India's Economy

Under guidance of Lecturer:

Mr. Ratha Imchan
Micro-economic (Year 2 Semester 1)
Evening Shift
 • 1.Heng Sreynit
• 2.Heng Sak Sema
• 3.Heang Ming Hong
Members • 4.Ham Seakliv
• 5.Elchan Doungvyros
• 6.Ngiem Kimlang
• 7.Voeurn Sengly
Table of Content

• Country's Introduction
• History of Economic
• GDP/GDP Per Capita
• Important Sectors in GDP
• Unemployment Rate
• Inflation Rate
• Currency/Exchange Rate
• Raw Material/Manufacture
• Export and Import
• Net International Trade
• Special Government Policy
Country's Introduction
• India is a country in South Asia, with a population
of about 1.4 billion people and an area of 3.3
million square kilometers. It is the world's largest
democracy and the second-most populous
country. India has a rich and diverse culture, with
22 official languages and many religions. India is
also known for its ancient history, monuments,
and achievements in science, technology, and
space exploration.
History of Economic
• India’s economy has undergone a
significant transformation from a largely
agrarian and feudal society to a mixed
economy with elements of socialism and
capitalism. After gaining independence in
1947, India adopted a planned economy
with state intervention and
regulation, aiming for self-reliance and
social justice. In 1991, India
initiated economic reforms, liberalizing its
trade, investment, and financial sectors,
and opening up to the global market. Since
then, India has achieved rapid economic
growth, becoming one of the world’s
fastest-growing and largest
economies. India’s economic system is
still evolving, as it faces new opportunities
and challenges in the 21st century
GDP/GDP Per Capita
• India's gross domestic product (GDP) is the total value of
goods and services produced in the country in a given period.
India's GDP per capita is the GDP divided by the population,
which measures the average income or living standard of the
people. According to the World Bank, India's GDP was $2.9
trillion in 2020, making it the fifth-largest economy in the
world. India's GDP per capita was $2,099 in 2020, ranking
142nd in the world. India's GDP growth rate was -7.3% in
2020, due to the impact of the Covid-19 pandemic, but it is
expected to rebound to 8.3% in 2021 and 7.5% in 2022.
India's GDP and GDP per capita have increased significantly
over the last 10 years, as shown in the table below.
• | Year | GDP (current US$ billion) | GDP per capita (current US$) | GDP growth
(annual %) |
• |-------|---------------------------|---------------------------|----------------------|
• | 2010 | 1,708.48 | 1,384.09 | 10.26 |
• | 2011 | 1,823.02 | 1,466.61 | 6.64 |
• | 2012 | 1,827.64 | 1,455.54 | 5.46 |
• | 2013 | 1,856.72 | 1,465.31 | 6.39 |
• | 2014 | 2,039.32 | 1,592.66 | 7.41 |
• | 2015 | 2,103.51 | 1,617.70 | 8.00 |
• | 2016 | 2,290.61 | 1,732.68 | 8.26 |
• | 2017 | 2,652.99 | 1,983.97 | 7.04 |
• | 2018 | 2,726.32 | 2,020.60 | 6.12 |
• | 2019 | 2,875.14 | 2,104.15 | 4.02 |
• | 2020 | 2,869.92 | 2,099.28 | -7.29 |
Important Sectors
in GDP
o India's GDP is composed of three main sectors:
agriculture, industry, and services. The services
sector is the largest and fastest-growing sector,
accounting for 54.4% of India's gross value added
(GVA) in 2020-21. The services sector includes
sub-sectors such as trade, hotels, transport,
communication, finance, real estate, public
administration, and other services. The industry
sector is the second-largest sector, contributing
29.7% of India's GVA in 2020-21. The industry
sector includes sub-sectors such as
manufacturing, mining, electricity, gas, water, and
construction. The agriculture sector is the third-
largest sector, representing 15.9% of India's GVA
in 2020-21. The agriculture sector includes sub-
sectors such as crops, livestock, forestry, and
fishing.
Unemployment Rate
o The unemployment rate is the percentage of the labor force
that is unemployed and actively looking for work. The labor
force is the total number of people who are either employed
or unemployed. According to the Centre for Monitoring
Indian Economy (CMIE), India's unemployment rate was
7.1% in September 2021, down from 8.1% in August 2021.
The urban unemployment rate was 8.3%, while the rural
unemployment rate was 6.5%. The unemployment rate
varies across states, with the highest rate of 18.9% in
Haryana and the lowest rate of 0.8% in Meghalaya. The
unemployment rate also differs by gender, age, and
education level.
 Inflation rate
• The inflation rate is the percentage change in the
average price level of goods and services over a
period of time. The price level is measured by a
consumer price index (CPI), which tracks the
prices of a basket of goods and services that are
consumed by a typical household. The inflation
rate reflects the purchasing power of money and
the cost of living. According to the Ministry of
Statistics and Programmed Implementation
(MOSPI), India's inflation rate based on the CPI
was 4.4% in September 2021, down from 5.3% in
August 2021. The inflation rate was within the
target range of 2-6% set by the Reserve Bank of
India (RBI). The inflation rate varies across
categories, with the highest rate of 9.5% for fuel
and light and the lowest rate of -0.7% for clothing
and footwear. The inflation rate also differs across
states, with the highest rate of 7.8% in Kerala and
the lowest rate of 1.9% in Himachal Pradesh.
Currency/Exchange rate
o The currency of India is the Indian rupee (INR), which is
divided into 100 paise. The exchange rate is the value of
one currency in terms of another currency. The
exchange rate reflects the demand and supply of
currencies in the foreign exchange market, as well as the
economic and political conditions of the countries
involved. The exchange rate can be either fixed or
floating. India follows a managed floating exchange rate
regime, which means that the RBI intervenes in the
market to smooth out excessive volatility and maintain
stability. According to the RBI, the reference exchange
rate of the INR against the US dollar (USD) was 74.81
INR per USD as of October 29, 2021. The exchange rate
of the INR against other major currencies, such as the
euro (EUR), the British pound (GBP), and the Japanese
yen (JPY), can be found on the RBI website.
Raw Material/Manufacture

