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The Telecommunication Industry In India Economics Essay

As a part of the national accounts of a country, and in regard to the national income equation Y=C I G (X-M), where I is investment or foreign investment, FDI in short refers to the net inflows of investment which is outflow minus inflow to acquire a management interest in an enterprise which is operating in an economy other than that of the investor. It is the total of equity capital which is shown by balance of payments. It is the movement of capital, technology, production, goods and services from one country to another country.
METHODS Foreign direct investment can be induced in a country by the following methods:
By acquiring shares of an enterprise in the target company.
By establishing a new enterprise or company in the target company.
By providing technology to the companies in the target country.
Through merger or acquisition.
By establishing a wholly owned subsidiary of a company in the target company.
By joint ventures of the companies in equity capital in the target company.
TELECOMMUNICATION INDUSTRY IN INDIA The word telecommunication is derived from the Greek work “tele” which means “far off” and the Latin word “communicare ” which means “to share”. Or in other words it refers to transmission of signals to different places with the help of telecom or telecommunication. In old days, communication between two people take place with the use of drum, letters, flags and smoke signals. And now it means high speed sophisticated submarine optical wires laid on ocean floor and by satellites which is in covering on the whole earth.
The modern system of telecommunication starts with the help of telegraphs networks. In old days, India seen increasing number of telephone wires connections. When the wireless telephone connections in the form of handsets or cell phones, it was not accepted widely by the Indian masses because of the high prices that can’t be bought. And with the reduced tariff of connections as well as the handsets of phones there is a huge demand. and now almost everyone is having at least one wireless connection with them. Now the telecom industry is witnessing low tariff telecom tariff globally.
Telecommunication was started as a state monopoly in 1980’s. in the early 1990 the telecom sector was freed from the state or government monopoly and was liberalized and there was huge private sector participation from then.
The main objective of the liberalization was:
Availability of affordable and efficient telecom services.
Creation of good telecom infrastructure in the country.
To provide the customers with more good quality services.
To increase the growth of the sector with the help of private payers.
To make the telecom industry according to the standards of the telecom services with the standards of other countries.
Telecom commission – the telecom commission mainly helps in the formulation of the policies, strategies, decides budget, promotes investment, promotes standardization, R

Market liberalization in the Chinese Economy

The Chinese economy Market liberalization in the Chinese Economy has brought its huge economy forward by leaps and bounds – but rural China still remains poor, even as its cities increase in affluence. China’s economy is huge and expanding rapidly. In the last 30 years the rate of Chinese economic growth has been almost miraculous, averaging 8% growth in Gross Domestic Product (GDP) per annum. The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars by 2007. In Purchasing Power Parity GDP, China already has the biggest economy after the United States. Most analysts project China to become the largest economy in the world this century using all measures of GDP.
However, there are still inequalities in the income of the Chinese people, and this income disparity has increased in the recent times, in part due to a liberalization of markets within the country. The per capita income of China is only about 2,000 US dollars, which is fairly poor when judged against global standards. In per capita income terms, China stands at a lowly 107th out of 179 countries. The Purchasing Power Parity figure for China is only slightly better at 7,800 US dollars, ranking China 82nd out of 179 countries.
Economic reforms started in China in the 70s and 80s. The initial focus of these reforms was on collectivizing the agricultural activities of the country. The leaders of the Chinese economy, at that point in time, were trying to change the center of agriculture from farming to household activities. At later stages the reforms extended to the liberalization of prices, in a gradual manner. The process of fiscal decentralization soon followed.
As part of the reforms, more independence was granted to the business enterprises that were owned by the state government. This meant that government officials at the local levels and the managers of various plants had more authority than before. This led to the creation of a number of various types of privately held enterprises within the services sector, as well as the light manufacturing sectors. The banking system was diversified and the Chinese stock markets started to develop and grow as economic reforms in China took hold.
