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Economy of India
From Wikipedia, the free encyclopedia
The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy with notable public sector in strategic sectors.[59] It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 136th by GDP (nominal) and 125th by GDP (PPP).[60] From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat driven enterprises and economic regulation. This is characterised as dirigism, in the form of the Licence Raj.[61][62] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.[63][64] Since the start of the 21st century, annual average GDP growth has been 6% to 7%.[59], India has about 1,900 public sector company,[65] Indian state has complete control and ownership of railways, highways; majority control and stake in banking,[66] insurance,[67] farming,[68] dairy, fertilizers & chemicals,[69] airports,[70] nuclear, mining, digitization, defense, steel, rare earths, water, electricity, oil and gas industries and power plants,[71] and has substantial control over digitalization, Broadband as national infrastructure, telecommunication, supercomputing, space, port and shipping industries,[72] among other industries, were effectively nationalised in the mid-1950s.[73][61][62]
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Currency | Indian rupee (INR, ₹) |
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1 April – 31 March | |
Trade organisations | WTO, WCO, SAFTA, BIMSTEC, WFTU, BRICS, G-20, BIS, AIIB, ADB and others |
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Gross savings | 31.781% of GDP (2023)[39] |
10-year bond 7.190% (Jan 2023)[40][41] | |
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–6.4% of GDP (2022–23)[53] | |
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All values, unless otherwise stated, are in US dollars. |
Nearly 70% of India's GDP is driven by domestic consumption;[74] country remains the world's fourth-largest consumer market.[75] Apart from private consumption, India's GDP is also fueled by government spending, investments, and exports.[76] In 2022, India was the world's 8th-largest importer and the 10th-largest exporter.[77] India has been a member of the World Trade Organization since 1 January 1995.[78] It ranks 63rd on the Ease of doing business index and 40th on the Global Competitiveness Index.[79] [80] India has one of the world's highest number of billionaires and extreme income inequality.[81][82] Economists and social scientists often consider India a welfare state.[5][7][6][8] India is officially declared a socialist state as per the constitution.[9][10] India's overall social welfare spending stood at 8.6% of GDP in 2021-22, which is much lower than the average for OECD nations.[83][84] With 586 million workers, the Indian labour force is the world's second-largest.[85]
During the 2008 global financial crisis, the economy faced a mild slowdown. India endorsed Keynesian policy and initiated stimulus measures (both fiscal and monetary) to boost growth and generate demand. In subsequent years, economic growth revived.[86]
In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the service sector, the computer industry, and the telecom industry.[87] India has free trade agreements with several nations and blocs, including ASEAN, SAFTA, Mercosur, South Korea, Japan, Australia, UAE, and several others which are in effect or under negotiating stage.[88][89] In recent years, independent economists and financial institutions have accused the government of manipulating various economic data, especially GDP growth rate.[90][91][92][93][94][95][96]
The service sector makes up more than 50% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force.[97] The Bombay Stock Exchange and National Stock Exchange are some of the world's largest stock exchanges by market capitalisation.[98] India is the world's sixth-largest manufacturer, representing 2.6% of global manufacturing output.[99] Nearly 65% of India's population is rural,[100] and contributes about 50% of India's GDP.[101] India faces high unemployment, rising income inequality, and a drop in aggregate demand.[102][103] India's gross domestic savings rate stood at 29.3% of GDP in 2022.[104]