DEPENDANCIES IN INDIA

Andaman and Nicobar Islands The Andaman and Nicobar Islands are two groups of islands in the Indian Ocean, extending approximately 970 km (600 mi) N–S and lying about 640 km (400 mi) W of both the Tenasserim coast of Myanmar and peninsular Thailand. Their total area is 8,293 sq km (3,202 sq mi); their population was estimated to exceed 188,000 in the mid-1990s. These islands together form a union territory with its capital at Port Blair. The legal system is under the jurisdiction of the high court of Calcutta. The Andaman Islands extend more than 354 km (220 mi) between 10° and 14°N and 92°12′ and 94°17′ E. Of the 204 islands in the group, the three largest are North, Middle, and South Andaman; since these are separated only by narrow inlets, they are often referred to together as Great Andaman. Little Andaman lies to the south. The Nicobars extend south from the Andamans between 10° and 6°N and 92°43′ and 93°57′ E. Of the 19 islands, Car Nicobar, 121 km (75 mi) S of Little Andaman, holds more than half the total population; the largest, Great Nicobar, 146 km (91 mi) NW of Sumatra, is sparsely populated. The Andamans were occupied by the British in 1858, the Nicobars in 1869; sporadic settlements by British, Danish, and other groups were known previously. During World War II (1939–45), the islands were occupied by Japanese forces. They became a union territory in 1956. That same year, the Andaman and Nicobar Islands (Protection of Aboriginal Tribes) Act came into force; this act, designed to protect the primitive tribes that live in the islands, prohibited outsiders from carrying on trade or industry in the islands without a special license. Six different tribes live in the Andaman and Nicobar Islands, the largest being the Nicobarese. There are lesser numbers of Andamanese, Onges, Jarawas, Sentinalese, and Shompens in the dependency. Access to tribal areas is prohibited. Agriculture is the mainstay of the economy. The principal crops are rice and coconuts; some sugarcane, fruits, and vegetables are also grown. There is little industry other than a sawmill and plywood and match factories, but the government is making plans to promote tourism in the islands. These plans include the construction of a 1,000-bed hotel, a casino, and dutyfree shopping facilities in Port Blair. Lakshadweep The union territory of Lakshadweep consists of the Laccadive, Minicoy, and Amindivi Islands, a scattered group of small coral atolls and reefs in the Arabian Sea between 10° and 13°N and 71°43′ and 73°43′ E and about 320 km (200 mi) W of Kerala state. Their total area is about 32 sq km (12 sq mi). Minicoy, southernmost of the islands, is the largest. In the mid-1990s, the population of Lakshadweep was estimated to exceed 40,000. The inhabitants of the Laccadives and Amindivis are Malayalam-speaking Muslims; those on Minicoy are also Muslim, but speak a language similar to Sinhalese. The islanders are skilled fishermen and trade their marine products and island-processed coir in the Malabar ports of Kerala. The main cottage industry is coir spinning. Politically, these islands were under the control of the state of Madras until 1956. The present territorial capital is at Kavaratti. Judicial affairs are under the jurisdiction of the high court of Kerala.

FAMOUS INDIANS OF INDIA

Siddartha Gautama was (624–544 BC according to Sinhalese tradition; 563?–483? BC according to most modern scholars) later known as the Buddha (“the enlightened one”). Born in what is now Nepal, he spent much of his life in eastern Uttar Pradesh and Bihar, propounding the philosophical doctrines that were later to become Buddhism. Contemporary with the Buddha was Vardhamana (599?–527 BC), also known as Mahavira (“great hero”), a saintly thinker of Bihar from whose teachings evolved Jainism. Some of the noteworthy religious and political leaders were Chandragupta (r.321?–297? BC), founder of the Maurya Dynasty; Asoka (r.273–232 BC), who made Buddhism the religion of his empire; Chandragupta II (r. AD 375?–413), whose era marked a high point of Hindu art and literature; Shivaji (1627?– 80), a hero of much Hindu folklore; Nanak (1469–1539), whose teachings are the basis of Sikhism; and Govind Singh (1666– 1708), the guru who gave Sikhism its definitive form. Akbar (1542–1605) greatly expanded the Mughal Empire, which reached its height under Shah Jahan (1592–1666), builder of the Taj Mahal, and his son, the fanatical emperor Aurangzeb (1618– 1707). Sanskrit grammarian Panini (5th?–4th? cents. BC), wrote the first book on scientific linguistics. The Bengali educator and reformer Rammohan Roy (1772–1833) has been called “the father of modern India.” Swami Vivekananda (1863–1902), founder of the nonsectarian Ramakrishna Mission and a great traveler both in India and abroad, did much to explain the Hindu philosophy to the world and to India as well. Sarvepalli Radhakrishnan (1888–1975), a leading 20th-century Hindu scholar and philosopher, also served as president of India from 1962 to 1967. Another revered religious philosopher was Meher Baba (1894–1969). The rising position of India in science and industry is well exemplified by Jamshedji Nusserwanji Tata (1822–1904), founder of the nation’s first modern iron and steel works as well as many other key industries; the physicist Jagadis Chandra Bose (1858–1937), noted for his research in plant life; Srinivasa Ramanujan (1887–1919), an amazingly original, although largely self-taught, mathematician; Chandrasekhara Venkata Raman (1888–1970), who was awarded the 1930 Nobel Prize for research in physics; Chandrasekhara Subramanyan (1910–1995), also a Nobel Prize laureate in physics, and Vikram A. Sarabhai (1919–71), the founder of the Indian space program. Mother Teresa (Agnes Gonxha Bojaxhiu, 1910–97, in what is now Yugoslavia) won the Nobel Peace Prize in 1979 for her 30 years of work among Calcutta’s poor. In modern times no Indian so completely captured the Indian masses and had such a deep spiritual effect on so many throughout the world as Mohandas Karamchand Gandhi (1869– 1948). Reverently referred to by millions of Indians as the Mahatma (“the great-souled one”), Gandhi is considered the greatest Indian since the Buddha. His unifying ability and his unusual methods of nonviolent resistance contributed materially to the liberation of India in 1947. A leading disciple of the Mahatma, Vinayak (“Vinoba”) Narahari Bhave (1895–1982), was an agrarian reformer who persuaded wealthy landowners to give about 600,000 hectares (1,500,000 acres) of tillable land to India’s poor. Gandhi’s political heir, Jawaharlal Nehru (1889–1964), had a hold on the Indian people almost equal to that of the Mahatma. Affectionately known as Chacha (Uncle) Nehru, he steered India through its first 17 years of independence and played a key role in the independence struggle. Indira Gandhi (1917–84), the daughter of Nehru and prime minister from 1966 to 1977 and again from 1980 to 1984, continued her father’s work in modernizing India and played an important role among the leaders of nonaligned nations. Her son Rajiv (1944–91) succeeded her as prime minister and, in the 1985 election, achieved for himself and his party the largest parliamentary victory since India became independent. A classical Sanskrit writer in Indian history was the poet and playwright Kalidasa (fl. 5th cent. AD), whose best-known work is Shakuntala. In modern times, Rabindranath Tagore (1861– 1941), the great Bengali humanist, influenced Indian thought in his many songs and poems. Tagore received the Nobel Prize in literature in 1913 and through his lifetime wrote more than 50 dramas and about 150 books of verse, fiction, and philosophy. Another Bengali writer highly esteemed was the novelist Bankim Chandra Chatterjee (1838–94). Tagore and Chatterjee are the authors, respectively, of India’s national anthem and national song. The novel in English is a thriving genre; notable modern practitioners include Rasipuram Krishnaswamy Narayan (1906– 2001), Bhabani Bhattacharya (1906–88), and Raja Rao (b.1909) and Khushwaut Singh. Influential poets of the last two centuries include the Bengalis Iswar Chandra Gupta (1812–59) and Sarojini Naidu (1879–1949), known as “the nightingale of India,” a close associate of Gandhi and a political leader in her own right. Modern interpreters of the rich Indian musical tradition include the composer and performer Ravi Shankar (b.1920) and the performer and educator Ali Akbar Khan (b.1922). Zubin Mehta (b.1936) is an orchestral conductor of international renown. Uday Shankar (1900?–1977), a dancer and scholar, did much to stimulate Western interest in Indian dance. Tanjore Balasaraswati (1919?–84) won renown as a classical dancer and teacher. Preeminent in the Indian cinema is the director Satyajit Ray (1921–1992).

TOURISM, TRAVEL AND RECREATION IN INDIA

The national Department of Tourism maintains tourist information offices at home and abroad. It has constructed many facilities for viewing wildlife in forest regions (by minibus, boat, or elephant) and operates tourist lodges in wildlife sanctuaries. The principal tourist attractions are India’s distinctive music, dance, theater, festivals, and cuisines; the great cities of Calcutta, Mumbai (formerly Bombay), and Madras; and such monuments as the Red Fort and Jama Masjid mosque in Delhi, the Taj Mahal at Agra, and the Amber Palace in Jaipur. Tourists and pilgrims also flock to the sacred Ganges River, the Ajanta temple caves, the temple at Bodhgaya where the Buddha is said to have achieved enlightenment, and many other ancient temples and tombs throughout the country. In general, all visitors must have a valid passport and an entry, transit, or tourist visa. Inoculation against cholera is recommended. The big-game hunting for which India was once famous is now banned, but excellent fishing is available, and there are many golf courses. Cricket, field hockey, polo, football (soccer), volleyball, and basketball are all popular, as are pony-trekking in the hill stations and skiing in northern India. All major cities have comfortable Western-style hotels that cater to tourists; in 1999 there were 72,114 hotel rooms with 144,228 beds and a 50% occupancy rate. In 2000, tourist arrivals numbered 2,641,157, with Europe being the most important generating region of tourists to India. Tourist receipts totaled $3.1 billion. As of 1999, the US government estimated the cost of staying in New Delhi at $260 per day. Daily expenses were estimated at $268 in Calcutta, $257 in Mumbai (formerly Bombay), and $215 in Bangalore.

