
exports-may-fall-by-4-5-million-tonnes-post-ban-on-broken-rice-20-pc-duty/
articleshow/94117958.cms?from=mdr
4. Menon, B. S. (2022, September 30). Ukraine crisis: Russian oil and gas turn to Asia.
BBC News. Retrieved October 10, 2022, from https://www.bbc.com/news/world-asia-
india-60783874
5. Prasad, G. C. (2022, September 25). Government to launch oilseed mission | Mint.
Mint. Retrieved October 10, 2022, from
https://www.livemint.com/industry/agriculture/government-to-launch-oilseed-
mission-11664124340866.html
6. Retail, E. T. (2022, July 5). Gold prices in India rise further after hike in import duty.
ETRetail.com. Retrieved October 10, 2022, from
https://retail.economictimes.indiatimes.com/news/apparel-fashion/jewellery/gold-
prices-in-india-rise-further-after-hike-in-import-duty/92674964
7. Reuters. (2022, June 14). India’s palm oil imports drop 10% in May as Indonesia
curbs exports. The Economic Times. Retrieved October 10, 2022, from
https://economictimes.indiatimes.com/news/economy/foreign-trade/indias-palm-oil-
imports-drop-10-in-may-as-indonesia-curbs-exports/articleshow/92199726.cms
8. Team, W. B. S. (2022, July 8). How will the hike in import duty of gold affect
customers in India. www.business-standard.com. Retrieved October 10, 2022, from
https://www.business-standard.com/article/markets/how-will-the-hike-in-import-duty-
of-gold-affect-customers-in-india-122070800406_1.html

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 9. The Hindu. (2022, October 1). India’s unemployment rate drops to 6.43% in
September: CMIE. Retrieved October 10, 2022, from
https://www.thehindu.com/business/Economy/indias-unemployment-rate-drops-to-
643-in-september-cmie/article65959726.ece
10. Unemployment. (n.d.). Retrieved October 10, 2022, from
https://unemploymentinindia.cmie.com/kommon/bin/sr.php?kall=wshowtab
11. White (Ed.). (2022, February 16). Why oil prices matter to the global economy - an
expert explains. World Economic Forum. Retrieved October 10, 2022, from
https://www.weforum.org/agenda/2022/02/why-oil-prices-matter-to-global-economy-
expert-explains/

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 Undertaking
This is to certify that the report submitted by me, Aastha Dave (217103_A) is solely prepared
by my knowledge and capability. There is no plagiarized content other than the specified
details about the news thus, my report is original. Any information taken from the internet is
being mentioned under the References.

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