India's Economy and Infrastructure

India's Economy and Infrastructure

Length: 1763 words (5 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
India's Economy and Infrastructure

OVERVIEW
India is rich in natural resources and manpower and has made significant economic progress since attaining independence in 1947. India's economy encompasses traditional village farming, forestry, fishing, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of support services.
Economy transformed from primarily agriculture, forestry, fishing, and textile manufacturing in 1947 to major heavy industry, transportation, and telecommunications industries by late 1970s. Central government planning in 1950 through late 1970s giving way to economic reforms and more private-sector initiatives in 1980s and 1990s. A sophisticated industrial base has been created and a large pool of skilled manpower has emerged. Nevertheless, 67% of India's labor force (nearly 400 million) works 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.

How to Cite this Page

MLA Citation:
"India's Economy and Infrastructure." 123HelpMe.com. 21 Nov 2019
    <https://www.123helpme.com/view.asp?id=165575>.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Improving the Infrastructure of India with Public Private Partnership Essay

- ... The road length per unit area is high solitary in Nagaland, Tripura, and Assam. In most NE states, village and district roads are primary. These roads are mostly important for facilitating intra-state pressure group of people and freight. The main road programmers that are being undertaken in the region are as follows: 1. National Highway development Programme (NHDP)-II proposes to link the east-west passageway beginning at Porbandar, Gujarat to the NE through a 678 km four-lane highway connecting Silchar to Srirampur via Lumding-Daboka-Nagaon-Guwahati in Assam....   [tags: economy, tourism, transportation]

Research Papers
3229 words (9.2 pages)

India's Investment in Infrastructure to Boost Economic Growth Essay

- Investment in infrastructure The Eleventh Plan (2007-08 to 2011-12) aims at a sustainable growth rate of 9 percent with emphasis on a broad-based and inclusive approach that would improve the quality of life and reduce disparities across regions and communities. There is consensus that infrastructure inadequacies would constitute a significant constraint in realizing this development potential. To overcome this constraint, an ambitious programme of infrastructure investment, involving both public and private sector, is being developed for the Eleventh Plan....   [tags: Economics Economy]

Free Essays
1874 words (5.4 pages)

India, the World Bank, and the IMF Essay

- Throughout the short history of an independent India, they have relied upon loans to grow their economy. Due to their prior colonization by Great Britain, they received most of their economy from Britain and there was no true need to receive loans. Since the independence of India from its mother- country, India has strongly relied upon the IMF and World Bank to grow its economy to the booming status that it has today. Until the middle of the 20th century, British investment and trade that was introduced by the British fueled India’s economy....   [tags: The Economy India]

Free Essays
997 words (2.8 pages)

Essay about India's Growing Economy

- India is likely to overtake China very soon, this is what the two authors of „Riding the Indian Tiger – Understanding India, the World’s Fastest Growing Market” state. The authors who wrote this book together know a lot about doing business in India from their experience. William Nobrega is president and founder of The Conrad Group, LLC, a consulting firm specializing in emerging market strategic planning, advisory services for institutional investor groups, and mergers and acquisitions. Ashish Sinha is the COO of RocSearch, a UK-based research and analytics offshoring firm....   [tags: India China Economics GDP]

Free Essays
1034 words (3 pages)

The Civilizations Of India And China Essay

- The civilizations of India and China are unique. Despite their colonization by British rule, there are existing cultural and religious aspects to their respective regions. In India, British colonization started with the East India Company, which brought several new concepts to the area. These concepts include private property, the English language, and liberal political philosophy. The British lasting influence is incorporated with modernization and technology: the telegraph, print media, the postal system, and the railroad....   [tags: India, Indian National Congress]

Research Papers
969 words (2.8 pages)

Essay on India's Strengths in Terms of High-Tech

- India's Strengths in Terms of High-Tech Strong Economic Growth India has an amazing rate of growth which has reached to 9% in 2007. The average rate of growth is 7% since 1994. This is an important evidence of the stable development of Indian economy. Also unlike to other developing countries India managed to have a very low rate of inflation which has remained close to 4% since 2000 and has not fluctuated much then. India seems to be one of the safest economic environments for investment when compared to other Asian countries....   [tags: India Economy Industry Technology]

Research Papers
1243 words (3.6 pages)

Essay about It Industry In India

- IT industry in India During the past decade, the Indian IT industry has been experiencing a dramatic growth. It grew from Rs.4.7 billion in 1991 to Rs.755.47 billion in 2003, accounting for nearly 3% of the GDP. The revenues generated from software exports reached $10.4 billion for the financial year 2003 with a 30% growth over the previous year. The main factors which contributed to the success story of the Indian IT industry are: -Support from the government in the form of industrial parks, which enjoy various incentives and tax benefits....   [tags: India IT Information Technology Analysis]

Research Papers
1010 words (2.9 pages)

