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Economy of India
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Economy of India
Currency 1 Indian Rupee (INR) (₨) = 100 Paise
Fiscal year April 1–March 31
Trade WTO, SAFTA

organisations
Statistics
GDP (PPP) $5.21 trillion (PPP) (2008 est.)
GDP growth 9.6% (2006/07)
GDP per capita $2,659 (nominal) [3]
GDP by sector agriculture: 19.9%, industry: 19.3%, services: 60.7%

(2006 est.)
Inflation (CPI) 12.01% (26 July 2008)[1]
Population 5.2% (2008 est.) [4]

below poverty line
Labour force 509.3 million (2006 est.)
Labour force agriculture: 60%, industry: 12%, services: 28%

by occupation (2003)
Unemployment 7.8% (2006 est.)
Main industries textiles, chemicals, food processing, steel,

transportation equipment, cement, mining, petroleum,
machinery, software, services
External
Exports $163 billion[2] (Financial Year 2007-2008)
Export goods textile goods, gems and jewelry, engineering goods,

chemicals, leather manufactures, services
Main export US 18%, the People's Republic of China 8.9%, UAE

partners 8.4%, UK 4.7%, Hong Kong 4.2% (2005)
Imports $187.9 billion f.o.b. (2006 est.)
Import goods crude oil, machinery, gems, fertilizer, chemicals
Main import the People's Republic of China 7.2%, US 6.4%,

partners Belgium 5.1%, Singapore 4.7%, Australia 4.2%,
Germany 4.2%, UK 4.1% (2005)
Public finances
Public debt $132.1 billion (2006 est.)
Revenues $109.4 billion (2006 est.)
Expenses $143.8 billion; including capital expenditures of $15

billion (2006 est.)
Economic aid donor: $17.3 million (2006)
Main data source: CIA World Factbook

All values, unless otherwise stated, are in US dollars
This box: view • talk • edit
The economy of India followed a socialist-inspired approach for most of its independent
history, with government control over private sector and what is termed "Licence Raj".
India's economy grew at just 1¼% annualized rate in the three decades after
Independence.[3] Since the mid-1980s, India has slowly opened up its markets through
economic liberalization. After more fundamental reforms since 1991 and their renewal in
the 2000s, India has progressed towards a market-based system and the growth has been
strong.[3]
In terms of occupation, two-thirds of the Indian workforce earn their livelihood directly
or indirectly through agriculture in rural villages. As a proportion of GDP, towns and
cities make over two thirds of the Indian economy. Markets which now enjoy much
lighter burden of regulative and other obstacles have ballooned in growth, for instance,
communications and world-famous business process services.[3][4] India's trade has risen
from 6% of GDP in 1985 to 24% in 2006, although still relatively moderate.[3][5] India's
share of world trade is around 1%.[6] Textiles, jewellery, engineering goods and software
are major export commodities while crude oil, machineries, fertilizers, and chemicals are
major imports.
Today, India has the twelfth largest GDP in the world, with a GDP of 1.2 trillion United
States dollars (2008).[7] In the late 2000s, India's growth has averaged at above 7%, which
will double the average income in a decade.[3] Analysts say that if India pushed more
fundamental market reforms, it could sustain the rate and even raise it to the
government's 2011 target of 10%.[3] Between 1999 and 2008, the annualized growth rates
for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were significantly higher than for
Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).[8] In 2007 India's
population of 1.2 billion, the world's second largest, had an estimated per capita income
of US$3,963, measured by PPP, and US$941, measured in nominal terms. 75.6% of the
population lives on less than $2 a day (PPP, around $0.5 in nominal terms), compared to
73.0% in Sub-Saharan Africa.[9] The World Bank suggests that the most important
priorities are public sector reform, infrastructure, agricultural and rural development,
removal of labor regulations, reforms in lagging states, and HIV/AIDS.[10] India ranked
120th on the Ease of Doing Business Index in 2008, compared with 86th for Pakistan,
83rd for People's Republic of China, and 122nd for Brazil.
Contents
[hide]
• 1 History
o 1.1 Pre-colonial
o 1.2 Colonial
o 1.3 Independence to 1991
o 1.4 After 1991
• 2 Government intervention
o 2.1 State planning and the mixed economy
o 2.2 Public expenditure
o 2.3 Public receipts
o 2.4 General budget
o 2.5 Reform
• 3 Currency system
• 4 Natural resources
• 5 Infrastructure
• 6 Financial institutions
• 7 Sectors
o 7.1 Agriculture
o 7.2 Industry
o 7.3 Services
o 7.4 Banking and finance
o 7.5 Companies
• 8 Socio-economic characteristics
o 8.1 Poverty
o 8.2 Corruption
o 8.3 Occupations and unemployment
o 8.4 Regional imbalance
o 8.5 Environment and health
• 9 External trade and investment
o 9.1 Global trade relations
o 9.2 Balance of payments
o 9.3 Foreign direct investment in India
• 10 See also
• 11 Notes
• 12 References
• 13 External links
[edit] History
Main articles: Economic history of India and Timeline of the economy of India
India's economic history can be broadly divided into three eras, beginning with the pre-
colonial period lasting up to the 17th century. The advent of British colonisation started
the colonial period in the 17th century, which ended with independence in 1947. The
third period stretches from independence in 1947 until now.
[edit] Pre-colonial
The citizens of the Indus Valley civilisation, a permanent and predominantly urban
settlement that flourished between 2800 BC and 1800 BC, practiced agriculture,
domesticated animals, used uniform weights and measures, made tools and weapons, and
traded with other cities. Evidence of well planned streets, a drainage system and water
supply reveals their knowledge of urban planning, which included the world's first urban
sanitation systems and the existence of a form of municipal government.[11]
Silver coin minted during the reign of the Gupta king Kumara Gupta I (AD 414–55)
The 1872 census revealed that 99.3% of the population of the region constituting present-
day India resided in villages,[12] whose economies were largely isolated and self-
sustaining, with agriculture the predominant occupation. This satisfied the food
requirements of the village and provided raw materials for hand-based industries, such as
textiles, food processing and crafts. Although many kingdoms and rulers issued coins,
barter was prevalent. Villages paid a portion of their agricultural produce as revenue to
the rulers, while its craftsmen received a part of the crops at harvest time for their
services.[13]
Religion, especially Hinduism, and the caste and the joint family systems, played an
influential role in shaping economic activities.[14] The caste system functioned much like
medieval European guilds, ensuring the division of labour, providing for the training of
apprentices and, in some cases, allowing manufacturers to achieve narrow specialization.
For instance, in certain regions, producing each variety of cloth was the speciality of a
particular sub-caste.
Estimates of the per capita income of India (1857–1900) as per 1948–49 prices.[15]
Textiles such as muslin, Calicos, shawls, and agricultural products such as pepper,
cinnamon, opium and indigo were exported to Europe, the Middle East and South East
Asia in return for gold and silver.[16]
Assessment of India's pre-colonial economy is mostly qualitative, owing to the lack of

quantitative information. One estimate puts the revenue of Akbar's Mughal Empire in
1600 at £17.5 million, in contrast with the total revenue of Great Britain in 1800, which
totalled £16 million.[17] India, by the time of the arrival of the British, was a largely
traditional agrarian economy with a dominant subsistence sector dependent on primitive
technology. It existed alongside a competitively developed network of commerce,
manufacturing and credit. After the fall of the Mughals, India was administered by
Maratha Empire. The Maratha Empire's budget in 1740s, at its peak, was Rs. 100 million.
After the loss at Panipat, the Maratha Empire disintegrated into confederate states of
Gwalior, Baroda, Indore, Jhansi, Nagpur, Pune and Kolhapur. Gwalior state had a budget
of Rs. 30M. However, at this time, British East India company entered the Indian
political theatre. Until 1857, when India was firmly under the British crown, the country
remained in a state of political instability due to internecine wars and conflicts.[18]
[edit] Colonial
An aerial view of Calcutta Port taken in 1945. Calcutta, which was the economic hub of
British India, saw increased industrial activity during World War II.
Company rule in India brought a major change in the taxation environment from revenue
taxes to property taxes resulting in mass impoverishment and destitution of the great
majority of farmers, resulting in numerous famines.[19] The economic policies of the
British Raj effectively destroyed India's large handicrafts industry and caused a massive
drain of India's resources.[20][21] An estimate by Cambridge University historian Angus
Maddison reveals that India's share of the world income fell from 22.6% in 1700,
comparable to Europe's share of 23.3%, to a low of 3.8% in 1952.[22] It also created an
institutional environment that, on paper, guaranteed property rights among the colonizers,
encouraged free trade, and created a single currency with fixed exchange rates,
standardized weights and measures, capital markets, a well developed system of railways
and telegraphs, a civil service that aimed to be free from political interference, and a
common-law, adversarial legal system.[23] India's colonisation by the British coincided
with major changes in the world economy—industrialisation, and significant growth in
production and trade. However, at the end of colonial rule, India inherited an economy
that was one of the poorest in the developing world,[24] with industrial development
stalled, agriculture unable to feed a rapidly growing population, one of the world's lowest
life expectancies, and low rates of literacy.
The impact of the British rule on India's economy is a controversial topic. While leaders
of the Indian independence movement, and left-nationalist economic historians have
blamed colonial rule for the dismal state of India's economy in its aftermath, right-wing
historians have countered that India's economic performance was due to various sectors
being in a state of growth and decline, resulting from changes brought about by
colonialism and a world that was moving towards industrialization and economic
integration.[25]
[edit] Independence to 1991
The green revolution during the late 1960s resulted in significant increase in agricultural
production across India.[26]
Indian economic policy after independence was influenced by the colonial experience
(which was seen by Indian leaders as exploitative in nature) and by those leaders'
exposure to Fabian socialism. Policy tended towards protectionism, with a strong
emphasis on import substitution, industrialization, state intervention in labor and financial
markets, a large public sector, business regulation, and central planning.[27] Jawaharlal
Nehru, the first prime minister, along with the statistician Prasanta Chandra Mahalanobis,
carried on by Indira Gandhi formulated and oversaw economic policy. They expected
favorable outcomes from this strategy, because it involved both public and private sectors
and was based on direct and indirect state intervention, rather than the more extreme
Soviet-style central command system.[28] The policy of concentrating simultaneously on
capital- and technology-intensive heavy industry and subsidizing manual, low-skill
cottage industries was criticized by economist Milton Friedman, who thought it would
waste capital and labour, and retard the development of small manufacturers.[29] Elaborate
licences, regulations and the accompanying red tape, commonly referred to as Licence
Raj, were required to set up business in India between 1947 and 1990.[30]
India's low average growth rate from 1947–80 was derisively referred to as the Hindu
rate of growth, because of the unfavourable comparison with growth rates in other Asian
countries, especially the "East Asian Tigers".[23]
[edit] After 1991
Major improvements in educational standards across India has helped its economic rise.
Shown here is the Indian School of Business at Hyderabad, ranked number 20 in global
MBA rankings by the Financial Times of London in 2008[31]
In the late 80s, the government led by Rajiv Gandhi eased restrictions on capacity
expansion for incumbents, removed price controls and reduced corporate taxes. While
this increased the rate of growth, it also led to high fiscal deficits and a worsening current
account. The collapse of the Soviet Union, which was India's major trading partner, and
the first Gulf War, which caused a spike in oil prices, caused a major balance-of-
payments crisis for India, which found itself facing the prospect of defaulting on its loans.
[32]
In response, Prime Minister Narasimha Rao along with his finance minister
Manmohan Singh initiated the economic liberalisation of 1991. The reforms did away
with the Licence Raj (investment, industrial and import licensing) and ended many public
monopolies, allowing automatic approval of foreign direct investment in many sectors.[33]
Since then, the overall direction of liberalisation has remained the same, irrespective of
the ruling party, although no party has tried to take on powerful lobbies such as the trade
unions and farmers, or contentious issues such as reforming labour laws and reducing
agricultural subsidies.[34] Since 1990 India has emerged as one of the fastest-growing
economies in the developing world; during this period, the economy has grown
constantly, but with a few major setbacks. This has been accompanied by increases in life
expectancy, literacy rates and food security.
While the credit rating of India was hit by its nuclear tests in 1998, it has been raised to
investment level in 2007 by S&P and Moody's.[35] In 2003, Goldman Sachs predicted that
India's GDP in current prices will overtake France and Italy by 2020, Germany, UK and
Russia by 2025 and Japan by 2035. By 2035, it was projected to be the third largest
economy of the world, behind US and China.[36][37]
In the revised 2007 figures, based on increased and sustaining growth, more inflows into
foreign direct investment, Goldman Sachs predicts that "from 2007 to 2020, India’s GDP
per capita in US$ terms will quadruple", and that the Indian economy will surpass the
United States (in US$) by 2043.[38] Goldman Sachs has outlined 10 things that it needs to
do in order to achieve its potential and grow 40 times by 2050. These are 1.improve
governance 2.raise educational achievement 3.increase quality and quantity of
universities 4.control inflation 5.introduce a credible fiscal policy 6.liberalize financial
markets 7.increase trade with neighbours 8.increase agricultural productivity 9.improve
infrastructure and 10.improve environmental quality.[39]
[edit] Government intervention

