India's population continues to grow at about 1.8% per year and is estimated at one 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.
Industry and services sectors are growing in importance and account for 26% and 48% of GDP, respectively, while agriculture contributes about 25.6% of GDP. More than 35% 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 6.8% in 1998-99, up from 5% in the 1997-98 fiscal year. Growth in 1999-2000 is expected to be around 6%. Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy foreign currency reserves ($32 billion in February 2000) and a moderate current account deficit of about 1% (1998-99). 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.
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 has agreed to eliminate quantitative restrictions on imports of about 1,420 consumer goods by April 2001 to meet its WTO commitments. On the other hand, the government has imposed "additional" import duties of 5% on most products plus a surcharge of 10% over the past 2 years. The U.S. is India's largest trading partner; bilateral trade in 1998-99 was about $10.9 billion. 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 U.S. 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 $98 billion in March 1999, compared to $94 billion in March 1998. The country's debt service ratio has fallen to about 20%. Bilateral assistance has been about $1 billion annually in recent years, with the U.S. providing about $150 million in development assistance in Fiscal Year 1999. The World Bank had approved loans worth about $1.05 billion for India in 1999.
GDP: purchasing power parity - $1.805 trillion (1999 est.)
GDP - real growth rate: 5.5% (1999 est.)
GDP - per capita: purchasing power parity - $1,800 (1999 est.)
GDP - composition by sector:
services: 45% (1997)
Population below poverty line: 35% (1994 est.)
Household income or consumption by percentage share:
lowest 10%: 4.1%
highest 10%: 25% (1994)
Inflation rate (consumer prices): 6.7% (1999 est.)
Labor force: NA
Labor force - by occupation: agriculture 67%, services 18%, industry 15% (1995 est.)
Unemployment rate: NA%
revenues: $35.8 billion
expenditures: $66.3 billion, including capital expenditures of $15.9 billion (FY98/99 est.)
Industries: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery
Industrial production growth rate: 6% (1999 est.)
Electricity - production: 448.6 billion kWh (FY98/99 est.)
Electricity - production by source:
fossil fuel: 80.34%
other: 0.2% (1998)
Electricity - consumption: 416.346 billion kWh (1998)
Electricity - exports: 130 million kWh (1998)
Electricity - imports: 1.575 billion kWh (1998)
Agriculture - products: rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish
Exports: $36.3 billion (f.o.b., 1999 est.)
Exports - commodities: textile goods, gems and jewelry, engineering goods, chemicals, leather manufactures
Exports - partners: US 21%, UK 6%, Germany 6%, Hong Kong 5%, Japan 5%, UAE 4% (1998)
Imports: $50.2 billion (f.o.b., 1999 est.)
Imports - commodities: crude oil and petroleum products, machinery, gems, fertilizer, chemicals
Imports - partners: US 10%, Belgium 7%, UK 6%, Germany 6%, Saudi Arabia 6%, Japan 6% (1998)
Debt - external: $98 billion (March 1999)
Economic aid - recipient: $2.9 billion (FY98/99)
Currency: 1 Indian rupee (Re) = 100 paise
Exchange rates: Indian rupees (Rs) per US$1 - 43.552 (January 2000), 43.055 (1999), 41.259 (1998), 36.313 (1997), 35.433 (1996), 32.427 (1995)
Fiscal year: 1 April - 31 March