Transcript India

Economy of South Asia
General Objective:
This course focuses on introducing the
economic situation and development in
South Asia , which is an important
political and economic region in Asia .
In this course, South Asia countries’ (mainly
India) culture ,tradition ,society and
economy are analyzed. By learning this
course, it is very important for us to get a
better understanding about advantages
and disadvantages , opportunities and
challenges during economic development
of South Asia.
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Course Outline:
1 introduction: why we focus on South Asia?
2 A short introduction about countries in
South Asia
3 India: history, culture, religion and society
4 economy of India: overview
5 Economic Reforms and Growth Prospects
in India
6 Recent Macroeconomic Developments and
Implications for Poverty and Employment in
Pakistan
7 Complementarity of Trade and FDI
Liberalization in Industrial Growth: Lessons
from Sri Lanka
8 Recent Developments in the Bangladesh
Economy
9 Software industry in India
10 Can India Overtake China?
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Course Requirement:
I. Class Participation
20%
Three times of absence will degrade the final.
II. Class performance
20%
Ⅲ Term Paper
60%
The term paper is required to hand in at the end of
the semester as the final and Late term paper will
degrade the final.
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Supplementary Reading List:
1 Edited by Uma Kapila: India’s Economy (since
Independence to 1996),Academic
foundation ,Delhi,1996
2 Edited by Prema-Chandra Athukorala :The
Economic Development of South Asia Volume Π, An
Elgar Reference Collection, Cheltenham,
UK· Northampton, MA,USA ,2002.
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3 Parvez Hasan: Pakistan’s Economy at the
Crossroads: past policies and present
imperatives, Oxford University Press,Oxford
New York Delhi 1998
4 Vijay Joshi, I.M.D. Little: India’s Economic
Reforms(1991-2001), Clarendon Press,
Oxford,1996.
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5 Edited by Arif A Waqif: South Asian
Cooperation in Industry, Energy and
Technology, Sage Publications, New Dehil
/Newbury Park/ London, 1987 .
6 Edited by Kalyan Banerji, Tavjani
Vakil:India Joining the world Economy, TaTa
Mcgraw-Hill Publishing company Limited,
New Dehil ,1995.
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7 Edited by Christophe Jaffrelot, Translated
by Gillian Beaumount:A History of Pakistan
and its Origins. Anthem Press,London,2002.
8 V.S.Naipaul: An Area of Darkness,1964; A
Wounded Civilization,1977;A Million Mutinies
Now,1990.
PART 1 Introduction: Why we focus on
South Asia( Especially India)
According to people’s impression, South Asia is
full of poverty and chaos. As for poverty, just
in India there are 4 billion people below
poverty line announced by the government.
Nepal, Bangladesh and Bhutan are all least
developed countries. As for chaos, not only
dispute on Kashmir between India and
Pakistan keep unresolved, but also so many
blood conflict continued in India,
Pakistan ,Nepal and Sri Lanka. General
speaking, South Asia is similar to Middle East
in so many aspects: various religions, varies
race, various culture, hostility among the
people with the same clan ,boundary conflict
left from colonial era and so on.
But all of these is changing in recent years.
Firstly, the economic growth is fast.
According to the data of the World Bank, South
Asia is the second fastest growing area with
growth rate of 7% in 2004-2005 and only
inferior to China with 9%.
About India
In South Asia, India is attracting more and
more eyeballs.
Nonviolent resistance to British colonialism led
to independence in 1947. The subcontinent
was divided into the secular state of India
and the smaller Muslim state of Pakistan.
A third war between the two countries in 1971
resulted in East Pakistan becoming the
separate nation of Bangladesh.
Fundamental concerns in India include the
ongoing dispute with Pakistan over Kashmir,
massive overpopulation, environmental
degradation, extensive poverty, and ethnic
strife, all this may despite impressive gains in
economic investment and output.
India's population is estimated at nearly 1.07
billion and is growing at 1.7% a year. It has
the world's 12th largest economy--and the
third largest in Asia behind Japan and China-with total GDP of around $570 billion.
Services, industry and agriculture account for
50.7%, 26.6% and 22.7% of GDP
respectively.
Nearly two-thirds of the population depends on
agriculture for their livelihood. About 25% of
the population lives below the poverty line,
but a large and growing middle class of 320340 million has disposable income for
consumer goods.
India is continuing to move forward with
market-oriented economic reforms that
began in 1991. Recent reforms include
liberalized foreign investment and exchange
system, industrial decontrol, significant
reductions in tariffs and other trade barriers,
reform and modernization of the financial sector,
significant adjustments in government
monetary and fiscal policies and
safeguarding intellectual property rights.
Real GDP growth for the fiscal year ending
March 31, 2004 was 8.17%, up from the
drought-depressed 4.0% growth in the
previous year.
Growth for the year ending March 31, 2005 is
expected to be between 6.5% and 7.0%.
Foreign portfolio and direct investment inflows have risen significantly in recent years.
They have contributed to the $120 billion in
foreign exchange reserves at the end of June
2004. Government receipts from privatization
were about $3 billion in fiscal year 2003-04.
However, economic growth is constrained by
inadequate infrastructure, a cumbersome
bureaucracy, corruption, labor market
rigidities, regulatory and foreign investment
controls, and high fiscal deficits. The outlook
for further trade liberalization is mixed.
India eliminated quotas on 1,420 consumer
imports in 2002 and has announced its
intention to continue to lower customs duties.
However, the tax structure is complex with
compounding effects of various taxes.
But now ,something has been changed
gradually. As the largest and most influential
country in South Asia, India developed
with annul average growth rate of 6.5% since
economic reform in 1991 and reach about
8% in 2004.Much study has pointed out that
India will be another engine of world
economy besides China.
Goldman, the famous investment bank has
anticipated that India ,China, Brazil and
Russia will grow into larger economy .
They will belong to the top six largest economy
in 2050, another two are U.S.A and Japan.
According to report of World Bank, if India
continued economy reform and reduce fiscal
deficit, it is very possible for India to keep
annual average growth rate of 8% for a long
period.
experts and various studies conducted across
the globe envisage India and China to rule
the world in the 21st century.
For over a century the United States has been
the largest economy in the world but major
developments have taken place in the world
economy since then,
leading to the shift of focus from the US and
the rich countries of Europe to the two Asian
giants- India and China.
The rich countries of Europe have seen the
greatest decline in global GDP share by 4.9
percentage points, followed by the US and
Japan with a decline of about 1 percentage
point each.
Within Asia, the rising share of China and India
has more than made up the declining global
share of Japan since 1990. During the
seventies and the eighties, ASEAN countries
and during the eighties South Korea, along
with China and India, contributed to the rising
share of Asia in world GDP.
According to some experts, the share of the US
in world GDP is expected to fall (from 21 per
cent to 18 per cent) and that of India to rise
(from 6 per cent to 11 per cent) in 2025, and
hence the latter will emerge as the third pole
in the global economy after the US and
China.
By 2025 the Indian economy is projected to be
about 60 per cent the size of the US
economy. The transformation into a tri-polar
economy will be completed by 2035, with the
Indian economy only a little smaller than the
US economy but larger than that of Western
Europe.
By 2035, India is likely to be a larger growth
driver than the six largest countries in the EU,
though its impact will be a little over half that
of the US.
India is slated to become the third largest
economy with a share of 14.3 per cent of
global economy by 2015 and graduate to
become the "third pole" and growth driver by
2035.
As the share of USA in World GDP falls from 21
to 18 per cent and that of India rises from 6
to 11 per cent in 2025, the latter emerges as
third pole in the global economy, according to
ADB India Economic Bulletin.
India, which is now the fourth largest economy
in terms of purchasing power parity, will
overtake Japan and become third major
economic power within 10 years.
The most interesting achievement in India may
be the development of software industry.
The rapidly growing software sector is boosting
service exports and modernizing India's
economy. Revenues from IT industry are
expected to cross $20 billion in 2004-05.
Software exports were $12.5 billion in 200304.
PC penetration is 8 per 1,000 persons, but is
expected to grow to 10 per 1,000 by 2005.
The country has 52 million cable TV
customers.
It is very difficult to imagine how software
industry can get so well developed in a
developing country with 0.4 billion illiteracy in
1 billion people of total population, in a
country with modern political structure and
semi-modern economic structure and premodern
social structure. Maybe it is really a miracle.