The economic reforms made in China in the 70s and 80s had other far reaching effects as well. The sectors outside the control of the state government of China grew at a rapid pace as a result of these reforms. China also opened its economy to the world for the purposes of trade and direct foreign investment.
China has adopted a slow but steady method in implementing their economic reforms. It has also sold the equity of some of the major Chinese state banks to overseas companies and bond markets during the middle phase of the first half of the 21st century. In recent years the role played by China in international trade has also increased.
The official support of a market-based economy that came from Deng Xiao Ping in 1992 has resulted in a more open system of trade for China, and subsequently a huge growth spurt in China’s economy. The economic reforms which Deng instigated culminated in a “socialist market economy”, a term which was actually incorporated into the Chinese constitution during the National People’s Congress in March 1993. Since that time, China’s economy has experienced a substantial boost in regards to living standards, quality of food and spendable income.
While these elements expand opportunities for U.S. exporters, factors such as inflationary pressure, irrational foreign exchange controls, and restrictive trade practices have created numerous barriers. In fact, China’s official Gross National Product (GNP) posted a 12.8 percent real growth rate in 1992 to about US$435 billion, or about US$371 for each of China’s 1.172 billion people- urban incomes grew at a real rate of 8.8 percent. Rural incomes also grew, but at a slower rate of 5.9 percent.
These figures, however, may be tainted by the disproportionate distribution of income and wealth that permeates China. The Chinese, after all, have lower human rights standards than the United States and the poor definitely suffer the consequences. Add to that the immense size of the Chinese population, and suddenly any estimates of wealth, buying power, or economic conditions appear to be quite diminished in their reliability. In the end, these figures are based on national averages, which creates a fictional middle class majority that simply does not exist. Realistically, a very large proportion of China’s economic growth comes from the collective and private sector, and not the subsidized state sector.
In addition, China continues to maintain an illogical foreign exchange mechanism, utilizing both an official exchange rate and a “swap center” rate, which is influenced even further by the black market rate – none of which can be properly measured. Other barriers include the fact that it can sometimes be hard to decipher the rules regarding license requirements, as well as what type of inspections are required. For those commodities which are still restricted at the central government level, there is also confusion as to which agency has the ultimate authority. These difficulties can be managed, but necessitate perseverance and diligence on the part of U.S. exporters.
The market and price reforms made by the China Communist Party in 1993 also fueled dynamic changes in China’s economic environment, especially in regards to agriculture. With the population of China increasing by approximately 17 million people every year, it is easy to see why China can only meet demands by increasing the number of agricultural and food product imports it receives. Today, there are over 80,000 grain and edible oil markets as well as numerous fruit and vegetable markets in China importing products for the domestic market. China has signed agreements which force them to loosen the restrictions on foreign trade, which has had a very positive impact on U.S. trade relations with China, especially in regards to food products.
In China, as in many countries throughout the world, the rise in incomes and living standards has perpetuated a notable increase in the per capita consumption of meat, fruits and vegetables, and most especially, processed and convenience foods is increasing. In major urban markets, and most noticeably in Beijing, Shanghai, and Guangzhou, consumers are literally “eating up” fast foods, convenience foods, and packaged food products. The elimination of price subsidies for grain, pork, milk, eggs and other products has caused some increase in price, however this increase has caused little, if any, dissension. This means that not only can Chinese consumers better afford to pay higher prices, but are willing to, in order to increase the number of alternatives that are available to them. Consumers in China today are demanding quality and variety in the food they buy and the U.S. market is more than happy to fulfill their needs. Unfortunately, there are still about 300 million people in China’s urban population who have not yet caught up with the rapid growth of the Chinese economy. The good news for U.S. exporters however is that as long as the economic trends in China continue to improve, more and more markets will continue to open up. The bad news is that the high tariffs, technical barriers and general lack of clarity that products of major interest to U.S. exporters, such as beef, nuts, and fruit, have received only minimal reductions in tariffs despite the many promises from China that international trade will be made more cost-efficient. Quarantine barriers also officially prohibit U.S. fruit and most fresh vegetables from entering China, due to fear of fruit fly contamination. However efforts are being made to permanently remove all restrictions that cannot be scientifically justified.
