Economy of India

1. The Economy of India is the tenth largest in the world by nominal GDP and the third largest by purchasing power parity PPP . The country is one of the G 20 major economies, a member of BRICS and a developing economy that is among the top 20 global traders according to the WTO. India was the 19th largest merchandise and the 6th largest services exporter in the world in 2013; it imported a total of $616.7 billion worth of merchandise and services .....

Pre colonial period

2. The citizens of the Indus Valley civilisation, a permanent settlement that flourished between 2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform weights and measures, made tools and weapons, and traded with other cities. Evidence of well planned streets, a drainage system and water supply reveals their knowledge of urban planning, which included the world s first urban sanitation systems and the existence of a form of .....

Colonial period

3. Company rule in India brought a major change in the taxation and agricultural policies, which tended to promote commercialisation of agriculture with a focus on trade, resulting in decreased production of food crops, mass impoverishment and destitution of farmers, and in the short term, led to numerous famines. The economic policies of the British Raj caused a severe decline in the handicrafts and handloom sectors, due to reduced demand and dippi .....

Pre liberalisation period

4. Indian economic policy after independence was influenced by the colonial experience, which was seen by Indian leaders as exploitative, and by those leaders exposure to British social democracy as well as the planned economy of the Soviet Union. Domestic policy tended towards protectionism, with a strong emphasis on import substitution industrialisation, economic interventionism, a large government run public sector, business regulation, and cent .....

Post liberalisation period

5. In the late 1970s, the government led by Morarji Desai eased restrictions on capacity expansion for incumbent companies, removed price controls, reduced corporate taxes and promoted the creation of small scale industries in large numbers. However, the subsequent government policy of Fabian socialism hampered the benefits of the economy, leading to high fiscal deficits and a worsening current account. The collapse of the Soviet Union, which was In .....

Sectors

6. Historically, India has classified and tracked its economy and GDP as three sectors agriculture, industry and services. Agriculture includes crops, horticulture, milk and animal husbandry, aquaculture, fishing, sericulture, aviculture, forestry and related activities. Industry includes various manufacturing sub sectors. India s definition of services sector includes its construction, retail, software, IT, communications, hospitality, infrastruc .....

Agriculture

7. India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 17 Percent of the GDP and employed 51 Percent of the total workforce in 2012. As Indian economy has diversified and grown, agriculture s contribution to GDP has steadily declined from 1951 to 2011, yet it is still the largest employment source and a significant piece of the overall socio economic development of India. Crop .....

Industry

8. Industry accounts for 26 Percent of GDP and employs 22 Percent of the total workforce. According to the World Bank, India s industrial manufacturing GDP output in 2012 was 10th largest in the world on current US dollar basis $239.5 billion , and 9th largest on inflation adjusted constant 2005 US dollar basis $197.1 billion . The Indian industrial sector underwent significant changes as a result of the economic liberalisation in India economic r .....

Petroleum products and chemicals

9. Petroleum products and chemicals are a major contributor to India s industrial GDP, and together they contribute over 34 Percent of its export earnings. India hosts many oil refinery and petrochemical operations, including the world s largest refinery complex in Jamnagar that processes 1.24 million barrels of crude per day. By volume, Indian chemical industry was the third largest producer in Asia, and it alone contributed 5 Percent of its GDP. I .....

Pharmaceuticals

10. The Indian pharmaceutical industry has grown in recent years to become a major manufacturer of health care products to the world. India produced about 8 per cent of global pharmaceutical supply in 2011 by value, that included over 60,000 generic brands of medicines sold around the world. It is one of the fastest growing sub sectors of its industry and significant contributor of India s export earnings. The state of Gujarat has become a hub for th .....

Engineering

11. Engineering industry of India is the largest sub sector of its industry GDP and is one of three largest foreign exchange earning sectors for the country. It includes transport equipment, machine tools, capital goods, transformers, switchgears, furnaces, cast and forged simple to precision parts for turbines, automobiles and railways. The industry employs about four million workers. On value added basis, India s engineering industry sector exporte .....

