Pestel Analyses of India

Topics: India, Economic growth, Economics Pages: 155 (42171 words) Published: October 9, 2011

In-depth PESTLE Insights
Publication Date: December 2010

This profile analyzes the political, economic, social, technological, legal and environmental structure in India. Each of the PESTLE factors is explored on four parameters: current strengths, current challenges, future prospects and future risks.

Summary Key findings
India is a stable democracy, but terrorism and its relationships with its neighbors continue to be a problem Since India gained independence in 1947, the country's political stability has allowed it to maintain its position as the largest democracy in the world. Harboring vast regional and cultural variation, it has survived as a nation in spite of insurgencies in the northeast, the disputed state of Jammu and Kashmir, and the growing threat from revolutionary communist Naxalite groups. Economic liberalization in 1991 not only led to rapid economic growth, but also brought India closer to North America and Western Europe, although the country also maintains strong ties with Russia, continuing relations established with the former USSR. Despite these successes, India has a long way to go to improve its performance in terms of political stability, as well as its ability to prevent terrorism and violence. The key challenges that India has faced and continues to face relate to its relationships with its neighbors, such as Pakistan, China and Bangladesh. While the Indian economy is inherently strong, poor infrastructure continues to hinder growth The Indian economy witnessed robust growth during 2005–07, registering an average GDP growth rate of 9.5% over the period. However, the global financial crisis brought down the growth momentum of the economy, and real GDP came down sharply to reach 6.4% in 2008. However, the economy recovered in 2009 to post a GDP growth rate of 7.4%. The country’s GDP is estimated to reach 8.5% in 2010 indicating a smart economic recovery. India’s GDP growth rate is expected to be more than 8% during 2010–13, which indicates the inherent strength of the country's economy. India’s port, road and rail networks need massive capital investment. The ports in India are operating beyond their intended

India: Country Analysis Report – In-depth PESTLE Insights
© Datamonitor. This brief is a licensed product and is not to be photocopied

Published 12/2010 Page 1


capacity in spite of the construction of a number of new sites. Moreover, there are bottlenecks when clearing goods from customs: the time required to clear goods in India is twice that of South Korea and Thailand and three times that of the average for members of the Organisation for Economic Co-operation and Development (OECD). Since most ports are overstretched and the time taken to obtain customs clearance is quite long, companies in India hold large inventories. Poor road and rail networks exacerbate these problems. India continues to experience power shortages and companies require back-up power supplies, which add to costs. This poor infrastructure is likely to impede investment and growth in the country. The country has a large working population, but performs poorly on social development India is the second most populous nation in the world, with a population of 1.1 billion. Given that in 2009 the median age was 25.3 years, a positive demographic factor is the large pool of working people that exists in the country. Indeed, those above the age of 65 make up just 5.3% of the population. India’s growing young population gives it access to a huge active workforce, which means that it has a significant edge over the majority of developed and developing nations. This will continue to be a competitive advantage for the country in the future. India’s social development policies, however, have been able to achieve very little in terms of human development, and the country was ranked 134th among 182 countries in the Human Development Report 2009. There...
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