China also maintains quotas on many products, but the quotas seem to be somewhat flexible. In truth, figuring out exact quota amounts is often very difficult. Therefore, when evaluating the U.S. market position for consumer ready products, China Customs data is the only source that provides comparable China Import data for the United States and other countries. There is still however a lot of discrepancies in figures, and it is assumed that the China market is larger than indicated by U.S. and Chinese statistics.
While market research is not exactly a prevalent practice in China, some evidence has shown that an American label does significantly help boost product sales. Subsequently, dishonest importers have been known to put U.S. labels on other countries’ products because it makes the item sell better. This not only skews statistical data, but could have a strong negative impact on the U.S. economy if the matter were to get out completely out of hand. Labeling requirements are not very restrictive at the moment, but the U.S. and China are working to eradicate this fraudulent behavior being perpetrated. The China market for American products is swiftly freeing itself from strict government control. The amalgamation of rapid economic growth and market reforms is has fueled the interest in American products on the part of the Chinese consumer. It is predicted that the hotel and restaurant industry will continue to be the major market opportunity for U.S. meats, wines, frozen potatoes, condiments and a plethora of other related products. In addition, the telecommunications, financial and other service markets also offer great potential for U.S. exporters. In spite of the plethora of trade restrictions which still limit the overall import market in China, the latest trends are pointing toward simplifying admission into the Chinese market. The number of trade corporations, and factories, for example, has gone sky high in the recent past. Because of its struggling economy, most emphasis in past China trade relations was based on exporting. There is currently is a continually increasing interest in importing products for the domestic market.
Foreign trade corporations that were at one time part of a strict government structure are now able to expand their scope of business and deal in more products and distribute to more outlets than ever before. While still associated with some level of the Chinese government, these corporations must now turn a profit and are subsequently becoming more active in importing U.S. products. In virtually all cases, these importers are also distributors. This has introduced an element of competition in the import sector that did not exist just a few years ago. It also means that at least some of these potential importers/distributors are not familiar with U.S. products or international trading practices. . In addition, the elimination of price controls and the establishment of wholesale markets has allowed China to achieve a better balance between supply and demand.
One of the most recent notable developments in regards to China’s trade regulations is that, China and the U.S. finally signed a deal which allowed China to enter the World Trade Organization. This agreement will benefit the U.S. in a number of ways, including the new freedom of foreign investors to partake in China’s internet market, and manufacturers are now allowed to import and export their products without overt governmental interference.
Economic reform and the establishment of a “socialist market economy” have virtually revolutionized trade between our two countries. Therefore it is vital that good relations with China are maintained so that both economies can experience the benefits of higher quality living.
China Economic Report As per China economic report formulated by Prime Minister Wen Jiabao central government would try to achieve a GDP growth rate of 8 percent in 2009 fiscal. This Chinese economic report also suggests that amount of urban employment in China would go up by 9 million and more.
Latest economic report of China by Wen Jiabao also suggests that in 2009 fiscal amount of registered unemployed people in urban areas would be held at less than 4.6 percent.
It has also been learned that, according to new economic report in China, consumer price index would reach 4 percent mark. Latest economic report at China has projected fiscal deficit in 2009 to be 750 billion Yuan. This is 570 billion more than in fiscal 2008. Chinese government would be raising 200 billion Yuan through issuance of government bonds.
According to latest economic report for China 130 billion Yuan has been set aside for helping recent earthquake victims in Wenchuan recover from a financial point of view.
Wen Jiabao, in his China economic report, has made it clear that 716.1 billion Yuan has been put aside as allocation for agricultural sector, farmers and rural areas. This amount is 120.6 billion Yuan more than 2008 fiscal.
