India has 28 states and seven union territories covering an area of nearly 1.3 million square miles. Its four regions show pronounced cultural variations, and there are 15 official languages. Hindi is the national language and primary tongue of 30% of the population, but English is often used for political and commercial communications.
The Indian economy is worth about $515 billion and rapidly getting bigger. It grew 7% in 2004 and is forecast to increase by at least 5% a year for the next 45 years – thanks largely to a strong services sector, which contributes nearly half the country’s GDP and has created a growing middle class. However, India is still a primarily agrarian society, characterised by considerable poverty. Seven hundred million of its almost 1.1 billion inhabitants live in the countryside; three hundred million live on less than $1 a day.
India’s large and expanding population – it is projected to reach to 1.6 billion by 2050, a 37.5% increase that will see the country far outstrip China as the world’s most populous state – has also contributed to the huge rise in its use of natural resources and massive environmental degradation. It already consumes more than 510 billion kWh of electricity a year and more than two million bbl/day, but domestic demand for energy is set to triple by 2020. Meanwhile, rapid industrial growth and streets choked with traffic have made the air in the largest cities more polluted than almost anywhere else in Asia.
The key issues
* There is a very wide income gap between the wealthy and the poor, with only 15% of the population reaping the benefits of India’s economic growth and nearly 20% living below the poverty line. This has resulted in a desynchronised pattern of consumption.
* The emphasis is on achieving higher growth, and little effort has been made to decouple growth from consumption.
* Recycling is rare, even though recycling policies exist.
* India has launched an aggressive drive to invest in clean technology and reduce emissions in order to reap the benefits offered by the CDM included in the Kyoto Protocol.
* Bribery and corruption are rife in both the public and private sectors. India scores only 2.8 on the Transparency International Corruption Perceptions Index.
* Child labour is common, as are other human rights issues.
* Few market pressures exist to demonstrate good governance, sound risk management, greater transparency and personal liability at board level. The private sector is acting on these issues on a voluntary basis, but there is little evidence of such measures in the public sector.
* Infrastructure remains the main stumbling block to India’s development and ability to attract foreign investment. It needs more mass transit systems, rural roads, new ports and power plants.
The key drivers
* Indians have little faith in the government and public sector.
* The private sector is keen to catch up with worldwide sustainability trends. This is especially true of Indian multinationals and companies wishing to raise funds via the European or US capital markets.
* The pressure from stakeholders is rising, particularly when it comes to the construction of new infrastructure projects.
* Companies are becoming increasingly aware that they must channel some of their profits into social development, since “islands of prosperity” cannot survive. They are also beginning to realise the importance of preserving the environment.
* Both public- and private-sector organisations must learn to separate economic growth from consumption. They must also take account of social pressures, if they are to avoid any disruption of their activities.
* The private sector needs better access to capital and credit, especially in the international markets.
* Closer alignment of the interests of private investors and other stakeholders is essential, as is better corporate governance.
* Parts of the public sector must be privatised. The remainder must be managed more effectively and made more accountable.
* Greater attention must be paid to the centralisation of regulatory power and formulation of public policies.