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Economy of India

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Indian Economy is Twelfth largest in the world and fourth largest by purchasing power parity. In the 21st century, India is an emerging economic power having vast human and natural resources.

Economic Growth: Economic growth has been defined as "an increase in real terms of the output of goods and services that is sustained over a long period of time, measured in terms of value added". Economic growth is a dynamic concept and refers to continuous increase in output.

Factors in Economic Growth: The four factors contributing to growth are

human resources (labour supply, education, discipline, motivation)
national resources (land, minerals, fuels, environmental quality)
capital formation (machines, factories, roads)
technology (science, engineering, management, entrepreneurship)

Growth and Development

While the term economic growth referees to increases over time in a country's real output of goods and services i.e. product per capita, the term economic development, in contrast, is more comprehensive. It implies progressive changes in the socio-economic structure. Economic growth and development frequently used interchangeably in economic literatures actually are not identical technically.

Difference Between Economic Growth and Economic Development

Economic Growth	Economic Development
It indicates quantitative improvement in the economic progress of a country It shows growth in natural income and per capita income over time A country may grow but it may not develop	It indicates qualitative improvement in the economic progress of a country It shows not only a sustained increase in national and per capita income but also qualitative changes which leads to higher standard of living. Economic development includes the notion of economic growth.
Economic Growth = Size of output (A Quantitative aspect) Economic Development = Size of output + Welfare (A Qualitative aspect)

Gross National Happiness (GNH) : The concept of gross national happiness has been introduced by king of Bhutan, Jigme Singya Wang Chuck, a tiny kingdom on the northern borders of India. The GNH aims to ensure that prosperity is shared across protecting the environment and maintaining a responsive the word happiness, more like what the signers of the Declaration of Independence had in mind when they included the "pursuit of happiness" as an inalienable right equal to liberty and life itself. The index is designed to challenge the well-established indices of countries development. HDI and GDP which are seen as not taking sustainability into account.

GNH Ranking
Ranking	Country	HPI
1	Vanuatu	68.21
2	Colombia	67.24
3	Costa Rica	66.00
4	Dominica	64.55
5	Panama	63.54
6	Cuba	61.86
7	Honduras	61.75
8	Guatemala	61.69
9	El Salvador	61.66
10	St. Vincent of the Grenading	61.37
90	India	42.46

India is the 90th happiest country in the world, behind Bhutan(13), China(31), Sri Lanka(13) and Bangladesh(41). It is ahead of Pakistan(112) and Russia(172).
Seven of the top 10 happiest countries are from western democracies, while countries in Asia, known for their strong cultural values, family ties and collective identities surprisingly scored low-China(31), Japan(95) and Thailand(32)

Millennium Development Goals to be Achieved by 2015
Achieve universal primary education Reduce child mortality Improve maternal health Combat HIV/AIDS, Malaria and other diseases Ensure environmental sustainability Develop a global patnership for development Eliminate gender disparities in primary and secondary education, preferably by 2005, and in all levels of education by 2015 Halve the proportion of the people suffering from Hunger.

