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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 598,966 515,000  481,400 12
         
GNI per capita
 US $ 530 480 470 160
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 043 - (28/08/07)

NUCLEAR TIFF RESULTS IN POLITICAL AND ECONOMIC INSTABILITY 
The UPA government has suffered a major beating from the Communist Party of India which is totally opposed to an Indo-US nuclear deal. There has been speculation that the government could be toppled over this issue prompting early elections. The nuclear agreement would allow American companies to sell and share civilian nuclear technology with India, which would, in exchange, open some of its reactors to international inspections for the first time. The support of the Communist Party has been critical for the survival of the Congress government, and their opposition to the nuclear deal has generated a severe political crisis for Manmohan Singh's government and his own career. According to a LA Times Report, "the leftists' objections to the deal draw on a deep well of suspicion toward Washington, which New Delhi has historically held at arm's length. Although the agreement has been hailed by many as the most important symbol of improving ties between the world's two most populous democracies, critics on the left say it tethers India too closely to American foreign policy and interests." 

Even the right has protested against the nuclear deal calling it "an infringement on national sovereignty because of ambiguous provisions that could penalize India if it conducted nuclear weapons tests." The tussle to keep the nuclear deal alive has raked up a lot of resentment amongst opposition groups who believe that the Prime Minister has compromised the interests of the nation. Political commentators have warned that the government could either fall or call snap elections because of the impasse. 

The political crisis has also had economic ramifications. In its latest brief, Fitch Ratings has observed that the political instability is posing a risk to the country's economic outlook along with the government's high fiscal deficit, which is still at 5.2 per cent of GDP. However, besides those risks, Fitch thinks that the India's growth sector will continue to surge ahead as its $200 billion strong forex reserve makes it less dependent on foreign investors and less susceptible to a global downturn. 

INDIA-US DEFENSE COOPERATION
Despite hitches in the India-US nuclear deal and the possibility of the agreement getting completely scrapped, India and the United States have arrived at an understanding to resolve differing perceptions on military cooperation. While India has been assigned the U.S. Pacific Command (Pacom), it wants to be shifted to the U.S. Central Command whose area extends westwards from India and is considered by its security planners as more crucial to national interests. It is believed that in future, senior officers from CENTCOM could be deputed to attend all inter-services (called Executive Steering Group) meetings to address India's concerns about greater awareness on its western flank. Admiral Keating, a senior naval officer also said the lines were not really sacred and the previous Pacom Commander Admiral Fallon would find it easier to coordinate after being positioned at CENTCOM. Admiral Fallon has made several visits to India and has a good working relationship with top Indian armed forces officers. India's Chief of Naval Staff, Admiral Suresh Mehta said that the five-nation naval exercise is scheduled to begin in the Bay of Bengal on September 4. Admiral Mehta also said the exercises were in the national interest and would help sharpen some of the Navy's skills. Over 70 fighter aircraft and three aircraft carriers are expected to participate in this U.S.- India-Singapore-Australia-Japan Malabar series of naval exercises.

ECONOMY/BUSINESS

INDIA-CHINA RELATIONS NEED "SYNERGY"
Hero Corporate Services Chairman, Sunil Kant Munjal has stated that India and China must work together instead of always being wary of each other's growth. "We should not be wary of China's progress, but should build synergies and connectivity, wherein the progress is shared between the two countries." Munjal made this statement at the industry chamber PHDCCI's CEO lecture series. He also added that social awareness and affirmative action is not only an expression of corporate social responsibility but also an articulation of the enlightened self-interest since distributive justice is the cornerstone of societal progress. And therefore, both countries should collaborate on economic projects. 

INDIA IS SECOND LARGEST MARKET FOR NOKIA
Separately, India has become the second largest market for Nokia in terms of sales - ahead of even the US. Over the last three years, India has been gaining major strides each year moving from fourth position in 2005 to third position in 2006, and is today poised right after China. Olli-Pekka Kallasvuo, president and CEO, Nokia Corporation said, "India is playing an increasingly important role in the global economy buoyed by impressive economic growth, skilled manpower and tremendous business opportunity. Today, India hosts a comprehensive Nokia R&D, manufacturing and design presence. Moreover, we are also the country's leading provider of wireless infrastructure through Nokia Siemens Network, the newly-merged entity. This not only reiterates our commitment and belief in the market but also underscores India's emergence as a strategic resource hub for Nokia globally." The company also announced that its manufacturing plant in Sriperumbudur, Chennai, has reached production volume of 60 million handsets (August 2007), and is exporting half of its production to 58 countries across Middle East, Africa, Asia, Australia and New Zealand. The company currently employs over 9,000 people and has 95,000 outlets with 50,000 exclusive Nokia brand stores. The Chennai manufacturing plant alone employs 4,700 people, 70% of which are women. Nokia Telecom Park has received investments of $500 million (around Rs 2,043 crore) with seven global component manufacturers likely to generate in excess of 30,000 jobs when fully functional. Clearly buoyed by the growth of Indian economy and the telecommunications segment, the company is looking at the country as a focused market. Its recent act of issuing a prompt 'product advisory' (the company does not call it a recall) for the BL-5C battery manufactured by Matsushita Battery Industrial shows how sensitive it is in maintaining its reputation.

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