India GDP Composition Sector Wise

The Gross Domestic Product or GDP is the indicator of the performance of an economy. According to the
estimates of 2008, India's GDP is $1.209 trillion and this is slated to make improvement in the coming times. It is
estimated that India's GDP will grow by 6.5% in the year 2009. In 2008 the country's GDP was 9%; the slowdown
that has been witnessed this year in the estimates is largely due to the slowdown witnessed by the agriculture
and the industrial sectors. A look at the India GDP composition sector wise throws up some interesting figures.
The agriculture sector contributed 17.2%; industry contributed 29.1% while the service sector had a contribution
of 52.7% according to 2008 estimates.

Sectors contributing to India's GDP

India is a vast country, so the sectors contributing to the country's GDP is also big in numbers. Various sectors
falling under the India GDP composition includes food processing, transportation equipment, petroleum, textiles,
software, agriculture, mining, machinery, chemicals, steel, cement and many others. Agriculture is the pre
dominant occupation in India, employing more than 50% of the population. The service sector accounts for
employing more than 25% while the industrial sector accounts for more than 10%.

India's GDP Statistics

GDP: $1.209 trillion (2008 Estimate)

GDP Growth: 6.7% (2009)
GDP per capita: $1016
GDP by sector (2008 Estimate):
Agriculture: 17.2%
Industry: 29.1%
Services: 53.7%

Inflation: 7.8% (2008 Estimate)

Labor force: 523.5 million (2008 Estimate

Agriculture contri to gdp

Agriculture Growth Rate in India GDP had been growing earlier but in the last few years it is
constantly declining. Still, the Growth Rate of Agriculture in India GDP in the share of the country's GDP
remains the biggest economic sector in the country.

India GDP means the total value of all the services and goods that are produced within the territory of
the nation within the specified time period. The country has the GDP of around US$ 1.09
trillion in 2007 and this makes the Indian economy the twelfth biggest in the whole world.

The growth rate of India GDP is 9.4% in 2006- 2007. The agricultural sector has always been an
important contributor to the India GDP. This is due to the fact that the country is mainly based on the
agriculture sector and employs around 60% of the total workforce in India. The agricultural sector
contributed around 18.6% to India GDP in 2005.

Agriculture Growth Rate in India GDP in spite of its decline in the share of the country's GDP plays a
very important role in the all round economic and social development of the country. The Growth Rate of
the Agriculture Sector in India GDP grew after independence for the government of India placed special
emphasis on the sector in its five-year plans. Further the Green revolution took place in India and this
gave a major boost to the agricultural sector for irrigation facilities, provision of agriculture subsidies and
credits, and improved technology. This in turn helped to increase the Agriculture Growth Rate in India
GDP.

The agricultural yield increased in India after independence but in the last few years it has decreased.
This in its turn has declined the Growth Rate of the Agricultural Sector in India GDP. The total production
 of food grain was 212 million tonnes in 2001- 2002 and the next year it declined to 174.2 million tonnes.
Agriculture Growth Rate in India GDP declined by 5.2% in 2002- 2003. The Growth Rate of the
Agriculture Sector in India GDP grew at the rate of 1.7% each year between 2001- 2002 and 2003-
2004. This shows that Agriculture Growth Rate in India GDP has grown very slowly in the last few years.

Agriculture Growth Rate in India GDP has slowed down for the production in this sector has reduced over
the years. The agricultural sector has had low production due to a number of factors such as illiteracy,
insufficient finance, and inadequate marketing of agricultural products. Further the reasons for the
decline in Agriculture Growth Rate in India GDP are that in the sector the average size of the farms is
very small which in turn has resulted in low productivity. Also the Growth Rate of the Agricultural Sector
in India GDP has declined due to the fact that the sector has not adopted modern technology and
agricultural practices. Agriculture Growth Rate in India GDP has also decreased due to the fact that the
sector has insufficient irrigation facilities. As a result of this the farmers are dependent on rainfall, which
is however very unpredictable.

