Mr. Aditya shrinivas initiating his talk said year-on-year (y-o-y) real GDP growth slowed from 5.5 per cent in Q1 of 2012-13 to 5.3 per cent in Q2. The decline in the GDP growth rate became broad based, with consumption demand also slowing alongside stalling investment and declining exports. On the supply side, there are indications of weakening resilience of services to sluggish global growth. India is the most attractive investment destination in the world. The Indian economy is expected to grow at 3.4 per cent in the current fiscal, a slight increase from 3.3 per cent in FY 201213, as per projections from the Organisation for Economic Co-operation and Development (OECD). The growth is estimated to be even greater in FY 201415 (5.1 per cent) and FY 201516 (5.7 per cent).The speaker said India has potential to grow three times ahead. India has the highest young working population. But foreign investors are feared to invest in India due to change in policy any time and non-clarity of taxation system in India. Indian economy requires sustainable growth. FDI will open new opportunities. Similarly, Government needs to look into fiscal deficit and current account deficit. They need to reduce unplanned expenditure and reduce wasteful expenditure to increase revenue.

Global financial crisis (2008) US responsible 7.5% to 8% avg GDP growth 9.3 % in 2007-08Our current Gross Domestic Product is 4.7%

How India survived global crisis-:India being late in opening its doors till 1991 to globalization helped India a lot as it wasn't as much dependent on US as many other countries. Also a high rate of savings -with lesser dependence on banks- helped India survive the crash.Despite being a supporter of globalization.2003-2008(bullish mode) In 2008 FII sold share worth of 52000 crore.The index are 21206 (10 Jan. 2008) to 7677 (27 Th Oct 2008) FII took 14000 points India victimises in capital market but comes back.Why2014- jan equity FII invest 75600 crore India debt market 40000 crore.Because sentiments drives liquidity which drives market.Dr.Adityas guest lecture helped us to understand the importance of improving the financial situation of our country, which in turn would lead to improvement of the overall economy of the nation. To summarize the session in a nutshell, the talk certainly helped the students understand the various dimensions of financial analysis to assess the state of a nations economy and the necessity to do so.

Not only are markets scaling new highs daily, equity premia over emerging market peers is also rising. All this against the backdrop of a sub-5% economic growth seems to suggest they have run ahead of fundamentals. However, international investors do not seem to have discounted Indias share in world economic output. As the chart shows, Indias share in global gross domestic product (GDP) is expected to touch 2.6% this year. But the countrys share in world market capitalization is lower at 2.31%. This is despite a 50 basis points increase in this ratio after the sharp market run-up in the first six months of 2014.

Devaluation of indian rupees

The Indian Rupee has fallen in value against a basket of currencies since independence in 1947. In recent years, the Indian Rupee has continued to depreciate in value.In 1990, you could buy $1 for 16 Indian Rupees. By 2013, the value of a Rupee had fallen, so that you would need 65 Indian Rupees to buy $1.Another way of thinking about it: In 1990 1 Indian Rupee = $0.06 In 2013 1 Indian Rupee = $0.016

This shows there has been a substantial fall in the value of the Indian Rupee against the US dollar. When there is devaluation in the Indian Rupee it means that Indian exports become cheaper, but imports are more expensive for Indians to buy. In particular, devaluation in the Rupee is bad news for Indians who need to import raw materials, such as oil and gold.Causes of Devaluation in RupeeLack of competitiveness/inflation.The long term decline in the value of the Rupee reflects Indias relative decline in competitiveness. In particular, India has a higher inflation rate than its international competitors. In November 2013, Indian inflation reached 11.24%. Therefore, there is relatively less demand for the rising price of Indian goods; this reduction in demand causes a fall in the value of the Rupee.Current account deficit. A consequence of poor competitiveness and high demand for imports is a current account deficit. This means India is purchasing more imports of goods and services than it is exporting. A large current account deficit tends to put downward pressure on a currency. This is because more currency is leaving the country to buy imports than is coming in to buy exportsIn the first quarter of 2013 the Current Account Deficit was 18.1 billion. The deficit was over 6.7% in last quarters 2012, the deficit has fallen to 1.2% in Q3 2013. However, the Economist notes that 75% of the deficit reduction is artificially related to reducing imports of gold through government restrictions. (See:Indian economy 2014)Therefore, there is still an underlying trade deficit, India will need to work on through increasing exports and competitiveness.A current account deficit can be financed by capital inflows (on the financial account). But, recently, India has been struggling to attract sufficient long-term capital investment. Some major companies have recently pulled out of foreign direct capital investment. This puts more downward pressure on the Rupee.Oil PricesIndia is a net importer of oil. It has to buy oil in dollars. Therefore, rising oil prices worsen Indias current account and also weaken the Rupee. More Indians Rupees have to be spent on buying oil.Impact of Devaluation in Indian RupeeInflationary pressures.India is trying to control inflation, which has been running into double digits. But, devaluation makes itself makes it harder to control inflation. The devaluation increases the price of imports, such as oil and fuels, leading to cost push inflation. Also, devaluation is considered an easy way of restoring competitiveness, therefore devaluation may reduce the incentives for exporters to work on improving long-term competitiveness. Finally, devaluation can help boost domestic demand. Exports will rise and consumers will switch to domestic producers rather than imports. This can cause demand-pull inflation.Economic growthA devaluation can boost domestic demand and short-term economic growth. However, this is not necessarily helpful for the Indian economy. Indias economy needs to concentrate on boosting productivity and long term productive capacity, rather than relying on boosting domestic demand. The rapid devaluation has also caused a loss of confidence in international and domestic investors. With a history of quick depreciation, foreign investors will be more nervous of investing in India. The devaluation and inflationary impact will also discourage domestic investors, e.g. firms worried about future oil prices. This reduction in investment is damaging to long-term economic growth.