[edit] State planning and the mixed economy
Main article: Five-Year Plans of India
Asia's oldest stock exchange, the Bombay Stock Exchange, is also Asia's fourth largest
stock exchange in terms of market capitalization. The National Stock Exchange of India
is Asia's fifth largest.[40] The government of India regulates stock exchanges across the
country through Securities Contracts Act.
After independence, India opted for a centrally planned economy to try to achieve an
effective and equitable allocation of national resources and balanced economic
development. The process of formulation and direction of the Five-Year Plans is carried
out by the Planning Commission, headed by the Prime Minister of India as its
chairperson.[41]
India's mixed economy combines features of both capitalist market economy and the
socialist planned economy, but has shifted more towards the former over the past decade.
The public sector generally covers areas which are deemed too important or not
profitable enough to leave to the market, including such services as the railways and
postal system. Since independence, there have been phases of nationalizing such areas as
banking. More recently, there have been phases of privatizing such sectors.[42]
[edit] Public expenditure

The number of people employed in non-agricultural occupations in the public and private
sectors. Totals are rounded. Private sector data relates to non-agriculture establishments
with 10 or more employees.[42]
India's public expenditure is classified as development expenditure, comprising central

plan expenditure and central assistance and non-development expenditures; these
categories can each be divided into capital expenditure and revenue expenditure. Central
plan expenditure is allocated to development schemes outlined in the plans of the central
government and public sector undertakings; central assistance refers to financial
assistance and developmental loans given for plans of the state governments and union
territories. Non-development capital expenditure comprises capital defense expenditure,
loans to public enterprises, states and union territories and foreign governments, while
non-development revenue expenditure comprises revenue defence expenditure,
administrative expenditure, subsidies, debt relief to farmers, postal deficit, pensions,
social and economic services (education, health, agriculture, science and technology),
grants to states and union territories and foreign governments.[43][44][42]
According to the Economist (2008), Indian central government employs around 3 million
people and states another 7 million, which includes a large number of railway workers
and what is described "vast armies of paper-shuffling peons"[45]. According to a
government officer responsible for personnel, India has 80,000 "Category One" Indian
Administrative Service (IAS) bureaucrats who make decisions.[45] An elite of merely
5600 members "mostly runs India".[45] 140 IAS bureaucrats were recruited from a pool of
around 200,000 applicants in 2008.[45] Even in IAS, incompetency is considered to be
large.[45] Political inference in common.[45] India is divided to 604 districts, size of small
countries.[45] District elite officers may deal with individual welfare applicants, an
example of vast inefficiency illustrated by the Economist.[45] Large bureaucracies can be
run without a single computer in the management.[45] One study found out at any given
time 25% of public sector teachers and 40% of public sector medical workers could not
be found at the workplace. Many of the present workers were doing something other than
their work.[46]
India's non-development revenue expenditure has increased nearly fivefold in 2003–04

since 1990–91 and more than tenfold since 1985–1986. Interest payments are the single
largest item of expenditure and accounted for more than 40% of the total non
development expenditure in the 2003–04 budget. Defence expenditure increased fourfold
during the same period and has been increasing due to India's desire to project its military
prowess beyond South Asia. In 2007, India's defence spending stood at US$26.5 billion.
[47]
Administrative expenses are compounded by a large salary and pension bill, which
rises periodically due to revisions in wages, dearness allowance etc. subsidies on food,
fertilizers, education and petroleum and other merit and non-merit subsidies account are
not only continuously rising, especially because of rising crude oil and food prices, but
are also harder to rein in, because of political compulsions.[48][42]
[edit] Public receipts

Regional office of the State Bank of India (SBI), India's largest bank, in Mumbai. The
government of India is the largest shareholder in SBI.
India has a three-tier tax structure, wherein the constitution empowers the union
government to levy income tax, tax on capital transactions (wealth tax, inheritance tax),
sales tax, service tax, customs and excise duties and the state governments to levy sales
tax on intrastate sale of goods, tax on entertainment and professions, excise duties on
manufacture of alcohol, stamp duties on transfer of property and collect land revenue
(levy on land owned). The local governments are empowered by the state government to
levy property tax and charge users for public utilities like water supply, sewage etc.[49][50]
More than half of the revenues of the union and state governments come from taxes, of
which half come from Indirect taxes. More than a quarter of the union government's tax
revenues is shared with the state governments.[51]
The tax reforms, initiated in 1991, have sought to rationalise the tax structure and
increase compliance by taking steps in the following directions:
• Reducing the rates of individual and corporate income taxes, excises, customs and
making it more progressive
• Reducing exemptions and concessions
• Simplification of laws and procedures
• Introduction of permanent account number (PAN) to track monetary transactions
• 21 of the 29 states introduced value added tax (VAT) on April 1, 2005 to replace
the complex and multiple sales tax system[50][52]
The non-tax revenues of the central government come from fiscal services, interest
receipts, public sector dividends, etc., while the non-tax revenues of the States are grants
from the central government, interest receipts, dividends and income from general,
economic and social services.[48]
Inter-State share in the federal tax pool is decided by the recommendations of the Finance
Commission to the President.
Total tax receipts of Centre & State amount to approximately 18% of national GDP. This
compares to a figure of 37-45% in the OECD and explains why the country remains
under-developed as evident inter-alia from the poor state of its infrastructure and social
services compared to OECD countries. The limited resources of Government affect its
ability to pay fair wages to public servants. This may well be the cause of endemic
corruption at all levels of government.
[edit] General budget
The Finance minister of India presents the annual union budget in the Parliament on the
last working day of February. The budget has to be passed by the Lok Sabha before it can
come into effect on April 1, the start of India's fiscal year. The Union budget is preceded
by an economic survey which outlines the broad direction of the budget and the economic
performance of the country for the outgoing financial year. This economic survey
involves all the various NGOs, women organizations, business people, old people
associations etc.
India's union budget for 2005–06, had an estimated outlay of Rs.5,14,344 crores ($118
billion). Earnings from taxes amount to Rs. 2,73,466 crore ($63b). India's fiscal deficit
amounts to 4.5% or 1,39,231 crore ($32b).[53] The fiscal deficit is expected to be 3.8% of
GDP, by March 2007.[54]
[edit] Reform
India's public sector is generally thought as a big obstacle to the country's economy. The
World Bank rates India's public sector reform as a first-class priority. The government of
India itself has concluded that most spending fails to reach its intended recipients.[45] Lant
Pritchett calls India's public sector "one of the world's top ten biggest problems - of the
order of AIDS and climate change".[45]
[edit] Currency system

Main article: Indian rupee
The rupee is the only legal tender accepted in India. The exchange rate as of November
18, 2008 is about 49.27 to a US dollar, [55] 64.01 to a Euro, and 80.45 to a UK pound. The
Indian rupee is accepted as legal tender in the neighboring Nepal and Bhutan, both of
which peg their currency to that of the Indian rupee. The rupee is divided into 100 paise.
The highest-denomination banknote is the 1,000 rupee note; the lowest-denomination
coin in circulation is the 1 rupee coin (it earlier had 25 & 50 paise coins which have been
discontinued by the Reserve Bank of India).[56] There has been a recent fall in the value of
the Rupee as a result of the global financial crisis of 2008, as foreign institutional
investors sell large amounts of Indian stocks and invest in US treasury bonds.
[edit] Natural resources

See also: Energy policy of India
India has the world's fourth largest wind power industry, with an annual power capacity
of 8,896 MW.[57] Shown here is a wind farm in Kayathar, Tamil Nadu.
India's total cultivable area is 1,269,219 km² (56.78% of total land area), which is
decreasing due to constant pressure from an ever growing population and increased
urbanisation.
India has a total water surface area of 314,400 km² and receives an average annual
rainfall of 1,100 mm. Irrigation accounts for 92% of the water utilisation, and comprised
380 km² in 1974, and is expected to rise to 1,050 km² by 2025, with the balance
accounted for by industrial and domestic consumers.
India has the world's 3rd largest coal reserves.[58] Shown here is a coal mine in Jharkhand.
India's inland water resources comprising rivers, canals, ponds and lakes and marine
resources comprising the east and west coasts of the Indian ocean and other gulfs and
bays provide employment to nearly 6 million people in the fisheries sector. In 2008, India
had the world's third largest fishing industry.[59]
India's major mineral resources include Coal (fourth-largest reserves in the world), Iron
ore, Manganese, Mica, Bauxite, Titanium ore, Chromite, Natural gas, Diamonds,
Petroleum, Limestone and Thorium (world's largest along Kerala's shores). India's oil
reserves, found in Bombay High off the coast of Maharashtra, Gujarat, and in eastern
Assam meet 25% of the country's demand.[60][61]
Rising energy demand concomitant with economic growth has created a perpetual state of
energy crunch in India. India is poor in oil resources and is currently heavily dependent
on coal and foreign oil imports for its energy needs. Though India is rich in Thorium, but
not in Uranium, which it might get access to in light of the nuclear deal with US. India is
rich in certain energy resources which promise significant future potential - clean /
renewable energy resources like solar, wind, biofuels (jatropha, sugarcane).
[edit] Infrastructure
A map of the network of National Highways in India
Development of infrastructure was completely in the hands of the public sector and was
plagued by corruption, bureaucratic inefficiencies, urban-bias and an inability to scale
investment.[62] India's low spending on power, construction, transportation,
telecommunications and real estate, at $31 billion or 6% of GDP in 2002 had prevented
India from sustaining higher growth rates. This had prompted the government to partially
open up infrastructure to the private sector allowing foreign investment[63][64][42] which has
helped in a sustained growth rate of close to 9% for the past six quarters.[65]
Some 600 million Indians have no mains electricity at all.[66] Where it is available, it's
supplied by the public sector and power outages are common.[66] Many buy their own
power generators to ensure electricity supply. As of 2005 the electricity production was at
661.6 billion kWh with oil production standing at 785,000 bbl/day. In 2007, electricity
demand exceeded supply by 15%. Outages as long as one day are costly for industrial
activities.[66]
Trucking goods from Gurgaon to the port in Mumbai can take up to 10 days.[6] Taxes and
bribes are common between state borders.[67] India holds second position in the world in
roadways' construction, more than twice that of China.[68]
Some 60% of India’s container traffic is handled by the Jawaharlal Nehru Port Trust in
Mumbai. It has just 9 berths compared to 40 in Singapore's main port. It takes an average
of 21 days to clear import cargo in India compared to just 3 in Singapore.[66]
A BusinessWeek article in 2007 reported that India's cell-phone market is the fast
growing in the world and companies adding some 6 million new customers a month.[6]
Very few Indians use Internet. As of January 15, 2007, there were 2.10 million broadband
lines in India.[69] The entire India has only 25,000 tourist-class hotel rooms, compared
with more than 140,000 in Las Vegas alone. Hotel companies see opportunities for big
investments.[6]
In some places, no major irrigation works have been done since the British era despite
opportunities to boost agricultural productivity. Some 700 million Indians do not have
access to a proper toilet.[66] Only 13% of sewage is treated according to one estimate,
leaving rivers and other water resources under severe strain.[66]
See also: Transport in India

