Indian economy

The economy of India is a developing mixed economy with a notable public sector in strategic sectors.[47] It is the world's fourth-largest economy by nominal GDP[48][49] and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 136th by nominal GDP and 119th by PPP-adjusted GDP.[50] From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat-driven enterprises and economic regulation. This was a form of the Licence Raj.[51][52][53] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.[54][55] India has about 1,900 public sector companies,[56] with the Indian state having complete control and ownership of railways. While the Indian government retains ownership through the National Highways Authority of India (NHAI), a large share of new national highway projects are now built and maintained under Public–private partnership (PPP) models rather than being fully government‑funded.[57][58] The government plays a major role in sectors like supercomputing, space and shipping but private participation is growing, especially in space, telecom, and satellite communications.[59] Nearly 70% of India's GDP is driven by domestic consumption;[60] the country remains the world's third-largest consumer market.[61] Aside from private consumption, India's GDP is also fueled by government spending, investments, and exports.[62] As of 2025, India is the world's 7th-largest importer and the 10th-largest exporter.[63] India is often described as the ‘pharmacy of the world’, supplying roughly 20% of the global demand for generic medicines and exporting pharmaceuticals to over 200 countries in 2023–24, with around 70% of exports to highly regulated markets like North America and Europe.[64][65] India has been a member of the World Trade Organization since 1 January 1995.[66] It ranks 40th on the Global Competitiveness Index.[67][68] As of 2025, India ranks third in the world in total number of billionaires.[69] According to the World Bank, India's Gini index fell to 25.5 in 2022‑23, making it the fourth-most equal country globally, suggesting significant progress in income equality.[70][71][72][73] Economists and social scientists often consider India a welfare state.[74][75][76][77] India's overall social welfare spending stood at 8.6% of GDP in 2021-22.[78][79] With 607 million workers, the Indian labour force is the world's second-largest.[80] Although India's labour productivity is lower than advanced economies, it aligns with levels observed in many emerging Asian countries like China.[81] In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the Finance, Banking, Insurance and R&D.[82] India has established free trade agreements and economic‑partnership with several countries and regional blocs, including ASEAN, SAFTA, Japan, South Korea, Australia, New Zealand, Oman and the United Arab Emirates, while also concluding agreements with EFTA (Iceland, Liechtenstein, Norway, Switzerland) and the United Kingdom. India maintains Comprehensive Economic Cooperation Agreements (CECA/CEPA) with Singapore, Malaysia, Mauritius, and Japan, and continues to negotiate or review trade agreements with partners such as Chile, Canada, Israel, the European Union, and the Eurasian Economic Union.

The economy of India is a developing mixed economy with a notable public sector in strategic sectors.[47] It is the world's fourth-largest economy by nominal GDP[48][49] and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 136th by nominal GDP and 119th by PPP-adjusted GDP.[50] From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat-driven enterprises and economic regulation. This was a form of the Licence Raj.[51][52][53] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.[54][55] India has about 1,900 public sector companies,[56] with the Indian state having complete control and ownership of railways. While the Indian government retains ownership through the National Highways Authority of India (NHAI), a large share of new national highway projects are now built and maintained under Public–private partnership (PPP) models rather than being fully government‑funded.[57][58] The government plays a major role in sectors like supercomputing, space and shipping but private participation is growing, especially in space, telecom, and satellite communications.[59] Nearly 70% of India's GDP is driven by domestic consumption;[60] the country remains the world's third-largest consumer market.[61] Aside from private consumption, India's GDP is also fueled by government spending, investments, and exports.[62] As of 2025, India is the world's 7th-largest importer and the 10th-largest exporter.[63] India is often described as the ‘pharmacy of the world’, supplying roughly 20% of the global demand for generic medicines and exporting pharmaceuticals to over 200 countries in 2023–24, with around 70% of exports to highly regulated markets like North America and Europe.[64][65] India has been a member of the World Trade Organization since 1 January 1995.[66] It ranks 40th on the Global Competitiveness Index.[67][68] As of 2025, India ranks third in the world in total number of billionaires.[69] According to the World Bank, India's Gini index fell to 25.5 in 2022‑23, making it the fourth-most equal country globally, suggesting significant progress in income equality.