Indian Economy Growth

Indian Economy Growth: The Growth rate of the Indian Economy was at it's fastest pace in the last 18 years during the financial year ended March 31, that was headed by a brave performance of its manufacturing and service sectors. The history of the Indian Economy shows that before the last decade India was probably on the short list of the countries which had the worst economic systems. At the time of independence the economy was predominantly agrarian. Although after that the Growth of the Indian Economy covering various other sectors made good progress. Beginning in the late 1970s, successive Indian governments sought to reduce state control of the economy. The rate of Growth of Indian Economy improved in the 1980s. From FY 1980 to FY 1989, the economy grew at an annual rate of 5.5 percent, or 3.3 percent on a per capita basis. Industry grew at an annual rate of 6.6 percent and agriculture at a rate of 3.6 percent. A high rate of investment was a major factor in the improved Economic growth rate of India. Investment went from about 19 percent of GDP in the early 1970s to nearly 25 percent in the early 1980s. India, however, required a higher rate of investment to attain comparable economic growth than did most other low-income developing countries, indicating a lower rate of return on investments.

Private savings financed most of India's investment, but by the mid-1980s further growth in private savings was difficult because they were already at quite a high level. As a result, during the late 1980s India relied increasingly on borrowing from foreign sources. This led to a balance of payments crisis in 1990, so in order to receive new loans, the government had to agree to further measures of economic liberalization. This commitment to economic reform was reaffirmed by the government that came into power in June 1991.

In FY 1991, the contribution to GDP of industry, including manufacturing, construction, and utilities, was 27.4 percent; services, including trade, transportation, communications, real estate and finance, and public- and private-sector services, contributed 39.8 percent.

Despite the fluctuating rate of Growth of the Indian Economy, it was transformed between 1947 and the early 1990s.The number of kilowatt-hours of electricity generated, for example, increased by more than fifty fold. By the early 1990s, economic changes led to the growth in the number of Indians with significant economic resources. About 10 million Indians are considered upper class, and roughly 300 million are part of the rapidly increasing middle class. Also in the early 1990s, domestic and foreign businesses hoped to take advantage of India's economic liberalization to increase the range of consumer products offered to this market.

Today the Indian Economy has a much higher capacity to absorb than in the early 1990s.
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