Indian economy before independence and after independence

1 Growth story of India before and after independence

LOVELY PROFESSIONAL UNIVERSITYACADEMIC TASK NO. 2

School of Business

Name of the faculty member: Gurpreet Singh

Course Code: ECO121 Course Title: Macro Economics

Class: UG Term: AutumnSection: Q4406 Batch: 2014Max. Marks: 30 Date of Submission: 12th week (April 6, 2015)

S. No

Roll No

Objectives of Academic Activity

Topic Details

Evaluation Parameters

Expected Outcomes

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B45B46B47

To encourage students to think analytically and correlate economic concepts with real life issues.

Each group will be allotted a unique topic. Each group has to submit written up.

Class to be divided into groups and each group allotted a unique topic. One group will consist of three students. Evaluation will be done on the basis of peer rating

This Academic task has focus on the following:

1) Helping students correlate concepts of economics with real life situations.

2) Enabling students to work as a team

Note: 1. No Assignment will be catered after due date.2. One Group will submit one write up in offline mode.3. Students have to attach first page of acknowledgment and rubrics in write up, without acknowledgment and rubric, write up is not to be accepted.4. Peer rating should be done on the first page and should be signed by the entire group.5. Evaluation should be done strictly on the basis of the Rubrics attached.

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EVALUATION PARAMTERS FOR WRITE UP

CATEGORY 1 2 3 4 5 Points awarded

Introduction (topic sentence)(5marks)

The topic sentence is an excellent introduction to the paragraph. It tells the main idea and gives the big picture (5)

The topic sentence is a good introduction to the paragraph. It may too broad or have a detail included. (4)

Introduces the paragraph. It does not introduce the topic very well and it includes too many details. (3)

The topic sentence does not introduce the paragraph.(2)

Does not display an understanding of the topic. Not in line with the topic. (1)

Sequencing (Organization)(5marks)

Details are placed in a logical order and the way they are presented effectively keeps the interest of the reader.(5)

Details are placed in a logical order, but the way in which they are introduced sometimes makes the writing less interesting.(4)

Some details are not in a logical or expected order, and this distracts the reader.(3)

Many details are not in a logical or expected order. There is little sense that the writing is organized(2)

All topics are not in logical and expected order. There is very little sense that writing is organized.(1)

Ideas , (5 marks) The topic has been discussed from different angles and Student has given excellent grasp of the topic. (5)

The topic has been discussed properly and Student has a good grasp of the subject. (4)

Student knows the subject but not related it with different angles (3)

Student uses just the facts to relay thoughts. There is not much of the student's own personality in the writing (2)

Information is gathered from electronic sources but the student does not know its relevance and importance (1)

Grammar & Spelling (Conventions)(5 marks)

Student makes no errors in grammar or spelling that are grade level appropriate(5)

Student makes a couple of errors in grammar or spelling that are grade level appropriate.(4)

Student makes several errors in grammar or spelling that are grade level appropriate(3)

Student makes many errors in grammar or spelling that are grade level appropriate.(2)

Student makes more than ten errors in grammar or spelling that are grade level appropriate.(1)

Practical application and relating concepts with Real World and Conclusion (10 mark)

Student makes no errors in appropriate practical application and Detailed conclusions are reached from the facts offered.(10)

Student makes little error to relate the concepts practically and Clear conclusion is reached from the facts offered.(8)

Student has tried to relate the concepts practically and Clear conclusion is reached from the facts offered. (6)

Student makes many errors in practical application and no clear conclusion can be formed from the facts offered.(4)

Student has not related with practical applications and no conclusion can be formed.(2)

TOTAL

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Indian EconomyIntroductionIndian Economy is the underdeveloped economy and our economy is a mixed economy where the public sector co-exists with the private sector. In India the bulk of population lives in conditions of misery. Poverty is not only active but is also chronic malady in India.

Fig. 1 Economic Survey 2014-15 Source: www.financialexpress.com

India is likely to be the third largest economy with a GDP size of $15 trillion by 2030.The economy of India is currently the world’s fourth largest in terms of real GDP (purchasing power parity) after the USA, China and Japan and the second fastest growing major economy in the world after China.

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http://www.financialexpress.com/article/economy/live-economic-survey-fm-arun-jaitley-to-table-report-at-parliament-around-12-noon-today/48252/


The independence-era Indian economy (before and a little after 1947) was inspired by the economy of the Soviet Union with socialist practices, large public sectors, high import duties and lesser private participation characterizing it, leading to massive inefficiencies and widespread corruption. However, later on India adopted free market principles and liberalized its economy to international trade under the guidance of Manmohan Singh.

