Information about India's economy

1. The Indian Economy
Economic Section -- Embassy New Delhi
Prepared by Economic Affairs

2. Key Social Indicators
1980s 1990s latest
Population
685 845 1090
(millions)
Poverty Incidence
44.5 36 25
(% pop.)
Teledensity
0.37 0.8 12
(per 100 pop.)
Literacy 44 52 66
Infant Mortality
115 79 60
(per 1000 births)
prevalance of HIV
n.a 3.5 6
(millions)
Sources: CMIE, RBI

3. India Economic Facts
GDP is $752 billion; world's 10th largest economy in terms of GDP.
Economic liberalization began in 1991; continues at a slow pace. India is slowly
integrating with global markets.
Since the 1990s, the middle class has grown and poverty levels have fallen.
GDP growth has fallen only slightly to 6.4% (2000-2005) from 6.7% (1994-
1999).
Tariffs are still among the world's highest (average 22%).
Challenges ahead: reduce poverty, accelerate pace of reform, reduce fiscal
deficit, upgrade infrastructure.
India's successes: IT, pharma & biotech, telcom, science and technology skills,
manufacturing gaining competitiveness.
Two-way U.S.-India trade tops $25 billion a year, was $10 billion in 1997.
India's GDP grew at an impressive 7.8% during 2005-2006.

4. English and education versus higher income
Read
Speak Read Speak
English
Hindi Hindi English
NO YES
YES
YES
NO
NO NO
Read Read
Class Hindi English
Poor 4% 2%
Middle Class 37% 23%
Upper Class 11.5% 10%
Total 51.5% 35%
Source: New Delhi, B.K. Sharma

5. Sectors of the Indian Economy
1990 2004
3.0%
30.8%
26.2%
39.5%
54.1%
16.7%
29.1%
0.6%
Services Agriculture
Manufacturing IT/Software
Source: CMIE, RBI, World bank

6. Nominal and Per Capita GDP
Fiscal year end March
600
400
200
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Nominal GDP USD billions Per Capita GDP US $
Source: Central Statistical Office

7. Real GDP Growth Rates
Fiscal year end March
10
8
6
4
2
0
20
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
07
91
94
92
93
95
96
97
98
99
00
01
02
03
04
05
06
(e
st
)
factor cost %
Source: Reserve Bank of India, Economic Survey, 2005-2006

8. GDP at Factor Cost by Sector
(1999-2000 Bare Year Prices)
%
Agriculture, forestry, fishing
Mining and quarrying
Manufacturing
Electricity, gas & water supply
Construction
Trade, hotels, transport, and communication
Financing, insurance, real estate, & services
GDP
0 2 4 6 8 10 12 14
Source: The Economic Times, CMIE, CSO

9. Comparative Growth Rate of GDP
% per annum
China
Korea
2002
Indonesia
2003
Malaysia
2004
Philippines
2005
Thailand
2006
Bangaladesh
India
Pakistan
0 2 4 6 8 10
Source: Asian Development Outlook, World Economic Outlook

10. Sources of Government Revenue
Fiscal year 2006
excise duty 27.0%
corporate tax 30.0%
other sources 0.3%
income tax 17.5% service tax 7.8%
customs collections 17.4%
Source: India Ministry of Finance, India Budget 2006-2007

11. Expenditure of General Government
Combined Center and State -- 2005
interest
26.5%
defense
16.4%
other
25.4%
subsidies
9.4%
other social services
education
health 6.8%
10.5%
4.9%
Source: IMF

12. Tax Revenues as Percent of GDP
Fiscal Year end March
30
25
Fiscal gap
20
15
10
5
0
20
19
20
20
20
20
20
20
0
9
0
0
0
0
0
0
0
9
1
2
3
4
5
6
Tax revenues Total revenue and grants Total expenditure and net lending
Source: IMF

13. Government Expenditure
% total expenditure
35
30
25
20
15
10
5
0
20
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
06
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
(p
r
oj
)
subsidies interest on debt
defense
Source: IMF

