INDIAN ECONOMY

2005-04-19T01:52:00.000-07:00

The current growth in the Indian economy is strong, hence a further pick-up in economic growth is imminent. The economy grew at 8.5%, which is the fastest clip in almost 15 years, this happened because of bountiful rains that boosted rural incomes and swelled demand for manufactured goods.

If we take a quick snapshot of some key indicators of Indian economy we will be able to understand how the growth is taking place. The size of the Indian economy is about $510 billion. Foreign direct investment (FDI), inflows into India was $4 billion in 2004. The silver lining here, of course, is India’s emergence as one of the top three favoured destinations for FDI.

Till date, we export just about five items — gems and jewellery, engineering goods, textiles and garments, chemicals and agriculture, these all give the combined exports of $49 billion which accounts for close to 80% of India’s goods exports. e.g It was iron ore (read low-value raw material for making steel) which accounted for 28% of the total merchandise exports. Its exports doubled to $824 million in 2003-04 over the previous year.

India ranked a distant 31; with $56 billion merchandise exports, less than 15% of China’s exports if we compare the exports of both countries. But India has done pretty well in services, led by software exports, which are expected to top $18 billion in 2004-05. This is reflected in the same WTO report, where India ranks 10th, with $25 billion worth of exports in commercial services. The services sector, which contributes about 50 per cent to India's GDP, is expected to grow by 7.5 per cent this year.

India is already becoming a global hub for car manufacturers such as Hyundai, backed by a buoyant domestic demand. Similarly, in the telecom sector, it can be amongst the top three mobile handset manufacturers, given the rapidly increasing mobile tele-density within the country. Thus all these facts are clearly signaling a further increase in the growth rate of the economy in the near future, which is really beneficial for the country.

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