India Economy

India’s industrial economy, which has invested much in advanced technology initiatives such as digital communications and space research, contrasts with the poverty that persists, particularly in rural areas. The country ranks among the top dozen in the world by gross national product. Roughly two-thirds of the population are involved in agriculture, both subsistence – mainly cereals – and cash crops including tea, rubber, coffee, cotton, jute, sugar, oil seeds and tobacco. Growth in this sector has been steady despite frequent damage through drought and flooding. India’s energy requirements are met by oil, most of which is imported despite the growth of indigenous production, and hydroelectric schemes, mostly based amid the powerful northern rivers. Mining is a relatively small sector, but does produce iron ore and cut diamonds for export. India’s main industrial development has been in engineering, especially transport equipment (a major export earner), iron and steel, chemicals, electronics and textiles. Economic reforms were put into effect throughout the 1990s, under which trade has been liberalized, the sprawling public sector cut back, and state-owned industries sold off. The plan was approved with the IMF, which supplied substantial credits to the Indian treasury.

After the hiatus following the 1997 Asian financial crisis, the economy has resumed its healthy growth rate, currently just over 8 per cent per annum, while inflation is just 4 per cent. Indian colleges and universities are turning out large numbers of graduates with advanced technology skills who are now the target of employers in Europe and North America (where there is a shortage of qualified IT workers): the Indian economy is as yet not sufficiently developed to absorb this resource. Further reforms, especially improvements to the national infrastructure and basic services, are now seen as the priority for central and regional governments. Foreign direct investment has reached an all-time peak of over US$4 billion annually and is set to continue rising. Japan and the Russian Federation are India’s major trading partners, among a wide range of extensive bilateral economic relations stretching from Australia and the Pacific Basin through Western Europe to the USA, Canada and Brazil.