Republic of India
LOCATION AND SIZE.
India is located in the south of the Asian continent, bordering the Arabian Sea and the Bay of Bengal. The country is slightly more than one-third the size of the United States. The country's territory is measured at nearly 3.3 million square kilometers (1.3 million square miles) extending from the snow-capped Himalayan Mountains in the north to tropical forests in the south. India shares more than 14,000 kilometers (8,800 miles) of borders with 7 neighboring countries. To the northwest are Afghanistan and Pakistan; to the north are China, Bhutan, and Nepal; and to the east are Burma (also known as Myanmar) and Bangladesh. A narrow channel of sea formed by the Palk Strait and the Gulf of Mannar separates another neighbor, Sri Lanka, an island nation with which southeast India shares strong cultural ties. The Indian mainland consists of 4 regions, namely the Himalayan Mountains, the plains of the Ganges and the Indus, and the southern desert. The Himalayas, which contains the highest peaks in the world, consists of 3 almost parallel ranges dotted with large plateaus and valleys, some of which, like Kashmir and Kullu valleys, are vast, fertile, and of great natural beauty. The plains of the Ganges and the Indus, about 2,400 kilometers (1500 miles) long and on average about 280 kilometers (175 miles) wide, are formed by the basins of 3 river systems of the Indus, the Ganges and the Brahmaputra Rivers. These fertile basins are among the most densely populated areas in the world. India is composed of 25 states and 7 union territories. The top 5 most populated states are Uttar Pradesh (140 million people), Bihar (86 million), Maharashtra (79 million), West Bengal (68 million), and Andhra Pradesh (67 million). The top 3 most populated union territories are New Delhi (10 million), Pondichery (800,000), and Chandigarh (650,000).
The caste system (a centuries-old traditionally rigid social hierarchy which allows little social mobility), though not officially sanctioned today, continues to divide Indian society. The caste system has a historical basis in the economic organization of Indian society, with different peoples or castes allocated to various occupations. Many Hindus believe that people are born into a particular social status based on their experiences in past lives and that good deeds can help a person scale the rungs of caste, allowing movement up to a higher caste upon reincarnation in the next life. The caste system continues to be a strong force, especially in rural India. In many Indian villages, for example, one's caste influences what food one cooks or what sari one wears (the garment worn primarily by women in southern Asia made up of several yards of lightweight cloth). The dalits or "untouchables" are people of traditionally poor households who may be peasants, laborers, or servants (and their ancestors as well). Up to this day, many dalits are forced into menial and undesired occupations, such as cleaning restrooms, sweeping streets, and disposing of the dead—all considered "unclean" by orthodox Hindus. In the urban areas, the caste system is less obvious, though it is still defended by many as a way to uphold social order. In recent years, the government has taken serious measures to stamp out such age-old discriminatory practices. It has, for example, enacted affirmative action measures that recognize that some groups in society, such as the dalits, have been left far behind and have suffered on account of the practice and custom of caste differentiation.
INFRASTRUCTURE, POWER, AND COMMUNICATIONS
Infrastructure covers a wide spectrum in India and includes transportation, power generation and distribution, telecommunications, postal facilities, and urban infrastructure. Historically, the responsibility for providing infrastructure services has been vested with the Indian government. This has been due to a number of reasons including high capital requirements, long gestation periods, high financial risks, and low rates of return. Fiscal shortages and technological innovations have challenged the old paradigm of a government monopoly in infrastructure development. Some amount of private involvement in the maintenance and formation of infrastructure, therefore, has been taking place.
|Country||Newspapers||Radios||TV Sets a||Cable subscribers a||Mobile Phones a||Fax Machines a||Personal Computers a||Internet Hosts b||Internet Users b|
|a Data are from International Telecommunication Union, World Telecommunication Development Report 1999 and are per 1,000 people.|
|b Data are from the Internet Software Consortium ( http://www.isc.org ) and are per 10,000 people.|
|SOURCE: World Bank. World Development Indicators 2000.|
Transportation in India includes roads, railways, aviation, and coastal shipping. The road network of India totals 2.7 million kilometers (1.3 million miles), making it one of the largest national networks in the world. Only 40 percent of the road system is paved, however. Nearly 63,000 kilometers (39,000 miles) of railroads are in operation in India, transporting millions of passengers and millions of tons of freight daily. Nearly 13,000 kilometers (8,000 miles) of Indian railroads function by electricity. Coastal shipping is an energy efficient and comparatively cheaper means of transportation, especially for bulk cargo. The country has the largest merchant shipping fleet among the developing countries. India has 14,500 kilometers (9,000 miles) of navigable waterways, which includes rivers, canals, backwaters, and creeks. Only about one-quarter of those waterways are navigable by large vessels, however. There are 11 major ports and 139 minor ports along the Indian coastline. The civil aviation sector is comprised of both private and public lines. Air India, Indian Airlines, Alliance Air (a subsidiary of Indian Airlines), and various private air taxis provide domestic and international air services. There are 343 airports, with two-thirds having paved runways.