See also: Indian Road Network
See also: Ports in India
See also: States of India by installed power capacity
See also: Water supply and sanitation in India
[edit] Financial institutions
Cuffe Parade, Mumbai is an important business district in India, home to the World Trade
Center as well as other important financial institutions.
India inherited several institutions, such as the civil services, Reserve Bank of India,
railways, etc., from its British rulers. Mumbai serves as the nation's commercial capital,
with the Reserve Bank of India (RBI), Bombay Stock Exchange (BSE) and the National
Stock Exchange (NSE) located here. The headquarters of many financial institutions are
also located in the city.
The RBI, the country's central bank was established on April 1, 1935. It serves as the
nation's monetary authority, regulator and supervisor of the financial system, manager of
exchange control and as an issuer of currency. The RBI is governed by a central board,
headed by a governor who is appointed by the Central government of India. The BSE
Sensex or the BSE Sensitive Index is a value-weighted index composed of 30 companies
with April 1979 as the base year (100). These companies have the largest and most
actively traded stocks and are representative of various sectors, on the Exchange. They
account for around one-fifth of the market capitalisation of the BSE. The Sensex is
generally regarded as the most popular and precise barometer of the Indian stock markets.
Incorporated in 1992, the National Stock Exchange is one of the largest and most
advanced stock markets in India. The NSE is the world's third largest stock exchange in
terms of transactions. There are a total of 23 stock exchanges in India, but the BSE and
NSE comprise 83% of the volumes.[70] The Securities and Exchange Board of India
(SEBI), established in 1992, regulates the stock markets and other securities markets of
the country.
[edit] Sectors
[edit] Agriculture
Main article: Agriculture in India

Farmers in Bihar. Farmers' investments in tools have improved agricultural productivity.
Processing of rice in Tamil Nadu. India is the second largest producer of rice in the
world[71]
Composition of India's total production (million tonnes) of foodgrains and commercial

crops, in 2003–04.
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 16.6% of the GDP in 2007, employed 60% of the total
workforce[61] and despite a steady decline of its share in the GDP, is still the largest
economic sector and plays a significant role in the overall socio-economic development
of India. Yields per unit area of all crops have grown since 1950, due to the special
emphasis placed on agriculture in the five-year plans and steady improvements in
irrigation, technology, application of modern agricultural practices and provision of
agricultural credit and subsidies since Green revolution in India. However, international
comparisons reveal that the average yield in India is generally 30% to 50% of the highest
average yield in the world.[72]
The World Bank credits the Green Revolution for helping to increase grain production in
the 1970s. Since 1990s, rural sectors have grown slowly. The World Bank identifies
following main problems:[73]
• India's large agricultural subsidies are hampering productivity-enhancing

investment.
• Overregulation of agriculture has increased costs, price risks and uncertainty.
• Government interventions in labor, land, and credit markets.
• Inadequate infrastructure and services.
In water and irrigation management, the World Bank identifies:[73]
• Inefficient, unsustainable and inequitable allocation of water.

• Deteriorating irrigation infrastructure.
The low productivity in India is a result of the following factors:
• Illiteracy, general socio-economic backwardness, slow progress in implementing

land reforms and inadequate or inefficient finance and marketing services for
farm produce.
• The average size of land holdings is very small (less than 20,000 m²) and is
subject to fragmentation, due to land ceiling acts and in some cases, family
disputes. Such small holdings are often over-manned, resulting in disguised
unemployment and low productivity of labour.
• Adoption of modern agricultural practices and use of technology is inadequate,
hampered by ignorance of such practices, high costs and impracticality in the case
of small land holdings.
• Irrigation facilities are inadequate, as revealed by the fact that only 52.6% of the
land was irrigated in 2003–04,[74] which result in farmers still being dependent on
rainfall, specifically the Monsoon season. A good monsoon results in a robust
growth for the economy as a whole, while a poor monsoon leads to a sluggish
growth.[75] Farm credit is regulated by NABARD, which is the statutory apex
agent for rural development in the subcontinent.
India has many farm insurance companies that insure wheat, fruit, rice and rubber
farmers in the event of natural disasters or catastrophic crop failure, under the supervision
of the Ministry of Agriculture. One notable company that provides all of these insurance
policies is agriculture insurance company of india and it alone insures almost 20 million
farmers.
[edit] Industry
India has one of the world's fastest growing automobile industries[76][77] and hopes to be a
global leader of the auto industry.[78] Tata Motors' Nano, the world's least expensive
production car.[79]
India is fourteenth in the world in factory output. They together account for 27.6% of the
GDP and employ 17% of the total workforce.[61] However, about one-third of the
industrial labour force is engaged in simple household manufacturing only.[80]
Economic reforms brought foreign competition, led to privatisation of certain public

sector industries, opened up sectors hitherto reserved for the public sector and led to an
expansion in the production of fast-moving consumer goods.[81]
Post-liberalisation, the Indian private sector, which was usually run by oligopolies of old
family firms and required political connections to prosper was faced with foreign
competition, including the threat of cheaper Chinese imports. It has since handled the
change by squeezing costs, revamping management, focusing on designing new products
and relying on low labour costs and technology.[82]
[edit] Services
See also: Information technology in India
Infosys headquarters in Bangalore, one of the largest software companies in India.
India is fifteenth in services output. It provides employment to 23% of work force, and it
is growing fast, growth rate 7.5% in 1991–2000 up from 4.5% in 1951–80. It has the
largest share in the GDP, accounting for 55% in 2007 up from 15% in 1950.[61]
Business services (information technology, information technology enabled services,

business process outsourcing) are among the fastest growing sectors contributing to one
third of the total output of services in 2000. The growth in the IT sector is attributed to
increased specialization, and an availability of a large pool of low cost, but highly skilled,
educated and fluent English-speaking workers, on the supply side, matched on the
demand side by an increased demand from foreign consumers interested in India's service
exports, or those looking to outsource their operations. India's IT industry, despite
contributing significantly to its balance of payments, accounted for only about 1% of the
total GDP or 1/50th of the total services in 2001[83] However the contribution of IT to
GDP increased to 4.8 % in 2005-06 and is projected to increase to 7% of GDP in 2008[84]
[85]
Most Indians shop at open markets or unorganized small stores.
Dabbawala delivery services.
Most Indian shopping takes place in open markets and millions of independent grocery
shops called kirana. Organized retail such supermarkets accounts for just 4% of the
market as of 2008.[86] Regulations prevent most foreign investment in retailing. Moreover,
over thirty regulations such as "signboard licences" and "anti-hoarding measures" may
have to be complied before a store can open doors. There are taxes for moving goods to
states, from states, and even within states.[86]
[edit] Banking and finance
Main article: Banking in India
Structure of the organised banking sector in India. Number of banks are in brackets.[87]
The Indian money market is classified into: the organised sector (comprising private,
public and foreign owned commercial banks and cooperative banks, together known as
scheduled banks); and the unorganised sector (comprising individual or family owned
indigenous bankers or money lenders and non-banking financial companies (NBFCs)).
The unorganised sector and microcredit are still preferred over traditional banks in rural
and sub-urban areas, especially for non-productive purposes, like ceremonies and short
duration loans.[88]
Prime Minister Indira Gandhi nationalised 14 banks in 1969, followed by six others in
1980, and made it mandatory for banks to provide 40% of their net credit to priority
sectors like agriculture, small-scale industry, retail trade, small businesses, etc. to ensure
that the banks fulfill their social and developmental goals. Since then, the number of bank
branches has increased from 10,120 in 1969 to 98,910 in 2003 and the population
covered by a branch decreased from 63,800 to 15,000 during the same period. The total
deposits increased 32.6 times between 1971 to 1991 compared to 7 times between 1951
to 1971. Despite an increase of rural branches, from 1,860 or 22% of the total number of
branches in 1969 to 32,270 or 48%, only 32,270 out of 5 lakh (500,000) villages are
covered by a scheduled bank.[89][90]
Since liberalisation, the government has approved significant banking reforms. While
some of these relate to nationalised banks (like encouraging mergers, reducing
government interference and increasing profitability and competitiveness), other reforms
have opened up the banking and insurance sectors to private and foreign players.[91][61]
[edit] Companies
34 Indian companies have been listed in the Forbes Global 2000 ranking for 2008.[92] The
10 leading companies are:
Profit Marke
Revenu Assets
World s t
e (billio
Rank Company Logo Industry
(billion
(billio
n
Value
n (billio
$) $)
$) n $)
Reliance Oil & Gas,
193 26.07 2.79 30.67 89.29
Industries Petrochemicals
Oil and
Oil & Gas
198 Natural Gas 18.90 4.11 33.79 54.11
Operations
Corporation
State Bank of
219 Banking 15.77 1.47 188.56 33.29
India
Indian Oil Oil & Gas
303 42.68 1.82 25.39 16.36
Corporation Operations
374 ICICI Bank Banking 9.84 0.64 91.07 29.85
411 NTPC Utilities 7.84 1.60 20.34 41.57
Steel Authority
647 of India Materials 7.88 1.45 8.05 26.37
Limited
738 Tata Steel Materials 5.83 0.97 11.48 14.63
Telecommunicatio
826 Bharti Airtel 4.26 0.94 6.61 39.16
ns Services
Reliance
File:Relcomm. Telecommunicatio
846 Communicatio 3.13 0.65 13.08 29.63
gif ns Services
ns
[edit] Socio-economic characteristics

Main article: Socio-economic issues in India
[edit] Poverty
Percentage of population living under the poverty line