Besides that, India is also proud of its fairly
perfect and effective financial market. The
bad debt ratio of bank is less than 10%.
And Pakistan ,another important country enjoy
growth rate of about 8.4% in 2004-2005 .
Secondly, the tension between India and
Pakistan became relaxed to a certain degree.
And the competition may transfer gradually
from military field to economy development.
Another, in Sri Lanka in 2002, a permanent
agreement for ceasefire got concluded
between government and anti-government
army, and then the blood conflict of 20 years
came to an end.
All of these show that South Asia may
gradually clear up the disputes and conflicts
based on different languages ,races,
nationalities ,religions and custom and
devote more efforts to economy development
and social progress.
What all of these mean to South Asia? To the
other developing country? To the whole world?
1 Is it possible for India to continue its quickly
growth and realize take-off in the near future?
If possible, Whether India’s growth can
drive the development of the whole South
Asia?
2 Why India developed software industry so
successfully ? What is the influence of
successful software industry on the whole
economy development ?
Is it possible for India to surpass the stage of
manufacturing and grow up into directly a
developed country by only outstanding
service industry ?
3 If all mentioned above become possible ,then
to what degree India’s experience is suitful
for other developing country such as China?
4 If India realize continued economy growth ,
how it will change or influence world
economy?
5 How other country including developed
country such as U.S.A and developing
country such as China will deal with this new
situation? More competition or more
cooperation?
6 what ’s the meaning of the development of
South Asia for the whole world?
These are what I plan to discuss in these
course. I am willing to share my Opinion with
you. No certain answer exist, everything is
open.
Part 2: A short introduction about
countries in South Asia
India
India, officially Republic of India, (2001
provisional pop. 1,027,015,247), 1,261,810
sq mi (3,268,090 sq km), S Asia. The second
most populous country in the world, it is also
sometimes called Bharat, its ancient name.
India's land frontier (c.9,500 mi/15,290 km long)
stretches from the Arabian Sea on the west
to the Bay of Bengal on the east and touches
Pakistan (W); China, Nepal, and Bhutan (N);
Bangladesh, which forms an enclave in the
northeast; and Myanmar (E). New Delhi is
India's capital and Bombay (Mumbai) its
largest city.
People and Culture
India is the world's second most populous nation (after
China). Its ethnic composition is complex, but two
major strains predominate: the Aryan, in the north,
and the Dravidian, in the south. India is a land of
great cultural diversity, as is evidenced by the
enormous number of different languages spoken
throughout the country.
Although Hindi (spoken in the north) and
English (the language of politics and
commerce) are used officially, more than
1,500 languages and dialects are spoken.
The Indian constitution recognizes 15
regional languages .Ten of the major states
of India are generally organized along
linguistic lines.
Although the constitution forbids the practice of
“untouchability,” and legislation has been
used to reserve quotas for former
untouchables (and also for tribal peoples) in
the legislatures, in education, and in the
public services, the caste system continues
to be influential.
About 80% of the population is Hindu, and 14%
is Muslim. Other significant religions include
Christians, Sikhs, and Buddhists. There is no
state religion. The holy cities of India attract
pilgrims from throughout the East.
With its long and rich history, India retains
many outstanding archaeological landmarks;
preeminent of these are the Buddhist
remains ,the cave temples ,the temple sites
at. And other aspects of Indian culture
include Hindu music; Indian art and
architecture; Indian literature; architecture;
and so on.
Economy
Economically, India often seems like two
separate countries: village India, supported
by primitive agriculture, where tens of
millions—one fourth of population—live
below the poverty line; and urban India, one
of the most heavily industrialized areas in the
world, with an increasingly middle-class
population.
Agriculture (about 55% of the land is arable)
makes up some 25% of the gross domestic
product (GDP) and employs almost 70% of
the Indian people. Vast quantities of rice are
grown wherever the land is level and water
plentiful; other crops are wheat, pulses,
sugarcane, and corn.
Cotton, tobacco, oilseeds, and jute are the
principal nonfood crops. There are large tea
plantations in Assam, Karnataka, Kerala, and
Tamil Nadu. The opium poppy is also grown,
both for the legal pharmaceutical market and
the illegal drug trade.
Fragmentation of holdings, outmoded methods
of crop production, and delays in acceptance
of newer, high-yielding grains were
characteristic of Indian agriculture in the past,
but since the Green Revolution of the 1970s,
significant progress has been made in these
areas.
Improved irrigation, the introduction of chemical
fertilizers, and the use of high-yield strains of
rice and wheat have led to record harvests,
and India became an net exporter of grain in
the early 1980s.
The subsistence-level existence of village India,
ever threatened by drought, flood, famine,
and disease, has been somewhat alleviated
by government agricultural modernization
efforts,
but although India's gross food output is
sufficient for the needs of its enormous
population, government price supports and
an inadequate distribution system still
threaten many impoverished Indians with
hunger and starvation. An estimated 40% of
the population is too poor to afford adequate
nourishment regularly.
India has perhaps more cattle per capita than
any other country, but their economic value is
severely limited by the Hindu prohibition
against their slaughter. Goats and sheep are
raised in the arid regions of the west and
northwest. Water buffalo are raised and there
is a large fish catch.
India has forested mountain slopes, with stands
of oak, pine, teak, palms, and bamboo, and
the cutting of timber is a major rural
occupation. Aside from coal, iron,
manganese, and in which the country ranks
high, India's mineral resources, although
large, are not as yet fully exploited.
The Chota Nagpur Plateau of S Jharkhand and the hill
lands of SW West Bengal, N Orissa, and
Chhattisgarh are the most important mining areas;
they are the source of coal, iron, mica, and copper.
There are workings of magnesite, bauxite, chromite,
salt, and gypsum. Despite oil fields in Assam and
Gujarat states and the spectacular output (since the
1970s) of Bombay High offshore oil fields, India is
deficient in petroleum.
Industry in India, traditionally limited to
agricultural processing and light
manufacturing, especially of cotton, woolen,
and silk textiles, jute, and leather products,
has been greatly expanded and diversified in
recent years.
There are large textile works at Bombay and
Ahmadabad, a huge iron and steel complex
(mainly controlled by the Tata family) at
Jamshedpur, and steel plants at Rourkela,
Bhilainagar, Durgapur, and Bokaro.
Bangalore has electronics and armaments
industries.
India also produces large amounts of machine
tools, transportation equipment, chemicals,
and cut diamonds (it is the world's largest
exporter of the latter) and has a significant
computer software industry.
. Its large film industry is concentrated in
Bombay, with other centers in Calcutta and
Madras. In the 1990s the government
departed from its traditional policy of selfreliant industrial activity and development
and worked to deregulate Indian industry and
attract foreign investment.
Since then the service industries have grown;
international call centers provide employment
for an increasing number of workers.
Most towns are connected by state-owned
railroad systems, one of the most extensive
networks in the world.
The train system is made mainly of broadgauge track but includes a variety of rail
gauges, which makes frequent
transshipment necessary; the country is in
the process of converting all tracks to broad
gauge.
Transportation by road is increasing, with the
improvement of highways and the
introduction of ordinary and luxury bus
service on long-distance routes, but in rural
India the bullock cart is still an important
means of transportation.
There are international airports at New Delhi,
Calcutta, Bombay, and Madras. The leading
ports are Bombay, Madras, Calcutta, and
Kochi, . The leading exports are gems and
jewelry, clothing, engineering goods,
chemicals, computer software, cotton thread,
fabric, and handicrafts.
The chief imports are machinery, petroleum,
fertilizers, and chemicals. India's major trade
partners are the United States, European
Union countries, Hong Kong, Kuwait, Saudia
Arabia, and Japan.
Parkistan
history
Pakistan was born out of the partition of India in
1947. It was created to meet the demands of
Indian Muslims 'for their own homeland'.
The erstwhile two parts: the east wing or
present-day Bangladesh is on the Bay of
Bengal bordering
India and Burma and the west wing or presentday Pakistan stretches from the Himalayas
down to the Arabian Sea.
Shortly after independence, India and Pakistan
went to war over the disputed northern
territory of Kashmir.
The two countries fought again in 1965. The
war in 1971 led to the creation of Bangladesh.
Alternating periods of civilian and military rule
have not helped to establish stability in
Pakistan.
