Economy of India
OverviewIndia has had robust economic growth since 1991 when the government reversed its socialist-inspired policy of a large public sector with extensive controls on the private sector and began to liberalize the economy. Liberalization has proceeded in fits and starts since then, mainly due to political pressures, but the economy has responded well by posting strong growth in many sectors. A 2003 report by Goldman Sachs predicted that India's economy would be the third largest by 2050. A certain amount of dissatisfaction is expressed in the face of these changes in the Indian economy- some of which are that a quarter of the population is still too poor to be able to afford an adequate diet, electricity shortages still continue in many regions and the manufacturing sector has slowed down at the expense of soft skills. With a GDP of 568 billion (B$) ($3.096 trillion (T$) at PPP) India has the world's 12th largest economy (and the 4th largest when adjusted for PPP). However, the large population means that per capita income is quite low. In 2003 the World Bank ranked India 143rd in PPP per capita income and 160th in real terms, among 208 countries. About 60% of the population depends directly on agriculture. Industry and services sectors are growing in importance and account for 25% and 50% of GDP, respectively, while agriculture contributes about 25.6% of GDP. More than 25% of the population live below the poverty line, but a large and growing middle class of 300 million has disposable income for consumer goods. India embarked on a series of economic reforms in 1991 in reaction to a severe foreign exchange crisis. Those reforms have included liberalized foreign investment and exchange regimes, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, and significant adjustments in government monetary and fiscal policies. The reform process has had some very beneficial effects on the Indian economy, including higher growth rates, lower inflation, and significant increases in foreign investment. Real GDP growth was 4.3% in 2002-03, mainly due to a severe drought. Growth in 2003-2004 is expected to be above 6%. Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy foreign currency reserves (119 B$ in July 2004) and a moderate current account deficit of about 1% (2002-03). India's economic growth is constrained, however, by inadequate infrastructure, cumbersome bureaucratic procedures, and high real interest rates. India will have to address these constraints in formulating its economic policies and by pursuing the second generation reforms to maintain recent trends in economic growth. LiberalisationAfter independence, India's economy was geared towards central planning and resource allocation. In an effort to target investment and catalyze social change, the government was highly interventionist and monopolised areas such as media, aviation, banking and telecommunications. Bold textRESULTS DUE TO LIB.India's trade has increased significantly since economic liberalisation began in 1991, largely as a result of staged tariff reductions and elimination of non-tariff barriers. India has agreed to eliminate quantitative restrictions on imports . On the other hand, the government has imposed "additional" import duties .The U.S. is India's largest trading partner; bilateral trade is also visible. Significant liberalization of its investment regime since 1991 has made India an attractive place for foreign direct and portfolio investment. The U.S. is India's largest investment partner. But in recent years India has gone from strength to strength. It has recorded a growth rate of above 5% India's economy grew at an unexpectedly robust 8.4 percent in the year through the third quarter, making it one of the fastest growing in the world. StatisticsGDP: purchasing power parity - $3.096 T$ (2003 est.) GDP - real growth rate: 6% (2003 est.) GDP - per capita: purchasing power parity - $2,880 (2003 est.) GDP - composition by sector:
Population below poverty line: 25% (2002 est.) Household income or consumption by percentage share:
Inflation rate (consumer prices): 5.4% (2002 est.) Labour force: 406 million Labour force - by occupation: agriculture 60%, services 23%, industry 17% (1999 est.) Unemployment rate: 8.8% Budget:
Industries: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery Industrial production growth rate: 6% (1999 est.) Electricity - production: 533.3 TWh (2001 est.) Electricity - production by source:
Electricity - consumption: 497.2 TWh (2001) Electricity - exports: 321 GWh (2001) Electricity - imports: 1.54 TWh (2001) Agriculture - products: rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish Exports: 44.5 B$ (f.o.b., 2001 est.) Exports - commodities: textile goods, gems and jewellery, engineering goods, chemicals, leather manufactures Exports - partners: US 21%, UK 6%, Germany 6%, Hong Kong 5%, Japan 5%, UAE 4% (1998) Imports: 53.8 B$ (f.o.b., 2001 est.) Imports - commodities: crude oil and petroleum products, machinery, gems, fertilizer, chemicals Imports - partners: US 20.9%, UK 5.2%, Germany 4.3%, Japan 4.0%, Benelux 3.3% (2000) Debt - external: 100.6 B$ (March 1999) Economic aid - recipient: 2.9 B$ (FY98/99) Currency: 1 Indian rupee (Re) = 100 paise Exchange rates: Indian rupees per US dollar - 45.63(2003), 48.6103 (2002), 47.1864 (2001), 44.9416 (2000), 43.0554 (1999), 41.2594 (1998) Fiscal year: 1 April - 31 March External links
Business magazines and newspapers in India
Categories: India | National economies |
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