ORGANIZATIONS IN INDIA

Cultural activities, especially traditional arts and crafts, are promoted throughout India by the National Academy of Fine Arts; the National Academy of Music, Dance, and Drama; the National Center for the Performing Arts; and the National Academy of Letters. Other state organizations for the furthering of cultural activities include the Ministry of Information and Broadcasting, the Indian Council for Cultural Relations, and the National Book Trust. There are a great many private cultural and institutional organizations based on religion and philosophy, language (including Sanskrit and Pali), drama, music and dancing, modern writing, the classics, and painting and sculpture. There are a number of scholarly and professional societies and associations focused on education and research in various scientific and medical fields, including the national Indian Medical Association. There are many political, commercial, industrial, and labor organizations, and rural cooperatives. Almost all commercial and industrial centers have chambers of commerce. The Center of Indian Trade Unions and All India Trade Union Congress are umbrella organizations representing the rights of worker’s. Notable national youth organizations include the All India Students Federation, Girl Guides and Scouts of India, Indian National Youth Organization, National Council of YMCA’s of India, Service Civil-Youth Volunteers of India, Student Christian Movement of India, Student Federation of India, The Bharat Scouts and Guides, Tibetan Youth Congress, United Nations Youth Organization of India, and Young Catholic Students of India. National women’s organizations include All India Women’s Conference, Women’s Equal Rights Group, and Women’s Protection League. There are a wide variety of international organizations with chapters in India, including Christian Children’s Fund, Defence for Children International, Habitat for Humanity, the Red Cross, Amnesty International, Kiwanis, and Lion’s Clubs.

MEDIA IN INDIA

All postal and telegraph and most telephone services are owned and operated by the government. International telephone services, both radio and cable, are available between India and all major countries of the world. In 2000, there were 27.7 million telephone lines and 2.93 million cellular phones in use. All-India Radio (AIR), government-owned, operates short- and medium-wave transmission through 148 stations and broadcasts in all major languages and dialects for home consumption. AIR also operates external services in 24 foreign and 36 Indian languages. There are privately licensed radio stations, but they are only permitted to broadcast educational or entertainment programming. News broadcasting by independent stations is prohibited. In 1959, India’s first television station was inaugurated in Delhi, and color television broadcasting was inaugurated in 1982. By the end of 1985, the government’s Doordarshan television network operated 22 broadcasting centers. As of 1999, there were, altogether, 153 AM and 92 FM radio stations and 562 television stations. In 2000, there were 121 radios and 78 television sets for every 1,000 people. The School Television Section broadcasts regular in-school instruction programs on selected subjects. India has a thriving film industry, centered at Mumbai (formerly Bombay), Madras, Calcutta, and Bangalore. Indians are avid film-goers and users of videocassettes. In 2001, there were five million Internet subscribers served by about 43 service providers. The first newspaper in India, an English-language weekly issued in Calcutta in 1780, was followed by English-language papers in other cities. The first Indian-language newspaper (in Hindi) appeared in Varanasi (Benares) in 1845. There are hundreds of newspapers in circulation throughout the country, published in some 85 languages, primarily Hindi, English, Bengali, Urdu, and Marathi. The majority of Indian newspapers are under individual ownership and have small circulations. About 30% are published in Delhi, Mumbai (formerly Bombay), Calcutta, and Madras. The principal national English-language newspapers are the Indian Express, with editions published in Mumbai (formerly Bombay) and 10 other cities, and the Times of India, published in Ahmadabad, Mumbai, Delhi, and three other cities. The largest Hindi daily is the Navbharat Times, published in Mumbai. Principal dailies (with estimated 2002 circulation) are as follows: LANGUAGE CIRCULATION MUMBAI (FORMERLY BOMBAY) Indian Express English 576,200 Times of India English 536,166 The Economic Times English 336,060 Lokasatta Marathi 258,090 Maharashtra Times Marathi NA CALCUTTA Jugantar Bengali 302,000 The Telegraph English 234,500 Aajkaal Bengali 157,713 DELHI Navbharat Times Hindi 418,500 Punjab Kesari Hindi 173,390 Indian Express English 130,000 Hindustan Hindi 98,900 MADRAS The Hindu English 300,320 Thanthi Tamil 297,797 Dinamani Tamil 178,230 CALICUT Mathirubhumi Malayalam 454,351 KOTTAYAM Malayala Manorama Malayalam 1,013,590 (nationwide circulation) KANPUR Dainik Jagran Hindi 409,480 In 1976, the four leading Indian news agencies—the Press Trust of India (English), United News of India (English), Hindustan Samachar (Hindi), and Samachar Bharati (Hindi)— merged to form Samachar, which means “news” in Hindi. The merger followed the cancellation by AIR of subscriptions to all four services. Samachar was dissolved in 1978, and as of 1991 there were three separate agencies: Indian News and Features Alliance, Press Trust of India and United News of India. Freedom of the press has been nominally ensured by liberal court interpretations of the constitution, but the government has long held the right to impose “reasonable restrictions” in the interest of “public order, state security, decency, and morality.” The government’s censorship of newspapers imposed in June 1975 was declared illegal by the courts, and press restrictions proclaimed by Indira Gandhi’s government in 1976 were relaxed by the Janata government in 1977. The independent Press Council, which had been abolished in 1975, was restored in 1979 with the function of upholding freedom of the press. On a day-today basis, the press is essentially unfettered, and news magazines abound in addition to the newspapers.

LIBRARIES AND MUSEUM IN INDIA

The National Library in Calcutta, with over 221 million volumes, is, by far, the largest in the country, and possibly the world. Some of the other leading libraries are the New Delhi Public Library (1.4 million volumes), the Central Secretariat Library in New Delhi (700,000 volumes), and the libraries of some of the larger universities. The Khuda Baksh Oriental Library in Patna, with a collection of rare manuscripts in Arabic, Urdu, and Farsi, is one of 10 libraries declared “institutions of national importance” by an act of parliament. The National Archives of India, in New Delhi, is the largest repository of documents in Asia, with 25 km (16 mi) of shelf space. There is an extensive public library system as well as cultural and religious institutions and libraries throughout the country. Noted botanical gardens are located in Calcutta, Mumbai (formerly Bombay), Lucknow, Ootacamund, Bangalore, Madras, and Darjeeling, and well-stocked zoological gardens are found in Calcutta, Mumbai, Madras, Trivandrum, Hyderabad, Karnataka, and Jodhpur.Most of India’s hundreds of museums specialize in one or several aspects of Indian or South Asian culture; these include 25 archaeological museums at ancient sites, such as Konarak, Amravati, and Sarnath. Some of the more important museums are the Indian Museum in Calcutta, the Prince of Wales Museum of Western India in Mumbai (formerly Bombay), and the National Museum and the National Gallery of Modern Art, both in New Delhi. There are also municipal museums throughout the country and dozens of museums and galleries devoted to prominent South Asian artists. There are science museums in Bhopal, Calcutta, Mumbai (formerly Bombay), and New Delhi. Bhavongor houses the Gandhi Museum, one of several sites devoted to the history of the national hero. In 2001 the Broadcasting Museum was founded in Delhi. There also are thousands of architectural masterpieces of antiquity—the palaces, temples, mausoleums, fortresses, mosques, formal gardens, deserted cities, and rock-hewn monasteries—found in every section of the subcontinent.

EDUCATION IN INDIA

According to 2000 UNESCO estimates, 44.2% of India’s population was illiterate (males, 31.4%; females, 57.9%). This figure represents a slow decline from the 59.2% illiteracy rate reported in 1981. In 1986, the National Education Policy (NPE) was adopted in order to bring about major reforms in the system, primarily universalization of primary education. In 1988, a national literacy mission was launched, following which states like Kerala and Pondicherry achieved 100% literacy. In 1992, the second program of action on education was introduced to reaffirm the 1986 policy with plans to achieve total literacy and free education for all children up to grade eight by the year 2000. As of 1995, public expenditure on education was 3.1% of GDP. Since 1947, public educational facilities have been expanded as rapidly as possible. The main goal has been primary education for children in the 6–11 age group. An emphasis on “basic education”—learning in the context of the physical and cultural environment, including domestic and commercial productive activities—has met with some success. In addition to expansion of primary education, there has been marked increase in educational facilities in secondary schools, colleges, universities, and technical institutes. An intensive development of adult education is under way in both urban and rural areas. Free and compulsory elementary education is a directive principle of the constitution. In 1997, there were 598,354 primary level schools with 1,789,733 teachers and 110,390,406 pupils. There were a total of 68,872,393 pupils, with 2,738,205 teachers, in secondary schools in that same year. The pupilteacher ratio at the primary level was 43 to 1 in 1999. India’s system of higher education is still basically British in structure and approach. The university system is second in size only to that of the United States’ with 150 universities and over 5,000 colleges and higher-level institutions. Educational standards are constantly improving and especially in the area of science and mathematics are as high as those found anywhere in the world. The older universities are in Calcutta, Mumbai (formerly Bombay), and Madras, all established in 1857; Allahabad, 1877; Banares Hindu (in Varanasi) and Mysore (now Karnataka), both in 1916; Hyderabad (Osmania University), in 1918; and Aligarh and Lucknow, both in 1921. Most universities have attached and affiliated undergraduate colleges, some of which are in distant towns. Christian missions in India have organized more than three dozen college-rank institutions and hundreds of primary, secondary, and vocational schools. In addition to universities there are some 3,500 arts and sciences colleges (excluding research institutes) and commercial colleges, as well as 1,500 other training schools and colleges. The autonomous University Grants Commission promotes university education and maintains standards in teaching and research. Many college students receive scholarships and stipends. In 1997, a total of 6,060,418 students were enrolled in institutions of higher learning.

HOUSING IN INDIA

Though pogress has been made toward improving the generally primitive housing in which most Indians live, there are still some deficits in housing supply and access to basic utilities. A number of subsidized, low-cost housing schemes have been launched by the government, but the goal of providing a house for every homeless family cannot be met because of the prohibitive cost. The sixth five-year plan envisaged an expenditure of R94 billion for rural housing and R35 billion for urban housing during 1980– 85, including R11.9 billion to provide shelter for homeless people. The eighth five-year plan (1990–95) called for an investment of $40 billion in housing, with 90% of this sum earmarked for the private sector. The government’s goal is to provide eight million new housing units between 1990 and 2000, two million to fill the existing backlog and six million to meet the needs that will be created by population growth. According to 2001 national statistics, there was a total of about 187,162,172 residential dwelling units nationwide. About 50% were considered to be in “good” condition and 44% were described as “livable.” Many rural dwellings are constructed of mud brick or burnt brick walls with mud floors and a thatched or tiled roof. Urban dwellings are made from concrete or burnt brick. As of 2001, about 55% of dwellings had access to electricity. Only about 36% of all dwellings had indoor bathroom facilities.