Essay about Retail In India -Revolution Or Evolution

- Executive Summary Graphics Not Available Retailing in India came with evolutionary patterns from Kirana store to Super market. This sector was un-organized in the initial stage, and after that it carried forward by the textiles industries through the dealer model. Now it is growing as supermarket and hypermarket. The main drivers of the retail evolution in India are buying behavior of the customer, increase in disposable income of middle class, infrastructure development and changing customer choice....   [tags: India Retail Business]

Free Essays
1664 words (4.8 pages)

IT Sector Trends in India Essay example

- IT Sector Trends in India The Indian information technology sector has been instrumental in driving the nation's economy onto the rapid growth curve. According to the Nasscom-Deloitte study, the IT/ITES industry's contribution to the country's GDP has increased to a share of 5.2 per cent in 2007, as against 1.2 per cent in 1998. Further, the IT and BPO industries are poised to clock revenues worth US$ 64 billion by the end of fiscal year 2008, registering a growth of 33 per cent with exports expected to cross US$ 40 billion and the domestic market estimated to clock over US$ 23 billion, according to a study....   [tags: India Information Technology]

Free Essays
1455 words (4.2 pages)

Avistion Industry In India Essay

- Aviation Industry In India Overview The history of civil aviation in India began in December 1912. At the time of independence, the number of air transport companies, which were operating within and beyond the frontiers of the company, carrying both air cargo and passengers, was nine. In early 1948, a joint sector company, Air India International Ltd., was established by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft....   [tags: History India Aviation]

Free Essays
978 words (2.8 pages)

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 government projects GDP growth of at least 5.5% in 1998.

KEY ECONOMIC INDICATOR (based on 1997 data unless otherwise stated)
GDP - US$1.534 trillion
- real growth rate 5%
- per capita US$1,600
- GDP composition by sector
Agriculture 30%
Manufacturing 28%
Services 42%

Inflation rate - consumer price index : 7%

Labor Force - nearly 400 million
- Labor force composition by sector :
Agriculture 67%
Manufacturing 18%
Services 15%
- Average Indian's worker salary Rs 2000 – Rs 5000 per month with others allowance such as:
§ Annual bonus
§ Cost of living allowance (amount about 10% of monthly salary)
§ Tenure gratuity (15 days per working year)

Currency - 1 Indian rupee (Rs) = 100 paise
- Exchange rates: Indian rupees (Rs) per US$ 1 - 39.358 (January 1998)
- 36.313 (1997)
- 35.433 (1996)
- 32.427 (1995)

Debt - US$ 90.7 billion

Exports - commodities: gems and jewelry, clothing, engineering goods (iron, metal, plastic, etc), chemicals, leather manufactures, cotton yarn, and fabric.
- partners: US, Hong Kong, UK, Germany

Imports - commodities: crude oil and petroleum products, machinery, gems, fertilizer, and chemicals.
- partners: US, Belgium, Germany, Kuwait, Saudi Arabia, UK, Japan

Deficit Trade Statistic (1990-1995) in Billions Rupee (Rs)
1990/1991 1991/1992 1992/1993 1993/1994 1994/1995
Export 325.53 440.41 536.88 697.51 826.74
Import 431.98 478.51 633.75 731.01 899.71
Deficit 106.45 38.10 96.87 33.50 72.97
GDP 4,778.14 5,527.68 6,301.82 7,231.03 8,541.03
Deficit as % of GDP 2.2% 0.69% 1.54% 0.47% 0.85%

Foreign Economic Aid - Most aid provided by consortium such as: World Bank, Asia Development Bank (ADB), OPEC, Aid to India Consortium and Japan India's largest aid granter and lender - $337 million grants and $2.4 billion loans between period 1984-1993.

Tax Structure
§ Business Tax : Corporate Income Tax : 40%
Dividend Tax : 25%
Royalty Tax : 30%
Interest on loans tax : 25%

§ Personal Income Tax : Rs 0 – Rs 35,000 : 0%
Rs 35,000 – Rs 60,000 : 20%
Rs 60,000 – Rs 120,000 : 30%
Rs 120,000 more : 40%

§ Capital Gain Tax Individual : 20% (Flat rate)
Corporation Long term : 30% (more than 3 years)
Short term : 20% (less than 3 years)

INFRASTRUCTURE
Electricity
Since independence, India has seen a phenomenal growth in installed capacity and electricity generation (mainly thermal, hydroelectric and nuclear). Total installed capacity is 83,288MW. 65% is owned and operated by the State Electricity Boards (SEB) and 29% by corporations set up by the Central Government. Nuclear stations under the Central Government-owned Nuclear Power Corporation account for 2% of installed generating capacity, and four private distributors own the remaining 4%. The public sector Power Grid Corporation of India Ltd (PGCIL) is in charge of interstate transmission.
In spite of the massive growth in generation capacity, severe power shortages persist throughout India. Energy deficiency is approximately 11 % and peaking shortage 18 %. Capacity addition has fallen far short of consumption growth. The gap between demand and supply has widened over the last five years and is expected to increase in the short term.
According to the recent survey conducted by the Central Electricity Authority (CEA), demand is expected to rise at a rate of 7.5 per cent per annum over the next decade. Over the next 10 years, the minimum capacity addition needed is estimated to be over 83,000 MW. At an average cost of US$1 million per MW, the investment called for is US$83 billion. If the investment required in transmission and distribution are taken into account, the total figure rises to US$143 billion. A majority of this amount will have to be funded by the private sector, both domestic and foreign.

