India's Macro Economic Indicators (as of July 2005)

Source: India in Business

Indian Economy

· Fourth largest economy (US$ 3 trillion GDP) in terms of Purchasing Power Parity after USA, China and Japan.

· The fundamentals of the Indian economy have become strong and stable. The macro-economic indicators are at present the best in the history of independent India with high growth, healthy foreign exchange reserves, and foreign investment and robust increase in exports and low inflation and interest rates.

· A unique feature of the transition of the Indian economy is that it has become the second fastest growing economy of the world in the year 2003 - 04. In the financial year 2004 - 05 the GDP growth has averaged 6.9% (estimated). India has recorded one of the highest growth rates in the 1990s. The target of the 10th Five Year Plan (2002-07) is 8% growth rate. India's services sector grew by 9.4% in 2004-05.

· The unique feature of Indian economy has been high growth with stability. The Indian economy has proved its strength and resilience when there have been crisis in other parts of the world including in Asia in recent years.
· The foreign exchange reserves have reached a record level of US$ 145.55 billion in September, 2005. The comfortable situation of forex reserves has facilitated further relaxation of foreign exchange restrictions and a gradual move towards greater capital account convertibility. According to IMF (2003 report) India's Forex Policies are in line with global best practices.

· Foreign Exchange Reserves (US$ 145.55 bn) now far exceed Foreign Debt (US$ 123.3 bn as on March, 2005).
· Short-term debt is less than 4 per cent of the reserves.

· In March 1991 Forex Reserves including gold stood at $5.8bn as against external debt of $83 billion.

· The external debt to GDP ratio has improved significantly from 38.7% in 1992 to 17.4% in end of March 2005. This is one of the lowest among developing economies. External debt in March 2005 was US$ 123.3 bn. Of this long-term NRI deposits is US$ 32.5 billion, commercial borrowings US$ 27 billion, multilateral debt US$ 31.7 billion, and bilateral debt US$ 17.2 billion.

· After a surplus in Current account for two fiscal years, 2002-03 and 2003-04, the current account showed a deficit of US$ 6.4 bn in 2004-05.

· Given the large foreign exchange reserves, the Government has made premature repayment of US$ 3 billion of 'high-cost' loans to the World Bank and the Asian Development Bank and is considering further premature repayment of other loans.

· The Government has decided to (i) discontinue receiving aid from other countries except the following nine: Japan, UK, Germany, USA, EU, France, Italy, Canada and the Russian Federation and (ii) to make pre-payment of all bilateral debt owed to all the countries except the ones mentioned above.

· Since July 2003, India has become a net creditor to IMF, after having been a borrower in the past.

· The Government has written off debts of US$ 30 million due from seven heavily indebted countries as part of the "India Development Initiative" announced in February 2003. The interest rate continues to be reduced and is around 6%. This is the lowest in the last thirty years and it is stimulating consumption and investment.

· After reaching an all-time low of Rs.49.06 per US dollar in May, 2002, the rupee has strengthened against the dollar reaching a rate of US$ 1 = Rs. 43.81(September 12 2005)

· The inflation rate has been contained at 5.5 per cent in 2003-04.The inflation rate in 2004-5 has been slightly higher at 6% but has slowed down at the beginning of the current year 2005 - 06 at 5.5%.