With respect to energy, India is a net importer. Among other fuels, it imports nearly US$8 billion worth of petroleum annually. Though India constitutes nearly 17 percent of the world population, it consumes only about 3 percent of the world's total energy, or 12.2 quadrillion BTUs (British Thermal Units, a common means of expressing energy as the production of heat) per year. On a per capita basis (12 million BTUs), Indians consume more than 5 times less energy per year than the average world citizen (65 million BTUs) and 28 times less than the average American (352 million BTUs). With increasing economic development, however, these figures are likely to rise significantly in the near future. Some 75 percent of India's electricity comes from thermal power plants, which use coal or atomic energy to boil water and in turn produce electricity. India has large domestic coal reserves and is the third largest coal-producing country in the world, behind China and the United States. More than half (55 percent) of all energy consumption in India is produced by coal. Another third (31 percent) of energy needs is met by petroleum, and 7 percent by natural gas (the country consumes about 8 billion cubic feet per year). Some 4 percent of energy needs are met by renewable and traditional fuels (wood, for instance), 3 percent by hydropower, and a mere 1 percent by atomic power (India operates 14 atomic reactors with a combined annual generating capacity of about 2,700 megawatts). The consumption of natural gas is expected to more than triple by 2010, reaching 2.7 trillion cubic feet per year. Despite increased reliance on natural gas, coal will continue to be the dominant fuel for power generation in India. The country's consumption of nearly 350 million tons in 1999 will likely increase by more than 40 percent by 2010, reaching just short of half a billion tons. Proven coal reserves are estimated to be more than 80 billion tons. Much of India's coal reserves, however, are not anthracite (which is clean-burning coal), forcing the government to import some anthracite coal from Australia and New Zealand, much of it for use in the steel industry.
Various government agencies oversee energy policy in India, including the Ministry of Petroleum and Natural Gas, the Ministry of Coal, the Ministry of Non-conventional Energy Sources, and the Ministry of Power. The Directorate General of Hydrocarbons (DGH) was set up in 1993 to oversee petroleum exploration programs, develop plans for the state-owned oil enterprises and private companies, and oversee efficient utilization of gas fields. Continued economic development and population growth are driving energy demand faster than India's capacity for energy supply. Electricity in India reaches about 80 percent of the country. The country faces an electricity shortage conservatively estimated at 11 percent and as high as 18 percent during peak demand. As a result, electricity blackouts are common. Furthermore, industry cites power supply as 1 of the biggest limitations on progress. One estimate projects 8 to 10 percent annual growth in energy demand over the next 15 years. Most of this energy will probably be imported via ship and pipeline. Oil consumption, for example, may increase by 60 percent by 2010, climbing to approximately 3.1 million barrels per day (b/d). Currently, as little as 750,000 b/d of oil is produced domestically, the majority of which is from the Bombay High, Upper Assam, Cambay, Krishna-Godavari, and Cauvery basins. The Bombay High Field is India's largest producing field, generating an average of about 230,000 b/d. The potential for discoveries of offshore oil reserves, particularly in deep water, is high. So far, exploration has taken place in only one-quarter of India's 26 sedimentary basins. India's offshore basins cover approximately 380,000 square kilometers (147,000 square miles). India's off-and onshore basins are estimated to contain as much as 30 billion tons of hydrocarbon reserves. To satisfy the growth in energy consumption, the country is also increasing its nuclear power capability via the construction of new reactors. Although India is trying to encourage greater foreign participation in its atomic power program, its failure to sign the Comprehensive Test Ban Treaty (CTBT, an international treaty that prohibits signatories from testing nuclear weapons) has inhibited investment and technical support from Western firms. Russia has taken advantage of this scenario and has been awarded permission to construct two 1,000 megawatt (MW) reactors at Kudankulam in southern India scheduled to begin service in 2006 and 2008. India would like to increase its atomic power capability by 2.7 times to 7,300 MW by 2007.
