Sunny Outlook for Economy of India
Previously a British colony, India has been independent for over 70 years, allowing it to establish an economy shaped by its contributions. The formidable Asian country has a mixed economy as half of the labour force is employed in the agriculture sector. Such industry is one of the major segments in its traditional economy.
In the economy of India, a third of the workers engage in the service industry, a sector that has proven to be necessary as well. It contributes about two-thirds of the output in the country. The service industry also made the country’s productivity level higher, allowing it to shift to a market economy. India has deregulated several industries since the 1990s as a result. Foreign investors began flocking in the economy of India, and many state-owned enterprises transitioned into privatization.
The economy of India has its competitive advantages. For example, the cost of living in this country is lower than in the United States, which is a good thing if you do not want to spend a lot. The country is a home for many well-educated workers in the field of technology. In addition, one of the country’s official subsidiary languages is English. This makes communications much easier and quicker, enticing foreign investors to set up shops here.
What Drives the Economy of India?
In 2019, the economy of India posted a remarkable growth of 5 per cent. The healthy demand for its goods and services and increased industrial activities supported its economy’s growth that year. The economy of India was able to diversify its business activities towards the service industry from being once a major supplier of British tea and cotton. By 2030, projections point to India becoming a high-middle income nation.
Under its industrial production, the economy of India has a special place for chemicals. The petrochemical segment, to recall, experienced speedy growth during the 1980s and 1990s. India also focuses on producing big supplies of pharmaceuticals and motor vehicles, motorcycles, tools, machinery, and forged steels, among others.
From 2019 to 2020, the mining sector of India gathered 729 million tons of coal. Apart from this, the country also mines gems and common minerals such as iron ore, bauxite, gold, limestone, and mineral.
In the agriculture segment, meanwhile, the economy of India sees increasing production. India takes the lead in producing the following products:
- sugar cane
While the economy of India has been robust, the coronavirus pandemic that began in 2020 hit it hard. The country’s gross domestic products in the second quarter for that year dropped by 22.6 per cent. Across the globe, however, a massive economic slump was observed as well.
Top Indian Cities
There are many cities that contribute to the growth of the economy of India. At the same time, these places are the most visited by the tourists, given the attractions situated there. Let us discuss the top Indian cities.
This is the richest city in India, with a GDP of $310 billion. Mumbai is the home of big Indian companies, including Tata Group, Aditya Birla Group, Reliance Industries, Godrej Group, Hindustan Petroleum, and Larsen & Toubro, among others. You can also find here the following headquarters:
- Reserve Bank of India
- National Stock Exchange
- Bombay Stock Exchange
Dubbed as “City of Dreams,” the city houses Gateway of India, EsselWorld, Elephanta Caves, and Red Carpet Wax Museum. Visitors may stay in Holiday Inn and Novotel Juhu Beach during their vacation.
Delhi, the national capital of India, has a GDP of $293.6 billion. The country’s population is highly concentrated in this city. The political personalities and government officials stay in Delhi, a metropolitan city that attracts many people given its growing urbanization. With this, experts expect that further economic boost is on the horizon for this city.
Among its popular destinations include the Qutub Minar, Jama Masjid, Purana Quila, Parliament House, Red Fort, and the Iskon temple.
Previously the capital of British India, this city is where the country’s oldest stock exchange is located. Over 83 per cent of Kolkata’s population works in the tertiary sector. Known as the third richest city in South Asia, Kolkata houses big corporations such as Coal India Limited, ITC Limited, Allahabad Bank, Britannia Industries, United Bank of India, and National Insurance Company, to name a few. Apart from this, the city is popular for its art, architecture, and culture. It houses many monumental buildings and renowned literary sources that every visitor aims to look for when they are in the city.
With a $110-billion economy, Chennai is among the wealthiest cities in India. It is the capital city of Tamil Nadu and situated by the majestic Bay of Bengal. This city is known to have a rich and diverse culture and history, given its experience with Madras Presidency during the British regime. With this, the city has been attracting many tourists every year. Tourists usually visit its beaches, temples, and lakes, even marvelling at the city’s outstanding architecture.
It has a GDP of $86 billion, the bulk of which may be attributed to its information technology (IT) exports. According to data, IT exports contribute over 35 per cent to the economy of India. Major manufacturing companies have placed their plants in this city, including Bharat Heavy Electricals Limited, Bharat Electronics Limited, and Bharat Earth Movers, among others. Industry giants such as Infosys and Wipro also established their headquarters in this city. Dubbed as the “Silicon Valley of India,” Bengaluru is also known for its Victorian architecture, shopping malls, and restaurants, to name a few.
What Lies Ahead in India’s Economy?
In 2020, the economy of India contracted by 7.1 per cent as business activities ground to a halt. The coronavirus pandemic has forced the country to implement lockdown protocols to contain the virus. This resulted in a major economic slump, which was also experienced in other countries as well.
Moody’s Analytics, a global think tank, expected the economy of India to recover in 2021. It anticipates a major reversal of 12-per cent growth.
Meanwhile, the Organization for Economic Cooperation and Development sees further growth in India’s economy by 2022. A growth of 12.6 per cent is expected, which is higher than the Reserve Bank of India’s 10.5-per cent growth forecast for the period.
The domestic and foreign demand for India has been improving, Moody’s Analytics said. This is a positive development that could boost private consumption and non-residential investment, it added. The think tank said that the easing of lockdown measures has helped India’s economy recover some ground in the fourth quarter of 2020.
While Moody’s Analytics is seeing a turnaround for the economy of India in 2021, it noted that the vaccination program should continue to be rolled out. Getting herd immunity is the best way to ride out the pandemic.
After all, India’s economy and the others will remain reeling from the pandemic if the people are not vaccinated. The coronavirus’s infection rate will likely increase if the countries will only rely on lockdown protocols.