Indian economy is positioned as sixth in terms of the nominal GDP and is
considered as the third largest economy in terms of purchasing power parity (PPP).
The years, 2015 and 2016 has played a vital role in Indian economic development
as during this period Indian World Bank’s expansion and growth was observed.
This was the major reason why economy developed to 7.6%.
However, this growth diminished in 2017 to 7.1% but it is assumed that
the growth rate will rise up to 7.2% in 2018 following 7.7% in 2019.
Indian economy is mainly known for its service
sectors as it has been one of the leading
countries to export business process outsourcing (BPO) services and software services.
India is also rich in agricultural sector employing thousands of people in agricultural
fields and seeking a second position in the world in terms of farm output.
History of Indian economy
After the conclusion of British rule, India’s
economy grew but the rate of development was slow.
When India adopted liberalization, it became one
of the fastest growing countries in the world.
Generally, there were 3 era’s in Indian histories that are:
ancient and medieval period, Mughal era, and British era.
Let’s discuss these periods in detail:
Ancient and medieval era
The ancient period is linked with 1800 BC and 2800 BC when the people
used to exercise agricultural activities, use uniform measures to weight,
developed urban sanitation system, and brought in various changes.
South India and West Asia were the two regions involved in maritime trading and
the two spots named Coromandel Coast and Malabar was set as the trading centers.
However, the trading could not sustain for a long time as the Coromandel Coast and
Malabar was snatched and controlled by the Jewish, Parsi, Syria, Muslim, and Christian.
In this era, the reputed kings and rulers used to take revenues from the
small agricultural farmers for lending them the land to harvest crops.
The farmers were given some harvested crops for their hard work and services.
This clearly states that though the kings had the authority to issue coins
and currency, the barter system still exist and exploited the peasants.
Mughal era
The Mughal era began in 1526 and lasted till 1793 in which
the Indian economy remained stable until the 18th century.
The Gold, Silver, copper, and other important
coins were issued by the Mughal emperor.
Before the arrival of Britishers, India was united.
There were about 64% of the people engaged in agricultural activities and 36%
of people opted for industrial and service sectors for their daily livelihood.
In comparison to the Europe where more than 80% of the people were
dependent on agriculture, Indian economy proved to be better.
Indian industrial sector boosted under the Mughal period.
The cash crops, goods, equipment, tools, and other
commodities were exported all over the world.
The major leading industries of India during the
Mughal rule include textiles, steel, and shipbuilding.
The food that was supplied is sugar, oil, and butter.
In the 17th and 18th century, Europe was highly
lured by the Mughal’s production and hence
several commodities like spices, indigo, peppers, and silks were imported from Europe.
The Mughal emperor concluded in the 18th century when north
India and South India were snatched by the Marathas.
This led to the decrease in agricultural productivity and hence
the industrial sectors were affected by the slow growth.
British era (1793-1947)
In the 19th century, India was controlled by
the Britishers who used to take the Indian raw
materials and supply the same to Britain for the
conversion of raw materials into final products.
These final products were then sold to Indians at an expensive rate.
The period of British era resulted in a declined productivity of
food crops, mass impoverishment, unemployment, and various famines.
The per capita income which was estimated to be 24.4% during
the Mughal period was brought down to 4.2% in 1950’s.
A large number of Indian markets were conquered
by the Britishers and the tariffs and Quotas
were introduced in India for exporting the
commodities to other countries except for Britain.
Although British government ruined the Indian economy, there
were some positive aspects of this colonial rule as well.
The railways, communication, airways, and roadways were well-developed by the
Britishers for the transfer of Indian commodities to Britain and vice versa.
After the conclusion of the British period, India adopted the worst
economy that comprised of the illiterate farmers and labor force,
insufficient agricultural production in respect to the Indian
population, inadequate infrastructure, and a massive unemployment.
