Economy and trade

economyOnce recognizing the amazing wealth of Indians, the Afghan invader Mohammad Ghauri said: “I have heard that there is a country of people where the mountains are made of gold, the cultivable lands are made makhmal and the children of this land play the toy balls made of diamond.”

As the painstaking statistical work of the Cambridge historian Angus Maddison has shown, India was the richest country in the world till 1,700 century AD. India’s share of world income collapsed from 22.6% in 1700, to as low as 3.8% in 1952. Indeed, at the beginning of the 20th century, “the brightest jewel in the British Crown” was left the poorest country in the world. However today, India is the second fastest growing economy in the world.

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[su_tab title=”GDP”]

Countries with highest Gross Domestic Product in the world (2014-15):
Source: International Monetary Fund (USD trillion)

Country GDP (based on PPP) GDP (official exchange rates)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
China
USA
India
Japan
Germany
Russia
Brazil
Indonesia
France
United Kingdom
Mexico
Italy
South Korea
Saudi Arabia
Canada
$17.632
$17.416
$7.277
$4.788
$3.621
$3.559
$3.073
$2.674
$2.587
$2.435
$2.144
$2.066
$1.79
$1.652
$1.579
$9.24
$16.08
$1.9
$4.9
$3.7
$2.1
$2.3
$0.87
$2.8
$2.7
$1.3
$2.1
$1.12
$0.749
$1.8

Notes:
– Purchasing Power Parity (PPP) involves the use of international dollar weights applied to quantities of goods and services produced in a given economy

India sector-wise contribution (GDP and labour)
Source: Indian government sources

Sector Contribution to GDP (2010-11) India’s 500 million labour by occupation (2011)
Agriculture
Industry
Services
15%
28%
57%
52%
14%
34%

India’s GDP and per capita GDP (Rupee terms)
Source: Reserve Bank of India

Year GDP (at current prices) Rs cr. Per capita annual income Rs.
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03

71,57,412
62,31,200
53,03,567
46,93,602

34,195,278


22,36,128
60,972
53,331


29,786
27,784
25,696
23,890
22,413
20,996

As per PPP, India’s $3,700 per capita income of 2011 (est.) compared with U.S. $48,100, Germany $37,900, Japan $34,300 and China $8,400. As per a 2009 government estimate, 37% of India’s population lived below the poverty line.

Major Finance indicators, March 2011
Source: Ministry of Finance, India (In Rs lakh crores)

Indicators
(Centre + state combined)
1990-91 2000-01 2010-011
(est.)
Total Expenditure
Total Revenue (tax/ non-tax)
Deficit
1.55
0.98
0.57
5.52
3.47
2.05
19.74
13.7
6.04

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[su_tab title=”Reserves”]

Worldwide Foreign Exchange Reserves
Source – IMF (March 2015)

Country Reserves (including Gold and SDR) (in US$ billions)
China
Japan
Saudi Arabia
Switzerland
Taiwan
Brazil
South Korea
Russia
India
Hong Kong
Singapore
Mexico
Germany
Algeria
Thailand
France
Italy
UK
Turkey
USA
Libya
3,899
1,261
734
586
421
363
362
355
343
333
251
198
194
193
155
179
147
139
131
123
121

Worldwide Gold Reserves
Source – World Gold Council (March 2015)

Country Gold reserves
(in thousand tons)
USA
Germany
Italy
France
Russia
China
Switzerland
Japan
Netherlands
India
Turkey
Taiwan
Portugal
Venezuela
Saudi Arabia
UK
Lebanon
Spain
8.134
3.384
2.452
2.435
1.208
1.054
1.040
0.765
0.613
0.558
0.530
0.423
0.383
0.368
0.323
0.310
0.287
0.282

Note: This list does not include gold reserves of IMF, EU central bank, Bank for International settlements etc.

Non-Resident Indian (NRI) inflows, 2014
Source: World Bank Global Economic Prospects report

India leads the world in remittances by over 20 million overseas workers. China is number two, with $64 billion remittances in 2014.

