India, the Great Partner

Indian Economy Takes Off

India’s economic take-off was long awaited. Gurcharan Das (2000) considers Nehru’s policy of the “iron frame” in the 1950s as the primary cause of the delay. Although the situation has considerably improved in recent years, a number of issues still persist today. Infrastructures remain underdeveloped, daily electricity supply interruptions are common in large cities, water networks are often deficient, and health services vary significantly from one place to another. According to the World Bank (2014), 36% of the population benefit from access to improved sanitary conditions. There are fewer than 0.7 doctors for every 1000 inhabitants, malnutrition remains a curse for millions of people in the country, more than 17% of the population is undernourished, and 43% of children younger than 5 years old are malnourished. Despite these worrying figures, the situation is better than 40 years ago, when 25% of the population (and 70% of the children) were undernourished.

Conditions have improved significantly since the reforms of 1991. India’s GDP grew 5% on average the last 10 years (Maps of India 2014). Population growth is about 1.2% per year, after reaching a peak 2.5% in 1970. The birth rate has dropped from six children per woman in the 1960s to 2.5 today. Life expectancy rose from 40 years in 1960 to 66 years today.

This spectacular economic growth is based on very specific principles. Unlike China, which focused on manufacturing products for export, India chose to focus on domestic consumption and the development of services. More than half of its GDP is today generated by services. The industry sector represents only 27% of total GDP. This policy led India to maintain a Gini coefficient at a reasonable level, around 33, comparable to that of Germany (30). It is lower than that of China (39), the United States (41) and Brazil (59) (Gapminder 2014). Actually, the weak development of the industry sector in India is also the primary result of a remarkable culture of entrepreneurship. An impressive 82% of people in India are selfemployed (World Bank 2014), against 7% in the United States and 11% in France. The country’s economy is therefore based on small-business local entrepreneurship. This particularity dates back ages, and was reinforced by the different measures taken by governments which ruled India in the past decades, in particular the ones headed by Indira Gandhi (between 1966 and 1984), which prevented large companies from taking over control of the manufacture of products. This led to the development of an economy centered around its own internal market and on the development of services. This made of India the world’s “back office” (Das 2000).

The Indian economy took off recently. With 5% GDP growth annually, a high birth rate, a large share of young people in its population, increasing life expectancy, a developing industry sector, modernizing bureaucracy and improving infrastructures, India will become in the twenty-first century a great champion of growth and a major power in the world balance.

This giant requires energy resources to fuel its growth.

 
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