Indian Economy - Intro

INDIAN
ECONOMY
INDIA
A growing economy
India: Fastest Growing Free Market Democracy
The economy of India is the

tenth-largest in the world by
nominal GDP and the third-largest by
purchasing power parity (PPP).
•The country is one of the
G-20 major economies,
•A member of BRICS
•A developing economy
So what is GDP & PPP?

INDIAN ECONOMY
 What is GDP? (Gross Domestic Product)
that refers to market value of all the
finished goods and services produced with in
the country in a given period (usually
calculated for a year)
 What is PPP? (Purchase Power Parity)The
concept of purchasing power parity allows
one to estimate what the exchange rate
between two currencies would have to be in
order for the exchange to be at par with the
purchasing power of the two countries'
currencies.
CALCULATION OF PPP
 Purchasing power parity (PPP) is a theory in

economics that approximates the total
adjustment that must be made on the
currency exchange rate between countries
that allows the exchange to be equal to the
purchasing power of each country’s currency.
 The relative version of PPP is calculated as:

http://www.investopedia.com/
CALCULATION OF PPP (CONTD..)
The relative version

of PPP is calculated
as:
Where:
"S" represents exchange rate of currency 1 to currency 2
"P1" represents the cost of good "x" in currency 1
"P2" represents the cost of good "x" in currency 2
INDIAN ECONOMY
 GDP : $1.87 trillion (nominal: 10th; 2013)
$5.07 trillion (PPP: 3rd; 2013)
 PPP stands for Purchase Power Parity
 GDP growth : 4.7% (2013)
 GDP per capita : $1,504 (nominal: 130th; 2013)
$4,077(PPP: 127th; 2013)[3]
 GDP by sector : agriculture: 13.7%, industry: 21.5%, services:
64.8% (2013) Inflation (CPI)
 CPI: 8.79%, WPI: 5.05% (January 2014)
 Population below poverty line 29.5% (2012, Rangarajan
panel)
22% (2012, Reserve Bank of India)
14.3% or 179.6 million people (2014, World Bank)
Sources: http://en.wikipedia.org/wiki/Economy_of_India;
www.moneycontrol.com
India: Fastest Growing Free Market Democracy
Among the top 20 global traders
according to the WTO. (World Trade
Organization)
India was the 19th-largest

merchandise and the 6th largest
services exporter in the world in
2013;
INDIAN ECONOMY
 The GDP (per Capita) of the Indian Economy
for 2010- 2011 is $1,371 which is the 138th in
the world
 What is GDP Per Capita?
 GDP per capita is the GDP/Population of the
country. It measures the standard of living
of a country
 For example the GDP per capita of United
States is $47,000 as opposed to
India’s which is $1371 which is 37 times
lower than USA
INDIAN ECONOMY
 The Economy of India is the 10th largest in
the world and The GDP of India is $1.63
trillion
 Indian economy is the 4th largest in terms of
PPP – USD 4.1 trillion in 2010
 What are the SECTORS IN THE Indian
Economy?
 Primary
 Secondary
 Tertiary
INDIAN ECONOMY
 Primary Agriculture sector is the largest

employer in India's economy but
contributes a declining share of its GDP
(14.6% in 2013-14)
 Secondary is its manufacturing industry
has held a constant share of its economic
contribution (around 28%)
 Tertiary sector which is the fastest growing
part of the economy is Service Sector >57%
INDIAN ECONOMY
 The largest contributor today is Service
Sector which comprises of :
 construction, telecom, software and
information technologies, infrastructure,
tourism, education, health care, travel,
trade, banking and others components of
its economy.
INDIAN ECONOMY AND EMPLOYMENT
 India's large service industry accounts
for 57.2% of the country's GDP while the
industrial and agricultural sectors
contribute 28.6% and 14.6%
respectively.
 Agriculture is the predominant
occupation in India, accounting for
about 52% of employment.
 The service sector makes up a further
34%, and industrial sector around 14%.
INDIAN ECONOMY
The post independence-era Indian
economy (from 1947 to 1991) was a
mixed economy with an inward-
looking, centrally planned,
interventionist policies (License Raj
and Bureaucracy )and import-
substituting economic model that
failed to take advantage of the post-
war expansion of trade and that
nationalized many sectors of its
economy.
INDIAN ECONOMY
 Previously a closed economy, India's
trade and business sector has grown fast
since the 1991 Liberalization,
Privatisation and Globalization (LPG)
 India currently accounts for 1.5% of
world trade as of 2007 according to the
World Trade Statistics of the WTO in
2006, which valued India's total
merchandise trade (counting exports
and imports) at $294 billion and India's
services trade at $143 billion.
INDIAN ECONOMY
 Major industries include
telecommunications, textiles, chemicals,
food processing, steel, transportation
equipment, cement, mining, petroleum,
machinery, information technology-enabled
services and pharmaceuticals.
 The labour force totals 500 million workers.
 ]
In 2009–2010, India's top five
trading partners are United Arab Emirates,
China, United States, Saudi Arabia and
Germany.
INDIAN ECONOMY
 Major agricultural products include rice,
wheat, oilseed, cotton, jute, tea,
sugarcane, potatoes, cattle, water buffalo,
sheep, goats, poultry and fish.
 India's total merchandise trade (counting
exports and imports) stands at $
606.7 billion and is currently the 9th largest
in the world.
 India is 12th in the world in terms of
nominal factory output.

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INDIAN

The economy of India is the

So what is GDP & PPP?

 Purchasing power parity (PPP) is a theory in

The relative version

India was the 19th-largest

 Primary Agriculture sector is the largest

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