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Indian Economy Overview
- Since independence India has been a 'mixed economy'. India's large public sectors were responsible for rendering the country a 'mixed economy' feature.
- Indian economic planning is associated with capitalist framework with no element of compulsion.
- Indian economy overview was highly inspired by Soviet Union's practices post-independence. It had been recording growth rate not greater than five jumped till 1980s. This stagnant growth was termed by many economists as 'Hindu Growth Rate'.
- In 1992, the country ushered into liberalization regime. Thereafter, the economy started scaling upward. This new trend in growth was called 'New Hindu Growth Rate'.
Nature of Indian Economy
- India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries and a multitude of services.
- Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labour force.
- The economy of India boasts of being the fourth largest economy in the world after the United States, China and Japan.
- The country's per capita GDP (PPP) was $3,500 in 2010 and ranked at 161, making it a lower-middle income economy.
- The country recorded the highest growth rates and touched to as high as 9% GDP in the mid-2000s. It was then considered by many financial institutions as one of the fastest-growing economies in the world.
- Notably, the robust growth rate reduced poverty by about 10 percentage points by mid-2000s.
- But the overview of Indian economy was hit by global slowdown in 2008. Its speed of growth received a jerk and the country's GDP slowed down to a large extent thereafter.
- Government of India has projected growth rate for 2011-12 at 8.2% of GDP compared to 8.5% registered last year.
- However, given the current European economic crisis and high inflation at domestic level, expected growth rate of 8.2% looks quite good!
- As regards inflation, it has been a major concern for the government to reign in. The inflation for over five years has crippled the economy. In 2005, the country witnessed inflation as low as 4 %. Thereafter, the graph has been constantly rising. At many times, inflation has reached to double digit. Several monetary measures are being taken by the government and the Central Bank to control the menace, but in vain. However, government expects that there will be some relief starting from November and will decline to 6.5% in March 2012.
- India is the 20th largest merchandise trading nation. The country's exports were worth $19870 million by October in 2011-12, amounting to 22% of country's GDP. Gems and jewellery constitute the single largest export item, that is, 16 percent of total export. However, it is feared that global economic crisis and appreciation of Rupee may hit domestic export adversely in future.
- According to Global Competitiveness Report 2010 released by World Economic Forum, India has slipped down to its rank to 51 from 49 in 2009.
- According to World Economic Outlook 20101 released by International Monetary Fund, China is ahead of India in terms of growth. The GDP exceeded the government's target in China and is estimated to be close to 10 percent in 2011.
Highlights of Economic Outlook 2011-12
- Highlights of Economic Outlook 2011-12
- Industry grew at 7.9% in 2010-11; projected at 7.1% in 2011-12
- Service sector grew at 9.4% in 2009-10; projected at 10.0% in 2011-12
- Investment: 36.4% in 2010-11; 36.7% in 2011-12
- Domestic savings as ratio of GDP projected at 33.8% in 2010-11 & 34.0% in 2011-12
- Capital flows at $61.9 billion in 2010-11; projected at $72.0 billion in 2011-12
- FDI inflows $23.4 billion in 2010-11; projected at $35 billion in 2011-12
- FII inflows $30.3 billion in 2010-11; projected to $14 billion