Indian
agriculture dates from the period 7,000–6,000 BCE, employs most of the national
workforce, and is second in farm output worldwide. Above, a farmer works an
ox-drawn plow in Kadmati, West Bengal.
According
to the International Monetary Fund, as of 2011, the Indian economy is nominally
worth US$1.676 trillion; it is the eleventh-largest economy by market exchange
rates, and is, at US$4.457 trillion, the third-largest by purchasing power
parity, or PPP. With its average annual GDP growth rate of 5.8% over the past
two decades, and reaching 6.1% during 2011–12, India is one of the world's
fastest-growing economies. However, the country ranks 140th in the world in
nominal GDP per capita and 129th in GDP per capita at PPP. Until 1991, all
Indian governments followed protectionist policies that were influenced by
socialist economics. Widespread state intervention and regulation largely
walled the economy off from the outside world. An acute balance of payments
crisis in 1991 forced the nation to liberalise its economy; since then it has
slowly moved towards a free-market system by emphasizing both foreign trade and
direct investment inflows. India's recent economic model is largely capitalist.
India has been a member of WTO since 1 January 1995.
The
487.6-million worker Indian labour force is the world's second-largest. The
service sector makes up 55.6% of GDP, the industrial sector 26.3% and the
agricultural sector 18.1%. Major agricultural products include rice, wheat,
oilseed, cotton, jute, tea, sugarcane, and potatoes. Major industries include
textiles, telecommunications, chemicals, food processing, steel, transport
equipment, cement, mining, petroleum, machinery, and software. In 2006, the
share of external trade in India's GDP stood at 24%, up from 6% in 1985. In
2008, India's share of world trade was 1.68% In 2011, India was the world's
tenth-largest importer and the nineteenth-largest exporter. Major exports
include petroleum products, textile goods, jewelry, software, engineering
goods, chemicals, and leather manufactures. Major imports include crude oil,
machinery, gems, fertiliser, and chemicals. Between 2001 and 2011, the
contribution of petrochemical and engineering goods to total exports grew from
14% to 42%.
Street-level view looking up at a
modern 30-story building.
The Bombay Stock Exchange is
Asia's oldest and India's largest bourse by market capitalisation.
Averaging
an economic growth rate of 7.5% during the last few years, India has more than
doubled its hourly wage rates during the last decade. Some 431 million Indians
have left poverty since 1985; India's middle classes are projected to number around
580 million by 2030. Though ranking 51st in global competitiveness, India ranks
17th in financial market sophistication, 24th in the banking sector,
44th in business sophistication,
and 39th in innovation, ahead of several advanced economies. With 7 of the
world's top 15 information technology outsourcing companies based in India, the
country is viewed as the second-most favourable outsourcing destination after
the United States. India's consumer market, currently the world's
eleventh-largest, is expected to become fifth-largest by 2030. Its
telecommunication industry, the world's fastest-growing, added 227 million
subscribers during the period 2010–11. Its automotive industry, the world's
second fastest growing, increased domestic sales by 26% during 2009–10, and
exports by 36% during 2008–09. Power capacity is 250 gigawatts, of which 8% is
renewable. At the end of 2011, Indian IT Industry employed 2.8 million
professionals, generated revenues close to US$100 billion equaling 7.5% of
Indian GDP and contributed 26% of India's merchandize exports.
Despite
impressive economic growth during recent decades, India continues to face
socio-economic challenges. India contains the largest concentration of people
living below the World Bank's international poverty line of US$1.25 per day,
the proportion having decreased from 60% in 1981 to 42% in 2005. Half of the
children in India are underweight, and 46% of children under the age of three
suffer from malnutrition. The Mid-Day Meal Scheme attempts to lower these
rates. Since 1991, economic inequality between India's states has consistently
grown: the per-capita net state domestic product of the richest states in 2007
was 3.2 times that of the poorest. Corruption in India is perceived to have
increased significantly, with one report estimating the illegal capital flows
since independence to be US$462 billion. Driven by growth, India's nominal GDP
per capita has steadily increased from US$329 in 1991, when economic liberalisation
began, to US$1,265 in 2010, and is estimated to increase to US$2,110 by 2016;
however, it has always remained lower than those of other Asian developing
countries such as Indonesia, Iran, Malaysia, Philippines, Sri Lanka, and
Thailand, and is expected to remain so in the near future.
According
to a 2011 PricewaterhouseCoopers report, India's GDP at purchasing power parity
could overtake that of the United States by 2045. During the next four decades,
Indian GDP is expected to grow at an annualised average of 8%, making it
potentially the world's fastest-growing major economy until 2050. The report
highlights key growth factors: a young and rapidly growing working-age
population; growth in the manufacturing sector due to rising education and
engineering skill levels; and sustained growth of the consumer market driven by
a rapidly growing middle class. The World Bank cautions that, for India to
achieve its economic potential, it must continue to focus on public sector
reform, transport infrastructure, agricultural and rural development, removal
of labour regulations, education, energy security, and public health and nutrition.
As
per a report by Datamonitor, India is expected to occupy sixth place in top 10
wealth markets list by the end of 2012.
Citing
persistent inflation pressures, weak public finances, limited progress on
fiscal consolidation and ineffectiveness of the government, rating agency Fitch
revised India's Outlook to Negative from Stable on 18 June 2012. Another credit
rating agency S&P had warned previously that a slowing GDP growth and
political roadblocks to economic policy-making could put India at the risk of
losing its investment grade rating. However, Moody didn't revise its outlook on
India keeping it stable, but termed the national government as the "single
biggest drag" on the business activity.
According
to the official estimates, Indian economy is expected to grow at 7.6% (+/- 0.25%)
in the fiscal year 2012-2013. However, leading financial organisations and
economic think-tanks expect Indian economy to grow slower than official
projections.
Indianeconomic growth outlook April, 2012 - March, 2013 Organisation Estimated GDP growth rate
Month of
projection
International Monitory Fund
6.1% July 2012
World Bank 6.9% June 2012
Asian Development Bank
6.5% July 2012
Nomura 5.8% June 2012
Morgan Stanley 5.8% June 2012
JP Morgan
6-6.5% June 2012
Goldman Sachs
6.6% May 2012
Bank of America- Merrill Lynch 6.5% May 2012
HSBC 6.2% June 2012
Standard Chartered
6.2% June 2012
Centre for Monitoring Indian Economy 7.2%
July 2012
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