Science and technological sector of China has also been provided with 146.1 billion Yuan in 2009 as per China economic report. This amount is 25.6 percent more than what had been provided in 2008 fiscal.
In 2009 fiscal, according to China economic report 293 billion Yuan would be spent on social safety net. This is equivalent of an increase of 43.9 billion Yuan or 17.6 percent.
Latest China economic report focuses a lot on improvement of overall economic structure of that country. It is also looking at addressing imbalances between income levels at rural and urban areas and increase overall income levels in China. It would also look at effecting improvements as far as balance of payments is concerned.
This China economic report would also focus on making real estate scenario in that country a more stable one. This report would try to reinforce some amount of regulations in real estate sector of China.
China Economic Growth About China economic growth Rate of China economic growth has been consistent over last few financial years. In last 25 years, average rate of growth of annual gross domestic product has been more than 10 percent. Rate of growth of per capita income in China had grown at a rate of over 8 percent, in last thirty years. This has helped to bring down levels of poverty in China.
However, there is yet another side to these startling statistics. Even though levels of income have increased in China, inequalities and disparities within Chinese population have gone up.
Non governmental sector of Chinese economy Non governmental sector of Chinese economy has grown at a good pace in last few years and Chinese economy has been made accessible to investors from different parts of world. This has increased volume of foreign investment and trading opportunities in China. As far as 2007 fiscal is concerned, China’s economic growth has been accentuated by private sector and not by exports.
Governmental efforts and Chinese economic growth In recent times, Chinese government has been trying to put stress on foreign trade as a means of accentuating economic growth of China. Between financial years 1949 to 1980, Chinese government brought about new industries that kicked off a long sequence of Chinese economic growth.
In initial five year plan from 1953 to 1957, heavy industries were focus of economic development in China. During 1980s, Chinese government followed a series of plans that helped them to achieve an average of 10 percent growth per year.
In decade of 1990 to 2000s, growth rate of Chinese economy came down a little. They started taking speculative loans based on an assumption that China was facing hyperinflation. Rates of interest were raised and investment projects were evaluated again. From 1996 fiscal onwards there was a slump that ran for three years as an after effect of ongoing Asian Financial Crisis, even as exports reduced and foreign direct investment came down.
A major challenge facing Chinese economy at present is maintaining high levels of growth achieved in recent years. It is important for China to keep its high rate of economic growth going so that it can sustain its job market.
China Economic Development China economic growth has been acknowledged by many as remarkable. In a very short span of time, it has grown to become one of world’s largest economies. It is predicted that by 2035, Chinese economy is likely to overcome that of United States of America. Credit for this remarkable economic growth of China goes to its communist government, which adopted several economic reforms and measures aiming for economic development.
Global economic slowdown Global economic slowdown has affected this Asian giant, although its effects have not been as pronounced as in other countries. International organizations like International Monetary Fund have predicted a slowdown in Chinese economic growth for 2009. However this is unlikely to affect economic development in China.
China stimulus package To counter economic pressures imposed by global economic crisis, China has announced an economic stimulus package of about 4 trillion yuan or $585 billion. A large part of this money would be utilized for economic development of this nation. It remains to be seen if this package is going to help China to boost its economy.
Investment on infrastructure projects A major part of China’s economic stimulus package would be utilized for infrastructure projects in that nation. Existing infrastructure and housing projects are likely to receive a boost following infusion of economic stimulus money.
About 7.5 billion yuan have been set aside for low-rent housing projects in China. This is in addition to about 2 billion yuan that had already been put on low-rent housing projects in China. Economic development of China will take place with investment in infrastructure projects that include railroad, water conservancy, and highways.
Corruption Corruption at local government level has been a major challenge for China’s national government. It has been one major problem that acts as an hindrance to China economic development. Lack of accountability of persons and money distributed to local governments for public utility services is a major area of concern for China.