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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 515,000 481,400  460,616 11
GNI per capita
 US $ 480 470 450 159
Ranking is given out of 208 nations - (data from the World Bank)

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India has emerged as one of the dominant players in the international system and a regional power in the South Asian subcontinent. Located in the heart of South Asia, India is unique for its cultural heritage, geographical diversity, and democratic ethos. India's ancient history was marked by series of invasions and foreign rule beginning with the entry of the Aryans in 1500 B.C., the advent of the Mughals in A.D 1000, culminating in British imperial rule around 1858. During this period, India was one of the richest countries in the world. It was renowned for its international trade in spices and textiles. Along with its rich resources, India's geographical location made it an attractive colony. The British wanted to exploit India as a market for the sale of its manufactured goods. They set up a centralized form of administration, built an extensive network of highways, railroads and post and telegraph systems. They also imparted western education to the Indians which led to the emergence of a middle class conscious of their own rights.
To overthrow British tutelage, a section of erudite Indians led by Surendra Nath Banerjee established the Indian National Congress in 1885. The Indian nationalist movement evolved through different phases and the INC emerged as the single largest representative of the Hindus in India. It became an umbrella organization and leaders like Bal Gangadhar Tilak and Lala Lajpat Rai were at the forefront in India's struggle for independence. Of the most famous of India's "freedom fighters", was a man called Mohandas Karamchand Gandhi. In the struggle for liberation against British rule, Gandhi developed concepts like ahimsa (non violence), satyagraha (search for truth) and civil disobedience. As the national movement picked up momentum, British rule began to weaken. From the 1940s, the Muslim League, a party representing the Muslims of India, demanded the creation of a Muslim majority state. The Indian National Congress was ill-prepared for these demands and tensions brewed amongst members of both camps leading to large scale Hindu-Muslim rioting. Finally in 1947, the Congress leaders acceded to the division of the country along religious lines which led to the creation of the separate nation of Pakistan. Partition left a deep impact on the secular fabric of the country. Close to half a million Hindus, Muslims and Sikhs were killed. On August 1947, India gained independence from the British. Yet, the memories of partition remained etched in the minds of Hindus and Muslims and were soon to become the root of an intractable conflict over Kashmir. 
From the time of independence, India has fought four major wars with Pakistan (1947, 1965, 1971 and 1999) and one with China (1962). While India suffered a severe debacle at the hands of the Chinese in the 1962 war, the dispute over Kashmir with Pakistan remains unresolved and has led to incessant crises on both sides. The roots of the Kashmir dispute date back to partition and the events of 1947. The end of British rule had compounded the problem of achieving a unified India. In the months after partition, the prince of Kashmir, Maharaja Hari Singh faced tremendous pressure from both India and Pakistan but refused to accede to either country. During the first week of October 1947, a tribal rebellion broke out in Poonch, a region in southwestern Kashmir. Sections of the Pakistani army aided the rebels with arms and men. Within two weeks, the insurgents were close to Srinagar, the capital of Jammu and Kashmir. At this point, Hari Singh appealed to India for protection against the intruders. India's Prime Minister Jawaharlal Nehru agreed to provide assistance to Hari Singh only if the Maharaja acceded to India and the accession was endorsed by Sheikh Abdullah, the political leader of Kashmir. Once the Maharaja signed the Instrument of Accession, Indian troops were airlifted into Kashmir. On 1 January 1948, India referred the Kashmir dispute to the UN Security Council by invoking articles 34 and 35 of the UN Charter. On 24 April, 1948, the UN Security Council passed a resolution stating that India and Pakistan should bring about a cessation of all hostilities and move towards the early restoration of peace in the region. It also urged both countries to conduct a free and fair plebiscite to determine the wishes of the Kashmir people. This resolution was held as the principal term of reference for future negotiations between the two countries. However, the UN achieved little and the dispute continued to rock the relations between the two countries. The problem of Kashmir took on a different dimension from the late 1980s when there was a rise in insurgency within the state of Kashmir. This was the first time that India was witnessing the start of cross-border terrorism. Moreover, while Pakistan has repeatedly sought third party mediation and looked towards the United States to play such a role, India has reiterated its position of resolving the dispute bilaterally. 
India's relations with China took a downslide after the 1962 war and also when the Chinese tested their first nuclear device in 1964. However, India has not been engaged in any major conflict with China since 1962 but continues to be wary of the Chinese presence north of the Himalayas. Another one of India's concerns with regard to China has been the technical and material support that China provided to Pakistan in developing the latter's nuclear weapons arsenal. 
With regard to the United States, India has predominantly enjoyed a cordial relationship. During the height of the Cold war between the US and the erstwhile Soviet Union, India advocated a policy of non-alignment and sought to distance itself from the power struggle between the two super powers. The United States was not very interested in South Asia during the Cold War but was careful not to allow the spread of communism to the region. Most of America's strategic interests in the region during the Cold War were guided by its fear of communist expansion. America maintained stronger relations with Pakistan and established a military alliance with Pakistan in 1954. While the US provided military assistance to both India and Pakistan, by 1964, Washington was unhappy with both countries and began to withdraw itself from the region. It was only after 1979 and the early 1980s that Washington began again to take an interest in India. In the period after the Cold war, Washington was particularly concerned with the development of India's nuclear capabilities and pushed for non-proliferation efforts in the region. The conduct of India's nuclear tests in the summer of 1998, followed by the Kargil war of 1999 between India and Pakistan raised fears in the international community about the possibility of a nuclear war between the two adjacent neighbors. Since then, the United States has repeatedly urged both countries to exercise restraint.

