India’s economy has been one of the most promising and rising of recent years. Following the economic reforms of the socialist-inspired economy in the 1990s, the country began to experience rapid economic growth, supported by markets reforms and by a significant amount of inflows of Foreign Direct Investment (FDI). Currently, the economy of India is the 12th largest economy in the world by nominal value and the 4th largest by purchasing power parity. Furthermore, India is the 3rd largest economy in Asia behind Japan and China.

The economic growth of the country began and accelerated during the 1990s. Since 1997 the average growth is more than 7% per year. In 2006-2007 it reached a significant peak of 9.7%. The perpetual economic blossom that India experienced was slightly diversified during the global financial crisis. India’s economy grew at 6.1% in June 2009, a fixture that was amongst the highest growth rates in the world. Nevertheless, it still represents a significant dip in the country’s economic growth, when compared with 9.7% that India had in 2006-2007. Thus, the vast economic resources of India gave the opportunity to the country to recover quickly from the financial crisis. As the latest estimations for 2009-2010, released by the Central Statistical Organization the growth of Gross Domestic Product (GDP) at factor cost is estimated at 7.2% in 2009-10, with agriculture & allied activities growing at (-) 0.2%, industry at 8.2% and services sector at 8.7%.      

As it is already mentioned the Indian industrial sector had a significant increase. The boost in growth occurred in the three main sectors, manufacturing, mining and electricity which grew at rates of 9.0, 8.5 and 5.8% respectively. Additionally, the use-based industry groups, basic goods, capital goods, intermediate goods and consumer durables recorded increase in growth during 2009-10 (April-December) while consumer non-durables showed decline in growth, compared to the previous year. The consumer durables showed a growth of 24.4% followed by the intermediate goods (12.5%), capital goods (11.1%) and basic goods by 6.0%.

One of the systemic problems that Indian economy faces is Inflation. In January 2010, measured by variations in the wholesale price index (WPI) on a year-on-year basis was 8.6% as against 5.0% in January 2009. Average inflation (Apr-Jan) is assessed at 2.4% (provisional) in 2009-10 compare to 9.7% for the same period in 2008-09. On financial year basis, inflation since March was 8.9% in January 2010 compared to 1.5% in January 2009.

Two noteworthy indicators that showcase the development of an economy are undoubtedly imports-exports and Foreign Direct Investment (FDI). Regarding imports and exports, the latest data for fiscal 2009-10, showed substantial decline during April-September vis-a-vis the corresponding period in 2008-09. However, there has been an improvement in the balance of payment (BoP) scenario during H1 (April-September) of 2009-10 over H1 of 2008-09, reflected in higher net capital inflows and lower trade deficit. The trade deficit was lower at US$ 58.2 billion during H1 of 2009 as compared with US$ 64.4 billion in April-September 2008 mainly because of the decline in oil import.

Concerning FDI, India still receives a significant amount. Net inward FDI that “flows” into India remained buoyant at US$ 21.0 billion during April-September 2009 (US $ 20.7 billion in April-September 2008) reflecting the continuing liberalization and better growth performance of the Indian economy. The investment portfolio mainly comprises foreign institutional investors, investments and American depository receipts and finally global depository receipts.

India’s wealth vis-a-vis the world has grown simultaneously. Nevertheless, the country still faces serious socio-economic challenges that include inadequate physical and social infrastructure, limited employment opportunities, and insufficient basic and higher education opportunities. It is essential for the authorities of the country to resolve these problems in order to continue expanding.