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Country Forecast India Product Image

Country Forecast India

  • Published: August 2013
  • Region: India
  • 48 Pages
  • The Economist Intelligence Unit

There is speculation that the Indian National Congress-led United Progressive Alliance (UPA) government will call the next general election early, before the end of the current parliamentary term in May 2014. The next government will again be a coalition, likely to be led by Congress or the main opposition Bharatiya Janata Party (BJP). But the opposition is beset by in-fighting, and so there is a possibility that a third front may emerge. Since late 2012 the UPA government has undertaken a series of reforms to tackle the burgeoning fiscal deficit and create new jobs. However, its efforts will be impeded by its lack of a reliable parliamentary majority. The rate of inflation will remain rapid in 2013-17, with consumer prices rising by an average of 8.1% a year. The current-account deficit, which reached the equivalent of 5% of GDP in 2012, is forecast to narrow in the next five years, to stand at 2.7% in 2017.

On July 30th the government announced its decision to divide the southern state of Andhra Pradesh so as to create Telangana, the country's 29th state. This announcement is expected to fan other dormant statehood movements across the country.

Since mid-July the Reserve READ MORE >

Country Forecast India

India at a glance: 2013-17
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast

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

Political outlook: Political and institutional effectiveness
The influence of state governments and state-level parties on policy will rise
Excessive red tape will continue to encourage corruption

Political outlook: Election watch

Political outlook: Key players to watch
Sonia Gandhi
Rahul Gandhi
Narendra Modi
Nitish Kumar

Political outlook: International relations

Demographic assumptions
India will become the most populous country within the next 20 years
The gender gap remains worryingly wide

Business environment outlook: Business environment rankings
Policy towards foreign investment will see the biggest improvement in 2013-17

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
Reforms will be held back by coalition politics and vested interests

Business environment outlook: Policy towards private enterprise and competi
Corruption will remain a significant constraint on the private sector

Business environment outlook: Policy towards foreign investment
More still needs to be done to encourage FDI in the retail sector

Business environment outlook: Foreign trade and exchange controls
An India-EU free-trade agreement will eventually be signed

Business environment outlook: Taxes
The roll-out of a GST will be delayed
India's tax authorities will target multinational companies

Business environment outlook: Financing
The private sector will become more important in the banking sector

Business environment outlook: The labour market
Labour laws will impose significant costs on business

Business environment outlook: Infrastructure
Better infrastructure will depend on reforms to the approvals process
Power supply will remain a problem despite investment
Alternative energy sources will grow fast but will remain marginal

Economic forecast: Policy trends

Economic forecast: Fiscal indicators

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

Market opportunities: Market outlook
India will be an increasingly important consumer market

Market opportunities: Consumer expenditure
Location and cultural factors influence purchasing decisions

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook
India's relentlessly growing population could prove a mixed blessing
India's rise on the global stage could be impeded by regional developments
Obstacles to reform will remain difficult to overcome in some areas
Upside and downside risks are evenly 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 ranking model

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