Economically, India often seems like two separate countries:
village India, supported by primitive agriculture, where
tens of millions—one fourth of population—live
below the poverty line; and urban India, one of the
most heavily industrialized areas in the world, with
an increasingly middle-class population. Agriculture
(about 55% of the land is arable) makes up some 25%
of the gross domestic product (GDP) and employs almost
70% of the Indian people. Vast quantities of rice are
grown wherever the land is level and water plentiful;
other crops are wheat, pulses, sugarcane, jowar (sorghum),
bajra (a cereal), and corn. Cotton, tobacco, oilseeds,
and jute are the principal nonfood crops. There are
large tea plantations in Assam, Karnataka, Kerala, and
Tamil Nadu. The opium poppy is also grown, both for
the legal pharmaceutical market and the illegal drug
trade; cannabis is produced as well.
Fragmentation
of holdings, outmoded methods of crop production, and
delays in acceptance of newer, high-yielding grains
were characteristic of Indian agriculture in the past,
but since the Green
Revolution of the 1970s, significant progress has
been made in these areas. Improved irrigation, the introduction
of chemical fertilizers, and the use of high-yield strains
of rice and wheat have led to record harvests, and India
became an net exporter of grain in the early 1980s.
The subsistence-level existence of village India, ever
threatened by drought, flood, famine, and disease, has
been somewhat alleviated by government agricultural
modernization efforts, but although India's gross food
output is sufficient for the the needs of its enormous
population, government price supports and an inadequate
distribution system still threaten many impoverished
Indians with hunger and starvation. An estimated 40%
of the population is too poor to afford adequate nourishment
regularly.
India
has perhaps more cattle per capita than any other country,
but their economic value is severely limited by the
Hindu prohibition against their slaughter. Goats and
sheep are raised in the arid regions of the west and
northwest. Water buffalo are raised and there is a large
fish catch.
India
has forested mountain slopes, with stands of oak, pine,
sal, teak, ebony, palms, and bamboo, and the cutting
of timber is a major rural occupation. Aside from coal,
iron, mica, manganese, and ilmenite, in which the country
ranks high, India's mineral resources, although large,
are not as yet fully exploited. The Chota Nagpur Plateau
of S Jharkhand and the hill lands of SW West Bengal,
N Orissa, and Chhattisgarh are the most important mining
areas; they are the source of coal, iron, mica, and
copper. There are workings of magnesite, bauxite, chromite,
salt, and gypsum. Despite oil fields in Assam and Gujarat
states and the spectacular output (since the 1970s)
of Bombay High offshore oil fields, India is deficient
in petroleum.
Industry
in India, traditionally limited to agricultural processing
and light manufacturing, especially of cotton, woolen,
and silk textiles, jute, and leather products, has been
greatly expanded and diversified in recent years; it
employs about 15% of the workforce. There are large
textile works at Bombay and Ahmadabad, a huge iron and
steel complex (mainly controlled by the Tata family)
at Jamshedpur, and steel plants at Rourkela, Bhilainagar,
Durgapur, and Bokaro. Bangalore has electronics and
armaments industries. India also produces large amounts
of machine tools, transportation equipment, chemicals,
and cut diamonds (it is the world's largest exporter
of the latter) and has a significant computer software
industry. Its large film industry is concentrated in
Bombay, with other centers in Calcutta and Madras. In
the 1990s the government departed from its traditional
policy of self-reliant industrial activity and development
and worked to deregulate Indian industry and attract
foreign investment. Since then the service industries
have grown; international call centers provide employment
for an increasing number of workers.
Most
towns are connected by state-owned railroad systems,
one of the most extensive networks in the world. The
train system is made mainly of broad-gauge track (5
ft/2 m) but includes a variety of rail gauges, which
makes frequent transshipment necessary; the country
is in the process of converting all tracks to broad
gauge. Transportation by road is increasing, with the
improvement of highways and the introduction of ordinary
and luxury bus service on long-distance routes, but
in rural India the bullock cart is still an important
means of transportation. There are international airports
at New Delhi, Calcutta, Bombay, and Madras. The leading
ports are Bombay, Madras, Calcutta, Kochi, and Vishakhapatnam.
The leading exports are gems and jewelry, clothing,
engineering goods, chemicals, computer software, cotton
thread, fabric, and handicrafts. The chief imports are
machinery, petroleum, fertilizers, and chemicals. India's
major trade partners are the United States, European
Union countries, Hong Kong, Kuwait, Saudia Arabia, and
Japan.
India's economy encompasses traditional village farming, modern agriculture,
handicrafts, a wide range of modern industries,
and a multitude of support services. Overpopulation
severely handicaps the economy and about a quarter of the population is too poor to be able to afford an adequate diet. Government controls have been reduced on imports and foreign
investment, and privatization of domestic output
has proceeded slowly. The economy has posted an excellent average growth rate of 6% since
1990, reducing poverty by about 10 percentage points. India has large numbers of well-educated people skilled in
the English language; India is a major exporter of software services and software
workers; the information technology sector leads the
strong growth pattern. The World Bank and others worry
about the continuing public-sector budget deficit, running
at approximately 10% of GDP in 1997-2002. In 2003 the state-owned Indian Bank substantially reduced non-performing loans, attracted
new customers, and turned a profit. Deep-rooted problems
remain, notably conflicts among political and cultural
groups.
For
much of its post-1947 history, India, under the Congress
Party, ran a socialist economy. Only in the early 1990s
did it begin to open up. The process accelerated once
the Bharatiya Janata Party took power in 1999: Atal
Behari Vajpayee, India's prime minister, opened India
to more foreign direct investment and allowed several
major privatisations.
Economic structure
Two-thirds of India's population work in agriculture
and agriculture, forestry and fishing accounts for around
25% of GDP. However, the majority of landholdings are
farmed at subsistence level and many farming families
live below the poverty line. India has some of the lowest
human development indicators in the world, particularly
in rural areas. At the other end of the scale, India
also has a large number of highly qualified professionals,
as well as several internationally established industrial
groups. Without a rapid and sustained increase in overall
rates of economic growth, reducing poverty will remain
a considerable challenge.
Agriculture
Agricultural
production—mainly foodgrains—accounts for
around one-quarter of GDP (at factor cost) and is an
important determinant of overall economic growth. Total
foodgrain production in 2001/02 (April-March) amounted
to a record 209.2m tonnes, including 89.5m tonnes of
rice and 75.6m tonnes of wheat. However, yields per
acre remain low by international standards. Other major
crops grown include oilseeds, cotton, pulses, sugar,
tea, coffee, rubber, jute and potatoes.
Industry
A
policy of import substitution in the decades after independence
encouraged the development of a broad industrial base.
However, a lack of competition contributed to poor product
quality and inefficiencies in production. Several sectors
have now been opened up to foreign participation under
India's liberalising reform programme, contributing
to a significant expansion in the production of durable
consumer goods, including cars, scooters, consumer electronics,
computer systems and white goods. However, a large proportion
of heavy industry is still publicly owned.
Services
Services
have proved India's most dynamic sector in recent years,
registering rapid growth in telecoms and information
technology (IT). Services accounted for over 48% of
GDP in 2000, including airlines, banks, construction
and small-scale private traders, as well as the public
sector. Moves to privatise state-owned telecoms companies
and the national and international carriers, Indian
Airlines and Air India, are proceeding slowly. The predominance
of inefficient state-owned enterprises, particularly
in the banking sector, remains a constraint to further
growth.
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