Main article: Poverty in India
Large numbers of India's people live in abject poverty. A 24.3% of the population earned
less than $1 (PPP) a day in 2005, down from 42.1% in 1981.[9][93] According to the new
World Bank's estimates on poverty based on 2005 data, India has 41.6% of its population
is living below the new international poverty line of $1.25 (PPP) per day.[9] The World
Bank further estimates that a third of the global poor now reside in India.
Moreover, 75.6% of the population is living below $2 a day (PPP), compared to 73% for
Sub-Saharan Africa.[94][95][96][97][9] India has also higher rates of malnutrition than Sub-
Saharan Africa.[98]
Wealth distribution in India is improving since the liberalization and with the end of the
socialist rule termed as the license raj.[99] While poverty in India has reduced
significantly, official figures estimate that 27.5%[100] of Indians still lived below the
national poverty line in 2004-2005.[101] A 2007 report by the state-run National
Commission for Enterprises in the Unorganised Sector (NCEUS) found that 65% of
Indians, or 750 million people, lived on less than 20 rupees per day[102] with most working
in "informal labour sector with no job or social security, living in abject poverty."[103]
Since the early 1950s, successive governments have implemented various schemes, under
planning, to alleviate poverty, that have met with partial success. All these programmes
have relied upon the strategies of the Food for work programme and National Rural
Employment Programme of the 1980s, which attempted to use the unemployed to
generate productive assets and build rural infrastructure.[42] In August 2005, the Indian
parliament passed the Rural Employment Guarantee Bill, the largest programme of this
type in terms of cost and coverage, which promises 100 days of minimum wage
employment to every rural household in 200 of India's 600 districts. The question of
whether economic reforms have reduced poverty or not has fuelled debates without
generating any clear cut answers and has also put political pressure on further economic
reforms, especially those involving the downsizing of labour and cutting agricultural
subsidies.[104][105]
[edit] Corruption
Main article: Corruption in India
Corruption has been one of the pervasive problems affecting India. The economic
reforms of 1991 reduced the red tape, bureaucracy and the Licence Raj that had strangled
private enterprise and was blamed for the corruption and inefficiencies. Yet, a 2005 study
by Transparency International (TI) India found that more than half of those surveyed had
firsthand experience of paying bribe or peddling influence to get a job done in a public
office.[106]
The Right to Information Act (2005) and equivalent acts in the states, that require
government officials to furnish information requested by citizens or face punitive action,
computerisation of services and various central and state government acts that established
vigilance commissions have considerably reduced corruption or at least have opened up
avenues to redress grievances.[106] The 2007 report by Transparency International ranks
India at 72nd place and states that significant improvements were made by India in
reducing corruption.[107][108]
[edit] Occupations and unemployment
Industrial plant in a rural area near Jodhpur, Rajasthan. Industrial growth in India has
provided increase employment opportunities across India.
Agricultural and allied sectors accounted for about 57% of the total workforce in 1999–
2000, down from 60% in 1993–94. While agriculture has faced stagnation in growth,
services have seen a steady growth. Of the total workforce, 8% is in the organised sector,
two-thirds of which are in the public sector. The NSSO survey estimated that in 1999–
2000, 106 million, nearly 10% of the population were unemployed and the overall
unemployment rate was 7.32%, with rural areas doing marginally better (7.21%) than
urban areas (7.65%).
Unemployment in India is characterized by chronic underemployment or disguised

unemployment. Government schemes that target eradication of both poverty and
unemployment (which in recent decades has sent millions of poor and unskilled people
into urban areas in search of livelihoods) attempt to solve the problem, by providing
financial assistance for setting up businesses, skill honing, setting up public sector
enterprises, reservations in governments, etc. The decreased role of the public sector after
liberalization has further underlined the need for focusing on better education and has
also put political pressure on further reforms.[109][42]
Slums next to high-rise commercial buildings in Kaloor, Kochi. Hundreds of people,
mostly comprising migrant labourers who come to the city seeking job prospects, reside
in such shabby areas.[110]
[edit] Regional imbalance
Main article: List of regions of India
One of the critical problems facing India's economy is the sharp and growing regional
variations among India's different states and territories in terms of per capita income,
poverty, availability of infrastructure and socio-economic development.[111]
Between 1999 and 2008, the annualized growth rates for Gujarat (8.8%), Haryana
(8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%),
or Madhya Pradesh (3.5%).[8]
The five-year plans have attempted to reduce regional disparities by encouraging

industrial development in the interior regions, but industries still tend to concentrate
around urban areas and port cities[112] After liberalization, the more advanced states are
better placed to benefit from them, with infrastructure like well developed ports,
urbanisation and an educated and skilled workforce which attract manufacturing and
service sectors. The union and state governments of backward regions are trying to
reduce the disparities by offering tax holidays, cheap land, etc., and focusing more on
sectors like tourism, which although being geographically and historically determined,
can become a source of growth and is faster to develop than other sectors.[113][114]
See also: States of India by size of economy

See also: Standard of living in India#Regional imbalance
[edit] Environment and health
See also: Famine in India, Environment in India, Water supply and sanitation in
India, and HIV/AIDS in India
On Yale and Columbia's Environmental Performance Index, India's score is 21/100 on

sanitation, compared with 67/100 for the region and 48/100 for the country income
group.[115]
About 1.2 billion people in developing nations lack clean, safe water because most
household and industrial wastes are dumped directly into rivers and lakes without
treatment. This contributes to the rapid increase in waterborne diseases in humans.[116]
Out of India's 3119 towns and cities, just 209 have partial treatment facilities, and only 8
have full wastewater treatment facilities (WHO 1992).[117] 114 cities dump untreated
sewage and partially cremated bodies directly into the Ganges River.[118] Downstream, the
untreated water is used for drinking, bathing, and washing. This situation is typical of
many rivers in India as well as other developing countries. NewsWeek describes Delhi's
sacred Yamuna River as "a putrid ribbon of black sludge" where fecal bacteria is 10,000
over safety limits despite a 15-year program to address the problem.[115] Cholera
epidemics are not unknown.[115] Open defecation is widespread even in urban areas of
India.[119][120]
Indoor air pollution from burning wood, coal and animal dung is widespread.[121] 70% of
rural households in India lack ventilation. Particulate concentrations in houses are
reported to range from 8,300 to 15,000 μg/m3, greatly exceeding the 75 μg/m3 maximum
standard for indoor particulate matter in the United States.[122]
Changes in ecosystem biological diversity, evolution of parasites, and invasion by exotic

species all frequently result in disease outbreaks such as cholera which emerged in 1992
in India. The frequency of AIDS/HIV is increasing. In 1996, about 46,000 Indians out of
2.8 million (1.6 % of the population) tested were found to be infected with HIV.[123]
[edit] External trade and investment

[edit] Global trade relations
Share of top five investing countries in FDI inflows. (2000–2007)[124]
Inflows
Rank Country Inflows (%)
(Million USD)
1 Mauritius 85,178 44.24%[125]
2 United States 18,040 9.37%
3 United Kingdom 15,363 7.98%
4 Netherlands 11,177 5.81%

5 Singapore 9,742 5.06%
Increasing foreign trade has resulted in rapid expansion of India's shipping industry.
Shown here is the newly constructed Mundra Port in Gujarat.
India currently accounts for 1.2% of World trade as of 2006 according to the WTO.[126]
Until the liberalisation of 1991, India was largely and intentionally isolated from the
world markets, to protect its fledging economy and to achieve self-reliance. Foreign trade
was subject to import tariffs, export taxes and quantitative restrictions, while foreign
direct investment was restricted by upper-limit equity participation, restrictions on
technology transfer, export obligations and government approvals; these approvals were
needed for nearly 60% of new FDI in the industrial sector. The restrictions ensured that
FDI averaged only around $200M annually between 1985 and 1991; a large percentage
of the capital flows consisted of foreign aid, commercial borrowing and deposits of non-
resident Indians.[127]
Indian exports in 2006
India's exports were stagnant for the first 15 years after independence, due to the
predominance of tea, jute and cotton manufactures, demand for which was generally
inelastic. Imports in the same period consisted predominantly of machinery, equipment
and raw materials, due to nascent industrialisation. Since liberalisation, the value of
India's international trade has become more broad-based and has risen to Rs. 63,080,109
crores in 2003–04 from Rs.1,250 crores in 1950–51.[citation needed] India's major trading
partners are China, the US, the UAE, the UK, Japan and the EU.[128] The exports during
April 2007 were $12.31 billion up by 16% and import were $17.68 billion with an
increase of 18.06% over the previous year.[129]
India is a founding-member of General Agreement on Tariffs and Trade (GATT) since

1947 and its successor, the World Trade Organization. While participating actively in its
general council meetings, India has been crucial in voicing the concerns of the
developing world. For instance, India has continued its opposition to the inclusion of
such matters as labour and environment issues and other non-tariff barriers into the WTO
policies.[130]
[edit] Balance of payments

Since independence, India's balance of payments on its current account has been
negative. Since liberalisation in the 1990s (precipitated by a balance of payment crisis),
India's exports have been consistently rising, covering 80.3% of its imports in 2002–03,
up from 66.2% in 1990–91. Although India is still a net importer, since 1996–97, its
overall balance of payments (i.e., including the capital account balance), has been
positive, largely on account of increased foreign direct investment and deposits from non-
resident Indians; until this time, the overall balance was only occasionally positive on
account of external assistance and commercial borrowings. As a result, India's foreign
currency reserves stood at $285 billion in 2008, which could be used in infrastructural
development of the country if used effectively.
India is a net importer: Per the CIA factbook in 2007, imports were $224bn and exports
$140bn. Shown here is the cargo of a container ship being unloaded at the Jawaharlal
Nehru Port, Navi Mumbai
India's reliance on external assistance and commercial borrowings has decreased since
1991–92, and since 2002–03, it has gradually been repaying these debts. Declining
interest rates and reduced borrowings decreased India's debt service ratio to 4.5% in
2007.[131] In India, External Commercial Borrowings (ECBs) are being permitted by the
Government for providing an additional source of funds to Indian corporates. The
Ministry of Finance monitors and regulates these borrowings (ECBs) through ECB policy
guidelines.[132]
[edit] Foreign direct investment in India
As the fourth-largest economy in the world in PPP terms, India is a preferred destination
for foreign direct investments (FDI);[133] India has strengths in information technology
and other significant areas such as auto components, chemicals, apparels,
pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI policies
resulted in a significant hindrance. However, due to some positive economic reforms
aimed at deregulating the economy and stimulating foreign investment, India has
positioned itself as one of the front-runners of the rapidly growing Asia Pacific Region.
[133]
India has a large pool of skilled managerial and technical expertise. The size of the
middle-class population stands at 50 million and represents a growing consumer market.
[134]
India's recently liberalized FDI policy (2005) allows up to a 100% FDI stake in ventures.
Industrial policy reforms have substantially reduced industrial licensing requirements,
removed restrictions on expansion and facilitated easy access to foreign technology and
foreign direct investment FDI. The upward moving growth curve of the real-estate sector
owes some credit to a booming economy and liberalized FDI regime. In March 2005, the
government amended the rules to allow 100 per cent FDI in the construction business.[135]
This automatic route has been permitted in townships, housing, built-up infrastructure
and construction development projects including housing, commercial premises, hotels,
resorts, hospitals, educational institutions, recreational facilities, and city- and regional-
level infrastructure.
A number of changes were approved on the FDI policy to remove the caps in most
sectors. Fields which require relaxation in FDI restrictions include civil aviation,
construction development, industrial parks, petroleum and natural gas, commodity
exchanges, credit-information services and mining. But this still leaves an unfinished
agenda of permitting greater foreign investment in politically sensitive areas such as
insurance and retailing. FDI inflows into India reached a record US$19.5bn in fiscal year
2006/07 (April-March), according to the government's Secretariat for Industrial
Assistance. This was more than double the total of US$7.8bn in the previous fiscal year.
The FDI inflow for 2007-08 has been reported as $24bn[136] and for 2008-09, it is
expected to be above $35 billion.[137] A critical factor in determining India's continued
economic growth and realizing the potential to be an economic superpower is going to
depend on how the government can create incentives for FDI flow across a large number
of sectors in India.[138]
[edit] See also

