How is the economy of India
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To this day, however, India remains one of the poorest nations on earth, with a per capita income of US $ 355.
The basis of the Indian economy are still the millions of small businesses in agriculture, industry and services. India ranges from extremely rudimentary techniques in agriculture to world-class technology in the computer sector.
Only around 7.5% of the potential Indian workforce is employed in the so-called organized sector of the economy (public institutions and private companies with more than 10 employees). This area has a disproportionate share in economic growth, which in turn is reflected in an extremely unequal distribution of income. Organized workers are highly unionized; India-wide umbrella organizations have membership numbers of 1 million and more and are often associated with political parties. Strikes are common.
The level of education is very unequal. An illiteracy rate of 46% of those over the age of 15 contrasts with many highly trained scientists and technicians. The productivity of most companies is very low, and productivity growth in India is rather moderate, but consistently positive.
The geographical distribution of economic power is also very uneven. Union states such as Tamil Nadu have a significantly higher per capita income than Bihar. The Indian government is trying to find a balance between the Union states.
The state plays a major role in the economic process as a planner, investor, regulator and producer, even if it has been increasingly liberalized since 1991. State-owned companies are increasingly being privatized. The inflow of foreign capital has also almost exploded after a cautious opening (with direct investment now stagnating).
The competitive disadvantage of the domestic economy compared to many imported products is still offset by high protection (import tariffs). The foreign trade volume of India is accordingly relatively low. Foreign aid, which was essential after independence, is of rather subordinate importance today and has changed from food and goods deliveries to technical aid and loans. Problems remain with the financing of the state budget, which leads to an acceleration in inflation (1999: 7%).
The Indian rupee is heavily dependent on the dollar and currently has an exchange rate of around 20 rupees for 1 German mark (as of December 2000).
In the Indian economy, the agricultural sector generates about a third of the gross domestic product; 63% of the Indian workforce work directly or indirectly in the agricultural sector.
43% of the country's area is used for agricultural activities, with rice being the most important crop (measured in terms of area), which is also the main food for large parts of the Indian population. India is the world's second largest rice producer after China.
Rice is followed by sugar cane, tea, cotton and jute. India is one of the world's leading producers of these products. Most of the tea and jute are exported.
The productivity of agriculture is strongly dependent on the course of the annual monsoon rains, so that there are large fluctuations in the harvest results, which are then also noticeable in other branches of the economy.
There are usually two harvests a year, the first during the rainy season (kharif), the second during the drier period (rabi).
The keeping of animals, especially horned cattle, buffalo, horses and mules, is of central importance in Indian agriculture. India had 192.7 million head of cattle in the early 1990s, more than any other country on earth.
There are also 79 million buffalo, 1.5 million camels, 10.5 million pigs, 118 million goats, 45 million sheep and 435 million chickens.
In 1994, both the slaughter of cattle and the possession of beef products were criminalized in the Union Territory of Delhi. Overall, meat consumption has increased by more than half since the mid-1980s, even if a large part of the Indian population continues to be vegetarian.
Although Indian agriculture has been able to increase its yield in recent decades, the food supply for the population is not always secure. In addition to drought-related setbacks, production was also unable to keep pace with population growth at times.
Around a fifth of the country's area is forested, of which almost 95% consists of hardwood. The proportion of firewood in the economically used wood is around 90%, as there are hardly any other energy sources available for most households.
The increasing deforestation is causing major disruptions to the water balance and increased soil erosion, especially in the offshore regions of the Himalayas. (see also below: environmental problems)
Fishing is carried out in inland waters as well as on the coast and as deep-sea fishing. The catches in 1992 reached approximately 4.2 million t.
Above all, shrimp and processed fish are exported and are moved to Kochin (Kerala), among other places, where the main transshipment port for fish exports is located.
The manufacturing industry, consisting of the areas of energy and water management,
Mining, quarrying of stones and earth, manufacturing and construction, contribute almost a third to the creation of the gross domestic product. The manufacturing industry plays a central role here.
