View the information below regarding the economy of India. The summary and statistics contains
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GDP: $501.8 billion (2002).
Real growth rate (2002-03-): 4.3-%.
Per capita GDP: $480.
Natural resources: Coal, iron ore, manganese, mica, bauxite, chromite, thorium, limestone, barite, titanium ore, diamonds, crude oil.
Agriculture (25% of GDP): Products--wheat, rice, coarse grains, oilseeds, sugar, cotton, jute, tea.
Industry (29% of GDP): Products--textiles, jute, processed food, steel, machinery, transport equipment, cement, aluminum, fertilizers, mining, petroleum, chemicals, computer software.
Services and Transportation (49% of GDP) Trade: Exports--$34 billion: agricultural products, engineering goods, precious stones, cotton apparel and fabrics, handicrafts, tea. Imports--$42 billion: petroleum, machinery and transport equipment, edible oils, fertilizer, jewelry, iron and steel. Major trade partners--U.S., EU, Russia, Japan, Iraq, Iran, central and eastern Europe.
Economy of India
India's population continues to grow at about 1.8% per year and is estimated at 1 billion. While its GDP is low in dollar terms, India has the world's 13th-largest GNP. About 62% of the population depends directly on agriculture for their livelihood.
Industry and services sectors are growing in importance and account for 26% and 49% of GDP, respectively, while agriculture contributes about 25% of GDP. More than 25% of the population live below the poverty line, but a large and growing middle class of 150-200 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, down from 5.6% in the 2001-02 fiscal year. Growth in 2003-04 is expected to be around 6.5%. Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy foreign currency reserves ($71 billion in January 2003) and a small current account surplus (2002). 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” of reforms to maintain recent trends in economic growth.
India's trade has increased significantly since reforms began in 1991, largely as a result of staged tariff reductions and elimination of nontariff barriers. The outlook for further trade liberalization is mixed. India eliminated quantitative restrictions on imports of about 1,420 consumer goods in March 2002 to meet its World Trade Organization (WTO) commitments. On the other hand, the government has imposed "additional" import duties of 5% on most products. The 10% tariff surcharge imposed 3 years ago has been repealed. The United States is India's largest trading partner; bilateral trade in 2002 was about $10.9 billion and may reach as high as $13 billion in 2003. Principal U.S. exports to India are aircraft and parts, advanced machinery, fertilizers, ferrous waste and scrap metal, and computer hardware. Major U.S. imports from India include textiles and ready-made garments, agricultural and related products, gems and jewelry, leather products, and chemicals.
Significant liberalization of its investment regime since 1991 has made India an attractive place for foreign direct and portfolio investment. The United States is India's largest investment partner, with total inflow of U.S. direct investment estimated at $2 billion (market value) in 1999. U.S. investors also have provided an estimated 11% of the $18 billion of foreign portfolio investment that has entered India since 1992. Proposals for direct foreign investment are considered by the Foreign Investment Promotion Board and generally receive government approval. Automatic approvals are available for investments involving up to 100% foreign equity, depending on the kind of industry. Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration and processing, and mining.
India's external debt was up to $101 billion in 2002, almost unchanged from the previous year. The country's debt service ratio has fallen to about 17%. Bilateral assistance has been about $1 billion annually in recent years, with the United States providing about $164 million in development assistance in fiscal year 2002. The World Bank had approved loans worth about $2.19 billion for India in 2002.