India Economy and Environment


According to the World Bank, India has recorded between 2004 and 2007, a rate of annual growth of GDP greater than or equal to 7%. The Indian economy, however, was affected by the effects of the global economic crisis: in 2008 growth was 3.9%. However, since 2009 it has started to grow again, so much so that for 2010 there has been a leap forward of 10.5%. The figure seemed to bring India back close to pre-crisis levels, but 2011 and 2012 recorded much more modest rates: 6.6% and 5%. Growth recovered slightly between 2013 and 2015, reaching 7.3% in 2015. According to analyzes, the country’s growth prospects for the next few years seem to be around this figure. Also in 2015, the main export partners were the USA(14%), and the Arab Emirates (10%) while, for imports, China (12%) far ahead of Washington (4%). The alternating phases of the Indian economy recorded by these indicators do not however constitute a mirror of the living conditions of the majority of the population, still in the grip of poverty. This situation partly unites India to other giants such as Brazil, China and Russia, the so-called BRIC. The road to balance and economic consolidation of India is therefore still long and passes through the development of infrastructures, the reduction of corruption, the improvement of the bureaucratic system, the mass training of skilled workers – and their regulation, from since 90% of the sector is informal – the privatization process, the reduction of inflation and public debt and the strengthening of the industrial sector. The latter contributes only a quarter to the national GDP, but provides the most concrete example of India’s potential with the film industry (known worldwide as Bollywood) and with the computer centers of which Bangalore is a world champion.

However, it is the tertiary sector that is the main driver of the economy and it is foreign outsourcing that plays a leading role, as India holds about half of the world market thanks to its low production costs. The average annual salary of a professional working in the legal sector in India, for example, is around 8,000 euros compared to 130,000 for a US professional.

The country’s growth is linked to foreign investment and, therefore, to the global availability of capital. The government supports this mechanism by stabilizing the currency, the rupee, through a US government bond purchase policy. The resulting internal inflation problems are managed with a policy of targeted subsidies. All of these factors have a decisive impact on the Indian economy and the government plays a central role in their management. National debt control is quite different with respect to large Indian corporations, whose debt ratios are exposed to the rising high interest rates of the global market.

Energy and environment

With 5.9% of world consumption, India was the third world energy user in 2012, behind China and the USA. Although energy production has also grown considerably over the last fifteen years, it has not managed to keep pace with consumption. India’s level of dependence on imports of raw materials has thus progressively increased. India’s energy mix is ​​dominated by coal, the use of which has been steadily increasing since 2000, along with that of lignite. The trend is expected and maintained and this means that India’s fossil fuel reserves, despite being among the largest on a world scale (7.5% in 2014), may not meet demand in the long term. The energy problem is one of the most important in the political landscape. Currently, the most popular proposals provide for the granting of more favorable conditions for oil companies, which over the years have moved away from the country, and support for oil exploration, which seems to be the only viable alternative to support the economy. Crude oil and natural gas come mainly from imports (respectively, approximately 75% and 30% of the total in 2014), a dependence that has become more and more marked over the years.

To secure itself in the long term, India is also developing nuclear power generation. Today the atom supplies 1.1% of the energy consumed, but it is estimated that it should produce 25% of electricity in 2050. In this perspective, the country has concluded bilateral agreements with numerous countries such as the United States, France, Russia, Kazakhstan and Canada. Rapid population growth and impetuous economic development have had a significant impact on the country’s natural resources: deforestation, reduction of biodiversity, soil degradation, water and air pollution are now real emergencies. The country has advanced environmental legislation which however is not properly implemented at the federal and state levels.

According to indexdotcom, growing cooperation has been initiated with Russia, already an energy supply partner. The Russians participate, for example, in the construction of the Kudankulam nuclear plant. The plant, which started in 2002, has suffered numerous delays, also due to protest movements against nuclear energy, and was only completed in July 2013.

Iran remains the second largest supplier of crude oil with 17% of imports after Saudi Arabia, which accounts for 29% of imports. The projects in the gas sector are significant, a resource that India imports today in liquefied form and which is destined to gain a growing share in the national energy mix. A project developed in the 1990s, but once again a priority on the regional agenda, with a view to stabilizing the Afghan theater, is the gas pipeline that from Turkmenistan should cross Afghanistan and Pakistan. However, discussions relating to transit taxes have blocked the project for the two-year period 2012-13 and the geopolitics of the region, marked by several unresolved issues, seems to place a serious veto on the plan. The parallel pipeline Iran-Pakistan-India faces similar difficulties. The gas pipeline from Myanmar that would arrive in India via Bangladesh is kept alive in the commercial negotiations between the countries concerned and the agreement would seem close, but the construction times remain long. For these reasons, India opted in 2003 to use regasifiers and to import liquefied natural gas, mainly from Qatar. This situation could only change with greater regional stability and with the gradual improvement of relations with Pakistan, gas-rich Bangladesh and Southeast Asia.

India Environment

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