14. Gross Domestic Savings and Investment
% GDP 2002
China
Korea
Indonesia
Malaysia
Philippines
Thailand
Bangaladesh
India
Pakistan
Sri lanka
0 10 20 30 40 50
Investment Savings
Source: Asian Development Outlook 2002

15. General Government Debt
Fiscal year end March
100
80
60
40
20
0
19
20
19
19
20
20
20
20
20
98
03
05
97
99
00
01
02
04
(p
roj
.)
Debt Stock/ GDP ratio External Debt/GDP
Source: IMF

16. GOI Fiscal Deficit: States vs. Center
%
GDP
14
12
10
8
6
4
2
0
19
19
19
20
20
20
19
19
19
19
19
19
20
20
91
93
98
00
02
04
92
94
95
96
97
99
01
03
Center States
Source: Indian Ministry of Finance

17. Government Debt/GDP Ratio
2003-2007
120
115
110
105
100
95
90
85
2003 2004 2005 2006 2007
Base Case Reform Case
Source: IMF

18. Composition of India's
2004 Sovereign Debt
IMF
IDA
1.0%
19.6
Bilateral
%
19.2%
IBRD
7.0%
Other Multilateral
4.6%
Short-term
3.0%
Private
45.5%
Source: IBRD

19. India’s External Debt
Fiscal year end March
US $ billions
140
120
Multilateral
100 Bilateral
IMF
80 Trade Credit
Commercial Borrowing
60 NRI & FC Deposits
Russian Rupee Debt
40 Short-term debt
20
0
19
19
19
20
20
19
19
19
19
19
19
19
20
20
20
20
92
95
96
03
04
90
91
93
94
97
98
99
00
01
02
05
Source: Reserve Bank of India; Finance Ministry

20. Gross Nonperforming Loans
% of Total Loans
20
15
10
5
0
1997 1998 1999 2000 2001 2002 2003 2004 2005
Public sector banks Private sector banks Foreign banks
Source: IMF

21. Indian Saving and Investment
% of GDP
30
25
20
15
10
5
0
1996 1997 1998 1999 2000 2001 2002 2003 2004
Private Domestic Savings Private Domestic Investment
Source: IMF, Ministry of Finance

22. Bet You Didn't Know (Part One)
India is one of only three countries that makes supercomputers (the US and Japan
are the other two).
India is one of six countries that launches satellites.
The Bombay stock exchange lists more than 6,000 companies. Only the NYSE has
more.
Eight Indian companies are listed on the NYSE; three on the NASDAQ.
By volume of pills produced, the Indian pharmaceutical industry is the world's
second largest after China.
India has the second largest community of software developers, after the U.S.
India has the second largest network of paved highways, after the U.S.
India is the world's largest producer of milk, and among the top five producers of
sugar, cotton, tea, coffee, spices, rubber, silk, and fish.
100 of the Fortune 500 companies have R&D facilities in India.

23. Current Account
Goods and Services-- Fiscal year end March
US $ billions
100
80
60
40
20
0
1982 1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
imports exports
Source: IBRD

24. Current Account balance
Fiscal year end March
US $ billions
10
8
6
4
2
0
-2
-4
-6
-8
19
19
19
19
19
19
19
19
20
20
20
20
20
92
92
94
95
96
97
98
99
00
01
02
03
04
Source: IBRD, CMIE

25. Sources of Real GDP Growth
Fiscal Year End March
14
12
10
8
6
4
2
0
-2
-4
19
20
19
19
19
20
20
20
20
20
96
02
97
98
99
00
01
03
04
05
Agriculture
Industry
Source: CSO, RBI, CMIE Services

26. Foreign Institutional Investment
2004
FII $ Sensex Thousands
2,000 millions 7
1,500
6
1,000
500 5
0
4
-500
-1,000 3
May
Apr
Jul
Oct
Feb
Jan
Jun
Aug
Dec
Sep
Nov
Mar
FII Investments
Sensex average
Source: Reserve Bank of India; SFBI; ABN-AMRO

