Since 2000, India's economy has grown at one of the quickest rates in the world.
On a nominal GDP basis, it is also the fifth-largest economy in the world.
India's GDP increased by 5% overall in 2019.
The main features of the Indian economy for this increase were a high level of industrial activity and robust demand for the nation's goods and services. The nation, which historically supplied cotton and tea to Britain, today has a diverse economy, with the service sector accounting for the majority of activity and growth. In today's worldwide economics, India is seen as a "global player."
The COVID-19 pandemic response has had a significant negative impact on India's economy in 2020–2021. India's GDP for the second quarter of 2020 was about 24% lower than the second quarter of 2019, as COVID-19-related restrictions on all non-essential goods severely retrenched economic activity.
Synopsis *The economy of India is currently one of the fastest growing in the world. * *As of 2020, agriculture, which was previously India's primary industry and source of income, accounted for only 18.32% of the nation's GDP. In India, *The service sector has grown from making up a small portion of the GDP over the past 60 years to almost 55% between 2018 and 2019. *The World Travel and Tourism Council estimated that tourism contributed 9.2% of India's GDP in 2018, with close to 10 million foreign visitors coming to the country in 2019. |
Following Is The Backbone Of The Indian Economy's Historical Development
India created a centralised planned economy in 1947 after achieving independence from Britain (also known as a command economy). In a system where production and distribution of goods are centrally controlled, most economic choices are made by the government.
The government concentrated on growing the heavy industry sector, but this effort was ultimately shown to be unsustainable. India started to relax its economic constraints in 1991, and as a result of greater economic liberalization, and globalisation the country's private sector expanded. The commercial and public sectors coexist in India's modern mixed economy, which also makes use of foreign trade.
Individuals have the freedom to establish their own private businesses and professions. However, the government still holds a monopoly in a certain sectors of the economy, including banking, power, defence, and other industries. The GDP of the nation has drastically increased, rising from $288 billion in 1992 to $2.66 trillion in 2020.
Agriculture Sector
As of 2020, agriculture, which was once India's primary industry and source of income, made up about 18.32% of the GDP.
Analysts have noted that this downturn should not be interpreted as a reduction in production, nevertheless. Instead, it is a reflection of the substantial growth in India's industrial and service outputs.
India's agricultural sector is now having some issues. First, the sector is not as effective as it could be because millions of small farmers rely on the monsoons to provide the water they need to grow their crops.
Since irrigation is insufficient and there aren't enough storage facilities or distribution networks, agricultural products are at risk of rotting due to underdeveloped agricultural infrastructure.
India is currently the second-largest fruit grower in the world, and it leads the globe in the production of lemons, bananas, mangoes, papayas, and limes.
Forestry is a rising industry that produces fuel, wood-based panels, paper, paperboard, and pulp for paper even though it makes up a minor portion of the nation's GDP.
Fishing and aquaculture, which includes the breeding and harvesting of shrimp, sardines, mackerel, and carp, contribute a minor supplementary portion of India's economy.
Industrial Production Sector
The petrochemical industry, which initially joined the Indian industrial landscape in the 1970s, saw significant growth in the 1980s and 1990s. Chemicals are big business in India.
Along with producing a sizable portion of the world's pharmaceuticals, India also manufactures millions of dollars' worth of automobiles, motorcycles, tools, tractors, machinery, and forged steel.
Along with asbestos, uranium, limestone, and marble, India also mines a significant quantity of gems and industrial minerals including iron ore, bauxite, and gold. For instance, India mined 729 million tonnes of coal between 2019 and 2020 (which, shockingly, was insufficient to satisfy the nation's coal needs).
In the 2018–2019 year, oil and gas were extracted at rates of 34.2 million metric tonnes and 32.9 billion cubic metres, respectively.
Information Technology (IT) and Outsourcing of Business Services
In India, the service sector has grown from making up a small portion of the GDP to nearly 55% between 2019 and 2020 over the past 60 years.
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India is an excellent nation for business because of its large population of educated, skilled, and English-speaking individuals.
