Indian Current Economic Scenario and Growth Potential

Current Indian Economic Scenario and Growth Potential is picking momentum on the back of improved output of
8 core sector industries – coal, crude oil, refining, steel, cement, natural gas,
fertilizers and electricity. Some of the important economic developments in the
country are as follows:

IMF lowers growth estimate to 6.1%
source: google images

● Indian companies have been signing much private equity (PE) deals, registering
a substantial increase from previous years.
● Indian corporations have also been raising a significant amount through
commercial papers (CPs).
● The cumulative amount of FDI equity inflows into India were worth around US$
300 billion in the 2000–2014 period. ( in the Indian Current Economic Scenario)
● The estimated value of FII holdings in India stands at US$ 279 billion.
● IT spending by the Government of India is growing 7 percent year-on-year,
as per the report by research and advisory firm Gartner.
● India’s IT-business process outsourcing (BPO) industry revenue is expected to
pass US$ 225 billion by 2020, according to a Confederation of Indian Industry
(CII) the report, titled ‘The SMAC Code-Embracing New Technologies for Future
● General Electric (GE) plans to make India a manufacturing hub for its global
businesses due to its huge talent pool and lower manufacturing costs. The
company’s future plant at Chakan, Maharashtra, is the first major step
towards this direction.
● The number of millionaires in India is expected to reach 300,000 by 2018 from
nearly 182,000 currently, as per the global wealth report released by the
Credit Suisse Research Institute. Wealth per adult in India has increased by 135
percent from US$ 2,000 in 2000 to US$ 4,700 in 2013, at an average annual rate
of 8 percent.
● India added about US$ 17.6 billion worth of value domestically in 2012 by
processing and fabricating gold bars and coins.

Structural Transformation of Indian Economy
Structural transformation in an economy is usually associated with the changes in
the sectoral composition of output, employment, and changes in the rural-urban
composition of output and employment.
Peculiar Structural Changes
● The share of agriculture in the Indian GDP fell from more than 40% in the early
The 1960s to around 17% by the end of 2000s
● It is to be noted that the rate of decline in the agricultural share accelerated as
the rate of economic growth increased.
● The share of industry as a whole rose from about 20% in 1960 to around 28% in
2009, whereas the share of manufacturing alone disappointingly stayed at
about 15% during the entire period, again a sign of sluggish structural
● By 1990 the share of the service sector was 40.59 percent, more important than that of
agriculture either industry, like what we find in developed nations. This phenomenon
of a growing share of the service sector was accelerated in the post-1991 period.
● Presently the service sector has emerged as the largest and fastest-growing sector
of the economy with around more than 50% contribution to the GDP (at current
prices) in 2015 as per the Economy survey.
● The distinctive feature of India’s growth has been the increasing contribution of
the service sector to GDP growth (also referred to as Growing Tertiarization of
Indian Economy).

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