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The Indian Pharmaceutical Market Outlook To 2020
From: Business Insights
India is a pluralistic, multi-lingual and multi-ethnic nation. The country is the second most populous in the world; with 1.1 billion residents in 2007, it is home to a sixth of the global population. The country is also the 12th largest world economy in terms of nominal US dollars; at purchasing power parity exchange rates, however, the country’s economy is the fourth largest in the world. The country has been a democracy since it gained independence in 1947.
Overview of Indian history
India’s mix of Aryan and Dravidian cultures evolved after Aryans from the northwest entered the subcontinent, which was originally populated by Dravidians, in 1500 BC. The country has a rich history, replete with influences from the various cultures and dynasties that ruled it over the ages. Indian science, art and culture flourished under the Gupta dynasty that reigned from the fourth to sixth century AD, a period considered by many to have been the golden age of Indian civilization. By the 19th century, the British had assumed political control of most part of the country. The country finally gained independence from British control in 1947 following a largely non-violent civil disobedience movement.
India is a federal republic, with the president being the chief of state and the prime minister the head of government. The prime minister is chosen by parliamentary members of the majority-winning party following legislative elections. Over the years, coalition politics have become the norm at the federal level in India and even at the state level since 1996.
Table 1 provides a political snapshot of India.
Table 1: Political snapshot of India
|Table 1: Political snapshot of India|
|Form of state||Federal republic|
|Administrative divisions||29 states, six union territories|
|Legal system||Based on the 1950 constitution and English common law|
|Head of state||President Pratibha Patil|
|Prime Minister||Dr Manmohan Singh|
Source: The Economist
A burgeoning economy
India has a diverse economy that includes traditional village farming, contemporary agriculture, an array of modern industries and a multitude of services. The service segment is the major driver of economic growth, accounting for half of the country’s output despite employing only a third of the labor force. More than half of the workforce is involved with agriculture. Aggregate demand in the Indian economy is mainly domestic, even though exports have been gaining progressively greater importance in recent years.
The Indian economy has undergone a significant change since economic reforms were introduced in 1991. Theses reforms were three-pronged, involving liberalization, privatization and globalization. They entailed deregulating the markets, promoting private participation and trade liberalization, reforming the tax system and the financial sector and removing the restrictions on domestic and foreign investment. These policy initiatives changed the economic landscape of the country and better integrated it with the rest of the world.
The country’s strong economic growth, coupled with a real estate boom, easy consumer credit and rising commodity prices, spurred inflation concerns from the middle of 2006 through to August 2008. Rising subsidies, combined with slowing growth, led to a large 2008 fiscal deficit. In the long run, however, the country’s bigger challenge and concern is the growing population, which poses a fundamental economic, social and environmental problem.
Key economic parameters
India’s current economic scenario features strong macroeconomic fundamentals and tangible progress towards fiscal consolidation. Inflation, in terms of the wholesale price index, stood at 0.4% for the week that ended on March 7, 2009, compared to 7.8% for the corresponding week in the previous year. Table 2 provides an economic snapshot of India.
Table 2: Economic snapshot of India
|GDP (purchasing power parity), $bn||3,267||2008 estimate|
|GDP (official exchange rate), $bn||1,237||2008 estimate|
|GDP per capita (purchasing power parity), $||2,800||2008 estimate|
|Total expenditure on health per capita||109||2006|
|Expenditure on health (% of GDP)||4.9||2006|
|Market capitalization of listed companies (% of GDP)||155.4||2007|
|Time required to start a business (days)||33||2007|
Source: CIA – The World Factbook, WHO, World Bank
As per estimates published by the Central Statistical Organization in November 2008, real GDP growth in the second quarter of 2008-09 was 7.6% compared to 9.3% in the corresponding quarter of 2007-08. This reflects a deceleration in the growth of services and industry.
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