Economy of India

The economy of India is the fourth largest in the world as measured by purchasing power parity (PPP), with a gross domestic product (GDP) of US $3.611 trillion.[1] When measured in USD exchange-rate terms, it is the twelfth largest in the world, with a GDP of US $719.8 billion (2005).[1] India is the second fastest growing major economy in the world, with a GDP growth rate of 8.9% [2] at the end of the first quarter of 2006–2007.[3] However, India's huge population results in a per capita income of $300 at PPP and $714 at nominal.

The economy is diverse and encompasses agriculture, handicrafts, textile, manufacturing, and a multitude of services. Although two-thirds of the Indian workforce still earn their livelihood directly or indirectly through agriculture, services are a growing sector and are playing an increasingly important role of India's economy. The advent of the digital age, and the large number of young and educated populace fluent in English, is gradually transforming India as an important 'back office' destination for global companies for the outsourcing of their customer services and technical support. India is a major exporter of highly-skilled workers in software and financial services, and software engineering.

India followed a socialist-inspired approach for most of its independent history, with strict government control over private sector participation, foreign trade, and foreign direct investment. However, since the early 1990s, India has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment. The privatisation of publicly owned industries and the opening up of certain sectors to private and foreign interests has proceeded slowly amid political debate.

India faces a burgeoning population and the challenge of reducing economic and social inequality. Poverty remains a serious problem, although it has declined significantly since independence, mainly due to the green revolution and economic reforms.