Indian economy is a developing market economy. It is the world’s fifth-largest economy as per nominal GDP and the third-largest as per purchasing power parity. However, according to the International Monitory Fund, on a per capita income basis, India ranks 139th as per GDP (nominal) and 118th as per GDP in 2018. Since the start of the 21st century, the annual average GDP growth was 6% to 7% but from 2014 to 2018, India became the world’s fastest growing economy, which is surpassing China. Historically, India was the biggest economy in the world for almost of the two millennia from the 1st till 19th century.
Some detail about Indian Economy
Agriculture in indian economy
India is an agricultural powerhouse and popular for many reason. Firstly, it is the world’s largest producer of pulses, milk and spices. Secondly, it has the world’s largest cattle herd (buffaloes), as well as the largest area under wheat, rice and cotton. Thirdly, it is the second largest producer of rice, wheat, cotton, sugarcane, fishes, sheep & goat meat, fruit, vegetables and tea. The country has some 195 million hectare under cultivation of which 37% are irrigated (70m hectare). In addition, forests cover some 65 million hectare of India’s land.
Moreover, agriculture is the main source of livelihood for Indian population because It is about 58 percents according to Gross Value Added (GVA), forestry and fishing around (US$ 276.37 billion). Growth in GVA in agriculture and allied sectors stood at 4%. Indian food industry has received a huge growth, increasing its contribution to world food trade. Indian food and grocery market take place as the world’s sixth largest, with retail contributing approximately 70 per cent of the total sales. The food processing industry accounts for 32 per cent of the country’s total food market, but most Importantly, It is one of the largest industries in India. It is ranked fifth in terms of consumption, export, production, and expected growth.
India’s engineering sector has witnessed a remarkable growth over the last few years in infrastructure and industrial production. Engineering sector, being closely associated with the infrastructure and manufacturing sectors, is of strategic importance to India’s economy. India has made significant stride towards developing its engineering industry. The Government has appointed Engineering Export Promotion Council as the apex body in charge of promotion of engineering products, goods and services. India exports many things like capital goods, transport equipment, machinery equipment and fasteners to various countries. India exports engineering goods mostly to USA and European countries, which account for over 62% of the total export. Indian engineering export goods for the period of FY20 stood around US$ 75.26 billion. On the other hand industrial production for electrical equipment stood at 104.7 in FY20.
Gems and Jewellery
The gems and jewellery sector plays a significant role in the Indian economy, contributing around 7% to country’s GDP and 15 per cent to India’s total merchandise export. It employs over 4.64 million people. India’s gems and jewellery industry is one of the largest in the world, which is contributing around 29% to the global jewellery consumption. This industry is the home to more than 300,000 gems and jewellery businesses. Its market size will grow around US$ 103.06 billion during 2019-2023. India’s demand for gold reached 690.4 tonnes in 2019. India’s gems and jewellery industry export stood around US$ 29.01 billion in FY20P. At the same time, India exported around US$ 18.66 billion worth of cut and polished diamonds to the different countries, which is contributing 64% of the total gems and jewellery export.
Infrastructure in indian economy
Infrastructure sector is a key sector for Indian economy because Firstly, this sector is much highly responsible for propelling India’s development and enjoys intense focus from the Government for making policies that may ensure the creation of world class infrastructure in the country. Secondly, infrastructure sector includes dams, roads, power, bridges and urban area development. Thirdly, India was ranked 44 out of 167 countries in World Bank’s Logistics Performance Index in 2018 and ranked second in the 2019 Agility Emerging Markets Logistics Index. According to the Department for Promotion of Industry and Internal Trade, FDI in Construction Development sector (Infrastructure, townships and construction projects) stood around US$ 25.66 billion during April to March 2020. The logistics sector in India is growing at a CAGR of 10.5% annually and is expected to reach US$ 215 billion in 2020.
This sector is very popular in India because Firstly, Indian textiles sector contributed around 7% of the industry output in FY19. It has contributed 2% to the Indian GDP and employed around 45 million people. Secondly, this sector has contributed 15% to India’s export earnings. Indian textiles industry has around 4.5 crore employee workers including 35.22 lakh handloom workers across the country. Thirdly, the domestic textiles and apparel market stands around US$ 100 billion in FY19. The production of cotton in India is projected around 36.04 million bales in FY20. In FY19, the production of fibre in India stood around 1.44 million tonnes and reached 1.60 MT in FY20, while that for yarn, the production stood at 4,762 million Kg during same period.
Banking and Finance
Indian banking sector has recently witnessed the innovative banking models like payments and small financial banks. RBI’s new measures might go for a long way to restructuring of the India banking industry. The digital payments system in India has evolved the most among 25 countries with India’s Immediate Payment Service being the only system at level five in the Faster Payments Innovation Index. The Indian banking system consists of around 18 public sector banks, 44 regional rural banks, 40 foreign banks, 21 private sector banks, 1,500 urban cooperative banks and around 94,350 rural cooperative banks in addition to cooperative credit institutions. On January 31, 2020, the total number of ATMs in India increased to 210,260 and is further expected to increase to 400,000.
Tourism in indian economy
The Indian tourism industry has emerged as one of the key factor of growth among the services industries in India. There are several reason Firstly, tourism in India has potential as considering the rich cultural, variety in ecology historical heritage, forts, temples and places of natural beauty spread around the country. Secondly, Indian tourism has potentially to provide large employment and can be a significant source of foreign exchange for the country. Thirdly, in 2019, around 4.2 crore jobs were created in tourism industry in India, which is around 8.1% of the total employment of India. The numbers are expected to rise around 2% per annum to 55.5 million jobs.
Moreover, according to WTTC, India stays third among 185 countries regarding travel and tourism sector with total contribution to GDP in 2018. India was ranked 34th in the Travel and Tourism Competitiveness Report in 2019. India is the one of the digitally advanced traveller country for using digital tools for booking, planning and experiencing the trips. India’s rising disposable income has supported the growth of outbound tourism. During 2019, foreign tourist arrivals in India stood around 10.80 million, with a growth rate of 3.15% y-o-y. During 2019, FEEs from tourism increased 4.8 per cent y-o-y to INR 194,881 crore (US$ 29.96 billion). In 2019, arrivals through e-Tourist Visa increased around 23.6 per cent y-o-y to 2.9 million.
India plays an important role in the global education industry. India has one of the largest networks of education institutions in the world. However, there is still need for further development in the education system. Moreover, the aim of Indian Government is to raise its current gross enrolment ratio to 30% by 2020 and will also boost the growth of education in India. India has the world’s second largest population of about 1.3 billion, which provides a great opportunity for the education sector.
The education sector of India was estimated around US$ 91.7 billion in FY18 and is expected to reach around US$ 101.1 billion in FY19. Number of colleges and universities in India are around 39,926 and 990 in FY19. India got 37.4 million students enrolled in higher education in FY19. Gross Enrolment Ratio in higher education reached 26.3% in FY19. India is the second largest market for E-learning after the USA. This education sector is expected to reach around US$ 1.96 billion in 2021 with around 9.4 million users.
The Indian healthcare system is categorized into two major components, private and public. The Government, i.e. public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres in rural areas. Indian private sector provides majority of secondary, tertiary, and quaternary care institutions with main concentration in metros and class I and class II cities. The Indian healthcare market can increase to Rs 8.6 trillion (US$ 133.44 billion) in 2022. Medical tourism in India is growing around 18% y-o-y and is expected to reach around US$ 10 billion in 2020. There are still many opportunities for developing the healthcare services. The Government’s expenditure on healthcare sector has grown to 1.6% of the GDP in FY20BE from 1.3 % in FY16.