• Economic development in India
• List of Indian companies
• International investment position
• Bilateral Investment Treaty
• Energy policy
• List of co-operative banks in India
[edit] Notes
1. ^ Kinetz, Erika (7 August 2008). "India inflation passes record 12 percent",
BusinessWeek. Retrieved on 8 August 2008.
2. ^ Exports surpass target in 2007-08
3. ^ a b c d e f Economic survey of India 2007: Policy Brief. OECD
4. ^ Mudur, Ganapati (June 2004). "Hospitals in India woo foreign patients". British
Medical Journal 328: 1338. doi:10.1136/bmj.328.7452.1338. PMID 15178611.
5. ^ G. Srinivasan (2008-04-18). "Rise in Indian services exports less than global
average: WTO", The Hindu Business Line. Retrieved on 16 November 2008.
6. ^ a b c d The Trouble With India: Crumbling roads, jammed airports, and power
blackouts could hobble growth from BusinessWeek March 19, 2007
7. ^ http://www.bloomberg.com/apps/news?
pid=20601091&sid=aK2ccLqM2xhQ&refer=india"
8. ^ a b A special report on India: Ruled by Lakshmi Dec 11th 2008 From The
Economist print edition
9. ^ a b c d The developing world is poorer than we thought, but no less successful in
the fight against poverty
10. ^ India Country Overview 2008. World Bank
11. ^ Nehru, Jawaharlal (1946). Discovery of India. Penguin Books. ISBN 0-14-
303103-1.
12. ^ Kumar, Dharma (Ed.) (1982). The Cambridge Economic History of India
(Volume 2) c. 1757 - c. 1970. Penguin Books. p. 519.
13. ^ Datt, Ruddar & Sundharam, K.P.M. (2005). "2". Indian Economy. S.Chand.
pp. 15–16. ISBN 81-219-0298-3.
14. ^ Sankaran, S (1994). "3". Indian Economy: Problems, Policies and
Development. Margham Publications. p. 50. ISBN.
15. ^ Kumar, Dharma (Ed.). "4". The Cambridge Economic History of India (Volume
2). p. 422.
16. ^ Datt, Ruddar & Sundharam, K.P.M.. "2". Indian Economy. p. 16.
17. ^ "Economy of Mughal Empire", Bombay Times, Times of India (2004-08-17).
18. ^ Kumar, Dharma (Ed.). "1". The Cambridge Economic History of India (Volume
2). pp. 32–35.
19. ^ http://www.unu.edu/unupress/unupbooks/80815e/80815E0k.htm
20. ^ http://books.google.com/books?
id=XdEpABrFW8QC&pg=PA20&dq=british+india+handicrafts+raj&client=firef
ox-a#PPA21,M1
21. ^ http://books.google.com/books?
id=rMoOAAAAQAAJ&pg=PA186&dq=british+india+economy&lr=&client=fire
fox-a
22. ^ "Of Oxford, economics, empire, and freedom", The Hindu (October 2, 2005).
23. ^ a b Williamson, John and Zagha, Roberto. "From the Hindu Rate of Growth to
the Hindu Rate of Reform" (PDF). Working Paper No. 144. Center for research on
economic development and policy reform.
24. ^ Roy, Tirthankar (2000). "1". The Economic History of India. Oxford University
Press. p. 1. ISBN 0-19-565154-5.
25. ^ Roy, Tirthankar (2000). "10". The Economic History of India. Oxford
University Press. p. 304. ISBN 0-19-565154-5.
26. ^ http://countrystudies.us/india/104.htm
27. ^ Kelegama, Saman and Parikh, Kirit. "Political Economy of Growth and
Reforms in South Asia". Second Draft.
28. ^ Cameron, John and Ndhlovu, P Tidings. "Cultural Influences on Economic
Thought in India: Resistance to diffusion of neo-classical economics and the
principles of Hinduism" (PDF).
29. ^ "Milton Friedman on the Nehru/Mahalanobis Plan".
http://www.indiapolicy.org/debate/Notes/fried_opinion.html. Retrieved on 2005-
07-16.
30. ^ Street Hawking Promise Jobs in Future, The Times of India, 2001-11-25
31. ^ "Indian School of Business placed 20th in global Top 100 rankings - livemint".
Livemint.com. http://www.livemint.com/2008/01/29001824/Indian-School-of-
Business-plac.html. Retrieved on 2008-11-03.
32. ^ Ghosh, Arunabha (2004-06-01). "India's pathway trough economic crisis"
(PDF). Global Economic Governance Programme GEG Working Paper 2004/06.
Retrieved on 2007-10-02.
33. ^ Panagariya, Arvind. "India in the 1980s and 1990s: A Triumph of Reforms".
34. ^ "That old Gandhi magic", The Economist (November 27, 1997).
35. ^
http://www.thehindubusinessline.com/2003/02/10/stories/2003021000040900.htm
36. ^ Wilson, Dominic; Purushothaman, Roopa (2003-10-01). "DreamingWith
BRICs: The Path to 2050" (PDF). Global economics paper No. 99. Goldman
Sachs. http://www2.goldmansachs.com/insight/research/reports/99.pdf. Retrieved
on 2007-10-04.
37. ^ Grammaticas, Damian. ""Indian economy 'to overtake UK'"". BBC News.
http://news.bbc.co.uk/1/hi/world/south_asia/6294409.stm. Retrieved on 2007-01-
26.
38. ^ "India's Rising Growth Potential"
39. ^ The top 10 challenges for India, Rediff
40. ^ http://www.world-exchanges.org/publications/EQU1108.pdf
41. ^ "History of the Planning Commission".
http://planningcommission.nic.in/aboutus/history/about.htm. Retrieved on 2005-
07-22.
42. ^ a b c d e f g "Economic Survey 2004–2005". http://indiabudget.nic.in/es2004-
05/esmain.htm. Retrieved on 2006-07-15.
43. ^ Public expenditure was classified as plan and non-plan expenditure in the 1987–
1988 union budget. It is now referred to as development and non-development
expenditure, but the definition remains the same. Development expenditure is a
capital expenditure.
44. ^ Datt, Ruddar & Sundharam, K.P.M.. "55". Indian Economy. p. 943.
45. ^ a b c d e f g h i j k India's civil service: Battling the babu raj Mar 6th 2008 The
Economist
46. ^ Teachers and Medical Worker Incentives in India by Karthik Muralidharan
47. ^ "India's budget may backfire | The Australian". Theaustralian.news.com.au.
April 3, 2008. http://www.theaustralian.news.com.au/story/0,25197,23474033-
23850,00.html. Retrieved on 2008-11-03.
48. ^ a b Datt, Ruddar & Sundharam, K.P.M.. "55". Indian Economy. pp. 943–945.
49. ^ Service tax and expenditure tax are not levied in Jammu and Kashmir; Intra-
state sale happens when goods or the title of goods move from one state to
another.
50. ^ a b Bernardi, Luigi and Fraschini, Angela. "Tax System And Tax Reforms In
India". Working paper n. 51.
51. ^ Tax revenue was 88% of total union government revenue in 1950–51 and has
come down to 73% in 2003–04, as a result of increase in non-tax revenue. Tax
revenues were 70% of total state government revenues in 2002 to 2003. Indirect
taxes were 84% of the union governments total tax revenue and have come down
to 62% in 2003–04, mostly due to cuts in import duties and rationalisation. The
states share in union government's tax revenue is 28.0% for the period 2000 to
2005 as per the recommendations of the eleventh finance commission. In
addition, states that do not levy sales tax on sugar, textiles and tobacco, are
entitled to 1.5% of the proceeds.Datt, Ruddar & Sundharam, K.P.M. (2005).
Indian Economy. S.Chand. pp. 938, 942, 946. ISBN 81-219-0298-3.
52. ^ "Indif_real_GDP_per_capitaa says 21 of 29 states to launch new tax", Daily
Times (March 25, 2005).
53. ^ "Union Budget & Economic Survey". http://indiabudget.nic.in/ub2006-
07/ubmain.htm. Retrieved on 2006-07-29.
54. ^ "Revenue surge boosts fiscal health". http://www.business-
standard.com/common/storypage.php?
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55. ^ "U.S. Dollar to Indian Rupee Exchange Rate - Yahoo! Finance India".
In.finance.yahoo.com. http://in.finance.yahoo.com/currency/convert?
amt=1&from=USD&to=INR&submit=Convert.. Retrieved on 2008-11-03.
56. ^ RBI
57. ^ "India to add 6,000 mw wind power by 2012; but below target". Business-
standard.com. http://www.business-standard.com/india/storypage.php?
tp=on&autono=44562. Retrieved on 2008-11-03.
58. ^ http://www.business-standard.com/india/storypage.php?tp=on&autono=33438
59. ^ "The Hindu : Kerala / Kochi News : Diversify fishing methods, says Pawar".
Hindu.com. http://www.hindu.com/2008/01/05/stories/2008010552830300.htm.
60. ^ Datt, Mihir Bhojani & Vivek Sundharam, K.P.M.. "7". Indian Economy.
pp. 90,97,98,100.
61. ^ a b c d e "CIA - The World Factbook - India". CIA. 2007-09-20.
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html#Econ.
62. ^ Sankaran, S (1994). Indian Economy: Problems, Policies and Development.
Margham Publications. ISBN.
63. ^ "Infrastructure the missing link".
http://edition.cnn.com/2004/WORLD/asiapcf/09/03/india.eye.infra/. Retrieved on
2005-08-14.
64. ^ "Infrastructure in India: Requirements and favorable climate for foreign
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14.
65. ^ India's Economic Growth Unexpectedly Quickens to 9.2%
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biggest handicap Dec 11th 2008 The Economist]
67. ^ India: Where Shipping Is Shaky. BusinessWeek
68. ^ "Infrastructure Rankings". https://www.cia.gov/library/publications/the-world-
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69. ^ http://www.trai.gov.in/trai/upload/PressReleases/419/pr15jan07no6.pdf
70. ^ "Regional stock exchanges—Bulldozed by the Big Two".
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71. ^ http://www.taipeitimes.com/News/worldbiz/archives/2008/03/29/2003407560
72. ^ Datt, Ruddar & Sundharam, K.P.M.. "28". Indian Economy. pp. 485–491.
73. ^ a b India: Priorities for Agriculture and Rural Development. World Bank
74. ^ Multiple authors. "Agricultural Statistics at a Glance 2004".
75. ^ Sankaran, S. "28". Indian Economy: Problems, Policies and Development.
pp. 492–493.
76. ^ "Tyres & Accessories". Reifenpresse.de.
http://www.reifenpresse.de/CDML007/en/gast/detail.php?
tk=&t=unt&RecID=7767&wert1=19843&wert2=. Retrieved on 2008-11-03.
77. ^ "The small car dream-merchants- Tata's People's Car-Specials-The Economic
Times". Economictimes.indiatimes.com.
http://economictimes.indiatimes.com/articleshow/2682810.cms. Retrieved on
2008-11-03.
78. ^ "Quamnet.com stock news". Quamnet.com.
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http://www.forbes.com/home/free_forbes/2007/0416/070.html. Retrieved on
2008-01-21.
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81. ^ "Economic structure", The Economist (October 6, 2003).
82. ^ "Indian manufacturers learn to compete", The Economist (February 12, 2004).
83. ^ Gordon, Jim and Gupta, Poonam. "Understanding India's Services Revolution"
(PDF). November 12, 2003.
84. ^ "Share of IT, ITeS in Indias GDP to go up to 7 per cent by 2008", domain-
b.com (20 December 2006).
85. ^ "The Coming Death Of Indian Outsourcing", Forbes (2008-02-29).
86. ^ a b [http://www.economist.com/displayStory.cfm?story_id=11465586 Retailing
in India Unshackling the chain stores] May 29th 2008 The Economist
87. ^ Old private banks are private banks existing prior to opening up of the banking
sector.
90. ^ Ghosh, Jayati. "Bank Nationalisation: The Record". Macroscan.
http://www.macroscan.com/cur/jul05/cur210705Bank_Nationalisation.htm.
92. ^ "Forbes Global 2000 (Ger-Ind)".
http://www.forbes.com/lists/2008/18/biz_2000global08_The-Global-2000-
India_10Rank.html. Retrieved on March.
93. ^ [http://www.business-standard.com/india/storypage.php?autono=332669 India
has fewer poor people: World Bank]
94. ^ "One-third of world's poor in India: Survey-India-The Times of India".
Timesofindia.indiatimes.com. http://timesofindia.indiatimes.com/India/One-
third_of_worlds_poor_in_India/articleshow/3409374.cms. Retrieved on 2008-11-
03.
95. ^ "The Hindu : National : World Bank’s new poverty norms find larger number of
poor in India". Thehindu.com.
http://www.thehindu.com/2008/08/28/stories/2008082856061300.htm. Retrieved
on 2008-11-03.
96. ^ "Define poverty anew- Opinion-The Economic Times".
Economictimes.indiatimes.com.
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w/3423435.cms. Retrieved on 2008-11-03.
97. ^ Steve Schifferes (27 August 2008). "BBC NEWS | Business | World poverty
'more widespread'", News.bbc.co.uk. Retrieved on 3 November 2008.
98. ^ [1]
99. ^ Income classes:India's income distribution widens
100. ^ This figure is extremely sensitive to the surveying methodology used.
The Uniform Recall Period (URP) gives 27.5%. The Mixed Recall Period (MRP)
gives a figure of 21.8%
101. ^ Planning commission of India. Poverty estimates for 2004-2005 [2]
102. ^ NCEUS Report
103. ^ "Nearly 80 Percent of India Lives On Half Dollar A Day", Reuters
(August 10, 2007). Retrieved on 15 August 2007.
104. ^ Datt, Ruddar & Sundharam, K.P.M.. "22". Indian Economy.
pp. 367,369,370.
105. ^ "Jawahar gram samriddhi yojana". http://rural.nic.in/jgsyg.htm.
106. ^ a b Transparency International India. "India Corruption Study 2005"
(PDF). Centre for Media Studies.
http://www.cmsindia.org/cms/events/corruption.pdf. Retrieved on 2008-03-14.
107. ^ "2007 Corruption Perceptions Index reinforces link between poverty and
corruption". Transparency International.
http://www.transparency.org/policy_research/surveys_indices/cpi/2007. Retrieved
on 2008-03-15.
108. ^ "CPI Table". Transparency International.
http://www.transparency.org/news_room/in_focus/2006/cpi_2006__1/cpi_table.
109. ^ Datt, Ruddar & Sundharam, K.P.M.. "24". Indian Economy. pp. 403–
405.
110. ^ "BBC News Online | Business | Winners and losers as India booms".
News.bbc.co.uk.
http://news.bbc.co.uk/nolpda/ukfs_news/hi/newsid_6677000/6677645.stm.
111. ^ Datt, Ruddar & Sundharam, K.P.M.. "27". Indian Economy. pp. 471–
472.
112. ^ Bharadwaj, Krishna (1991). "Regional differentiation in India". in
Sathyamurthy, T.V. (ed.). Industry & agriculture in India since independence.
Oxford University Press. pp. 189–199. ISBN 0-19-564394-1.
113. ^ Sachs, D. Jeffrey; Bajpai, Nirupam and Ramiah, Ananthi.
"Understanding Regional Economic Growth in India" (PDF). Working paper 88.
114. ^ Kurian, N.J.. "Regional disparities in india".
http://planningcommission.nic.in/reports/sereport/ser/vision2025/regdsprty.doc.
115. ^ a b c SPECIAL REPORT: Putrid Rivers Of Sludge: Delhi's bureaucrats
bicker over cholera and the role of city drains and state sewers. NewsWeek on
July 7-14, 2008 issue
116. ^ Gleick PH. 1993. Water in Crisis. New York: Oxford University Press.
117. ^ Russell Hopfenberg and David Pimentel HUMAN POPULATION
NUMBERS AS A FUNCTION OF FOOD SUPPLY oilcrash.com Retrieved on-
February 2008
118. ^ National Geographic Society. 1995. Water: A Story of Hope.
Washington (DC): National Geographic Society
119. ^ The Politics of Toilets, Boloji
120. ^ Mumbai Slum: Dharavi, National Geographic, May 2007
121. ^ 'Indoor' air pollution is the biggest killer. The Times of India
122. ^ Christiani DC. 1993. Urban and trans-boundary air pollution: Human
health consequences. Pages 13-30 in Chivian E, McCally M, Hu H, Haines A,
eds. Critical Condition: Human Health and the Environment. Cambridge (MA):
MIT Press.
123. ^ Burns JF. 1996. Denial and taboo blind India to the horror of its AIDS
scourge. New York Times, 22 September: A1.
124. ^ "FDI in India Statistics".
http://dipp.nic.in/fdi_statistics/india_fdi_index.htm. Retrieved on 2008-02-12.
125. ^ Much of India's FDI is routed through Mauritius, because both countries
have an agreement to avoid double taxation. "India to sign free trade agreement
with Mauritius". http://www.bilaterals.org/article.php3?id_article=1521.
126. ^ India's Trade policy review by the wto
127. ^ Srinivasan, T.N.. "Economic Reforms and Global Integration" (PDF).
January 17, 2002.
128. ^ Datt, Ruddar & Sundharam, K.P.M.. "46". Indian Economy.
pp. 767,772–76.
129. ^ INDIA’S FOREIGN TRADE: APRIL-DECEMBER, 2007
130. ^ "India & the World Trade Organization".
http://www.indianembassy.org/policy/WTO/overview.html. Retrieved on 2005-
07-09.
131. ^ India`s external debt rises to US$190.5bn
132. ^ External Commercial Borrowings
133. ^ a b "India 2nd best country for biz investment: Survey - The Financial
Express". Financialexpress.com. http://www.financialexpress.com/news/India-
2nd-best-country-for-biz-investment-Survey/343344/. Retrieved on 2008-11-03.
134. ^ Next Big Spenders: India's Middle Class
135. ^ The Hinduonline
136. ^ Hindustan Times India attracts $ 25 billion FDI in 2007-08
137. ^ Economic Times FDI inflows to exceed USD 35 billion target in 2008-
09
138. ^ [Indian Economic Superpower: Fiction or Future? edited by Jayashankar
M. Swaminathan, World Scientific Publishing, 2008]
[edit] References
Books
• Nehru, Jawaharlal (1946). Discovery of India. Penguin Books. ISBN 0-14-