• India is a major producer and consumer of raw

materials, such as minerals, metals, chemicals, textiles,
and agricultural products. India is also a leading
manufacturer of various products, such as machinery,
electronics, automobiles, pharmaceuticals, and
consumer goods. Some of the important raw materials
and manufactured products of India are:
• Iron ore: India is the fourth-largest producer of
iron ore in the world, with an output of 230
million ton in 2020-21. Iron ore is used to
make steel, which is a key input for various
industries, such as construction, infrastructure,
automobiles, and engineering. India exports
iron ore mainly to China, Japan, and South
Korea, and imports iron ore mainly from
Australia, Brazil, and South Africa.
• Cotton: India is the largest
producer and second-largest
consumer of cotton in the world,
with a production of 36.5 million
bales in 2020-21. Cotton is used
to make textiles, garments, and
other products, such as
cottonseed oil and cottonseed
meal. India exports cotton
mainly to Bangladesh, China,
and Vietnam, and imports cotton
mainly from the US, Australia,
and Egypt.
• Pharmaceuticals: India is the third-
largest producer and the largest
exporter of pharmaceuticals in the
world, with a turnover of $41.7 billion in
2020-21. Pharmaceuticals include
drugs, vaccines, biologics, and medical
devices, which are used to prevent,
diagnose, and treat various diseases
and conditions. India exports
pharmaceuticals mainly to the US, the
UK, and South Africa, and imports
pharmaceuticals mainly from China, the
US, and Germany.
• Electronics: India is the second-largest
producer and the fifth-largest exporter of
electronics in the world, with a production of
$76.9 billion in 2020-21. The electronic sector
in India is a rapidly growing industry, with the
electronics market in India valued at **$155
billion** and domestic production accounting
for **65%** of this value . The electronic
industry in India constitutes less than 1% of
the global electronic industry, but the demand
for electronics hardware in India is growing
rapidly at over **25% per annum** . The
electronic devices industry is segmented into
mobile phones, consumer electronics,
strategic electronics, computer hardware,
LEDs, and industrial electronics, comprising of
auto, medical, and other industrial electronic
products ³. India's electronics production is
projected to become **$300 billion** by FY26
Import and
Export
• India is a significant
player in global trade,
both in terms
of exports and imports.
Let’s delve into the
details:
 The Import of India

Information Technology Textiles and Garments: Pharmaceuticals: India Automobiles and Auto Chemicals and Engineering Goods: Agro-Products: India
and Software Services: The textile and apparel is a significant exporter Components: The Petrochemicals: India Machinery, equipment, exports agricultural
India is renowned for its industry is a major of pharmaceutical automotive sector is a exports a variety of and other engineering products such as rice,
IT and software contributor to India's products, including key contributor to chemicals, including goods constitute a spices, tea, coffee, and
services, and exports a exports. The country is generic medicines. Its India's exports, with the specialty chemicals, substantial portion of marine products.
substantial amount of a leading exporter of pharmaceutical industry country exporting petrochemicals, and India's exports.
software, IT services, textiles, garments, and is one of the largest in vehicles, components, pharmaceutical
and business process home textiles. the world. and accessories to intermediates.
outsourcing (BPO) various markets.
services to countries
around the world.
 Crude Oil and Petroleum
Products: India is heavily
dependent on imports for its
crude oil and petroleum
products to meet its energy
needs.
Gold and Precious Metals:
India is one of the largest
consumers of gold in the
world, and significant
amounts are imported to
meet domestic demand.