Political Structure and Elections

India's political structure is modeled along the British parliamentary system. Under the Indian Constitution, executive power resides in the President who represents the symbolic head of the nation. The President is also the Supreme Commander of the Indian Armed Forces. The Prime Minister is the executive head supported by a cabinet of ministers and is responsible for the actual execution of policy. The Indian Parliament consists of two houses: the Lok Sabha which is the lower house and is popularly called the House of the People and Rajya Sabha, the upper house. The members of the Lok Sabha are elected on the basis of universal adult suffrage directly from India's 25 states. The members to the Rajya Sabha are nominated by the President on the basis of their expertise in the fields of literature, science and social service. 

Since 1951, elections in India have witnessed the gradual decline of the Congress party and from the early 1990s the rise of the Bharatiya Janata Party (BJP). From 1989 to 1998, India has had four national elections and except for the period between 1996 and 1998, these elections produced unstable short term coalition governments. In the 1996 and 1998 elections, four distinct political groups emerged, namely the Congress and its allies; the BJP and its allies; the United Front and a large number of caste based and regional parties. In the 1998 elections, the BJP came to power and won 25.47 percent of the vote and 179 seats. The Bharatiya Janata Party still continues to be the dominant party at the Center and is heading a multi party coalition called the National Democratic Alliance (NDA). 

In post independence India, there were major debates about the future of the Indian economy and the type of model India should adopt for economic reconstruction. India's Prime Minister Jawaharlal Nehru was interested in building a strong decentralized state along socialist lines. In 1948, the Industrial Policy Resolution was passed which called for a mixed economy in which some industries like railroads and atomic energy would remain under the public sector while industries like coal, iron and steel and manufacturing would be open to private enterprise. As part of this model, India embarked on a set of Five Year plans which continued well into the mid 1960s. In the 1960s, India was faced with the challenge of liberalization and the Fourth Five Year Plan encompassed the need for allowing a more free hand for the market. From 1963 to 1973, a series of constitutional amendments were initiated to restructure the Indian economy. This was a period of structural reform in which Prime Minister Indira Gandhi nationalized a number of private sector banks and the government took over a large part of the private sector. From 1973 onwards, a second phase of liberalization began. However, even though the liberalization produced some changes, the Indian economy took a downslide and by the early 1990s India was practically bankrupt, forcing it to borrow loans from the International Monetary Fund (IMF). This in turn unleashed a new spate of economic reforms and led to the complete liberalization of the Indian economy. Ever since then, different governments at the Center have dealt with the process of liberalization in various ways and it remains a fundamental bedrock of the Indian economy. Over the years, India has opened up its markets to numerous multi national corporations and has become a thriving market for the import and export of international products. 

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Update No: 002 - (29/03/04)

With the Lok Sabha elections coming up, there is widespread speculation amongst Indian analysts and political gurus about which party will come to power and form the government at the Center. As the current situation reveals itself, it seems that the National Democratic Alliance (NDA) led by the Bharatiya Janata Party will continue to remain in its seat of power. On March 26, Deputy Prime Minister L.K.Advani ended phase one of his "Bharat Uday Yatra", a rally which had begun on March 10, 2004. The Deputy Prime Minister has sought to use the sensitive issue of India-Pakistan relations as one of the pillars for garnering votes. This has been particularly prominent in the BJP's political agenda in the state of Jammu and Kashmir; the intention being to win a large number of Muslim votes. Towards this end, Advani has promised education and development to 300 OBC (Other Backward Classes) or minorities. Although, Prime Minister Vajpayee would lead the BJP's final campaign, Advani's All-India rally is being seen as a way of strengthening his own position within the party so that he very well could prove to be the future successor of Vajpayee. March 26 marked the end of the first phase of the Bharat Uday Yatra. The next phase will begin on March 30 from Porbandar in Gujrat. As part of its election campaign, the BJP led government had released two reports as of February 22, 2004. The first report outlined the achievements of the NDA government while the second was related to funds granted to each state on centrally sponsored schemes. Political struggles within the BJP continue to prevail. But the BJP seems to have reached an understanding with Mamata Banerjee's Trinamool Congress Party in West Bengal on 40 out of the 42 seats. All this is being done with a view to maximize support for the BJP and its allies. The Congress party under the leadership of Sonia Gandhi has also begun its campaign propaganda with much enthusiasm. One of the primary issues on the Congress agenda is the need to curb the spread of communalism and also generate more employment. For the very first time, Sonia Gandhi's (and former Prime Minister Rajiv Gandhi's) son, Rahul Gandhi is contesting on behalf of the Congress party from Amethi in Uttar Pradesh. This will mark the much awaited entry of the younger generation of Gandhis into the election foray. It is interesting to see that while Rahul Gandhi's sister Priyanka Gandhi has not yet declared her intentions to join the Congress Party's election campaign, their cousin Varun Gandhi (son of Sanjay Gandhi, Rajiv's younger brother) has decided to campaign for the BJP. The BJP is also using the Gandhi name to gain maximum leverage in the run up to the elections. The BJP has made consistent attacks against the policies of the Congress party particularly in raking up the controversy over the Bofors scandal and the party's neglect of development projects. 
Election Phases: There are primarily five phases to the 2004 Election campaign in India. The first phase of the parliamentary polls on April 20 will be held in 15 states and union territories covering 139 constituencies. The second phase on April 22, will be held only in Tripura covering 2 seats. The April 26 polls will be held in 11 states and union territories covering 137 Lok Sabha seats. In the fourth phase of the polls on May 5, 2004, people from seven states which account for 83 seats will cast their votes. On May 10, 2004, the last day of the elections 16 states and Union territories will go in for polls covering 182 seats. Nearly 675 million voters are eligible to cast their votes which will be for the first time across the country through electronic voting machine to elect a 543 member Lok Sabha. 

