India's economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of support services. Government controls have been reduced on foreign trade and investment, and privatization of domestic output has proceeded slowly. But continued social, political, and economic rigidities hold back needed initiatives. The economy has posted an average growth rate of 6.8% since 1994, reducing poverty by about 10 percentage points. India is capitalizing on its large numbers of well-educated people skilled in the English language to become a major exporter of software services and software workers. Despite strong growth, the World Bank and others worry about the combined state and federal budget deficit, running at approximately 9% of GDP. The huge and growing population is the fundamental social, economic, and environmental problem. In late December 2004, a major tsunami took at least 60,000 lives in India and caused massive destruction of property.

Despite impressive gains in economic investment and output, India faces pressing problems such as the ongoing dispute with Pakistan over Kashmir, massive overpopulation, environmental degradation, extensive poverty, and ethnic and religious strife.¹¹⁸

GDP per capita is Intl$1,568. Compared with other countries in Asia this is low (Table 16).

Table 16 GDP per capita (Intl $): countries of Asia, 2002