HEALTH IN INDIA

Great improvements have taken place in public health since independence, but the general health picture remains far from satisfactory. The government is paying increasing attention to integrated health, maternity, and child care in rural areas. An increasing number of community health workers and doctors are being sent to rural health centers. Primary health care is provided to the rural population through a network of over 150,000 primary health centers and sub-centers that are staffed by trained midwives and health guides. In the mid-1990s, India had nearly 400,000 physicians and almost 700,000 hospital beds. The government’s eighth five-year plan, from 1990 to 1995, included eradication of malaria and control of leprosy, tuberculosis, and cataracts. India also wants to achieve a goal of one hospital bed per 1,000 people. (As of 1999, there were an estimated 0.4 physicians and 0.8 hospital beds per 1,000 people.) In the mid-1990s, there were nearly 40,000 hospitals and dispensaries. In addition, the rural population was served by more than 130,000 subcenters, over 20,350 primary health centers, and nearly 2,000 community health centers. There are also numerous herb compounders, along with thousands of registered practitioners following the Ayurvedic (ancient Hindu) and Unani systems. India has modern medical colleges, dental colleges, colleges of nursing, and nursing schools. More than 100 colleges and schools teach the indigenous Ayurvedic and Unani systems of medicine and 74 teach homeopathy. New drugs and pharmaceutical plants, some assisted by the UN and some established by European and American firms, manufacture antibiotics, vaccines, germicides, and fungicides. However, patent medicines and other reputed curatives of dubious value are still widely marketed; medical advisors of the indigenous systems and their curatives probably are more widely followed than Western doctors, drugs, and medical practices. As of 1999, total health care expenditure was estimated at 5.4% of GDP. Average life expectancy increased from 48 years in 1971 to 63 years in 2000. Infant mortality declined from 135 per 1,000 live births in the mid-1970s to 69 in 2000. The high mortality rate among infants and children is directly linked to size of family, which is being reduced through the small family norm (National Family Planning Program). The overall mortality rate in 2002 was an estimated 8.6 per 1,000 people. The government’s goal is to raise the life expectancy to 64 years. The government of India took stringent measures to prevent plague following outbreaks during 1994. Mandatory screenings at airports and inspections of passengers were instituted. A shortterm multi-drug therapy launched in India in 1995 led to a dramatic fall in the leprosy prevalence. The incidence of malaria was reduced by 98% between 1953 and 1965, but the number of reported cases increased from 14.8 million in 1966 to 64.7 million in 1976 because DDT-resistant strains of mosquitoes had developed. The incidence of malaria in 1995 was 295 cases per 100,000 people. The death toll from smallpox was reduced to zero by 1977 through a massive vaccination program and plague has not been reported since 1967. Between 1948 and 1980, 254 million people were tested for tuberculosis and 252 million received BCG, an anti-tuberculosis vaccine. In 1999, there were 185 reported cases of tuberculosis per 100,000 people. In 994, there was a serious outbreak of pneumonic plague in western India, which spread to others parts of the country, killing thousands. Many diseases remain, especially deficiency diseases such as goiter, kwashiorkor, rickets, and beriberi. However, India’s immunization rates for children up to one year old are high. Data from 1997 shows vaccinations against tuberculosis, 96%; diphtheria, pertussis, and tetanus, 90%; polio, 91%; and measles, 81%. There is also a national system to distribute vitamin A capsules to children because a lack of this vitamin contributes to blindness and malnutrition. As of the mid-1990s, nearly 25% of the country’s children had been reached. Hypertension is a major health problem in India. Between 3.5% and 6.5% of adults have high blood pressure. UN data shows that India is currently the country with the most HIV-infected people. As of 1999 the number of people living with HIV/AIDS was estimated at 3.7 million and deaths from AIDS that year were estimated at 310,000. HIV prevalence was 0.7 per 100 adults.

SOCIAL DEVELOPMENT IN INDIA

India’s governments have established an extensive social welfare system. Programs for children include supplementary nutrition for expectant mothers and for children under seven years of age, immunization and health programs, vacation camps for lowincome families, and training for adolescents. There are also services for the blind, deaf, mentally retarded, and orthopedically handicapped. Programs for women include welfare grants, women’s adult education, and working women’s hostels. Special measures are aimed at rehabilitating juvenile delinquents, prostitutes, and convicts. Begging in public places is forbidden by law in most states and localities. Other social welfare programs cover displaced persons; family planning and maternity care; rural community development; emergency relief programs for drought, flood, earthquake, and other disasters; untouchability (the Harijans); and underdeveloped tribal peoples. The program for old age, disability, and death benefits are covered by a provident fund with deposit linked insurance for industrial workers in 177 categories. The system is partially funded by insured persons and employers, with a small pension scheme subsidized by the government. There is a social insurance system covering sickness and maternity as well as work injury. The law requires employers to pay a severance indemnity of 15 days pay for each year of employment. Although the law prohibits discrimination in the workplace, women are paid less than men in both rural and urban areas. Discrimination exists in access to employment, credit, and in family and property law. Laws aimed at preventing employment discrimination, female bondage and prostitution, and the sati (widow burning), are not always enforced. Wife murder, usually referred to as “dowry deaths,” are still evident. Domestic violence is commonplace and more than half of women surveyed believe it is justifiable and a normal part of married life. Not only does the male population exceed that of females, but India is also one of the few countries where men, on the average, live longer than women. To explain this anomaly, it has been suggested that daughters are more likely to be malnourished and to be provided with fewer health care services. Female infanticide and feticide is a growing problem is a society that values sons over daughters. It is estimated there are nearly 500,000 children living and working on the streets. Child prostitution is widespread. Despite its illegality, child marriages are still arranged in many parts of India. Human rights abuses, including incommunicado detention, are particularly acute in Kashmir, where separatist violence has flared. Although constitutional and statutory safeguards are in place, serious abuses still occur including extrajudicial killings, abuse of detainees, and poor prison conditions. Despite efforts to eliminate discrimination based on the longstanding caste system, the practice remains unchanged.

ECONOMIC DEVELOPMENT IN INDIA

Under a series of five-year plans through 2000, the government became a participant in many industrial fields and increased its regulation of existing private commerce and industry. Long the owner-operator of most railway facilities, all radio broadcasting, post, and telegraph facilities, arms and ammunition factories, and river development programs, the government reserved for itself the right to nationalize any industries it deemed necessary. Yet the government’s socialist approach was pragmatic, not doctrinaire; agriculture and large segments of trade, finance, and industry remained in private hands. Planning is supervised by an eightmember planning commission, established in 1950 and chaired by the prime minister. India’s first four five-year plans entailed a total public sector outlay of R314.1 billion. The first plan (1951–56) accorded top priority to agriculture, especially irrigation and power projects. The second plan (1956–61) was designed to implement the new industrial policy and to achieve a “socialist pattern of society.” The plan stressed rapid industrialization, a 25% increase in national income (in fact, the achieved increase was only 20%), and reduction of inequalities in wealth and income. The focus of the third plan (1961–66) was industrialization, with 24.6% spent on transportation and communications and 20.1% on industry and minerals. Drought, inflation, and war with Pakistan made this plan a major disappointment; although considerable industrial diversification was achieved and national income rose, per capita income did not increase (because of population growth), and harvests were disastrously low. Because of the unsettled domestic situation, the fourth five-year plan did not take effect until 1969. The 1969–74 plan sought to control fluctuations in agricultural output and to promote equality and social justice. Agriculture and allied sectors received 16.9%, more than in any previous plan, while industry and minerals received 18.5%, transportation and communications 18.4%, and power development 17.8%, also more than in any previous plan. The fifth plan (1974–79) aimed at the removal of poverty and the attainment of self-reliance. A total outlay of R393.2 billion was allocated (26% less than originally envisaged), and actual expenditures totaled R394.2 billion. Once again, the emphasis was on industry, with mining and manufacturing taking 22.5%, electric power 18.7%, transportation and communications 17.2%, and agriculture 12.1%. The fifth plan was cut short a year early, in 1978, and, with India enmeshed in recession and political turmoil, work began on the sixth development plan (1980–85). Its goal, like that of the fifth, was the removal of poverty, although the planners recognized that this gigantic task could not be accomplished within five years. The plan aimed to strengthen the agricultural and industrial infrastructure in order to accelerate the growth of investments and exports. Projected outlays totaled R975 billion, of which electric power received 27.1%, industry and mining 15.4%, transportation and communications 12.7%, and agriculture 12.2%. The main target was a GDP growth rate of 5.2% annually. The seventh development plan (1985–90) projected 5% overall GDP growth (which was largely achieved and even exceeded) based on increases of 4% and 8% in agricultural and industrial output, respectively. Outlays were to total R1,800 billion. The eighth development plan (for 1992–97), drafted in response to the country’s looming debt crisis in 1990–91, laid the groundwork for long-term structural adjustment. The plan’s overall thrust was to stimulate industrial growth by the private sector, and thereby free government resources for greater investment in basic infrastructure and human resources development. In addition to liberalized conditions for private and foreign investment, the foreign exchange system was reformed, the currency devalued, the maximum tariff reduced from 350% to 85%, import barriers generally loosened, and those for key intermediate goods removed altogether. Reform of the tax system, reduction of subsidies, and restructuring of public enterprises were also targeted. While the eighth plan generally supported expansion of private enterprise, unlike structural adjustment programs in other developing countries, it did not stipulate a large-scale privatization of the public sector. As the eighth plan came to an end in 1997 most analysts proclaimed it a success; economic growth averaged 6% a year, employment rose, poverty was reduced, exports increased, and inflation declined. The ninth development plan (1997–2002) focused on the redistribution of wealth and alleviation of poverty, the further privatization of the economy and attraction of foreign investment, and the reduction of the deficit. Overall there were improvements in the reform era including an increase in the GDP growth rate from an average of about 5.7% to about 6.1% in the Eighth and Ninth Plan periods, a reduction of the percent in poverty from a third of the population to a fourth, increased literacy from 52% in 1991 to 65% in 2001, and India’s emergence as a competitor in state-of-the-art technologies of the new information age economy. However, persistent inefficiencies—unemployment and underemployment, and welfare deficiencies—remained. Moreover, since 1998 a series of domestic and international shocks have brought a disturbing deceleration to India’s economic growth. In the tenth five-year plan, 2002–2007, the government set the ambitious target of achieving an average 8% growth, above the level achieved during the ninth plan and well ahead of the 5% to 5.5% growth forecast for 2002/03. Other monitorable economic targets include a reduction of the poverty rate by 5% by 2007, and by 15% by 2012; providing gainful and high-quality employment at least equal to the projected increases in the labor force; increase in forest and tree cover to 25%, in 2007 and to 33% by 2012; all villages with sustained access to potable water by 2007; and cleaning of all major polluted rivers by 2007. Agricultural development is viewed as the core element of the tenth plan with attention to sectors most likely to create employment opportunities. These include agriculture in its extended sense, construction, tourism, transport, small-scale industries (SSI), retailing, IT, and communications enabling services. Industrial policy includes continued emphasis on privatization and deregulation. The ambitious 8% annual growth of the tenth plan is considered achievable because of the inefficiencies that have traditionally plagued Indian agriculture and industry. Because the scope for improvement is so wide, both in the public sector and it the private sector, strong growth can be expected from efficiency enhancing policies.

