Indian Economy Overview

Indian Economy

The Indian economy is one of the fastest growing economies in the world. It operates under the framework of a socialist, secular democratic republic, which controls the commanding heights of the economy. The government is involved in five key areas: defence, railways, atomic energy, coal and electricity generation, and major ports. India has a mixed economic system with both private enterprise coexisting alongside public sector enterprises. Here's more information about various aspects of the Indian economy:

Economic Growth Rate

India's average annual growth rate was around 7% between 2002 and 2011. From 2011 to 2015, the economy grew at an average rate of 7.3%. The country's GDP was $3.4 trillion in 2015. As of 2015, India was the world's seventh-largest economy by purchasing power parity (PPP) and the second-fastest growing major economy.

Key Sectors

The key sectors in India's economy are agriculture, manufacturing, and services. Agriculture contributed around 17% to the Indian economy's GDP in 2018. Manufacturing contributed approximately 17% to the Gross Value Added (GVA) in the financial year 2019-2020. In terms of employment, agriculture employs the vast majority of the workforce. Despite its importance, agriculture accounts for only 17% of the country's total exports. Services contribute substantially to the overall GDP of India.

Foreign Trade

In 2019, India had a positive balance of trade at $13.4 billion. As of December 2020, India's foreign exchange reserves stood at $679.21 billion. There have been issues with India's negative trade balance since 2008. However, there were signs of recovery after the global financial crisis. The services sector accounted for 40.2% of the global trade in goods and services from India in 2020, while manufacturing accounted for 49.2%, and agriculture accounted for just 10.6%.

Employment

As of 2019, India had an estimated population of 1.4 billion people. Of these, less than half the population earn their livelihood from nonagricultural activities. Approximately 70% of the nonagricultural labor force could be classified as wage/salaried employees. Agriculture remains the largest single employer accounting for over two thirds of the labour force.

Challenges in the Indian Economy

Despite positive economic indicators, challenges persist in the Indian economy. One such challenge is high inflation, which can lead to higher costs for consumers and businesses. Another challenge is massive unemployment and rising inequality, especially among youth. A significant part of the agricultural population continues to suffer from poverty. Finally, the lack of access to credit facilities by small borrowers poses a concern.