Five Year Plans

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First plan(1951 to 56)	It was based on Harrod-Damor model Community development programme was launched in 1952 Emphasised technical, price stability, power and transport It was more than a success, because of good are blessed in the last two years
Second plan(1956 to 61)	Also called Mahalanobis plan after its chief architect. Its objective was rapid industrialisation Advocated use imports which led to emptying of funds leading to foreign loans. It shifted basic emphasis from agriculture to industry far too soon. During this plan, price level increased by 30% against a decline of 13% during the first plan
Third plan(1961 to 66)	At its conception time, it was felt that Indian economy has entered it takeoff stage. Therefore, a was to make India a self reliant and self generating economy. Also, it was realised from the experience of first two planes that agriculture could be given the top priority to suffice the requirements of export and industry. Complete failure due to unforeseen misfortunes viz. Chinese aggression(1962), Indo Pak war (1962) , Indo Pak war (1965 ), Seve rest drought to 100 years (1965 to 66)
Three annual plans(1966 to 69)	Plan holiday for three years. The prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the annual plans. During these plans a whole new agriculture strategy involving widespread of distribution of highly-yielding varieties of seeds, the extensive use of fertilisers, exploitation of irrigation potential and soil conservation was put into action to tide over the crisis in agriculture production. During the annual plans, the economy basically absorbed the shocks given during the third plan, making way for a planned growth
Fourth plan(1969 to 74)	Main emphasis on agriculture's growth rate so that chain reaction can start Fared well in the first two years with record production, last three years failure cause of poor monsoon. Had to tackle the influx of Bangladeshi refugees before and after 1971 Indo Pak war
Fifth plan (1974 to 79 )	the fifth plan repaired and launched by D.D Dhar proposed to achieve two main objectives viz removal of poverty(Garibi Hatao) and attainment of self reliance, through promotion of high rate, better distribution of income and a very significant growth in the domestic rate of saving. the plan was terminated in 1978 (instead of 1979 ) when Janta government came to the power.
Rolling plan(1978 to 80)	there were two sixth plans. One by Genta government.(For 78 to 73) which was in operation for two years only and the other by Congress government when it returned to power in 1980 the Janata government plan is also called Rolling plan
Sixth plan(1980 to 85)	Objectives: Increase in national income, modernisation of technology, ensuring continuous decrease in poverty and unemployment, population control through family planning etc.
Seventh plan(1985 to 90)	the seventh plan emphasized policies and programmes which aimed at rapid growth in food grains production, increased employment opportunities and productivity within the framework of basic tenants of planning. It was a great success, the economy recorded 6% growth rate against the targeted 5%
Eighth plan(1992 to 97)	The eighth plan was postponed by two years because of political upheavals at the Centre and it was launched after a worsening balance of payment position and inflation during 1990-91 the plan undertook various drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6% some of the main economic performance during eighth plan period were rapid economic growth, high growth in exports and imports, improvement in trade and current account deficit.
Ninth plan(1997 to 2002)	Tt was developed in the context of four important dimensions: quality of life, generation of productive employment, a regional balance and self-reliance.
Tenth plan (2002 to 2007)	Its objectives included achieving the growth rate of 8%, reduction of poverty ratio to 20% by 2007 and 210% by 2012, universal access to primary education by 2007, increase in literacy rate to 72% within the plan period and to 80% by 2012
Eleventh plan(2007 to 2012)	Accelerate growth rate of GDP from 8% to 10% and then maintain at 10% in the 12th plan in order to double per capita income by 2016-17 Increase agricultural GDP growth rate of 4% per year to ensure a broader spread of benefits. Reduce drop out rates of children from elementary school from 52.2% in 2003-04 to 20% by 2011-12 Increase the literacy rate for persons of faith seven years or more to 85% reduce infant mortality rate(MR) 28 and maternal mortality ratio(MMR) to 1 part 1000 live births. raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by 2016-17 Ensure electricity connection to all village and BPL households by 2009 and the round-the-clock power by the end of the plan increase forest and free cover by the five percentage points

Plan	Target	Actual
First Plan(1951-56)	2.9%	3.6%
Second Plan(1956-61)	4.5%	4.3%
Third Plan(1961-66)	5.6%	2.8%
Fourth Plan(1969-74)	5.7%	3.3%
Fifth Plan(1974-79)	4.4%	4.8%
Sixth Plan(1980-85)	5.2%	6.0%
Seventh Plan(1985-90)	5.0%	6.0%
Eighth Plan(1992-97)	5.6%	6.8%
Ninth Plan(1997-2002)	6.5%	5.4%
Tenth Plan(2002-2007)	8.0%
Eleventh Plan(2007-2012)	9.0%

Poverty and unemployment

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Poverty line is defined on the basis of nutritional standards. The list calorie intake is fixed at 2400 Cal/person/day for rural area and 2100 Cal/person/day for urban area. The people below these nutritional is an income standards are considered to be below the poverty line(BPL).
Presently 24.4% population in India is below poverty line. It is 24.36% in ruler India and 24.50% in urban areas. National Sample survey Organisation(NSSO) conducts this survey.
Unemployment simply means a situation when able and willing people are not getting jobs as per their own capabilities

Green Revolution

Indian Green Revolution is associated with the use of HYVS(highly yielding variety seeds), chemical fertilisers and new technology which led to a sharp rise in agriculture production during the middle of 1960.
The term "Green Revolution" was given by American scientists, Dr William Gande.
During the middle of 60s, Indian agriculture scientist developed a number of new highly yielding varieties of wheat by processing wheat seeds imported from Mexico. A similar improvement in variety of rice was also observed.
The credit of this goes not only to Nobel Laureate Dr. Norman Borlaug, but also to Dr MS Swaminathan