303103-1.
• Kumar, Dharma (Ed.) (1982). The Cambridge Economic History of India
(Volume 2) c. 1757 - c. 1970. Penguin Books.
• Sankaran, S (1994). Indian Economy: Problems, Policies and Development.
Margham Publications. ISBN.
• Roy, Tirthankar (2000). The Economic History of India. Oxford University Press.
ISBN 0-19-565154-5.
• Bharadwaj, Krishna (1991). "Regional differentiation in India". in Sathyamurthy,
T.V. (ed.). Industry & agriculture in India since independence. Oxford University
Press. pp. 189–199. ISBN 0-19-564394-1.
Papers
• Williamson, John and Zagha, Roberto. "From the Hindu Rate of Growth to the
Hindu Rate of Reform" (PDF). Working Paper No. 144. Center for research on
economic development and policy reform.
• Centre for Media Studies. "India Corruption Study 2005: To Improve
Governance Volume – I: Key Highlights" (PDF). Transparency International
India.
• Kelegama, Saman and Parikh, Kirit. "Political Economy of Growth and Reforms
in South Asia". Second Draft.
• Cameron, John and Ndhlovu, P Tidings. "Cultural Influences on Economic
Thought in India: Resistance to diffusion of neo-classical economics and the
principles of Hinduism" (PDF).
• Balin, Bryan Jonathan. "India’s New Capital Restrictions: What Are They, Why
Were They Created, and Have They Been Effective?". May 2008.
• Panagariya, Arvind. "India in the 1980s and 1990s: A Triumph of Reforms".
• Rodrik, Dani and Subramanian, Arvind. "From “Hindu Growth” To Productivity
Surge: The Mystery Of The Indian Growth Transition" (PDF).
• Bernardi, Luigi and Fraschini, Angela. "Tax System And Tax Reforms In India".
Working paper n. 51.
• Gordon, Jim and Gupta, Poonam. "Understanding India's Services Revolution"
(PDF). November 12, 2003.
• Ghosh, Jayati. "Bank Nationalisation: The Record". Macroscan.
http://www.macroscan.com/cur/jul05/cur210705Bank_Nationalisation.htm.
• Srinivasan, T.N.. "Economic Reforms and Global Integration" (PDF). January 17,
2002.
• Sachs, D. Jeffrey; Bajpai, Nirupam and Ramiah, Ananthi. "Understanding
Regional Economic Growth in India" (PDF). Working paper 88.
Government publications
• "Jawahar gram samriddhi yojana". http://rural.nic.in/jgsyg.htm. Retrieved on

2005-07-09.
• "India & the World Trade Organization".
http://www.indianembassy.org/policy/WTO/overview.html. Retrieved on 2005-
07-09.
• "Economic Survey 2004–2005". http://indiabudget.nic.in/es2004-05/esmain.htm.
• "History of the Planning Commission".
http://planningcommission.nic.in/aboutus/history/about.htm. Retrieved on 2005-
07-22.
• Multiple authors. "Agricultural Statistics at a Glance 2004" (PDF).
• Kurian, N.J.. "Regional disparities in india".
http://planningcommission.nic.in/reports/sereport/ser/vision2025/regdsprty.doc.
News
• "That old Gandhi magic", The Economist (November 27, 1997).

