India - Setting the Context

India at a Glance

  • India is the second fastest growing major economy globally.  The IMF estimates growth of  6.3% in 2015 and 6.5% in 2016, placing it just behind China
  • The Indian economy is supported by highly favourable demographic fundamentals, with an estimated 70% of its citizens under 36 years old and an emerging class of university educated graduates (3.5 million new graduates per annum)
  • This large and active working population, combined with widening opportunities in education and business, underpins a fast growing domestic economy, fuelled by domestic demand
  • Exports are an increasingly important contributor to growth, comprising 25% of GDP in 2013 compared to just 13% in 2000.  This figure lags emerging market peers (c.52% for Asia ex-Japan), but leaves India less exposed to fluctuations in international trade
  • The changing regulatory regime is fostering an attractive environment for investment.  The Services Sector accounts for c.22% of investment, computer software and hardware for 8%, telecommunications for 8% and housing and real estate for 7%

Political Background

  • India gained independence in 1947, and is the world’s most populous democracy, with 714 million people eligible to vote
  • The Prime Minister is the head of government, and presides over a Council of Ministers composed of elected members of parliament
  • The President is the head of state, and has limited executive power, but can influence the formation of governments when no party has gained an outright majority
  • The judiciary is constitutionally independent
  • The Congress Party and the Bharatiya Janata Party (BJP) they are the two main forces in Indian politics.
  • Government is therefore through coalitions with smaller independent or regional parties often acting as coalition partners; two main alliances have emerged:
    • United Progressive Alliance (“UPA”), led by the Congress Party
    • National Democratic Alliance, led by the BJP
  • The NDA was re-elected to government in May 2014, and currently holds 334 seats in parliament. 
  • The  government is headed by Mr. Narendra Modi, a former chief minister of Gujrat state in India.