Revolution	Area
Yellow revolution	oil seeds
White revolution	milk
Blue Revolution	Fish
Pink revolution	Shrimp/Meat
Brown Revolution	nonconventional energy resources
Grey revolution	wool
Golden Revolution	horticulture

Important industries of India

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Iron and steel industry

First steel industry at Kulti, Near Jharia, West Bengal - Bengal iron works company in 1870
First large scale steal plant TISCO at Jamshedpur in 1907 followed by IISCO at Burnpur in 1919. Both belonged to private sector
The first public sector unit was "Vishveshvaraya Iron and Stell works" at Bhadrawati

Public sector steel plants

Russian government -

Location	Assistance
Rourkela(Orrisa)	Germany
Bhilai(MP)	Russian government
Durga[ir(WB)	British government
Bokaro(Jharkhand)
Burnpur(WB)	Acquired from private sector in 1976
Vishakhapattnam(AP)	Russian government
Salem(Tamil Nadu)	-
Vijai Nagar(Karnataka)
Bhadrawati(Karnataka)	nationalisation of Vishveshvarayya Iron and Steel Ltd(owned by Central and State government)

all these are managed by SAIL(at present all important steel plants except TISCO, are under public sector)
steel authority of India Ltd(SAIL) was established in 1974 and was made responsible for the development of the steel industry
Presently India is the eighth largest steel producing country in the world.

Jute industry

Jute industry is an important industry for a country like India, because not only it earns foreign exchange but also provides substantial employment opportunities in agriculture and industrial sectors
Its first modernised industrial unit was established at Reshra in West Bengal in 1855
The jute industry in the country is traditionally export oriented. India ranks number one in the raw jute and juite goods production and number two in export of jute goods in the world.

Cotton and textile industry

Oldest industry of India, and employees largest number of workers
It is the largest organised and broad-based industry which accounts for 4% of GDP, 20% of manufacturing value-added and one third of total export earnings.
The first Indian modernised cotton cloth mill was established in 1818 at Fort Gloaster near Calcutta but this mill was not successful. The second mill named "Mumbai's spinning and weaving Co." Was established in 1854 at Bombay by KGN Daber.

Sugar industry

Sugar industry is the second largest industry after cotton textile industry among agriculture-based industries in India.
India is now the largest producer and consumer of sugar in the world. Maharashtra contributes over one third of the total sugar output, followed closely by Uttar Pradesh.

Fertiliser industry

India is the third largest producer of nitrogenous fertilisers in the world

Paper industry

The first mechanised paper mill was set up in 1812 at Serampur in West Bengal.
The paper industry in India is ranked among the 15 top global paper industries.

Silk industry

India is the second-largest(first being China) country in the world in producing natural silk. At present, India produces about 16% silk of the world.
India and joys that distinction of being the only country producing all the five known commercial varieties of silk viz Mulberry, Tropical Tussar, Oak Tussar, Eri and Muga.

Petroleum and natural gas

First successful Oilwell was dug in India in 1889 at Digboi, Assam.
at present a number of regions having oil reserves have been identified and oil is being extracted in these regions
for exploration purpose , Oil and Natural Gas Commission (ONGC) was established in 1956 at Dehradun, Uttarakhand.

Five Year Plans

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Five Year Plans form an important portion of the planning process in India. These are formulated, executed and monitored by the Planning Commission of India, which is an institution in the Government of India, headed by the Prime Minister.

The First Five Year Plan, formulated by the Planning Commission, was presented and launched in the Parliament of India by Jawaharlal Nehru, India’s first Prime Minister, on 1^st April 1951. The tenure of this plan was from year 1951 to 1956. After the completion of this tenure, the second and the third Five Year Plans were successfully formulated and launched by the Planning Commission. Although, in 1965, when the Second Kashmir War betweenIndia and Pakistan broke out and consequently the smooth process of planning in India got interrupted. Two years of successive drought, devaluation of currency, inflation and erosion of resources further disrupted the planning process. As a result, instead of formulating a Five Year Plan in 1966, the Planning Commission had to formulate three annual plans between the years 1966 and 1969. After these three annual plans, the Fourth Five Year Planwas formulated and launched in 1969.

