Economic trends
India is amongst the world's 10 largest economies. After growing strongly in 2010, in 2011 India experienced a periode of stagnation of growth and of high inflation (10%). In 2012, economic growth, estimated at 7.4% by the IMF, should be driven by vigorous domestic demand.
The government's goal to bring the budget deficit under 4.6% of the GDP in the fiscal year 2011-2012 will probably not be achieved but fiscal re-balancing reamins a priority. The government seeks to reorient domestic saving towards private investment. A series of reforms have been announced, including liberalizing the insurance sector and privatizing the aviation industry. Inflation remains low and the central bank will therefore decrease interest rates to stimulate growth. Large welfare programs for creating and supporting jobs in the rural areas in order to stimulate consumption will also be pursued.
India remains a poor country: the GDP per capita is low, almost 25% of the population still lives below the poverty line and the inequalities are very strong.
Main branches of industry
India is the world's fourth agricultural power. Agriculture contributes to about 20% of the GNP and employs close to two-thirds of the active population. The main agricultural products are: wheat, millet, rice, corn, sugar cane, tea, potatoes and cotton. India is also the second producer of cattle, third producer of sheep and fourth in fishing production.
Coal is the country's main energy source (India is the third largest world producer of coal). In the manufacturing industry, textile plays a predominant role. In terms of size, the chemical industry is the second largest industrial sector (12% of the GNP).
The services sector is the most dynamic part of the Indian economy. It contributes to more than half of its GDP, and it does not employ but a third of its active population. The software sector, which grows rapidly, is boosting the export of services and modernizing the Indian economy.
International trade
India was a protectionist state for a long time, but the country has become progressively more open to international trade. It has recently signed free trade agreements with South Korea and the ASEAN, and has entered into negotiations with several partners (EU, MERCOSUR, Australia, New Zealand, South Africa). India is the world's seventh largest exporter and importer of commertical services. Trade represents almost 50% of the country's GDP.
India's has a trade deficit. The withdrawal of foreign capital in 2011 led to a fall in the value of the rupee, which worsened the trade balance and in 2011 it reached its highest level since 17 years. India imports almost 80% of its energy and the rise of oil prices is a large item on its imports invoice.
The main trade partners of India are the European Union, the United Arab Emirates, China and the United States.
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Last updates: May 2012
