India, the land of culture, tradition, and also one of the oldest civilizations in the world. Today India is a rising as well as a struggling economy. Yet many economists believe that, in the future India is going to contribute a much larger portion in the world economy. And might get near the ranks of China someday.
As Historically India was an economic giant. By 1700, Mughal India had become the world's largest economy, ahead of China and Western Europe. The sub continent contained approximately 24.2% of the global population, while producing about a quarter of world's output. This was because, at that time the world economy was dependent on agriculture. And India was one of the biggest producers.
In 1991, India began to loosen its economic restrictions and started to increase liberalization. And this led to growth of country's private sector. Today, India is considered a mixed economy. However, in certain areas such as defense, power, banking, and other industries, the government maintains a monopoly. After the economic reforms the country's economy has grown exponentially. If you call for the numbers, it grew from $288 billion in 1992, to $2.9 trillion in 2019.
The reforms helped the country to shift from an agriculture based, to industrial and service based economy. While the share of other sectors in the GDP stared to increase, that of agriculture has fallen to 16% of the country’s GDP, as of 2019.
Apart from the economic shift, this could also be because the agricultural industry in India faces quite big challenges. The industry is not as efficient as it could be, you see nearly 50% of the country's work force works in this sector, still the output in not as expected. Also the reliance on monsoons for the water needs in crop production is very high. And if you see the agricultural infrastructure, it is also not well developed, hence the produce is at the risk of spoilage due of a lack of adequate storage facilities and distribution channels. Still, India is a leading producer of wheat, rice, sugar cane, cotton, mangoes, and much more.
Now coming to the industrial sector, it accounts for 26% of GDP and employs 22% of the total workforce. According to the World Bank, India's industrial manufacturing GDP output in 2015 was 6th largest in the world on a current US dollar basis.
In this sector, chemicals is a big business in India. The petrochemical industry, which first entered the Indian industrial scene in the 1970s, experienced rapid growth in the 80s and 90s. In addition to chemicals, the country produces a large supply of the world’s pharmaceuticals as well as billions of dollars worth of cars, motorcycles, tools, tractors, machinery, and also forged steel.
Now heading to the major sector of the economy. Yes it is the services sector. Over the past 60 years, the service industry in India has increased from a fraction of the GDP to approximately 56% between 2019 and 2020. This growth is a result of India's has a high population of skilled, English-speaking, and educated people, and is a great place for back office work. Among services industries in the country telecommunications, IT, software, and BPO's are leading. Specifically the Business process outsourcing or BPO is a well known industry here. BPO's are the fastest growing segment of the ITES industry in India. Thanks to economics of scale, cost advantages, risk mitigation, and competency. This makes the service sector the backbone of Indian economy.
But like every other developing country, India also has numerous problems. Yet from the last few years we have been seeing improvements in some areas. However achieving results will take time. The improvements will help the government to expand the formal sector of the economy. For that, the government needs to create more jobs. By attracting more FDI's. Same what China did a few decades ago. Another way to do that is to create a large number of labour intensive industries. These industries require a large number of skilled and unskilled laborers, which India has plenty. These industries will create a large number of jobs. And it will help to grow the middle income class in the country.
Now we know that India's economy is struggling. But we cannot deny that they are on the edge of an economic miracle, where China was a couple of decades ago. All they need to do is the right things. And in no time India could rise and get near the ranks of China.


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