27. U.S. Investment in India
Calendar Year
US $ billions
5
4
3
2
1
0
19
19
20
20
20
19
19
19
20
20
20
95
99
00
04
05
96
97
98
01
02
03
FDI
Portfolio
Source: SIA, Ministry of Commerce and Industry

28. Market Capitalization of Listed Companies
2002
%
GDP
India
Brazil
China
Egypt
Kenya
Malaysia
Mexico
Poland
Turkey
USA
0 20 40 60 80 100 120 140 160
Source: World bank, IMF

29. Domestic Listed Companies
2003
India
Brazil
China
Egypt
Kenya
Malaysia
Mexico
Poland
Turkey
USA
0 1 2 3 4 5 6
Thousands
Source: World Bank. IMF

30. Bet You Didn't Know (Part Two)
Two million people of Indian origin live in the U.S.
Indian-born Americans are among the most affluent and best educated of the recent
immigrant groups in the U.S.
Thirty percent of the R&D researchers in American pharmaceutical companies are Indian
Americans.
Nearly 49% of the high-tech startups in silicon Valley and Washington, D.C. are owned by
Indians or Indian-Americans.
There are over 700 companies in Silicon Valley owned by Indian-Americans.
India sends more students to U.S. colleges than any country in the world. In 2004-2005,
over 80,000 Indian students entered the U.S. China sent only 65,000 students during the
same time.
In a case decided by the U.S. Supreme Court, an Indian-American woman scientist, Dr.
Ananda Chakrabaty, won the argument that persons may be granted patents for useful
manufacture of living organisms. She defeated the U.S. Patent Office, that argued that
living things may not be patented, thus establishing the legal foundation for the biotech
industry, (Diamond vs. Chakrabaty, 1980). Dr. Chakrabaty invented a microbe that eats oil
spills.

31. Indian Rupees to 1 USD
Monthly Average - December
50
40
30
20
10
0
19
20
19
19
19
19
19
20
20
20
20
20
94
00
95
96
97
98
99
01
02
03
04
05
Source: Reserve Bank of India

32. Indian Rupees to 1 USD
Monthly average
50
40
30
20
10
0
A
Fe
M
M
Fe
A
Se
N
A
O
M
Ja
Ju
Ju
D
Ja
pr
ug
ov
pr
ec
ct
ar
ay
ar
n
n
b
b
ne
ly
p
Source: Reserve Bank of India, CMIE

33. World's Ten Wealthiest Countries
GDP
USA
Japan
Germany
Britain
France
Italy
China
Spain
Canada
India
0 1 2 3 4 5 6 7 8 9 10 11 12
$US (In Trillions)
Source: World Bank

34. Forex Reserves Increase and Import Cover
US$bn Mnths
18
200
16
180
160 14
140 12
120
10
100
8
80
6
60
4
40
2
20
0
0
FY00
FY06
FY93
FY94
FY97
FY98
FY99
FY01
FY02
FY04
FY95
FY05
FY91
FY92
FY96
FY03
FY07E
Reserves
Months of Import Cover
Source: DGCI&S; RBI; Citigroup

35. Foreign Exchange Reserves
Fiscal Year end March
US $
billions
160
140
120
100
80
60
40
20
0
19
19
19
19
19
19
19
19
19
19
20
20
20
19
19
19
20
20
M
19
19
20
ar
85
86
87
88
92
93
94
96
97
98
02
03
04
90
91
95
00
05
89
99
01
20
06
SDRs
Gold
Source: Reserve Bank of India Foreign Currency Assets

36. Exports by Commodity
A China-India Comparison
China India
Agricultural products 22.2 7.9
Fuels and mining products 18.1 6.4
Manufactures 397.0 48.0
Of which
Iron and steel 4.8 2.9
Chemicals 19.6 7.3
Machinery and transport equipment 187.8 6.1
Textiles and clothing 79.0 13.5
Others 105.8 18.2
Total 437 62
(2003, US$bn)
Source: WTO

