289 indian economy an overview

8/2/2019 289 Indian Economy an Overview

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Indian Economy: An Overview

India.

The world's largest democracy.

The world's 2nd most populous state having 17.5% of the world's population.

The 12th largest GDP in terms of nominal value and 4th highest in terms of purchasing power

parity.

These are a few points which showcase on the most powerful and progress countries of Asia-

India. After gaining independence from the British rule in 1947, India has gradually emerged as

a potent force in the global scenario and is making waves across the world. At the time of its

independence, India was primarily an agricultural state. But with reforms and liberalization

policies over decades, India has become an important hub for business on the world map.

Service industry forms 63% of the economy and gives employment to around 34% people in

India. On the other hand, agriculture, which is still the most important occupation, contributes toaround 52% of the GDP, by employing 17% of the workforce. The Indian industry is also an

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important sector as it contributes 20% of the GDP and supports and employs 14% of the

working population. Thus, for a country with a population of over 1.2 billion, the figures are

simply mind boggling.

The Indian economy has largely fluctuated over the centuries and has been controlled by

historical events like the British colonial rule. Around 1700 AD, India formed 22% of the world

income which diminished to 3.8% by the time it gained independence, largely due to drain of

wealth through revenues and taxes by the rulers. Even after independence, various factors hadtied down the Indian economy. From 1947 to 1991, protectionism, industrialization, state

intervention, large public sector, license raj etc. hurt the Indian economy. However, post

economic liberalisation in 1991, the face of the Indian economy has changed for the good. New

policies like deregulation, international trade, FDI's, BSE & NSE for trading of stocks etc have

all put India back on the world map for doing business.

Overview

An overview of the major sectors alongwith growth, problem and challenges is discussed below:

Agriculture sector is the back bone of the Indian economy as it supports over half the population

and contributes around 17% to the GDP. This sector includes forestry, logging, fishing etc. India

is the leading producer of milk, tea, nuts, ginger, coconut and pepper, alongwith having the

largest cattle in the world. Apart from this, India ranks 2nd in the production of wheat, rice, sugar

and groundnut. However, agriculture is a neglected sector as it faces problems like price

risks, lack of infrastructure, dependence on external factors etc.

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Industries contribute to around 20% of the GDP in India. People are employed in industries

including mining, quarrying, petroleum, oil, natural gas, electricity etc.

The Services sector has grown in leaps and bounces since the turn of the 21st century and

contributes to around 53% of the GDP. India is one of the leaders in Information Technology,

BPO service, IT enabled services etc which have seen a constant growth.

Indian Banking Industry and financial institution are also a very important part in the Indian

economy. India has 28 public sector banks, 29 private banks and around 31 foreign banks.

Apart from this, there are roughly about 53000 branches and over 20000 ATM's.

Challenges

However, the other side of the coin paints a bleak picture of the Indian economy.

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Around 85% of the people in India have less than $2.5 PPP per day.

75% of the population earns less than $2 per day, and over 24% earn less than $1 per day.

41% of the Indian population earns less than the international poverty line of $1.25 per day.

Also, 27% of the population is below the national poverty line $1 per day.

The infrastructure in India is also below the international standards as over 600 million people

dont have access to electricity, 80% dont have electrical lines, 65 million are extremely poor

etc.

Thus, these are some problems which need to be prioritized and should be tackled before they

grow beyond control. Govt. policies like Aam aadmi including NREGA , Public Distribution

System etc wouldonly help India emerge stronger.

In India, there are is parallel life which the citizens live. On one hand there are all the luxuries oflife to the people in the urban areas, on the other hand there is darkness prevailing in the rural

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areas where mere survival is a challenge. However, despite all odds, if India can overcome

these hurdles with well thought out plans and proper implementation, then no can stop India in

becoming an unstoppable global economic super power.

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289 indian economy an overview

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