Construction workers at a building site in the Indian capital New Delhi

Political situation Focus on economic policy

With around ten million young people entering the Indian labour market each year, the focus of Prime Minister Narendra Modi's government is on economic policy and creating jobs.

Accordingly, Modi's government has launched fundamental economic reforms, including the introduction of a uniform value-added tax throughout the country; opening the country to more foreign investment; a reorganisation in the extractive industries of licensing procedures, which have been prone to corruption; and a restructuring programme for state banks. The government has also introduced a number of social programmes.

Despite the low tax ratio, the Indian government is also providing substantial amounts of funding for development policy initiatives and programmes, and is adopting some innovative approaches to do so by getting the private sector and the general public actively involved in these development efforts.

Obstacles to development

Since Modi took office, the influence of Hindu nationalists on national politics has become more pronounced – with the result that conditions have become more difficult for religious minorities. Although freedom of the press is guaranteed by India's constitution, the media are increasingly finding themselves subjected to political or financial pressure.

And despite the steps taken by the government to reduce the high levels of corruption and the discrimination of certain population groups (such as the “caste-less” Dalits), these problems are still a severe constraint on development.