Despite largely successful UN efforts at
voluntary repatriation, thousands of Afghan
refugees continue to reside in Pakistan.
Though General Musharraf pledged to revive
the country's fortunes after the bloodless
coup in 1999, but he faced economic
challenges (and law and order problems
mainly in the southern province of Sindh).
Tension also persists with India over Kashmir
and a nuclear arms race began after
Pokhran blasts.
Facts
Population: 157 million (UN, 2004)
Capital: Islamabad
Area: 796,095 sq km (307,374 sq miles)
(excluding Pakistani-held parts of Kashmir)
Major languages: Urdu (official), Punjabi,
Sindhi, Pashto, Balochi and English
Major religion: Islam
Life expectancy: 61 years (men), 61 years (women)
(UN)
Monetary unit: 1 Pakistani Rupee = 100 paisa
Main exports: Textile products, rice, cotton, leather
goods
GNI per capita: US $470 (World Bank, 2003) Major
religion: Islam
Culture
Nearly all Pakistanis are Muslim, and Islam
is the state religion. Christians are the
largest minority, followed by Hindus and
Parsees, descendants of Persian
Zoroastrians .
The pleasures of Pakistan are ancient:
Buddhist monuments, Hindu temples, Islamic
palaces, tombs, pleasure grounds and AngloMogul mansions - some in a state of
dereliction which makes their former
grandeur more emphatic.
Pakistani culture is largely rural yet beset by
the problems of hyperurbanization. The cities
are more crowded than ever; parts of Karachi
and Lahore are more densely populated
even than Dhaka, the capital of Bangladesh.
Since its freedom in 1947, Pakistan has
enjoyed a robust and expanding economy,
but wealth is poorly distributed. Almost onethird of all Pakistanis live in poverty. It is a
male-controlled society in which social
development has taken a back seat.
"Three things symbolised Pakistan's material
culture in the 1990s: videocassette recorders,
locally manufactured Japanese Suzuki cars,
and Kalashnikov rifles," said an anonymous
writer.
Videocassette tapes can be rented in many
small villages, where residents also watch
Cable News Network (CNN)--censored
through Islamabad--on televisions that are as
numerous as radios were in the 1970s.
Economy
Overview
Agriculture is the mainstay of Pakistan's
economy, employing almost 50 per cent
of the population. Wheat, rice, cotton,
sugarcane, and tobacco are the chief
crops, and cattle and sheep are raised.
Most of Pakistan's agricultural output comes
from the Indus basin. The country is now
self-sufficient in food, as vast irrigation
schemes have extended farming into arid
areas, and fertilizers and new varieties of
crops have increased yields.
Pakistan's industrial base is able to supply
many of the country's needs in consumer
goods, although production has slowed in
recent years.
The country's natural resources provide
materials for such industries as textile
production (the biggest earner of foreign
exchange), oil refining, metal processing,
and cement and fertilizer production.
Remittances from Pakistanis working abroad
constitute the second largest source of
foreign exchange
Since the mid-1950s electric power output has
greatly increased, mainly because of the
development of hydroelectric power potential
and the use of thermal power plants.
Pakistan's chief imports are petroleum,
machinery, transport equipment, chemicals,
and edible fats and oils.
The chief trading partners are the European
Union nations, the United States, Japan, and
China. In the late 1990s, following years of
lax fiscal policies, Pakistan appeared on the
verge of bankruptcy, with a foreign debt of
over $30 billion.
Concern
Ringing alarm bells over increasing
numbers of poor and unemployed in
Pakistan, the country's state bank said
recently, the level of poverty rose to 33
per cent from 20 per cent in the last 15
years, even though the economy looked
up with a growth rate of 5.1 per cent.
The performance of public companies and
poverty reduction strategies are areas of
continuing concern.
Trends
Pakistan's economy in fiscal 2002-3
demonstrated strong resilience in the face
of a continuing global economic
downturn.
The global recession was fueled by hikes in
oil prices inthe wake of the Iraq war, an
outbreak of SARS in the Asia-Pacific
region, and the continuing sluggish
performance of US markets.
Despite these challenges, Pakistan managed
to register a 5.1% GDP growth rate and
attained significant macroeconomic stability,
reports said.
The manufacturing and agricultural sectors
emerged as the main engines of growth,
experiencing 7.7 per cent and 5.8 per cent
growth rates respectively over the year.
Manufacturing growth was led by a sharp
increase in automobile production, while the
best agricultural performers were rice and
wheat.
In addition, a number of trends in the
macroeconomy revealed positive signs of
Pakistan's economic performance
Foreign exchange reserves touched $10.5
billion; four billion dollars were added to the
reserves over the last one year.
Pakistan secured over $800 million of foreign
direct investment over the fiscal year. Per
capita income increased by 17.4 per cent
over the fiscal year. It constitutes a significant
step towards achieving a higher standard of
living.
Bangladesh
Facts
GDP - Per capita: Purchasing power parity $1,900 (2004 est.)
GDP - Composition by sector: Agriculture:
21.7%, Industry: 26.6%, Services: 51.7%
(2004 est.)
Investment (gross fixed): 23.2% of GDP (2004
est.)
Population below poverty line: 35.6% (2004
est.)
Unemployment rate: 40% (includes
underemployment) (1)
Budget: Revenues: $5.352 billion,
expenditures: $7.55 billion, including capital
expenditures of NA (2004 est.)
Agriculture - Products: rice, jute, tea, wheat,
sugarcane, potatoes, tobacco, pulses,
oilseeds, spices, fruit; beef, milk, poultry
Industries: Cotton textiles, jute, garments, tea
processing, paper newsprint, cement,
chemical fertilizer, light engineering, sugar
Electricity - production: 15.33 billion kwh
(2001)
Electricity - consumption: 14.25 billion kwh
(2001)
Oil - production: 3,581 bbl/day (2001 est.)
Oil - consumption: 71,000 bbl/day (2001 est.)
Natural gas - production: 9.9 billion cu m
(2001 est.)
Natural gas - consumption: 9.9 billion cu m
(2001 est.)
Exports - commodities: Garments, jute and
jute goods, leather, frozen fish and seafood
(2001)
Imports - commodities: machinery and
equipment, chemicals, iron and steel, textiles,
foodstuffs, petroleum products, cement (2000)
Economy
Bangladesh ranks as one of the poorest nations of
the world. It has an average annual per capita
income of about $150 a year. The economy of
Bangladesh is underdeveloped and depends
almost entire on agriculture. Waterways serve as
the chief transportation routes in Bangladesh.
Bangladesh is essentially an agricultural
country. The vast majority of
Bangladesh's inhabitants - almost 80 per
cent - live in its rural areas, and 65 per
cent of its labour force are involved in
farming, particularly for food .
Agriculture contributes 22 per cent to
Bangladesh's GDP. This does not include the
unmeasured contributions of women farmers.
Nearly half of the Bangladeshi farming force is
comprised of women, who play a major role
in various aspects of food and rice
production, and in nearly all aspects of food
processing. More than half of GDP is
generated through the service sector.
Despite sustained domestic and international
efforts to improve economic and
demographic prospects, Bangladesh remains
one of the world's poorest, most densely
populated, and least developed nations.
Once part of British India and then Pakistan,
Bangladesh suffered from chronic economic
neglect. The overall density, 891 persons per
sq km in 2002 is much higher than that of
other countries except for microstates such
as Singapore.
Bangladesh supports a large rural population,
with 21 per cent of the Bangladeshi people
classified as urban in 1999. Throughout the
1980s, Bangladesh became highly
dependent on foreign aid, although this
brought little real change in the lives of its
people.
Major impediments to growth include frequent
cyclones and floods, inefficient state-owned
enterprises, insufficient port facilities, a
rapidly growing labour force that cannot be
absorbed by agriculture, delays in exploiting
energy resources (natural gas), insufficient
power supplies, and slow implementation of
economic reforms.
Reform is stalled in many instances by political
infighting and corruption at all levels of
government.
The region that produced large quantities of
agricultural goods, including most of the
world's jute, received little investment in such
basic items as transportation facilities and
industrial plants. Bangladesh's gross
domestic product was around at $46 billion in
1999.
Jute and tea, which are principal sources of
foreign exchange, follow rice as the most
valuable agricultural products. The nation
produces about one-fifth of the world's supply
of raw jute.