FOREIGN INVESTMENT IN INDIA

Until recently, foreign investment remained closely regulated. Rules and incentives directed the flow of foreign capital mainly toward consumer industries and light engineering, with major capital-intensive projects reserved for the public sector. Under the Foreign Exchange Regulation Act of 1973, which went into effect on 1 January 1974, all branches of foreign companies in which nonresident interest exceeded 40% were required to reapply for permission to carry on business; most companies had reduced their holdings to no more than 40% by 1 January 1976. Certain key export-oriented or technology-intensive industries were permitted to maintain up to 100% nonresident ownership. Tea plantations were also exempted from the 40% requirement. Although the government officially welcomed private foreign investment, collaboration and royalty arrangements were tightly controlled. Due to the restrictiveness of these policies, foreign investment remained remarkably low during the 1980s, ranging between $200 and $400 million a year. Government reform measures in mid-1991 changed this picture significantly. Under the New Industrial Policy, the amount of money invested in the country doubled annually from 1991 to 1995. In 1997 the New Exploration and Licensing Policy (NELP) was announced permitting the participation of foreign oil companies in upstream exploration and development of oil and gas resources. In 2000, the first exploration blocks were awarded in two rounds of bidding, but the major international oil companies (BP, Shell, ExxonMobil) have yet to become involved. Effective 1 April 2001, imports of crude oil and petroleum products were liberalized, with state-run enterprises losing their exclusive right to import certain petroleum products for domestic consumption. Also in 2001, India removed quantitative restrictions (QRs) from 715 items (147 agricultural products, 342 textile items, and 226 manufactured goods, including automobiles) in compliance with WTO standards. Under the New Industrial Policy as amended most sectors have been opened for 100% foreign investment. Sectors such as banking, telecommunications, and print media are still restricted. In some restricted sectors, foreign investment up to 49% or 74% is allowed in the equity of an Indian joint venture company. Recently the requirement prior approval by the Reserve Bank of India was removed from enterprises falling within categories allowing 100% foreign investment. India has eight export processing zones (EPZs) designed to provide internationally competitive infrastructure and duty-free, low-cost facilities for exporters. Foreign investors in some industries can operate in EPZs, export oriented units (EOUs), special economic zones (SEZs) and Software Technology Parks of India (STPIs). Under the Market Access Initiative of 2001, greater access was to SEZs was afforded, although as of 1 April 2003 profits and gains derived from the STPIs and EOUs would only be 90% tax-free. SEZs are regarded as foreign territory for purposes of duties and taxes and sector caps that limit foreign direct investment (FDI) in different industries do not apply in the SEZs. In any case, the corporate tax rate on foreign companies was reduced to 48% to 40%, and the peak customs rate was reduced from 35% to 30%. Other liberalizing steps in the 2002/ 03 budget include the removal of price controls on petroleum products, the removal of price controls from all but 99 drugs, and permission for foreign banks to set up subsidiaries instead of only branches. In November 1999 the government announced its intention to disinvest in 247 state-owned enterprise to the general level of 26% ownership, and established the Ministry of Disinvestment. Although the program has involved the transfer of significant amounts of equity and management control from the government to private sector, it has yet to generate appreciable foreign investment. Despite the trend towards liberalization, India’s foreign investment regime remains complex and relative restricted. Although FDI has increased, average a net $2.64 billion per year 1997/98 to 2001/02, the inflow is still small compared to China, the most relevant comparison, where FDI is running $30 billion to $40 billion a year. The net flow dropped to $1.8 billion in 2000/01, and then recovered to a net $3.4 billion in 2001/02. Net portfolio investment, $1.8 billion in1997/98, turned negative in 1998/99, at net -$100,000. Over the next three years, however, the net portfolio inflow averaged about $3 billion. Statistics on FDI for India show Mauritius as consistently the largest source, averaging about $700 million per year from 1995 to 2000, with the US in second place, averaging about $383 million a year. However, most of the investments credited to Mauritius are actually from American companies seeking to take advantage of its lower withholding taxes or exemptions on payments of royalties, dividends, technical service fees, interest on loans and capital gain by Indian joint venture companies under the terms of the Double Tax Agreement (DTA) between India and Mauritius. From 1991 to 2001 about 10% of FDI has come from the US and 20% from Mauritius. The third-, fourth-, and fifthlargest sources 1995 to 2000 were Japan (annual average $138.3 million), Germany (annual average $115.8 million), and the United Kingdom (annual average 78.2 million). Foreign investment through the stock market is limited to 30% to 40%.

CUSTOMS AND DUTIES IN INDIA

The majority of imports and some exports are subject to tariffs. There are both revenue and protective tariffs, although the former are more important and have long been a major source of central government income. The Indian government has been steadily reducing tariff rates in order to increase trade and investment. A 35% tariff ceiling was set in the 2001–2002 budget. However, India’s tariffs are still among the highest in the world. Additional, special duties can more than double the barriers to importing a product, including textiles and apparel. Gold is taxed at an added rate of 9% at the state level and at least an added 3% at the local level. Indians spend more money on gold than anything but oil, at a level of $7 billion in 2000. India intends to reduce tariff rates to a peak of 20% by the year 2005.

TAXATION IN INDIA

Taxes are levied by the central government, the state governments, and the various municipal governments. The sources of central government tax revenue are union excise duties, the central value-added tax or CENVAT, corporate and personal income (nonagricultural) taxes, wealth taxes, and customs duties. The gift tax was abolished in January 1998. State government sources, in general order of importance, are land taxes, sales taxes, excise duties, and registration and stamp duties. The states also share in central government income tax revenues and union excise duties, and they receive all revenues from the wealth tax on agricultural property. Municipal governments levy land and other property taxes and license fees. Many also impose duties on goods entering the municipal limits. There is little uniformity in types or rates of state and municipal taxes. The lowest level of income subject to taxation was lowered to r50,000 for individuals in 2000, less than half the previous level. Income tax rates are progressive and form four brackets: 0% on taxable income to R50,000 ($1,035); 10% on taxable income between R50,000 and R60,000 ($1,240); 20% on income between R60,000 and R150,000 ($3,000) plus R1000 ($20); and 30% on income above R150,000 plus R19,000 ($390). In 2002/ 03, surcharges of 12% and 17% on incomes of R60,000 and R150,000, respectively, were replaced with a 2% surcharge on all incomes above R60,000. Corporate income tax for domestic companies as of 1 April 2001 is 35% plus a 5% surcharge, and for foreign companies 40% plus a 5% surcharge, down from 48%. The wealth tax is one percent of wealth exceeding R1,500,000 ($31,000). Interest income is taxed at 10%; rental income; capital gains at 20% at 15%; and winnings from lotteries and horse races at 30%. There is not tax on dividends. The central government imposes a 16% value-added tax (VAT) called the CENVAT introduced in 2001/02. The CENVAT has not been fully implemented throughout India; this is scheduled for completion in 2005. For the 2003/04 Union Budget, the excise structure was rationalized into four tiers: exempt items many of which had carried 4% rates (like umbrellas, band-aids, toys, corrective glasses, CDs); 8% (like pressure cookers, buckets, dental chairs); 16% (the standard VAT rate applied to most items), and 24% reduced from 20% to 50% on polyester filament yarn, motor cars, utility vehicles, and replacement tires. Special Excise Duties of 32% are applied to aerated soft drinks and concentrates, pan masala, and chewing tobacco. As of 1 April 2003, instead of being 100% tax free, profits and gains derive from Software Technology Parks of India (STPIs) and export oriented units (EOUs) will only be 90% tax-free.

PUBLIC FINANCE IN INDIA

The government’s financial year extends from 1 April to 31 March, and the budget is presented to the parliament on the last day of February. The executive branch has considerable control over public finance. Thus, while parliament can oversee and investigate public expenditures and may reduce the budget, it cannot expand the budget, and checks exist that prevent it from delaying passage. Budgets in recent decades have reflected the needs of rapid economic development under rising expenditures of the five-year plans. Insufficient government receipts for financing this development have led to yearly deficits and a resulting increase of new tax measures and deficit financing. The Gulf crisis, increased interest payments, subsidies, and relief in 1991 caused the central government’s fiscal deficit to reach 9% of GDP. It fell to 5.7% in 1992–93 but rose to 7.3% of GDP in 1993–94. Principal sources of government revenue are customs and excise duties and individual and corporate income taxes. Major items of expenditure are defense, grants to states and territories, interest payments on the national debt, and economic, social, and community services. High interest rates, 8% inflation, slow industrial growth, and weak foreign investment prompted the government to recommend dramatic new initiatives in the 1997– 98 budget, including cuts in taxes and duties. The proposed budget projected a 15% increase in expenditures to $65 billion and a reduction in the deficit to 4.5% of GDP. While expenditures were cut, the budget deficit actually grew in 1997– 98 to about 8.5% of the GDP due to currency devaluation and the Asian financial crisis. The budget for 2000 included a 30% increase on defense spending due to the Pakistani conflict. Although applauded by the business community as marketfriendly, some observers were chagrined by the 2000 budget’s failure to squarely tackle infrastructure reforms. Most analysts agree that India spends too much on current expenditures and not enough on public investment. India suffers from inadequate roads and ports, a substandard educational system, and unreliable power supplies. The US Central Intelligence Agency (CIA) estimates that in 2001/2002 India’s central government took in revenues of approximately $48.3 billion and had expenditures of $78.2 billion including capital expenditures of $14 billion. Overall, the government registered a deficit of approximately $29.9 billion. External debt totaled $100.6 billion. The following table shows an itemized breakdown of government revenues and expenditures. The percentages were calculated from data reported by the International Monetary Fund. The dollar amounts (millions) are based on the CIA estimates provided above. REVENUE AND GRANTS 100.0% 48,300 Tax revenue 73.1% 35,306 Non-tax revenue 22.6% 10,932 Capital revenue 4.0% 1,953 Grants 0.2% 109 EXPENDITURES 100.0% 78,200 General public services 6.1% 4,793 Defense 15.6% 12,202 Education 2.2% 1,739 Health 1.8% 1,405 Housing and community amenities 4.4% 3,480 Economic affairs and services 14.6% 11,386 Other expenditures 27.4% 21,412 Interest payments 27.9% 21,784

INSURANCE IN INDIA

The life insurance business was formally nationalized on 1 September 1956 by the establishment of the Life Insurance Corp. of India (LIC), which absorbed the life insurance business of 245 Indian and foreign companies. LIC also transacts business in certain African and Asian countries where there are large Indian populations. The general insurance business was nationalized as of 1 January 1973, and all nationalized general insurance companies were merged into the General Insurance Corp. (GIC) of India. GIC serves as the parent company for the four operating insurers, the New India Assurance Company, the Oriental Fire and General Insurance Company, the National Insurance Company, and the United India Insurance Company. In 1997, despite repeated promises to allow private insurers into the industry, an announcement on privatization in the financial services sector was postponed in the face of institutional resistance. The unions and left-wing parties led a struggle to stop an opening up of the insurance sector. They were alarmed by government plans to introduce legislation that would set up an independent Insurance Regulatory and Development Authority (IRA). Under the Insurance Regulatory and Development Authority Act of 1999, the IRA finally gained the power to issue licenses to private insurance companies in 2000 to Indians and foreigners. In India, third-party auto liablity, public liability for hazardous material handling, workers’ compensation, and thirdparty liablity for inland water vessels are all compulsory.

