India - Overview
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The populist measures adopted in 2008 destabilised state finances. the Government's priority is therefore to reduce its budget deficit and current accounts deficit. The aim of the 2013-2014 budget aims to achieve "inclusive growth" by increasing public spending by 16%. It provides €140m to create a fund for the security and empowerment of women, establish a bank reserved for women, increases the defense budget as part of the modernization of the Indian Army; a tax increase of 10% for the richest parts of the population, a tax increase on certain luxury goods and tobacco and an expansion of the "direct cash transfer" program for the poor. The interim budget for 2014-2015 (adopted in order to cover the government's expenses until its mandate ends in May) plans to reduce the deficit to 4.6% of the GDP and then to 4.1% in the following year. It confirms the goals of budget consolidation, boosting growth and strenghtening the manufacturing sector. The central bank's priority is to control inflation as well as attract foreign capital and limit capital outflow. Industry remains the country's weak point since the sector is struggling with frequent power cuts, a difficult acceess to property and an excessively rigid labour legislation. The finance minister P Chidambaram has also announced a ten-point agenda to make India the third largest economic power by 2043. In parallel, the role of economic growth as a driver of development has been questioned, especially regarding the healthcare and education sectors.
India remains a poor country: the GDP per capita is low, almost 25% of the population still lives below the poverty line and the inequalities are very strong. Half of the children under 5 years of age suffer from malnutrition. Unemployment affects around 7% of the workforce.
Coal is the country's main energy source (India is the third largest world producer of coal). In the manufacturing industry, textile plays a predominant role. In terms of size, the chemical industry is the second largest industrial sector (12% of the GNP).
The services sector is the most dynamic part of the Indian economy. It contributes to more than 55% of its GDP, and it only employs over a fourth of its active population (approximately 471 million workers). The software sector, which grows rapidly, is boosting the export of services and modernizing the Indian economy.
Foreign trade overview
The country has a trade deficit. India imports nearly 80% of its energy needs, and rising oil prices also increased its import bill. In 2013 the deficit diminished significantly due to a drop in imports - especially of gold - and a rise in exports encouraged by the devaluation of the currency against the dollar. In January 2014, the deficit stood at 120 billion USD, as opposed to nearly 170 billion USD for the same period in the previous year.
The main trade partners of India are the European Union, the United Arab Emirates, China and the United States.