Other valuable agricultural products are wheat,
pulses (leguminous plants, such as peas,
beans, and lentils), sweet potatoes, oil seeds
of various kinds, sugarcane, tobacco, and
fruits such as bananas, mangoes, and
pineapples.
At the time of independence, Bangladesh
pursued a socialist economic policy. Despite
its low GNP per capita, Bangladesh has done
better in areas of human and social
advancement than many other countries with
similar income.
By 1977, all nationalised institutions were
returned to their former owners, but this
resulted in little substantial economic
progress. Between 60 per cent and 75 per
cent of Bangladesh's population are landless.
Although small, the industrial sector contributes
significantly to Bangladesh's exports,
providing employment and a market for cash
crops.
Industry contributes 27 per cent of
Bangladesh's GDP. Since the early 1980s,
production of ready-made garments for the
US and other markets has grown rapidly.
culture
Overview
About 82 per cent of the people of Bangladesh
live in rural areas. Bangladesh's Muslims and
Hindus live in relative harmony. The Muslim
majority has religious leaders, pirs, whose
status straddles the gap between that of a
bishop and that of a sage.
As Hinduism in Bangladesh lacks Indian
version's pomp, Hindu ceremonies are rarely
conducted in the depths of temples to which
access is restricted.
Islamic slant of the country's intellectual life
tends to deny the achievements of the
preceding Hindu and Buddhist cultures.
People and religion:
About 90 per cent of the people are Muslims.
Less than 10 per cent of the people of
Bangladesh are Hindus.
Hindus are divided into various castes. Intermarriage between castes is rare. Hindu
women have few legal rights. Most of the
ethnic groups of the Chittagong Hills area
practise Buddhism.
Some groups combine Buddhist principles with
local religious beliefs. Less than 1 per cent of
the people of Bangladesh are Christians.
Most Muslim parents arrange marriages for
their children. Most Muslim men in
Bangladesh are too poor.
Women's status:
The men in a Muslim family have far more
authority and freedom than the women have.
Many Muslim women avoid social contact
with men who do not belong to their family,
and they participate in few activities outside
the home.
They cover their heads with veils in the
presence of strangers. In 1988, a
constitutional amendment made Islam the
state religion of Bangladesh.
Way of life
Most Bangladeshis farm the land with
simple tools and ancient methods, much
as their ancestors did many years ago.
Since the mid-1970s, however, there has been
increasing use of fertilizers and new kinds of
seeds. About 70 per cent of all adult
Bangladeshis cannot read and write.
Few homes in rural areas have electricity or
plumbing. Most of the families in the cities
and towns live crowded together in small
wooden houses.
Some wealthy city families have large brick or
concrete homes. Most Hindus and members
of other minority groups live together in
distinct neighbourhoods.
Education:
About 30 per cent of all Bangladeshis can read and
write. Bangladesh has about 31,700 elementary and
high schools and about 300 colleges and technical
schools. The University of Dhaka is the nation's
largest university. Dhaka is also the home of the
Jahangirnagar University and Bangladesh University
of Engineering and Technology.
Communication: Bangladesh has many
Bangla and English-language newspapers.
The government owns the nation's radio
stations and television stations. Radio is
available everywhere.
Nepal
Overview
With its ancient culture and the Himalayas as a
backdrop, the landlocked Kingdom of Nepal
has for many years been the destination of
choice for foreign travellers in search of
adventure.
With the world's highest mountain, Everest,
and spectacular scenery and wildlife, the
country has become a popular destination for
tourists.
It also boasts a distinctive Hindu and Buddhist
culture. But it faces a number of
environmental challenges such as
deforestation, encroachment on animal
habitats and vehicle pollution in the capital,
Kathmandu.
In 1951, the Nepalese monarch ended the
century-old system of rule by hereditary
premiers and instituted a cabinet system of
government.
Reforms in 1990 established a multiparty
democracy within the framework of a
constitutional monarchy. A Maoist insurgency,
launched in 1996, has gained traction and is
threatening to bring down the regime.
In 2001, the Crown Prince massacred ten
members of the royal family, including the
king and queen, and then took his own life.
In October 2002, the new King dismissed the
prime minister and his cabinet for
"incompetence" after they dissolved the
Parliament and were subsequently unable to
hold elections because of the ongoing
insurgency
The country is now governed by the King and
his appointed cabinet, which has negotiated
a cease-fire with the Maoist insurgents until
elections can be held at some unspecified
future date.
Facts:
Population: 25.7 million (UN, 2004)
Capital: Kathmandu
Area: 147,181 sq km (56,827 sq miles)
Location: Between China and India;
contains eight of world's 10 highest peaks,
including Mount Everest - the world's
tallest - on the border with China
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Climate: Varies from cool summers and
severe winters in north to subtropical
summers and mild winters in south
Major language: Nepali
Major religions: Hinduism (official), Buddhism
Life expectancy: 60 years (men), 60 years
(women) (UN)
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Monetary unit: 1 Nepalese rupee = 100 paisa
Main exports: Carpets, clothing, leather
goods, jute goods, grain
GNI per capita: US $240 (World Bank, 2003)
Economy
One of the least developed counties in the
world, that is how the United Nations (UN)
sees Nepal .
The nation's gross domestic product (GDP)
was $5 billion in 1999; with per capita GDP of
$210.
Landlocked geography, rugged terrain,
deficiency of natural resources, and poor
infrastructure have mainly contributed to
Nepal's underdevelopment.
China, India, Japan, the United States, and
several European nations have made large
investments in Nepal's economy through
foreign aid since 1952. Still, the nation's
economic growth has been slow .
Nepal's economy is characterised by heavy
dependence on foreign aid, a narrow range
of exports, increasing economic disparity
between the mountain areas and the more
developed Tarai region, excessive
governmental control and regulation, and
inefficient public enterprises and
administration.
Tourism, a chief source of foreign exchange
(along with international aid and Gurkha
pensions), has been hurt by the escalation of
the conflict with the country's Maoist rebels.
Nepal's trade is overwhelmingly with India. In
recent years, significant deforestation and a
growing population have greatly affected the
country.
In addition, the economy has not kept pace
with the nation's high population growth. In
particular, the slow growth of agriculture has
resulted in food shortages and malnutrition
for some of Nepal's people.
The economy is heavily dependent on imports
of basic materials and on foreign markets for
its forest and agricultural products.
Nepal imports essential commodities, such as
fuel, construction materials, fertilizers, metals,
and most consumer goods, and exports such
products as rice, jute, timber, and textiles
The political and administrative system of
Nepal has not made those changes in trade,
investment, and related economic policies
that would expedite economic development
and attract foreign capital. The government's
development programmes, which are funded
by foreign aid, also have failed to respond
directly to the needs of rural people.
Agriculture is the mainstay of the economy,
providing a livelihood for over 80 per cent of
the population and accounting for 41 per cent
of GDP .
Industrial activity mainly involves the
processing of agricultural produce including
jute, sugarcane, tobacco, and grain.
Production of textiles and carpets has
expanded newly and accounted for about 80
per cent of foreign exchange earnings in the
past three years.
Agricultural production is growing by about 5
per cent on average as compared with
annual population growth of 2.3 per cent.
Nepal has considerable scope for accelerating
economic growth by exploiting its potential in
hydropower and tourism, areas of recent
foreign investment interest. Prospects for
foreign trade or investment in other sectors
will remain poor.
The international community's role of funding
more than 60 per cent of Nepal's
development budget and more than 28 per
cent of total budgetary expenditures will likely
continue as a major ingredient of growth.
Culture
Land-linked between India and China, Nepal is
the meeting place of central and south Asia,
and as such is a country replete with
tremendous cultural, linguistic, social,
geological, and biological diversity.
Nepal is often characterised as a nation caught
in two different worlds, having one leg in the
sixteenth century and another in the 20th
century .
At once a time machine and a magic carpet,
Nepal sweeps you along crooked, ancient
streets flanked by irregular, multi-roofed
pagodas, stupas and stone sculptures, and
into rooms cluttered with horror-eyed masks,
spinning prayer wheels, trippy thangka
scrolls and Tibetan carpets.
Social status:
There was no doubt among observers that only
an increasing flow of foreign aid and loans
had kept Nepal from bankruptcy.
Yet there seemed to be little to demonstrate
suggesting that the aid had alleviated mass
poverty and uplifted the society as a whole.