The Planning Commission conducted the planning process smoothly after 1969 and it formulated, executed and monitored four Five Year Plans successfully after 1969 on scheduled time. However, in 1990, the Eighth Five Year Plan could not be formulated as a result of the fast changing political scenario in the country. Hence, the Planning Commission again had to formulate two annual plans for year 1990 and 1991. Finally, the Eighth Five Year Planwas launched by the Planning Commission in 1992. After this, the planning process in India has been smooth so far. Presently, the Eleventh Five Year Plan issued by the Planning Commission is underway and the Twelfth Five Year Plan is all set to be launched in 2012.

The glimpses of the various Five Year Plans launched by the Planning Commission of India, along with their tenure, are mentioned below.

First Five Year Plan (1951-1956)
Second Five Year Plan (1956-1961)
Third Five Year Plan (1961-1966)
Fourth Five Year Plan (1969-1974)
Fifth Five Year Plan (1974-1979)
Sixth Five Year Plan (1980-1985)
Seventh Five Year Plan (1985-1989)
Eighth Five Year Plan (1992-1997)
Ninth Five Year Plan (1997-2002)
Tenth Five Year Plan (2002-2007)
Eleventh Five Year Plan (2007-2012)

First Five Year Plan

The First Five Year Plan formulated by the Planning Commission of India was presented before the parliament on 1^st April 1951 by Jawaharlal Nehru, India’s first Prime Minister. The tenure of this plan was between 1951 and 1956. With this plan, the Planning Commission tried to address the problems of the agricultural sector, which was severely hit after the partition of the country. The total planned budget of this Five Year Plan was 206.8 billion which was broadly allotted to seven different areas which are listed in the table below.

Area	Irrigation & Energy	Agriculture & Community Development	Transport & Communications	Industry	Social Services	Land Rehabilitation	Other Sectors & Services
Budget Allocation	27.2%	17.4%	24%	8.4%	16.64%	4.1%	2.5%

Many irrigation projects and dams, including the Bhakra Dam and the Hirakud Dam, were initiated under this plan. The government of India, along with the World Health Organization, also addressed the alarming problems of children’s health. As a result the infant mortality rate was significantly controlled.

By the end of this First Five Year Plan in 1956, the University Grant Commission was established to facilitate funding and to strengthen the higher education in the country. Five IITs (Indian Institute of Technology) were also opened successfully as major technical education institutions in the country. Under this plan several initiatives were also taken to start five steel plants in the country. These plants were completely established by the middle of theSecond Five Year Plan.

The First Five Year Plan targeted to achieve a growth rate equal to 2.1% of the annual gross domestic product (GDP) but India managed to achieve a higher growth rate of 3.6% of the annual gross domestic product (GDP).

Second Five Year Plan

The Second Five Year Plan was launched in 1956. Under this plan, the focus was shifted towards the industrial sector from the agrarian sector. The major emphasis under this plan was to increase the domestic production of industrial products through the development of public sector industries in India. The Mahalanobis model, formulated by Prasanta Chandra Mahalanobis, was highly used under this plan to determine the optimal allocation of resources to different sectors of production so as to attain maximum long run economic growth.

The total planned budget for the Second Five Year Plan was Rs. 480 million. This amount was allocated to four different sectors, namely – communications and transport, power and irrigation, social services and miscellaneous.

By the end of this plan tenure, there was a sizable improvement in the production of coal and many new railway lines were laid to address the problems in transporting raw materials. Also, the five steel plants which were initiated during the tenure of the First Five Year Plan were completed under this plan.

Third Five Year Plan

Initially, the Third Five Year Plan was formulated with a prime focus on agriculture, majorly on improving the production of wheat but as a result of the India-China war in 1962, soon the focus was shifted towards country’s defense industry. Later, India fought another war with Pakistan in 1965 which resulted in high rates of inflation in the country and consequently the focus of the Third Five Year Plan was again shifted towards price stabilization.

The targeted growth rate under this Five Year Plan was to achieve a growth rate equal to 5.6% of GDP but the rate actually achieved was much lower (only 2.2% of GDP). However, some major developments were made in the education sector, during this plan tenure, including the formation of state boards of secondary education and establishment of primary schools in rural areas.

Fourth Five Year Plan

The Fourth Five Year Plan was initially focused towards the development of country’s industrial sector but as a result of the India-Pakistan war in 1971, a major segment of the allotted funds was diverted towards the war needs.

