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• Overview: 
India's economy is a mixture of traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of support services. Faster economic growth in the 1980s permitted a significant increase in real per capita private consumption. A large share of the population, perhaps as much as 40%, remains too poor to afford an adequate diet. Financial strains in 1990 and 1991 prompted government austerity measures that slowed industrial growth but permitted India to meet its international payment obligations without rescheduling its debt. Production, trade, and investment reforms since 1991 have provided new opportunities for Indian businessmen and an estimated 100 million to 200 million middle class consumers. New Delhi has always paid its foreign debts on schedule and has stimulated exports, attracted foreign investment, and revived confidence in India's economic prospects. Foreign exchange reserves, precariously low three years ago, now total more than $19 billion. Positive factors for the remainder of the 1990s are India's strong entrepreneurial class and the central government's recognition of the continuing need for market-oriented approaches to economic development, for example in upgrading the wholly inadequate communications facilities. Negative factors include the desperate poverty of hundreds of millions of Indians and the impact of the huge and expanding population on an already overloaded environment. 

India's population continues to grow at about 1.7% per year and is estimated at 952 million in 1997. While its GDP is low in 
dollar terms, India has the world's fifth largest economy in terms of purchasing power parity. About 62% of the population 
depends directly on agriculture. 

Industry and services sectors are growing in importance and account for 29% and 42% of GDP, respectively, while 
agriculture contributes about 29% of GDP. More than 35% of the population lives below the poverty line, but a large and 
growing middle class of 150-200 million has disposable income for consumer goods. 

India embarked on a series of economic reforms in 1991 in reaction to a severe foreign exchange crisis. Those reforms have 
included a liberalized foreign investment regime, significant reductions in tariffs and other trade barriers, reform and 
modernization of the financial sector, a liberalized foreign exchange regime, and significant adjustments in government 
monetary and fiscal policies. 

The reform process has had some very beneficial effects on the Indian economy. Real GDP growth has averaged close to 
7% for the past three years. While GDP growth is projected by the government to be in the 6-7% range in the 1997-98 fiscal 
year, it will fall short of that target unless there is a significant increase in production during the second half of the year. 
Inflation has declined from double digits in 1995 to less than 4% (wholesale price index) in September 1997. Foreign portfolio 
and foreign direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy 
foreign currency reserves ($26 billion in September 1997) and a moderate current account deficit of about 1% of GDP 
(1996-97). India's economic growth is, however, constrained by inadequate infrastructure, cumbersome bureaucratic 
procedures, and high real interest rates. India will have to address these constraints on the economy and continue with 
economic reforms in other sectors to maintain the pace of economic growth. 

India's trade has increased significantly since reforms began in 1991, reaching an estimated $71.5 billion in 1996-97, with a 
trade deficit of $5.4 billion. The U.S. is India's largest trading partner; bilateral trade in 1996-97 was about $9.5 billion. 
Principal U.S. exports to India are aircraft and parts, advanced machinery, fertilizers, ferrous waste and scrap metal, and 
computer hardware. An increasingly open trade regime offers significant trade opportunities for U.S. companies. 

A liberalized regime also makes India an attractive place for foreign direct and portfolio investment. The U.S. is India's 
largest investment partner, with total U.S. direct investment estimated at $6-7 billion (market value) in 1996, and U.S. 
companies providing the lion's share of over $8 billion in foreign portfolio investment. Proposals for foreign direct investment 
generally receive quick approval from the Government of India. Automatic approvals are available in many sectors for 
investments involving up to 51% foreign equity, and investments of up to 100% may be approved on a case-by-case basis. 
Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration, 
and processing and mining. 

India's external debt was about $90.5 billion in March 1997, down from a peak of $99 billion in March 1995. The country's 
debt service ratio has fallen to about 26.4 %. Bilateral assistance totaled about $950 million in 1996-97, with the U.S. 
providing $30.7 million. The World Bank has announced that it plans to double its lending in India to about $3 billion per year. 
The Asian Development Bank is also active in India. 

 
• National product: 
GDP - purchasing power parity - $295 billion (1997 est.) 
 
• National product real growth rate: 
6.8% (1997 est.) 
 
• National product per capita: 
$360 (1997 est.) 
 
• Inflation rate (consumer prices): 
4% (1997 est.) 
 
• Unemployment rate: 
NA% 
 
• Budget: 
 
revenues: 
$30.85 billion 
 
expenditures: 
$48.35 billion, including capital expenditures of $10.5 billion 
 
• Exports: 
$24.4 billion (f.o.b., 1997 est.) 
 
commodities: 
clothing, gems and jewelry, engineering goods, chemicals, leather manufactures, cotton yarn, and fabric 
 
partners: 
US, Japan, Germany, UK, Hong Kong 
 
• Imports: 
$25.5 billion (c.i.f., 1997 est.) 
 
commodities: 
crude oil and petroleum products, machinery, gems, fertilizer, chemicals 
 
partners: 
US, Germany, Saudi Arabia, UK, Belgium, Japan 
 
• External debt: 
$90.5 billion (March 1997) 
 
• Industrial production: 
growth rate 7% (1997 est.); accounts for 28% of GDP 
 
• Electricity: 
 
capacity: 
81,200,000 kW 
 
production: 
314 billion kWh 
 
consumption per capita: 
324 kWh (1993) 
 
• Industries: 
textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery 
 
• Agriculture: 
accounts for 34% of GDP; principal crops - rice, wheat, oilseeds, cotton, jute, tea, sugarcane, potatoes; livestock - cattle, buffaloes, sheep, goats, poultry; fish catch of about 3 million metric tons ranks India among the world's top 10 fishing nations 
 
• Illicit drugs: 
licit producer of opium poppy for the pharmaceutical trade, but an undetermined quantity of opium is diverted to illicit international drug markets; major transit country for illicit narcotics produced in neighboring countries; illicit producer of hashish and methaqualone; produced 82 metric tons of illicit opium in 1994 
 
• Economic aid: 
 
recipient: 
US commitments, including Ex-Im (FY70-89), $4.4 billion; Western (non-US) countries, ODA and OOF bilateral commitments (1980-89), $31.7 billion; OPEC bilateral aid (1979-89), $315 million; USSR (1970-89), $11.6 billion; Eastern Europe (1970-89), $105 million 
 
• Currency: 
1 Indian rupee (Re) = 100 paise 
 
• Exchange rates: 
Indian rupees (Rs) per US$1 - 31.374 (January 1995), 31.374 (1994), 30.493 (1993), 25.918 (1992), 22.742 (1991), 17.504 (1990) 
 
• Fiscal year: 
1 April - 31 March