• "Indif_real_GDP_per_capitaa says 21 of 29 states to launch new tax", Daily
Times (March 25, 2005).
• "Economic structure", The Economist (October 6, 2003).
• "Indian manufacturers learn to compete", The Economist (February 12, 2004).
• "India’s next 50 years", The Economist (August 14, 1997).
• "The plot thickens", The Economist (May 31, 2001).
• "The voters' big surprise", The Economist (May 13, 2004).
• "Regional stock exchanges – Bulldozed by the Big Two".
http://www.thehindubusinessline.com/businessline/2001/07/20/stories/042062cr.h
tm. Retrieved on 2005-08-10.
• "Infrastructure the missing link".
http://edition.cnn.com/2004/WORLD/asiapcf/09/03/india.eye.infra/. Retrieved on
2005-08-14.
• "Rural Employment Guarantee Bill passed by voice vote", Yahoo (August 23,
2005).[dead link]
• "Of Oxford, economics, empire, and freedom", The Hindu (October 2, 2005).
• "Indian GDP expected to be 902 billion dollars", People's Daily Online (January
12, 2007).
• "India, now a $1-trillion economy!", Rediff (April 26, 2007).
Articles
• "Economic Development of India" (PDF).

http://upload.wikimedia.org/wikipedia/en/f/f5/Economic_Development_of_India.
pdf. Retrieved on MAy 17.
• "Milton Friedman on the Nehru/Mahalanobis Plan".
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07-16.
• "Forex reserves up by $88mn". http://www.business-
standard.com/bsonline/storypage.php?bKeyFlag=BO&autono=9047. Retrieved on
2005-08-10.
• "CIA - The World Factbook". https://www.cia.gov/library/publications/the-world-
factbook/geos/in.html. Retrieved on 2005-08-02.
• "Infrastructure in India: Requirements and favorable climate for foreign
investment". http://www.asiatradehub.com/india/intro.asp. Retrieved on 2005-08-
14.
• "PPP GDP 2004".
http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,content
MDK:20415471~menuPK:1192714~pagePK:64133150~piPK:64133175~theSite
PK:239419,00.html. Retrieved on 2005-08-14.
• "Total GDP 2004".
http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,content
MDK:20415471~menuPK:1192714~pagePK:64133150~piPK:64133175~theSite
PK:239419,00.html. Retrieved on 2005-08-14.
• "Forbes Global 2000 (Ger-Ind)". http://www.forbes.com/lists/results.jhtml?
passListId=18&passYear=2005&passListType=Company&searchParameter1=un
set&searchParameter2=unset&resultsHowMany=100&resultsSortProperties=
%2Bstringfield4%2C
%2Bnumberfield1&resultsSortCategoryName=country&fromColumnClick=true
&bktDisplayField=stringfield4&bktDisplayFieldLength=3&category1=category
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15.
• "Forbes Global 2000 (Ind-Jap)". http://www.forbes.com/lists/results.jhtml?
passListId=18&passYear=2005&passListType=Company&searchParameter1=un
set&searchParameter2=unset&resultsHowMany=100&resultsSortProperties=
%2Bstringfield4%2C
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15.
• John, Williamson (2006-05-11). "The Rise of the Indian Economy".
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[edit] External links

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Economic development in India

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Main article: Economy of India
Most Indians work in agriculture.
Major improvements in educational standards across India has helped its economic rise.
Shown here is the Indian School of Business at Hyderabad, ranked number 20 in global
MBA rankings by the Financial Times of London in 2008[1]
The economic development in India is has accelerated in recent years. India followed a
socialist-inspired approach for most of its independent history, with pervasive
government control over private sector, elaborate licences, regulations and the
accompanying red tape, commonly referred to as Licence Raj. India's economy was
stagnated from 1947 until the 1990s, growing at just 1¼% annualized rate in the three
decades after Independence.[2] Since the early 1990s, India has slowly opened up its
markets through economic reforms. The overall growth has significantly improved,
although with state-level disparities. Between 1999 and 2008, the annualized growth rates
for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar
(5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).[3]
Two-thirds of the Indian workforce still earn their livelihood directly or indirectly
through agriculture in rural villages. However, non-agricultural jobs and towns are
playing an increasingly important role in India's economy. Service sectors such as
business process services which can operate under significantly lighter burden of
government interference have grown impressively.[2] Today, India is the twelfth largest in
the world, with a GDP of 1.2 trillion United States dollars (2008).[4] In the late 2000s,
India's growth has averaged at above 7%, which will double the average income in a
decade.[2] Analysts say that if India pushed more fundamental market reforms, it could
sustain the rate and even raise it to 10%.[2] India's population of 1.2 billion, the world's
second largest, has an estimated per capita income of US$3,963, measured by PPP, and
US$941, measured in nominal terms, as of 2007.
According to a World Bank report in 2008, 75.6% of the population lives on less than $2
a day (PPP), compared to 73.0% in Sub-Saharan Africa.[5] India has also higher rates of
malnutrition than Sub-Saharan Africa.[6] The World Bank suggests that the most
important priorities are public sector reform, creaking infrastructure, agricultural and
rural development, removal of labor regulations, reforms in lagging states, and
HIV/AIDS.[7]
Contents
[hide]
• 1 Agriculture
• 2 Industrial output
• 3 Services
• 4 Banking and finance
• 5 Companies
• 6 India's resource consumption
o 6.1 Oil
o 6.2 Natural gas
• 7 Issues
• 8 Future predictions
• 9 References
• 10 External links
[edit] Agriculture
Main article: Agriculture in India
Composition of India's total production (million tonnes) of foodgrains and commercial

crops, in 2003–04.
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 18.6% of the GDP in 2005, employed 60% of the total
workforce[8] and despite a steady decline of its share in the GDP, is still the largest
economic sector and plays a significant role in the overall socio-economic development
of India. Yields per unit area of all crops have grown since 1950, due to the special
emphasis placed on agriculture in the five-year plans and steady improvements in
irrigation, technology, application of modern agricultural practices and provision of
agricultural credit and subsidies since the green revolution.[citation needed]
India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger,
turmeric and black pepper.[9] It also has the world's largest cattle population (193 million).
[10]
It is the second largest producer of wheat, rice, sugar, groundnut and inland fish.[11] It
is the third largest producer of tobacco.[11] India accounts for 10% of the world fruit
production with first rank in the production of banana and sapota.[11]
The required level of investment for the development of marketing, storage and cold
storage infrastructure is estimated to be huge. The government has implemented various
schemes to raise investment in marketing infrastructure. Among these schemes are
Construction of Rural Go downs, Market Research and Information Network, and
Development / Strengthening of Agricultural Marketing Infrastructure, Grading and
Standardization.[12]
Main problems in the agricultural sector, as listed by the World Bank, are:[13]
• India's large agricultural subsidies are hampering productivity-enhancing

investment.
• Overregulation of agriculture has increased costs, price risks and uncertainty.
• Government interventions in labor, land, and credit markets.
• Inadequate infrastructure and services.
Research and development
The Indian Agricultural Research Institute (IARI), established in 1905, was responsible
for the research leading to the "Indian Green Revolution" of the 1970s. The Indian
Council of Agricultural Research (ICAR) is the apex body in agriculture and related
allied fields, including research and education.[14] The Union Minister of Agriculture is
the President of the ICAR. The Indian Agricultural Statistics Research Institute develops
new techniques for the design of agricultural experiments, analyses data in agriculture,
and specializes in statistical techniques for animal and plant breeding. Prof. M.S.
Swaminathan is known as "Father of the Green Revolution" and heads the MS
Swaminathan Research Foundation.[15] He is known for his advocacy of environmentally
sustainable agriculture and sustainable food security.
[edit] Industrial output

Indiais fourteenth in the world in factory output. Manufacturing sector in addition to
mining, quarrying, electricity and gas together account for 27.6% of the GDP and employ
17% of the total workforce. Economic reforms introduced after 1991 brought foreign
competition, led to privatisation of certain public sector industries, opened up sectors
hitherto reserved for the public sector and led to an expansion in the production of fast-
moving consumer goods.[16]
Post-liberalisation, the Indian private sector, which was usually run by oligopolies of old
family firms and required political connections to prosper was faced with foreign
competition, including the threat of cheaper Chinese imports. It has since handled the
change by squeezing costs, revamping management, focusing on designing new products
and relying on low labour costs and technology.[17]
[edit] Services
India is fifteenth in services output. Service industry employs 23% of the work force and
is growing quickly, with a growth rate of 7.5% in 1991–2000, up from 4.5% in 1951–80.
It has the largest share in the GDP, accounting for 53.8% in 2005 up from 15% in 1950.[8]
Business services (information technology, information technology enabled services,
business process outsourcing) are among the fastest growing sectors contributing to one
third of the total output of services in 2000. The growth in the IT sector is attributed to
increased specialisation and availability of a large pool of low cost. Highly skilled,
educated and fluent English-speaking workers on the supply side and on the demand side,
has increased demand from foreign consumers interested in India's service exports or
those looking to outsource their operations. India's IT industry, despite contributing
significantly to its balance of payments, accounts for only about 1% of the total GDP or
1/50th of the total services.[18]
The ITES-BPO sector has become a big employment generator especially amongst young
college graduates. The number of professionals employed by IT and ITES sectors is
estimated at around 1.3 million as on March 2006. Also, Indian IT-ITES is estimated to
have helped create an additional 3 million job opportunities through indirect and induced
employment.[19]
[edit] Banking and finance

Main articles: Banking in India and Insurance in India
The RBI headquarters in Mumbai

Since liberalisation, the government has approved significant banking reforms. While
some of these relate to nationalised banks (like encouraging mergers, reducing
government interference and increasing profitability and competitiveness), other reforms
have opened up the banking and insurance sectors to private and foreign players.[8][20]
Currently, in 2007, banking in India is generally mature in terms of supply, product range
and reach-even, though reach in rural India still remains a challenge for the private sector
and foreign banks.[21] In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheets relative to other banks in
comparable economies of Asia.[21] The Reserve Bank of India is an autonomous body,
with minimal pressure from the government. The stated policy of the Bank on the Indian
Rupee is to manage volatility but without any fixed exchange rate.[22]
Currently, India has 88 scheduled commercial banks (SCBs) — 28 public sector banks
(that is with the Government of India holding a stake), 29 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges) and
31 foreign banks.[23] They have a combined network of over 53,000 branches and 17,000
ATMs. The public sector banks hold over 75% of total assets of the banking industry,
with the private and foreign banks holding 18.2% and 6.5% respectively.[23]
[edit] Companies
34 Indian companies have been listed in the Forbes Global 2000 ranking for 2007.[24] The
10 leading companies are:
Market
Revenue Profits Assets
World Value
Company Logo Industry (billion (billion (billion
Rank (billion
$) $) $)
$)
Oil and Natural Oil & Gas
239 15.64 3.46 26.98 38.19
Gas Corporation Operations
Reliance Oil & Gas
258 18.05 2.11 21.75 42.62
Industries Operations
State Bank of
326 Banking 13.66 1.24 156.37 12.35
India
Indian Oil Oil & Gas
399 34.22 1.11 22.68 10.92
Corporation Operations
494 NTPC Utilities 6.06 1.31 17.25 26.06
536 ICICI Bank Banking 5.79 0.54 62.13 16.72
Steel Authority
800 Materials 6.30 0.91 7.06 10.16
of India Limited
Tata Consultancy Software &
1047 2.98 0.67 1.93 26.27
Svcs Services
1128 Tata Steel Materials 4.54 0.84 4.61 5.80
1130 Infosys Software & 2.14 0.55 2.09 26.19
Technologies Services
[edit] India's resource consumption