Agriculture Growth Rate in India GDP has declined over the years. The Indian government must take
steps to boost the agricultural sector for this in its turn will lead to the growth of Agriculture Growth
Rate in India GDP.

Services
Services Sector Growth Rate in India GDP has been very rapid in the last few years. The Services Sector contributes the
most to the Indian GDP. The Growth Rate of the Services Sector in India GDP has risen due to several reasons and it has also
given a major boost to the Indian economy.
Indian Economy
India gross domestic product (GDP) means the total value of all the services and goods that are manufactured
within the territory of the nation during the specified period of time.

The Indian economy is the second fastest major growing economy in the whole world with the growing rate of the GDP at 9.4%
in 2006- 2007. The economy of India is the twelfth biggest in the world for it has the GDP of US$ 1.09 trillion in 2007.
Services Sector in India
India ranks fifteenth in the services output and it provides employment to around 23% of the total workforce in the country.
The various sectors under the Services Sector in India are construction, trade, hotels, transport, restaurant, communication
and storage, social and personal services, community, insurance, financing, business services, and real estate.
Services Sector contribution to the Indian Economy
The Services Sector contributes the most to the Indian GDP. The Sector of Services in India has the biggest share in the
country's GDP for it accounts for around 53.8% in 2005. The contribution of the Services Sector in India GDP has increased a
lot in the last few years. The Services Sector contributed only 15% to the Indian GDP in 1950. Further the Indian Services
Sector's share in the country's GDP has increased from 43.695 in 1990- 1991 to around 51.16% in 1998- 1999. This shows
that the Services Sector in India accounts for over half of the country's GDP.
The Reasons for the growth of the Services Sector contribution to the India GDP
The contribution of the Services Sector has increased very rapidly in the India GDP for many foreign consumers have shown
interest in the country's service exports. This is due to the fact that India has a large pool of highly skilled, low cost, and
educated workers in the country. This has made sure that the services that are available in the country are of the best quality.
The foreign companies seeing this have started outsourcing their work to India specially in the area of business services which
includes business process outsourcing and information technology services. This has given a major boost to the Services Sector
in India, which in its turn has made the sector contribute more to the India GDP.
The Services Sector in India must be given boost
Services Sector Growth Rate in India GDP registered a significant growth over the past few years. The Indian government must
take steps in order to ensure that Services Sector Growth Rate in India GDP continues to rise. For this will ensure the growth
and prosperity of the country's economy.
infrastructure
Infrastructure Sector Growth Rate in India GDP has been on the rise in the last few years. The
Growth Rate of the Infrastructure Sector in India GDP has grown due to several reasons and this in its
turn has given a major boost to the country's economy.
Economy of India
India gross domestic product (GDP) means the total value of all the services and goods
that are manufactured within the borders of the country within the specified period of
time.

The Indian economy is the twelfth biggest in the whole world for it has the GDP of US$ 1.09 trillion in
2007. The economy of India is the second major growing economy in the whole world for it has the GDP
growing at the rate of 9.4% in 2006- 2007.
The Infrastructure Sector in India
The Infrastructure Sector in India was after independence completely in the hands of the public sector
and this hampered the growth of this sector. India's less spending on real estate, power,
telecommunications, construction, and transportation prevented the country from sustaining very high
rates of growth. The amount that India was spending on the Infrastructure Sector was 6% of GDP or
US$ 31 billion in 2002.
The contribution of the Infrastructure Sector in the India GDP
Infrastructure Sector Growth Rate in India GDP came to 3.5% in 1996- 1997 and the next year, this
figure was 4.6%. The Growth Rate of the Infrastructure Sector in India GDP increased after the Indian
government opened the sector to 100% foreign direct investment (FDI). This was done in order to boost
the Infrastructure Sector in the country. The result of opening the sector to the private sector has been
that Infrastructure Sector Growth Rate in India GDP has increased at the rate of 9%. It is estimated that
the Growth Rate of the Infrastructure Sector in India GDP will grow at the rate of 8.5% between 2006
and 2010. The biggest ongoing project in the Infrastructure Sector in India is the Golden Quadrilateral,
which is improving the main roads that connect the four cities of Chennai, Mumbai, Delhi, and Kolkata.
The Government of India must boost the Infrastructure Sector
Infrastructure Sector Growth Rate in India GDP thus has increased over the last few years due to the
efforts that have been made by the Indian government. The government of India must continue to take
steps to improve the Infrastructure Sector in the country. For this in its turn will help to boost the Indian
economy in future.