The country also has vast hydroelectric potential. Estimates place India's hydroelectric potential at 86,000 MW, a mere one-quarter of which is being utilized. India plans to build the world's largest hydroelectric plant on the Brahmaputra River. The dam is expected to have a capacity of 21,000 MW and cost US$23 billion and be operational by 2012. Furthermore, special attention is being paid to alternative energy sources such as wind, solar photo-voltaic (PV) technologies, and biomass. India has abundant wind resources, ranking fifth in the world in the number of wind power installations; wind power installed capacity as of June 2000 was 1,175 MW. The Ministry of Non-Conventional Energy Sources has identified 192 potential sites for wind stations with a total estimated potential of 20,000 MW. The ministry also estimates India's energy potential from biomass at nearly 20,000 MW, 3,500 MW being from co-generation plants using bagasse (a fibrous plant residue left over after the extraction of juice from sugarcane) from sugar mills. Plans are also in the works to create a national electricity grid, which would provide for easy power sharing among regions and even neighboring countries. An impediment to the construction of large power plants has been scrutiny by public interest groups, which have rightly cited the potential damage to the environment caused by large hydroelectric dams.
India has probably the least adequate telephone system among industrializing countries. In 1996, for instance, it had only 12 million telephones. The equivalent of 3 out of every 4 villages have no telephone service and only 5 percent of Indian villages have long-distance service. Poor telephone service significantly impedes India's commercial and industrial growth and penalizes the country in global markets. Recently, several satellite earth stations (including 8 Intelsat and 1 Inmarsat) and submarine cables to Malaysia and the United Arab Emirates (UAE) were put into service for long-distance communications.
The Indian economy presents a mixture of the traditional and modern. Prior to 1947, the major sectors were agriculture, forestry, fishing, and textile manufacturing. Currently, village farming, state agriculture, energy, manufacturing, mining, services, and a flourishing information technology are the chief economic sectors of India. Though agriculture employs the most people (186 million), the service sector, with a labor force of 57 million, contributes the most to the country's income, accounting for nearly half of India's GDP. Industry and manufacturing expanded rapidly during the 1990s, and information technology is a sector with very high expectations. The information technology sub-sector of software experienced 70 percent growth in 1999. The CIA World Factbook estimated that agriculture accounted for 25 percent,
The Indian economy is currently at a difficult stage. Despite the initiatives taken by the government in deepening structural reforms and accelerating the privatization process, some problems of growth will likely be faced in the near future. Because of irregular rainfall for the second successive year, for example, agricultural growth was low or absent in 2000. Industrial growth also slowed, and despite some efforts to open the economy to private and foreign businesses, the sentiment for new investment has not improved. The persistence of high international oil prices and the slowdown of the global economy have compounded the problem. Although the major industries of Gujarat have fortunately escaped the worst effects of the recent massive earthquake, the impact of dislocations on the various sectors of the economy cannot be ignored.
According to the Central Statistical Organization of India, the manufacturing sector was expected to grow by 6.4 percent in 2001, slightly down from the 6.8 percent growth a year earlier. A combination of higher oil prices, a weak national currency, and an easing of import restrictions—in compliance with India's membership in the WTO—is thought to be having some initially negative effects on domestic manufacturing.
Indian consumption of natural gas grew from 17 billion cubic meters in 1995 to 34 billion cubic meters in 2000 and is projected to reach nearly 85 billion cubic meters in 2020. This is one of the fastest-ever increases in fuel demand by Indian customers. Most of the increase is due to a projected increase in the demand for natural gas for power generation. Almost 70 percent of India's limited natural gas reserves are found in the Bombay High basin and the state of Gujarat. The Indian government has been avidly encouraging the construction of gas-fired electric power plants, especially in coastal regions where they can be easily supplied with liquefied natural gas (LNG) by sea. Given that domestic gas supply is not likely to keep pace with demand, India will have to import most of its gas requirements, either via pipeline or LNG tankers, making it potentially one of the world's largest gas importers. The dominant commercial fuel in India, however, continues to be coal. Coal accounts for more than half of India's energy demand, and 70 percent of coal consumption is used for power generation. Coal consumption is projected to increase to 465 million short tons in 2010, a 26 percent increase from 1998. India's coal industry is the world's third largest, and most of the country's coal demand is satisfied by domestic supplies.
The mining industry has grown substantially since independence, with the value of minerals mined exceeding US$10 billion today. Still, mining accounts for only about 2 percent of India's GDP. India has been extracting a range of minerals. Among others, it produces significant amounts of coal, iron ore, bauxite, copper, gold, diamonds, limestone, and chromite. India has among the world's largest reserves of iron ore (more than 19 billion tons) and is one of the world's lowest-cost sources. Most of India's iron ore—the largest being in the privately owned mines in the state of Goa—is exported to South Korea and Japan. India's bauxite reserve is approximately 2.7 billion tons or 8 percent of the world total. Given this, and bauxite's critical role in the production of aluminum, India has tentative plans to expand its aluminum production. Copper reserves are estimated at more than 410 million tons, yet India has been importing copper as well. Reserves of lead and zinc are estimated at 360 million tons. Foreign investors have shown interest in mining gold in partnership with the government at a mine in Kolar. The main mining industry remains, however, the production of steaming coal for power generation.
