Front Matter

Front Matter

Author(s):
Catriona Purfield, and Jerald Schiff
Published Date:
August 2006
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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

    Please send orders to:

    International Monetary Fund, Publication Services

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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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