Indian Economy - Definition, Importance, and Highlights

The Indian economy is by far the most important aspect of the country itself. We begin to learn about it in our primary classes of history and then take an interest in it by participating in political discussions, understanding the nation’s current GDP growth rate and means of economic development. If one wants to understand how India works or where it stands in the worldwide forum, learning and knowing about the Indian economy is where you start.

At the time of the nation’s impending independence, the Indian economy was in trouble. As a colony, she was serving the demands of another country’s development rather than her own. The state, which ought to have been in charge of innovations in agriculture and industry, declined to take even a little part in this. On the other hand, the world experienced accelerated development and expansion in agriculture and industry during the 50 years before India’s independence, thanks to the states’ active participation.

The lack of significant social sector reforms by British leaders limited the economy’s ability to produce goods and services. With a life expectancy of 32.5 years, barely 17 percent of Indians were literate at the time of independence. As a result, once India gained independence, the government of the day faced a serious issue in organizing the economy in a methodical manner. Political leaders were under extreme pressure to achieve growth and development because the nation was riding high on campaign promises and patriotic fervor. By 1956, many significant and strategic decisions had been made that are currently influencing India’s economic development.

The Indian Economy in Brief

India’s economy is currently the third largest in terms of purchasing power parity and the seventh largest overall (PPP). The estimated GDP of the Indian economy is $2.9 trillion. Arun Jaitley, the finance minister, said during a news conference that we constantly fluctuate between the fifth and sixth largest economies, depending on the dollar exchange rate. Looking ahead, we’ll be worth $5 trillion by 2024 and $10 trillion by 2030 or 2031.

In 2017, India’s GDP per person was $ 1963.55. India’s GDP per capita, which averaged $693.96 between 1960 and 2017, is 16% of the global average. In 2017, it rose to an all-time high of $635.55.

According to a new WEF analysis titled “Future of Consumption in Fast-Growth Consumer Market – India,” the size of the Indian market is expected to increase by a healthy $ 6 trillion over the next few years.

Some recent economic highlights

India’s exports in various merchandise trades witnessed 299.74 billion in US dollars from April 2021 to December 2021
India’s GST revenue collection got a 15% rise and stood at Rs. 1.38 trillion, which in US dollar is dollar 18.42 billion in January 2022
India saw inflation in CPI- Consumer Price Index by 5.20% in 2021 April to 2022 December
The foreign portfolio investors invested an estimated Rs 50,009 crore, which is 6.68 billion in US dollars in India

Some important government steps are taken for the Indian economy

In May 2021, the government made an invested Rs. 2,250 crore (US$ 306.80 million) for the development in the horticulture sector
The number of foreign companies set-ups in India is also increasing, for example, Make in India and Digital India
National Bank for Financing Infrastructure and Development (NaBFID) will provide non-recourse infrastructure financing
It will also support, fund and encourage projects from the first quarter of FY 2022-23 by investing up to Rs. 4 lakh crore (US$ 53.58 billion)
India is expected to attract investment of around US$ 100 billion in developing the oil and gas infrastructure in between the period of 2019-23

The Government of India has also taken the initiative to increase public health by investing and spending up to 2.5% of the GDP growth rate by 2025.

Top Performing Sectors of the Indian Economy

In 1991, India adopted the New Economic Policy, which brought an end to the mixed economy model, abolished the licensed raj regime, and opened up the Indian economy to the rest of the world. Following is a summary of India’s top-performing economic sectors:

1. Agricultural Sector:

Agriculture continues to be one of the most significant economic sectors in India. Its contribution to the nation’s GDP has decreased and is now only 14%. But the nation’s entire population—more than 50%—remains reliant on agriculture. Aiming to treble farmers’ incomes by 2022, the Union Budget for 2017–18 gave the agricultural sector a top priority.
Government support for farming is at an all-time high.
• In addition, cropping patterns have changed in favor of cash crops like rubber and sugarcane.
• The establishment of cooperative farming initiatives like e-choupal, etc.
• The growth of SHGs like Lijjat Papad.
• The remaining agricultural land is being put under pressure as industrial and commercial use of agricultural land increases.

