Economy of India

India has emerged as one of the fastest growing economies and stands second in terms of the growth rate, next only to China. Also, India has the ninth largest economy in the world in terms of nominal GDP while it stands on third position on the basis of the purchasing power parity. A Global Investment Bank, Goldman Sachs, recently predicted that by 2035 India would be the third largest economy in the world, next only to USA and China. It is expected that the Indian Economy will grow to 60% of size of the USA’s economy. Today, India has been successful to be a part of the G-20 major economies and is also a member of BRICS.
According to the recently revealed statistics, in 2011, India’s GDP per capita (PPP) was US$ 3,703, making it stand on 127th position in the world which in turn makes it one of the lower middle income economies.
Initially, for some years before and after the independence, the economy of India was mainly inspired by the USSR model of economic development under which the prime efforts were laid on the development of public sectors and there were high import duties combined with interventionist policies. Under this economic regime, there were massive inefficiencies coupled with widespread corruption. Later, in 1991, under the leadership of Prime Minister, P.V. Narasimha Rao, and Finance Minister, Manmohan Singh, India liberalized its economy to promote international trade and adopted a free market economy structure. Gradually, in wake of these economic reforms of 1991, there was a tremendous growth in country’s economy with extremely high growth rates. Also, after 1991, the per-capita income of the country increased significantly.
Indian economy has witnessed its highest growth rate in mid-2000s. Also, it has been during the same timeframe that India has achieved one of the highest growth rates in the world. These high growth rates have been possible because of the sizable growth of the middle class customers, huge foreign investments and country’s demographic dividend.
Today, India is the eleventh largest importer and the fourteenth largest exporter in the world. The most recent economic growth rates, for fiscal year 2011-2012, of India are projected at around 9.2%.

Current Statistics of the Economy of India

GDP (Gross Domestic Product)US$ 1.846 trillion (Nominal; World Rank – 9th ; Year – 2011 )
US$  4.469 trillion (PPP; World Rank- 3rd; Year – 2011)
GDP by SectorServices: 55.6%
Industry: 26.3%
Agriculture: 18.1%
(2011 Estimates)
GDP per capitaUS$ 1,527 (Nominal; World Rank – 135th; Year –  2011)
US$ 3,703 (PPP; World Rank – 127th; Year – 2011)
GDP Growth8.5% (Fiscal Year – 2010-2011 )
Labor force                                        487.6 million (2011 Estimates)
Labor force by occupationServices: 34%
Industry: 14%,
Agriculture: 52%
(2009 Estimates))
Unemployment9.8% (2011 Estimates)
Average Gross SalaryUS$ 1330 annually (2010)
Population below poverty line37% (Year – 2011)
Inflation (CPI)6.55% (January 2012)
RevenuesUS$ 218.7 billion (2011 Estimates)
ExpensesUS$ 311.2 billion (2011 Estimates)
Foreign reservesUS$ 296 billion (December 2011)
ExportsUS$ 298 billion (2011 Estimates)
ImportsUS$ 451 billion (2011 Estimates)
Export goods
  • Petroleum products
  • Machinery
  • Iron and Steel
  • Vehicles
  • Chemicals
  • Precious Stones
  • Apparels
Import goods
  • Crude Oil
  • Machinery
  • Iron and Steel
  • Chemicals
  • Fertilizers
  • Precious Stones
Major Export Partners
  • USA – 12.6%
  • UAE – 12.2%
  • China – 8.1%
  • Hong Kong – 4.1%
(Year – 2010)
Major Import Partners
  • China – 12.4%
  • UAE – 6.5%
  • Saudi Arabia – 5.8%
  • USA – 5.7%
  • Australia – 4.5%
(Year – 2010)
Main Industries
  • Telecommunications
  • Software
  • Machinery
  • Steel
  • Mining
  • Petroleum
  • Transportation Equipment
  • Textiles
  • Pharmaceuticals
  • Chemicals
  • Food Processing
  • Cement

Major Challenges before the Economy of India

Poverty:  As per the latest statistical data, at around 37% of the total population lives below the poverty line inIndia. This is a sizable and an alarming proportion of the country’s total population. Though, government has taken several measures to address this problem and there has been some improvement in the recent times, but India is still far away from the desired results. Better policy formulation and implementation is what Indian economydemands to achieve a sizable decline in poverty ridden population in India.
Unemployment: At present, India is in the phase of its demographic dividend. Large youth population available inIndia today can be very productive in boosting the Indian economy to the targeted levels. But unfortunately, Indiahas so far not been able to use its demographic dividend optimally. Government has not been successful in creating job opportunities at par with the increasing population of the country. Though, government has taken several steps to generate employment opportunities but a lot more is required to meet the growing needs of employment. Some schemes undertaken by the government for the growth of employment opportunities in the country includes the Self Employment Scheme for Educated Unemployed Youth and the Jawahar Rozgar Yojna.
Inclusive Growth: India has yet not been able to maintain a balance between the urban and the rural development. The urban sector of the country has experienced a tremendous growth in past few decades but in some rural sectors several basic development needs are still unaddressed. Also, a major segment of the Indianpopulation still resides in rural areas, but sadly the contribution of this major segment to the overall country’s GDP is very less in comparison to what is contributed by the urban sector. Though the government has identified this problem very well and has taken some bold steps to accelerate growth in the rural sector it is still a goal far to achieve.

Population: Population, in a way, is the most important problem that should be taken care of by the GOI, Government of India, with an immediate effect. India is the second most populous country in the world, next only to China. According to the data revealed by the population census conducted in year 2011, the total population ofIndia, at present, is ­­­­­1.21014569 billion. This population explosion holds the prime responsibility of the widespread unemployment and poverty across the country. Also, if this problem is addressed, the high inflation rates in the country will come down automatically. Though, population control has been a government’s prime agenda, but not much has really been achieved on this front.


Post a Comment

Popular Posts