BANKING AND SECURITIES IN INDIA

A well-established banking system exists in India as a result of British colonialism. The Reserve Bank of India, founded in 1935 and nationalized in 1949, is the central banking and note-issuing authority. The Reserve Bank funds the Deposit Insurance and Credit Guarantee Corporation, which provides deposit insurance coverage to the banking sector. The largest public-sector bank is the State Bank of India, which, at the end of 1996, accounted for one-third of income. Banks operating in the public sector account for 75% of commercial banking, while private banks take 15% of the market and foreign banks account for the remaining 10%. In 1997, 58% of commercial banks operated regionally, extending credit to small borrowers in rural areas. Scheduled banks maintain branches, mainly in the major commercial and industrial centers of Maharashtra, West Bengal, Uttar Pradesh, and Tamil Nadu states and the Delhi territory. Over 100 branches of Indian commercial banks operate overseas as well, primarily in the United Kingdom, United States, Fiji, Mauritius, Hong Kong, and Singapore. As of July 2000, there were 45 foreign banks in India with 180 branches, as well as 26 foreign representative offices. Total deposits in commercial banks reached $206 billion in 2000-01. The cost of borrowing remains very high, because of bad debts and non-performing assets. Most Indian banks lend approximately 30% to 40% of their capital to the government of India, and over 80% of investment is in government securities. In an attempt to regulate lending practices and interest rates, the government encouraged the formation of cooperative credit societies. Long-term credit is provided by the cooperative land development banks. Nonagricultural credit societies and employees’ credit societies supply urban credit. A process of gradual liberalization is being applied to government institutions that supply most medium- and long-term credit. These termlending institutions also control about 30% of all share capital and act as a channel for most foreign borrowing by the private sector. The main bodies are the Industrial Development Bank of India (IDBI), the Industrial Finance Corporation of India (IFCI), the Industrial Credit and Investment Corp. of India (ICIC), and the Export-Import Bank of India (Eximbank).The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $81.6 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $283.4 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 6.5%. The main stock exchanges are located in Calcutta, Mumbai (formerly Bombay), and Madras, and there are secondary exchanges in Ahmadabad, Delhi, Kanpur, Nagpur, and other cities. The Securities and Exchange Board of India supplies regulation of the stock market. These regulations are not strict, and at times margin trading and other questionable practices have tended to produce wild speculation. Rules favor exchange members rather than public protection or benefit. Brokerage and jobbing are commonly combined. Of India’s 21 stock exchanges, the Mumbai Stock Exchange (BSE) and National Stock Exchange (NSE) are the most important. There are more than 5,000 companies listed in Mumbai (formerly Bombay), the largest on the Indian market and on this criterion the largest outside New York. Total market capitalization on the BSE’s 5,795 listed companies was R5.3 trillion as of 2001. The NSE, however, is perceived as more transparent, has faster trading cycles, more timely settlements, and is in the process of setting up a share depository. Major efforts have been made to strengthen the stock market institutionally and make it less like a casino. In 1996-97 negative market sentiment, particularly among foreign institutional investors, took the overall price earnings ratio down from 19.6 in June 1996 to 11.3 in November. In the two years ending October 1996, all but 436 of the 2,531 mosttraded shares lost over half their value; more than 1,000 lost over 80% of their value. The market continued to lose ground in 1997 and 1998 due to the Asian financial crisis. In 1999-2000, though, both the BSE and the NSE gained approximately 40% in market share value due to the growth in information technology (IT) stocks. Between 1998 and 1999 alone, the local S&P CNX Index grew 97.8%, but then dropped about 23-24% in each of the next two years. The S&P IFCG and IFCI Indexes also dropped about 20-30% in 1999 and 2000.

BALANCE OF PAYMENT IN INDIA

India has a chronic deficit on current accounts. What bridges the gap between payments and receipts is mainly external aid (especially nonproject assistance), tourism earnings, and remittances from Indians working abroad. Heavy imports of food grains and armament purchases caused a decline in India’s foreign exchange reserves in the mid-1960s. An economic recovery from 1968–69, however, eased the problem, and by September 1970, foreign exchange reserves amounted to $616 million, as compared with $383 million by December 1965. Reserves declined to $566 million by the end of 1972 but increased to $841 million as of December 1975, despite massive deficits on current accounts, attributable to the quadrupling of oil import prices during 1973–74. Foreign exchange reserves declined from $6,739 million at the end of 1979 to $3,476 million as of November 1982 but subsequently rose to $5,924 million by March 1987. The Gulf War crisis worsened the ratio of current account deficit to GDP. Foreign exchange reserves plummeted because of export losses in Kuwait, Iraq, and other nations. Remittances from Indian workers fell, and sudden price increases for oil imports caused an estimated loss to India of over $2.8 billion in earnings. By November 1993, however, India’s foreign exchange reserves had risen to $8.1 billion, the highest level since 1951. A substantial reduction in the trade deficit, increased inflows from foreign institutional investors, a stable exchange rate, and improved remittances all contributed in the recovery of reserves. Although export growth remained strong, the current account deficit tripled from 1993–94 to 1995–96. The increase was attributed to a continuing surge in imports and higher debt service requirements. However, between 1995 and 1998 the current account deficit shrank to about 1% of GDP due to increased textile exports and a liberalizing trade regime. India’s total external debt in 2001 was estimated at $100.6 billion. In 2000, the external debt-GDP ratio stood at around 20.7%, down from 41% in 1991/92. In the early 2000s, India’s exports to East and Southeast Asia increased, including to Japan and South Korea. High growth rates were registered for textiles, chemicals and related products, engineering goods, and leather and manufactures. The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of India’s exports was $44.5 billion while imports totaled $53.8 billion resulting in a trade deficit of $9.3 billion. The International Monetary Fund (IMF) reports that in 2000 India had exports of goods totaling $43.1 billion and imports totaling $55.3 billion. The services credit totaled $18.3 billion and debit $19.9 billion. The following table summarizes India’s balance of payments as reported by the IMF for 2000 in millions of US dollars. Current Account -4,198 Balance on goods -12,193 Balance on services -1,582 Balance on income -3,876 Current transfers 13,453 Capital Account … Financial Account 9,616 Direct investment abroad -335 Direct investment in India 2,315 Portfolio investment assets … Portfolio investment liabilities 1,619 Other investment assets -1,136 Other investment liabilities 7,152 Net Errors and Omissions 670 Reserves and Related Items -6,087

FOREIGN TRADE IN INDIA

Initially, India’s foreign trade followed a pattern common to all underdeveloped countries: exporting raw materials and food in exchange for manufactured goods. The only difference in India’s case was that it also exported processed textiles, yarn, and jute goods. Until the late 1980s, the government’s strongly import substitution-oriented industrial policy limited the significance of exports for the Indian economy, and while exports have become more important, they remain only about 8% of national income. With imports exceeding exports almost continuously in the 1970s and 1980s, India registers a chronic trade deficit. Stabilization and structural adjustment measures taken in 1991, including a 50% currency devaluation, have improved the country’s balance of trade position by depressing imports and making exports more competitive in the world market. Given the country’s relatively well-developed manufacturing base, items like textile goods, gems and jewelry, engineering goods, chemicals, and leather manufactures now comprise the country’s leading exported items, replacing jute, tea, and other food products that dominated its export base in the 1960s and early 1970s. In 1999 India’s imports were distributed among the following categories:India’s exports are dominated by textiles, followed by agricultural products, gems and jewelry, and engineering goods. Major imports include petroleum and petroleum products, gold and precious stones, machinery, chemicals, and fertilizers.

DOMESTIC TRADE IN INDIA

Under a nationwide scheme launched in 1979 for the distribution of essential commodities, goods are procured by the central government and then supplied to citizens. Each state has its own consumer cooperative federation; all of these groups are under the aegis of the National Cooperative Consumers Federation with the Minister of Consumer Affairs and Public Distribution. By 2000, more than 26,000 cooperatives and 681 wholesale stores shared in the distribution of sugar, edible oils, and grains in rural areas. With the government’s new emphasis on growth in private enterprise since the late 1980s, the expansion of privately-owned retail outlets have competed with the cooperative sector. Most private commercial enterprises are small establishments owned and operated by a single person or a single family; retail outlets are often highly specialized in product and usually very small in quarters and total stock. Often the Indian retail shop is large enough to hold only the proprietor and a small selection of stock; shutters fronting the store are opened to allow customers to negotiate from the street or sidewalk. There are no major national chains but foreign franchises do exist. In most retail shops, fixed prices are rare and bargaining is the accepted means of purchase. Some department stores and supermarkets have begun to appear in shopping centers in major cities. These shopping centers usually offer entertainment and leisure activities as well. India’s domestic trade is widely influenced by informal and unreported commerce and income, known as “black money.” Government and business hours are generally from 10 AM to 5 PM, Monday through Friday, with a lunch break from 1 to 2 PM. Larger shops in Delhi are open from 9:30 AM to 1:30 PM and from 3:30 to 7:30 PM. Normal banking hours are from 10 AM to 4 PM on weekdays and from 10 AM to 12 noon on Saturdays.

