Economy
India has elements of both a modern industrial economy and a subsistence economy. Since independence in 1947, the nation has directed its efforts largely to improving and developing manufacturing industries. As a result, it now produces many and varied manufactured goods, including many technologically advanced products. Manufacturing employs an increasing number of people and produces some of India's chief exports. Many Indians, however, live much as their ancestors did and are outside of the modern industrial economy. Most farmers grow barely enough food to feed themselves and their families. In cities, millions of people earn meager wages at unskilled jobs or are unemployed.
Efforts to raise India's standard of living have been hindered largely by rapid population growth.
Since the early 1950's India's economic system has been based largely on the doctrine of democratic socialism. Private enterprise predominates, but is combined with public (that is, government) ownership of certain basic industries and financial institutions. In general, the government has expanded its economic role by establishing new enterprises rather than by nationalizing existing ones. Only the transportation, communications, banking, and insurance industries have been largely or completely nationalized. Since 1951 economic development has been guided by a series of five-year plans, designed to stimulate industrialization and improve agriculture.
The success of India's development plans depends heavily on the nation's ability to modernize its agriculture, which supports about 60 per cent of the people and provides about 30 per cent of the gross domestic product (GDP). Much of the nation's food and many industrial raw materials come from farming; yet agriculture is probably the segment of the economy most in need of modernization. Most farmers work small family plots of less than five acres (2 hectares), using age-old methods.
Government programs designed to aid agriculture stress land reform, improved irrigation and rural transportation, formation of farmers' cooperatives, and introduction of fertilizer, pesticides, and high-yielding seed. In areas where these programs have been implemented crop yields have risen sharply, resulting in a significant increase in the supply of food, particularly of such staples as rice and wheat. In years with good rainfall there has been surplus grain production. Food production as a whole is sufficient to meet domestic requirements. Occasional droughts and floods, however, cause food shortages in some areas.
Roughly half of India's area, or about 420 million acres (170 million hectares), is cultivated—more land than in any other nation except the United States. The nation's vast irrigation system serves a fourth of the farmland. The rest of the farmland receives virtually all of its water from the monsoon rains, which are highly variable in amount; consequently, crop yields can fluctuate widely from year to year.
Cereals and other staples take up about three-fourths of the cropland. India grows more rice than any country except China and is also a major wheat producer. Rice predominates on the lower Ganges Plain, in Assam, and along the eastern and southwestern coasts. Wheat is grown mainly on the drier central and western plains, which are unsuited to rice. Other cereals produced in large quantities include sorghum, millet, and corn. Chickpeas, lentils, and dry beans are the principal noncereal foods grown. They constitute the chief source of protein in India, where meat consumption is restricted by religious beliefs.
The remaining one-fourth of the farmland is devoted to commercial crops. India is one of the world's leading producers of tea, peanuts, cotton, jute, sugarcane, and tobacco. Rubber, coffee, and spices are also important. The commercial crops, grown on both small farms and large plantations, provide raw materials for domestic industries and, as exports, earn much of the nation's foreign exchange.
India has a huge domestic animal population, with cattle the most numerous. They are widely used as draft animals and provide milk, fuel (dried dung), and manure for fertilizer. Because cattle have religious significance to Hindus, they are rarely slaughtered and eaten. Large numbers of sheep and goats are raised for meat, milk, wool, hair, and skins.
Except for textile milling, which was established on a large scale in the 1850's, India had little modern manufacturing prior to independence in 1947. Since then industrialization has progressed rapidly, drawing on the nation's relatively abundant raw materials and aided by public and private investment. Great emphasis has been placed on the development of heavy industry, much of which is controlled wholly or partly by the government. The production of consumer goods has also increased, but at a slower rate. Except for some metallurgical industries, located near the source of raw materials, manufacturing is concentrated in and around major cities, especially Mumbai (Bombay), Kolkata (Calcutta), and Chennai (Madras).
