Country Forecast India

  • ID: 2138634
  • July 2014
  • Region: India
  • 52 Pages
  • The Economist Intelligence Unit
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Background: India gained independence in 1947, after two centuries of British colonial rule. Partition at the same time created the state of Pakistan, with which India has fought three wars, two over the disputed territory of Kashmir. India is the second most populous country in the world, with more than 1.2bn people in 2013. Its economy is the 11th-largest in the world when measured in nominal US dollars, but it is the third-largest when measured at purchasing power parity exchange rates. The large and inefficient public sector coexists with a sizeable and diversified private sector.

Political structure: India has been a democracy since independence. The growing importance of regional parties has made coalition government the norm at federal level for three decades. In 2014 the Bharatiya Janata Party reversed this trend by winning a majority in the general election. Democratic procedures are, on the whole, respected. The prime minister is the leader of the government, requiring the support of a majority in parliament. The president is the head of state and, although limited in executive power, can influence the formation of governments at both state and national levels when READ MORE >

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Country Forecast India

India--highlights: Political outlook

India--highlights: Demographic outlook

India--highlights: Business environment outlook

India--highlights: Economic outlook

India--highlights: Market opportunities

India--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability
Regional parties will retain significant power

Political outlook: Political and institutional effectiveness
The NDA's majority will imply more independent policymaking

Political outlook: Election watch

Political outlook: Key players to watch
Narendra Modi
Sonia Gandhi
Rahul Gandhi
Amit Shah

Political outlook: International relations

Demographic assumptions
The government aims to reduce the fertility rate to 2.1 children per woman
The National Health Policy will focus on developing primary care.

Business environment outlook: Business environment rankings
Foreign trade and exchange control policy will improve in 2014-18

Business environment outlook: India's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
The labour market

Business environment outlook: Macroeconomic environment
Balancing inflation with reviving economic growth will be a key challenge
Economic growth could exceed 8% if the government delivers on its promises

Business environment outlook: Policy towards private enterprise and competi
There will be a focus on minimum government and good governance
Deregulation of state-owned enterprises will be prioritised

Business environment outlook: Policy towards foreign investment

Business environment outlook: Foreign trade and exchange controls
EU-India trade negotiations will resume in 2014-18

Business environment outlook: Taxes
Tax reform will include a new direct tax code

Business environment outlook: Financing
High levels of NPLs will pose a significant risk to banking sector health

Business environment outlook: The labour market
Labour reforms will provide a growth impetus to the manufacturing sector

Business environment outlook: Infrastructure
Land reform will be necessary for infrastructural development
The government will strive to meet a target 25 km of new highway a day
Alternative energy sources will partially alleviate chronic energy shortages

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in India
Stocks and flows
Origin and distribution

Economic forecast: In focus: The growth budget that fell short of expectati

Market opportunities: Market outlook
The growing middle class offers potential for manufacturers
Income distribution will determine market potential

Market opportunities: Consumer expenditure
Food and beverages will dominate the consumer expenditure basket

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook
An upsurge in remittances will benefit the economy
Economic disparities between states will remain wide
Success will remain concentrated in a few high-tech industries
Poverty will pose a political challenge if growth is not balanced

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model

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