Services play a significant role in the economy of India, accounting for nearly 40 percent of the GDP or about US$200 billion per year. Services include the sectors of telecommunications, airlines, banking, construction, and small-scale enterprises. Some components of the services sector are also in the public sector .
Although some form of banking, mainly of the money-lending type, has been in existence in India for thousands of years, it was only a little over a century ago that Western-style banking was introduced to the country. Indian households account for nearly 90 percent of the national savings. Whereas in 1980, as little as 10 percent of all savings of Indian households were held in financial form (as in bank deposits, shares, and insurance policies) rather than physical form (as in money under mattresses). As of 2001, that figure has surpassed 50 percent. In addition, although the percentage of people who own company shares or have invested in mutual funds is still low as compared to more affluent and Western countries, those numbers are also on the rise. Government banks still play an important role and own more than four-fifths of the banking business. However, private (especially foreign) banks are gradually taking up an increasing share of the financial market. There are an estimated US$400 billion worth of private savings in India, some 44 percent of which is in bank deposits, another 5 percent in mutual funds, and less than 25 percent in postal savings and pension funds. Despite considerable openness in the Indian economy, increasing liberalization of the financial sector is hindered by that fact that nearly 30 percent of assets are considered to be non-performing. This is due to an excessive number of loans having been extended to businesses and individuals through political pressure rather than economic merit. As a result, the rate of bankruptcy of financial institutions has been high, which in turn has forced interest rates to be high as well. As a result of these and other factors, Indian industry's access to proper credit has been limited.
Market liberalization in India has led to the sale of shares of private and some public companies to domestic and international bidders. Currently, there are more than 6,000 companies listed on India's largest stock market, the Bombay Stock Exchange, but only about 8 percent of them are actively traded. The stock market has attracted a good amount of international institutional equity investment, such as foreign pension schemes and mutual funds. However, the Indian stock market, not unlike others worldwide, has had periods of intense volatility. In 2000, for example, market capitalization fell by 62 percent in 6 months, from US$265 billion in February to US$100 billion in August.
Due to its wealth of cultural and recreational facilities, India has had a large tourism industry. Tourism is India's fourth largest foreign currency earner. The top states for tourist attractions are Kerala, Delhi, and Assam. The state of Kashmir used to have a thriving tourism industry; however, the number of tourists has sharply declined due to political unrest and extremist activities over the border dispute with Pakistan. Overall, India's tourism in the past decade has been growing at an average rate of about 7 percent yearly. With about 2.25 million people per year, India's international visitors constitute less than 0.5 percent of world's total number of international tourists. (Top world tourism countries such as France and Spain receive as many as 50 million visitors and generate tens of billions of dollars from tourism annually.) The income generated from tourism in India is estimated to be a mere 1 percent of total world spending of international tourists or US$3 billion per year. Indeed, more Indians travel abroad (3 million per year) than tourists visit India. India's tourism industry is hampered by an international perception of India as being very poor, politically unstable, and requiring precautions against epidemic diseases, despite the attractions of its beautiful historic sites, rich and varied cultures, and appetizing cuisine. The Taj Mahal, for instance, is regarded as one of the architectural marvels of the world. The country also attracts backpackers and adventurers who come for the local festivals, to ride on India's famous railroads, or to see the holy Ganges River.
India has no territories or colonies.
Rupee (Rs). Rs1 equals 100 paise. Coins are in denominations of Rs1, 2, and 5, and 10, 25, and 50 paise. Paper currency is in denominations of Rs5, 10, 20, and 50.
Clothing, engineering goods, chemicals, leather products, gems and jewelry, cotton fiber, yarn, fabrics.
Chief imports of India are crude oil and petroleum products, machinery, gems, fertilizer, chemicals.
GROSS DOMESTIC PRODUCT:
US$497 billion (2001 est. of real GDP at market exchange rates). [The CIA World Factbook estimated the GDP at PPP to be US$2.2 trillion in 2000.]
BALANCE OF TRADE:
Exports: US$46.0 billion (2001 est.). Imports: US$54.9 billion (2001 est.). [The CIA World Factbook estimated exports at US$43.1 billion in 2000 (f.o.b.) and imports at US$60.8 billion (f.o.b.).]