Public and private sectors

The public sector continues to play a major role in the country's growth and accounts for nearly 24 percent of the GDP. The public sector in industry comprises public utilities (railroads, airlines, postal and telecommunications services, ports power, and irrigation projects), departmental undertakings of the central and state governments, various defense production establishments, and various industrial undertakings producing or selling goods and rendering services. The public sector is also predominate in the production of minerals, steel, metals, coal, natural gas and petroleum, chemicals and pharmaceuticals, and heavy engineering products. In banking the public-sector banks occupy the dominant position, and the life insurance and general insurance businesses are entirely in the public sector.

The private sector covers not only the rest of organized industry but also several of the above areas. Small-scale industry, agriculture, trade, construction, and wholesale and retail distribution are predominately in the private sector.

Liberalization has resulted in the opening to the private sector of several of the areas previously reserved for the Public sector. Even in the short list reserved for the public sector, the private sector is allowed to participate selectively.

Key economic indicators 

The population has increased by about 2 percent per year. Only modest gain in per capital GDP have been achieved for the last few years, the average growth rate being 5.6 percent during the seventh five-year plan ending in March 1990. The growth rates in 1994/95 and 1995/96 are estimated at 5 to 6 percent per annum.

Indian foreign currency reserves, which had reached a low of a little over US $1 billion in mid-1991, exceeded US $17 billion at the end of December 1995.

India's external debt currently stands at approximately US $93 billion. However, a large chunk of this is through multilateral development banks and is highly concessional. Debt-service payments account for about 27 percent of current account receipts.

Foreign direct investment is estimated to be more than US $1.5 billion in 1995/96. A large number of multinationals are seeking entry and being cleared to invest directly in the Indian economy. Portfolio investment by Foreign Institutional Investors (FIIs) and Global Depository Receipts are estimated at US $1.8 billion in 1995/96.

Inflation has been reduced from the peak of 17 percent in August 1991 to about 7 percent in December 1995. The average inflation rate during 1995/96 is estimated at about 9.5 percent.