The Ultimate Cheat Sheet on the Indian Economy

Economy of India

India's economy is a mixed economy under development with a significant public sector in key areas. India's economy is third globally in terms of purchasing power parity (PPP) and fifth globally in terms of nominal GDP. When considering per capita income, the country ranks 125th in terms of PPP and 136th in terms of nominal GDP. Following the Soviet model, succeeding governments supported protectionist economic policies from 1947 to 1991. 

These included substantial Sovietization, state involvement, demand-side economics, natural resources, bureaucrat-driven firms, and economic regulation. This is what the Licence Raj characterizes as dirigism. Broad economic liberalization and suggestive planning were adopted in India in 1991 as a result of the end of the Cold War and a severe balance of payments problem.

History

India's economy, which accounted for 35–40% of the global GDP, was the largest in the world for around 1700 years, starting in the year 1 CE. For a while after British control ended, India was ruled by a mix of protectionist, import-substitution, Fabian socialism, and social democratic-inspired policies. Dirigism was then used to describe the economy. It had moderate growth, a lot of regulations, protectionism, governmental control of big monopolies, and widespread corruption.

 Since 1991, the nation has been moving toward a market-based economy as a result of ongoing economic liberalization. India's economy had become one of the fastest-growing in the world by 2008.

British era (1793–1947)

Without a doubt, we had good reason to be upset with the British Empire. Almost equivalent to Europe's contribution of 23.3% in 1700, India's portion of world revenue fell to as low as 3.8% in 1952, as the meticulous statistical work of Cambridge historian Angus Maddison has demonstrated. When it came to per capita wealth at the start of the 1900s, "the brightest jewel in the British Crown" was the world's poorest nation.

COVID-19 pandemic and aftermath (2020–present)

Many rating agencies reduced India's GDP projections for FY21 to negative numbers during the COVID-19 pandemic, indicating the country was going through its worst recession since 1979. 6.6 percent was the actual contraction of the Indian economy, not the projected 7.3 percent. Similar to the outlooks of S&P Global Ratings and Moody's Investors Service, the ratings agency Fitch Ratings raised India's outlook to stable in 2022. In the initial quarter of the 2022–2023 fiscal year, the Indian economy experienced a growth of 13.

Sectors

Agriculture, forest, and fishing

The GDP was composed of 18.4% from agricultural and related industries including logging, forestry, and fisheries. According to data, 51.2 crore people, or 45.5% of India's workforce, were employed in these industries. The United States is the country with the most arable land in the world, followed by India, a significant producer of agriculture. But the production of agriculture falls well short of its potential.

 From 1951 to 2023, India's GDP derived from agriculture decreased steadily, from 52% to 15%]yet it remains the industry that provides the most jobs in the nation. Important contributors to Indian agriculture are the states of Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Andhra Pradesh, Telangana, Bihar, West Bengal, Gujarat, and Maharashtra.

Micro, Small, and Medium Enterprises (MSME)

If the barriers preventing the sector's expansion are removed, micro and small businesses can alleviate India's unemployment problem. As per the Annual MSME Report 2021-22, the micro-segment comprises more than 90% of India's 6.3 crore MSMEs. In the micro sector, 62% of businesses are sole proprietorships with no employees, 32% have two or three employees, and 6-7% have four employees or more With 179 offerings, SME IPOs achieved a record-breaking year in 2023.

Mining, resources, and chemicals

In 2021, mining accounted for 1.75 percent of GDP and directly or indirectly employed 11 million people. In 2009, India's mining sector ranked seventh in terms of value and fourth in terms of volume produced minerals worldwide. 80 non-fuel minerals, three atomic energy minerals, and four fuel minerals were among the 89 minerals it mined and processed in 2013. In terms of volume, 68% of mineral production in 2011–12 was produced by the public sector. With its fourth-largest natural resource base in the world, India's mining industry accounts for 2.5% of the nation's overall GDP and 11% of its industrial GDP.

Foreign trade and investment

India was a founding member of both the WTO and the General Agreement on Tariffs and Trade (GATT). India has played a pivotal role in representing the concerns of the developing world at its general council meetings, actively participating in them. For instance, India has continued its opposition to the inclusion of labor, environmental issues, and other non-tariff barriers to trade in WTO policies.

India secured 43rd place in the competitiveness index

Balance of payments

India has had a negative current account balance of payments since gaining its independence. India's exports have steadily increased since economic liberalization in the 1990s, which was sparked by a balance-of-payment problem. In 2002–2003, they accounted for 80.3% of the country's imports, compared to 66.2% in 1990–91. However the world economy collapsed, and there was a widespread slowdown in international trade, which caused the exports to become 61.4% of imports in 2008–09. The primary cause of India's significant current account deficit, which increased to $118.7 billion, or 11.11% of GDP, in 2008–09, is thought to be the country's rising oil import bill In 2010, India purchased $82.1 billion worth of crude oil between January and October. 

Employment

In 2009–10, almost 52% of all workers were employed in the agricultural and related sectors. Agriculture has historically employed fewer workers overall, but services—which include infrastructure and construction—have grown steadily over time, accounting for 20.3% of employment in 2012–13. Seven percent of all workers are employed in the organized sector, of which two-thirds are in the public sector under government supervision In India, 51.2% of workers are independent contractors.

Unemployment

India's unemployment is typified by chronic (covert) unemployment. Government programs aimed at ending unemployment and poverty, which have driven millions of low-income and unskilled workers into cities in recent years in search of work, try to address the issue by offering funding for launching new ventures, developing skills, establishing public sector businesses, securing government reservations, etc. 

Conclusion

In conclusion. India's economic outlook is bright and shows a solid development trajectory for the fiscal year 2023–2024. This optimistic view is a result of several variables, such as favorable monsoon patterns, higher capital investment, strong new firm registrations, and persistent credit expansion.