India - Economy, Currency and Monetary Policy

India is a federal parliamentary republic, located in Southern Asia. The prime minister is the leader of the government. The president is the head of state and, although limited in executive power, can influence the formation of governments at both state and national levels. India is the 5^th largest economy in the world (by GDP PPP), but is ranked only 156^th by GDP per capita. Around 45% of India’s merchandise exports are directed to just three markets (European Union, United States and United Arab Emirates). Total external trade volume is  22% of GDP. The central bank, Reserve Bank of India (RBI) pursues an inflation-targeting approach to monetary policy and maintains a floating exchange rate regime. Poverty, income inequality, inadequate infrastructure and current and fiscal deficits are usually named among key weaknesses of the Indian economy.