India-Pakistan Relations
In February, Pakistan expressed its willingness to undertake a nuclear restraint regime with India. Pakistan's Foreign Office spokesman expressed concerns regarding the accidental or unauthorized use of nuclear weapons. This was part of a series of confidence building measures that both countries had decided to embark upon. As part of its diplomatic efforts, Pakistan also pressed one of the most virulent militant organizations, the Hizbul Mujahideen to abandon its cause of "jihad" (holy war) and declare ceasefire in order to prevent the escalation of tensions between both countries. On January 6, India's Prime Minister Atal Behari Vajpayee and the Pakistani President Pervez Musharraf issued a joint statement in which the Pakistani President pledged that Pakistani territory would not be used for terrorist activities against India. However Pakistan continues its efforts to build and test its missiles demonstrating its resolve not to roll back its nuclear weapons program. This month, Pakistan tested the SHAHEEN II missile which can carry warheads upto 2000 kilometers. 
The United States has played a particularly important role in the region. On March 15, US Secretary of State Colin Powell, left on a tour of South Asia aimed at encouraging further peace talks between the two countries. Powell's visit comes in the wake of India's Foreign Minister's rejection of Pakistani President Musharraf's insistence that the disputed region of Kashmir was the central issue dividing the two countries. In India, Powell focused on expediting a two-month old agreement to boost cooperation on civilian nuclear activities, civilian space programs and high technology trade. In Pakistan, the Secretary of State's agenda included discussions on the situation in Afghanistan and the war against terrorism. The US has seen Pakistan as a vital ally in its war against terror and US Defense Secretary Donald Rumsfeld has echoed this view from time to time even though the United States was somewhat concerned over the recent scandal involving the sale of nuclear secrets by a Pakistani scientist to countries like Iran, Libya and North Korea. In the last two weeks, both India and Pakistan have sought to facilitate better relations with each other. In this regard, the public's love for cricket has been used as a cementing factor. Over the last two weeks, the India cricket team has been in Pakistan participating in a series of one-day tournaments, a highly successful exercise in normalization in the relations between the ordinary citizens of both nations - a great success. Also, India and Pakistani government officials are working on the possibility of running a bus service between Rajasthan in India and the Sindh province in Pakistan. While Kashmir is still at the root of the problem, these are just some of the beginnings of what could be a peaceful reconciliation. 

India's Gross Domestic Product (GDP) has risen by 8.9% due to tremendous growth in agricultural, industrial and service sectors. India's Finance Minister Jaswant Singh believes that this comes close to the expected calculations of the government's projected figures for. India's exports in particular products like tea has also marked a major increase in non-traditional sectors. Over the years Indian tea has become extremely popular among Americans, Australians and the Japanese. In the area of commerce, India's Minister of Commerce Arun Jaitley has drawn up a plan called Vision 2004 which envisages spending upto 50,000 crores on infrastructure. The BJP government is also interested in allocating sums of money for power projects and water transportation. In addition, towards achieving higher growth rates, the government is developing "economic growth clusters" in both urban and rural sectors. With regard to current WTO trade negotiations, India has objected to the framework advanced by the US representatives of trade. New Delhi suspects that the model mooted by the EU and the US will play a subversive role for it by distancing the significant opening up of global agricultural trade from the crucial question of cutting down the high levels of farm subsidies in the US and EU. India wants the framework to provide some indicators on tariff reduction, export subsidies in different aspects of the negotiations whether it pertains to agriculture, industrial products or services. The terms of the framework were discussed during US Trade Representative Robert Zoellick's recent visit to India. In the banking sector, the government is trying to come up with guidelines for allowing foreign banks to set up their subsidiaries in the country. Foreign Direct Investment (FDI) regulations have been eased giving foreign banks like HSBC, ABN AMRO and Standard Chartered the incentives to set up subsidiaries in India.

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