India Political and Economic Outlook 2010-2014
India's General Outlook for 2011-2014
This hub takes a brief look at the political and economic outlook of India for 2011 to 2014. The main sources of this outlook are the Economist Intelligence Unit (EIU) and Country Watch. The following is a general summary of EIU's forecasted outlook for India through 2014
- Despite its lack of a reliable parliamentary majority, the Indian National Congress-led United Progressive Alliance (UPA) coalition government is expected to serve a full second term that will run until 2014.
- Although the government survived a parliamentary no-confidence vote in April 2010, a nationwide strike in July against high food and petrol prices showed that the opposition will continue to make life difficult for the UPA.
- The Economist Intelligence Unit expects the government to meet its budget deficit target of 5.5% of GDP for fiscal year 2010/11 (April-March). Public expenditure will continue to rise rapidly in 2010-14.
- The Reserve Bank of India (RBI, the central bank) will continue to tighten monetary policy during the remainder of 2010 and in 2011. Monetary policy will return to a more neutral stance in 2012-14.
- Real GDP on an expenditure basis is forecast to expand by 8.4% in 2010/11 and 8.6% in 2011/12, compared with 7.7% in 2009/10. Growth will average 8.7% a year in 2012/13-2014/15.
- Consumer price inflation is forecast to slow from 11.7% in 2010 to 6.4% in 2011, owing to the high base in 2010. It will average 5.3% a year in 2012-14.
India Fun Facts and Vital Statistics
CultureGrams reports the following fund facts and other vital signs about the country of India -
India Fun Facts
Covering 1,269,338 square miles (3,287,590 square kilometers), India is roughly one-third the size of the United States. India has the second largest population in the world and is one of the world's most ethnically diverse countries. The nation is home to several hundred languages, of which 33 have 100,000 or more speakers. India is the birthplace of Buddhism, Hinduism, Jainism, and Sikhism.
India Vital Statistics
Capital: New Delhi
Current Time: 12:38 AM
Population: 1,173,108,018 (rank=2)
Area, sq. mi.: 1,269,219 (rank=7)
Area, sq. km.: 3,287,263
Human Dev. Index rank: 134 of 182 countries
Adjusted for women: 114 of 155 countries
Real GDP per capita: $2,753
Adult literacy rate: 77% (male); 55% (female)
Infant mortality rate: 30 per 1,000 births
Life expectancy: 62 (male); 65 (female)
Currency: Indian rupee
India's History - A Brief Look
In brief sketch about the history and background of India, Country Watch analysts reported the following:
India is the largest democracy and second most populous country in the world.
Its history dates back to 2500 B.C.E., when the inhabitants of the Indus River valley developed an urban culture based on commerce and sustained by agricultural trade.
Aryan tribes from the northwest infiltrated onto the Indian subcontinent about 1500 B.C.E., bringing the indigenous beliefs that evolved into Hinduism, and various empires followed.
Arab incursions starting in the 8th century and Turkic in the 12th were followed by those of European traders beginning in the late 15th century. By the 19th century, Britain had assumed political control of virtually all Indian lands. Nonviolent resistance to British colonialism led by Mohandas Gandhi brought independence in 1947, and Pakistan was established as a separate Muslim state because of Muslim-Hindu hostilities.
There have been three wars between India and Pakistan since 1947, two of them over the disputed territory of Kashmir. A third war between the two countries in 1971 resulted in East Pakistan becoming the separate nation of Bangladesh.
India is now one of the fastest growing economies in the world with a large skilled workforce.
The country has a burgeoning urban middle class and has made great strides in fields such as information technology. However, India's economic growth remains constrained by inadequate infrastructure, bureaucracy, labor market rigidities, and regulatory and foreign investment controls.
About 60 percent of the population is still living close to, or below, the poverty line.
India Political Outlook for 2010-2014
As reported in the October 2010 Economist Intelligence Unit update, the Indian National Congress led by the United Progressive Alliance (UPA) coalition did well to lead a strong economic recovery after the global recession in 2008-2009. However, they were less than impressive in the political sphere and because of that fact India's political outlook for 2010-2014 may be rocky.
While many hoped that the government led by prime minister Manmohan Singh and UPA coalition would be more effective in the second term (2009-2014) than in its first (2004-2009), difficulty passing important legislation demonstrates that the political situation is less than rosy.
Moreover, EIU analysts observed that the rocky political outlook is probably exacerbated by the fact that the UPA coalition lacks a firm majority in the lower house of parliament and is in the minority in the upper house.
In April 2010 Singh and his group survived a no confidence vote; however, a nationwide strike in July 2010 against high food and gas prices demonstrates that those in power will continue to be challenged by the opposition parties.
According to EIU, in the early part of the forecast period the UPA-led government will face several substantial and formidable challenges including
- Slowing the rate of inflation;
- Delivering on its promise of inclusive growth;
- Dealing with an escalating Maoist insurgency in eastern and central India;
- Making more progress on fighting corruption;
- Keeping control over the uprising in Kashmir.
Even though the general public gives credit to Singh and his coalition for the economic recovery, other fears impacting India's political outlook for 2010-2014 include the concern that instability will mount if the rate of inflation cannot be brought under control.This was made glaringly clear by the success of the opposition parties to shut down the country with strikes in July 2010.
During the forecast period, India's political outlook for 2010-2014 will also be heavily impacted by the burgeoning Maoist movement and continuing problems with neighboring Pakistan. Subsequently, India faces both domestic and foreign terrorist threats. However, the EIU analysts commented that India's democracy seems entrenched and resilient, thus the possibility of political collapse is lower than in most other Asian countries.
India Economic Outlook for 2010-2014
In light of the fact that prime minister Singh and the UPA coalition survived the no confidence vote, India's economic outlook for 2010-2014 should remain generally positive. This means the economic policies for the forecast period will be consistent with the direction that was pursued in the first five years of Singh's coalition government which led to steady growth and expansion.
Since the beginning of 2010, the Indian economy surged in activity and that surge is expected to continue through the forecast period. Accordingly, EIU analysts forecast that India's real GDP will grow 8.4% in 2010/2011, 8.6% in 2011/2012, and 8.7% per year in 2012/2013 to 2014/2015. So, India's economic outlook for 2010-2014 seems to be favorable.
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