In spite of some severe socio-economic challenges, India has proved its ability to break through global economy during the past decade. With a constantly rising growth rate, several of the strongest industry and agriculture markets worldwide and important exports and import, the nation is now considered as one of the fastest-growing economy in the world and could become the world’s first power by 2050.
An auspicious growth
Today, India is considered as the world’s sixth-largest economy by nominal GDP and the third-largest by purchasing power parity. According to several studies, India’s growth rate should stabilise at 8% during the next decades, ranking the country as the world’s fastest-growing economy. Its GDP could overtake that of the US before 2050, turning India into the strongest economy worldwide.
India’s key growth factors are:
- a young and rapidly growing working-age population,
- rising education and engineering skill levels, accentuating growth in the manufacturing sector,
- a rapidly growing middle-class, implementing a sustained growth of the consumer market.
India’s economic strengths
India’s economy is distributed as followed:
- Agriculture: 17,4% of GDP, 49% of employment;
- Industry: 25,8% of GDP, 20% of employment;
- Services: 56,9% of GDP, 31% of employment.
Today, India ranks second worldwide in farm output and seventh in agricultural exports. The country is part of the world’s top 3 producer of tea, coffee, sugar, cereals, spices and many other staple foods such as rice, wheat and potatoes.
India’s economy today relies mainly on a few industry markets:
- Telecommunication industry, which is now the world’s fastest growing and which surpassed the US in 2017 to become the second largest smartphone market in the world after China,
- Automotive industry, which is now the world’s second fastest growing,
- Pharmaceutical and biotechnology industry, which is among the world’s most significant emerging markets (India is the world’s first generic drugs producer and exporter yet).
Other major Indian industries include computer science, construction industry, chemicals, food processing, steel, transport equipment, cement, mining, petroleum, machinery, tourism and manufacture industries such as textile.
Exports and Imports
In 2006, the share of external trade in India’s GDP stood at 24%, up from 6% in 1985. Today, India ranks 10th worldwide in global exports. Main exportation include:
- Petroleum products (42% from total exports in 2011, against 14% in 2001),
- Textile goods (2nd worldwide),
- Engineering goods,
India is also the world’s 10th largest importer, major imports including crude oil, machinery, fertilisers and chemical.
Although India is not amongst the most evolved country regarding spatial activity, it eventually sent a first rocket in 2007 and now owns nine operational geostationary satellites, which consequently helped improve tele-education and medicine for the people.
Indian labour force is the world’s second largest, with 513,7 million workers, which is almost 40% of the population. Today, employment in India is distributed as such:
- Services : 31%
- Industry : 20%
- Agriculture: 49%
- Unemployment rate: 8,8%
According to the World Bank, for India to achieve its economic potential, the nation must persevere in its efforts toward :
- public sector reforms,
- transport infrastructure,
- agricultural and rural development,
- removal of labour regulations,
- energy security,
- public health,
Poverty and economic inequality
Although India has more than doubled its hourly wage rates during the first decade of the 21st century, helping some 431 million Indians to rise to middle-class, poverty remains a major challenge in the country, with a poverty rate still up to 15% (against 60% in 1981 and 42% in 2005). This place India as the country containing the largest number of people living below the World Bank’s international poverty line of 1,25 dollar per day.
As poverty appears to be regularly decreasing, economic inequality between different states keeps growing, the richest states’ GDP being sometimes three times higher than the poorest ones.
One of poverty direct consequence is malnutrition. According to Food and Agriculture Organization 2015 report, 15% of the population are undernourished and 30% of Indian children under 5 are underweight.
Modern slavery and Child Labour
Consequently to poverty and undernutrition, India struggles to put an end to modern slavery and child labour, which affects almost 20 million Indian people, half of them children. Child labour has decreased from only 2 millions since 2001, which shows how difficult it is for the government to fight this challenge.
Building strategic partnerships
Amongst the country’s efforts to attain its economic goals, India started building strategic partnerships with other Asian nations and some of the world’s greatest powers:
- the US, as part of the Next Steps in Strategic Partnership (NSSP),
- the Association of Southeast Asian Nation (ASEAN), in the framework of the Look East Policy,
- the G4 (Germany, Bresil, Japan and India), hoping to get a permanent seat in the United Nations Security Council,
- China, especially regarding borders disputes.
Remarkable global rankings
- Global competitiveness: 51st
- Financial market sophistication: 17th
- Banking sector: 24th
- Business sophistication: 44th
- Innovation: 39th
- Consumer market: 11th
With 7 of the world’s top 15 information technology outsourcing companies based in India, the country is also now viewed as the second-most favourable outsourcing destination after the United States.