[70][71][72][73] Economists and social scientists often consider India a welfare state.[74][75][76][77] India's overall social welfare spending stood at 8.6% of GDP in 2021-22.[78][79] With 607 million workers, the Indian labour force is the world's second-largest.[80] Although India's labour productivity is lower than advanced economies, it aligns with levels observed in many emerging Asian countries like China.[81] In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the Finance, Banking, Insurance and R&D.[82] India has established free trade agreements and economic‑partnership with several countries and regional blocs, including ASEAN, SAFTA, Japan, South Korea, Australia, New Zealand, Oman and the United Arab Emirates, while also concluding agreements with EFTA (Iceland, Liechtenstein, Norway, Switzerland) and the United Kingdom. India maintains Comprehensive Economic Cooperation Agreements (CECA/CEPA) with Singapore, Malaysia, Mauritius, and Japan, and continues to negotiate or review trade agreements with partners such as Chile, Canada, Israel, the European Union, and the Eurasian Economic Union. Additionally, India has bilateral investment and tax treaties with countries including Bangladesh, Uzbekistan, Kyrgyzstan, Belarus, and Trinidad & Tobago.[83][84][85][86][87] As of 2025, the service sector accounts for around 55% of GDP. [88] India has two of the world's ten largest stock exchanges (both by trade volume and market capitalisation).[89] According to United Nations Industrial Development Organization (UNIDO) India is the world's fifth-largest manufacturer, representing 3.2% of global manufacturing output.[90] India’s digital economy was estimated at US$402 billion in 2022–23, equal to about 11.74% of GDP, and is projected to rise to around 13.4% by 2024–25 and nearly 20% of GDP by 2029–30, with its total value expected to surpass US$1 trillion by 2029.[91][92] Nearly 63% of India's population is rural,[90] and contributes about 46% of India's GDP.[93][94] India's unemployment rate remained at 3.2% in 2023–24.[95] The labour force participation rate reached 60.1% overall, with a worker–population ratio of 58.2%.[95] India's gross domestic savings rate stood at 29.3% of GDP in 2022.[96] History Main articles: Economic history of India and Timeline of the economy of the Indian subcontinent For a continuous duration of nearly 1700 years from the year 1 CE, India was the world's largest economy, constituting 35 to 40% of the world GDP.[97] The combination of protectionist, import-substitution, Fabian socialism, and social democratic-inspired policies governed India for sometime after the end of British rule. The economy was then characterised as Dirigism,[52][53] It had extensive regulation, protectionism, public ownership of large monopolies, pervasive corruption and slow growth.[54][55][98] Since 1991, continuing economic liberalisation has moved the country towards a market-based economy.[54][55] By 2008, India had established itself as one of the world's faster-growing economies. Ancient and medieval eras Indus Valley Civilisation The citizens of the Indus Valley civilisation, a permanent settlement that flourished between 2800 BCE and 1800 BCE, practised agriculture, domesticated animals, used uniform weights and measures, made tools and weapons, and traded with other cities. Evidence of well-planned streets, a drainage system, and water supply reveals their knowledge of urban planning, which included the first-known urban sanitation systems and the existence of a form of municipal government.[99] West Coast Maritime trade was carried out extensively between southern regions of India and Southeast Asia and West Asia from early times until around the fourteenth century CE. Both the Malabar and Coromandel Coasts were the sites of important trading centres from as early as the first century BCE, used for import and export as well as transit points between the Mediterranean region and southeast Asia.[100] Over time, traders organised themselves into associations which received state patronage. This state patronage for overseas trade came to an end by the thirteenth century CE, when it was largely taken over by the local Parsi, Jewish, Syrian Christian, and Muslim communities, initially on the Malabar and subsequently on the Coromandel coast.[10

The economy of India is a developing mixed economy with a notable public sector in strategic sectors.[47] It is the world's fourth-largest economy by nominal GDP[48][49] and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 136th by nominal GDP and 119th by PPP-adjusted GDP.[50] From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat-driven enterprises and economic regulation. This was a form of the Licence Raj.[51][52][53] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.[54][55] India has about 1,900 public sector companies,[56] with the Indian state having complete control and ownership of railways. While the Indian government retains ownership through the National Highways Authority of India (NHAI), a large share of new national highway projects are now built and maintained under Public–private partnership (PPP) models rather than being fully government‑funded.[57][58] The government plays a major role in sectors like supercomputing, space and shipping but private participation is growing, especially in space, telecom, and satellite communications.