Economy of India

The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy with notable public sector in strategic sectors.[48] It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). According to the International Monetary Fund (IMF), on a per capita income basis, India ranked 139th by GDP (nominal) and 127th by GDP (PPP).[49] From independence in 1947 until 1991, successive governments followed Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat driven enterprises and economic regulation. This is characterised as dirigism, in the form of the Licence Raj.[50][51] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.[52][53] Since the start of the 21st century, annual average GDP growth has been 6% to 7%.[48] The economy of the Indian subcontinent was the largest in the world for most of recorded history up until the onset of colonialism in early 19th century.[54][55][56] India accounts for 7.2% of the global economy in 2022 in PPP terms, and around 3.4% in nominal terms in 2022.[57][58]

Quick facts: Currency, Fiscal year, Trade organisations, C... ▼

Economy of India

Mumbai, the financial centre of India[1][2]
Currency	Indian rupee (INR, ₹)
Fiscal year	1 April – 31 March
Trade organisations	WTO, WCO, SAFTA, BIMSTEC, WFTU, BRICS, G-20, BIS, AIIB, ADB and others
Country group	Developing/Emerging[3] Lower-middle income economy[4] Newly industrialized country
Statistics
Population	1,417,173,173 (2nd; 2022 est.)[5][6]
GDP	$3.732 trillion (nominal; 2023 est.)[7] $13.12 trillion (PPP; 2023 est.)[7]
GDP rank	5th (nominal; 2023) 3rd (PPP; 2023)
GDP growth	7.2% (FY2022-23)[7] 6.3% (FY2023-24)[8] 7.6% (Q2 2023-24)[9]
GDP per capita	$2,612 (nominal; 2023 est.)[7] $9,183 (PPP; 2023 est.)[7]
GDP per capita rank	139th (nominal; 2023)[lower-alpha 1] 127th (PPP; 2023)[lower-alpha 1]
GDP by sector	Agriculture: 18.8% Industry: 28.2% Services: 53% (FY 2021–22)[10]
GDP by component	Private final consumption: 57.2% Government final consumption: 10.3% Gross fixed capital formation: 33.9% Exports of goods and services: 22.7% Imports of goods and services: -29.7% Other source: 5.7% (FY 2022–23)[11]
Inflation (CPI)	4.87% (October 2023)[12]
Base borrowing rate	4.50% (18 August 2023)[13]
Population below poverty line	$2.15/day (2017 PPP) (% population): 11.90% (2021) [14] 14.96% in multidimensional poverty [15] (2023)
Gini coefficient	35.7 medium (2019)[16] 33.9 medium (2013)[17]
Human Development Index	0.633 medium (2021)[18] (132nd) 0.475 low IHDI (108th) (2021)[19]
Corruption Perceptions Index	40 (2022)[20] (85th)
Labour force	523,839,158 (2022)[21] 49.8% employment rate (2022)[22]
Labour force by occupation	Agriculture: 42.60% [23] Industry: 25.12% [24] Services: 32.28% [25] (2019)
Unemployment	10.09% (October 2023)[26] 20.2% youth unemployment (15 to 24 year-olds; 2022)[27]
Gross savings	29.345% of GDP (2022)[28]
Yield curve	10-year bond 7.190% (Jan 2023)[29][30]
Purchasing Managers' Index	55.3 Manufacturing (Feb 2023)[31] 59.4 Services (Feb 2023)[32]
Main industries	Textiles chemicals food processing steel transportation equipment cement mining petroleum machinery software pharmaceuticals[33]
External
Exports	$770.18 billion (FY2022-23)[34]
Export goods	Manufacturers 70.7% Fuels and mining products 14.7% Agricultural products 14.1% Others 0.5%[35] (2022)
Main export partners	United States 18.1%  European Union 14.9%  United Arab Emirates 6.4%  China 5.8%  Bangladesh 3.6% Other 51.1%[35] (FY 2021–22)
Imports	$892.18 billion (FY2022-23)[34]
Import goods	Agricultural products 7% Fuels and mining products 33.2% Manufacturers 52.1% Other 7.7 %[35] (2022)
Main import partners	China 14.07%  United Arab Emirates 7.43%  United States 7.21%  Russia 6.32%  Saudi Arabia 5.97% Other 59%[36] (FY 2022–23)
FDI stock	$514 Billion (2021–22) [37][38]
Current account	–$120.569 billion (2022)[28][39] –3.476% of GDP (2022)[28]
Gross external debt	$624.7 billion (March 2023)[40] ( 18.9% of GDP)
Net international investment position	–$379.7 billion (June 2023)[41]
Public finances
Government debt	₹246.531 trillion (US$3.1 trillion)[28] 81.9% of GDP (2023)[28]
Budget balance	6.4% of GDP (2022–23)[42]
Revenues	₹27.163 trillion (US$340 billion) (2023–24) [43]
Expenses	₹45.031 trillion (US$560 billion) (2023–24) [43]
Economic aid	Donor: $4.234 billion (2021) ($30.59 billions Line of Credit in total)[44]
Credit rating	Standard & Poor's:[45] BBB- Outlook: Positive Moody's:[45] Baa3 Outlook: Stable Fitch:[45] BBB− Outlook: Stable DBRS:[46] BBB(low) Outlook: Positive
Foreign reserves	$595.40 billion[lower-alpha 2][47] (4th) (as of 17 November 2023)
All values, unless otherwise stated, are in US dollars.

