Economy of India
The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy with notable public sector in strategic sectors.[59] It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 136th by GDP (nominal) and 125th by GDP (PPP).[60] From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat driven enterprises and economic regulation. This is characterised as dirigism, in the form of the Licence Raj.[61][62] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.[63][64] Since the start of the 21st century, annual average GDP growth has been 6% to 7%.[59], India has about 1,900 public sector company,[65] Indian state has complete control and ownership of railways, highways; majority control and stake in banking,[66] insurance,[67] farming,[68] dairy, fertilizers & chemicals,[69] airports,[70] nuclear, mining, digitization, defense, steel, rare earths, water, electricity, oil and gas industries and power plants,[71] and has substantial control over digitalization, Broadband as national infrastructure, telecommunication, supercomputing, space, port and shipping industries,[72] among other industries, were effectively nationalised in the mid-1950s.[73][61][62]
Currency
Indian rupee (INR, ₹)
1 April – 31 March
1,428,627,663 (1st; 2024 est.)[11]
- Agriculture: 18.4%
- Industry: 28.3%
- Services: 53.3%
- (FY 2021–22)[16]
- Private final consumption: 57.2%
- Government final consumption: 10.3%
- Gross fixed capital formation: 33.9%
- Exports of goods and services: 22.7%
- Imports of goods and services: -29.7%
- Other source: 5.7%
- (FY 2022–23)[17]
4.85% (March 2024)[18]
6.50% (9th February 2024)[19]
0.644 medium (2022, HDI 134th)[24]- 0.444 low (2022, IHDI 118th)[24]
70.9% of GDP (2022)[37]
29% of GDP (2022)[38]
31.781% of GDP (2023)[39]
$776.68 billion (FY 2023–24)[45]
- Manufacturers 70.7%
- Fuels and mining products 14.7%
- Agricultural products 14.1%
- Others 0.5%[46] (2022)
United States 17.7%
European Union 17.4%
United Arab Emirates 8.2%
China 5.7%
Hong Kong 1.9%
Singapore 2.9%
United Kingdom 2.6%
Saudi Arabia 2.6%
Bangladesh 2.5%
South Africa 2.0%
Australia 1.8%- (2023–24)[47]
$854.80 billion (FY 2023–24)[45]
- Agricultural products 7%
- Fuels and mining products 33.2%
- Manufacturers 52.1%
- Other 7.7 %[46] (2022)
- China 18.1%
- Hong Kong 3.0%
Russia 9.1%- European Union 8.8%
- United Arab Emirates 7.1%
- United States 6.0%
- Saudi Arabia 4.7%
Iraq 4.4%
Indonesia 3.5%
Switzerland 3.1%- Singapore 3.1%
- (2023–24)[47]
$663.8 billion (March 2024)[51]- ( 18.7% of GDP)
–$379.7 billion (June 2023)[52]
–6.4% of GDP (2022–23)[53]
- Donor: $4.234 billion (2021) ($30.59 billions Line of Credit in total)[55]
Nearly 70% of India's GDP is driven by domestic consumption;[74] country remains the world's fourth-largest consumer market.[75] Apart from private consumption, India's GDP is also fueled by government spending, investments, and exports.[76] In 2022, India was the world's 8th-largest importer and the 10th-largest exporter.[77] India has been a member of the World Trade Organization since 1 January 1995.[78] It ranks 63rd on the Ease of doing business index and 40th on the Global Competitiveness Index.[79] With 476 million workers, the Indian labour force is the world's second-largest.[80] India has one of the world's highest number of billionaires and extreme income inequality.[81][82] Economists and social scientists often consider India a welfare state.[5][7][6][8] India is officially declared a socialist state as per the constitution.[9][10] India's overall social welfare spending stood at 8.6% of GDP in 2021-22, which is much lower than the average for OECD nations.[83][84]
During the 2008 global financial crisis, the economy faced a mild slowdown. India endorsed Keynesian policy and initiated stimulus measures (both fiscal and monetary) to boost growth and generate demand. In subsequent years, economic growth revived.[85]
In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the service sector, the computer industry, and the telecom industry.[86] India has free trade agreements with several nations and blocs, including ASEAN, SAFTA, Mercosur, South Korea, Japan, Australia, UAE, and several others which are in effect or under negotiating stage.[87][88] In recent years, independent economists and financial institutions have accused the government of manipulating various economic data, especially GDP growth rate.[89][90][91][92][93][94][95]
The service sector makes up more than 50% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force.[96] The Bombay Stock Exchange and National Stock Exchange are some of the world's largest stock exchanges by market capitalisation.[97] India is the world's sixth-largest manufacturer, representing 2.6% of global manufacturing output.[98] Nearly 65% of India's population is rural,[99] and contributes about 50% of India's GDP.[100] India faces high unemployment, rising income inequality, and a drop in aggregate demand.[101][102] India's gross domestic savings rate stood at 29.3% of GDP in 2022.[103]
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