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Country Forecast India

  • ID: 2138634
  • Country Profile
  • Region: India
  • 48 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 an estimated 1.34bn people in 2017, according to the UN. Its economy is the sixth largest in the world when measured in nominal US dollars, but the third largest at purchasing power parity exchange rates.

Political structure: India has been a democracy since independence. At federal level, the Bharatiya Janata Party (BJP) holds a majority in the Lok Sabha (the lower house of parliament), although it governs in a broader coalition, the National Democratic Alliance (NDA). India follows the Westminster model of parliamentary government, with a prime minister as head of government, and a president as the head of state. The country has a quasi-federal structure, with state governments having their own legislatures and enjoying a fair degree of freedom.

Policy issues: Progress on reform is constrained by a lack of consensus across the political spectrum over the nature and scope of economic reforms. The NDA administration has made headway in speeding up infrastructure projects and undertaking piecemeal liberalisation of outdated regulations, but broader reform is hindered by the NDA's lack of a majority in the Rajya Sabha (the upper house). The Economist Intelligence Unit expects the NDA to obtain a majority in the upper house after 2020, which will make it easier to push legislation through parliament.
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Country Forecast India

India--highlights: Political outlook

India--highlights: Business environment outlook

India--highlights: Economic outlook

India--highlights: Demographic 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

Political outlook: Election watch

Political outlook: International relations

Business environment outlook: Business environment rankings

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
Taxes
Financing
The labour market
Infrastructure
Technological readiness

Business environment outlook: Macroeconomic environment
The economy will record robust growth in 2018-22

Business environment outlook: Policy towards private enterprise and competition
The government's privatisation plan will be only partially successful

Business environment outlook: Policy towards foreign investment
Policy changes will encourage foreign investment in the automotive sector

Business environment outlook: Foreign trade and exchange controls
Most restrictions on the free movement of capital will stay in place in 2018-22
India will remain fairly protectionist

Business environment outlook: Taxes
Corporate tax rates will fall gradually over the forecast period

Business environment outlook: Financing
The share of private banks in total lending will rise in 2018-22
Priority-sector lending targets will remain in place

Business environment outlook: The labour market
Efforts to revamp labour laws will meet political resistance

Business environment outlook: Infrastructure
Significant gaps between demand supply in infrastructure will persist
Flagship infrastructure projects are likely to miss completion targets

Business environment outlook: Technological readiness
Internet speeds will remain slow by global standards

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends
Land-acquisition challenges will inhibit faster growth in the industrial sector

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

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

Demographic assumptions
High levels of gender disparity will increase the risk of social unrest
The agricultural sector will continue to employ the bulk of the labour force
The pace of job growth in manufacturing will be sluggish

Market opportunities: Market outlook
The middle class will continue to grow throughout the forecast period
Growth in the e-commerce segment will be robust

Market opportunities: Consumer expenditure
Local factors will continue to shape consumer preferences

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook
A skills mismatch will persist in the workforce
Migration from poorer states could cause a spike in social tensions
The judicial system will remain independent
Services will continue to dominate the economy in the longer term

Long-term outlook: Long-term trends
Climate change and sustainability
Migration and urbanisation

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
Abbreviations

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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