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Economy

India registered a growth rate of 8.2% in 2003, the 2nd fastest growth rate in the world after China. It is the fastest growing free-market democracy in the world. A Goldman Sachs report ("Dreaming with BRICs: The Path to 2050" -http://www.gs.com/insight/research/reports/report6.html) states that among Brazil, Russia, India and China, India will grow the fastest over the next 30 to 50 years by leveraging its demographic advantages and through sustained development.

In agriculture, India possesses the intrinsic advantage of being a richly endowed nation, having 1/10th of the world’s arable land. India is one of the world’s largest food grain producers, with a production of about 600 million tonnes every year. It is the largest producer of milk, tea and sugarcane, and 2nd largest producer of and fruits and vegetables. It is one of the leading exporters of rice and wheat in the world. The agricultural exports comprise nearly 14.2% of the total exports. A new US$ 12 billion fund has been launched under the aegis of the National Bank for Agricultural and Rural Development (NABARD) to engineer India's Second Green Revolution. A Food Chain Revolution that aims to double the average income of the Indian farmer by 2010 is currently underway in the country.

India has a diversified and large industrial base, which is becoming globally competitive. The Indian companies have drawn up ambitious plans for expanding and diversifying their manufacturing activities with about US$12 billion in the next three years. Most of the companies have been able to generate the funds from their own operations. The industries whose output is being scaled up are automobiles, auto parts, metals, chemicals, pharmaceuticals and electronics. The growth rate of industry in 2003-04 was 6.9% and the manufacturing sector registered growth of 7.2%. India is fast developing into a manufacturing hub for world corporations wanting to leverage the sector's proven skills in product design, reconfiguration and customisation with creativity, assured quality and value addition. About 20 percent of Indian automotive production in 2004 has been exported to developed countries.

The textile industry of India, the 2nd largest in the world, is undergoing modernization and is set to benefit from the dismantling of quota system in 2005. According to a DHL-Mckinsey Study of 2004, India's share in world textile will go up from 4 per as of now to 6.5 per cent by 2008. India is the 2nd largest cement producer in the world with 110 million tons. India is the world's premier center for diamond cutting and polishing. Nine out of every 10 stones sold in the world pass through India.India has a large entertainment industry, which produces 800 movies per year overshadowing Hollywood. The turnover is expected to reach US$ 6.7 Billion in 2005 from US$ 5.7 billion in 2002.

Growing consistently at a rate of 7% per annum, the services sector currently accounts for almost half of India’s GDP. India has emerged as a leading centre for outsourcing activities. Indian software firms are developing new applications for finance, digital appliances and industrial plants. ITeS, Tourism, Healthcare, Financial Services and Education are some of the sectors that hold the promise of sustainable growth in the years ahead.

Macro Economic Indicators

  • GDP: US$ 3.02 Trillion in 2003 (PPP) – 4th largest economy in terms of PPP after USA, China & Japan
  • 2nd fastest growing economy in the world - growth rate of 8.2% in 2003 – recorded one of the highest growth rates in the 1990s – target of the 10th Five Year Plan(2002-07) is 8%
  • Foreign Exchange Reserves of $126.92 billion (Nov 2004) – 6th largest forex holder – it exceeds foreign debt of US$ 112 billion – short term debt is 4% of forex reserves
  • Current account surplus for last two fiscal years, 2002-03 & 2003-04
  • FDI Inflow of US$ 4.3 Billion in 2004

Economic Reforms

  • Since 1991, India has undertaken far-reaching economic reforms of deregulation and liberalization, which have unleashed the enormous growth potential of the economy.
  • Reform process is irreversible and dynamic.
  • Committed to keeping India a top FDI destination.
  • Radical FDI policy reforms – entry in practically all areas through the automatic route.
  • Tax reforms - Rationalization of tax structure and re-engineering of tax system.

The Path to 2050’- by Goldman Sachs
(http://www.gs.com/insight/research/reports/report6.html)

  • BRICs (Brazil, Russia, India & China) economies could be larger than G-6 in less than 40 years. – By 2025 over half of G-6 size against less than 15% at present
  • India has a potential growth rate higher than 5% over the next 30 years and of close to 5% as late as 2050. – Only India among BRICs to have growth rates significantly above 3% by 2050.
  • Indian economy can overtake Italy by around 2017, Germany by around 2027 and Japan by 2032.
  • India has the potential to raise its per capita income by 35 times in US$ terms by 2050.

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