Some major developments under this plan include the initiation of Green Revolution in India and the nationalization of fourteen Indian banks. India also successfully performed its first nuclear test in 1974.

The targeted growth rate during this plan was 5.7% of GDP but the growth rate actually achieved was just 3.3% of the GDP.

Fifth Five Year Plan

The Fifth Five Year Plan formulated by the Planning Commission of India mainly focused on the alleviation of poverty and employment generation in the country. Increased domestic production of agricultural and defense products were the other prime objectives of this plan.

Some major achievements made during the tenure of this Five Year Plan include the introduction of Indian national highway system and the enactment of the Electricity Supply Act in 1975.

The targeted growth rate under this Five Year Plan was 4.4% of GDP but a higher growth rate equal to 5.5% ofGDP was actually achieved.

Sixth Five Year Plan

The Sixth Five Year Plan introduced the concept of family planning in India. Unlike China, the family planning inIndia was introduced in form of an awareness campaign and not as a forceful obligation. This introduction to the family planning concept yielded good results in certain privileged areas of India where the birth rate was sizably controlled. However, in many under privileged areas of the country, high birth rate is still a major problem to address.

To achieve a growth rate equal to 5.2% of GDP was set under this Five Year Plan but a higher growth rate, 5.4% of GDP, was actually achieved.

Seventh Five Year Plan

The Seventh Five Year Plan primarily focused on employment generation, increasing economic productivity and the production of food grains. The success of the Sixth Five Year Plan laid a strong foundation for this plan and made the goals set under this Five Year Plan more realistic. The key efforts laid under this plan were on the areas listed below.

Anti-poverty programs
Increase supply of food, clothing and shelter
Promoting the use of modern technology
Development of agriculture

The target growth rate to achieve under this Five Year Plan was 5% of GDP but India successfully managed to achieve a higher growth rate equal to 5.7% of GDP.

Eighth Five Year Plan

The Eighth Five Year Plan was formulated and launched by the Planning Commission in 1992 after the economic reforms of 1991 in the country. The major emphasis under this Five Year Plan was laid on the modernization of the existing public sector industries. Other objectives set under this plan are listed below.

Poverty reduction
Infrastructure development
Tourism Management
Empowerment of Panchayat Raj, Nagar Palika and NGOs
Decentralization of power
Development of Energy sector
Population control

The target growth rate set under this Five Year Plan was 5.6% of the annual GDP whereas the actually achieved growth rate was comparatively higher, standing at 6.78% of the annual GDP.

Ninth Five Year Plan

The Ninth Five Year Plan of the Planning Commission was formulated and launched in 1997. The primary emphasis under this plan was laid on self resilience and speedy industrialization. Other main objectives set under this plan are listed below.

Human Development
Employment Generation
Poverty Reduction
Rural Development
Promote Primary Education
Price Stabilization
Population Control
Food and Nutritional Security

The Ninth Five Year Plan proposed a target growth rate of 6.5% of GDP. However, India could only manage a growth rate equal to 5.35% of GDP.

Tenth Five Year Plan

The Tenth Five Year Plan was launched by the Planning Commission in 2002. The primary objectives of this plan are listed below.

Higher Female Literacy Rate
Poverty Alleviation
GDP growth rate of 8%

Eleventh Five Year Plan

The Eleventh Five Year Plan is the latest plan issued by the Planning Commission. The tenure of this plan will last till 2012. The emphasis under this Five Year Plan is laid on six areas which are listed below.

Income & Poverty
Education
Health
Women & Children
Infrastructure
Environment

The success analysis of this Five Year Plan and the next plan is soon to be issued by the Planning Commission.

Planning Commission

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Established in March 1950, the Planning Commission is an institution in the Government of India, headed by the Prime Minister, providing a platform for the efficient planning by formulating India’s Five Year Plans. The Planning Commission of India was established by the Government of India with an objective to ensure effective utilization of resources to meet the immediate demand of employment opportunities for the citizens and to promote the overall standard of living in the country. Along with several other functions and responsibilities, the most important responsibility of the Planning Commission is to make an acute assessment of the resources present in the country, augment deficient resources, determine priorities’ and finally formulate a Five Year Plan for the most efficient and balanced utilization of resources of the country.