Unemployment among the educated was
partially addressed through the continued
development of government jobs, but such
development resulted in bureaucratic
redundancy and, in fact, hindered economic
development.
Furthermore, such a strategy had only a limited
ability to reduce the mass unemployment
and underemployment that typified Nepal's
society .
Widespread unemployment and
underemployment, which fuelled poverty,
further were exacerbated by continued rapid
population growth.
Despite a long-term and vigorous family
planning programme, the population has
been growing at an increasing rate.
Sri Lanka
Overview
The Sinhalese arrived in Sri Lanka late in the 6th
century BC, probably from northern India.
Buddhism was introduced beginning in about the
mid-third century BC, and a great civilisation
developed at the cities of Anuradhapura
(kingdom from circa 200 BC to circa 1000 AD)
and Polonnaruwa (from about 1070 to 1200).
Facts:
Population: 19.2 million (UN, 2004)
Capital: Colombo (commercial), Sri
Jayawardenepura (administrative)
Area: 65,610 sq km (25,332 sq miles)
Major languages: Sinhala, Tamil, English
Major religions: Buddhism, Hinduism,
Islam, Christianity
Life expectancy: 70 years (men), 76 years
(women) (UN)
Monetary unit: 1 Sri Lankan rupee = 100
cents
Main exports: Clothing and textiles, tea,
gems, rubber, coconuts
GNI per capita: US $930 (World Bank, 2003)
Economy
Famous historically for its cinnamon and
tea and moderately socialist after
independence, Sri Lanka has in the last 20
years increasingly engaged in
privatisation and moved towards marketoriented policies and export-oriented
trade.
While tea and rubber are still important in the
economy, the most dynamic sectors now are
food processing, textiles and apparel, food
and beverages, telecommunications, and
insurance and banking.
By 1996 plantation crops made up only 20 per
cent of exports (compared with 93 per cent in
1970), while textiles and garments accounted
for 63 per cent.
GDP grew at an average annual rate of 5.5 per
cent throughout the 1990s until a drought
and a deteriorating security situation lowered
growth to 3.8 per cent in 1996.
he economy rebounded in 1997-2000 with
average growth of 5.3 per cent. But 2001
saw the first contraction in the country's
history, due to a combination of power
shortages, severe budgetary problems, the
global slowdown, and continuing civil strife.
However, it is now showing signs of recovery
after the Government and the LTTE signed a
ceasefire in 2002. Colombo stock exchange
reported the highest growth in Asia for 2003.
Today, Sri Lanka has the highest per capita
income in South Asia.
Culture
Ethnic intolerance and militant readings of
religious philosophy are largely responsible for
the tragedy of Sri Lanka.
The Sinhalese are predominantly Buddhist, the
Tamils mainly Hindus, and there are sizeable
Muslim and Christian Burgher (descendants of
Dutch colonists) minorities.
The Tamils in the hill country - recent low caste
arrivals brought in by the British to work on
the plantations - share little in common with
the Tamils of the north who have been in Sri
Lanka for over 1000 years.
Maldives
People of Maldives:
he origins of the Maldivians are lost in history.
Archaeological finds indicate that the islands
were inhabited as early as 1500 BC, and
there are tales of a legendary people called
the Redin, who may have been among the
earliest of explorers.
It is believed that Aryan immigrants from the
Indian subcontinent established permanent
settlements around 500 BC. The early
Maldivians were probably Buddhists or
Hindus migrating from the Indian
subcontinent.
Today, Maldives is perhaps the only country
with a hundred per cent Sunni Muslim
population. Islam was introduced around AD
800, and the moderate form practised in
Maldives has remained virtually unchanged.
Religion: Islam
Economy
Tourism, Maldives' largest industry, accounts
for 20 per cent of GDP and more than 60 per
cent of the Maldives' foreign exchange
receipts. Fishing is a second leading sector.
Over 90 per cent of government tax revenue
comes from import duties and tourismrelated taxes.
The Maldivian Government began an economic
reform programme in 1989 initially by lifting
import quotas and opening some exports to
the private sector.
Subsequently, it has liberalised regulations to
allow more foreign investment. Agriculture
and manufacturing continue to play a lesser
role in the economy, constrained by the
limited availability of cultivable land and the
shortage of domestic labour.
Industry, which consists mainly of garment
production, boat building, and handicrafts,
accounts for about 18 per cent of GDP.
Maldivian authorities worry about the impact
of erosion and possible global warming on
their low-lying country; 80 per cent of the
area is one meter or less above sea level.
Facts:
GDP: Purchasing power parity - $1.25 billion
(2002 est.)
GDP - Real growth rate: 2.3 per cent (2002 est.)
GDP - Per capita: purchasing power parity $3,900 (2002 est.)
Budget: Revenues: $224 million (excluding
foreign grants), expenditures: $282 million,
including capital expenditures of $80 million
(2002 est.)
Agriculture - Products: coconuts, corn, sweet
potatoes; fish
Industries: Fish processing, tourism, shipping,
boat building, coconut processing, garments,
woven mats, rope, handicrafts, coral and
sand mining .
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Electricity - Production: 117 million kwh (2001)
Electricity - Consumption: 108.8 million kwh
(2001)
Oil - consumption: 3,200 bbl/day (2001 est.)
Bhutan
Culture:
It is believed that the name Bhutan is derived from
the Sanskrit 'Bhotant', meaning 'the end of Tibet',
or from 'Bhu-uttan', meaning 'high land'.
Historically the Bhutanese have referred to their
country as Druk Yul, 'land of the thunder dragon'.
Bhutanese refer to themselves as Drukpa people.
The Buddhist Kingdom of the Peaceful Thunder
Dragon lies in the eastern Himalayas,
between Tibet to the north, the Indian
territories of Assam and West Bengal, to the
south and east, and Sikkim to the west.
The Kingdom has a total area of about 47,000
square kilometres, about the size of
Switzerland. Located in the heart of the high
Himalayan mountain range, Bhutan is a landlocked country surrounded by mountains.
Bhutan remains mainly a rural country with
90 per cent of the people engaged in farming.
Bhutan is home to one of the world's richest
natural environments and a virtually
untouched and vibrant Buddhist culture. The
Kingdom has over 72 per cent of the land
under forest cover that shelters several
species of flora and fauna, including many
rare and endangered species.
Bhutan is the only country to maintain
Mahayana Buddhism in its Tantric Vajrayana
form as the official religion. Indeed, religion is
the focal point for the arts, festivals and a
considerably above average number of
individuals.
Bhutanese culture derives from ancient Tibetan
culture. Dzongkha and Sharchop, the
principal Bhutanese languages, are closely
related to Tibetan, and Bhutanese monks
read and write the ancient variant of the
Tibetan language known as chhokey.
Economy
One of the world's smallest and least
developed economies - Bhutan - is based
on agriculture and forestry, providing the
main livelihood for more than 90 per cent
of the population. Agriculture consists
largely of subsistence farming and animal
husbandry
Most development projects, such as road
construction, rely on Indian migrant labour.
Bhutan's hydropower potential and its
attraction for tourists are key resources. The
industrial sector is technologically backward,
with most production of the cottage industry
type.
Each economic programme takes into account
the government's desire to protect the
country's environment and cultural traditions.
For example, the government in its cautious .
expansion of the tourist sector encourages
the visits of upscale, environmentally
conscientious visitors.
Bhutan's economy is wholly dependent on
India. It was the benevolent Nehru, who put
Bhutan on the path of economic
development. India has been the largest
donor of external aid to Bhutan and its main
development partner.
Bhutan's first Five Year Economic Development
Plan (1962-67) was totally funded by India.
India had committed Nu/Rs.9000 million (US
$ 215 million) for the Eighth Plan (19972002).
Once totally dependent on India for its
development assistance and government's
establishment expenses, Bhutan has been
increasingly turning to various bilateral,
multilateral, and international finances.
Model education, social, and environment
programmes are underway with support from
multilateral development organisations.
The United Nations, World Bank, Asian
Development Bank, Australia, Austria,
Finland, Denmark, Japan, Netherlands,
Norway, Canada, Switzerland, Germany, Italy,
New Zealand, Sweden, Republic of Korea,
United Kingdom and the United States
provide foreign aid to Bhutan.