37. Share of World Output
Select Asian Developing Countries -- 2004
%
China
India
South Korea
Indonesia
Taiwan
Thailand
Philippines
Malaysia
Hong Kong
Vietnam
Singapore
0 2 4 6 8 10 12 14
1982 1992 2004
Source: IMF

38. Total pop. of India
Rural India
248
91
Total female workers Total female non-workers
Female non-workers
Female
Urban India
36
121
Main workers
Total female workers Total female non-workers
Marginal workers
Source: 2001 Census of India (millions)
Total female workers

39. Comparative Export of High-Technology
Manufactured Goods
India
Brazil
China
Egypt
Kenya
Malaysia
Mexico
Poland
Turkey
USA
0 10 20 30 40 50 60
% of High-technology Manufactured Goods
Source: Dun & Bradstreet

40. Comparative Annual Wages in
Manufacturing
India
Brazil
China
Egypt
Malaysia
Mexico
Poland
Thailand
Turkey
USA
0 10 20 30 40
Thousands
Source: Dun & Bradstreet

41. India’s Share of World Exports
% of Global Trade
1
0.8
0.6
0.4
0.2
0
19
19
19
19
20
20
20
20
19
19
19
19
20
75
80
95
98
00
01
02
04
70
85
90
99
03
Source: IBRD; WTO

42. Comparative Customs Duty Rates
India and other Developing Countries
%
India
Pakistan
Brazil
China
Indonesia
Thailand
South Korea
0 10 20 30 40 50
All goods Agriculture Manufacturing
Source: IMF

43. India’s Top Trade Partners - Exports
2004-2005
France 2.1%
Other 44.2%
Singapore 5.0%
Italy 2.9%
Belgium 3.2%
Japan 2.6%
Germany 3.5%
UK 4.7%
Hong Kong 4.8%
UAE 9.4%
USA 17.5%
Source: India Trade promotion Organization

44. India’s Top Trade Partners - Imports
2004-2005
Other 60.7%
Malaysia 2.1%
Japan 2.8%
Belgium 4.3%
Singapore 2.4%
Switzerland 5.4%
Australia 3.3%
Germany 3.6%
China 6.3%
UK 3.2%
USA 5.9%
Source: India Trade promotion Organization

45. Commodity Composition of Trade
Others 25.0%
EU 21.0%
Japan 3.0%
ASEAN 5.0%
China 5.0%
NE 10.0%
USA 18.0%
Composition of Exports, FY04
Agricultural
Middle East 13.0% Ores
Leather 12.0%
4.0%
Direction of Exports, FY04 Commodities
3.0%
4.0%
Chemicals Oil
10.0% 6.0
%
Other goods
6.0%
Engineering
18.0%
Gems, jewelry
17.0%
Textiles
Readymades
Source: DGCI&S 10.0%
10.0%

46. U.S. Business Complaints
Excessive government interference.
High tariffs and excessive indirect taxes
Differential tax rates for foreign companies.
Restrictions on foreign investment.
Substandard infrastructure.
Questions about ‘sanctity of contract.’
Weak enforcement of intellectual property rights.

47. Estimated Trade Losses Due To Copyright
Piracy And Piracy Levels In-Country
Motion Pictures Records & Music Business Software Entertainment Books Total
Software Losses
Losses Piracy Losses Piracy Losses Piracy Losses Piracy Losses
Levels Levels Levels Levels
Pakistan 12.0 NA 70.0 100% 14.0 82% NA NA 52.0 148.0
Indonesia 32.0 92% 27.6 80% 100.0 87% NA NA 32.0 191.6
India 360.0 55% 102 50% 520.0 73% 59.5 86% 90.0 483.8
Russia 275.0 80% 411.9 66% 800.0 87% 255.8 73% 42.0 1784.7
China 280.0 95% 202.9 85% 1488.0 90% 510.0 90% 50.0 2530.0
(Cost in millions of U.S. dollars)
Source: International Intellectual Property Alliance