The First Five Year Plan of India was launched and presented before the Parliament by the Planning Commissionon April 1, 1951. The tenure of the First Five Year Plan was from year 1951 till year 1956. After this, two subsequent plans were formulated by the Planning Commission of India till 1965, when there was a break owing to the Second Kashmir War between India and Pakistan. Devaluation of currency, two years of successive drought, inflation and erosion of resources further disrupted the five year planning process for a further period of three years between 1966 and 1969. After the three annual plans, the Fourth Five Year Plan was issued by the Planning Commission of India in 1969.

Later in 1990, the Five Year Planning Process was again interrupted by the fast changing political scenario at the centre. As a result, the Eighth Five Year Plan which was scheduled to take off in 1990 was not passed by thePlanning Commission. Instead, two annual plans were again passed in year 1990 and 1991. Finally, this Eighth Five Year Plan of the Planning Commission was passed in 1992 after the initiation of the structural adjustment policies. After the launch of the eighth plan, the planning process in India has been smooth so far. The Twelfth Five Year Plan is all set to take off in 2012.

Functions of the Planning Commission

The functions of the Planning Commission, determined at the time it was established in 1950 are listed as follows:

Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement.
Formulate a Plan for the most effective and balanced utilization of country’s resources.
On a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage.
Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan.
Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects.
Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary.
Make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of prevailing economic conditions, current policies, measures and development programmes or on an examination of such specific problems as may be referred to it for advice by Central or State Governments.

Today, the planning process in India is gradually inclining towards the indicative planning. In this indicative planning, the Planning Commission focuses on building a long term strategic vision and decides on the priorities of the country. The focus now is to work out the sectoral targets and provide a stimulus to the economy to grow in a desired direction.

Planning Commission has an important role in the development of a holistic approach to the policy formulation in the critical areas of human and economic development. The focus of the Planning Commission is on maximizing the output by utilizing our limited resources optimally.

IT in Indian Economy

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IT and ITES (i.e. Information Technology and Information Technology Enabled Services) have played a great role in framing the economy of India. According to the Information Technology Association of America, “Information Technology can be defined as the study, design, development, implementation, support or management of computer based information systems, particularly software applications and computer hardware.”

In more simple terms, IT deals with the use of electronic computers and computer software to convert, store, protect, transmit, and securely retrieve information.

Back in the history of India (particularly in economic history of India), for the first time, IT was introduced in India by the IBM (International Business Machine) during the decade of 1930s. The core aim of IBM in India was to promote the sales of its products in the Indian market. As a result of good response from the market IBM also decided to establish a manufacturing unit in India itself. The establishment of this manufacturing unit completed in year 1951 and from then onwards till mid of 1970s its business worked very well in the Indian markets. However, thereafter, according to the India’s Foreign Exchange Regulation Act all the foreign owned companies were asked to reduce their equity ownership (particularly in case of IBM it was to 26%). IBM was unwilling to undertake this course and finally decided to quit its business in India. By the end of year 1978, IBM ceased all its operations in India.

Prior to the economic liberalization which under took in year 1991 in India, the economic environment was not much favorable for the IT industry to flourish. A lot many reasons restricted its growth. Some of those were the import restrictions, Forex controls, poor telecom infrastructure, and scarcity of capital for the development of infrastructure, underdeveloped capital markets and distrust among the policy makers.

However, after the year 1991 many reforms were undertaken by the government and amendments were made into its economic policies, which altogether attracted many foreign companies to expand their IT and ITES related operations in India. Some of these reforms were the decentralized power to the regional and state governments and the rationalization of various taxes. The power given to the state government in decision making were enhanced which could lead to better decision making and the rationalization of taxes made the Indian market a favorable and unexplored spot for the foreign companies and investors.

After these and some more reforms undertaken by the Indian government, India became the favrite spot for the offshore services by many of the US and other foreign companies. India was chosen for these offshore jobs because of the following reasons:-

• Stable Economy

• Modern Telecom Infrastructure

• Vast pool of technically sound and skilled workers.

• Government Policies

• English

However it suffered a lot many problems but the Indian Economy did showed a stable growth since independence unlike the other newly independent states which did formed a positive opinion amongst the foreign companies and investors for industrial setup in India. Apart from this after 1991 the government policies were also much amended to attract these companies. English speaking vast pool of skilled workers with proficiency in English language gave India an edge over its competitors for the development of IT industry.

