THE ECONOMY OF INDIA-PART I

AN INTRODUCTION

The Economy of India is the ninth-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP). The country classified as newly industrialized country, one of the G-20 major economies, a member of BRICS and a developing economy with approximately 7% average growth rate for the last two decades. India's economy became the world's fastest growing major economy from the last quarter of 2014, replacing China's.

The long-term growth prospective of the Indian economy is moderately positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. The Indian economy has the potential to become the world's 3rd-largest economy by the next decade, and one of the largest economies by mid-century.

THE CONTRIBUTORS OF GDP.

India has the one of fastest growing service sectors in the world with annual growth rate of above 9% since 2001, which contributed to 57% of GDP in 2012-13.

 India has capitalized its economy based on its large educated English-speaking population to become a major exporter of IT services, BPO services, and software services with $167.0 billion worth of service exports in 2013-14. It is also the fastest-growing part of the economy. The IT industry continues to be the largest private sector employer in India.

India is also the fourth largest start-up hub in the world with over 3,100 technology start-ups in 2014-15

The agricultural sector is the largest employer in India's economy but contributes to a declining share of its GDP (17% in 2013-14). India ranks second worldwide in farm output.

The Industry sector has held a constant share of its economic contribution(26% of GDP in 2013-14).

The Indian auto industry is one of the largest in the world with an annual production of 21.48 million vehicles in FY 2013-14.

 India has $600 billion worth of retail market in 2015 and one of world's fastest growing E-Commerce markets.

WHY INDIAN ECONOMY IS LIKELY TO BE STABLE?

  “Demographic dividend”: Half of India’s 1.2-billion population is under the age of 25. By 2020, India will have the world’s youngest population, with a median age of 29 years, compared with a median age of 37 in China. This demographic dividend could potentially give India the biggest labour force and make it the largest consumer market in the world.

  Growing middle class: India’s middle class of 250 million already represents one of the biggest consumer markets in the world. This educated, tech-savvy and relatively affluent group is expected to continue its rapid growth in the years ahead.

  A functioning democracy: One of India’s greatest strengths is that it is a vibrant and functioning –( albeit a trifle chaotic) – democracy, where the electorate regularly exercises its constitutional right to kick out non-performing governments. India’s army, one of the world’s largest, is also staunchly apolitical and has consistently remained aloof from political shenanigans.

  Established companies and institutions: India has a thriving business sector with dynamic SMEs and large companies that are increasingly expanding overseas, educational institutions that are among the world’s best, and competent financial organizations. India’s central bank, the Reserve Bank of India (RBI), is currently headed by Raghuram Rajan, who was formerly chief economist at the IMF.

BRIC GDP growth rates (2011-13) and projections (2014-15)
	2011	2012	2013	2014	2015
Brazil	2.7%	1.0%	2.5%	0.3%	1.4%
Russia	4.3%	3.4%	1.3%	0.2%	0.5%
India	6.3%	4.7%	5.0%%	5.6%	6.4%
China	9.3%	7.7%	7.7%	7.4%	7.1%