Gems and jewelry

12. India is one of the world s largest diamonds and gem polishing and jewelry manufacturing center; it is also one of the two largest consumers of gold. After crude oil and petroleum products, the export and import of gold, precious metals, precious stones, gems and jewelry accounts for the largest portion of India s global trade. The industry contributes about 7 Percent of India s GDP, employs millions, and is a major source of its foreign exchange .....

Textile

13. Textile industry contributes about 4 per cent to the country .....

Mining

14. India s mining industry was the 4th largest producer of minerals in the world by volume, and 8th largest producer by value in 2009. In 2013, it mined and processed 89 minerals, of which 4 were fuel, 3 were atomic energy minerals, and 80 non fuel. The government owned public sector accounted for 68 Percent of mineral produced by volume, in 2011 12. Nearly 50 Percent of India s mining industry, by output value, is concentrated in eight states Od .....

Services

15. India s services sector has the largest share in the GDP, accounting for 57 Percent in 2012, up from 15 Percent in 1950. It is the 12th largest in the world by nominal GDP, and fourth largest when purchasing power is taken into account. The services sector provides employment to 27 Percent of the work force. Information technology and business process outsourcing are among the fastest growing sectors, having a cumulative growth rate of revenue 33 .....

Energy and power

16. As of 2009, India is the fourth largest producer of electricity and oil products and the fourth largest importer of coal and crude oil in the world. Coal and oil together account for 66 Percent of the energy consumption of India. India s oil reserves meet 25 Percent of the country s domestic oil demand. As of 2012, India s total proven oil reserves of 5.5 million barrels 870 million litres , while gas reserves stood at 43,800 million cubic feet .....

Infrastructure

17. India s infrastructure and transport sector contributes about 5 Percent of its GDP. India has the world s second largest road network in quantitative terms, covering more than 4.3 million kilometers. Qualitatively, India s roads are a mix of modern highways and narrow, unpaved roads. India also has the lowest kilometer lane road density per 100,000 people among G 27 countries leading to traffic congestion. It is upgrading its infrastructure. As .....

Retail

18. Retail industry contributes between 14 15 Percent to 20 Percent of India s GDP. The Indian retail market is estimated to be US$450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail market in the world, and is projected to reach $1.3 trillion by 2020. India s retailing industry mostly consists of the local mom and pop store, owner manned shops and street vendors. Organised re .....

Tourism

19. International and domestic tourism industry contributes more to India s GDP than its textile sector. India attracted 6.85 million international tourist arrivals and $18.4 billion in foreign exchange earnings from tourism receipts in 2013. Tourism to India has seen a steady growth, year on year, from 4.45 million arrivals in 2006 to nearly 7 million arrivals in 2013. The United States is the largest source of international tourists to India, while .....

Banking and finance

20. The Indian money market is classified into the organised sector, comprising private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks, and the unorganised sector, which includes individual or family owned indigenous bankers or money lenders and non banking financial companies. The unorganised sector and microcredit are still preferred over traditional banks in rural and sub urban areas, especially .....

Global trade relations

21. Until the liberalisation of 1991, India was largely and intentionally isolated from the world markets, to protect its economy and to achieve self reliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions, while foreign direct investment FDI was restricted by upper limit equity participation, restrictions on technology transfer, export obligations and government approvals; these approvals were needed for n .....

Balance of payments

22. Since independence, India s balance of payments on its current account has been negative. Since economic liberalisation in the 1990s, precipitated by a balance of payment crisis, India s exports rose consistently, covering 80.3 Percent of its imports in 2002 03, up from 66.2 Percent in 1990 91. However, the global economic slump followed by a general deceleration in world trade saw the exports as a percentage of imports drop to 61.4 Percent in 20 .....

Income and consumption

23. India s gross national income per capita had experienced high growth rates since 2002. India s Per Capita Income has tripled from Rs. 19,040 in 2002 03 to Rs. 53,331 in 2010 11, averaging 13.7 Percent growth over these eight years peaking 15.6 Percent in 2010 11.However growth in the inflation adjusted Per capita income of the nation slowed to 5.6 Percent in 2010 11, down from 6.4 Percent in the previous year. These consumption levels are on an i .....

Poverty

24. The World Bank in 2010, using its older 2005 methodology, estimated about 400 million people in India, as compared to 1.29 billion people worldwide, live on less than $1.25 PPP per day. The World Bank reviewed and proposed revisions in May 2014, to its poverty calculation methodology and purchasing power parity basis for measuring poverty worldwide, including India. According to this revised methodology, the world had 872.3 million people below .....