48. Principal Products of
U.S.-India Merchandise Trade
Top ten products in 2005 -- US $ millions
U.S. Imports from India Amount U.S. Exports to India Amount
Gems and jewelry 4,730 Airplanes/aircraft machinery 467
Womens/girls blouses 336 Fertilizers 413
Mens/boys shirts 294 Ferrous waste/scrap 126
Petroleum oils 303 Bituminous coal 150
Shrimps/prawns 290 Transmission apps 107
Sweaters/pullovers 271 Industrial oils 99
Cashew nuts 261 Almonds 94
Womens/girls skirts 281 Jewelry and parts 101
Industrial oils 249 Digital data processors 87
Toilet/kitchen linen 247 Parts for boring machinery 86
All other 11,447 All other 5,235
Total 18,709 Total 6,965
Source: US International Trade Commission

49. U.S.-India Trade in Services: 2003
US $ millions
Service Type U.S. exports U.S. imports
Education 1,457 3
Travel 1,180 723
Business/prof/technical 353 420
Freight 170 81
Telcom 129 428
Royalties and license fees 115 8
Intra-company services 110 262
Port services 83 66
Financial services 56 19
Passenger fares 26 167
Film/TV/tape rentals 14 0
Insurance 5 5
Other 14 2
Total Services 3,728 2,184
Sources: US International Trade Commission

50. U.S. - India Trade in Goods
20
15
10
5
0
19
20
19
20
19
19
19
19
19
19
20
20
20
20
99
03
97
05
92
93
94
95
96
98
00
01
02
04
Exports to India
Imports from India
Source: International Trade Commission

51. U.S. - India Trade in Services
5
4
3
2
1
0
19
20
19
20
19
19
19
19
19
19
20
20
20
20
94
00
96
03
92
93
95
97
98
99
01
02
04
05
Exports to India
Imports from India
Source: International Trade Commission

52. Total U.S. Trade with India
US$ billions
20
15
10
5
0
19
19
19
19
19
20
20
20
20
20
20
19
19
19
93
94
96
97
99
00
01
02
03
04
05
92
95
98
Total exports to India
Total imports from India
Source: International Trade Commission

53. Top Ten Reasons Favoring
FDI in Retailing
Experience of other countries shows that retailing has attracted significant FDI.
•
FDI would bring technical know-how and skill.
•
It would speed up the growth of organized retailing, set up supply chaings and lead to
•
implementation of Information Technology.
Joint ventures would ease capital constraints of existing organized retailers.
•
Domestic retailers would get access to global best management practices.
•
Sourcing from India would increase.
•
There will be more investment in upstream activities and allied sectors.
•
Competition would drive down prices.
•
Protection leads to inefficiency.
•
FDI would lead to development of different retail formats and modernization of the
•
sector.
Source: FDI in Retail Sector, India 2005

54. States Attracting Highest FDI Flows in India
(2000-2003)
2000 2001 2002 2003
Amount % Share Amount % Share Amount % Share Amount % Share
Delhi 24576 30.6 69183 18.9 29943 18.5 21047 22
Maharashtra 35789 44.5 29917 43.7 48657 30.1 10228 10.7
Karnataka 5826 7.2 13104 8.3 8929 5.5 9991 10.5
Tamil Nadu 5519 6.87 7427 4.7 13412 8.3 8055 8.4
Chandigarh 8426 5.2
Gujurat 10426 10.9
Andra Pradesh 2517 3.13 3398 2.1
(Amount in INR millions)
Source: World Bank

55. Sectoral FDI Equity Caps
Sector FDI cap in %
Retailing (single-brand only) 51
Real Estate 0
Small Scale Industries 24
New print media 26
Insurance 26
Defense Industry Sector 26
Refining with Public Cos 26
Private Sector Banking 74*
Domestic Airlines 49
Telecommunications 74
Trading 51
Internet service provider 74
Mining 74
Oil marketing 100
*Includes FDI and FII
Source: Ministry of Commerce and Industry

56. More Economic Data and Forecasts
A 36% surge in imports at US$106bn resulted in India's trade deficit touching a
record high of US$26.5bn in FY05 compared to US$14.3bn in FY04.
The predicted trade deficit for FY06 is US$30.9bn.
Citigroup estimates that the value of Indian currency is expected to decline by
15% over the next 4 years.
India's savings rate has risen to 28.1%, while investments have risen by 26.3%.
Non-agricultural sector growth may trend to 9% in the coming years.
In FY04, India committed more revenue to subsidies (nearly US$1bn) than it did
to non-capital defense expenditures.
Almost 55% of India's tax revenue in FY04 was collected from excise duties and
customs collections.
India's FY06 budget targets a fiscal deficit of 4.3% of GDP.
In India, services account for nearly 50% of GDP.