Indian industry is structured in many ways. There are highly developed areas (including aerospace technology, nuclear technology, armaments, software) whose technologies are also exported to other countries. However, there are also many production areas that work with outdated methods and are not competitive on the world market.
The steel industry, the building materials industry (especially cement) and the chemical industry (fertilizer production, etc.) are counted among the largest key industries.
The textile industry continues to dominate in the consumer goods sector, although it is becoming increasingly less important.
Other important branches of the manufacturing industry are sugar, tobacco, leather goods, pharmaceutical products and paper.
A significant part of Indian energy consumption, especially that of Indian small-scale industry and private households, is based on non-commercial energy sources (firewood, cow dung, other biomass). The largest consumers of commercial energy (coal, oil, natural gas and nuclear or water power), on the other hand, are the manufacturing industry and the transport sector.
Thermal power plants supply the majority of the electrical energy. Nuclear power plants are currently only available in small numbers (April 2000: 10). They account for around 2% of the energy budget. However, the construction of new plants with Russian support is planned.
About 20-25% of the total generation comes from hydropower plants.
The national demand for energy cannot be covered by the public electricity supply. Both the overall insufficient supply of electrical energy and the delivery uncertainties are causing problems
Of the raw material deposits in India, coal, crude oil and natural gas are the most important. Coal provides 65% of the energy used by the manufacturing industry. Although India has the fourth largest coal reserves on earth, more coal has to be imported to meet demand.
Crude oil has become more and more important in recent years. However, India has to import about 20% of its needs.
In the natural gas sector, the Bassei field, located in the offshore area, is one of the largest natural gas fields on earth.
Tourism was able to recover from the collapse of the years 1992 to 1995 (riots, plague). In 1995, 2.1 million foreigners visited India - more than ever before. Most of the visitors came from Great Britain (334,800), the USA (203,300), Sri Lanka (114,200), Germany (89,000), France (82,300) and Japan (76,000); Many visitors of Indian origin are likely to be included in these numbers. International tourism has become one of the main sources of foreign currency income: income from international travel rose to US $ 2.2 billion in 1993/94.
The domestic economic development in 1998/99 fell short of expectations. The gross domestic product recorded a growth of 5.8% compared to the expected 6.5%. However, since the basis for calculating the price base has been changed, according to estimates, the growth comparable to previous years should be set about one percentage point lower.
This means that the period from 1994 to 1997, in which high growth of over 7.5% was achieved, has come to an end for the time being. The hope of keeping the growth rate constant at a high level has thus suffered a damper.
The poor general conditions of the Indian economy are primarily responsible for this: rigid monetary policy, decline in demand at home and abroad, infrastructural problems and an uncertain investment climate due to the hesitant domestic policy.
Employment & wage development
Only about 7.5% of the potential Indian workforce is in the so-called organized part of the economy (public institutions and private companies with more than 10 employees). The remaining 92.5% work mainly in small businesses or in agriculture and there mostly in legally unprotected conditions. The announcements in the National Agendato pay more attention to the creation of safe jobs has not yet been implemented. To ensure a minimum wage, the government has, by means of the Minimum wage acts the possibility of lowering wages even in the unorganized part. In the areas of agriculture, mining, roads and railways, this is a matter for the federal government, in other areas a matter for the respective Union state. The statutory minimum wages fluctuate widely: from 96.17 rupees (3.81 DM) daily wages in West Bengal to 8 rupees (0.32 DM) in Tamil Nadu.
In the organized sector, wages range from over 50,000 rupees (2,100 DM) annual salary in the plastic and petroleum industry to around 13,000 rupees (520 DM) in the beverage and tobacco industry.
The per capita income is US $ 355 (16,000 rupees) according to the 1999 Economic Survey.
Balance of payments
In an international comparison, the volume of Indian foreign trade is rather low, especially in view of the diverse domestic economic base.