SCIENCE AND TECHNOLOGY IN INDIA

Total expenditures on research and development amounted to 41.9 billion rupees in 1987–97; India had an estimated 149,000 scientists and engineers and 108,000 technicians engaged in research and development that year. Allocations are divided among government and industry, with government providing the major share. There has been a marked growth in the training of engineers and technicians. In 1987–97, science and engineering students accounted for 25% of college and university enrollments. Among the technological higher schools are the Indian Institute of Science at Bangalore and the Indian Institutes of Technology at Mumbai (formerly Bombay), Delhi, Kanpur, Kharagpur, and Madras. In 1947, there were 620 colleges and universities; by 1996, that number was nearly 7,700. One of the primary science and technology issues facing India is a “brain drain.” Over 13,000 Indian students annually seek science and engineering degrees in the United States. Such an exodus may greatly reduce the quality of science and engineering education in India. There are more than 2,500 national research and development institutions connected with science and technology in India. Principal government agencies engaged in scientific research and technical development are the Ministry of Science and Technology, the Council of Scientific and Industrial Research, the Ministry of Atomic Energy, and the Ministry of Electronics. The Council for Scientific and Industrial Research (founded in 1942) has 39 national laboratories under its umbrella. In March 1981, a cabinet committee, headed by the prime minister, was established to review science and technology programs and to decide future policy. An importer of nuclear technology since the 1960s, India tested its own underground nuclear device for the first time in 1974 at Pokaran, in Rajasthan. In May 1996, India once again performed nuclear tests, dropping three bombs into 700-footdeep shafts in the desert at Pokoran, with an impact of 80 kilotons. Pakistan responded later the same month with tests of its own. The first Indian-built nuclear power plant, with two 235- MW heavy-water reactors, began operating in July 1983, and an experimental fast-breeder reactor was under construction. The country’s largest scientific establishment is the Bhabha Atomic Research Center at Trombay, near Mumbai (formerly Bombay), which has four nuclear research reactors and trains 150 nuclear scientists each year. In the area of space technology, India’s first communications satellite, Aryabhata, was launched into orbit by the former USSR on 19 April 1975, and two additional satellites were orbited by Soviet rockets in 1979 and 1981. The Indian Space Research Organization constructed and launched India’s first satellite-launching vehicle, the SLV-3, from its Vikram Sarabhai Space Center at Sriharikota on 18 July 1980; the four-stage, solid-fuel rocket put a 35 kg (77 lb) Rohini satellite into near-earth orbit. Indian-built telecommunications satellites have been launched into orbit from Cape Canaveral, Florida, by the US National Aeronautics and Space Administration, by the European Space Agency, and from French Guiana. India has established a satellite-tracking station at Kavalur, in Tamil Nadu. In 1984, the first Indo-Soviet manned mission was completed successfully; in 1985, two Indians were selected for an Indo-US joint shuttle flight. An important international sciences program is the United States-India Fund (USIF), through which scientists and engineers participate in Indo-US joint research projects at 15 institutions in each country. Projects include earthquake, atmospheric, marine, energy, environment, medical, and life sciences. Major learned societies in the country are the Indian Academy of Sciences (founded in 1934 in Bangalore), the Indian National Science Academy (founded in 1935 in New Delhi), and the National Academy of Sciences (founded in 1930 in Allahabad).

INDUSTRY IN INDIA

Modern industry has advanced fairly rapidly since independence, and the industrial sector now contributes 26.9% of the GDP. Large modern steel mills and many fertilizer plants, heavymachinery plants, oil refineries, locomotive and automotive works have been constructed; the metallurgical, chemical, cement, and oil-refining industries have also expanded. Moreover, India has established its role in the high value-added sectors of the “new economy” sectors of information technology (IT), computer hardware, computer software, media and entertainment. Yet, though the total product is large, industry absorbs only about 17% of the labor force. Nine states— Maharashtra, West Bengal, Tamil Nadu, Gujarat, Uttar Pradesh, Bihar, Andhra Pradesh, Karnataka, and Madhya Pradesh— together account for most of Indian industry. Industrial production expanded at an average annual rate of 5– 6% between 1970 and 1990. Enforced austerity and demand management measures taken to stabilize rapidly worsening macroeconomic imbalances in 1991–92 slowed growth in the industry sector to 0% for that year. This was followed by a modest recovery to 1.9% growth in 1992–93, though declining to an estimated 1.6% in 1993–94, due to lingering effects of the earlier stabilization measures as well as poorer than expected demand in key export markets. In 1995–96, however, the index of industrial production (IIP) jumped 11.7%, led by a 13% increase in manufacturing output, the highest in 25 years. Growth in industrial production was 6.6% in 1997/98, but slowed to 4.1% in 1998/99 primarily due to the effects of the Asian financial crisis, but also in part to international sanctions imposed after its nuclear tests in 1998. A rebound evidenced in 6.6% growth in 1999/00 was cut short by the global slowdown in 2001, and the aftermath of the 11 September 2001 terrorist attacks on the United States, including intensifying regional tensions with Pakistan. Growth in industrial production slowed, to 5.1% in 2000/01 and to 2.7% in 2001/02. Under the planned development regime of past decades, government directives channeled much of the country’s resources into public enterprises. Private investment was closely regulated for all industries, discouraging investors from formal entry into the sector. However, industrial policy in recent years has shifted towards privatization and deregulation. Since 1991 government licensing requirements have been abolished for all but a few “controlled areas”: distillation and brewing of alcoholic drinks, cigars and cigarettes, defense equipment, industrial explosives, hazardous chemicals, and drugs and pharmaceuticals. Under the government disinvestment program announced at the end of 1999, only three sectors remain completely closed to private investment: defense, atomic energy, ad railway transport. The oil industry was opened to joint foreign investment in 1997 under the New Exploration and Licensing Policy (NELP). The first exploration blocks were auctioned off in two rounds in 2000, but the initiative none of the major international oil companies put in bids. The Ministry of Disinvestment was established in December 1999 to oversee the reduction of government shares in 247 stateowned companies, referred to as public sector units (PSUs), to a 26% stake. The first sale, in early 2000, was 51% of the Bharat Aluminum Company, Ltd. to Sterlite Ltd. of India. In May 2002, managerial control of Maruti Udyog Ltd. (MUL), India’s top carmaker claiming a 60% market share, was transferred to Suzuki Maintenance Corporation (SMC) of Japan, one of the few foreign buyers in the disinvestment program to date. SMC was already MUL’s technology provider in their joint venture and owned a 46% share of MUL. SMC took control by buying an additional 5% for about $213 million, a move it had previously declined to take. The government plans to offer the rest of its shares on the stock market in 2004. Generally, the PSUs for which the government has found buyers in its disinvestment program have not been in the industrial or manufacturing sectors. Instead, the government has also steps to make their operations more competitive. In 2001, for instance, quantitative restrictions (QRs) were removed from about 715 imports, including cars, clothes watches, pins, dairy products, part of the accession process to the WTO. Credit and capital markets have also been greatly liberalized. Since 1992, all foreign companies have been on par with Indian companies in the area of foreign exchange solvency and on the stock market. With these reforms, private investment in industry is now proceeding at a steady if still modest pace, fostering increased competition in most of the mining and manufacturing sectors previously monopolized by parastatals. In 2001/02 net foreign direct investment (FDI) and net portfolio investment combined equaled $6.3 billion, the highest on record. Textile production dominates the industrial field, accounting for about 30% of export earnings while adding only 7% to 8% to imports. The textile industry employs approximately 35 million workers, making it the second-largest employer in India after agriculture. The sector is highly fragmented, containing about 7000 operational units encompassing a $2.9 billion clothing industry, a $16.3 billion finished fabrics industry, a $1.9 billion industrial textile products industry, and a $600 million household textile products industry. On a broad level it can also be divided between the natural fiber segment (cotton, silk, wool, jute, etc.) and the man-made fiber segment (polyester filament yarn, blended yarns, etc.). Cotton accounts for about 60% of both domestic consumption and exports. In terms of operations, since the 1980s decentralized powerlooms have produced an increasingly large share of production as centralized mills have declined. In 1986, there were about 638,000 decentralized powerlooms in operation, and by 2002 these had increased 260% to about 1,662,000, including an estimated 1,227,000 conventional shuttle looms, 400,000 drop-box semi-automatic looms, 30,000 automatic looms and 5,000 shuttleless looms (most second-hand imports). Anticipating the globalization of the textile market in 2004 when the multifiber agreement (MFA) is scheduled to be phased out, India’s National Textile Policy-2000 has pinpointed the weaving sector as the crucial link in the textile value chain (from fiber to fabric to garment to style) that needs to become more competitive. The Textile Program, announced in the budget for 2001/02, included a program for modernizing the powerloom sector through the introduction of 50,000 shuttleless looms and 250,000 semiautomatic looms. The union budget for 2002/03 continued the program, adding an array of tax and duty exemptions for the benefit of powerloom operators. In 2002/03, the Office of the Textile Commissioner estimated that decentralized powerlooms accounted for 76.8% of cloth production (including hosiery); hand looms, 18%; mills, 3.7%; and others, 1.5%. By contrast, integrated mill operations, which perform spinning, weaving and processing in a central location, have stagnated and declined. In December 2002, 464 mills were closed compared to 220 in 1999/98, and hundreds more were slated for closure in 2003. There were 1,782 cotton and manmade fiber mills in 1999, only 192 of them were publicly owned. Mumbai (formerly Bombay), Ahmadabad, and the provincial cities in southern India lead in cotton milling, which accounts for about 65% of the raw material consumed by the textile industry. Jute milling is localized at Calcutta, center of the jute agricultural area. India is the world’s number one jute manufacturer. On average, textile production has been growing about 5% a year, although in 2001–02, with demand damped by a series of negative events—economic recession in the United States, a global economic slowdown, the 11 September 2001 terrorist attacks on the United States, the attack on India’s Parliament 13 December 2001 and sectarian violence in Gujarat—growth fell to 2.6%, compared with 4.4% in 2000/01, while textile exports fell 9%. However, by the end of 2002 and continuing into 2003 strong growth was evidenced. The production of textile products, including ready-made garments, grew 17% during the first quarter of 2003 year-on-year (YOY) and textile exports grew 8.48%. India is the world’s tenth-largest steel producer. In 2001/02, according to the Ministry of Steel, it produced 4.08 million tons of pig iron (up 19.8%) and 30.64 million tons of finished steel (up 4.7%). The industry consists of seven large integrated mills and about 180 mini steel plants. Despite some signs of recovery 2002, all the major steel companies except the Tata Steel Corporation, the largest and oldest (founded in 1907), were facing serious financial problems due to overcapacity, cheap imports, and anti-dumping duties imposed by the United States in June 2001 that affected Indian exports. Nevertheless, during 2002 steel experienced a strong revival due to rising steel prices, increased domestic demand mainly from highway construction projects, and a 15.88% YOY rise in exports April to November 2002. The metallurgical sector also produced 818,000 tons of aluminum products, up from 640,000 tons in 1998/99. Automobile production, fed by both the steel and aluminum industries, has grown at an annual rates of close to 20% since liberalization in 1993, propelled by low interest rates, the expansion of consumer finance, and strong export demand. In 2002, 90.2% of vehicles produced were economy cars, and 9.8% were luxury cars and SUVs. From 1999/2000 to 2001/02, total production of cars, utility vehicles and commercial vehicles declined 4.7% from 875,179 to 834,071, while the production of two-wheelers increased 14.4%, from about 4.8 million to 5.47 million. Exports of all kinds of vehicles totaled 215,318 April to December 2002, a 68% YOY increase. In the field of computers and consumer electronics production has been boosted by the liberalization of technology and component imports. In consumer durables, production in many cases grew at double-digit rates in 2002/02 (air conditioners, 25%; microwave ovens, over 20%; color TVs, over 15%, refrigerators, 12%; audio products and DVDs, 10%; washing machines, less than 5%), while computer production was up 36%. Computer software exports have grown as a compound growth rate of 50% per year for the past five years. In 2001/02, electronics hardware exports reached $1.253 billion, up 22.6% over 2001/02, while computer software exports reached $7.8 billion, up 28.7%. In the petrochemical sector, India has 18 refineries throughout the country with a total refinery capacity of more that two million barrels per day. Sixteen refineries are government-owned, one is jointly owned, and one, the 540,000-barrels-per-day Reliance Industries refinery at Jamnagar in Gujarat State, is privately owned. Almost half India’s refinery capacity—now at 970,000 barrels per day—has been built since 1998, the government’s goal being self-sufficiency in refined petroleum products. India’s total refinery capacity should currently be enough to meet domestic demand, but because of operational problems it still has to import diesel fuel. India’s cement industry is the second-largest in the world, after China, with an installed capacity of 135 million tons as of March 2002. Exports have been very limited and only to immediate neighbors. The cement industry is highly fragmented, consisting of 120 large plants and 56 companies. In the last decade, government’s portion of cement consumption decreased from 50% to 35% as the domestic housing market has grown. However, government financed infrastructure projects also helped sparked a growth in construction of about 9.7% YOY April to December 2002. In 2001/02, 106.9 million tons of cement were produced, of which 5.14 million tons were exported. Like cement, India’s food processing industry in oriented mainly toward the domestic market. It is India’s fifth largest industry, with output reaching $31 billion food in 2001/02. Structurally it consists of about 9000 operational units, accounts for about 6.3% of GDP, 13% of exports, and 18% of industrial employment (about 1.6 million workers). India’s fertilizer industry is the third largest in the world, and central to its efforts to increase agricultural productivity. The industry consists of 64 large fertilizer plants (39 producing urea, the most affordable fertilizer and 18 manufacturing diammonium phosphate or DAP, and other products), and 79 small and medium plants. As of 2000, installed capacity in nitrogen-based nutrients was 11 million tons and in phosphate-based nutrients, 3.6 million tons. Potassium-based nutrients must all be imported. Since 1992 the government has been gradually decontrolling the price of fertilizers. The prices of urea are scheduled to be completely decontrolled by 2006/07. Overall industrial production grew at 2.7% in 2001/02, its weakest performance since the early 1990s. Manufacturing, accounting for about 80% of the sector, grew 2.9%, while the electricity segment increased 3.1% and mining only 1.2%. Figures for April to November 2002 showed signs of recovery, however, with a 5.3% YOY increase for industrial production overall, and 5.4% YOY growth in manufacturing.

