Indian Economy

The economy of India is the ninth-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP).[1] The country is one of the G-20 major economies and a member of BRICS. On a per-capita-income basis, India ranked 141st by nominal GDP and 130th by GDP (PPP) in 2012, according to the IMF.[12] India is the 19th-largest exporter and the 10th-largest importer in the world. Economic growth rate slowed to around 5.0% for the 2012–13 fiscal year compared with 6.2% in the previous fiscal.[13] It is to be noted that India's GDP grew by an astounding 9.3% in 2010–11. Thus, the growth rate has nearly halved in just three years. GDP growth went up marginally to 4.8% during the quarter through March 2013, from about 4.7% in the previous quarter. The government has forecasted a growth of 6.1%-6.7% for the year 2013-14, whilst the RBI expects the same to be at 5.7%.
The independence-era Indian economy (from 1947 to 1991) was based on a mixed economy combining features of capitalism and socialism, resulting in an inward-looking, interventionist policies and import-substituting economy that failed to take advantage of the post-war expansion of trade.[14] This model contributed to widespread inefficiencies and corruption, and the failings of this system were due largely to its poor implementation.[14]
In 1991, India adopted liberal and free-market principles and liberalized its economy to international trade under the guidance of Former Finance minister Manmohan Singh under the Prime Ministry of P.V. Narasimha Rao, prime minister from 1991 to 1996, who had eliminated License Raj, a pre- and post-British era mechanism of strict government controls on setting up new industry. Following these major economic reforms, and a strong focus on developing national infrastructure such as the Golden Quadrilateral project by Atal Bihari vajpayee, prime minister, the country's economic growth progressed at a rapid pace, with relatively large increases in per-capita incomes.[15]
Contents [hide]
1 Overview
2 History
2.1 Pre-colonial period (up to 1773)
2.2 Colonial period (1773–1947)
2.3 Pre-liberalisation period (1947–1991)
2.4 Post-liberalisation period (since 1991)
3 Sectors
3.1 Industry and services
3.1.1 Textile
3.1.2 Services
3.1.3 Retail
3.1.4 Tourism
3.1.5 Mining
3.2 Agriculture
3.3 Banking and finance
3.4 Energy and power
3.5 Infrastructure
4 External trade and investment
4.1 Global trade relations
4.2 Balance of payments
4.3 Foreign direct investment
5 Currency
6 Income and consumption
7 Employment
8 Economic trends and issues
8.1 Agriculture
8.2 Corruption
8.3 Education
8.4 Economic disparities
9 See also
10 Notes
11 References
12 Further reading
13 External links
Overview[edit]

The combination of protectionist, import-substitution, and Fabian social democractic-inspired policies governed India for sometime after the end of British occupation. The economy was then characterised by extensive regulation, protectionism, public ownership of large monopolies, pervasive corruption and slow growth.[16][17] Since 1991, continuing economic liberalisation has moved the country towards a market-based economy.[16][17] By 2008, India had established itself as one of the world's fastest growing economies. Growth significantly slowed to 6.8% in 2008–09, but subsequently recovered to 7.4% in 2009–10, while the fiscal deficit rose from 5.9% to a high 6.5% during the same period.[18] India's current account deficit surged to 4.1% of GDP during Q2 FY11 against 3.2% the previous quarter. The unemployment rate for 2010–11, according to the state Labour Bureau, was 9.8% nationwide.[2] As of 2011, India's public debt stood at 68.05% of GDP which is highest among the emerging economies.[19] However, inflation remains stubbornly high with 7.55% in August 2012, the highest amotrade (counting exports and imports) stands at $606.7 billion[20] and is currently the 9th largest in the world. During 2011–12, India's foreign trade grew by an impressive 30.6% to reach $792.3 billion (Exports-38.33% & Imports-61.67%).
History[edit]

Main articles: Economic history of India and Timeline of the economy of India
Pre-colonial period (up to 1773)[edit]
The citizens of the Indus Valley civilisation, a permanent 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.[21]

The spice trade between India and Europe was the main catalyst for the Age of Discovery.[22]
Maritime trade was carried out extensively between South India and southeast and West Asia from early times until around the fourteenth century AD. Both the Malabar and Coromandel Coasts were the sites of important trading centres from as early as the first century BC, used for import and export as well as transit points between the Mediterranean region and southeast Asia.[23] Over time, traders organised themselves into associations which received state patronage. Raychaudhuri and Habib claim this state patronage for overseas trade came to an end by the thirteenth century AD, when it was largely taken over by the local Parsi, Jewish and Muslim communities, initially on the Malabar and subsequently on the Coromandel coast.[24]

Atashgah is a temple built by Indian traders before 1745. The temple is west of Caspian Sea, between West Asia and Eastern Europe. The inscription shown is in Sanskrit (above) and Persian.
Other scholars suggest trading from India to West Asia and Eastern Europe was active between 14th and 18th century.[25][26][27] During this period, Indian traders had settled in Surakhani, a suburb of greater Baku, Azerbaijan. These traders had built a Hindu temple, now preserved by the government of Azerbaijan. French Jesuit Villotte, who lived in Azerbaijan in late 1600s, wrote this Indian temple was revered by Hindus;[28] the temple has numerous carvings in Sanskrit or Punjabi, dated to be between 1500 and 1745 AD. The Atashgah temple built by the Baku-resident traders from India suggests commerce was active and prosperous for Indians by the 17th century.[29][30][31][32]
Further north, the Saurashtra and Bengal coasts played an important role in maritime trade, and the Gangetic plains and the Indus valley housed several centres of river-borne commerce. Most overland trade was carried out via the Khyber Pass connecting the Punjab region with Afghanistan and onward to the Middle East and Central Asia.[33] Although many kingdoms and rulers issued coins, barter was prevalent. Villages paid a portion of their agricultural produce as revenue to the rulers, while their craftsmen received a part of the crops at harvest time for their services.[34]

Silver coin of the Maurya Empire, 3rd century BC.

Silver coin of the Gupta dynasty, 5th century AD.
Sean Harkin estimates China and India may have accounted for 60 to 70 percent of world GDP in the 17th century.[35]