If we look at the employment figures of India then, IT and ITES services in India appointed at about 1.29 million people in the financial year 2005-06 which increased to 1.63 million in financial year 2006-07 and to 2.01 million people in year 2007-09. According to the latest statistics available today, this industry has given employment to about 2.3 million population of the country.

Talking in terms of GDP, IT sector contributed to about 1.2% in the GDP in year 1998 and its contribution increased to about 5.8% in year 2008. However, due to the economic slowdown in year 2009, the contribution of this sector in GDP reduced to 5.2%, however, a quick recovery and growth is expected in year 2010.

IT industry has highly influenced the Banking sector in India. Prior to IT introduction, things were much more complicated in the Indian Banks. IT has reduced the workload and made Banking more competitive in India.

In India, the interface of the Information Technology with agriculture is highly unexplored. This could be the target for the various IT companies across the nation. Recently, an IT service to provide agriculture related information to farmers was launched by an Indian company ITC, under the name eChopal. Such developments are essentially required in nation and can be the next coverage target for IT companies in India.

Major Sectors of Indian Economy

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India is an emerging global economy. It ranks eleventh in the world in terms of the nominal GDP and stands on third position worldwide by Purchasing Power Parity (PPP). Major sectors of Indian Economy which have contributed to bring India to this stand are listed and described below:

Agricultural Sector in Indian Economy

Agricultural Sector, employing 52.1% of the total Indian workforce, is the highest employment provider in India. However, despite this fact, the overall contribution of the agricultural and allied sectors including fishing, forestry and logging to the overall GDP of India is less than twenty percent. In financial year 2009-2010, agriculture sectorcontributed only 15.7% to the country’s GDP. However, even though its contribution to the overall GDP being not very significant, agriculture remains an important & prudent sector in India and has had an immense contribution in uplifting the economy of the nation.

India stands on second position in the world in terms of farm output. However, a few recent surveys and findings conducted on an international level revealed that the average yield in India is only 30% to 50% of the highest average yield in the world. During pre-independent era, excessive stress was laid by the British on the commercialization of the Indian agriculture and encouragement of cash crops. The consequences of this were devastating for the fertile Indian lands and led to frequent famines, droughts, floods and in the decrease in fertility of the Indian soils. When India gained its independence in 1947, it was a challenge for the Indian Government to revitalize the agriculture in country and to address this challenge, agricultural sector was taken on top priority during initial Five Year Plans framed by the Planning Commission of India. This gradually lead to the improvement of agricultural infrastructure, provision of agricultural credits and subsidies to the farmers, adaptation of neweragriculture techniques and many other positive developments to revitalize the Indian agriculture. All these steps finally contributed to the green revolution in India and evolved India as one of the major producers of agriculturalproducts in the world. States of India providing highest contribution to country’s total annual agricultural produce includes Punjab, Haryana, Uttar Pradesh, Maharashtra, Bihar, Andhra Pradesh, Gujarat and West Bengal.

Major agricultural produce of India includes wheat, rice, sugarcane, groundnuts, pulses, fruits, vegetables, silk, jute, cotton and milk. Also, India stands on first position in the world in terms of the production of pusles, jute & milk and is also the second largest producer of wheat, rice, sugarcane, groundnuts, cotton, fruits and vegetables.

Industrial Sector in Indian Economy

Industrial sector is the second highest employment provider in India, next only to the agricultural sector, and provides employment to almost 23% of the country’s total work-force. Also, the GDP contribution of the industrial sector stands on the second position, next only to the Service Sector, contributing almost 28% to the total GDP of the nation.

The Industrial Sector in India has grown at a tremendous rate in the past two decades. This growth rate has been triggered by the economic reforms of 1991, which were adopted under the leadership of Prime Minister, Narasimha Rao, and Finance Minister, Manmohan Singh, in order to avail a US$ 1.8 billion bailout loan from the International Monetary Fund (IMF). Under these reforms, many import restrictions were removed, FDI regime was liberalized and many public sector industries were privatized.

Though, on the whole, the economic reforms of 1991 have been a success for the Industrial Sector of India, but these reforms were accompanied with some negative impacts as well. After these reforms, with the entry of foreign players into the Indian markets, the competition became very stiff. This led most local industry to adopt newer and more sophisticated technology in order to cut down there cost of production. Though, adaptation of newer technology was a prudent decision but it lead to squeezing of the labor force which intensified the already prevalent problem of unemployment in country.

