Indias Economy and Infrastructure :: India Economy

Indias Economy and InfrastructureOVERVIEWIndia is rich in natural resources and manpower and has made significant economical progress since attaining independence in 1947. Indias economy encompasses traditional village farming, forestry, fishing, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of support services. Economy transformed from primarily agriculture, forestry, fishing, and material manufacturing in 1947 to major heavy industry, transfer of training, and telecommunications industries by late 1970s. Central government planning in 1950 through late 1970s giving way to economic reforms and more private-sector initiatives in 1980s and 1990s. A sophisticated industrial base has been created and a large pool of skilled manpower has emerged. Nevertheless, 67% of Indias labor impel (nearly 400 million) works in agriculture, which contributes 30% of the countrys GDP. Production, trade, and investment reforms since 1991 have provided new opport unities for Indian businesspersons and an estimated 300 million middle class consumers. New Delhi has avoided debt rescheduling, attracted outside investment, and revive confidence in Indias economic prospects since 1991. Many of the countrys fundamentals - including savings rates (26% of GDP) and reserves (now about $24 billion) - are healthy. Inflation eased to 7% in 1997, and interest rates dropped to between 10% and 13%. Even so, the Indian Government needs to restore the early momentum of reform, especially by keep reductions in the extensive remaining government regulations. Moreover, economic policy changes have not yet significantly increased jobs or reduced the risk that planetary financial strains will reemerge within the next few years. Nearly 40% of the Indian population remains too poor to afford an adequate diet. Indias exports, currency, and foreign institutional investment were affected by the East Asian crisis in late 1997 and early 1998, but capital account con trols, a low proportionality of short-term debt to reserves, and enhanced supervision of the financial sector helped insulate it from near term balance-of-payments problems. Export growth, has been slipping in 1996-97, averaging only about 4% to 5%a large drop from the more than 20% increases it was experiencing over the prior three yearsmainly because of the fall in Asian currencies relative to the rupee. Energy, telecommunications, and transportation shortages and the legacy of inefficient factories constrain industrial growth, which expanded only 6.7% in 1997down from more than 11% in 1996. Growth of the agricultural sector is tranquilize fairly slow rebounding to only 5.7% in 1997 from a fall of 0.1% in 1996. Agricultural investment has slowed, while costly subsidies on fertilizer, food distribution, and rural electricity remain.