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About Indian Economy Growth Rate & Statistics

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Last updated: Oct, 2019

Introduction

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships.

Market size

India’s nominal GDP growth rate is estimated at 12 per cent in 2019-20. The estimate for 2018-19 was 11.5 per cent. During Q1 of 2019-20, GDP (at constant 2011-12 prices) grew by 5 per cent.

India has retained its position as the third largest startup base in the world with over 4,750 technology startups, with about 1,400 new start-ups being founded in 2016, according to a report by NASSCOM.

India's labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

India's foreign exchange reserves were US$ 393.29 billion in the week up to December 21, 2018, according to data from the RBI.

Recent Developments

With the improvement in the economic scenario, there have been various investments in various sectors of the economy. The M&A activity in India increased 53.3 per cent to US$ 77.6 billion in 2017 while private equity (PE) deals reached US$ 24.4 billion. Some of the important recent developments in Indian economy are as follows:

  • Exports from India increased 4.32 per cent year-on-year to US$ 92.33 billion in April-May 2019.
  • Nikkei India Manufacturing Purchasing Managers’ Index (PMI) stood at 51.40 in July 2019, showing expansion in the sector.
  • Mergers and Acquisitions (M&A) activity in the country has reached US$ 41.6 billion in first half of 2019 (Jan-June).
  • Income tax collection in the country reached Rs 2.50 lakh crore (US$ 35.88 billion) between April-November 2018.
  • In the first six months of 2019, eight companies held IPOs, raising as much as Rs 5,509 crore (US$ 0.79 billion).
  • India's Foreign Direct Investment (FDI) equity inflows reached US$ 436.47 billion between April 2000 and June 2019, with maximum contribution from services, computer software and hardware, telecommunications, construction, trading and automobiles.
  • India's Index of Industrial Production (IIP) rose 2 per cent year-on-year June 2019
  • Consumer Price Index (CPI) inflation rose moderated to 3.15 per cent in July 2019 from 3.18 per cent in June 2019.
  • Around 10.8 million jobs were created in India in 2017.
  • India has improved its ranking in the World Bank's Doing Business Report by 23 spots over its 2017 ranking and is ranked 77 among 190 countries in 2019 edition of the report.
  • India is expected to have 100,000 startups by 2025, which will create employment for 3.25 million people and US$ 500 billion in value, as per Mr. T V Mohan Das Pai, Chairman, Manipal Global Education.
  • The World Bank has stated that private investments in India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption growth of 7.4 per cent, and thereby drive the growth in India's gross domestic product (GDP) in FY 2018-19.
  • India is expected to retain its position as the world’s leading recipient of remittances in 2018, with total remittances touching US$ 80 billion, according to World Bank’s Migration and Development Brief.

Government Initiatives

The Union Budget for 2018-19 was announced by Mr. Arun Jaitley, Union Minister for Finance, Government of India, in Parliament on February 1, 2018. This year’s budget will focus on uplifting the rural economy and strengthening of the agriculture sector, healthcare for the economically less privileged, infrastructure creation and improvement in the quality of education of the country. As per the budget, the government is committed towards doubling the farmers’ income by 2022. A total of Rs 14.34 lakh crore (US$ 196.94 billion) will be spent for creation of livelihood and infrastructure in rural areas. Budgetary allocation for infrastructure is set at Rs 5.97 lakh crore (US$ 81.99 billion) for 2018-19. All-time high allocations have been made to the rail and road sectors.

In June 2019, India's unemployment rate is 7.91 per cent.

Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Some of the recent initiatives and developments undertaken by the government are listed below:

  • In India, Atal Innovation Mission (AIM), flagship initiative of NITI Aayog, launched the Atal Community Innovation Centre (ACIC) program in NITI Aayog which aims at spurring community Innovation in underserved and unserved areas of the country.
  • National Institute for Transforming India (NITI) Aayog released a strategic document titled 'Strategy for New India @75' to help India become a US$ 4 trillion economy by FY23.
  • The Government of India is going to increase public health spending to 2.5 per cent of GDP by 2025.
  • For implementation of Agriculture Export Policy, government has approved an outlay Rs. 206.8 crore (US$ 29.59 million) for 2019, aimed at doubling farmers income by 2022.
  • Government is planning to launch Bharatcraft portal, an e-commerce marketing platform to market and sell the products.
  • Under the Pradhan Mantri Awas Yojana (Urban), government have been sanctioned Rs. 4.83 lakh crore (US$ 69.10 billion) for the construction of 81 lakh houses of which construction about 47 lakh houses has started.
  • Village electrification in India was completed in April 2018.
  • Around 26.02 million households have been electrified as on 31st March 2019 under the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA).
  • Prime Minister's Employment Generation Programme (PMEGP) will be continued with an outlay of Rs 5,500 crore (US$ 755.36 million) for three years from 2017-18 to 2019-20, according to the Cabinet Committee on Economic Affairs (CCEA).
  • The target of an Open Defecation Free (ODF) India will be achieved by October 2, 2019 as adequate funding is available to the Swachh Bharat Mission (Gramin), according to Ms. Uma Bharti, Minister of Drinking Water and Sanitation, Government of India.
  • The Government of India has decided to invest Rs 2.11 trillion (US$ 32.9 billion) to recapitalize public sector banks over the next two years and Rs 7 trillion (US$ 109.31billion) for construction of new roads and highways over the next five years.
  • As per the Union Budget 2019-20, public sector banks (PSBs) will be provided with a capital infusion of Rs. 70,000 crores (US$ 10.02 billion), allowing NBFCs to raise foreign debt.
  • The mid-term review of India's Foreign Trade Policy (FTP) 2015-20 has been released by Ministry of Commerce & Industry, Government of India, under which annual incentives for labour intensive MSME sectors have been increased by 2 per cent.
  • Under the scheme Pradhan Mantri Gram Sadak Yojana (PMGSY-III), government plans to spend Rs 50,250 crores (US$ 7.19 billion) to build roads to boost rural connectivity.

Road Ahead

India's gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve upper-middle income status on the back of digitization, globalization, favorable demographics, and reforms.

India's revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412 billion) by 2019, owing to Government of India's measures to strengthen infrastructure and reforms like demonetization and Goods and Services Tax (GST).

India is also focusing on renewable sources to generate energy. It is planning to achieve 40 per cent of its energy from non-fossil sources by 2030 which is currently 30 per cent and also have plans to increase its renewable energy capacity from to 175 GW by 2022.

India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by PricewaterhouseCoopers.

Exchange Rate Used: INR 1 = US$ 0.014533 as of July 2019.