Facts about Indian economy Low per capita income. Inequalities in income distribution. Predominance of agriculture. (More than 2/3rd of India’s working population is

engaged in agriculture. But in USA only 2% of the working population is engaged in agriculture.)

Rapidly growing population with 1.2% annual change. Chronic unemployment (A person is considered employed if he / she works for 273

days of a year for eight hours every day.)Unemployment in India is mainly structural in nature.

Low rate of capital formation due to less saving rate. Dualistic Nature of Economy (features of a modern economy, as well as

traditional).Mixed Economy Follows Labour Intensive Techniques and activities.

Gross Domestic Product of IndiaThe Gross Domestic Product (GDP) in India was worth 1876.80 billion US dollars in 2013. The GDP value of India represents 3.03 percent of the world economy. GDP in India averaged 517.27 USD Billion from 1970 until 2013, reaching an all-time high of 1876.80 USD Billion in 2013 and a record low of 63.50 USD Billion in 1970. GDP in India is reported by the World Bank Group.

Fig.2 GDP of India Source: http://www.tradingeconomics.com/india/gdp

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In January 2015, the government revised base year from 2004-05 to 2011–12. Also, changes were made in Gross Domestic Product (GDP) reporting, GDP at factor cost will henceforth be presented as Gross Value Added (GVA) at basic prices for industry-wise estimates, while ‘GDP at market prices’ will hence forth be referred to as ‘GDP’.

GDP performance in 2014–15 from the demand side (comprising consumption, investment and net exports)

1. on the demand side, growth of private final consumption increased to 7.6 per cent in 2014–15, from 6.percent in 2013–14 as per advanced estimates.

2. The fixed capital formation in the economy has picked up growth but lost share in

aggregate demand. Gross fixed capital formation increased from 3.0 per cent in 2013–14 to 4.1 per cent in 2014–15.

3. Exports in 2014–15 recorded a growth of just 0.9 per cent as compared to 7.3 per cent

in 2013–14. Imports, on the other hand, increased from -8.4 percent in 2013–14 to -0.5 per cent in 2014–15, primarily due to the sharp decline in international oil prices in the current year that compressed the oil import bill.

History and Growth story of Indian economy before independence The history of India begins with the dawn of Indus Valley civilization which flourished in 3500 BC to 1800 BC. The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport.

Its citizens practiced agriculture, domesticated animals, made sharp tools and weapons from copper, bronze and tin and traded in terracotta pots, beads, gold and silver, coloured gem stones such as turquoise and lapis lazuli, metals, flints, seashells and pearls. They used to ships to reach Mesopotamia where they sold gold, copper and jewellery.

For the next 1500 years, India produced its classical civilizations which generated wealth in huge amount. Between 1st and 17th centuries AD, India is estimated to have had the largest economy of the ancient and medieval world, controlling between one third and one fourth of the world's wealth.

Economic growth of India in Mughal periodIndia's nationalist historians have portrayed its pre-colonial economy as a golden age of prosperity, and this fabulous wealth set the Europeans on their great voyages of discovery.8 During the Mughal Empire at the end of the 16th century.

The gross domestic product of India in the 16th century was estimated at about 25.1% of the world economy. An estimate of India's pre-colonial economy puts the annual revenue of Emperor Akbar's treasury in 1600 AD at £17.5 million (in contrast to the entire treasury of Great Britain two hundred years later in 1800 AD, which totalled £16 million). The gross domestic product of Mughal India in 1600 AD was estimated at about 24.3% the world economy, the second largest in the world.

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By this time the Mughal Empire had expanded to include almost 90 per cent of South Asia, and enforced a uniform customs and tax-administration system. In 1700 AD the exchequer of the Emperor Aurangzeb reported an annual revenue of more than £100 million.

India's wealth did indeed sustain more than 100 million people. With plenty of arable land, its agriculture was certainly as productive as Western Europe's, and even the subsistence-oriented peasant got a decent return.9 India also had a large, skilled workforce that produced not only cotton but also luxuries for the aristocracy. Consequently, the economy produced a large financial surplus, which was used to support the growing Mughal Empire and finance spectacular monuments like the Taj Mahal.

GDP in millions of 1990 International Dollars

Fig. 3 GDP of India before independence Source: http://cgijeddah.mkcl.org

Economic growth of India in Pre-British periodThe India economy in the pre-British period consisted of isolated and self-sustaining villages on the one hand, and towns, which were the seed administration, pilgrimage, commerce and handicraft, on the other. Means of transport or communication were highly underdeveloped and so the size of the market very small.

