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Economy of India

For most of its democratic history, India adhered to a quasi-socialist approach, with strict government control over private sector participation, foreign trade, and foreign direct investment. However, since 1991, India has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment. Forex reserves have risen from US$5.8 billion in March 1991 to US$177 billion in January 2007. High level of foreign reserves acts as a cushion against external shocks. Privatisation of publicly-owned industries and the opening of certain sectors to private and foreign participation has continued amid political debate.

With a GDP growth rate of 9.2%, the Indian economy is among the fastest growing in the world. It is the world's third largest as measured by purchasing power parity (PPP), with a GDP of US $4.042 trillion. However, when measured by USD exchange-rate terms, it is the twelfth largest in the world, with a GDP of US$785.47 billion. A Goldman Sachs report recently cited by BBC News stated that 'India could overtake Britain and have the world's fifth largest economy within a decade as the country's growth accelerates' [13] Wealth distribution in India, a developing country, is fairly uneven, with the top 10% of income groups earning 33% of all income. India's per capita income of US $3,700 is ranked 117nd in the world. The federal and state budget deficits, has reduced.

India has a labour force of 509.3 million, 60% of which is employed in agriculture or agriculture-related industries. The service sector accounts for 54% of GDP; the agricultural and industrial sectors make up 28% and 18% respectively. Major agricultural crops include rice, wheat, oilseed, cotton, jute, tea, sugarcane, and potatoes. Major industries include automobiles, cement, chemicals, consumer electronics, food processing, machinery, mining, petroleum, pharmaceuticals, steel, transportation equipment and textiles.

Last year exports stood at US$112 billion and imports was around US$187.9 billion. Textiles, Jewellery, Engineering goods and software are major export commodities.Crude oil, machineries, fertilizers and chemicals are major import commodities. India's most important trading partners are the United States, the European Union, Japan, China, and the United Arab Emirates.More recently, India has capitalised on its large pool of educated, English-speaking people to become an important outsourcing destination for multinational corporations. India has also become a major exporter of software as well as financial, research, and technology services. India's software exports is growing at the rate 30-35% per year.