Economy Economy


Economic Situation in India

The economy of India is the  tenth-largest  in the world by  nominal GDP  (1.877 trillion USD  in 2013) and the third-largest  by  purchasing power parity  (PPP). The country is one of the  G-20 major economies , a member of  BRICS  and a developing economy that is among the top 20 global traders according to the  WTO .

Agriculture sector is the largest employer in India's economy but contributes a declining share of its GDP (13.7% in 2012-13). Its manufacturing industry has held a constant share of its economic contribution, while the fastest-growing part of the economy has been its services sector - which includes construction, telecom, software and information technologies, infrastructure, tourism, education, health care, travel, trade, banking and other components of its economy.

After a fiscal crisis in 1991, India has increasingly adopted free-market principles and liberalised its economy to international trade. Following these economic reforms, and a strong focus on developing national infrastructure such as the  Golden Quadrilateral  project, the country's economic growth progressed at a rapid pace, with relatively large increases in per-capita incomes. In the last decade from 2004-05 to 2013-14, the economy grew at an average rate of 7.6 per cent per year. According to a latest report by PricewaterhouseCoopers (PwC), India is all set to become the world's third largest economy by the year 2030.

Steps taken towards fiscal consolidation like deregulation of diesel prices have shown positive results. Inflation has decelerated over the past three years and we hope to contain it below 5% through a judicious mix of policy measures. Our agriculture sector is performing well. India now ranks second in the world in both wheat and rice production. A record food grains production of 264.8 million tonnes last year helped the agriculture sector grow at a healthy 4.7 per cent in 2013-14.  A number of measures aimed at investment revival, strengthening of macro-economic stability and ramping up infrastructure will certainly posit India back into the high growth trajectory of 7-8 per cent.

India continues to be one of the most preferred destinations for foreign direct investment with FDI inflows into India peaking at 46.6 billion US Dollars in 2011-12. India has a growing and aspirational middle class, an increasing per capita income and a young working population all of which present a great opportunity and are of interest to foreign investors.

To further facilitate FDI, India has recently enhanced FDI limits in sectors like insurance and defence manufacturing and allowed 100 per cent FDI in railway infrastructure.

In 2011 , India unveiled a policy that envisaged increasing the contribution of manufacturing to our GDP from 15 percent presently to 25 percent by 2022. India is committed to pursuing  an objective of making India a manufacturing hub. India is on course to becoming a manufacturing base and an export hub for diverse goods ranging from agricultural products to automobile components to high-end services. The Indian government is committed to a business-friendly environment – impediment free, predictable, facilitatory and transparent. To that end, India has embarked on an ambitious ‘Make in India’ program to make the country an investor-friendly destination by setting up single window clearances, e-Business portals and Investor Facilitation Cells. The infrastructure sector is a focus area for our economy. In the next few years, we envisage to spend  a trillion US Dollars on infrastructure, including on new power projects. Clean and renewable energy is recognized as the way forward for sustainable expansion of our energy programme. To facilitate greater investment in infrastructure, we have set up facilities and schemes such as Industrial Corridors, the Industrial Infrastructure Up-gradation Scheme, National Investment and Manufacturing Zones, Industrial clusters and Smart Cities.

The total value of India's listed companies is expected to cross the US$ 1.5 trillion mark within the next 12 months as India enters the top 10 club of countries by market capitalization. India could become the world's seventh biggest nation in terms of private wealth, with a 150 per cent increase in total, from US$ 2 trillion in 2013 to US$ 5 trillion by 2018.