India's nationalist historians have blamed the British Raj for India's poverty. The classic nationalist case is that India had been rich before the British came and colonialism weakened agriculture and “deindustrialized” India, throwing millions of artisans out of work. Britain's trade policies encouraged the import of manufactures and the export of raw materials; finally, it drained the wealth of India by transferring its capital to Britain.

The British East India Company whose political power gradually expanded in India from 1757 onwards, used huge revenue generated by the provinces under its rule for purchasing Indian raw materials, spices and goods. Thus the continuous inflow of bullion that used to come into India on account of foreign trade stopped altogether.

The Colonial government used land revenue for waging wars in India and Europe leaving little for development of India. In short span of 80 years (1780-1860 AD) under Colonial

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rule, India changed from being an exporter of processed goods for which it received payment in bullion, to being an exporter of raw materials and a buyer of manufactured goods.More specifically, in the 1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; by 1850s raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of India's exports.

India was a leading manufacturer in the 18th centuryIndia was a leading manufacturing country in the world in the early 18th century. It had 22.6 percent share of the world's GDP, which came down to around 16 percent by 1820, closer to its share of world population.13 It had a developed banking system and vigorous merchant capital, with a network of agents, brokers and middlemen. Given the enormous financial surplus, a skilled artisan class, large exports, plenty of arable land and reasonable productivity.

India begins to re-industrialisationIndian entrepreneurs began to set up their own modern textile mills after 1850 and very slowly began to recapture the domestic market. In 1896, Indian mills supplied 8% of the total cloth consumed in India; in 1913, 20%; in 1936, 62%; and by 1945, 76%. Although India did not participate in global trade expansion between 1870 and 1913,

Indian businessmen made large profits during the First World War, which they reinvested in after the war. Thus, India's manufacturing output grew 5.6 percent per year in 1913-38, well above the world average of 3.3 percent.” The British government finally provided tariff protection from the 1920s, which helped industrialists to expand and diversify.

By Independence in 1947, Indian entrepreneurs were strong and in a position to buy out the businesses of the departing British. Industry's share in India's GNP had doubled from 3.8 percent (in 1913) to 7.5 percent (in 1947), and the share of manufactures in her exports rose from 22.4 percent (in 1913) to 30 percent (in 1947).

The ruthless exploitation under British colonial rule completely devastated India’s economy. India’s population was subject to frequent famines, had one of the world's lowest life expectancies, suffered from pervasive malnutrition and was largely illiterate. As per British economist, Angus Maddison India’s share of the world income went from27% in 1700 AD (compared to Europe's share of 23%) to 3% in 1950.

INDIAN GROWTH 1900-2000Colonial Post-Independence Reform Period

Fig. 4 Indian Growth in 1900-2000 Source: http://gurcharandas.org/rich-nation-poor

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Year 1900-1950 1950-1980 1981-1990 1991-2000

GDP growth 0.8 3.5 5.6 6.2Per capita growth 0 1.3 3.5 4.4


Monitoring the World Economy, 1820-1992 (Paris: OECD); 1990-2000: World Bank/IMF. Although 1991 is the celebrated turning point of India's economic reforms, modest and significant reforms began in the 1980s

Indian Economy: Journey after independenceSince 1951, India has grown as a planned economy. The first few plans focused on growth with strengthening of the manufacturing sector emphasizing heavy industries to form the backbone of the economy. Other principal areas of planning were agriculture and social development i.e. Housing and poverty alleviation.

Over the years India saw a changing composition of its economic structure: agriculture which initially comprised of 51.9% of the GDP now comprises around 16% and services comprise a massive 60% of the GDP in 2014 growing from 30% in the 50s.

Fig. 5 Economic Journey Source: www.economictimes.com

Landmark changes in 1991 were brought about under pressure from IMF and World Bank when India was left with foreign exchanges to barely support two weeks imports. The new era saw delicensing, massive tariff reductions, FDI cap relaxations and gradual convertibility of the current account followed by the capital account. The liberalisation process started in the early nineties has seen massive growth especially in the services sector. India has consistently grown at more than 6% over the last five years and in terms of sheer GDP PPP currently stands at rank 4 in the world according to latest World Bank estimates. However, when we look at GDP per capita by PPP we rank at 153 according to the World Bank Liberalisation has helped India grow consistently and boost up its forex reserves through massive inflows of foreign funds both through FDI and FII establishing India among the world’s top three most preferred investment destinations.