March year-end Total NRI deposits outstanding
(US $ Billion)
1991
1998
2000
2003
2004
2006
2010
2014
13.99
20.37
21.68
28.27
33.27
35.13
49.88
70.38

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[su_tab title=”Debt”]

Indian government balance sheet (Gross public debt was 62% of GDP)
Source: Ministry of Finance

Liability 2010 (USD b) 2000 (USD b)
Public Debt
Internal Debt
523
493
178
165

external debtIndia’s external debt
Source: Ministry of Finance

(includes long-term debt like IMF loans, Commercial borrowings, export credit, NRI deposits, Rupee debt AND short term debt)

Year (as of) External debt (US $ billion)
Dec 2011
Mar 2011
Mar 2010
Mar 2009
2008
2007
2006
2004
1999
1991
1990
1980
335
306
261
225
224
172
139
111.7
96.89
83.8
70.2
20.6

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[su_tab title=”Trade”]

foreign tradeIndia’s share in the global trade, has increased from 0.4% in 1980-95 to 1.1% in 2004 to 1.5% in 2006-07 and about 2% in 2014. Foreign trade, as a percentage of GDP (in rupee terms) was over 45% in 2010, up from 14.1% in 1990-91.

Total foreign trade by India:
Source: Indian Ministry of Commerce and Industry (Rs lakh Cr.)

Year Exports Imports
1997-98
2002-03
2005-06
2007-08
2008-09
2009-10
2010-11
1.30
2.50
4.55
6.56
8.41
8.46
11.43
1.55
2.97
6.31
10.12
13.75
13.64
16.84

World’s top exporters (2011)
Source: World Trade Organization

Country Export value (US$ billion)
European Union
China
USA
Germany
Japan
France
Netherlands
South Korea
Italy
Russia
UK
Canada
Hong Kong
Singapore
Saudi Arabia
Mexico
Belgium
Spain
Taiwan
Switzerland
India (rank 19)
Australia
2,131
1,898
1,511
1,408
801
578
577
557
522
499
495
451
428
409
351
336
332
331
325
308
304
266

exportsIndia’s export growth is the second fastest in the world after China’s. India’s services contributed about 35% of the total exports as of 2010-11. India’s chief exports include computer software, agricultural products (cashews, coffee, tea, pulses, spices and tobacco), cotton yarn and clothing (ready-made garments and silk), gems and jewellery, cut diamonds, handicrafts, iron ore, mica, jute products, leather goods, shrimp. The country also exports industrial goods, such as appliances, electronic products, transport equipment, light machinery as well as chemical and engineering products. India imports rough diamonds, cuts them, and exports the finished gems. India’s export partners are US 12.6%, UAE 12.2%, China 8.1%, Hong Kong 4.1% (2010)

World’s top importers (2011)
Source: World Trade Organization

Country Import value (US$ billion)
European Union
USA
China
Germany
Japan
France
UK
Italy
South Korea
Netherlands
Hong Kong
India
2,344
2,314
1,744
1,339
795
686
655
541
526
514
493
489

importsCapital goods and fuel, each account for more than a quarter of Indian imports. Other imports of India include edible oils, fertilizer, food grains, iron and steel, industrial machinery, professional instruments and transportation equipment. Chemicals, precious and semi-precious stones and non-ferrous metals are the other major imports. India’s main import partners included China 12.4%, UAE 6.5%, Saudi Arabia 5.8%, US 5.7%, Australia 4.5% (2010).

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[su_tab title=”Forex rates”]

Foreign Exchange Rates (per US $)
Source – International Monetary Fund

Year Indian Rupee
(annual averages)
1950
1960
1970
1975
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
2000
June 2002
Jan 2004
Aug 2005
Jan 2006
Apr 2007
Apr 2010
Apr 2011
May 2012
June 2012
July 2013
April 2015
4.79
4.77
7.58
8.41
7.89
12.37
17.51
22.74
25.92
30.49
31.37
32.43
35.43
36.31
41.26
45.0
49.04
45.6
43.45
44.04
41.01
45

53.45
57
60
62

The Indian rupee is significantly, albeit not fully, convertible for current account balances. By and large, the Indian exchange control regime is flexible to allow the market to play an important role in the determination of the exchange rate.

Foreign Direct Investment

According to UNCTAD’s report, India’s is ranked 9th most attractive investment destination in the world, in terms of FDI (Foreign Direct Investment). FDI as a percentage of GDP has increased from 0.9% in 2005 to 2.8% in 2008 (higher than China’s)

Foreign funds inflow, 2011
Source: Reserve Bank of India

Foreign Direct Investment (excludes portfolio investments) Foreign Investment Inflows (Includes direct & portfolio investments)
1990-1998
1998-2003
2010-2011
US$ 10.6 billion
US$ 13.43 billion
US $30 billion
US$ 26.53 billion
US$ 28.54 billion
US $ 100 billion

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