Telecommunication
§ Telephone
Although India's telephone system is not adequate and still using outdated manual switchboard instead of digital but India's 21 million-line telephone subscriber is the third in Asia (after China and Republic of Korea). The Long Distance Transmission Network has nearly 1,700,000 route kilometers of low capacity microwave radio relay and co-axial cables and about 171,000 route kilometers of optical fiber cables. The present ratio of connectivity per person is very low at about 2.2 lines per hundred persons, offering a vast scope for growth.
Today, India has 22 private companies providing cellular services in 4 metro cities (Delhi, Mumbai, Chennai and Calcutta). Ever since their introduction, cellular services have shown a fair growth with the subscriber base crossing the 1 million mark by the first quarter of 1999. India has adopted the Global System of Mobile Communication (GSM) for provision of cellular services.

§ Radio
India has 96 AM stations and only 4 FM stations with approximately 70 million households own it.

§ Television
India has 274 broadcast stations which are all government controlled and 33 million households own it.

Transportation
§ Highway Road



Road transport is the dominant mode of transportation in India, both for moving goods and passengers. India has a huge network of roads comprising of National Highways, State Highways, Major District Roads and other roads covering a total length of 33,000,000 kilometer. 60% of the goods and 80% of people movement takes place through roads.
Though the National Highways constitute only 2% of the entire road network, they carry about 40% of the freight and people movement. The National Highways cover a length of 52,000 kilometers and pass through every state of India. There are 259 National Highways on the basis of their route numbers. They are the vital lifelines of the economy making trade and commerce possible.

§ Railway
Before the road becomes the dominant mode of transportation, it was the railway that shouldering a major share of transportation needs in India. The history of Indian Railways dates way back to the British colonization. Britain needed a fast and reliable transport system for troop movement (to counter armed rebellion) and for exploitation of the vast resources of India.
Nowadays India's rail network consists of more than 1,000,000 track kilometers, carries more than 11 million passengers per day and transports 40% of the freight.

§ Port & Harbor
There are 12 major ports in the country and 139 minor working ports along the coastline of about 5,600 km. Major ports are the direct responsibility of the Central Government while the minor/intermediate are under the management of the state governments.
The major ports of the west coast are Kandla, Mumbai (Bombay), Mormugao, New Manglore, Cochin and Jawaharlal Nehru port. On the east coast, Tuticorin, Chennai, Visakhapatnam, Paradip and Calcutta-Haldia are the major ports.

§ Air Transport
India has bilateral air services agreements with 93 countries as on May 31, 1999. Air India Limited is the major international carrier of the country. It operates services to USA, Europe, Russian, Middle East, East Asia, Far East and Africa.

INDUSTRY
1. Manufacturing
The principal manufacturing industries are textiles, petrochemicals, food processing, steel, motor vehicles, fertilizers, cement, and petroleum.
Manufacturing accounts 27%of GDP but employed only about 9 percent of the work force.

2. Energy
India importer of petroleum and natural gas but has abundant coal, hydroelectric power (especially in parts of North India), and burgeoning nuclear power industry.

3. Mining
Less than 2 percent share of GDP and only 1 percent of labor force involved in mining and excavation. Basic minerals are iron, bauxite, copper, lead, zinc, manganese, gold, coal, mica, asbestos, limestone, and gypsum.

4. Services
Services industry are banking, insurance, real estate, transportation, health, entertainment, legal, and education. Contribute to 39% of GDP and employ about 13 percent of work force.

5. Agriculture
The principal agriculture products are rice, wheat, oilseed, cotton, corn, sorghum, jute, tea, sugarcane, and coffee. Dairy farming, fishing, and forestry are also important parts of agricultural sector. With fish catch of about 3 million metric tons per year ranks India among the world's top 10 fishing nations.
Agriculture has 30% share of GDP and employ majority of workers, 67% of total labor force. Agricultural products account 18 percent of total exports.

6. Science and Technology
The Indian government makes substantial investment in defense, nuclear, space, computer & information technology and agriculture. The government control the science and technology sector with 200 national laboratories, 200 government-sector research and development institutions, and about 1,000 research and development units in industrial sector.

Return to 123HelpMe.com