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Economic developments is also very significant one in the development of any country. We can consider it as a backbone of the country.in this 21st century Indian economy is one of the most discussing matter among other country even India considering as a developing country. In short, Indian economy has a bright future. But a better proper plan is very vital to develop such a brilliant economy. Mainly Indian economy consist of agriculture, industries etc.Three sectors of economy in India 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. 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.

Fig. 6 Structural growth Source: www.planningcommission.gov.in

GDP growth rates for agriculture, industry and services sectors realized during the Eleventh Five Year Plan Period were at 4.1 percent, 7.7 per cent and 9.4 per cent against the growth target of 4 per cent, 10-11 per cent and 9-11 per cent respectively. The Twelfth Plan targets

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growth rates of 4 per cent for agriculture, 7.6 per cent for industry and 9.0 per cent for services, thereby aiming at 8 per cent growth in overall GDP

The growth rates for three sectors, namely, Agriculture, Industry and Services, were at 4.6 percent, 0.7 per cent and 6.9 percent respectively, during 2013-14 (i.e. the second year of Twelfth Plan)

Growth performance of Agriculture Sector after independenceAgriculture, as a sector, has been playing a decisive role in shaping the overall growth trajectories of the Indian economy since Independence. As is well-known, in the overall Gross Domestic Product (GDP) of the country, the contribution of the primary sector (which comprises agriculture, forestry and fishing, and mining and quarrying) has come down substantially over the years, and, it accounts for 13.7 percent as of 2012-13. During 1950-51, the primary sector was contributing 51.9 percent of the country’s GDP (at factor cost and at 2004-05 constant prices), which declined to 29.5 percent by 1990-91 and has shrunk further to 13.7 percent by 2012-13.

Further, the share of ‘agriculture’ alone (within the primary sector) was recorded at a low of 11.6 percent in 2012-13, from a much higher share (in GDP) of 41.8 percent during 1950-51. Much of this decline in percentage share of agriculture sector in the overall GDP of the economy seems to have been due to the increasing contributions of other sectors, viz. industry and services sectors, during the said period. Such a trajectory of economic transformation, as witnessed in India, has been commonly observed across the world.

However, in spite of this decline in its share in the country’s GDP, half of India’s population is still dependent on agriculture as the major source of their livelihood. Moreover, as a source of raw materials for a number of sectors and its share in the country’s total exports, the linkages of agriculture with overall economic growth and well-being are well established.

The Agriculture and Allied Sector is estimated to contribute approximately 13.9% of India’s GDP (at constant 2004-05 prices) during 2011-12 as per advance estimate released by CSO on 07.02.2012.

GDP of Agriculture and Allied Sectors and its share in the total GDP of the country during the last 4 years, including current year, at 2004-05 prices, is as follows:

. Fig. 7 Agriculture Contribution Source: http://www.ekalavvya.com/

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http://www.ekalavvya.com/wp-content/uploads/2012/09/09102012-Agri-contribution-to-GDP-declining-equitymaster1.gif


There has been a continuous decline in the share of Agriculture and Allied Sectors in the GDP from 16.8 per cent in 2007-08 to 13.9 per cent in 2011-12 at 2004-05 prices.Falling share of Agriculture and Allied Sectors in GDP is an expected outcome in a fast growing and structurally changing economy.

Recent changes in agriculture sector The agriculture sector grew at an impressive rate of 8.6 per cent in 2010-11 but declined to 5 per cent in the year 2011-12. However, it yielded an average of 4.1 per cent during the Eleventh Plan Period, above the targeted growth rate of 4 per cent. There was further moderation in the growth seen in the agriculture sector which, estimated at 1.4 per cent for the year 2012-13 as per the First Revise Estimates. According to the Advance Estimates, it is expected to grow at 4.6 per cent in the year 2013-14. This is based on an expected increase in the production of food grains which is estimated to grow by 2.3 per cent, in comparison to a decline of 0.8 per cent seen in data of the previous year by Department of Agriculture andCooperation (DAC).

Annual Growth Rate of GDP by Industry of Origin at Constant (2004-05) (percent)

Fig. 8 Growth Rate Source: www.planningcommision.gov.in

Growth performance of Industrial Sector after independenceIndustrialisation has a major role to play in the economic development of the underdeveloped countries. The gap in per capita income between the developed and underdeveloped countries is largely reflected in the disparity in the structure of their economies.From olden time onwards Indian industry was a renounced one. During that time, the industrial set up was entirely traditional. There were many artisans and handicraft products, which attracted the world market. After the colonization, it began to spread the modern industries and the economic set up of India also began to change.India is tenth in the world in factory output. Manufacturing sector in addition to mining, quarrying, electricity and gas together account for 27.6% of the GDP. And 9th largest on inflation adjusted constant 2005 US dollar basis ($197.1 billion).

