MBA India

Indian Economy


 

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By nominal GDP Indian economy is ranked as the 11th largest. And the PPP was of US$3290, by 2010. The country is managing free market principles since 1991, this encourages a rapid economy growth.

India has been basically by social democratic principles from the middle 40īs until 1991; due to the implications of this management in a country with the background India had economical growth was very slow in the country. Fortunately for Indian economy and starting in 1991 a market based management started thanks to an economic liberalization and the country is now the 2nd fastest growing major economy in the world.

Due to the 2007-2010 economical crisis India suffered, itīs GDP slowed, only to eventually recover in 2009 and 2010.

Agriculture is the main occupation in India, and statistics say that over 50% of employment comes from this activity, some agricultural products are wheat, rice, jute, tea, potato, oilseed, cotton, sugarcane and many other. When it comes to GDP the service industry accounts over 55% whil other sectors such as agriculture accounts for over 28%.

There are many different industries in the country, such as chemicals, steel, textiles, food processing, telecommunications, machinery, mining and many more. Indian labor force accounts over 500 million people. Trading takes place with many countries, being the major ones: China, Saudi Arabia, The USA, Germany and the United Arab Emirates.

Once India gained its independence from the British Raj it was exposed to democratic socialism, partly because of the experience during the colony and partly because of the Soviet Union Economy. Economy in India was protectionist and interventionist and by the 50īs mining, steel, insurance, and among others were nationalized.

Economy had a very low rate of growth for three decades when the country got its independence; this economy spectrum is known as the Hindu Rate of Growth.

By 1965, India went through what is known as the Green Revolution, using increased fertilizers, better irrigation facilities, and a variety of seeds the country experienced an increase and improvement in Agriculture, this came along with capitalistic farming, which was not good for the country.

By the late 70īs Morarji Desai promoted the creation of mini industries, and help reduced corporate taxes, he also removed price controls and in the overall helped ease restrictions. Unfortunately Socialism took over again and led to fiscal deficits, the situation got worse with the fall of the Soviet Union (an important partner) and the rise of oil prices due to the Gulf War.

After all this, India started the Economic Liberalization of 1991 with a new approach that included fewer restrictions for foreign investment and no public monopolies. In the overall India is managing a free market economy and the state does not have the same control and pressure over economy.


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