Highlights
• The service sector now accounts for more than half of India's GDP: 51.16 per
cent in 1998-99. This sector has gained at the expense of both the agricultural
and industrial sectors through the 1990s. The rise in the service sector's share
in GDP marks a structural shift in the Indian economy and takes it closer to the
fundamentals of a developed economy (in the developed economies, the
industrial and service sectors contribute a major share in GDP while agriculture
accounts for a relatively lower share).
• The service sector's share has grown from 43.69 per cent in 1990-91 to 51.16
per cent in 1998-99. In contrast, the industrial sector's share in GDP has
declined from 25.38 per cent to 22.01 per cent in 1990-91 and 1998-99
respectively. The agricultural sector's share has fallen from 30.93 per cent to
26.83 per cent in the respective years.
 • Some economists caution that if the service sector bypasses the industrial
sector, economic growth can be distorted. They say that service sector growth
must be supported by proportionate growth of the industrial sector, otherwise
the service sector grown will not be sustainable. It is true that, in India, the
service sector's contribution in GDP has sharply risen and that of industry has
fallen (as shown above). But, it is equally true that the industrial sector too has
grown, and grown quite impressively through the 1990s (except in 1998-99).
Three times between 1993-94 and 1998-99, industry surpassed the growth rate
of GDP. Thus, the service sector has grown at a higher rate than industry which
too has grown more or less in tandem. The rise of the service sector therefore
does not distort the economy.
• Within the services sector, the share of trade, hotels and restaurants increased
from 12.52 per cent in 1990-91 to 15.68 per cent in 1998-99. The share of
transport, storage and communications has grown from 5.26 per cent to 7.61
per cent in the years under reference. The share of construction has remained
nearly the same during the period while that of financing, insurance, real estate
and business services has risen from 10.22 per cent to 11.44 per cent.
• The fact that the service sector now accounts for more than half the GDP
probably marks a watershed in the evolution of the Indian economy.

