Economy

Economy of India

The Bombay Stock Exchange, Sensex, index reflects investor confidence in the Indian economy
The Bombay Stock Exchange, Sensex, index reflects investor confidence in the Indian economy

For most of its post-independence history, India adhered to a quasi-socialist approach with strict government control over private sector participation, foreign trade, and foreign direct investment. However, since 1991, India has gradually opened up its markets through economic reforms and reduced government controls on foreign trade and investment. Foreign exchange reserves have risen from US$5.8 billion in March 1991 to US$208 billion in June 2007,[33] while federal and state budget deficits have reduced.[34] Privatisation of publicly-owned companies and the opening of certain sectors to private and foreign participation has continued amid political debate.

With a GDP growth rate of 9.4% in 2006-07, the Indian economy is among the fastest growing in the world.[35] India's GDP in terms of USD exchange-rate is US$1,103 billion, which makes it the twelfth largest economy in the world.[36] When measured in terms of purchasing power parity (PPP), India has the world's fourth largest GDP at US$4.042 trillion. India's per capita income (nominal) is $979, ranked 128th in the world, while its per capita (PPP) of US$3,700 is ranked 118th.

The Indian economy has grown steadily over the last two decades; however, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas.[37] Although income inequality in India is relatively small (Gini coefficient: 32.5 in year 2000), it has been increasing of late. Despite significant economic progress, a quarter of the nation's population earns less than the government-specified poverty threshold of $0.40/day. In addition, India has a higher rate of malnutrition among children under the age of three (46% in year 2007) than any other country in the world.[37][38]

India has a labour force of 509.3 million, 60% of which is employed in agriculture and related industries; 28% in services and related industries; and 12% in industry.[2] Major agricultural crops include rice, wheat, oilseed, cotton, jute, tea, sugarcane, and potatoes. The agricultural sector accounts for 28% of GDP; the service and industrial sectors make up 54% and 18% respectively. Major industries include automobiles, cement, chemicals, consumer electronics, food processing, machinery, mining, petroleum, pharmaceuticals, steel, transportation equipment, and textiles.[2]

In 2006, estimated exports stood at US$112 billion and imports were around US$187.9 billion. Textiles, jewellery, engineering goods and software are major export commodities. Crude oil, machineries, fertilizers, and chemicals are major imports. India's most important trading partners are the United States, the European Union, China, and the United Arab Emirates.[2] More recently, India has capitalised on its large pool of educated, English-speaking people to become an important outsourcing destination for multinational corporations. India has also become a major exporter of software as well as financial, research, and technological services.