The Electronics and Electrical

Equipment: The country
Machinery and Equipment:
India imports machinery and

Export of
imports a considerable equipment for various
amount of electronic goods, industries, including
including consumer manufacturing and

India
electronics and components. infrastructure development.

Coal: To support its energy

Chemicals and Fertilizers:
needs, India imports coal,
India imports chemicals and
although efforts are made to
fertilizers to meet the
increase domestic production
requirements of its industries
and reduce dependence on
and agriculture.
imports.

Defence Equipment: Defence

imports play a role in
strengthening the country's
military capabilities.
 Net Internation Trade

Services
Information Economic Strategic
Sector
Diverse Export Technology Reforms: Over Trade Emerging
Pharmaceutic Surplus: India
Basket: India and Software the years, Partnerships: Sectors: India
al Industry: often Skilled
has a diverse Services: experiences a India has India has been has been
India has The Indian Workforce: implemented actively
range of surplus in the diversifying its
exportable established pharmaceutica India's skilled economic engaging in export base,
l industry is a services and educated
India's goods and itself as a reforms to bilateral and with emerging
major player in sector, workforce is a
international services. Its global hub for liberalize trade multilateral sectors like
the global including IT, key asset in
trade has software IT and and attract trade renewable
market, known software, and delivering
several services, IT software foreign agreements to energy,
for producing business high-quality
positive outsourcing, services. The investment. strengthen its aerospace,
high-quality process services and
aspects that pharmaceutica export of These reforms trade ties. and defense
generic outsourcing. products,
contribute to ls, textiles, and software and have Collaborative gaining
medicines. This surplus making the
the country's automotive IT-enabled contributed to efforts with prominence.
India's helps offset country an
economic industries are services has increased various These sectors
pharmaceutica the trade attractive
growth and globally significantly trade volumes, countries and have the
l exports deficit in destination for
development: competitive, contributed to improved regions aim to potential to
contribute merchandise outsourcing
allowing India the country's business boost exports contribute
significantly to and and
to tap into foreign environments, and create significantly to
healthcare contributes international
various exchange and enhanced mutually India's export
accessibility positively to collaboration.
international earnings and global beneficial growth in the
worldwide. the overall
markets. economic competitivene economic future.
balance of
growth. ss. relationships.
payments.
India has a wide range of policies covering various sectors, including economic, social,
environmental, and foreign policy. Some of the key policy areas include:

Economic Policies: India has implemented various economic policies to promote

growth, attract foreign investment, and address issues such as inflation and fiscal
deficit. Initiatives like "Make in India" and "Goods and Services Tax (GST)" are examples.

Social Welfare Policies: The Indian government has introduced several social welfare
schemes to address issues related to poverty, education, healthcare, and employment.
Examples include the Mahatma Gandhi National Rural Employment Guarantee Act
Special
Government
(MGNREGA) and the Pradhan Mantri Jan Dhan Yojana.

Environmental Policies: To tackle environmental challenges, India has policies aimed at

promoting sustainable development, addressing pollution, and conserving natural
resources. Initiatives like the National Action Plan on Climate Change (NAPCC) are part
of these efforts.
Policy
Foreign Policy: India's foreign policy focuses on maintaining good relations with
neighboring countries, participating in international organizations, and promoting
economic diplomacy. The "Act East Policy" is an example of India's strategic approach to
its eastern neighbors.

Digital Policies: The government has been working on digital initiatives to promote e -
governance, digital literacy, and a digital economy. The "Digital India" program is one
such comprehensive initiative.
Reference
• Unemployment rate in India (2008 to 2023): Current rate, historical ....
https://www.forbesindia.com/article/explainers/unemployment-rate-in-
india/87441/1.
• India Inflation Rate - TRADING ECONOMICS.
https://tradingeconomics.com/india/inflation-cpi.
• Economic history of India - Wikipedia.
https://en.wikipedia.org/wiki/Economic_history_of_India.
• India Economic System - Maps of India.
https://business.mapsofindia.com/india-economy/system.html.
• What Products Are Made In India? // Sourcing and Manufacturing in India ....
https://www.sourcinghub.io/what-products-are-made-in-india/.
• Raw material Suppliers in India - Volza.com. https://www.volza.com/p/raw-
material/manufacturers/manufacturers-in-india/.
Reference (2)
• International Trade Profile of India - WorldRef Insights.
https://insights.worldref.co/international-trade-profile-of-india-2022/.
• India | History, Map, Population, Economy, & Facts | Britannica.
https://www.britannica.com/place/India.
• India’s Electronics Industry: One Of The Fastest-Growing In The
World.India’s Electronics Industry: One Of The Fastest-Growing In
The World (electronicsb2b.com)
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