Tabulation
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Economy Index
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Share of the service sector in India's GDP (in Rs. crore).
Figures in brackets indicate percentage share of different sectors and subsectors.
Figures for 1994-95 onwards are on a changed base (1993-94=100), so they show huge
increases compared to the preceding period.
1998- 1997- 1996- 1995- 1994- 1993- 1992- 1991- 1990- 1985- 1980-
Year
99 98 97 96 95* 94 93 92 91 86 81
56900 53764 4985 4639 4232 1089 1021 9704 9273 6630 5017
Services 5 2 72 80 00 74 42 5 3 6 7
of which (51.16 (51.24 (49.9 (50.0 (49.1 (45.6 (45.3 (45.3 (43.6 (42.2 (40.9
) ) 1) 8) 5) 2) 4) 5) 9) 5) 9)
50328 49313 47382 46054 42560 10517 10386 10047 9833 7183 6114
Construction
(4.53) (4.70) (4.74) (4.97) (4.94) (4.40) (4.61) (4.70) (4.63) (4.59) (4.99)
15595 14385 12753
Trade, hotels 31057 28650 26827 26580 19649 14713
164355 4 8 2
& restaurants .... (13.00(12.72(12.54(12.52(12.55(12.02
(15.68) (15.61(15.53(14.81
of which ) ) ) ) ) )
) ) )
14730 13608 12154
29082 26866 25147 24933 18498 13839
155120 5 7 6
i) Trade .... (12.18(11.93(11.75(11.75(11.81(11.30
(14.78) (14.75(14.69(14.12
) ) ) ) ) )
) ) )
ii) Hotels & 9235 8649 7771 5986 1975 1784 1680 1647 1151 874
....
restaurants (0.88) (0.87) (0.84) (0.70) (0.83) (0.79) (0.79) (0.78) (0.74) (0.71)
Transport,
storage &
79819 74956 68788 63118 13057 12398 11785 11164 7951 5724
communicatio ....
(7.61) (7.50) (7.43) (7.33) (5.47) (5.50) (5.51) (5.26) (5.08) (4.68)
ns
of which
11521 11189 10647 9846 1746 1758 1778 1677 1404 1124
i) Railways ....
(1.10) (1.12) (1.15) (1.14) (0.73) (0.78) (0.83) (0.79) (0.90) (0.92)
ii) Transport .... 50144 47895 44513 41706 9209 8735 8275 7853 5309 3680
by other (4.78) (4.79) (4.80) (4.84) (3.86) (3.88) (3.87) (3.70) (3.39) (3.01)
means
655 646 652 621 188 180 175 177 163 122
iii) Storage ....
(0.06) (0.06) (0.07) (0.07) (0.08) (0.08) (0.08) (0.08) (0.10) (0.10)
iv)Communic 17499 15226 12976 10945 1914 1725 1557 1457 1075 798
....
ation (1.67) (1.52) (1.40) (1.27) (0.80) (0.77) (0.73) (0.69) (0.69) (0.65)
Financing, 11057 10243
94609 27711 25084 23972 21700
insurance, 127205 119814 5 8 14708 10791
(10.99(11.06(11.14(11.20(10.22
real estate (11.44) (11.42) (11.07(11.06 (9.39) (8.81)
) ) ) ) )
of which ) )
i) Banking & 65814 58034 51343 45190 16111 13861 13107 11169 5828 3408
....
insurance (6.27) (5.81) (5.54) (5.25) (6.74) (6.15) (6.13) (5.26) (3.72) (2.78)
ii) Real
estate, 54000 52481 51095 49419 11600 11223 10865 10531 8880 7383
....
dwelling (5.15) (5.25) (5.52) (5.74) (4.86) (4.98) (5.08) (4.96) (5.67) (6.03)
business
Community, 10970 10284
95381 26632 25624 24414 23456 16815 12835
social, 131047 124341 5 2
(11.08(11.15(11.37(11.41(11.05(10.74(10.48
personal (11.78) (11.85) (10.98(11.10
) ) ) ) ) ) )
of which ) )
i) Public
58631 48736 46635 43620 12483 12170 11570 11328 8016 5794
admin. & ....
(5.59) (4.88) (5.03) (5.07) (5.23) (5.40) (5.41) (5.34) (5.12) (4.73)
defence
ii) Other 65710 60969 56207 51761 14149 13454 12844 12128 8799 7041
....
services (6.26) (6.10) (6.07) (6.01) (5.92) (5.97) (6.00) (5.71) (5.62) (5.75)
11122 10491 9989 9264 8610 2388 2252 2139 2122 1565 1224
Total GDP:
06 91 78 12 64 64 68 83 53 66 27
* Figures for 1994-95 onwards are on a changed base (1993-94=100), so they show
huge increases compared to the preceding period.
Source: Studies by Reserve Bank of India

It sector
The information technology (IT) industry has increased its contribution to the country's GDP from 1.2 per cent in
1997-98 to 5.2 per cent in 2006-07, according to a Nasscom-Deloitte study.
The report, titled Indian IT Industry: Impacting the Economy and Society, further says that export earnings in
2007-08 will hit $40 billion, a growth of 36 per cent. Meanwhile, direct employment is expected to be 2 million in
2007-08, growing at a CAGR of 26 per cent in the last decade.

The report, while bringing forth the contribution of the IT/ITeS sector, points out that the industry has been the
trigger for many 'firsts' and has contributed not only to unleashing the hitherto untapped entrepreneurial potential
of the middle class but also taking Indian excellence to the global market.