[edit] Oil
India had about 5.6 billion barrels (890,000,000 m3) of proven oil reserves as of January
2007, which is the second-largest amount in the Asia-Pacific region behind China.[25]
Most of India's crude oil reserves are located in the western coast (Mumbai High) and in
the northeastern parts of the country, although considerable undeveloped reserves are also
located in the offshore Bay of Bengal and in the state of Rajasthan.
The combination of rising oil consumption and fairly unwavering production levels
leaves India highly dependent on imports to meet the consumption needs. In 2006, India
produced an average of about 846,000 barrels per day (bbl/d) of total oil liquids, of which
77%, or 648,000 bbl/d (103,000 m³/d), was crude oil.[25] During 2006, India consumed an
estimated 2.63 Mbbl/d (418,000 m³/d) of oil.[26] The Energy Information Administration
(EIA) estimates that India registered oil demand growth of 100,000 bbl/d (16,000 m³/d)
during 2006.[27] EIA forecasts suggest that country is likely to experience similar gains
during 2007 and 2008.
Sector organisation
India’s oil sector is dominated by state-owned enterprises, although the government has
taken steps in past recent years to deregulate the hydrocarbons industry and support
greater foreign involvement. India’s state-owned Oil and Natural Gas Corporation
(ONGC) is the largest oil company, and also the country’s largest company overall by
market capitalization. ONGC is the leading player in India’s upstream sector, accounting
for roughly 75% of the country’s oil output during 2006, as per Indian government
estimates.[25]
As a net importer of oil, the Government of India has introduced policies aimed at
growing domestic oil production and oil exploration activities. As part of the effort, the
Ministry of Petroleum and Natural Gas crafted the New Exploration License Policy
(NELP) in 2000, which permits foreign companies to hold 100% equity possession in oil
and natural gas projects.[25] However, to date, only a handful of oil fields are controlled by
foreign firms. India’s downstream sector is also dominated by state-owned entities,
though private companies have enlarged their market share in past recent years.[25]
[edit] Natural gas
As per the Oil and Gas Journal, India had 38 trillion cubic feet (Tcf) of confirmed natural
gas reserves as of January 2007. A huge mass of India’s natural gas production comes
from the western offshore regions, particularly the Mumbai High complex. The onshore
fields in Assam, Andhra Pradesh, and Gujarat states are also major producers of natural
gas. As per EIA data, India produced 996 billion cubic feet (Bcf) of natural gas in 2004.
[28]
India imports small amounts of natural gas. In 2004, India consumed about
1,089×109 cu ft (3.08×1010 m3) of natural gas, the first year in which the country showed
net natural gas imports. During 2004, India imported 93×109 cu ft (2.6×109 m3) of
liquefied natural gas (LNG) from Qatar.[28]
Sector Organization
As in the oil sector, India’s state-owned companies account for the bulk of natural gas
production. ONGC and Oil India Ltd. (OIL) are the leading companies with respect to
production volume, while some foreign companies take part in upstream developments in
joint-ventures and production sharing contracts (PSCs). Reliance Industries, a privately-
owned Indian company, will also have a bigger role in the natural gas sector as a result of
a large natural gas find in 2002 in the Krishna Godavari basin.[28]
The Gas Authority of India Ltd. (GAIL) holds an effective control on natural gas
transmission and allocation activities. In December 2006, the Minister of Petroleum and
Natural Gas issued a new policy that allows foreign investors, private domestic
companies, and national oil companies to hold up to 100% equity stakes in pipeline
projects. While GAIL’s domination in natural gas transmission and allocation is not
ensured by statute, it will continue to be the leading player in the sector because of its
existing natural gas infrastructure.[28]
[edit] Issues
Regulation, public sector, corruption
India ranked 120th on the Ease of Doing Business Index in 2008, compared with 86th for
Pakistan, 83rd for People's Republic of China, 108th for Nigeria, 122nd for Brazil,and
123rd for Indonesia.
Extent of corruption in Indian states, as measured in a 2005 study by Transparency

International India. (Darker regions are more corrupt)[29]
Corruption in many forms has been one of the pervasive problems affecting India. For
decades, the red tape, bureaucracy and the Licence Raj that had strangled private
enterprise.[30] The economic reforms of 1991 cut some of the worst regulations that had
been utilized in corruption.
Corruption is still large. A 2005 study by Transparency International (TI) India found that
more than half of those surveyed had firsthand experience of paying a bribe or peddling
influence to get a job done in a public office.[29] The chief economic consequences of
corruption are the loss to the exchequer, an unhealthy climate for investment and an
increase in the cost of government-subsidised services. The TI India study estimates the
monetary value of petty corruption in 11 basic services provided by the government, like
education, healthcare, judiciary, police, etc., to be around Rs.21,068 crores.[29] India still
ranks in the bottom quartile of developing nations in terms of the ease of doing business,
and compared with China, the average time taken to secure the clearances for a startup or
to invoke bankruptcy is much greater.
The Right to Information Act (2005) and equivalent acts in the states, that require
government officials to furnish information requested by citizens or face punitive action,
computerisation of services and various central and state government acts that established
vigilance commissions have considerably reduced corruption or at least have opened up
avenues to redress grievances.[29][31] The 2006 report by Transparency International puts
India at 70th place and states that significant improvements were made by India in
reducing corruption.[32] [33]
Employment
India's labor force is also growing by 2.5% every year, but employment is growing only
at 2.3% a year.[34] Official unemployment exceeds 9%.
Regulation and other obstacles have discouraged the emergence of formal businesses and
jobs. Almost 30% of workers are casual workers who work only when they are able to
get jobs and remain unpaid for the rest of the time.[34] Only 10% of the workforce is in
regular employment.[34]
India's labor regulations are heavy even by developing country standards and analysts
have urged the government to abolish them.[35][36]
Most children never go beyond primary level schooling. Children under 14 constitute
3.6% of the total labor force in the country. Of these children, 9 out of every 10 work in
their own rural family settings. Around 85% of them are engaged in traditional
agricultural activities. Less than 9% work in manufacturing, services and repairs.[37] Child
labor is a complex problem that is basically rooted in poverty. The Indian government is
implementing the world's largest child labor elimination program, with primary education
targeted for ~250 million. Numerous non-governmental and voluntary organizations are
also involved. Special investigation cells have been set up in states to enforce existing
laws banning employment of children (under 14) in hazardous industries. The allocation
of the Government of India for the eradication of child labor was $10 million in 1995-96
and $16 million in 1996-97. The allocation for 2007 is $21 million.[37]
Environmental Degradation
About 1.2 billion people in developing nations lack clean, safe water because most
household and industrial wastes are dumped directly into rivers and lakes without
treatment. This contributes to the rapid increase in waterborne diseases in humans.[38] Out
of India's 3119 towns and cities, just 209 have partial treatment facilities, and only 8 have
full wastewater treatment facilities (WHO 1992).[39] 114 cities dump untreated sewage
and partially cremated bodies directly into the Ganges River.[40] Downstream, the
untreated water is used for drinking, bathing, and washing. This situation is typical of
many rivers in India as well as other developing countries. Globally, but especially in
developing nations like India where people cook with fuelwood and coal over open fires,
about 4 billion humans suffer continuous exposure to smoke. In India, particulate
concentrations in houses are reported to range from 8,300 to 15,000 μg/m3, greatly
exceeding the 75 μg/m3 maximum standard for indoor particulate matter in the United
States.[41] Changes in ecosystem biological diversity, evolution of parasites, and invasion
by exotic species all frequently result in disease outbreaks such as cholera which emerged
in 1992 in India. The frequency of AIDS/HIV is increasing. In 1996, about 46,000
Indians out of 2.8 million (1.6 % of the population) tested were found to be infected with
HIV.[42]
[edit] Future predictions

File:IndianEconomicForecast.SVG
It has been estimated by the economists that the domestic political scene will be
dominated by the upcoming general election, which is due to be held by May 2009 but
might be held sooner. The increasing importance of regional parties will ensure that the
next government will again be a coalition government, likely to be led by either the
current ruling party (Indian National Congress) or by the main opposition (Bharatiya
Janata Party). A governing alliance of regional and left-wing parties could also be a
possibility.[43]
The Reserve Bank of India (RBI, the central bank) is most likely to maintain a bias
towards monetary tightening during the remainder of 2007 in order to keep inflation
under control. Monetary policy will move to a more neutral orientation in 2008 to 2012,
provided that the wholesale price inflation remains within the RBI's medium-term target
range of 4 to 4.5%.[43]
The government will remain committed to increased spending on public facilities such as
health, education and rural welfare projects in a bid to improve living standards outside
the country's fast-growing urban localities. Also, the strong economic growth will
increase tax revenue, allowing the government to continue to reduce the budget deficit.
The real GDP growth (on an expenditure basis) is forecast to slow from 9.4% in fiscal
year 2006/2007 (from April to March) to an annual average of 7.7% in 2007/2008 to
2012/2013. Information technology (IT) and IT-enabled services (ITES) output will grow
rapidly in the upcoming period, owing to India's cost advantages in these sectors.[43]
The strength of the Indian rupee against the US dollar will mitigate inflationary pressures
by limiting import-led price rises. However, strong domestic demand, together with
supply-side bottlenecks, will keep consumer price inflation at an average of nearly 5.1%
a year in 2008 to 2012.[43] For the years 2008-2010, India, is the second largest
destination for Foreign direct investment, after China.

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Currency 1 Indian Rupee (INR) (₨) = 100 Paise

Fiscal year April 1–March 31

Trade WTO, SAFTA

GDP growth 9.6% (2006/07)

GDP per capita $2,659 (nominal) [3]

GDP by sector agriculture: 19.9%, industry: 19.3%, services: 60.7%

Inflation (CPI) 12.01% (26 July 2008)[1]

Population 5.2% (2008 est.) [4]

Labour force 509.3 million (2006 est.)

Labour force agriculture: 60%, industry: 12%, services: 28%

Unemployment 7.8% (2006 est.)

Main industries textiles, chemicals, food processing, steel,

Exports $163 billion[2] (Financial Year 2007-2008)

Export goods textile goods, gems and jewelry, engineering goods,

Main export US 18%, the People's Republic of China 8.9%, UAE

Imports $187.9 billion f.o.b. (2006 est.)

Import goods crude oil, machinery, gems, fertilizer, chemicals

Main import the People's Republic of China 7.2%, US 6.4%,

Public debt $132.1 billion (2006 est.)

Revenues $109.4 billion (2006 est.)

Expenses $143.8 billion; including capital expenditures of $15

Economic aid donor: $17.3 million (2006)

Main data source: CIA World Factbook

This box: view • talk • edit

Assessment of India's pre-colonial economy is mostly qualitative, owing to the lack of

[edit] Independence to 1991

[edit] After 1991

[edit] Government intervention

Main article: Five-Year Plans of India

[edit] Public expenditure

India's public expenditure is classified as development expenditure, comprising central

India's non-development revenue expenditure has increased nearly fivefold in 2003–04

[edit] Public receipts

[edit] General budget

[edit] Currency system

[edit] Natural resources

A map of the network of National Highways in India

See also: Transport in India

Main article: Agriculture in India

Composition of India's total production (million tonnes) of foodgrains and commercial

• India's large agricultural subsidies are hampering productivity-enhancing

In water and irrigation management, the World Bank identifies:[73]

• Inefficient, unsustainable and inequitable allocation of water.

The low productivity in India is a result of the following factors:

• Illiteracy, general socio-economic backwardness, slow progress in implementing

Economic reforms brought foreign competition, led to privatisation of certain public

See also: Information technology in India

Infosys headquarters in Bangalore, one of the largest software companies in India.

Business services (information technology, information technology enabled services,

Dabbawala delivery services.

[edit] Banking and finance

Main article: Banking in India

738 Tata Steel Materials 5.83 0.97 11.48 14.63

[edit] Socio-economic characteristics

Percentage of population living under the poverty line

Main article: Corruption in India

[edit] Occupations and unemployment

Unemployment in India is characterized by chronic underemployment or disguised

[edit] Regional imbalance

Main article: List of regions of India