Telecommunications, IT, and software are among the top service sectors in the nation. Both domestic and foreign businesses, such as Intel (INTC), Texas Instruments (TXN), Yahoo (YHOO), Meta (META)—formerly Facebook, Google (GOOG), and Microsoft—employ these individuals (MSFT).
A smaller but more well-known sector in India is business process outsourcing (BPO), which is dominated by firms like American Express (AXP), IBM (IBM), Hewlett-Packard (HPQ), and Dell. Because of economies of scale, cost advantages, risk minimization, and competency, BPO is the ITES (Information Technology Enabled Services) business subsegment in India that is expanding at the quickest rate. BPO in India, which began in the middle of the 1990s, has expanded tremendously.
Retail Sector
In India, there is a sizable retail industry. Agricultural retail, which is vital in a country like India where there is a concern about inflation, is also flourishing, in addition to typical consumer retail, fashion, electronics, and other sectors.
Agriculture waste, however, has become more prominent in recent years. Over 400,000 tonnes of wheat and rice are thought to have been squandered between 2018 and 2021 as a result of transportation and storage concerns. This would feed the country's population of around 80 million people.
A mix of government policy, technology, and infrastructure, according to experts, is the best way to address the country's significant waste problem. Reports indicate that there is little storage available for agricultural products in India. A number of solutions are reportedly being investigated by the Indian government.
Different Services Sector
Tourism and energy generation are two more segments of India's service sector. Oil, gas, and coal make up the majority of the nation's energy supply, but it is also increasingly expanding its ability to create nuclear, wind, solar, and hydroelectric power.
The number of foreign visitors to India in 2018 exceeded 10 million.
Travel to India generated an estimated $28.585 billion in foreign money in 2018.
10.3% of India's GDP was derived from tourism in 2019, according to estimates by the World Travel and Tourism Council.
India's medical tourism industry is also expanding. A study by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young predicts that the market for medical tourism in India would reach the $9 billion milestone by 2023.
Due to its affordable healthcare and adherence to international norms, India is a popular destination for medical tourism. A small number of people use India's commercial surrogate facilities, and patients travel from all over the world for treatments like heart, hip, and plastic surgery.
The Conclusion
India has emerged as a major economic force in the twenty-first century. More than 90 million people in India were lifted out of extreme poverty between 2011 and 2015, in large part because of the country's strong economic growth, which raised people's living conditions nationwide.
According to the World Bank's most recent Global Economic Prospects Report, *India's growth is expected to slow from 8.7 per cent in the fiscal year 2021-2022 to 6.9 per cent in the fiscal year 2022-2033.
*The economic growth decline since June will be reduced by 0.6 percentage points.
*India's GDP would rise at the greatest rate among the top seven largest emerging markets and developing economies (EMDEs), according to the report.
*India continues to be economically stronger than other nations in the South Asian region, despite the global financial slowdown (SAR).
*Due to the current global financial slowdown, India's growth is anticipated to decrease in the fiscal year 2024
*The following are the main issues that India will have to deal with in the upcoming fiscal year:
(a) High Inflation
(b)Increasing Current and Fiscal Account Deficit (CAD)
(b) A decline in exports
(d) Low-Income Growth
*According to the World Bank, India's goods trade imbalance has more than doubled since 2019.
*In the last nine years, the current account deficit (CAD), which is 4.4% of GDP, has remained the biggest.
*The World Bank indicated that, taking the impending challenges into consideration, economic growth is anticipated to decelerate to 6.6% in the fiscal year 2024 before rising to its potential rate of a little around 6%.
*India has handled the economic slowdown and crisis in such a way that neighbouring nations and western countries are taking notice.
*India is one of the fastest-growing economies among the major emerging markets. Investors from all around the world have started to focus on it.
*The World Bank report attributes the drop in global economic growth to a number of causes, including tightening of policy, high inflation, deteriorating financial conditions, and ongoing disruptions from Russia's invasion of Ukraine.
*The world bank forecasted 3 percent global growth in 2023, but it has now fallen to 1.7 percent.