The current account deficit was US $ 6.5 billion in 1997/98, and US $ 6.0 billion was expected for 1998/99. Export growth slowed from 4% to 2.1% over the same period, while import growth declined from 6% to 4.4%. As a result, imports again grew faster than exports, which resulted in an increase in the foreign trade deficit of US $ 1.5 billion.
The financial account recorded a net inflow of US $ 11.3 billion, a lower amount than last year due to lower direct investment, fewer remittances from foreign children and lender responses to India's nuclear tests.
Export as well as import products are very diverse, an outstanding position of individual products cannot be determined. The ranking of exports according to their total value is headed by jewelry and jewelery (especially for the Middle East, often imported and then processed gemstones), followed by textiles (due to the low labor costs) and leather or leather products. Other important exports are agricultural products, minerals and marine products. So-called service exports such as tourism, labor and computer software are becoming increasingly important.
Imports are even more heterogeneous than exports. The main products here are fuels (especially petroleum), machines, pearls, gemstones and chemicals.
India has worldwide trade connections. The most important partners in 1997/98 were the European Union (25.2%), followed by the USA (19.5%) and Japan (5.5%). The Eastern European countries, which were in second place among the partner countries in 1994, now only have a share of 3.1% (including Russia with 2.6%).
Foreign trade policy
The government has recently taken some steps to ease protectionist stance on foreign trade. This includes deregulation and reducing the bureaucracy on the administrative side as well as various export promotion measures. Import restrictions for 894 different product groups were also dropped in 1999, plus 414 product groups for which the import ban was replaced by a licensing procedure. India is thus taking WTO requirements into account, which must be implemented by 2003.
However, shortly before implementation, an announced reduction in import tariffs was prevented by protests by domestic companies; the average tariff, which is very high in an inter-Asian comparison, thus remains at around 30%.
As the seventh largest country in the world, India has a large amount and an enormous variety of natural resources. In relation to its population, however, important resources such as cultivable soils, wood, water and fuels are rather scarce. Nevertheless, the diversity of resources (especially mineral resources) compared to other countries can be seen as an advantage for India's economy.
Abundant deposits of iron ore (extraction in 1996: 9.8 billion t; mainly for export) as well as manganese ores (65.5 billion t) and chromium compounds are distributed all over India. Copper (3.5 million t), bauxite (2.3 billion t; raw material for aluminum production), zinc (5.9 billion t), lead, gold and silver are also mined. India is also home to the largest known store of thorium oxide, an important raw material for radioactive fuels.
Non-metallic mineral resources include limestone, dolomite, stone phosphates, ceramic clays, mica, asbestos, gypsum, feldspar, graphite and diamonds.
In the fossil fuel sector, India has large hard coal deposits (coking coal 3.7 billion t, other coal 46.4 billion t). The coal deposits are widespread, the main mining region is the Chota Nagpur Plateau because of the particularly easy extraction possibilities. Developed oil fields are located in Assam, Gujarat and offshore in the Arabian Sea, further deposits exist on- and offshore in Tamil Nadu, Andhra Pradesh and Arunachal Pradesh.
Production rates 1994/95 (1993/94) in million t: hard coal 255 (246); Petroleum 32.2 (27.0); Bauxite 4.6 (5.7); Chrome ore 0.87 (1.06); Copper ore 4.8 (5.0); Iron ore 60.7 (58.3); Manganese ore 1.7 (1.7); Limestone 88.6 (83.7), gypsum 1.5 (1.7), mica 2,400 t (2,400 t), lead concentrates 0.05 (0.05), zinc concentrate 0.25 (0.28), gold 2,376 kg (2,076 kg). In 1993/94, 18.3 billion m3 (18.1 billion m3) Natural gas produced, 16.3 billion m3 (16.1 billion m3) were used. In 1993/94 only 10% of the natural gas produced was flared. (Source: Statistical outline of India 1996-97. P. 87)
Soil and water
Due to the great importance of the agricultural sector for India, fertile soils are of enormous importance. However, less than half of the cultivable soil is of high quality, this is mainly in the Ganges plain (alluvial soils) and in the Deccan Lava Plateau (black regur soils). The red to yellow laterite soils that dominate the rest of India are of rather poor fertility. In addition, the fertility of the soil in many regions decreases due to erosion, alkalization (due to excessive irrigation) and fallow periods that are too short.
