Introduction

Indian Economy is the eleventh largest economy in the world by nominal GDP and the fourth largest economy in the world by purchasing power parity (PPP). India was under social democratic based government under 1947 to 1991. This economy was based on public ownership and protectionism with slow growth rate. Since 1991, India changed its policy and reformed it to a market-based economy.

The currency of India is the Indian Rupee. As of 30^th Dec 2010, 44.8 INR equals to 1 USD and 1 EUR equals 59.34 INR. The major stock exchanges in India are Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). India’s GDP accounts for 57.2% service industry, 28% industrial sector and 14.6% agricultural sector. The labour force totals half a billion workers. India currently accounts for 1.5% of world trade as of 2007 according to World Trade Organization (WTO).

Indicators of Economy

An economy has various indicators which allow analysis and prediction of future performances. Some of these are Gross Domestic Product (GDP), unemployment rate, Consumer Price Index (a measure of Inflation), stock market prices and various others.

Gross Domestic Product

The gross domestic product (GDP) or gross domestic income (GDI) is the amount of goods and services produced in a year, in a country. It is the market value of all final goods and services made within the borders of a country in a year. In 2009, GDP nominal of India was $1,367 billion (11th) whereas; GDP PPP was $3,862 billion (4th). Forecast for 2010: GDP nominal will be $1,430 billion and GDP PPP will be $4,001 billion. If we compare per capita GDP, in 2009 GDP nominal per capita was $1,142 (142nd) and expected to be $1,176 for 2010. In 2009, GDP PPP per capita was $3,176 (127th) whereas in 2010 it is expected to be $3290. India’s gross domestic product (GDP) growth rate significantly slowed to 6.7% in 2008-09, but subsequently recovered to 7.2% in 2009-10

Inflation

A consumer price index (CPI) measures changes through time in the price level of consumer goods and services purchased by households. It is a measure of inflation. In India, instead of CPI, wholesale price index is calculated. The Indian method for calculating inflation, the Wholesale Price Index, is different from the rest of world. Each week, the wholesale price of a set of 435 goods is calculated by the Indian government. Since these are wholesale prices, the actual prices paid by consumers are far higher. The trend of Inflation rate is shown in the graph below. Have a look.

Figure 1: Consumer Price Index of India, Feb’09-Nov’10

The inflation rate in Apr 09 was 8.03%, lowest in the duration. It advances to sudden increase in Aug 09 at 11.89%. From there after, for four months the inflation rate was almost same. From Dec 09 it starts rising again and it goes to the max of the duration in Feb 10 with 16.22%. After that for the last 10 months it is coming down slowly and in Nov 10, inflation rate is 9.7%. Still, 9.7% is very high. But, compared to 16.22% it is much under control.

Unemployment Rate

The labour force in India is 467 million, 2^nd in the world, as of 2009. The labour force division in each sector is 52% in agriculture, 14% in industry and 34% in services. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force. The unemployment rate of India in 2009 was 6.8% (85^th rank) which is expected to increase to 10.7% (121^st rank) in 2010.

Foreign Direct Investment

Following are some tables showing comparison of Stock of direct foreign investment – at home, Stock of direct foreign investment – abroad and Stock of domestic credit in USD.

Foreign Exchange Reserves

Foreign exchange reserves (also called Forex reserves or FX reserves) in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. Reserves of foreign exchange and gold in India in the start of 2009 were $254 billion. In the start of 2010, it was $274.7 billion. Currently, as of Nov’10 it is $300.2 billion.

Economy on the basis of Sectors

Industry

Industry accounts for 28% of the GDP and employ 14% of the total workforce. However, about one-third of the industrial labour force is engaged in simple household manufacturing only. The major industries in India are textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software and pharmaceuticals.

Services

India is fifteenth in services output. It provides employment to 23% of work force, and it is growing fast. It has the largest share in the GDP, accounting for 54.6% in 2009 and expected to be 57% in 2010. The total no. of people getting employment in this sector in 2010 will be 34% (estimated).

Conclusion

If we sum up the conclusion from above it is quite easy to say that India is progressing rapidly for 2010 than 2009. Being an agriculture based nation, India is changing slowly to an Industry based nation with support from service sector. The main concern in India’s progress is inflation rate. Value of INR has increased in the mentioned period. No doubt India is moving towards progress and next year we can see some much nice figures and ranks in all the section.