The economy of India is the tenth-largest in the world by nominal GDP and the third-largest by Purchasing Power Parity(PPP). The country is one of the G-20 major economies, a member of BRICS and a developing economy that is among the top 20 global traders according to the WTO. India was the 11th largest importer in the world in 2018; and was 13th largest exporter.
The agriculture sector is the largest employer in India’s economy but contributes a declining share of its GDP. Its manufacturing industry has held a constant share of its economic contribution, while the fastest growing part of the economy has been its services sector – which includes construction, telecom, software and information technologies, infrastructure, tourism, education, health care, travel, trade, banking and others components of its economy.
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India has increasingly adopted free-market principles and liberalised its economy to international trade. These reforms were started by former Finance minister Manmohan Singh under the Prime Ministership of P.V.Narasimha Rao. They eliminated much of Licence Raj, a pre- and post-British era mechanism of strict government controls on setting up new industry. Mumbai is known as the trade and financial capital of India.
Indian economic policy after independence was influenced by the colonial experience, which was seen by Indian leaders as exploitative, and by those leaders’ exposure to British social democracy as well as the planned economy of the Soviet Union. Domestic policy tended towards protectionism, with a strong emphasis on import substitution industrialisation, economic interventionism, a large government runs public sector, business regulation, and central planning, while trade and foreign investment policies were relatively liberal. Five-Year Plans of India resembled central planning in the Soviet Union. Steel, mining, machine tools, telecommunications, insurance, and power plants, among other industries, were effectively nationalised in the mid-1950s.
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Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalisation of 1991. The reforms did away with the Licence Raj, reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors.
India has classified and tracked its economy and GDP as three sectors – agriculture, industry and services. Agriculture includes crops, horticulture, milk and animal husbandry, aquaculture, fishing, sericulture, aviculture, forestry and related activities. the industry includes various manufacturing sub-sectors. India’s definition of services sector includes its construction, retail, software, IT, communications, hospitality, infrastructure operations, education, health care, banking and insurance, and many other economic activities.
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing is still the largest employment source and a significant piece of the overall socio-economic development of India. India is the largest producer in the world of milk, jute and pulses, and also has the world’s second largest cattle population. It is the second largest producer of rice, wheat, sugarcane, cotton and groundnuts, as well as the second largest fruit and vegetable producer, accounting for 10.9% and 8.6% of the world fruit and vegetable production respectively. India is also the second-largest producer and the largest consumer of silk in the world, producing 77,000 tons in 2005.
India exports several agriculture products, such as Basmati rice, wheat, cereals, spices, fresh fruits, dry fruits, buffalo beef meat, cotton, tea, coffee and other cash crops particularly to the Middle East, Southeast and East Asian countries. It earns about 10 percent of its export earnings from this trade.
India hosts many oil refinery and petrochemical operations, including the world’s largest refinery complex in Jamnagar. Indian chemical industry was the third largest producer in Asia. India is one of the top 5 world producers of agrochemicals, polymers and plastics, dyes and various organic and inorganic chemicals.
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Engineering industry of India is the largest sub-sector of its industry GDP and is one of three largest foreign exchange earning sectors for the country. It includes transport equipment, machine tools, capital goods, transformers, switchgears, furnaces, cast and forged simple to precision parts for turbines, automobiles, and railways.
India is the world’s largest producer of and the largest market for tractors. India is the 12th largest producer and 7th largest consumer of machine tools in the world.
India is one of the world’s largest diamonds and gem polishing and jewellery manufacturing center; it is also one of the two largest consumers of gold. After crude oil and petroleum products, the export and import of gold, precious metals, precious stones, gems and jewelry accounts for the largest portion of India’s global trade.
Ludhiana produces 90% of woollens in India and is known as the Manchester of India. Tirupur has gained universal recognition as the leading source of hosiery, knitted garments, casual wear and sportswear. India’s cotton farms, fiber and textile industry provides employment to 45 million people in India.
India’s mining industry was the 4th largest producer of minerals in the world by volume and 8th largest producer by value in 2009. In 2013, it mined and processed 89 minerals, of which 4 were fuel, 3 were atomic energy minerals and 80 non-fuel. The government owned public sector accounted for 68% of mineral produced by volume, in 2011-12.
India’s mining industry, by output value, is concentrated in eight states Odisha, Rajasthan, Chhattisgarh, Andhra Pradesh, Telangana, Jharkhand, Madhya Pradesh and Karnataka. India’s was one of five largest producers of mica, chromite, coal, lignite, iron ore, bauxite, barites, zinc, manganese; while being one of the 10 largest global producers of many other minerals. India was the fourth largest producer of steel in the world in 2013 and seventh largest producer of aluminum.
The Indian money market is classified into the organised sector, comprising private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks, and the unorganised sector, which includes individual or family owned indigenous bankers or money lenders and non-banking financial companies. The unorganised sector and microcredit are still preferred over traditional banks in rural and sub-urban areas, especially for non-productive purposes, like ceremonies and short duration loans.