Information about Asia and the Pacific Asia y el Pacífico
Front Matter

Front Matter

Author(s):
Catriona Purfield, and Jerald Schiff
Published Date:
August 2006
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Information about Asia and the Pacific Asia y el Pacífico
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India Goes Global: Its Expanding Role in the World Economy

Catriona Purfield

Jerald Schiff

Editors

INTERNATIONAL MONETARY FUND

© 2006 International Monetary Fund

Production: IMF Multimedia Services Division

Cover design: Massoud Etemadi and Jorge Salazar

Cover photograph: Pablo Bartholomew/Netphotograph.com

Typesetting: Bob Lunsford

Figures: Jason Soleil

Cataloging-in-Publication Data

India goes global: its expanding role in the world economy / Catriona Purfield, Jerald Schiff, editors—[Washington, D.C.]: International Monetary Fund, 2006.

  • p. cm.
  • ISBN 1-58906-568-9

1. India—Economic conditions. 2. India—Economic policy. 3. Banks and banking—India. 4. Fiscal policy—India. 5. Textile industry—India. I. Purfield, Catriona. II. Schiff, Jerald Alan. III. International Monetary Fund.

HC433.I54 2006

Price: $22.00

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Contents

The following conventions are used in this publication:

  • In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible” Minor discrepancies between sums of constituent figures and totals are due to rounding.
  • An en dash (–) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).
  • “Billion” means a thousand million; “trillion” means a thousand billion.
  • “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

Preface

The team at the IMF that has worked on this book has been extremely fortunate to be involved with India precisely as it emerged as a global economic power. In the last several years, India has opened itself to the global economy and become one of the world’s fastest growing economies, the leading outsourcing destination, and a favorite of international investors. At the same time, India faces daunting challenges as it seeks to continue to integrate with the world economy, sustain rapid growth, and improve the well-being of all its citizens. The studies in this book document and analyze India’s impressive achievements, while examining the important and difficult steps that remain to consolidate and build on these gains. It is our hope that these studies can contribute to the vibrant public debate—both within India and outside—on the direction of economic policy in India.

This book grew out of the IMF staff’s ongoing policy dialog with the Indian authorities, in particular at the Ministry of Finance and the Reserve Bank of India. The focus of several chapters was suggested by officials from these agencies, while other chapters benefited from a stimulating exchange of views as well as specific comments and suggestions made by the staff of the Reserve Bank and Ministry of Finance on earlier drafts. The Office of the Executive Director for India at the International Monetary Fund, headed by B.P Misra, has been instrumental in facilitating this dialog while providing helpful input into our work. Wanda Tseng, Deputy Director of the IMF’s Asia and Pacific Department, who has led the department’s work on India for several years, provided critical intellectual leadership for the project. Rabin Hattari, Yuko Kobayashi, and Nong Jotikasthira provided outstanding research and administrative assistance. Esha Ray provided invaluable support in editing the book and coordinating its production.

The opinions expressed here are those of the authors and do not necessarily reflect the views of the Indian authorities, the IMF, or IMF Executive Directors.

Abbreviations

AETR

Average effective tax rate

ASEAN

Association of South East Asian Nations

ATC

Agreement on Textiles and Clothing

BPO

Business process outsourcing

CAR

Capital adequacy ratio

CIT

Corporate income tax

CPI

Consumer price index

CSO

Central Statistical Organisation

CST

Central sales tax

CV

Coefficient of variation

ECB

External commercial borrowing

EPW

Economic and Political Weekly

EREER

Equilibrium real effective exchange rate

ETE

Export tax equivalent

EU

European Union

FDI

Foreign direct investment

FICCI

Federation of Indian Chambers of Commerce and Industry

FII

Foreign institutional investor

FIPB

Foreign Investment Promotion Board

FRBMA

Fiscal Responsibility and Budget Management Act

FRL

Fiscal responsibility legislation

G-5

Group of Five

G-7

Group of Seven

GDP

Gross domestic product

GNI

Gross national income

GMM

Generalized method of moments

GSDP

Gross state domestic product

GST

Goods and services tax

GTAP

Global Trade Analysis Project

ICRIER

Indian Council for Research on International Economic Relations

IFS

International Financial Statistics

ISP

Internet service provider

IT

Information technology

LIBOR

London interbank offered rate

METR

Marginal effective tax rate

METW

Marginal effective tax wedge

MFA

Multifiber Arrangement

NBFC

Nonbank financial company

NFA

Net foreign assets

NPA

Nonperforming asset

NPL

Nonperforming loan

NSDP

Net state domestic product

NSSO

National Sample Survey Organisation

OECD

Organization for Economic Cooperation and Development

OLS

Ordinary least squares

PIT

Personal income tax

PLR

Prime lending rate

PPP

Purchasing power parity

RBI

Reserve Bank of India

REER

Real effective exchange rate

SME

Small and medium-sized enterprise

T&C

Textiles and clothing

TFC

Twelfth Finance Commission

UN

United Nations

UNCTAD

United Nations Conference on Trade and Development

VAT

Value-added tax

VECM

Vector error correction model

WDI

World Development Indicators

WTO

World Trade Organization

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