Economy - overview India's economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of support services. 67% of India's labor force of nearly 400 million work in agriculture, which contributes 30% of the country's GDP. Production, trade, and investment reforms since 1991 have provided new opportunities for Indian businesspersons and an estimated 300 million middle class consumers. New Delhi has avoided debt rescheduling, attracted foreign investment, and revived confidence in India's economic prospects since 1991. Many of the country's 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 continuing reductions in the extensive remaining government regulations. Moreover, economic policy changes have not yet significantly increased jobs or reduced the risk that international financial strains will reemerge within the next few years. Nearly 40% of the Indian population remains too poor to afford an adequate diet. India's exports, currency, and foreign institutional investment were affected by the East Asian crisis in late 1997 and early 1998, but capital account controls, a low ratio 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 years - mainly 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 1997 - down from more than 11% in 1996. Growth of the agricultural sector is still 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. Nevertheless, even if a series of weak coalition governments continue to rule in New Delhi over the next few years and are unable to push reforms aggressively, parts of the economy that have already benefited from deregulation will continue to grow. Indian think tanks project GDP growth of at least 5.5% in 1998.

GDP purchasing power parity - $1.534 trillion (1997 est.)

GDP - real growth rate 5% (1997 est.)

GDP - per capita purchasing power parity - $1,600 (1997 est.)

GDP - composition by sector
agriculture: 30%
industry: 28%
services: 42% (1996 est.)

Inflation rate - consumer price index 7% (1997 est.)

Labor force
total: 390 million (1997 est.)
by occupation: agriculture 67%, services 18%, industry 15% (1995 est.)

Unemployment rate NA%

Budget
revenues: $39 billion
expenditures: $61 billion, including capital expenditures of $10 billion (FY97/98 est.)

Industries textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery

Industrial production growth rate 6.7% (1997 est.)

Electricity - capacity 83.288 million kW (1996)

Electricity - production 398.28 billion kWh (1995)

Electricity - consumption per capita 427 kWh (1995)

Agriculture - products rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish catch of about 3 million metric tons ranks India among the world's top 10 fishing nations

Exports
total value: $33.9 billion (f.o.b., 1997)
commodities: gems and jewelry, clothing, engineering goods, chemicals, leather manufactures, cotton yarn, and fabric
partners: US, Hong Kong, UK, Germany

Imports
total value: $39.7 billion (c.i.f., 1997)
commodities: crude oil and petroleum products, machinery, gems, fertilizer, chemicals
partners: US, Belgium, Germany, Kuwait, Saudi Arabia, UK, Japan

Debt - external $90.7 billion (1997)

Economic aid
recipient: ODA, $1.237 billion (1993); US ODA bilateral commitments $171 million; US Ex-Im bilateral commitments $680 million; Western (non-US) countries, ODA bilateral commitments $2.48 billion; OPEC bilateral aid $200 million; World Bank (IBRD) multilateral commitments $2.8 billion; Asian Development Bank (AsDB) multilateral commitments $760 million; International Finance Corporation (IFC) multilateral commitments $200 million; other multilateral commitments $554 million (1995-96)

Currency 1 Indian rupee (Re) = 100 paise

Exchange rates Indian rupees (Rs) per US$1 - 39.358 (January 1998), 36.313 (1997), 35.433 (1996), 32.427 (1995), 31.374 (1994), 30.493 (1993)

Fiscal year 1 April - 31 March

NOTE: The information regarding India on this page is re-published from the 1998 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of India Economy 1998 information contained here. All suggestions for corrections of any errors about India Economy 1998 should be addressed to the CIA.