Indian Economy Growth

The economy of India is the 12th largest in the world in terms of the rates of market exchange while in terms of the purchasing power parity (PPP), it is the 4th largest in the world. Since its independence in the year 1947, the economy of India has gradually grown and today it is one of the most developing economies in the global scenario.

The early years of Indian economy

After independence, for a period of around one and a half decades, India followed the social democratic economic policies. From the year 1991, to keep pace with the changing trends in the market, a new liberalization policy was formulated. The chief architect of this policy was Dr Manmohan Singh, the then Finance Minister of India. Due to the economic liberalization policies in the 1990s and the 2000s, the country steadily climbed up the economic ladder and by the year 2008, it became the second fastest growing economy in the globe.

The socio economic development

According to economists and researchers, there has been a direct link between the economic growth of India and social development. In fact the favorable socio economic scenario of the country has contributed a lot towards its development. Due to the improvement of the civic amenities such as education, health care and lots more, the standard of living has also risen which has put a significant positive impact on the Indian economy.

The growth of various sectors

The share of the service industry accounts to around 54% of the annual Gross Domestic Product (GDP) of the country. Next are the industrial and agricultural sectors which contribute around 29% and 17% respectively. Some of the major agricultural export items consist of wheat, rice, tea, cotton, jute, sugarcane and so on. Some of the other allied exports consist of steel, chemical, textiles, cement, machinery, IT services and so on. Due to the development of science and technology, the number and quality of exports have also grown to a great extent which has led to favorable Indian economic growth.

Since the year 2007, the economy of India has developed by more than 9%. The growth rate of the decade has been around 7%. This growth rate has improved the per capita income and the standard of living and poverty has reduced by around 10%.

To complement this growing trend, the Indian service sector has also performed well. Since the year 2007, the growth rate in this sector has been around 11.18% on an average with around 53% contribution to the GDP. During the same time, the industrial sector grew by around 10.63 % and contributed around 29% to the GDP. The manufacturing sector experienced a growth of around 12% which was a significant leap from the 8.98% in the year 2005. In the communication and storage sector, the growth rate was around 16.64%. The 10 leading Indian companies listed by Forbes Global 2000 in the year 2009 are:

  • Reliance Industries Limited (RIL)
  • State Bank of India (SBI)
  • Oil and Natural Gas Corporation (ONGC)
  • Steel Authority of India (SAIL)
  • Reliance Communications
  • Larsen & Toubro Limited (L&T)
  • Bharat Petroleum Corporation Limited (BPCL)
  • Bharat Heavy Electrical Limited (BHEL)
  • Housing Development Finance Corporation Ltd. (HDFC)
  • Tata Consultancy Services (TCS)

Effect of the economic downturn

Like all other economies of the world, the Indian economic growth has also been affected by the global meltdown. However, compared to other countries, the effect of the recession was not huge here. This was partly due to the fact that the economy in India is still a balance between open market and social economic policies.

To cope with the economic meltdown and also to make the economy grow, the government has decided to take certain steps. Around $559 billion has been ear-marked to develop investment in infrastructure. Similarly, the rural and the service sectors will also be developed significantly.

The favorable investment atmosphere and the market trends have paved a good path for Indian economy growth.