India Basic Information
2014
Prime Minister – Narendra Modi
Basic data
Land area
3,287,263 sq km (including Indian-administered Kashmir); of the total, 57% is agricultural land and 16% is forest area
Population
1.24bn (2012; IMF)
Main towns
Population in millions of metropolitan areas/regions (2011 census)
New Delhi: 21.8
Mumbai (Bombay): 20.8
Kolkata (Calcutta): 14.6
Chennai (Madras): 8.9
Bangalore: 8.7
Hyderabad: 7.7
Climate
Varied; humid subtropical in Ganges basin, semi-arid in the north-west, tropical humid in north-east and most of the peninsula, tundra in the Himalayas; all areas receive rain from the south-west monsoon in June-September; the south is also served by the north-east monsoon in January-March
Weather in New Delhi (altitude 218 metres)
Hottest month, May, 26-41°C (average daily minimum and maximum); coldest month, January, 7-21°C; driest month, November, 4 mm average rainfall; wettest month, July, 180 mm average rainfall
Languages
Hindi is the official language and the primary tongue of 30% of the population. English is an additional language used for official purposes and is also used widely in business circles. Individual states may legislate their own official language, and several states have done so
Religions
Hindu (80.5% in 2001 census); Muslim (13.4%); Christian (2.3%); Sikh (1.9%); Buddhist (0.8%); Jain (0.4%)
Measures
Metric system. Numbers are often written in lakhs (100,000) and crores (10m)
Currency
Rupee (Rs); Rs1=100 paisa. Average exchange rate in 2012: Rs53.4:US$1
Fiscal year
April 1st-March 31st
Time
5 hours 30 minutes ahead of GMT
Fact sheet
Annual data / 2012a / Historical averages (%) / 2008-12Population (m) / 1,220 / Population growth / 1.2
GDP (US$ bn; market exchange rate) / 1,839 / Real GDP growth / 5.6
GDP (US$ bn; purchasing power parity) / 4,710b / Real domestic demand growth / 5.9
GDP per head (US$; market exchange rate) / 1,508 / Inflation / 8.5
GDP per head (US$; purchasing power parity) / 3,861b / Current-account balance (% of GDP) / -3.2
Exchange rate (av) Rs:US$ / 53.4 / FDI inflows (% of GDP) / 2.3
a Actual. b Economist Intelligence Unit estimates.
Background: India gained independence in 1947, after two centuries of British colonial rule. Partition at the same time created the state of Pakistan, with which India has fought three wars, two over the disputed territory of Kashmir. India is the second most populous country in the world, with more than 1.2bn people in 2010. Its economy is the 11th-largest in the world measured in nominal US dollars, but it is the third-largest when measured at purchasing power parity exchange rates. The large and inefficient public sector co-exists with a sizeable and diversified private sector.
Political structure: India has been a democracy since independence. The growing importance of regional parties has made coalition government the norm at federal level. Democratic procedures are, on the whole, respected. The prime minister is the leader of the government, requiring the support of a majority in parliament. The president is the head of state, and, although limited in executive power, can influence the formation of governments at both state and national levels when no party has gained an outright majority. The judiciary is formally independent and is becoming increasingly assertive.
Policy issues: India was fairly insulated from the 2009 global recession compared with most countries in Asia. However, a bout of populist spending initiated in 2008 has wrought havoc with the public finances, and progress on market-friendly reforms has slowed in recent years. Indians have turned to imported gold as a hedge against the rapid pace of price increases, thereby causing the shortfall on the current account to expand. The government needs to address India's twin fiscal and current-account deficits in order to boost economic growth, while simultaneously keeping a lid on inflation.
Taxation: The top rate of both personal income tax and corporation tax for Indian companies is 30%. The corporation tax rate for foreign companies is 40%. However, a complex system of exemptions reduces the effective tax rate for Indian firms to less than 20%. All companies pay a 10% tax on distributed profits. Customs duties have been lowered substantially but remain high by international standards. An overhaul of India's byzantine tax code has been mooted; however, the proposal has yet to secure parliamentary approval.
Foreign trade: India's trade deficit (in balance-of-payments terms) widened to US$202bn in 2012, from US$168bn in 2011, as exports slumped even as imports continued to grow. Exports contracted by 1.7% to US$302bn in 2012, while imports rose by 5.9% to US$504bn.