ENERGY AND POWER IN INDIA

Petroleum reserves were estimated at 4.8 billion barrels in early 2002. From less than 100,000 tons in 1951, crude oil production rose to 37.1 million tons in 1995. Production was 1.9 million barrels per day in 2001, and expected to grow to 3.4 million barrels per day by 2010. Oil exploration and production are undertaken in joint ventures between government and private foreign companies. Oil accounts for roughly 30% of India’s energy consumption. Production of natural gas increased from 920 million cu m in 1973 to 21,300 million cu m in 1999. In 2000, India consumed 509.9 billion kWh of electricity, of which 1.675 billion kWh was imported. Total installed electric capacity, which was 18,500 MW in 1974, rose to 111,777 MW in 2001. Production in 2000 was 512 billion kWh, of which 83.4% was from fossil fuels, 13.9% from hydropower, 2.6% from nuclear power, and the rest from other sources. A 380 MW nuclear power station, India’s first, was completed with US assistance in 1969 at Tarapur, near Mumbai (formerly Bombay). (The Tarapur plant has long been a center of controversy because of India’s alleged failure to observe international safeguards to prevent the diversion of nuclear materials for military purposes.) Another nuclear station, in Rajasthan, began partial operations in the early 1970s, and two more plants were added by the end of the decade. In 1996, India had 10 operating reactors with a combined capacity of 1,695 MW, and four more under construction with a planned capacity of 808 MW. In 1999, the 740 MW initial phase of the Dabhol LNG-fired power plant began operation. (LNG is liquefied natural gas.) Under the Commission on Additional Sources of Energy, within the Department of Science and Technology, research programs in biogas and biomass have been established. Demonstration projects in solar and wind energy were also undertaken in the early 1980s.

MINING IN INDIA

Well endowed with industrial minerals, India’s leading industries in 2002 included steel, cement, mining, and petroleum, and gems and jewelry comprised the country’s second-leading export commodity. The minerals industry of India produced more than 80 mineral commodities in the form of ores, metals, industrial minerals, and mineral fuels and was among the world’s leading producers of iron ore, bituminous coal, zinc, and bauxite, with 10% of world deposits. In 1997, total mineral production was valued at $9.5 billion, or about 3.5% of GDP, which grew by 5.4% in 2001. Mineral resources contributed 2% to GDP in 2001. Minerals accounted for 20% of exports. An estimated 4,400 mines operated in the country. Most mines were small surface operations using only handtool methods. There were also 300 underground mines in the nonfuel sector, most of which were operated manually. Employment in the minerals industry was estimated at more than 1 million (4.5% of the employed labor force), with the public sector employing 90% of the total. Total exports represented 10% of GDP in 2001, with jewelry leading the growth. The country exploited 52 minerals—11 metallic, 38 non-metallic, and three mineral fuels. Increases in production were noted for bauxite, cathode copper, crude oil, iron ore, steel, and other minerals. Industrial mineral operations were unscathed by the January 2001 earthquake in Gujarat and Rajasthan; infrastructure repairs were under way. In 2001, India also produced lead, monazite, selenium, silver, ilmenite, rutile, tungsten, uranium, zircon, corundum, garnet, jasper, asbestos, barite (from the Cuddapah District mines, Andhra Pradesh), bromine, hydraulic cement, chalk, clays (including ball clay, diaspore, fireclay, and kaolin), feldspar, fluorspar, agate, aquamarine, emerald, ruby, spinel, graphite, kyanite, sillimanite, lime, magnesite, nitrogen, phosphate rock, apatite, ocher, mineral and natural pigments, pyrites, salt, soda ash, calcite, dolomite, limestone, quartz, quartzite, sand (including calcareous and silica), slate, talc, pyrophyllite, steatite (soapstone), vermiculite, and wollastonite. Output of iron content in mined ore totaled 50.7 million tons in 2001, up from 44.9 in 1999. Iron ore reserves, estimated at 11,000 million tons of hematite ore containing at least 55% iron, were among the largest in the world. Principal iron ore output came from the rich fields along the Bihar-Orissa border, close to all major existing iron and steel works. Smaller amounts were mined in the Bababudan Hills of Karnataka and elsewhere. The joint venture Rio Tinto Orissa Mining Ltd. studied a new mining project, in the Gandhamardan/Malanjtoli areas of Orissa, that had ore reserves of 800 million tons and could start in 2006, produce 25 million tons per year by its fifth year, and have an eventual capacity of 50 million tons per year. India’s gross weight output of bauxite was 8.4 million tons in 2001, up from 6.1 in 1998. Bauxite deposits were estimated at 2,300 million tons. The state-owned National Aluminium Co. Ltd. (Nalco), which doubled its mining capacity to 4.8 million tons per year, was to be privatized by the government in 2001. Nalco’s Panchpatmali Hills, Koraput District mines, in Orissa, had a production capacity of 2.4 million tons per year. Production of zinc concentrates (zinc content) in 2001 was 146,000 tons. The state-owned Hindustan Zinc Ltd. (HZL), which was for sale, planned to close its Sargipalli lead mine (150,000 tons per year capacity), in Orissa; HZL’s Rampura Agucha mines (1.3 million tons per year lead-zinc ore capacity), in Rajasthan, were highly prized. Gold and silver came largely from the Kolar fields of southeastern Karnataka, where the gold mines have reached a depth of more than 3.2 km and contained reserves of 55,000 kg of gold. The Geological Survey of India outlined three new gold resources— in the Dona block, Andhra Pradesh, 4.8 million tons averaging 1.9 grams per ton of gold; in the Banswar district, Rajasthan, 7.1 million tons averaging 2.96 grams per ton of gold; and in the Ghrhar Pahar block, Sidhi district of Madhya Pradesh, 3.3 million tons averaging 1.04 grams per ton of gold. The import duty on gold was reduced to curtail smuggling. In 2001, 60,000 carats of diamonds were produced, up from 31,000 in 1997—industrial diamond output went from 20,000 to 43,000. Emerald and fissionable materials also were mined. Transworld Garnet India Pvt. Ltd, 74% owned subsidiary of Western Garnet International Ltd, of the United States, acquired lease rights to a mineral sands beach deposit in Andhra Pradesh with a resource base of 1.1 million tons of garnet and 0.8 million tons of ilmenite grading 24% and 20%, respectively. Western Garnet had been producing garnet in Tamil Nadu from reserves that would last for 20 to 25 years. Content of manganese in mined ore produced was 600,000 tons in 2001. Manganese deposits were estimated at 154 million tons. Manganese was mined in Andhra Pradesh, Karnataka, the Nagpur section of Maharashtra, northward in Madhya Pradesh, along the Bihar-Orissa border adjoining the iron ore deposits, along the Maharashtra-Madhya Pradesh-Rajasthan border, and in central coastal Andhra Pradesh. Mineral production in 2001 included 30,900 tons of mined copper ore, down from 39,900 in 1998; 1.68 million tons of gross weight chromite, compared with 1.95 in 2000 and 1.31 in 1998 (India was the largest exporter of chromite to China, selling more than 400,000 tons per year); 2.25 million tons of gypsum; and 1,300 tons of crude mica, down from 1,794 in 1997 (the best-quality mica came from Bihar). There were extensive workable reserves of fluorite, chromite, ilmenite (for titanium), monazite (for thorium), beach sands, magnesite, beryllium, copper, and a variety of other industrial and agricultural minerals. However, India lacked substantial reserves of some nonferrous metals and special steel ingredients. The government simplified excise duties and sold its stakes in state-owned enterprises. In 2001, it approved applications for $700 million of foreign direct investment in the mining sector— poor infrastructure, delays in decision-making, labor laws, and high royalty rates were the most important factors. The West Bengal government was to give up its monopoly on mining rights and to announce a new mining policy to invite private investment; the state was known to contain apatite, coal, and dimension-stone resources. The Haryana government decided to grant mining leases for minor minerals by public auction. The new Ennore port, north of Chennai, in Tamil Nadu, was opened in 2001. A 1993 revision of the National Mineral Policy opened development of 13 minerals to private investment, both foreign and domestic. The exploration and processing of chrome, copper, diamond, gold, iron ore, lead, manganese, molybdenum, nickel, platinum-group metals, sulfur, tungsten, and zinc were exclusively controlled by the government.