The availability of water in most of India fluctuates strongly with the seasonal climate and is strongly dependent on the intensity of the monsoons. The result is that in areas without irrigation systems, only one harvest per year is possible, and the risk of a crop failure is high in many regions. Only the Ganges plain offers a really good water supply, in addition to the relatively constant level of the rivers there is also an enormous groundwater reservoir. Most of the Indian peninsula, on the other hand, is subject to strong seasonal fluctuations, and rocky soil often makes it more difficult to create wells for tapping the groundwater.
As already mentioned, the decreasing fertility of the soil due to intensive use and erosion is a major problem. Another problem is the high level of deforestation in India.On the one hand, many forest areas have been converted into arable land, on the other hand they have been decimated by deforestation for construction and firewood. The procurement of firewood has become a major problem, and fast-growing bamboo has taken on this function in many places. According to official information, a quarter of the Indian area is covered by forest, in fact many of these declared areas are rather barren bush landscapes. The ecological consequences of land overexploitation and deforestation are erosion, falling groundwater levels and faster drainage of rain.
There have long been active environmental protection movements among the Indian public. The major irrigation projects, such as the damming of the Narmada, are met with fierce opposition because of the displacement of tens of thousands.
According to Indian data (Statistical Outline of India 1996-97. P. 237), 0.5 t of carbon calorific value equivalents per capita were released in India in 1988/89 (Germany 3.7 t per capita). In 1995 India was the fifth largest producer of carbon dioxide emissions, ahead of Germany, with 835 million tons.
The environmental problems in the cities are reflected primarily in air pollution of enormous proportions from power plants, industry and road traffic, contamination of the groundwater due to the lack of sewage treatment plants, unregulated waste dumps, pollution of rivers and noise.
During the colonial era, the British colonial power built a transport infrastructure in India that clearly overshadowed that of other colonies. The railway network in particular opened up the country and was constantly being expanded. Rail transport is currently still of enormous importance, especially in national passenger transport.
The Indian government estimates for 1996/97 that 80% of all passenger traffic and 60% of freight traffic are carried by road; for the year 2000 these proportions are expected to increase to 87% and 65%. International traffic is carried out almost exclusively by air (people) and sea (goods); Overland traffic with neighboring countries is minimal, with the exception of Nepal, which also reflects the tense situation with India's neighboring countries Pakistan and China.
In contrast to the railway lines, which have hardly been expanded since independence, the road network has grown enormously since then - the length of the tarred roads has increased almost tenfold in the last 50 years. The approximately 1.44 million km of tarred roads, 34,298 km of which are national roads (1996/97), have roughly the same length of unpaved roads. There are still 54% of the villages not directly accessible from roads, especially in tribal areas the connection has not been promoted. The road network, as well as a large part of the public bus transport, is maintained by the state. A wide range of modes of transport is encountered: from cycle rickshaws to ox wagons to modern trucks. The number of bicycles is estimated at over 100 million.
India has a rail network of 62,915 km (1997), making it the sixth longest in the world. It is operated by a state company that is divided into nine regional units. It is India's largest employer with 1.6 million employees.
The different gauges still present problems, the narrow-gauge (3,794 km) and meter-wide (18,501 km) are now gradually being converted to the broad-gauge standard (40,609 km). In addition, the single-lane to two-lane routes are being expanded (14,849 km) and increasing electrification (1997: 12,306 km).
In 1995/96 4 billion passengers and 391 million tons of freight were transported. Coal makes up almost half of the freight transport.