In addition to supporting modern factory development, the government has encouraged the expansion of cottage industries—small-scale manufacturing enterprises operated out of the home. These enterprises employ several times the number of workers employed by factories and provide many of the items used in everyday life.
Textile milling remains India's largest and best-developed industry, in both employment and value of output. The nation is one of the world's leading manufacturers of cotton and jute textiles and also produces woolen, silk, and synthetic goods. Mechanized mills contribute most of the textile output; however, wool and silk textiles are produced predominantly by cottage industries.
The making of iron and steel is India's chief heavy industry. Government-owned steel mills, built under the five-year plans, account for most of the steel produced. The rest comes from plants that are privately owned or jointly owned by the government and private concerns. Other prominent manufacturing industries include petroleum refining and the making of chemicals and fertilizers, motor vehicles, aircraft, ships, machinery, electrical equipment, aluminum, and cement. Also important are food processing, primarily the refining of sugar and the production of vegetable oils; metal fabricating; printing and publishing; and the making of rubber goods, tobacco products, and paper.
India makes numerous technologically advanced products such as electronic devices and precision instruments. However, their contribution to the economy is small in terms of employment and value of production.
India has abundant and varied mineral resources, and mining is an important activity. Like most other large-scale undertakings, mining is divided between the public and private sectors of the economy, with new development the responsibility of the government.
Coal and petroleum are the nation's principal mineral resources, accounting for most of the value of all minerals produced. Wells in Assam and Gujarat and in the Gulf of Cambay, an arm of the Arabian Sea, produce most of the petroleum. Coal is mined primarily in the eastern states of Bihar, West Bengal, and Madhya Pradesh. India has a large share of the world's known reserves of iron ore, which is mined in large amounts both for domestic use and for export. Other minerals that rank high in both production and value include mica, manganese, chromite, and bauxite.
Although fishing has considerable economic potential, it is not a major activity in India. Fish make up a minor part of the Indian diet, being widely eaten only in coastal areas and the island territories. A small but growing commercial fishing industry yields mainly shrimp for export.
India has an extensive government-owned and -operated railway network, which was begun under the British. The railways serve all major cities and carry most of the nation's freight and passenger traffic.
National highways link state capitals and major ports and connect with the highways of neighboring countries. Many roads, however, are narrow and often impassable during the summer monsoon. The use of motor vehicles and bicycles is increasing rapidly, particularly in urban areas. However, most $rroads are not suited to a heavy volume of traffic, and congestion is becoming a serious problem.
Some of India's rivers are important transportation routes. The Ganges, Brahmaputra, Godavari, and Krishna rivers carry most of the waterborne traffic. Ocean shipping is concentrated at nine major seaports —Kolkata, Paradip, Visakhapatnam, and Chennai on the east coast and Kandla, Mumbai, Marmagao, Mangalore, and Cochin on the west coast. These ports handle nearly all of India's foreign trade. Dozens of smaller ports are engaged in extensive coastal trade.
Air transportation is well developed and is provided mainly by two airlines: Air India, which is the long-distance international carrier, and Indian Airlines, which serves cities within India and also flies to adjacent countries. Numerous foreign carriers provide international service through airports at Mumbai, Kolkata, Delhi, and Chennai.
India's imports exceed exports by a large margin in terms of value. Major imports include petroleum and petroleum products, machinery, pearls, and precious and semiprecious stones. Among the major exports are jewelry and gems, transportation equipment, garments, chemicals, and cotton textiles. The United States is India's principal trading partner. Other important trading partners include Japan, Germany, Belgium, Great Britain, Saudi Arabia, and the countries of eastern Europe, especially the republics of the former Soviet Union.
The government owns and operates all postal, telephone, and telegraph services. Radio and television broadcasting is also a government monopoly. The All India Radio network (AIR) broadcasts in more than 40 languages and dialects. Because of the nation's high rate of illiteracy, radio is an extremely important means of getting educational material to the people.