Major exports 2012/13a / % of total / Major imports 2012/13a / % of totalEngineering goods / 21.7 / Petroleum products / 34.5
Petroleum products / 20.1 / Gold & silver / 11.3
Gems & jewellery / 14.5 / Electronic goods / 6.4
Agriculture & allied products / 13.5 / Machinery / 5.6
Leading markets 2012 / % of total / Leading suppliers 2012 / % of total
UAE / 12.2 / China / 10.7
US / 12.0 / UAE / 7.8
China / 5.0 / Saudi Arabia / 6.8
Singapore / 4.9 / Switzerland / 6.2
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August 30th 2013
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Political forces at a glance
Present government: The United Progressive Alliance (UPA) coalition won a second five-year term at the April-May 2009 general election. The Indian National Congress party, which dominates the ruling coalition, won 206 of the 543 elected seats in the LokSabha (the lower house of parliament). Following the departure of two key allies in the past year, the UPA now controls only 230 seats in the 545-member LokSabha (which includes two nominated members). The UPA has confidence-and-supply arrangements with other regional parties which have 47 seats between them, enabling it to govern with a slim majority. Congress's main rival at national level, the BharatiyaJanata Party (BJP), performed poorly in the 2009 poll, as didCongress's communist erstwhile allies. The main opposition grouping in parliament, the BJP-led National Democratic Alliance (NDA), has been divided by in-fighting and has lost the support of some of its member parties since the 2009 general election. In mid2013 several smaller regional and state-based parties expressed an interest in combining to offer an alternative to Congress and the BJP at the next polls. Previous such attempts have enjoyed little success; indeed, in the 66 years since India's independence no government not headed by one of the country's two main political parties has survived for a full parliamentary term.
Parliamentary forces, May 2009 general election(no. of seats in the LokSabhaa)
United Progressive Alliance / 262
Indian National Congress / 206
All India Trinamool Congress / 19
DravidaMunnetraKazhagam / 18
Nationalist Congress Party / 9
National Conference / 3
Jharkhand MuktiMorcha / 2
Indian Union Muslim League / 2
Kerala Congress (Mani) / 1
All India Majlis-e-IttehadulMuslimeen / 1
ViduthalaiChiruthaigalKatchi / 1
National Democratic Alliance / 159
BharatiyaJanata Party / 116
Janata Dal (United) / 20
Shiv Sena / 11
RashtriyaLok Dal / 5
ShiromaniAkali Dal / 4
TelanganaRashtraSamithi / 2
AsomGanaParishad / 1
Third Front / 74
Left Front / 20
BahujanSamaj Party / 21
BijuJanata Dal / 14
All India Anna DravidaMunnetraKazhagam / 9
Telugu Desam Party / 6
Janata Dal (Secular) / 3
Haryana Janhit Congress / 1
Fourth Front / 27
Samajwadi Party / 23
RashtriyaJanata Dal / 4
LokJanshakti Party / 0
Other parties & independents / 21
Totalb / 545
Political structure
Official name
Republic of India
Form of state
Federal republic, with 28 states and seven union territories
Head of state
The president, Pranab Mukherjee, was elected in July 2012 for a five-year term by the members of the central and state legislatures
The executive
The prime minister presides over a Council of Ministers chosen from the elected members of parliament
National legislature
Bicameral. The LokSabha (the lower house) has 545 members—543 elected from single-member constituencies (79 seats are reserved for "scheduled castes" and 40 for "scheduled tribes"), and two representatives of Anglo-Indians appointed by the president. The RajyaSabha (the upper house) has 245 members—233 elected by weighted votes of the elected members of parliament and the legislative assemblies of states and union territories, and 12 appointed by the president
State legislatures
Unicameral or bicameral, with elected members; state governors are appointed by the president
Legal system
Based on the 1950 constitution and English common law
National government
The United Progressive Alliance (UPA), a coalition led by the Indian National Congress, won the largest number of seats at the April-May 2009 general election and formed a government
National election
The most recent LokSabha election was held in April-May 2009; the next is due by May2014
Main political organisations