South Asia's first underground railway has been operating in Kolkata (Calcutta) since 1989.
While the largest ports in India are directly subordinate to the Indian government, the large number of medium-sized and smaller ports are maintained by the respective states. However, the former account for around 90% of maritime traffic. There are 174 ports in total; the most important are (million tons of handling, 1995/96): Bombay (34.1), Visakhapatnam (32.8), Madras (30.7), Kandla (30.3), Calcutta / Haldia (21.4) , Marmagao (18.1), Cochin (11.5), Paradip (11.3), Tuticorin (9.3), New Mangalore (8.9), Jawaharlal Nehru Port (near Bombay) (6.9). The capacity of the ports is almost completely exhausted: in 1995/96 215 million t were handled, 9.1% more than in the previous year - a clear indication of the increasing interdependence of the world market. Oil, iron ore and coal account for 42%, 16% and 14% of the turnover. With 17.6 million t, containers (1995-96) account for only 8.2% of the throughput; more than half of them in Bombay and its new port, Jawaharlal Nehru Port.
There are more than 50 shipping companies, the largest being the state-owned one Shipping Corporation of India. More than 4,700 kilometers of inland waters would be navigable, only a third is used commercially, and the share of total transport is rather small.
The im Air Corporation Act 1953 established monopoly of the state airlines Indian Airlines (Domestic traffic) and AirIndia (international traffic) was discontinued on March 1, 1994. State agencies still have strong control over the aviation market, such as licensing procedures for newly acquired aircraft and tariff interventions.
However, competition has led to a significant increase in service on the state lines. Indian Airlines hold 61% market share in the domestic Indian market in 1999, followed by the private lines Jet Airways with 31% and Sahara India Airlines with 8%. Indian Airlines are now also active on international routes (30% of their income) and practically debt-free after state aid. Air India however, is in a financially difficult situation. Discussions about a possible merger of the two companies as well as about privatization do not stop.
Indian Airlines carried 7.7 million passengers with its 59 aircraft in 1995/96, Air India with 26 aircraft 2.85 million passengers. The share of Indian companies in the international flight movements to and from India was only 22% in 1995, the load factor of the flights is also rather low at 62%. The route network and the passenger volume increased steadily until 1996, meanwhile all larger and most medium-sized cities have regular ones Flight connections with each other. 5 of the 88 civil airports operate internationally (Bombay, Delhi, Calcutta, Madras and Trivandrum), other airports are served directly by charter planes). The international airports had a passenger volume of 26 million passengers in 1995/96.
With 150,000 post offices spread across the country and around 600,000 employees, India has the largest postal system in the world.
In 1996 every third village had a public telephone connection, and in 1999 there were around 31 million connections in total. An increase of 23.7 million is planned in the 9th five-year plan. The penetration would then be 5.11%.
Despite the opening of the telecommunications market to private investors, the state holds Department of Telecommunication (DoT) still 95% of the landline connections and is also the responsible regulatory authority. The mobile network is operated by 21 private companies for around 1 million subscribers and is mainly concentrated in the metropolitan areas of Delhi, Bombay, Madras and Calcutta. Foreign investors have withdrawn from the sector because of rather poor profit prospects.
Internet services are from Department of Telecommunications(DOT) and from the Videsh Sanchar Nigam Ltd. (VSNL), the state company for international telecommunications.
- Federal Office for Foreign Trade Information (bfai): Economic Development India 1998/99
- Rothermund, Dietmar (Ed.) (1995): India: Culture, History, Politics, Economy, Environment. A manual, Munich
- Encyclopedia Britannica: India - The Economy.
- Microsoft Encarta: India Economy
- Parikh, Kirit (Ed.) (1999): India Development Report 1999-2000, New Delhi
- Zingel, Wolfgang-Peter: India. Economy at a Glance (South Asia Institute at Heidelberg University, Department of International Economic and Development Policy)
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