The Indian industrial sector underwent significant changes as a result of the economic liberalisation in India economic reforms of 1991, which removed import restrictions, brought in foreign competition, led to the privatisation of certain government owned public sector industries, liberalised the FDI regime, improved infrastructure and led to an expansion in the production of fast moving consumer goods.

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Fig. 9 India Industrial Production Source: www.tradingeconomics.com/inida

This charts show the industrial production of India in various years. Industrial Production in India averaged 6.54 percent from 1994 until 2015, reaching an all-time high of 20 percent in November of 2006 and a record low of -7.20 percent in February of 2009. Industrial Production in India is reported by the Ministry of Statistics and Programme Implementation (MOSPI).

Recent changes in the industrial sector of India Industrial growth also exhibited slowdown in the year 2012-13, at 1 per cent as per Revised Estimates as compared to growth of 7.8 per cent in the year 2011-12. The decline in industrial growth in the year 2012-13 may be attributed to the fall of the growth rates in the 'manufacturing' sector at 1.1 per cent, 'construction' which at 1.1 per cent, 'electricity, gas & water supply' at 2.3 per cent and, 'mining and quarrying' at (-) 2.2 per cent. These sector had higher growth rates in the year 2011-12 with the sectors of 'manufacturing' at 7.4 per cent, 'construction' at 10.8 percent, 'electricity, gas and water supply' at 8.4 per cent, and 'mining and quarrying' at 0.1 percent . In the comparatively low growth rates seen in different sectors evidences that the industry sector had faced shortfalls growing at 0.2 per cent in the first quarter of the year 2013-14, 2.3 percent In the second quarter and registered a negative growth of 0.7 per cent in the third quarter. The Advance Estimates for the year 2013-14 estimate growth of (-) 0.2 per cent in 'manufacturing', 1.7 percent in 'construction', 6 per cent in 'electricity, gas and water supply' and (-) 1.9 per cent in 'mining and quarrying' sector; together yielding a growth rate of 0.7 per cent for the industry sector during this period.

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Fig.10 Growth Rate Source: www.planningcommission.com

Government latest initiative to develop industrial sectorWith launch of the ‘Make in India’ initiative, Mr Narendra Modi, the Prime Minister of India, aims to give global recognition to the Indian economy and also place India on the world map as a manufacturing hub.India has also set for itself an ambitious target of increasing the contribution of manufacturing output to 25 per cent of gross domestic product (GDP) by 2025, from 16 per cent currently.India's economy is expected to grow at 7.4 per cent in 2014-15 as per a Government forecast. According to a new formula which uses 2011-12 as the new 'base year', the revised statistics showed inflation-adjusted economic growth rate for October-December 2014 at 7.5 per cent, making India the fastest growing major economy in the world.

Fig. 11 Manufacturing clusters of India Source: Google Images

E-biz project: Under the project a Government to Business (G2B) portal is being set up to serve as a one stop shop for delivery of services to the investors and address the needs of the business and industry from inception through the entire life cycle of the business. The process of applying for industrial licence and industrial entrepreneur memorandum has been made online

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Road AheadThe Government of India has an ambitious plan to locally manufacture as many as 181 products. The move could help infrastructure sectors such as power, oil and gas, and automobile manufacturing that require large capital expenditure and revive the Rs 1.85 trillion (US$ 29.74 billion) Indian capital goods business.India is an attractive hub for foreign investments in manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country.With impetus on developing industrial corridors and smart cities, the government aims to ensure holistic development of the nation. The corridors would further assist in integrating, monitoring and developing a conducive environment for the industrial development and will promote advance practices in manufacturing.

Growth performance of Service Sector after independenceThe service sector, also called tertiary sector, is the third of the three economic sectors. The service sector is an important part of the economy. India's services sector has the largest share in the GDP, accounting for 57% in 2012, up from 15% in 1950. Information technology and business process outsourcing are among the fastest-growing sectors.A trend that started some two decades back is now well in its prime. Several multinational firms continue to outsource their tele services and IT services to India. The acquisition of expertise in information technology has led to the generation of thousands of new jobs, which in turn increased domestic consumption and naturally, more foreign direct investments happened to meet the demands.

