Indian Economy: An Overview

The Indian economy, which witnessed a growth of over 9% during the last three years, has seen a decade of 7% plus growth. The growth was supported by market reforms, huge inflows of FDI, rising foreign exchange reserves, both IT and real estate boom, and a flourishing capital market. During this period of stable growth, the performance of the Indian service sector has been particularly significant. The growth rate of the service sector was 14.59% in 2007-08 and now contributes 61.35% of GDP. The industrial sector grew 13.77% in the same period and is now 20.89% of GDP. Agriculture is 17.75% of the Indian economy. Growth in the manufacturing sector, 8.8% in 2007-08, has also complemented to the growth momentum.

A growing number of investors all around the world feel that the Indian market is currently undervalued and are seeing this as a buying opportunity. Foreign Direct Investment in India from March to September 2008 increased by 137% to US $ 17.21 billion due to inflows into construction, real estate, services, computer hardware and software firms. With the largest number of listed companies - 10,000 across 23 stock exchanges, India has the third largest investor base in the world. Total foreign investment inflow during the first half of 2008-09 was US $ 13.8 billion in September 2008. The government has earmarked Rs.23.8 trillion (approximately US $ 559 billion) for infrastructure upgrades during the 11th Five Year Plan (2007-2012). It plans to fund 70% of project costs, with the other 30% being supplied by the private sector. Ports, airports, roads and railways are all seen as vital for the Indian economy and have been targeted for investment. The government approved 513 Special Economic Zones till August 2008, of which 250 were notified. Investments are expected to cross US $ 45.73 billion by December 2009 providing incremental employment to 800,000 people.

India has the second largest area of arable land in the world, making it one of the world's largest food producers. In 2007-08, India produced 230.67 million tons of grain, an improvement of 4.6% over previous year. India is also the largest producer of milk (100 million tons per annum), sugarcane (315 million tons per annum) and tea (930 million Kg per annum) and the second largest producer of rice, fruits and vegetables.

India is among the world's youngest nations with a median age of 25 years. Its working age population is estimated to rise to 70% of the total demographic by 2030 - the largest in the world. India will see 70 million new entrants to its workforce over the next five years.

The Indian economy is holding its ground amidst the current global economic crisis, with a projected growth rate of 7-8%.

India - Economic Indicators
(Available figures as on Feb 10, 2009)

Indicator Items	Value	Growth, % (Over previous year)
GDP at factor cost at current prices (2007-08)	Rs.4303.70 thousand crores (US$ 1000.84 billion)	9%
GDP at 2003-04 prices	Rs.3122.70 thousand crores (US$ 686.34 billion)	9%
Agriculture and allied sectors (2007-08)	Rs.764.08 thousand crores (US$ 155.93 million)	17.8%
Food grain production (2007-08)	230.67 million tons	4.6%
Index of Industrial Production (As in November 2008)	267.20	2.4%
Electricity generated (2007-08)	690 billion Kwh	7%
Wholesale Price Index (As on 24 January 2009)	230.1	4.85%
Consumer Price Index for industrial workers (As on November 2008)	575	10.8%
Money Supply (As on 21 November 2008)	Rs.4410 thousand crores (US$ 979.98 billion)	19.55%
Imports at current prices (April 2008 - July 2008)	US$ 91.21 billion	45.43%
Exports at current prices (April 2008 - July 2008)	US$ 55.72 billion	38.36%
Foreign currency assets (As on 30 January 2009)	US$ 248.61 billion	(-) 13.77%