The economy of the India is the fourth largest economy in the world with a GDP of $3 trillion (2007) when measured on Purchasing Power Parity (PPP) basis. Since 1991, continuing economic liberalization has moved India towards a market economy and transformed it into a fast- growing economy with a growth rate of 9% in 2007.
India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries and a multitude of services. Services are the major source of economic growth, accounting for more than half of India’s output with less than one-third of its labour force.
About three-fifths of the workforce is in agriculture but they make up less than a third of GDP. Previously a closed economy, India’s trade has grown fast. India currently accounts for 1.5% of World trade as of 2007 according to the WTO.
Image Source: agriculturalorganics.com
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According to the World Trade Statistics of the WTO in 2006, India’s total merchandise trade (export + import) was valued at 294 billion dollars in 2006 and India’s services trade inclusive of export and import was 143 billion dollars.
Thus, India’s global economic engagement in 2006 covering both merchandise and services trade was of the order of 437 billion dollars, up by a record 72 percent from a level of 253 billion dollars in 2004.
India remains one of the poorest countries in the world. Although the Indian economy has grown steadily over the last two decades; its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas. Unemployment rate is 7.2% (2007 estimate).
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The percentage of people living below the new international poverty line $1.25 a day (PPP, in nominal terms Rs 21.6 a day in urban areas and Rs 14.3 in rural areas in 2005) decreased from 60% in 1981 to 42% in 2005. 85.7% of the population was living on less than $2.50 (PPP) a day in 2005, compared with 80.5% for Sub- Saharan Africa.
Even though the arrival of Green Revolution brought end to famines in India, half of children are underweight, one of the highest rates in the world and nearly double the rate of Sub-Saharan Africa.