Employment

25. Agricultural and allied sectors accounted for about 52.1 Percent of the total workforce in 2009 10. While agriculture employment has fallen over time in percentage of labor employed, services which includes construction and infrastructure have seen a steady growth accounting for 20.3 Percent of employment in 2012 13. Of the total workforce, 7 Percent is in the organised sector, two thirds of which are in the government controlled public sector. A .....

Corruption

26. Corruption has been one of the pervasive problems affecting India. A 2005 study by Transparency International TI found that more than half of those surveyed had firsthand experience of paying bribe or peddling influence to get a job done in a public office in the previous year.A follow on 2008 TI study found this rate to be 40 percent. In 2011, Transparency International ranked India at 95th place amongst 183 countries in perceived levels of pu .....

Education

27. India has made huge progress in terms of increasing primary education attendance rate and expanding literacy to approximately three fourths of the population.India s literacy rate had grown from 52.2 Percent in 1991 to 74.04 Percent in 2011. The right to education at elementary level has been made one of the fundamental rights under the eighty sixth Amendment of 2002, and legislation has been enacted to further the objective of providing free edu .....

Insurance

28. India became the 10th largest insurance market in the world in 2013, rising from 15th rank in 2011.At a total market size of US$66.4 billion in 2013, it remains small compared to world s major economies, and Indian insurance market accounts for 2 Percent of world s annual insurance business. India s life and non life insurance industry has been growing at double digit growth rates and this growth is expected to continue through 2021. Life Insura .....

Security Markets

29. The development of Indian security markets began with launch of Bombay Stock Exchange BSE , Mumbai in July 1875 and Ahmedabad Stock exchange in 1894 and 22 other exchange in various cities over the years. In 2014, India s stock exchange market became the 10th largest in the world by market capitalization, just above those of South Korea and Australia.India s two major stock exchanges, BSE and National Stock Exchange of India, had a market capita .....

Research and development

30. The Indian Agricultural Research Institute IARI , established in 1905, was responsible for the research leading to the Indian Green Revolution of the 1970s. The Indian Council of Agricultural Research ICAR is the apex body in kundiure and related allied fields, including research and education. The Union Minister of Agriculture is the President of the ICAR. The Indian Agricultural Statistics Research Institute develops new techniques for the .....

Industrial output

31. India is tenth in the world in factory output. Manufacturing sector in addition to mining, quarrying, electricity and gas together account for 27.6 Percent of the GDP and employ 17 Percent of the total workforce. Economic reforms introduced after 1991 brought foreign competition, led to privatisation of certain public sector industries, opened up sectors hitherto reserved for the public sector and led to an expansion in the production of fast mov .....

Oil

32. India consumes the second largest amount of oil in the Asia Pacific region behind China. The combination of rising oil consumption and fairly unwavering production levels leaves India highly dependent on imports to meet the consumption needs. .....

Natural gas

33. As per the Oil and Gas Journal, India had 38 trillion cubic feet 1.1?1012 m3 of confirmed natural gas reserves as of January 2007. A huge mass of India s natural gas production comes from the western offshore regions, particularly the Mumbai High complex. The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also major producers of natural gas. As per EIA data, India produced 996 billion cubic feet 2.82?1010 m3 of natural gas in .....

Market size

34. Indian markets grew by 19 per cent in the first half of FY15, the best performance by any market during this period, globally. The rise was primarily due to strong inflows from foreign institutional investors FIIs . As of September 26, FIIs had invested Rs 61,024 crore US$ 9.86 billion this financial year, while mutual funds had put in Rs 15,298 crore US$ 2.47 billion during the same period, according to Securities and Exchange Board of Indi .....

Challenges before Indian economy

35. Population explosionThe rising population is eating into the success of India. According to 2011 census of India, the population of India has crossed one billion and isgrowing at a rate of 2.11 Percent approx. Such a vast population puts lots of stress on economic infrastructure of the nation. Thus India has to control its burgeoning population. PovertyAs per records of National Planning Commission, 36 crore people are living below the poverty li .....