57. Bottlenecks to Growth
(Survey responses by country for each
perceived ‘bottleneck’ category)
%
100
80
60
40
20
0
Business Regulation Tax and Customs Corruption
Brazil
China
Source: World Bank Investment Climate Surveys India

58. Economic Freedom?
Political Days taken to Competitiveness Corruption
Freedom start a business ranking ranking
Brazil Free 152 57 59
China Not Free 41 46 77
Egypt Not Free 43 62 102
India Free 89 55 90
Indonesia Partly Free 151 69 133
Malaysia Not Free 30 31 64
Mexico Free 58 48 64
Pakistan Not Free 24 91 39
Philippines Free 50 76 102
Russia Not Free 36 70 71
South Korea Free 22 29 47
Thailand Free 33 34 90
Source: Economic Times

59. Time Taken to Register Property
Norway
China
Pakistan
S.A. Average
Sri Lanka
India
Malaysia
0 20 40 60 80 100 120 140 160
No. of Days
Source: World Bank

60. Land Cost Relative to Income Level
(Ratio of land cost/sq.m to GDP per capita in 1999, indexed to New Delhi - 100)
120
100
80
60
40
20
0
To
Si
B
N
K
Sy
B
M
Ta
Se
Ja
an
ew
ua
an
um
ng
ka
ip
ky
dn
ou
ga
la
gk
ei
ap
rt
o
ba
D
ey
l
a
Lu
lo
el
ok
or
i
hi
re
m
e
pu
r
Land Cost
Source: World Bank

61. Start-up Times for New Businesses
Australia
USA
England
Nepal
Pakistan
Malaysia
Belgium
Bangladesh
China
Sri Lanka
India
0 20 40 60 80 100
Days to Set Up
Source: World Bank

62. Time to Enforce a Contract
Tunisia
China
Malaysia
Nepal
Bangladesh
S.A. Average
Pakistan
India
Sri Lanka
0 100 200 300 400 500
No. of Days
Source: World Bank

63. Bankruptcy Recovery Rate
(Cents on the Dollar, Recovered From Insolvent Firm)
Best Recovery
Japan
Pakistan
Malaysia
China
Sri Lanka
Nepal
Bangladesh
S.A. Average
India
0 20 40 60 80 100
Recovery Rate
Source: World Bank

64. Real Interest Rate
Prime Lending Rate minus WPI
%
14
12
10
8
6
4
2
0
19
19
19
20
20
20
19
19
19
19
19
19
20
20
20
20
91
92
93
00
01
05
94
95
96
97
98
99
02
03
04
06
Source: Reserve Bank of India

65. Time To Go Through Insolvency
Shortest Time
Ireland
Sri Lanka
Malaysia
China
Pakistan
Bangladesh
S.A. Average
Nepal
India
0 2 4 6 8 10 12
Years
Source: World Bank

66. Rigidity of Employment Index
Least Rigid
Hong Kong
Malaysia
Bangladesh
China
Sri Lanka
S.A. Average
Nepal
India
Pakistan
0 20 40 60 80 100
Rigidity Index
Source: World Bank

67. Problem: The Transformed Relationship is incomplete.
Solution: Grow the economic and commercial relationship.
Economic
Commercial
CEO Forum Strategy
Private Sector
Involvement
Energy Dialogue
Strategic
Economic Dialogue
Trade High Tech
Trade
Finance Dialogue
Trade Policy Dialogue
Commerce: High Tech
Cooperation
Financial
Intel Unit
WTO and
Standards and Trade
USTR
Facilitation