India Services PMIServices PMI in India increased to 53.90 Index Points in February of 2015 from 52.40 Index Points in January of 2015. Services PMI in India averaged 51.37 Index Points from 2012 until 2014, reaching an all-time high of 57.50 Index Points in January of 2013 and a record low of 44.60 Index Points in September of 2013.

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Fig.12 India Service PMI Source: www.tradingeconomics.com

Recent changes in the service sector of India The growth in services sector was recorded at 7 per cent in 2012-13 as per Revised Estimates and 6.9 per cent in the year 2013-14, according to the Advance Estimates as compared to 6.6 percent in the year 2011-12. However, growth in services sector declined from 6.7 percent in the first quarter of 2013-14 to 6 percent in the second quarter, due to the stagnant growth in 'Trade, hotels, transport and communications', at around 4 per cent for both quarters.And a significant fall in the growth rate of 'Community, social and personal services' from 9.4 percent in the first quarter of 2013-14 to 4.2 per cent in the second quarter. However, in the third quarter of the year 2013-14, 'Trade, hotels, transport and communications' recorded a growth of 4.3 percent and growth in 'Community, social and personal services' rose to 7.0 percent, resulting in an increase in service sector growth to 7.6 percent for the third quarter of 2013-14


Fig 13 Growth Rate Source: www.planningcommission.gov.in

According to the Quarterly Estimates released by the CSO on 28th February, 2014. The relatively slow pace of growth in services sector, over the years, is attributable in part to the global crises faced during the Eleventh Plan, wherein growth of the service sector, a major contributor to India's GDP, moderated to 9.7 per cent in the year 2010-11 and 6.6 percent in the year 2011-12.The major drivers of growth in 2012-13 have been 'financing, insurance, real estate and business services' (10.9 per cent), 'transport, storage and communication' (6 per cent) and 'community, social and personal services' (5.3 percent).However, the moderation in growth of services sector is mainly attributed to a fall in the growth rate of trade, hotels & restaurants and transport, storage & communication from 12 percent in 2010-11 to 1.2 per cent in 201112 and 12.6 per cent in 2010-11 to 9.4 percent 2011-12, respectively. In 2012-13, the growth of these sectors was recorded at 4.5 per cent and 6 per cent respectively.

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http://www.planningcommission.gov.in/


Employment in all sectors of India

Fig. 14 Employment Rate Source: Google Images

AgricultureIndia ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing. As Indian economy has diversified and grown, agriculture's contribution to GDP has steadily declined from 1951 to 2011, yet it is still the largest employment source and a significant piece of the overall socio-economic development of India.The changing structure of Indian agriculture in terms of employment and land holding. Is that the share of agriculture in employment declined from about 82 percent in 1950/51 to about 53 percent in 2010 and the number is still declining.

Industrial SectorManufacturing sector in addition to mining, quarrying, electricity and gas together account for 27.6% of the GDP and employ 17% of the total workforce. Economic reforms introduced after 1991 brought foreign competition, led to privatisation of certain public sector industries, opened up sectors hitherto reserved for the public sector Service SectorIndia's services sector has the largest share in the GDP, accounting for 57% in 2012, up from 15% in 1950.It is the 12th largest in the world by nominal GDP, and fourth largest when purchasing power is taken into account. The services sector provides employment to 27% of the work force. Information technology and business process outsourcing are among the fastest-growing sectors, having a cumulative growth rate of revenue 33.6% between 1997 and 1998 and 2002–03 and contributing to 25% of the country's total exports in 2007–08. The growth in the IT sector is attributed to increased specialisation, and an availability of a large pool of low cost, highly skilled, educated and fluent English-speaking workers

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Conclusion

India can become $10 trillion economy in 20 yearsIndia has the potential to achieve 9 per cent growth rate and become a $10 trillion economy by 2035 on the back of concerted efforts by the corporate sector and a constructive role played by the government. Up to 40 per cent of India's $10 trillion economy of 2035 could be derived from new solutions,

Fig. 15 Future of India Source: www.etcinternational.com

India will overtake China to become the world’s biggest economy in less than 40 years, according to leading economist Douglas McWilliams, chief executive of the Centre for Economics and Business Research think-tank

Challenges to Economy of India1. Inadequate supply of infrastructure2. Corruption3. Bureaucracy4. Policy instability5. Inflation6. Financing7. Workforce8. Tax rates9. Innovation10. Forex11. Security12. Government instability/coups

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13. Healthcare

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Data & Analytics

Indian economy before independence and after independence