[59] Nearly 70% of India's GDP is driven by domestic consumption;[60] the country remains the world's third-largest consumer market.[61] Aside from private consumption, India's GDP is also fueled by government spending, investments, and exports.[62] As of 2025, India is the world's 7th-largest importer and the 10th-largest exporter.[63] India is often described as the ‘pharmacy of the world’, supplying roughly 20% of the global demand for generic medicines and exporting pharmaceuticals to over 200 countries in 2023–24, with around 70% of exports to highly regulated markets like North America and Europe.[64][65] India has been a member of the World Trade Organization since 1 January 1995.[66] It ranks 40th on the Global Competitiveness Index.[67][68] As of 2025, India ranks third in the world in total number of billionaires.[69] According to the World Bank, India's Gini index fell to 25.5 in 2022‑23, making it the fourth-most equal country globally, suggesting significant progress in income equality.[70][71][72][73] Economists and social scientists often consider India a welfare state.[74][75][76][77] India's overall social welfare spending stood at 8.6% of GDP in 2021-22.[78][79] With 607 million workers, the Indian labour force is the world's second-largest.[80] Although India's labour productivity is lower than advanced economies, it aligns with levels observed in many emerging Asian countries like China.[81] In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the Finance, Banking, Insurance and R&D.[82] India has established free trade agreements and economic‑partnership with several countries and regional blocs, including ASEAN, SAFTA, Japan, South Korea, Australia, New Zealand, Oman and the United Arab Emirates, while also concluding agreements with EFTA (Iceland, Liechtenstein, Norway, Switzerland) and the United Kingdom. India maintains Comprehensive Economic Cooperation Agreements (CECA/CEPA) with Singapore, Malaysia, Mauritius, and Japan, and continues to negotiate or review trade agreements with partners such as Chile, Canada, Israel, the European Union, and the Eurasian Economic Union. Additionally, India has bilateral investment and tax treaties with countries including Bangladesh, Uzbekistan, Kyrgyzstan, Belarus, and Trinidad & Tobago.[83][84][85][86][87] As of 2025, the service sector accounts for around 55% of GDP. [88] India has two of the world's ten largest stock exchanges (both by trade volume and market capitalisation).[89] According to United Nations Industrial Development Organization (UNIDO) India is the world's fifth-largest manufacturer, representing 3.2% of global manufacturing output.[90] India’s digital economy was estimated at US$402 billion in 2022–23, equal to about 11.74% of GDP, and is projected to rise to around 13.4% by 2024–25 and nearly 20% of GDP by 2029–30, with its total value expected to surpass US$1 trillion by 2029.[91][92] Nearly 63% of India's population is rural,[90] and contributes about 46% of India's GDP.[93][94] India's unemployment rate remained at 3.2% in 2023–24.[95] The labour force participation rate reached 60.1% overall, with a worker–population ratio of 58.2%.[95] India's gross domestic savings rate stood at 29.3% of GDP in 2022.[96] History Main articles: Economic history of India and Timeline of the economy of the Indian subcontinent For a continuous duration of nearly 1700 years from the year 1 CE, India was the world's largest economy, constituting 35 to 40% of the world GDP.[97] The combination of protectionist, import-substitution, Fabian socialism, and social democratic-inspired policies governed India for sometime after the end of British rule. The economy was then characterised as Dirigism,[52][53] It had extensive regulation, protectionism, public ownership of large monopolies, pervasive corruption and slow growth.[54][55][98] Since 1991, continuing economic liberalisation has moved the country towards a market-based economy.[54][55] By 2008, India had established itself as one of the world's faster-growing economies. Ancient and medieval eras Indus Valley Civilisation The citizens of the Indus Valley civilisation, a permanent settlement that flourished between 2800 BCE and 1800 BCE, practised agriculture, domesticated animals, used uniform weights and measures, made tools and weapons, and traded with other cities. Evidence of well-planned streets, a drainage system, and water supply reveals their knowledge of urban planning, which included the first-known urban sanitation systems and the existence of a form of municipal government.[99] West Coast Maritime trade was carried out extensively between southern regions of India and Southeast Asia and West Asia from early times until around the fourteenth century CE. Both the Malabar and Coromandel Coasts were the sites of important trading centres from as early as the first century BCE, used for import and export as well as transit points between the Mediterranean region and southeast Asia.[100] Over time, traders organised themselves into associations which received state patronage. This state patronage for overseas trade came to an end by the thirteenth century CE, when it was largely taken over by the local Parsi, Jewish, Syrian Christian, and Muslim communities, initially on the Malabar and subsequently on the Coromandel coast.[10