In current scenario, the Textile Manufacturing Industry is the highest employment provider in the entire Industrial Segment of the Indian Economy. In fact, Textile Manufacturing Industry alone is the second highest employment provider in India, next only to agriculture. Also, it accounts for 20% of the total manufacturing output of the country. Most improvements in this segment of manufacturing industry have been attained after 2005, when government lifted several limitations which were put on the textile industry.

Service Sector in Indian Economy

Service Sector, contributing almost 55% to the country’s GDP, is the highest contributor to the economy of India. Also, at the same time, Service Sector contributes such a significant proportion to the GDP of India with the engagement of minimum work-force of the country. This sector employs only 14% of the country’s total work-force. However, the engagement of work-force in this sector is on a steady growth. The rate of increase in work-force engaged in service sector rose from 4.5% in 1951-80 to 7.5% in 1991-2000.

Under Service Sector, Information Technology & BPO (Business Process Outsourcing) are the two fastest growing segments which alone account for almost one-fourth of India’s total export. Today, India ranks 13^th in terms of the services output according to latest international statistics. However, this sector not always had its dominance over the Indian Economy. Prior to the economic reforms of 1991, service sector grew in India at a decent rate and had an average contribution to the country’s GDP. However, post the economic reforms of 1991, which were adopted by the Government of India under the leadership of Finance Minister, Manmohan Singh, and Prime Minister, Narasimha Rao, the service sector of country has shown a tremendous growth and gradually began to dominate the Indian Economy. Some factors which have contributed to the tremendous growth of this sector post liberalization includes the availability of a vast pool low cost, educated, highly specialized & skilled, English speaking manpower which meet the demand of most foreign consumers.

HDI of India

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HDI is the abbreviated form of Human Development Index. It was formulated and launched by Mahbub-ul-Haq, a Pakistani economist, followed by Amartya Sen, an Indian economist, in 1990. Human Development Index, HDI, is a comprehensive tool devised by the United Nations for measuring the levels of social and economic developments of the different countries and ranking them accordingly. It is a comparative measure of literacy, life expectancy, education and standard of living. Essentially, Human Development Index, HDI, makes use of four parameters for measuring and ranking countries according to their social and economic development which includes the Life Expectancy at Birth, Expected Years of Schooling, Mean Years of Schooling and Gross National Income per Capita.

HDI scores ranges from 0 to 1, with 1 being the best possible score for a country to attain. Prior to Year-2011, different method was used for calculating the Human Development Index, HDI, score of a nation but post Year-2011 a new method has been adopted for calculating the same.

HDI was essentially originated to determine the social and economic developments of countries, but it can also be used and is actually used for the determination of social and economic developments of various states and cities within a nation.

At present, the overall average HDI Score of India is 0.547.

Below provided is a list of Indian States & Indian Union Territories along with their respective HDI scores.

HDI of Indian States

States	HDI Rank	HDI
Andhra Pradesh	20	0.473
Arunachal Pradesh	15	0.617
Assam	22	0.444
Bihar	28	0.367
Chhattisgarh	23	0.358
Goa	3	0.617
Gujarat	14	0.527
Haryana	11	0.552
Himachal Pradesh	8	0.652
Jammu & Kashmir	17	0.529
Jharkhand	24	0.376
Karnataka	18	0.519
Kerala	1	0.921
Madhya Pradesh	26	0.375
Maharashtra	6	0.689
Manipur	5	0.707
Meghalaya	19	0.585
Mizoram	2	0.790
Nagaland	4	0.770
Orissa (now Odisha)	27	0.362
Punjab	9	0.605
Rajasthan	21	0.434
Sikkim	7	0.684
Tamil Nadu	10	0.570
Tripura	16	0.608
Uttar Pradesh	25	0.380
Uttarakhand	13	0.490
West Bengal	12	0.492

HDI of Indian Union Territories

Union Territories	HDI Rank	HDI
Andaman & Nicobar Islands	4	0.766
Chandigarh	1	0.892
Dadra and Nagar Haveli	7	0.618
Daman and Diu	5	0.754
Delhi	3	0.750
Lakshadweep	2	0.796
Pondicherry	6	0.748

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