Debate on Indian Economic Policy on 4 May 2014 The Economy of India is the 8th-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP).[3].India is one of the fastest developing Economic Superpower with potential to become world third largest economy(Nominal) by 2020[4]. The country is one of the G-20 major economies and a member of BRICS. On a per-capita-income basis, India ranked 135th by nominal GDP [3] and 127th by GDP (PPP) in 2013, according to the IMF.[16] India is the 16th-largest exporter and the 8th-largest importer in the world. The economy slowed to around 5.0% for the 2012--13 fiscal year compared with 6.2% in the previous fiscal.[17] According to Moody's, the Economic Growth Rate of India would be 5.5% in 2014-15.[18] On 28 August 2013 the Indian rupee hit an all time low of 68.80 against the US dollar. In order to control the fall in rupee, the government introduced capital controls on outward investment by both corporates and individuals.[19] India's GDP grew by 9.3% in 2010--11; thus, the growth rate has nearly halved in just three years. GDP growth rose marginally to 4.8% during the quarter through March 2013, from about 4.7% in the previous quarter. The government has forecast a growth rate of 6.1%--6.7% for the year 2013--14, whilst the RBI expects the same to be at 5.7%. Besides this, India suffered a very high fiscal deficit of US$ 88 billion (4.8% of GDP) in the year 2012--13. The Indian Government aims to cut the fiscal deficit to US$ 70 billion or 3.7% of GDP by 2013--14.[citation needed] The independence-era Indian economy (from 1947 to 1991) was based on a mixed economy combining features of capitalism and socialism, resulting in an inward-looking, interventionist policies and import-substituting economy that failed to take advantage of the post-war expansion of trade.[20] This model contributed to widespread inefficiencies and corruption, and the failings of this system were due largely to its poor implementation.[20] In 1991, India adopted liberal and free-market principles and liberalised its economy to international trade under the Prime Ministership of P.V.Narasimha Rao and Finance minister Manmohan Singh , who had eliminated Licence Raj, a pre- and post-British era mechanism of strict government controls on setting up new industry. Following these major economic reforms, and a strong focus on developing national infrastructure such as the Golden Quadrilateral project by former Prime Minister Atal Bihari Vajpayee, the country's economic growth progressed at a rapid pace, with relatively large increases in per-capita incomes.[21] The south western state of Maharashtra contributes the highest towards India's GDP among all states. Mumbai (Maharashtra) is known as the trade and commerce capital of India.[1][2][22] Overview[edit] The combination of protectionist, import-substitution, and Fabian social democratic-inspired policies governed India for sometime after the end of British occupation. The economy was then characterised by extensive regulation, protectionism, public ownership of large monopolies, pervasive corruption and slow growth.[23][24] Since 1991, continuing economic liberalisation has moved the country towards a market-based economy.[23][24] By 2008, India had established itself as one of the world's fastest growing economies. Growth significantly slowed to 6.8% in 2008--09, but subsequently recovered to 7.4% in 2009--10, while the fiscal deficit rose from 5.9% to a high 6.5% during the same period.[25] India's current account deficit surged to 4.1% of GDP during Q2 FY11 against 3.2% the previous quarter. The unemployment rate for 2012-13, according to the state Labour Bureau, was 8.8% nationwide.[6] As of 2011, India's public debt stood at 68.05% of GDP which is highest among the emerging economies.[26] However, inflation remains stubbornly high with 7.55% in August 2012, the highest amotrade (counting exports and imports) stands at $606.7 billion[27] and is currently the 9th largest in the world. During 2011--12, India's foreign trade grew by an impressive 30.6% to reach $792.3 billion (Exports-38.33% & Imports-61.67%). History[edit] Main articles: Economic history of India and Timeline of the economy of India Pre-colonial period (up to 1773)[edit] India was World Leader in terms of contribution of GDP to world GDP for 1700 years.The citizens of the Indus Valley civilisation, a permanent settlement that flourished between 2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform weights and measures, made tools and weapons, and traded with other cities. Evidence of well-planned streets, a drainage system and water supply reveals their knowledge of urban planning, which included the world's first urban sanitation systems and the existence of a form of municipal government.[28]

• published: 04 May 2014
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