According to the International Monetary Fund, as of 2011, the Indian economy is nominally worth US$1.843 trillion; it is the tenth-largest economy by market exchange rates, and is, at US$4.469 trillion, the third-largest by purchasing power parity, or PPP.[5] With its average annual GDP growth rate of 5.8% over the past two decades, and reaching 10.4% during 2010,[193] India is one of the world's fastest-growing economies.[194] However, the country ranks 138th in the world in nominal GDP per capita and 129th in GDP per capita at PPP.[5] Until 1991, all Indian governments followed protectionist policies that were influenced by socialist economics. Widespread state intervention and regulation largely walled the economy off from the outside world. An acute balance of payments crisis in 1991 forced the nation to liberalise its economy;[195] since then it has slowly moved towards a free-market system[196][197] by emphasizing both foreign trade and direct investment inflows.[198] India's recent economic model is largely capitalist.[197]
The 467-million worker Indian labour force is the world's second-largest.[6] The service sector makes up 54% of GDP, the agricultural sector 28%, and the industrial sector 18%. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, and potatoes.[165] Major industries include textiles, telecommunications, chemicals, food processing, steel, transport equipment, cement, mining, petroleum, machinery, and software.[165] In 2006, the share of external trade in India's GDP stood at 24%, up from 6% in 1985.[196] In 2008, India's share of world trade was 1.68%;[199] India was the world'sfifteenth-largest importer in 2009 and the eighteenth-largest exporter.[200] Major exports include petroleum products, textile goods, jewelry, software, engineering goods, chemicals, and leather manufactures.[165] Major imports include crude oil, machinery, gems, fertiliser, and chemicals.[165] Between 2001 and 2011, the contribution of petrochemical and engineering goods to total exports grew from 14% to 42%.[201]
Averaging an economic growth rate of 7.5% during the last few years,[196] India has more than doubled its hourly wage rates during the last decade.[202] Some 431 million Indians have left poverty since 1985; India's middle classes are projected to number around 580 million by 2030.[203] Though ranking 51st in global competitiveness, India ranks 17th in financial market sophistication, 24th in the banking sector, 44th in business sophistication, and 39th in innovation, ahead of several advanced economies.[204] With 7 of the world's top 15 information technology outsourcing companies based in India, the country is viewed as the second-most favourable outsourcing destination after the United States.[205] India's consumer market, currently the world's thirteenth-largest, is expected to become fifth-largest by 2030.[203] Its telecommunication industry, the world's fastest-growing, added 227 million subscribers during the period 2010–11.[206] Its automotive industry, the world's second fastest growing, increased domestic sales by 26% during 2009–10,[207] and exports by 36% during 2008–09.[208] Power capacity is 250 gigawatts, of which 8% is renewable.[209]
Despite impressive economic growth during recent decades, India continues to face socio-economic challenges. India contains the largest concentration of people living below the World Bank's international poverty line of US$1.25 per day,[210] the proportion having decreased from 60% in 1981 to 42% in 2005.[211] Half of the children in India are underweight,[212] and 46% of children under the age of three suffer from malnutrition.[210] The Mid-Day Meal Scheme attempts to lower these rates.[213] Since 1991, economic inequality between India's states has consistently grown: the per-capita net state domestic product of the richest states in 2007 was 3.2 times that of the poorest.[214] Corruption in India is perceived to have increased significantly,[215] with one report estimating the illegal capital flows since independence to be US$462 billion.[216] Driven by growth, India's nominal GDP per capita has steadily increased from US$329 in 1991, when economic liberalisation began, to US$1,265 in 2010, and is estimated to increase to US$2,110 by 2016; however, it has always remained lower than those of other Asian developing countries such as Indonesia, Iran, Malaysia, Philippines, Sri Lanka, and Thailand, and is expected to remain so in the near future.[217]
According to a 2011 PricewaterhouseCoopers report, India's GDP at purchasing power parity could overtake that of the United States by 2045.[218] During the next four decades, Indian GDP is expected to grow at an annualised average of 8%, making it potentially the world's fastest-growing major economy until 2050.[218] The report highlights key growth factors: a young and rapidly growing working-age population; growth in the manufacturing sector due to rising education and engineering skill levels; and sustained growth of the consumer market driven by a rapidly growing middle class.[218] The World Bank cautions that, for India to achieve its economic potential, it must continue to focus on public sector reform, transport infrastructure, agricultural and rural development, removal of labour regulations, education, energy security, and public health and nutrition.[219]
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