Bhutan's economy saw a healthy growth in
2002 with the GDP climbing to 7.7 per cent in
2002 from 6.6 the previous year, according to
the annual report of Bhutan's central bank,
the royal monetary authority (RMA), and the
momentum was maintained in 2003.
The renewable natural resources sector which
includes livestock, forestry, logging and major
cash crops like mandarin and apple,
continued to dominate the share of the GDP
with 33 per cent in 2002.
It remains the most significant sector,
employing about 75 per cent of the country's
labour force, the report pointed out.
Construction and electricity were also key
players in 2002, contributing 17 per cent and
9.7 per cent.
Facts:
GDP: Purchasing power parity - $2.7 billion
(2003 est.)
GDP - Real growth rate: 7.7% (2003 est.)
GDP - Per capita: Purchasing power parity $1,300 (2003 est.)
Budget: Revenues: $146 million expenditures:
$152 million, including capital expenditures
of NA
Agriculture - Products: Rice, corn, root crops,
citrus, food grains; dairy products, eggs
Industries: Cement, wood products, processed
fruits, alcoholic beverages, calcium carbide
Electricity - Consumption: 379.5 million kwh (2001)
Exports: 1.4 billion kwh (2001)
Electricity - Imports: 16 million kwh (2001)
Population: 2.3m (UN, 2004)
Capital: Thimphu
Area: 38,364 sq km (14,812 sq miles)
Major language: Dzongkha (official)
Major religions: Buddhism (official), Hinduism
Life expectancy: 62 years (men), 64 years
(women) (UN)
Monetary unit: 1 ngultrum = 100 chetrum
Main exports: Electricity, timber, cement,
agricultural products, handicrafts
GNI per capita: US $660 (World Bank, 2003)
Climate: Varies; tropical in southern plains; cool
winters and hot summers in central valleys;
severe winters and cool summers in
Himalayas
Terrain: Mostly mountainous with some fertile
valleys and savanna
Natural resources: Timber, hydropower,
gypsum, calcium carbide
Part 3:India:history,culture,religion and
society
3.1 history and culture
India. Birthplace of civilizations, cradle of
religions, still home to almost a quarter of the
world's people. India has dominated the
world stage through most of human history,
as the home of mighty empires, as a
powerful trading nation, and as a wellspring
of culture and civilization.
India has always intrigued and fascinated the
rest of the world. The "fabulous
Indies". Rumours of its empires and its
wealth brought traders and
travelers. Alexander the Great marched
across Asia to India. Arab and Jewish
traders sailed here.
At one time Roman soldiers were barracked
here. The ancient Greeks had trading
colonies. Columbus wasn't looking for
America. He hoped to find a new route to
India. European history dramatically
favoured nations with an India connection.
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India excelled in international trade. Five
thousand years ago the thriving cities of the
Indus Valley traded with
Mesopotamia. Indian traders spread their
goods and influence through South East
Asia. The Hindu island of Bali is one
surviving remnant of a great trading empire.
Spices, gems, pearls and silks flowed out of
India into the rest of the world. Crafts,
textiles, and exotic birds and animals were
also traded. Hannibal's elephants came from
India. So did many of the lavish fabrics
craved by Roman nobility. At one point, so
much gold was leaving Rome for India that
the Roman economy was seriously
weakened.
India was the 'Japan' of the ancient world,
dominating trade relationships. Ideas and
culture spread with trade goods. India gifted
a numbering system and mathematics to the
world.
Philosophy, sciences, and medicine reached
unrivalled heights, enriching the great
scientific achievements of China and the
Arab world. The influences of Indian thought
can be found in early European culture, and
still today, Indian philosophy is influencing
modern global cultures.
India has had an epic history. Great empires
rose and fell. Colossal armies clashed hundreds of thousands of soldiers,
thousands of elephants and horses,
thundering cannons - often at the whims of
capricious rulers. Great fortresses and
palaces were built and destroyed. War,
pestilence, or invaders shattered long
periods of prosperity and peace.
The colonial era brought new and different challenges
to India, culminating in an Independence Movement
without parallel, that has left an indelible mark on
non-violent struggles for freedom and justice
throughout the modern world. During this dramatic
history, society in India wove an intricate web of
relationships, rituals, and duties, yet remained
astonishingly tolerant and diverse.
Great religions developed and spread from
India. Hindus, Buddhists, Jains, and Sikhs
trace their roots from India. India has the
second largest Muslim population in the
world and is home to Animists, Christians,
Zoroastrians, Bah'a'is, Jews, and
others. This elaborate history and culture is
slowly finding its expression on the World
Wide Web.
Many of the best sites on India have been built
by educational institutions around the
world. There are increasing numbers of sites
developed in India by Indians, reflecting both
the techological skills here and the keen
interest in projecting an Indian presence on
the Net .
3.2 Religion
India is a land of many religions. The majority
of Indians are Hindus, with a large minority of
Muslims. Besides, there is Sikhism,
Christianity, Jainism, Buddhism,
Zoroastrianism and many other religions.
Different religious communities living together,
celebrating their festivals make our culture
richer and our people more interesting.
In spite of its heterogeneous religious outlook,
India is still dominated by Hinduism, the
religion of the majority. A discussion of India
is thus never complete without touching on
Hinduism.
since at least the eighteenth century, India has
been associated in the European imagination
as preeminently a land of religion. By the late
nineteenth century, Europeans (and
increasingly Americans) were coming to India
as a landthat promised spiritual release from
the weariness of the material life.
In the twentieth century, this reputation
appeared to be solidified. The struggle for
independence came to be waged under the
leadership of Gandhi, whose unflinching
advocacy of non-violence endeared him to
admirers as a man of religion and peace;
; and in the 1960s, when the enduring image of
India was as a land suffused spirituality,
Westerners flocked to India to avail
themselves of the spiritual advice and
teachings of countless number of Indian
gurus.
This image has taken something of a battering
in recent years, and today Westerners, when
they think at all of India, think of the country
as engulfed by religious 'wars' and hatred, as
ensnared by perpetual Hindu-Muslim conflict;
meanwhile, the gross materialism of middleclass Indians, given naked encouragement
by the state, indigenous and foreign
corporate interests, the culture of modernity,
and international finance organizations such
as the IMF and the World Bank, has all but
eroded the image as a land of sublime
spirituality.
What is indubitably unique about India as a
'land of religions' is that it is the birthplace of
several major world religions. Three-fourths
of the people describe themselves as
adherents of Hinduism, the oldest continuous
faith in the world. Though today Hinduism
has spread to all parts of the world,
taken there by Indian migrants, Hinduism has,
and will continue to have, an indelible
association with India; and perhaps in no
other case is the association between a faith
and a land so close as it is with Hinduism.
This religion produced a vast corpus of texts.
India is equally a land of other faiths: the
world's second largest population of Muslims,
nearly 130 million in number, is to be found in
India, and there are also some 25 million
Christians. Indian Islam has enjoyed a
relationship that is at once syncretistic and
agonistic with Hinduism, and the fruits of this
encounter have been many,
extending from the more obvious vocal and
classical music of India, Mughlai cuisine, and
Indo-Mughal architecture, to the lived
practices common to adherents of both these
great faiths. In antiquity, Buddhism flourished
in India, and it is in Bodh Gaya that the
Buddha gained enlightenment;
his great contemporary, Mahavira, is the
founder of Jainism, also uniquely Indian.
Today Jains are among India's most
distinguished trading and business
communities; and the legacy of Jain art and
culture is just as profound. Sikhism, another
Indian faith, is often imagined as the
Protestantism of Hinduism: today there are
nearly 15 million Sikhs in India,
and perhaps as many as 2 million outside India, whose
practices and precepts may well change the nature
of the faith in India. India also has the largest
community of Zoroastrians, also known as Parsees,
and though in recent years the once-thriving and
very old Jewish community of Cochin has all but
disappeared, the small Jewish community of
Bombay still makes its presence felt in the public
realm.
But all these are only the institutionalized forms
of religious worship in India, and a
bewildering array of other religious practices,
both outside the faiths and within the faiths,
are encountered all over India. Various
devotional poets, religious mendicants,
renowned men and women of spirituality,
and local holy men and women wear no
religious tags, and their teachings and lives
continue to be an example to the common
realm of humanity. From the 9th century to
the 16th century, from the Deccan to the
north, and from Bengal in the east to
modern-day Gujarat and Maharashtra in the
West, India was swept by the fervor of bhakti,
or devotion.