A wide range of export markets is now open to agricultural products.
• A new “Sunrise Industry” is emerging: food processing.

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Industry Sector:

The industry sector is a significant component of the Indian economy. Changes like the abolition of the “Permit Raj” and the liberalization of the economy were warmly embraced in the nation. Since 1991, these modifications have enhanced the economy’s industrial potential.
• The expansion of industries, from conventional iron and steel to jute and cars.
• Independence in terms of distribution, marketing, and production.
• A decrease in red-tapism.
• Support for domestic and foreign direct investments (FDI).
• The benefits of research and development and the transfer of technology to the economy.
• The introduction of investment models like joint ventures, PPPs, and MNCs.
• Formerly monopolized by the government, new markets were now open to private actors.

Services Sector:

4. Food Processing:

The “Make in India” project has identified the food processing industry as one of its key sectors since it has developed as a high-growth, high-profit industry. India is regarded as a significantly appealing market for the sector due to the enormous supply of raw materials, and resources, favorable governmental measures, and numerous incentives. India possesses a sizable consumer base with a population of 1.3 billion and an average age of 29, as well as a fast-expanding middle-class population that spends a considerable percentage of their discretionary income on food. By 2025, it is anticipated that India’s total consumption of food and beverages will rise from $369 billion to $1.14 trillion.

5. Manufacturing Sector:

After the services sector, manufacturing accounts for the second-largest share of India’s GDP. The manufacturing sector’s participation will increase in the near future thanks to a number of government programs, including Make in India, MUDRA, Sagarmala, Startup India, Freight Corridors, and a wholehearted contribution by the states.
However, the industry would need to dramatically increase its research and development spending if India hopes to increase its manufacturing sector’s contribution to GDP to about 25%. To encourage individuals to work in manufacturing, the government must raise the amount of value addition at all levels and provide appealing compensation.

Recent Developments in the Economy of India

In addition to these advancements and reforms, it is crucial to remember that effective coordination between the federal and state governments is necessary in order to maximize economic potential and maintain good governance. This would strengthen India’s economy in addition to strengthening our cooperative federal system. Initiatives like Startup India, the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and Digital India

The Indian economy has improved 65 places (in the past four years) according to the World Bank’s Ease of Doing Business Report, among other factors.

These actions solidified India’s position as one of the few shining lights in a generally gloomy global economy. With lowering inflation, better fiscal and external balances, and a stable macroeconomic environment, India has one of the fastest-growing major economies. Additionally, it was one of the few economies to implement significant “structural reforms” that have made India a competitive player in the global economy.

The Indian Economy in Brief:- Future of the Indian Economy

The NITI Aayog has published a comprehensive report titled “Strategy for New India @75” with the goals of making India a $5 trillion economy by 2030 and maintaining an average growth rate of 8%. One of its primary goals is to double farmer incomes.

Establishing an all-India talent pool for the federal government and the States, similar to the All-India Services
Giving the “Make in India” campaign a big boost.
Improving the tax-to-GDP ratio from the present 17% to 22% by 2023.
Increasing the current 29% investment rate to 36% by 2023.

The Indian Economy in Brief:- India is a rising superpower with a thriving economy, guided by firm democratic principles and a strong government. India’s growth rate was estimated to have been 7.7% in the most recent quarter under Prime Minister Narendra Modi. The prospect for a company has never been better because of the youth demography and the steadily growing middle-class base.

Conclusion

This first and foremost step is to gather an idea on how India as a country is running itself, providing, producing, and investing. One should follow and note the country’s economic status, growth, fall, business, and new aspects. Without the economic aspect of India, one would hardly be able to grasp and conquer the country’s philosophy. The Indian economy gives us an idea of the financial framework, market sizes, profits, business motives of the country.