Page 61 - DECO303_INDIAN_ECONOMY_ENGLISH

Indian Economy

Notes For instance, a developing country can hypothetically increase its GDP by a better margin with
a set amount of capitals than its industrialised counterpart can. This is because the industrialised
republic is even now operating with the maximum level of technology and infrastructure. Any
additional developments would have to come from additional expensive research and
development, while the developing country can implement current technology to recover its
situation.

Self Assessment

Fill in the blanks:

7. The National Savings Rate, though it is referred to as a “savings rate,” does not actually
measure …………………… for the long-term.
8. A higher ICOR value is not preferred because it indicates that the entity’s production is
…………………….
9. Some critics of………………… have suggested that its uses are restricted as there is a limit
to how efficient countries can become as their processes become increasingly advanced.

Task Prepare a report on the impact of the Tenth Five-Year plan on business and study
the growth and saving rate on the Economy.

Case Study The Great Fall (Scam of 2001): A Case of Stock

Exchange and SEBI

he sudden crash in the stock markets in March 1, 2001, by 176 points prompted the
Securities Exchange Board of India (SEBI) to investigate into the volatility of stock
Tmarkets. Anand Rathi, the President of Bombay Stock Exchange (BSE), resigned
because of the allegations that he used some privileged information, which led to crash.
At least eight people committed suicide and many investors went bankrupt due to crash.
CBI arrested Mr Ketan Parekh, famously known as ‘Bombay Bull’, in March, 2001. He was
basically a chartered accountant. He came into limelight during 1992 scam. Over the years,
Ketan Parekh built a network of companies, mainly in Mumbai, involved in stock market
operations. The companies in which Ketan Parekh held stakes included Amitabh Bachchan
Corporation Limited (ABCL), Mukta Arts, Tips and Pritish Nandy Communications. He
also had stakes in HFCL, Global Telesystems (Global), Zee Telefilms, Crest
Communications, and PentaMedia Graphics. Ketan Parekh selected those companies for
investment which listed high growth with a small capital base.
The stocks in which Ketan Parekh invested became famous as K-10 Stocks in the market.
The shares were held through Ketan Parekh’s company, Triumph International. In July
1999, he held around 1.2 million shares in Global. Ketan Parekh controlled around 16% of
Global’s floating stock, 25% of Aftek Infosys, and 15% each in Zee and HFCL. The buoyant
stock markets from January to July 1999 helped the K-10 stocks increase in value
substantially. HFCL soared by 57%, while Global increased by 200%. As a result, brokers
and fund managers started investing heavily in K-10 stocks.
Contd...

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