words per minute
6
Nucleus1
00:00
Speed
The economy of India is a middle income developing mixed economy. It is the world's sixth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). According to the International Monetary Fund (IMF), on a per capita income basis, India ranked 145th by GDP (nominal) and 122th by GDP (PPP). From independence in 1947 until 1991, successive governments promoted protectionist economic policies, with extensive state intervention and economic regulation. This is characterised as dirigism, in the form of the License Raj. The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India. Since the start of the 21st century, annual average GDP growth has been 6% to 7%, and from 2013 to 2018 and in 2021, India is the world's fastest growing major economy, surpassing China. Historically, India was the largest economy in the world for most of the two millennia from the 1st until the 19th century.
The long-term growth perspective of the Indian economy remains positive due to its young population and corresponding low dependency ratio, healthy savings, and investment rates, increasing globalisation in India and integration into the global economy. The economy slowed in 2017, due to shocks of "demonetisation" in 2016 and the introduction of the Goods and Services Tax in 2017. Nearly 60% of India's GDP is driven by domestic private consumption. The country remains the world's sixth-largest consumer market. Apart from private consumption, India's GDP is also fueled by government spending, investment, and exports. In 2019, India was the world's ninth-largest importer and the twelfth-largest exporter. India has been a member of the World Trade Organization since 1 January 1995. It ranks 63rd on the Ease of doing business index and 68th on the Global Competitiveness Report. With 500 million workers, the Indian labour force was the world's second-largest as of 2019. India has one of the world's highest number of billionaires and extreme income inequality. Because of several exemptions, barely 2% of Indians pay income taxes.
During the 2008 global financial crisis the economy faced a mild slowdown. India undertook stimulus measures (both fiscal and monetary) to boost growth and generate demand. In subsequent years, economic growth revived. According to the 2017 PricewaterhouseCoopers (PwC) report, India's GDP at purchasing power parity could overtake that of the United States by 2050. According to the World Bank, to achieve sustainable economic development, India must focus on public sector reform, infrastructure, agricultural and rural development, removal of land and labour regulations, financial inclusion, spur private investment and exports, education, and public health.
In 2020, India's ten largest trading partners were the United States, China, the United Arab Emirates (UAE), Saudi Arabia, Switzerland, Germany, Hong Kong, Indonesia, South Korea, and Malaysia. In 2019–20, the foreign direct investment (FDI) in India was $74.4 billion. The leading sectors for FDI inflows were the service sector, the computer industry, and the telecom industry. India has free trade agreements with several nations, including ASEAN, SAFTA, Mercosur, South Korea, Japan, and several others which are in effect or under negotiating stage.