The songs, lyrics, and religious compositions of
the bhakti poets — Nammalvar, Jnaneshvar,
Kabir, Tulsidas, Surdas, Tukaram, Vidyapati,
Chandidasa, Mirabai, among others — are
still sung to popular and classical music alike,
and scarcely any kind of literature resonates
more with Indians than do their compositions.
Similarly, though the institutionalized religions are
associated with great architectural monuments, such
as the Hindu temple cities of South India
(Kanchipuram, Rameswaram, Chidambaram, and
many others), the Mughal splendors of Delhi, Agra,
and Fatehpur Sikri, or the Golden Temple at Amritsar,
the roadside monuments and shrines are even more
indicative of the manner in which these faiths
interweave with the lives of their adherents.
3.3 society
Indian society is multifaceted to an extent perhaps
unknown in any other of the world's great
civilizations. Virtually no generalization made about
Indian society is valid for all of the nation's
multifarious groups. Comprehending the
complexities of Indian social structure has
challenged scholars and other observers over many
decades.
The ethnic and linguistic diversity of Indian
civilization is more like the diversity of an
area as variable as Europe than like that of
any other single nation-state. Living within
the embrace of the Indian nation are vast
numbers of different regional, social, and
economic groups,
each with different cultural practices.
Particularly noteworthy are differences
between social structures in the north and
the south, especially in the realm of kinship
systems. Throughout the country, religious
differences can be significant,
especially between the Hindu majority and the
large Muslim minority; and other Indian
groups--Buddhists, Christians, Jains, Jews,
Parsis, Sikhs, and practitioners of tribal
religions--all pride themselves on being
unlike members of other faiths.
Access to wealth and power varies
considerably, and vast differences in
socioeconomic status are evident
everywhere. The poor and the wealthy live
side by side in urban and rural areas. It is
common in city life to see a prosperous, wellfed man or woman chauffeured in a fine car
pass gaunt street dwellers huddled beneath
burlap shelters along the roadway.
In many villages, solid cement houses of
landowners rise not far from the flimsy
thatched shacks of landless laborers. Even
when not so obvious, distinctions of class are
found in almost every settlement in India.
Urban-rural differences can be immense in the
Indian Society. Nearly 74 percent of India's
population dwells in villages, with agriculture
providing support for most of these rural
residents. In villages, mud-plastered walls
ornamented with traditional designs, dusty
lanes,.
herds of grazing cattle, and the songs of birds
at sunset provide typical settings for the
social lives of most Indians herds of grazing
cattle, and the songs of birds at sunset
provide typical settings for the social lives of
most Indians.
In India's great cities, however, millions of
people live amidst cacophony--roaring
vehicles, surging crowds, jammed apartment
buildings, busy commercial establishments,
loudspeakers blaring movie tunes--while
breathing the poisons of industrial and
automotive pollution.
Gender distinctions are pronounced. The
behavior expected of men and women can
be quite different, especially in villages, but
also in urban centers. Prescribed ideal
gender roles help shape the actions of both
sexes as they move between family and the
world outside the home.
Crosscutting and pervading all of these
differences of region, language, wealth,
status, religion, urbanity, and gender is the
special feature of Indian society that has
received most attention from observers:
caste. The people of India belong to
thousands of castes and castelike groups-hierarchically ordered,
named groups into which members are born.
Caste members are expected to marry within
the group and follow caste rules pertaining to
diet, avoidance of ritual pollution, and many
other aspects of life.
Given the vast diversity of Indian society, any
observation must be tempered with the
understanding that it cannot apply to all
Indians. Still, certain themes or underlying
principles of life are widely accepted in India.
Part 4 economy of India: overview
India's population is estimated at nearly 1.07 billion and
is growing at 1.7% a year. It has the world's 12th
largest economy--and the third largest in Asia behind
Japan and China--with total GDP of around $570
billion. Services, industry and agriculture account for
50.7%, 26.6% and 22.7% of GDP respectively.
Nearly two-thirds of the population depends on
agriculture for their livelihood. About 25% of
the population lives below the poverty line,
but a large and growing middle class of 320340 million has disposable income for
consumer goods. Nearly two-thirds of the
population depends on agriculture for their
livelihood..
About 25% of the population lives below the
poverty line, but a large and growing middle
class of 320-340 million has disposable
income for consumer goods.
India is continuing to move forward with marketoriented economic reforms that began in 1991.
Recent reforms include liberalized foreign
investment and exchange regimes, industrial
decontrol, significant reductions in tariffs and other
trade barriers, reform and modernization of the
financial sector, significant adjustments in
government monetary and fiscal policies and
safeguarding intellectual property rights.
Real GDP growth for the fiscal year ending
March 31, 2004 was 8.17%, up from the
drought-depressed 4.0% growth in the
previous year. Growth for the year ending
March 31, 2005 is expected to be between
6.5% and 7.0%. Foreign portfolio and direct
investment in-flows have risen significantly in
recent years.
They have contributed to the $120 billion in
foreign exchange reserves at the end of June
2004. Government receipts from privatization
were about $3 billion in fiscal year 2003-04.
However, economic growth is constrained by
inadequate infrastructure, a cumbersome
bureaucracy, corruption, labor market
rigidities, regulatory and foreign investment
controls, the "reservation" of key products for
small-scale industries and high fiscal deficits.
The outlook for further trade liberalization is
mixed. I
ndia eliminated quotas on 1,420 consumer
imports in 2002 and has announced its
intention to continue to lower customs duties.
However, the tax structure is complex with
compounding effects of various taxes .
The United States is India's largest trading
partner. Bilateral trade in 2003 was $18.1
billion and is expected to reach $20 billion in
2004. Principal U.S. exports are diagnostic or
lab reagents, aircraft and parts, advanced
machinery, cotton, fertilizers, ferrous
waste/scrap metal and computer hardware.
Major U.S. imports from India include textiles
and ready-made garments, internet-enabled
services, agricultural and related products,
gems and jewelry, leather products and
chemicals. The United States is India's
largest trading partner. Bilateral trade in 2003
was $18.1 billion and is expected to reach
$20 billion in 2004.
Principal U.S. exports are diagnostic or lab
reagents, aircraft and parts, advanced
machinery, cotton, fertilizers, ferrous
waste/scrap metal and computer hardware.
Major U.S. imports from India include textiles
and ready-made garments, internet-enabled
services, agricultural and related products,
gems and jewelry, leather products and
chemicals.
The rapidly growing software sector is boosting
service exports and modernizing India's
economy. Revenues from IT industry are
expected to cross $20 billion in 2004-05.
Software exports were $12.5 billion in 200304. PC penetration is 8 per 1,000 persons,
but is expected to grow to 10 per 1,000 by
2005.
The cellular mobile market is expected to surge
to over 50 million subscribers by 2005 from
the present 36 million users. The country has
52 million cable TV customers.
The United States is India's largest investment
partner, with total inflow of U.S. direct
investment estimated at $3.7 billion in 2003.
Proposals for direct foreign investment are
considered by the Foreign Investment
Promotion Board and generally receive
government approval.
Automatic approvals are available for
investments involving up to 100% foreign
equity, depending on the kind of industry.
Foreign investment is particularly sought
after in power generation,
telecommunications, ports, roads, petroleum
exploration/processing and mining.
India's external debt was $112 billion in 2003,
up from $105 billion in 2002. Bilateral
assistance was approximately $2.62 billion in
2002-03, with the United States providing
about $130.2 million in development
assistance in 2003. The World Bank plans to
double aid to India to almost $3 billion over
the next four years, beginning in July 2004.
Some facts:
GDP: $576 billion (2003); $648 billion (2004 est.).
Real growth rate: 8.2% (2003).
Per capita GDP: $543 (2003); $602 (2004 est.).
Natural resources: Coal, iron ore, manganese,
mica, bauxite, chromite, thorium, limestone, barite,
titanium ore, diamonds, crude oil.
Agriculture: 22.7% of GDP. Products--wheat, rice,
coarse grains, oilseeds, sugar, cotton, jute, tea
Industry: 26.6% of GDP. Products--textiles,
jute, processed food, steel, machinery,
transport equipment, cement, aluminum,
fertilizers, mining, petroleum, chemicals,
computer software.
Services and transportation: 50.7% of GDP.