Three sectors of Economy
Indian adopted a three sectors economy including:
Agricultural sector – crops, horticulture, milk and animal
husbandry, fishing, aquaculture, forestry, aviculture, and much more
Industry and manufacturing sector – manufacture and processing
of steel, iron, copper, and other industrial related goods.
Service sector – construction, infrastructure,
education, communication, healthcare, banking
and financing, hospitals, transport, insurance, and other such economic activities.
Agricultural sector
According to the surveys of 2014, India was placed at 2nd position in agricultural
productivity with around 49% of the people employed in the same sector.
Although Indian agriculture declined till 2011, the green Revolution
played a major part in improving the irrigation, technology,
adoption of modern agricultural tools and equipment,
and allowance of various agriculture subsidies.
The international reports clarified that Indian agricultural contribute
30% - 50% of the total agricultural production in the world.
Uttar Pradesh, Madhya Pradesh, Telangana, Andhra Pradesh, Bihar, West Bengal,
Maharashtra, and Gujarat are the major contributors of agriculture productivity.
Around six million of Indian workforce is engaged in fisheries work.
The country has also occupied the Sixth position
in the largest fishing industries of the world.
Cotton, milk, and jute are largely produced in India
and are exported to diverse parts of the world.
The 2011 estimation states that there are a total of 170 million animals
present in this land i.e., the second largest country in animal population.
India has ranked second in the production of wheat, Rice, sugarcane,
cotton, groundnuts, fruit and vegetables, and consumer silk.
Industrial sector
There is recently 22% of Indian workforce engaged in the industrial sector.
The Indian industries experience several amendments after the end of colonial rule.
In 1991, India was liberalized from the export and import of
foreign countries and hence welcomed the foreign investment,
the government - owned companies that experienced
losses were privatized, and the infrastructure was
improved to a great extent leading to the easy flow
of goods and services from one place to another.
India also adopted the latest and modern
technologies reducing labor-intensive industries.
But this expansion also resulted in increased unemployment.
Petroleum products and chemicals
The overall contribution of petroleum and chemical industries to India’s GDP is 34%.
Jamnagar in India owns the world’s largest refinery.
India is also listed under the top 5 producers of agrochemicals,
polymers, plastic, dyes, and other such chemicals.
At the same time, the country also imports a large amount
of chemical to accomplish the domestic requirements.
Engineering
The engineering sector includes machine, tools, transformers,
capital goods, automobiles, switchgear, furnaces, and much more.
India is the third largest exporter of Engineering products
and this sector also have a major contribution to the GDP.
Gems and jewelry
India has been the major producer and supplier of precious
metals like Diamonds, Gold, and Silver for many years.
Surat and Mumbai are mainly known for polishing
jewelry, cutting, finishing, and supply.
The jewelry industries contribute to 7% of Indian GDP.
Service sector
In 1950, the service sector has the lowest contribution to GDP that is 15% but
in today’s era, this sector is the major contributor with 57% to world’s GDP.
Around 27% of the Indian workforce is employed by the service sector.
Banking and finance are one of the essential
service factors that are classified into two types
i.e., an organized sector that consists of private
banks, public banks, and foreign-operated bank.
The unorganized sector consists of the money
lenders and other financial institutions.
According to the surveys taken in 2006 and 2007, the public bank had around 75%
of assets and on the other hand, the private and foreign-owned had 18.2% assets.
Electricity sector
India is titled as the third largest energy consuming country with China
and the United States of America being at the first and second places.
India consumes 85% of coal and crude oil and the oil
stock of India accomplishes 25% of people’s requirement.
Assam, Gujarat, Rajasthan, and Mumbai are the major
cities where the oil and natural gas fields are sited.
In 2013, India ranked third in the production of electricity.
Infrastructure
India’s infrastructure adds 5% to the GDP.
The roadways are well built and the Indian roads
are second largest roadways in the world.
India has government-owned railway tracks that are
considered as the fourth largest railways in the world.
There are about 125 airports in India among which there are 65 airports
that have the permit to carry both the travelers as well as the cargo.