Growth
 India's Economic Growth since 1980
India Economy Growth :The rate of growth
improved in the 1980s. From FY 1980 to FY
1989, the economy grew at an annual rate of
5.5 percent, or 3.3 percent on a per capita
basis. Industry grew at an annual rate of 6.6
percent and agriculture at a rate of 3.6 percent.
A high rate of investment was a major factor in
improved economic growth. Investment went
from about 19 percent of GDP in the early
1970s to nearly 25 percent in the early 1980s.
India, however, required a higher rate of
investment to attain comparable economic
growth than did most other low-income
developing countries, indicating a lower rate of
return on investments.

Part of the adverse Indian experience was

explained by investment in large, long-
gestating, capital-intensive projects, such as
electric power, irrigation, and infrastructure.
However, delayed completions, cost overruns,
and under-use of capacity were contributing
factors.

Private savings financed most of India's investment, but by the mid-1980s further
growth in private savings was difficult because they were already at quite a high level.
As a result, during the late 1980s India relied increasingly on borrowing from foreign
sources (see Aid, this ch.). This trend led to a balance of payments crisis in 1990; in
order to receive new loans, the government had no choice but to agree to further
measures of economic liberalization. This commitment to economic reform was
reaffirmed by the government that came to power in June 1991.
India's primary sector, including agriculture, forestry, fishing, mining, and quarrying,
accounted for 32.8 percent of GDP in FY 1991 (see table 17, Appendix). The size of the
agricultural sector and its vulnerability to the vagaries of the monsoon cause relatively
large fluctuations in the sector's contribution to GDP from one year to another (see Crop
Output, ch. 7).

In FY 1991, the contribution to GDP of industry, including manufacturing, construction,