Trade: Exports--$62 billion; agricultural products,
engineering goods, precious stones, cotton apparel
and fabrics, gems and jewelry, handicrafts, tea.
Software exports--$12.5 billion. Imports--$76 billion;
petroleum, machinery and transport equipment,
electronic goods, edible oils, fertilizers, chemicals,
gold, textiles, iron and steel. Major trade partners-U.S., EU, Russia, Japan, Iraq.
India GDP growth rate
A growth rate of above 8% was achieved by
the Indian economy during the year 200304 and in the advanced estimates for
2004-05, Indian economy has been
predicted to grow at a level of 7 %.
Growth in the Indian economy has steadily
increased since 1979, averaging 5.7% per
year in the 23-year growth record.
(However in comparison to many East
Asian economies, having growth rates
above 7%, the Indian growth experience
lags behind.)
Many factors are behind this robust
performance of the Indian economy in
2004-05. High growth rates in Industry &
service sector and a benign world
economic environment provided a
backdrop conducive to the Indian
economy.
Another positive feature was that the
growth was accompanied by continued
maintenance of relative stability of prices.
However, agriculture fell sharply from its
2003-04 level of 9 % to 1.1% in the current
year primarily because of a bad monsoon.
Thus, there is a paramount need to move
Indian agriculture beyond its centuries
old dependency on monsoon. This can be
achieved by bringing more area under
irrigation and by better water
management.
The Three Sectors of Indian Economy
Agriculture
More than 58% of country's population
depends on agriculture, a sector
producing only 22% of GDP. The
agriculture and allied sector witnessed a
growth of 9.1% in 2003-04, which fell
steeply to 1.1% in the current fiscal year.
Favorable monsoon facilitated an
impressive growth rate of 9.6% in 2003-04
on the back of negative growth in the
preceding year. However, deficient rainfall
from the southwest monsoon is estimated
to have caused a significant decline in
kharif crops production in the current
year.
While looking at some of the agricultural
products, one finds that India is the
largest producer of Tea, jute and jute like
fibre. India is not only the largest
producer but also largest consumer of tea
in the world. India accounts for around
14% of the world trade in tea.
Indian tea is exported in various forms such
as bulk tea, packet tea, tea bags, instant
tea etc, to more than 80 countries of the
world. Among livestock cattle and buffalo
are found maximum in India. Indian total
milk production is highest in the world.
India has also the privilege of having the
1st rank in total irrigated land in area
terms in the world.
Among cereals production, India is placed
third, having second largest production in
wheat and rice and the largest production
in pulses. However, the full potential of
Indian agriculture as a profitable activity
hasn't been realized yet. Agriculture
upliftment will not only benefit farmers
and a large section of the rural poor,
but also will give fillip to overall growth of
the economy through the backward and
forward linkages of agriculture with the
rest of the economy.
Priority must be given to livestock's &
fisheries, horticulture, organic farming,
commercial crops and agro-processing,
as these are the potential areas of high
growth. Further, rationalization of
minimum support price regime and
introduction of other risk- mitigation
measures,
improvements in rural infrastructure are
essential for sustaining high agricultural
growth. It is conceived that reforms in
legislations, strengthening R&D and
improvements in post harvest
management technologies will give a
further boost to Indian agriculture.
While acceleration in agriculture growth to 4
- 4.5% is imperative, even with such
growth rate; share of agriculture in total
GDP is likely to reduce further. Therefore,
there is a need to absorb excess
agricultural labour in other sectors,
notably industry. Rapid growth of agro processing industry close to the
agricultural production
centers can bring about this shift without
moving people from rural to urban areas.
Also, public investment in agriculture
needs to be augmented, especially in
rural infrastructure, irrigation, and
agricultural research & development.
Better access to institutional credit for
more farmers, is also high on priority list.
The New trade policy gives focus to
agriculture and all the hurdles in Indian
agriculture will be crossed gradually.
Industry
Index of industrial production which measures the
overall industrial growth rate was 10.1% in
October 2004 as compared to 6.2% in October
2003. The double digit in IIP was aided by a
robust growth of 11.3% in the manufacturing
sector followed by mining and quarrying and
electricity generation.
But industrial production saw a decline in
Dec 2004 when IIP dipped to 8 %. Thus
one of the critical challenges facing
Indian economic policy consists in
devising strategies for sustained
industrial growth.
Final phase-out of the MFA and India's
conformity with the international
intellectual property system from Jan 1st
Jan 2005, have been two significant
developments in the world of commerce &
industry.
Textile industry is the largest industry in
terms of employment economy from the
current US $37 billion to $ 85 billion by
2010 creation of 12 million new jobs in the
textile sector and modernization &
consolidation for creating a globally
competitive textile industry.
With the phasing out of quota regime under
MFA, from Jan 1st 2005, developing
countries including India with both textile
& clothing capacity may be able to
prosper.
Automobile sector has demonstrated the
inherent strengths of Indian labour and
capital. The pharma industry and the IT
industry are two sunrise sectors for India.
Among the sectors that have experienced
the greatest transformation in India, the
pharmaceutical is perhaps the most
significant.
India's WTO involvement during the last decade
has encouraged our pharma companies to adopt
a strategy of R & D based innovative growth.
Indian pharma exports were 14000 crore Rupees
& accounts for more than a third of the industry's
turnover. Apart from manufacture of drugs, the
pharma industry offers huge for outsourcing of
clinical research.
A vast pool of scientific and technical
personnel & recognized expertise in
medical treatment & health care are
India's strength, India can take
advantages of its strength once patent
protection is given to the result of the
researches.
By participating in the international system
of intellectual property protection, India
unlocks for herself vast opportunities in
both exports as well as her potential to
become a global hub in the area of R & D
based clinical research outsourcing,
particularly in the area of bio-technology.
The three main sub sectors of industry viz
Mining & quarrying, manufacturing, and
electricity, gas & water supply recorded
growths of 5%, 8.8% and 7.1%
respectively.
Apart from infrastructure, particularly adequate and
reliable power supply at reasonable cost and
transportation facilities, there is need for stepped
up investment in manufacturing. Industry needs
to grow rapidly not only to boost the overall
growth rate in the economy but also to generate
gainful employment for the existing unemployed,
as well as the new entrants.
In a diverse range of industrial activities,
several Indian firms have succeeded in
getting integrated into global production
chains and realized rapid growth of
exports. This experience suggests that
with appropriate scale, investment and
technology, rapid industrial growth is
indeed possible.
Services
Service sector has maintained a steady
growth pattern since 96-97, except into a
fall in 2000-01. Trade hotels, transport &
communications have witnessed the
highest growth of level 10.9% in 2004,
followed by financial services (With a
overall growth rate of (6.4) % and
community, social & personal services
(5.9)% of all the three sectors, services
have been the highest contributor to total
GDP growth rate.
While in most parts of the developed world,
the services sector's share of
employment rose faster than its share of
output in India there has been a relatively
slow growth of jobs in the service sector.
This is primarily because of the rise in
labour productivity in services in sectors
such as information technology that is
dependent on skilled labour. Growth in
tourism and tourism - related services
such as hotels, holds a large potential for
employment generation.
IT enabled services, such as Business
Process Outsourcing have been growing
rapidly in the recent past and will
continue to rise. However, the skill
requirements for such services are of a
specialized nature and the emergence of
somewhat inexplicable protectionist
tendencies in some developed countries
is a disturbing trend.
However, it is important that India sees BPO
in a larger perspective, than the Internet,
as India's share is just $ 3.5 billion in
December 2004 compared to the global
market of US $ 178 billion.
Also India outsourcing companies need to
work more closely with their customers.
In the complex BPOs, customers would
like to have hybrid processes to control
value. Indian companies need the right
mix of domain expertise and process
expertise, further, mere knowledge of
English is not sufficient;
management skills are also needed.
Education for the offshoring industry
needs to be given impetus too.
The beginning of New Year saw Tsunami, a
worst ever disaster, which killed
thousands of people in India, Sri Lanka,
Indonesia & Thailand. Many of them were
international tourists. The disaster was
expected to have a negative impact on
India's tourism in terms of large-scale
cancellations of tourists to India
but nothing of that sort was seen. In fact,
tourist arrivals in India rose 23.5 percent
in Dec 2004 and tourist arrivals crossed 3
million mark for the first time in 2004.
Part 5 Economic Reforms and Growth
Prospects in India