Look Back 2012 This year has seen India struggle against tough economic circumstances with growth set to hit its lowest level in a decade.
Big bang sets India on new frontier
"Big bang" reforms
The Indian government announced a flurry of "big bang" reforms in September in an effort to open up the country to more foreign investment and boost growth.
The reforms were cheered by investors.
Before it made the announcements, the government had been accused of dithering on taking decisions on important economic reforms that could help to turn around India's slowdown in economic growth. "If we have to go down, let us go down fighting," Manmohan Singh, the prime minister, was quoted as saying as he decided on the measures.
Most significantly and controversially, the reforms included relaxing investment rules to allow foreign direct investment of up to 51 per cent in supermarkets, paving the way for foreign supermarket chains such as Wal-Mart and Tesco to set up shop in India.
The move triggered a political backlash and protests across India, with many small shopkeepers complaining that the entry of large chains such as Wal-Mart could put them out of business. Other reforms included allowing foreign airlines to buy stakes of up to 49 per cent in the country's carriers as well as opening up the broadcasting industry to more foreign investment.
In October, India revealed plans to increase the caps on foreign investment in the insurance and pensions sector.
The government won a vote in parliament this month over its supermarket reform.
India grappled with a mix of tough economic circumstancesthis year, with growth expected to hit its lowest levels in a decade.
The extent of the country's economic problems came into sharp focus when Standard & Poor's published a report in June titled "Will India be the first Bric fallen angel?" It highlighted that the country was at risk of becoming the first Bric country to lose its investment grade rating. Despite moves by the government to bolster growth, S&P recently warned that India still faced a one-in-three chance of its sovereign rating being downgraded in the next two years.
As well as slowing growth, other challenges have included stubbornly high inflation, which has prevented the Reserve Bank of India from cutting interest rates in recent months, despite calls from industry for such a move. A weak monsoon season pushed food prices even higher.
The rupee meanwhile tumbled to a record low against the dollar in June. The country's GDP growth slowed to 5.3 per cent in the quarter between July and September compared to 5.5 per cent in the previous quarter. The government has said that consistent growth of 8 per cent a year is needed to create jobs for the millions of Indians entering the labour market each year.
The stock market has been boosted in recent months by the economic reforms, which have attracted foreign investors. The Bombay Stock Exchange benchmark Sensex has risen by about 25 per cent this year and is headed for its largest annual growth since 2009.
Foreign institutional investors have poured more than US$23 billion (Dh84.48bn) into the stock market this year, with overseas investors pumping more than $3.4bn in during this month alone, according to data from the Securities and Exchange Board of India (Sebi).
State Bank of India and Tata Motors are among the stocks on the Sensex that have surged since the beginning of the year.
"Foreign institutional investors (FIIs) pumped in capital into the Indian equities as the lack of investment options make the country an attractive destination. The Indian market has attracted the highest amount of foreign flows compared with Asian peers so far in 2012," Sudip Bandhopadhyay, the chief executive at Destimoney Securities, said. He added that challenges include the country's slowing growth and high inflation levels.
"But we are still better off than other economies across the globe, which raises optimism of more FII flows into the country."
Kishor Ostwal, head at CNI Research, said: "India has had an excellent year so far after a disastrous 2011. I think Indian valuations look cheaper compared to historical average."
This year has been tough for Kingfisher Airlines, the carrier owned by the tycoon Vijay Mallya. The airline has been grounded since the beginning of October as labour unrest erupted because of unpaid salaries.
The aviation regulator then suspended Kingfisher's licence until it submitted a plan that showed that it could operate a "safe, reliable and efficient and sustainable scheduled air transport service".
The carrier, which has not managed to turn a profit since its launch in 2005, is estimated to have debts of up to $2.5bn, with government-owned banks, including the State Bank of India, among the lenders that have exposure.
Kingfisher's operational costs and debt soared as it expanded aggressively in the years following its launch to become India's second-largest airline, touting itself as a "five-star" carrier. The airline was eventually forced to cut routes to lower its costs in an increasingly competitive market, shrinking to become the country's smallest scheduled airline.
Its fate is still hanging in the balance. On Wednesday, the aviation ministry said that Kingfisher had failed to provide regulators with a clear funding plan. Mr Mallya has said that Kingfisher is talking to foreign airlines to raise investment after the government relaxed the rules on foreign carriers buying stakes in Indian airlines in September. Reportedly, Etihad Airways is considering the possibility of buying a stake in the troubled airline.
Prices of the precious metal soared to record highs this year because of the weak rupee. It reached its most recent historical high last month as it surged to more than 32,500 per 10 grams. The fact that the rupee has weakened sharply against the US dollar pushes gold prices higher in local currency terms.
Gold is traditionally given as gifts during festivals and weddings in India, which accounts for a large portion of the country's huge appetite for the precious metal. But jewellers this year reported that demand had been dampened because of the sky-high prices and concerns surrounding the economy.
A number of steps were taken this year to try to control imports of the precious metal into the country, which is exacerbating the ballooning deficit. These measures include higher import duties and regulations to reduce lending for speculative investment in gold.
Following a weak first half of the year, the World Gold Council reported an improvement for the third quarter.
"The growth in the third quarter demand was not sufficient to overcome the weakness experienced in India during the first half," the World Gold Council said last month. "On a year-to-date basis overall consumer demand was 24 per cent weaker relative to the same period in 2011. It is unlikely that demand will recover sufficiently to result in a gain for the year as a whole."
India was the world's largest consumer of gold last year, but it is expected to be overtaken by China this year.
Government auditors compiled a report which alleged that India lost out on more than $33bn during its sales of coalfields between 2004 and 2009.
The scandal was dubbed "Coalgate" by the media.
The opposition Bharatiya Janata Party accused the government of receiving bribes in return for the allocation of coal blocks. Opposition leaders called for the prime minister, Mr Singh, to quit because of the scandal. He was the coal minister during some of the years when the sales were made but he denied any wrongdoing.
The scandal caused a deadlock in the country's parliament during the monsoon session, when it was supposed to be focusing on solutions to the country's economic issues.
This also stirred up fresh debates about the problem of corruption. Observers have drawn comparisons between "Coalgate" and the 2G telecommunications scandal in which government officials allegedly undercharged telecoms companies for licences.
The Supreme Court cancelled 122 second generation, or 2G, telecoms licences in February. They were issued to companies in 2008 but were cancelled because of a corruption scandal surrounding the sale of the licences at prices that were said to have been below their market value.
Arvind Kejriwal, the anti-corruption firebrand, formally launched a new anti-corruption political partylast month.