and utilities, was 27.4 percent; services, including trade, transportation,
communications, real estate and finance, and public- and private-sector services,
contributed 39.8 percent. The steady increase in the proportion of services in the
national economy reflects increased market-determined processes, such as the spread of
rural banking, and government activities, such as defense spending (see Agricultural
Credit, ch. 7; Defense Spending, ch. 10).
Despite a sometimes disappointing rate of growth, the Indian economy was transformed
between 1947 and the early 1990s. The number of kilowatt-hours of electricity
generated, for example, increased more than fiftyfold. Steel production rose from 1.5
million tons a year to 14.7 million tons a year. The country produced space satellites and
nuclear-power plants, and its scientists and engineers produced an atomic explosive
device (see Major Research Organizations, this ch.; Space and Nuclear Programs, ch.
10). Life expectancy increased from twenty-seven years to fifty-nine years. Although the
population increased by 485 million between 1951 and 1991, the availability of food
grains per capita rose from 395 grams per day in FY 1950 to 466 grams in FY 1992 (see
Structure and Dynamics, ch. 2).
However, considerable dualism remains in the Indian economy. Officials and economists
make an important distinction between the formal and informal sectors of the economy.
The informal, or unorganized, economy is largely rural and encompasses farming,
fishing, forestry, and cottage industries. It also includes petty vendors and some small-
scale mechanized industry in both rural and urban areas. The bulk of the population is
employed in the informal economy, which contributes more than 50 percent of GDP. The
formal economy consists of large units in the modern sector for which statistical data are
relatively good. The modern sector includes large-scale manufacturing and mining,
major financial and commercial businesses, and such public-sector enterprises as
railroads, telecommunications, utilities, and government itself.
The greatest disappointment of economic development is the failure to reduce more
substantially India's widespread poverty. Studies have suggested that income
distribution changed little between independence and the early 1990s, although it is
possible that the poorer half of the population improved its position slightly. Official
estimates of the proportion of the population that lives below the poverty line tend to
vary sharply from year to year because adverse economic conditions, especially rises in
food prices, are capable of lowering the standard of living of many families who normally
live just above the subsistence level. The Indian government's poverty line is based on
an income sufficient to ensure access to minimum nutritional standards, and even most
persons above the poverty line have low levels of consumption compared with much of
the world.
Estimates in the late 1970s put the number of people who lived in poverty at 300
million, or nearly 50 percent of the population at the time. Poverty was reduced during
the 1980s, and in FY 1989 it was estimated that about 26 percent of the population, or
220 million people, lived below the poverty line. Slower economic growth and higher
inflation in FY 1990 and FY 1991 reversed this trend. In FY 1991, it was estimated that
332 million people, or 38 percent of the population, lived below the poverty line.
India Economy Growth - Farmers and other rural residents make up the large majority of
India's poor. Some own very small amounts of land while others are field hands,
seminomadic shepherds, or migrant workers. The urban poor include many construction
workers and petty vendors. The bulk of the poor work, but low productivity and
intermittent employment keep incomes low. Poverty is most prevalent in the states of
Orissa, Bihar, Uttar Pradesh, and Madhya Pradesh, and least prevalent in Haryana,
Punjab, Himachal Pradesh, and Jammu and Kashmir.
By the early 1990s, economic changes led to the growth in the number of Indians with
significant economic resources. About 10 million Indians are considered upper class, and
roughly 300 million are part of the rapidly increasing middle class. Typical middle-class
occupations include owning a small business or being a corporate executive, lawyer,
physician, white-collar worker, or land-owning farmer. In the 1980s, the growth of the
middle class was reflected in the increased consumption of consumer durables, such as
televisions, refrigerators, motorcycles, and automobiles. In the early 1990s, domestic
and foreign businesses hoped to take advantage of India's economic liberalization to
increase the range of consumer products offered to this market.
Housing and the ancillary utilities of sewer and water systems lag considerably behind
the population's needs. India's cities have large shantytowns built of scrap or readily
available natural materials erected on whatever space is available, including sidewalks.
Such dwellings lack piped water, sewerage, and electricity. The government has
attempted to build housing facilities and utilities for urban development, but the efforts
have fallen far short of demand. Administrative controls and other aspects of
government policy have discouraged many private investors from constructing housing
units.
Liberalization in the Early 1990s
Increased borrowing from foreign sources in the late 1980s, which helped fuel economic
growth, led to pressure on the balance of payments. The problem came to a head in
August 1990 when Iraq invaded Kuwait, and the price of oil soon doubled. In addition,
many Indian workers resident in Persian Gulf states either lost their jobs or returned
home out of fear for their safety, thus reducing the flow of remittances (see Size and
Composition of the Work Force, this ch.). The direct economic impact of the Persian Gulf
conflict was exacerbated by domestic social and political developments. In the early
1990s, there was violence over two domestic issues: the reservation of a proportion of
public-sector jobs for members of Scheduled Castes (see Glossary) and the Hindu-
Muslim conflict at Ayodhya (see Public Worship, ch. 3; Political Issues, ch. 8). The
central government fell in November 1990 and was succeeded by a minority
government. The cumulative impact of these events shook international confidence in
India's economic viability, and the country found it increasingly difficult to borrow
internationally. As a result, India made various agreements with the International
Monetary Fund (IMF--see Glossary) and other organizations that included commitments
to speed up liberalization (see United Nations, ch. 9).
In the early 1990s, considerable progress was made in loosening government
regulations, especially in the area of foreign trade. Many restrictions on private
companies were lifted, and new areas were opened to private capital. However, India
remains one of the world's most tightly regulated major economies. Many powerful
vested interests, including private firms that have benefited from protectionism, labor
unions, and much of the bureaucracy, oppose liberalization. There is also considerable
concern that liberalization will reinforce class and regional economic disparities.
The balance of payments crisis of 1990 and subsequent policy changes led to a
temporary decline in the GDP growth rate, which fell from 6.9 percent in FY 1989 to 4.9
percent in FY 1990 to 1.1 percent in FY 1991. In March 1995, the estimated growth rate
for FY 1994 was 5.3 percent. Inflation peaked at 17 percent in FY 1991, fell to 9.5
percent in FY 1993, and then accelerated again, reaching 11 percent in late FY 1994.
This increase was attributed to a sharp increase in prices and a shortfall in such critical
sectors as sugar, cotton, and oilseeds. Many analysts agree that the poor suffer most
from the increased inflation rate and reduced growth rate. India Economy Growth Data
1995. Courtesy Library of Congress.