Indian National Congress; BharatiyaJanata Party (BJP); Trinamool Congress (TMC); DravidaMunnetraKazhagam (DMK); Samajwadi Party (SP); RashtriyaJanata Dal (RJD); Janata Dal (United); BahujanSamaj Party (BSP); All India DravidaMunnetraKazhagam (AIADMK); BijuJanata Dal (BJD); RashtriyaLok Dal (RLD); Nationalist Congress Party (NCP); Communist Party of India (Marxist), or CPI (M)
Prime minister: Manmohan Singh (Congress)
Key ministers
Agriculture: SharadPawar (NCP)
Civil aviation: Ajit Singh (RLD)
Coal: SriprakashJaiswal (Congress)
Commerce & industry, textiles: Anand Sharma (Congress)
Communications & law: KapilSibal (Congress)
Defence: A K Antony (Congress)
External affairs: Salman Khurshid (Congress)
Finance: P Chidambaram (Congress)
Home affairs: Sushil Kumar Shinde (Congress)
Petroleum & natural gas: VeerappaMoily (Congress)
Power: JyotiradityaScindia (Congress)
Railways: C P Joshi (Congress)
Rural development: Jairam Ramesh (Congress)
Urban development: Kamal Nath (Congress)
Central bank governor
RaghuramRajan
In brief
India's economic outlook remains challenging, but there are signs that the worst of the downturn is over. From a four-year low of 4.4% in April-June, GDP growth at factor cost picked up to 4.8% year on year in July-September, led by better monsoons. Downside risks will persist, reflecting global headwinds and domestic problems. Policymaking is being hampered by the Congress-led coalition's wafer-thin majority and complicated by looming national elections, which must be held by May 2014.
Economic growth
(%)2013 / 2014 / 2015
US GDP / 1.7 / 2.6 / 2.3
OECD GDP / 1.2 / 2.1 / 2.2
World GDP / 2.0 / 2.7 / 2.8
World trade / 2.9 / 5.2 / 5.0
Source: The Economist Intelligence Unit
India’s economy
Start me up
Despite a tumbling currency, India’s economy has got more stable in the past year. But a revival in growth remains elusive
Jun 29th 2013 | MUMBAI |From the print edition
INDIA’S richest man may also be its most optimistic. On June 6th MukeshAmbani, the boss of Reliance Industries, addressed an auditorium in Mumbai watched by his glamorous wife in the front row and bodyguards with oiled submachine guns in the wings. India’s economy, he said, was in a funk but his faith was “unshakable”. Soon the country would “trigger a major transformation of the world order”. The audience rose in delight.
Such bullish talk is rare these days. It is a year since markets got jittery about the risk of an economic crisis in India and nine months since the government responded with reforms meant to kick-start growth. Officials, business folk and economists hunting for signs of life have been disappointed. Asia’s third-largest economy expanded by 5% in the year to March, a decadal low and far shy of the 8% its leaders still claim is its potential growth rate.
In this section
The prospects of a revival have only been complicated by the possible winding down of quantitative easing (QE) in America. India has been a voracious consumer of the hot money that has sloshed around the world in recent years, using it to plug its balance-of-payments gap. On June 26th the rupee hit a record low of 61 per dollar (see chart 1). It has been the weakest emerging-market currency in the past month. Credit-default swaps on State Bank of India, a proxy for the riskiness of India’s government debt, have risen towards the levels of a year ago. India is the riskiest big emerging economy on this measure. Indian officials have been wheeled out to utter the dreaded words: “Don’t panic.”
Rupeeasy does it
Are the officials right? An apocalyptic scenario is that equity investors and multinational firms head for the exit. They form the vast bulk of the stock of foreign capital in India. This is unlikely. India is still growing faster than most countries and plenty of outsiders remain beguiled. In April Unilever offered $5 billion to buy out minority shareholders in its Indian unit. Net outflows of equity investments have been small so far.
Foreign bondholders are far less loyal. They have withdrawn $6.5 billion since mid-May. But the stock of external debt is a lowish 21% of GDP. Providing existing equity investors and multinationals stay put, India can probably handle a debt-buyers’ strike. Foreign reserves are 1.6 times likely financing requirements in the next year (defined as the current-account deficit plus short-term debt).
