The economy of India is the 11th largest in the world by nominal GDP and the 3rd largest by purchasing power parity . The country is one of the G-20 major economies and a member of BRICS. On a per capita income basis, India ranked 140th by nominal GDP and 129th by GDP (PPP) in 2011, according to the IMF.

After the independence-era Indian economy was inspired by the Soviet model of economic development, with a large public sector, high import duties combined with interventionist policies, leading to massive inefficiencies and widespread corruption. However, later on India adopted free market principles and liberalized its economy to international trade.

India recorded the highest growth rates in the mid-2000s, and is one of the fastest-growing economies in the world. India has recorded a growth of over 200 times in per capita income in a period from 1947 (Rs 249.6) to 2011. The growth was led primarily due to a huge increase in the size of the middle class consumer, a large labour force, growth in the manufacturing sector due to rising education levels and engineering skills and considerable foreign investments. India is the nineteenth largest exporter and tenth largest importer in the world. Economic growth rate stood at around 6.5% for the 2011-12 fiscal year.

Overview Indian economy

A combination of protectionist, import-substitution, and Fabian socialist-inspired policies governed India for sometime after the end of British occupation. The economy was then characterized by extensive regulation, protectionism, public ownership, pervasive corruption and slow growth. Since 1991, continuing economic liberalization has moved the country towards a market-based economy.

By 2008, India had established itself as one of the world’s fastest growing economies. Growth significantly slowed to 6.8% in 2008-09, but subsequently recovered to 7.4% in 2009-10, while the fiscal deficit rose from 5.9% to a high 6.5% during the same period.

India’s current account deficit surged to 4.1% of GDP during Q2 FY11 against 3.2% the previous quarter. The unemployment rate for 2010-11, according to the state Labour Bureau, was 9.8% nationwide. As of 2011, India’s public debt stood at 68.05% of GDP which is highest among the emerging economies. However, inflation remains stubbornly high with 6.87% in July 2012, the highest among its BRICS counterparts.

India’s large service industry accounts for 57.2% of the country’s GDP while the industrial and agricultural sectors contribute 28.6% and 14.6% respectively. Agriculture is the predominant occupation in Rural India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%.[18] However, statistics from a 2009-10 government survey, which used a smaller sample size than earlier surveys, suggested that the share of agriculture in employment had dropped to 45.5%.

Major industries include telecommunications, textiles, chemicals, food processing, teel, transportation equipment, cement, mining, petroleum, machinery, software and pharmaceuticals. The labour force totals 500 million workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. In 2010-2011, India’s top five trading partners are United Arab Emirates, China, United States, Saudi Arabia and Germany.