India still has informal domestic economies; COVID-19 reversed both economic growth and poverty reduction; credit access weaknesses contributed to lower private consumption and inflation; and new social and infrastructure equity efforts.[59] Economic growth slowed down in 2017 due to the shocks of "demonetisation" in 2016 and the introduction of the Goods and Services Tax in 2017.[60] Nearly 70% of India's GDP is driven by domestic consumption.[61] The country remains the world's sixth-largest consumer market.[62] Apart from private consumption, India's GDP is also fueled by government spending, investments, and exports.[63] In 2022, India was the world's 6th-largest importer and the 9th-largest exporter.[64] India has been a member of the World Trade Organization since 1 January 1995.[65] It ranks 63rd on the Ease of doing business index and 40th on the Global Competitiveness Index.[66] Due to extreme rupee/dollar rate fluctuations India's nominal GDP fluctuates significantly.[67] With 476 million workers, the Indian labour force is the world's second-largest.[21] India has one of the world's highest number of billionaires and extreme income inequality.[68][69] The number of income tax returns filed has been increasing year on year reaching a record 6,77,00,000 income tax returns for the 2023-24 financial year filed by 31st July 2023; this was a 16.1% increase on the previous year when 5,83,00,000 tax returns were filed by 31 July 2022.[70] Income-Tax Department said that it was a "fair indication of widening of [the] tax base" that 53,67,000 of the tax returns were by people who had never filed a tax return before.[70]

During the 2008 global financial crisis, the economy faced a mild slowdown. India endorsed Keynesian policy and initiated stimulus measures (both fiscal and monetary) to boost growth and generate demand. In subsequent years, economic growth revived.[71] According to the World Bank, to achieve sustainable economic development, India must focus on public sector reform, infrastructure, agricultural and rural development, removal of land and labour regulations, financial inclusion, spur private investment and exports, education, and public health.[72] The period between 2004 and 2014 is referred to as India’s lost decade as India fell behind other BRIC economies.[73][74]

In 2022, India's ten largest trading partners were the United States, China, United Arab Emirates (UAE), Saudi Arabia, Russia, Germany, Hong Kong, Indonesia, South Korea, and Malaysia.[75] In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the service sector, the computer industry, and the telecom industry.[76] India has free trade agreements with several nations and blocs, including ASEAN, SAFTA, Mercosur, South Korea, Japan, Australia, UAE, and several others which are in effect or under negotiating stage.[77][78]

The service sector makes up more than 50% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force.[79] The Bombay Stock Exchange and National Stock Exchange are some of the world's largest stock exchanges by market capitalisation.[80] India is the world's sixth-largest manufacturer, representing 2.6% of global manufacturing output.[81] Nearly 65% of India's population is rural,[82] and contributes about 50% of India's GDP.[83] It has the world's fifth-largest foreign-exchange reserves worth $561 billion.[84] India has a high public debt with 83% of GDP, while its fiscal deficit stood at 6.4% of GDP.[85] India faces high unemployment, rising income inequality, and a drop in aggregate demand.[86][87] India's gross domestic savings rate stood at 29.3% of GDP in 2022.[88] In recent years, independent economists and financial institutions have accused the government of manipulating various economic data, especially GDP growth.[89][90] India's overall social spending as a share of GDP in 2021–22 will be 8.6%, which is much lower than the average for OECD nations.[91][92]