And although the world has got less forgiving as the end of QE looms, India’s stability has improved in some ways since last year. The government’s one unambiguous success is the public finances. Borrowing is still high but under Palaniappan Chidambaram, the finance minister since last August, it is no longer reckless. Control of spending and cuts in subsidies of fuel should mean the overall deficit in the year to March 2014 is 7% of GDP, according to ChetanAhya of Morgan Stanley. For a while a deficit of 10% seemed possible. At this lower level India’s ratio of debt to GDP should be stable.
With an election due by May 2014, there will be pressure to boost spending. A proposed policy to give more food to the poor could add 0.2 of a percentage point to the deficit, analysts reckon. Still, the hope is Mr Chidambaram will see off his wilder colleagues. When other ministers float populist policies that would “devastate the economy”, Mr Chidambaram “says unpleasant things”, in order to shoot them down, according to PrithvirajChavan, an ex-minister who now runs Maharashtra, a big western state.
Inflation also looks less scary, largely due to easing commodity prices. Wholesale prices rose by 4.7% in May year on year, about half the rate at the peak. Consumer-price inflation, at 9.3%, remains more stubborn, as do Indians’ expectations of inflation. But both are moderating.
A rout is unlikely, then. The one-quarter decline in the rupee since 2011 may eventually help boost India’s competitiveness and spark a long-awaited boom in Indian manufacturing that makes Godot seem punctual. This is probably the view of India’s central bank, which has not intervened much to support the currency.
But in the short term the currency gyrations do make life harder. Firms that have taken a punt and borrowed in dollars will struggle. Dearer fuel imports will raise inflation and the government’s subsidy bill; both effects are manageable but unhelpful, says Rajeev Malik of CLSA, a broker. The central bank will find it harder to ease policy to spur growth. On June 13th its counterpart in Indonesia raised rates, partly to stabilise its currency.
What of that elusive economic revival? It has proved even harder to spot than a tiger in an Indian nature reserve. In the quarter to March GDP grew by 4.8%, with exports, consumption and fixed investment all sluggish (see chart 2). More recent data, such as car sales, industrial-production figures and surveys of purchasing managers’ intentions, have been slack. Exports fell in May. Few firms say activity is picking up, according to Sanjeev Prasad of Kotak, a broker.
Consumption could bounce as the public-spending cuts ease and lower inflation raises Indians’ purchasing power. But capital spending is what really matters—it boosts current growth and the economy’s potential. At first glance it is hard to discern a problem. Gross domestic savings and gross fixed investment have dipped but are still about 30% of GDP. This is healthy enough, even by East Asia’s robust standards. Indian officials, Mr Chidambaram included, often suggest that abundant funds and capital spending almost preordain fast growth.
Drill down deeper, however, and things are less reassuring, says SajjidChinoy of J.P. Morgan. Almost half of all savings are now directed into physical assets that bypass the financial system—people buying gold, for example. The quality of capital investment has fallen, with almost half now spent by households, mainly on construction. The most productive kind of capital investment, by private firms that build factories and buy machinery, has dropped from 14% of GDP in the year to March 2008 to below 10% today.
How can the animal spirits of India Inc be revived? Firms are miffed by a lack of land, power shortages and a surplus of red tape. Too many have shot balance-sheets. A third of India’s corporate debt sits in firms with interest costs in excess of operating profits, according to Credit Suisse. State-controlled banks are grappling with bad debts. Bosses are paranoid about anti-graft probes. On June 11th investigators searched the office and home of Naveen Jindal, the head of Jindal Steel & Power, a big industrial firm, and a legislator for the ruling Congress party. India’s national auditor claims the firm was one of many to benefit unduly from the allocation of coal mines. Its shares have since fallen by 25%.
The reform charade
One possible response to this malaise is a big burst of liberal reform to restore faith that India is on the right track. Don’t hold your breath. When the government announced its package of measures last September optimists hoped it was a moment to rival 1991, when India opened its economy to the world. It is now clear that deep reforms are not going to happen in the near future, reflecting both the profound ambivalence of India’s ageing rulers and a tricky political climate, with a weak coalition and an election looming (see table).
A new tax to replace a mess of local levies on goods and services has been shelved until after the poll. The liberalisation of coal mining and electricity distribution, both government-run bottlenecks, is not discussed. A landmark decision to let foreign supermarkets into a backward food industry still stands in theory, but fluid and onerous fine print means Walmart, Tesco and others are not investing yet.