India's Economy and Infrastructure OVERVIEWIndia is rich in natural resources and manpower and has made significant economic progress since gaining independence in 1947. India's economy comprises l traditional village agriculture, forestry, fishing, modern agriculture, handicrafts, a wide range of modern industries and a multitude of support services. The economy transformed from primarily agriculture, forestry, fishing, and textile manufacturing in 1947 to the major industries of heavy industry, transportation, and telecommunications in the late 1970s. Central government planning from the 1950s until the late 1970s gave way to economic reforms and greater private sector initiatives in the 1980s and 1990s. A sophisticated industrial base has been created and a large pool of skilled labor has emerged. However, 67% of India's workforce (nearly 400 million) works in the agricultural sector, which contributes 30% to the country's GDP. Reforms in production, trade and investment since 1991 have provided new opportunities for Indian entrepreneurs and some 300 million middle-class consumers. . New Delhi has avoided debt renegotiation, attracted foreign investment and revived confidence in India's economic prospects since 1991. Many of the country's fundamentals – including savings rates (26% of GDP) and reserves (now around 24 billion dollars) – are healthy. Inflation fell to 7% in 1997 and interest rates fell to between 10% and 13%. Nonetheless, the Indian government needs to regain its initial reform momentum, in particular by continuing to reduce remaining government regulations. Furthermore, economic policy changes have not yet significantly increased jobs or reduced the risk of international financial tensions re-emerging in the coming years. Nearly 40% of India's population remains too poor to afford an adequate diet. India's exports, currency and foreign institutional investment were affected by the East Asian crisis of late 1997 and early 1998, but capital account controls, a low spending ratio, short-term debt forward relative to reserves and greater oversight of the financial sector have helped insulate it from short-term balance of payments problems. Export growth slowed in 1996-97, averaging only around 4% to 5% – a sharp decline from increases of more than 20% in the previous three years – mainly due to declining exports. Asian currencies against the dollar. rupee. Shortages in energy, telecommunications and transportation and the legacy of inefficient factories limit industrial growth, which grew only 6.7 percent in 1997, down from more than 11 percent in 1996. Agricultural sector growth is still rather slow, with a recovery of only 5.7% in 1997. compared to a decline of 0.1% in 1996. Agricultural investment has slowed, while costly subsidies for fertilizers, food distribution and rural electricity..