FORESTRY IN INDIA

The major forestlands lie in the foothills of the Himalayas, the hills of Assam state, the northern highlands of the Deccan, the Western Ghats, and the Andaman Islands. Other forestlands are generally scrub and poor secondary growth of restricted commercial potential. India’s forests are mostly broad-leaved; the most important commercial species are sal (10.9% of forest trees), mixed conifers (8.1%), teak (6.8%), fir (3.2%), chir-pine (2.4%), and upland hardwood (2.4%). In 2000 there were 64,113,000 hectares (158,423,000 acres) of forestland, according to a satellite survey. About 40% of the forest area is highly degraded and devoid of wood producing trees. India’s forests have historically suffered tremendous pressure from its large human and animal populations as a source of fuel wood, fodder, and timber. In recent decades, harvesting and encroachment resulted in a 2.3% reduction of forest land each year. According to the government’s national forest policy, 33% of the land area should be covered by forest, but actual forest coverage is just 21.6%. About 138,000 hectares (341,000 acres) were planted annually during the 1980s under afforestation programs. During 1990–2000, the forested area grew by an annual average of 38,000 ha (94,000 acres). Most forests (98%) are owned by state governments and are reserved or protected for the maintenance of permanent timber and water supplies. The government has prohibited commercial harvesting of trees on public land, except for mature, fallen, or sick trees. In order to help meet the fuel needs of much of the population, harvesting dead and fallen branches is permitted is government forests, but this policy is widely violated. About 93% of the total timber cut in 2000 was burned as fuel. The total timber cut in 2000 was 319.5 million cu m (11.3 billion cu ft). Production that year included (in million of cubic meters): sawn wood, 7.9; paper and paperboard, 3.8; woodbased panels, 0.4; and wood pulp, 1.6. Other forestry products include bamboos, canes, fibers, flosses, gums and resins, medicinal herbs, tanning barks, and lac. Imports of forest products nearly totaled $1,028 million in 2000, and mainly consisted of newsprint ($176.1 million), printing and writing paper ($104.8 million), and recovered paper products ($96.7 million).

FISHING IN INDIA

Fishing is an important secondary source of income to some farmers and a primary occupation in small fishing villages. Almost three-fifths of the catch consists of sea fish. The bulk is marketed fresh; of the remainder, more than half is sun-dried. Fish and fish products account for about 2.5–3% of the total export value. Deep-sea fishing is not done on a large scale. Inland fishing is most developed in the deltaic channels of Bengal, an area where fish is an important ingredient of the diet. In recent years, the government has been encouraging ocean fishing through the establishment of processing plants and the introduction of deep-sea craft. Fishing harbors have been built along the coasts of the Bay of Bengal and the Arabian Sea. Under the fifth national plan (1974–79), fish farming was encouraged through the creation of Fish Farmers’ Development Agencies. Fish production achieved a new high of about 3.7 million tons at the end of the seventh national plan (1986–91). The total fish catch in 2000 was 3,594,396 tons (eighth in the world), of which marine fish accounted for 2,797,682 tons and inland sources for 796,714 tons. Fish exports, still only a fraction of the potential, have shown a steady gain in recent years. In 2000, exports of fish products amounted to over $1.4 billion.

ANIMAL HUSBANDRY IN INDIA

The livestock population of India is huge and animals as a whole play an important role in the agricultural economy even though they often receive inadequate nourishment. Slaughter of cattle in India is prohibited in all but a few states since Hindus believe that cows and other animals may contain reincarnated human souls. The slaughter of buffaloes is not as offensive to the religious beliefs of Hindus, and buffaloes are slaughtered for meat. In 2001 there were an estimated 219.6 million head of cattle, representing about 15% of the world’s total and more than in any other country. There are eight breeds of buffalo, 26 cattle breeds, and numerous crossbreeds. The bovine inventory in 2001 also included 94.1 million buffalo. Other livestock in 2001 included 123.5 million goats, 58.2 million sheep, 17.5 million hogs, 900,000 camels, 750,000 asses, 800,000 horses, and 735 million chickens. Bullocks (steers) and water buffalo are important draft animals. Dairy farming has made India self-sufficient in butter and powdered milk. Dairying in India is undertaken on millions of small farms, where one to three milk animals are raised on less than a hectare (2.5 acres), and yields consist of two to three liters of milk daily. To improve milk production, a dairy development program was begun in 1978 to build up the milch herd to 150 million crossbred cows. Milk output in 2001 from over 35 million dairy cows was estimated at 37.1 million tons, second in the world. Egg production in 2001 was 1,906,000 tons. The production of cattle and buffalo hides and goat- and sheepskins is a major industry. About 53,700 tons of wool were produced in 2001. Silk production that year amounted to 15,000 tons, second highest after China. Animal dung is also used for fuel and fertilizer.

AGRICULTURE IN INDIA

In 1998, of the total land area of 297 million hectares (734 million acres), the net sown area was 169 million hectares (420 million acres), or about 57%. The irrigated area totaled 59 million hectares (145.8 million acres) in 1998. At least 10 million hectares (24.7 million acres) were redistributed under land reform programs during 1951–79. Agriculture employs about 60% of India’s population and contributes about 25% to GDP. Agricultural production increased at an average annual rate of 2.9% during the 1970s, 3.1% during the 1980s, and 3.8% during 1990–98, mainly as the result of the “green revolution,” which has made India basically self-sufficient in grain output through the use of improved hybrid seeds, irrigation, and fertilizers. Cereal production averaged over 104 million tons per year from 1979 to 1981; in 1999, production totaled 230 million tons. Rice leads all crops and, except in the northwest, is generally grown wherever the conditions are suitable. In 1999, 131.2 million tons of rice were produced on 44.8 million hectares (110.7 million acres). The combined acreage and production of other cereals, all to a large extent grown for human consumption, considerably exceed those of rice. These include jowar, a rich grain sorghum grown especially in the Deccan; wheat, grown in the northwest; and bajra, another grain sorghum grown in the drier areas of western India and the far south. A wheat crop of 70.8 million tons was harvested on 27.4 million hectares (67.7 million acres) in 1999. Vegetables, pulses, and oilseeds are the other main food crops. Oilseed production in 2000/01 included 4.9 million tons of cottonseed and 3.73 million tons of rapeseed. Nonfood crops are mainly linseed, cotton, jute, and tobacco. The cotton crop in 2000 was 10.9 million bales (170 kg each) and was large enough to both supply the increasing demands of the domestic textile sector and provide export receipts. For centuries, India has been famous for its spices and today is one of the world’s largest producers, consumers, and exporters of a wide range of spices. Of the 63 spices grown in the country, black pepper, cardamom, ginger, turmeric, and chilles are the most economically important. Since World War II (1939–45), India has been the world’s largest producer of black pepper (19,641 tons exported in 2001). Pepper production is concentrated in the southern states of Kerlala (65%), Karnataka (20%), and Tamil Nadu (15%). India was the world’s second-leading producer (after Brazil) of sugarcane in 1999, with an output of 282.3 million tons. Tea, coffee, and rubber plantations contribute significantly to the economy, although they occupy less than 1% of the agricultural land (in hill areas generally unsuited to Indian indigenous agriculture), and are the largest agricultural enterprises in India. Tea, the most important plantation crop, is a large foreign exchange earner, with an export value of $367.2 million in 2001, based on exports of 177,603 tons. Production in 1999 was 749,000 tons, the highest in the world and 26% of global production. It is grown mostly in Assam and northern Bengal, but also in southern India. Coffee (265,000 tons in 1999) is produced in southern India, and rubber (550,000 tons in 1999) in Kerala. Leaf tobacco production totaled 702,000 tons in 1999. Because of the ever-present danger of food shortages, the government tightly controls the grain trade, fixing minimum support and procurement prices and maintaining buffer stocks. The Food Corp. of India, a government enterprise, distributes 12 million tons of food grains annually and is increasing its storage capacity.

LABOUR IN INDIA

In 1999, India’s active labor force totaled 406 million. In that year, 60% were employed in agriculture, 17% in industry, and 23% in services. The unemployment rate in 2002 stood at 8.8%. In 2002, there were an estimated 13 to 15 million organized industrial workers, all belonging to the formal economy, which accounted for 30 million workers, or less than 10% of the total labor force. Most trade unions are affiliated with political parties. The right to strike is often exercised, but public sector unions are required to give 14 days notice prior to an organized strike. Employers are prohibited from discriminating against union activity, and collective bargaining is practiced. Working hours are limited by law to 48 per week for adults with eight hour days. Minimum wages are set according to industry. By law, earned income also includes a cost-of-living allowance and an annual bonus. These regulations are only applicable to factories and all other establishments with 20 or more employees. Factory employment of children under 14 years of age is prohibited, although estimates place the number of child laborers as of 1999 at anywhere between 11 to 55 million. Many of them work in the hand-knotted carpet industry. Bonded labor was abolished in 1976, but is still prevalent. Estimates of the number of bonded laborers range as high as 40 million. Health and safety standards are not regularly enforced.

INCOME OF INDIA

The US Central Intelligence Agency (CIA) reports that in 2002 India’s gross domestic product (GDP) was estimated at $2.66 trillion. The per capita GDP was estimated at $2,540. The average inflation rate in 2002 was 5.4%. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange. It was estimated that agriculture accounted for 25% of GDP, industry 25%, and services 50%. According to the United Nations, in 2000 remittances from citizens working abroad totaled $9.034 billion or about $9 per capita and accounted for approximately 1.9% of GDP. Worker remittances in 2001 totaled $11.36 billion. Foreign aid receipts amounted to about $2 per capita. The World Bank reports that in 2001 per capita household consumption (in constant 1995 US dollars) was $294. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the same period private consumption grew at an annual rate of 3%. The richest 10% of the population accounted for approximately 33.5% of household consumption and the poorest 10% approximately 3.5%. It was estimated that in 2002 about 25% of the population had incomes below the poverty line.