India’s economy is the fifth-largest in the world with a GDP (one year of goods and services) of $ 2.94 trillion (US). If you consider PPP (purchasing power parity: how much money you can buy in India compared to other countries), the economy is the third largest (valued at $ 10.51 trillion). However, due to India’s large population, the economy was still only $ 6,209 per year in 2015 (considering PPP).
India’s economy includes agriculture, crafts, industry, and many services. The service sector is the main source of economic growth in India today, although two-thirds of Indians earn livelihood directly or indirectly through agriculture. In recent times, due to its many educated people who can speak English, India has become a leader in information technology.
The social and economic problems facing India are population growth, poverty, lack of infrastructure (buildings, roads, etc.), and rising unemployment. Although poverty has declined by 10% since the 1980s, a quarter of India’s citizens still cannot get enough food.
Today, India is ranked as the seventh-largest economy and third largest in terms of purchasing power parity (PPP). The GDP of the Indian economy is tied to $ 2.9 tonnes. In a press conference, Finance Minister Arun Jaitley commented: We are continuing from the fifth to the sixth-largest economy based on the dollar rate. As we see in the coming years, we will be $ 5 trillion by 2024 and $ 10 trillion by 2030 or 31 December.”
The GDP per capita in India in 2017 was $ 1963.55. The per capita GDP in India is equivalent to 16% of the world average, and the average from 1960 to 2017 is $ 693.96.
Performing Sectors of Indian Economy
The adoption of the new economic policy in 1991 saw a historic change in the Indian economy as it abolished the mixed economy model and the state licensing system and opened up the Indian economy to the world. The following is an overview of the best performing sectors of the Indian economy:
Agricultural – Indian Economy
One of the most important sectors of the Indian economy is agriculture. Its participation in the country’s GDP has decreased and currently stands at 14%. However, more than 50% of the total population of the country still depends on agriculture. Keeping this in mind, the Union Budget 2017-2018 gave high priority to the agriculture sector and aimed to double the income of farmers by 2022.
- Government subsidies for agriculture are at their highest point.
- Also, cropping patterns have changed in favor of cash crops like sugarcane and rubber.
- Introduction to cooperative agriculture like – e-Choupal, etc.
- Increase in SHG in the form of Lijjat Papad.
- Agricultural land is being put under industrial and commercial use, reducing the remaining agricultural land.
- Many export areas have been opened for agricultural products.
Manufacturing – Indian Economy
The manufacturing Area is the second-largest contributor to India’s GDP after the services Area. Various government initiatives like Make in India, MUDRA, Sagarmala, Start-up India, and Freight Corridor will increase the participation of the manufacturing area for future construction, with an honest contribution from the states.
However, if India intends to increase its manufacturing share of GDP by 25%, the industry will have to significantly increase its R&D spending. The added value should be increased at all levels and the government should offer attractive remuneration to motivate people to join the manufacturing area.
Industrial – Indian Economy
Another important part of the Indian economy is the industrial area. Changes such as the end of the “Raj Permit” and the opening of the economy were received with great enthusiasm and optimism in the country. As a result of these changes, the industrial capacity of the economy has increased since 1991.
- The spread of industries from traditional iron and steel to jute and automobiles.
- Autonomy in production, marketing, and distribution.
- Red Tapestry Reduction.
- Promoting private investment, both national and foreign direct investment.
- Technology transfer and research and development benefits for the benefit of the economy.
- The advent of investment models such as joint ventures, public-private partnerships, multinationals.
- Private actors had the opportunity to enter new territories, previously under the monopoly of the government.
Service – Indian Economy
The Area that benefited the most from the new economic policy was the area. Banking, finance, business process outsourcing, and most importantly, information technology services have experienced double-digit growth.
- Indian IT giants like Infosys, Wipro, and TCS have made their mark on the global platform.
- 60% of the GDP comes from the services area.
- India has become the IT hub of the world, with its huge potential for demographic.
- New employment opportunities are being created in this sector.
- Services area skills have increased with the opening up of transport, tourism, and medical areas.
- RBI has gone from being a regulator to a regulator.
- Variety of financial investment products.
- Greater penetration of services like insurance, banking, stock exchange, etc.
- Significant improvement in foreign exchange reserves.
Future of Indian economy – Indian Economy
To transform India into a $ 5 trillion economy by 2030 and achieve sustained growth of 8%, NITI Aayog has published a comprehensive document titled “Strategy for New India @ 75”. Its main objectives are:
- Doubling the income of farmers.
- Like All India Services, create a talent pool for each other from all over India and states.
- Greatly promoting the “Make in India” campaign.
- Achieve a 22% tax rate on GDP by 2023, up from the current 17%.
- Get an investment rate of 36% by 2023, up from the current 29%.
Due to democratic credibility and strong government leadership, India is an emerging superpower with a vibrant economic environment. Under Prime Minister Narendra Modi, India’s growth rate in the last quarter has been 7.7%. And with a middle-class base and an evergreen youth demographic, the business opportunity has never been better.