India Economic Outlook
Growing economic presence:
India's economy has gone from strength to strength in recent years, with the country's GDP nearly doubling in nominal terms in the past decade to become the fifth largest in the world. Over the same period, real GDP growth has averaged around 6%, one of the best rates in Asia. However, despite substantial economic progress since the turn of the millennium, India remains a poor country in per capita GDP terms.
Diverse economic structure:India's economy is a complex mix of agriculture, manufacturing, and a rapidly growing service sector. Agriculture employs a significant portion of the workforce, with major crops including rice, wheat, and cotton. Despite its significant role, the sector faces challenges like low productivity and inadequate infrastructure and is vulnerable to climatic conditions. Manufacturing varies from traditional village industries to modern industries like pharmaceuticals, automobiles, and textiles. The service sector, including IT and financial services, has seen rapid expansion, becoming a major GDP contributor in recent years; cities like Bangalore and Hyderabad are now known as IT hubs.
Manufacturing drive:In 2014, the government launched a 'Make in India' initiative, which aims to turn India into a global manufacturing hub through courting FDI, improving infrastructure, offering financial incentives to firms and improving the ease of doing business. The country has had some success; for instance, Apple produced over USD 7 billion in iPhones from India in the 12 months ending March 2023.
Evolving trade policy:India's trade policy has evolved from protectionism to liberalization in recent decades. That said, the country has steered clear of recently created trading blocs in the Asia-Pacific region, such as the CPTPP or the RCEP, due to concerns over foreign firms undercutting local producers, somewhat limiting access to overseas markets.
Demographic potential:In early 2023, India overtook China as the world's most populous nation; the demographic gap between the two will widen going forward. India's large and young population presents both challenges and opportunities. While it offers a vast labor pool and a growing consumer market, it also poses challenges in terms of ensuring sufficient job creation and skill development.
India's economic outlook:The Consensus among our analysts is for India to remain among Asia's top performers in the coming years, boosted by domestic political stability, a business-friendly reform agenda, strong population growth and increased interest from foreign firms looking to diversify supply chains away from China. Upgrading still-shoddy infrastructure, trimming red tape, improving educational standards, territorial disputes with China and Pakistan, and Modi's creeping authoritarianism are key risks going forward.
India's Macroeconomic Analysis:
Nominal GDP of USD 3,639 billion in 2023.
Nominal GDP of USD 3,568 billion in 2023.
GDP per capita of USD 2,497 compared to the global average of USD 10,589.
GDP per capita of USD 2,547 compared to the global average of USD 10,589.
Average real GDP growth of 6.2% over the last decade.
Average real GDP growth of 6% over the last decade.
Sector Analysis
In 2022, services accounted for 49.8% of overall GDP, manufacturing 12.8%, other industrial activity 21.4%, and agriculture 16.0%. Looking at GDP by expenditure, private consumption accounted for 60.3% of GDP in 2023, government consumption 10.5%, fixed investment 33.7%, and net exports -4.5%.International trade
In 2023, manufactured products made up 63.5% of total merchandise exports, mineral fuels 20.7%, food 11.0%, ores and metals 3.9% and agricultural raw materials 0.8%, with other categories accounting for 0.1% of the total. In the same period, manufactured products made up 47.9% of total merchandise imports, mineral fuels 33.2%, food 4.7%, ores and metals 6.0% and agricultural raw materials 1.5%, with other goods accounting for 6.7% of the total. Total exports were worth USD 437.60 billion in 2024, while total imports were USD 720.20 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 6.0% in the decade to 2023. The COVID-19 pandemic severely impacted the economy in 2020, but India demonstrated a strong rebound in 2021-2023, aided by government stimulus and a gradual resumption of economic activities. To read more about GDP growth in India, go to our dedicated page.
Fiscal policy
India's fiscal deficit averaged 5.0% of GDP in the decade to 2023. The COVID-19 pandemic further strained public finances, leading to a 9% of GDP deficit in 2020 and causing a surge in public debt. Both the fiscal deficit and public debt have been reduced post-COVID, but remain worryingly large. Find out more on our dedicated page.
Inflation
Inflation averaged 5.5% in the decade to 2023. The country's inflation dynamics were influenced by various factors, including domestic economic activity, international commodity prices, monsoon patterns affecting agricultural output, and fiscal and monetary policy decisions. Go to our India inflation page for extra insight.
Monetary Policy
India's monetary policy rate ended 2023 at 6.50%, down from 8.00% a decade earlier. The Reserve Bank of India (RBI) then cut rates significantly during the COVID-19 pandemic to stimulate the economy. However, the RBI then hiked rates in 2022 to tame price pressures and support the rupee. See our India monetary policy page for additional details.
Exchange Rate
The Indian rupee depreciated against the U.S. dollar over the last decade. This trend was influenced by India's large trade deficits, global geopolitical uncertainty, and persistently higher inflation than in the U.S. The Reserve Bank of India intervened on occasion to stem the swings in the currency. For more info on the rupee, click here.
Economic situation in India
GDP grew 6.2% year on year in October–December (Q3 FY 2024), according to recently released data, accelerating from July–September’s 5.6% expansion and cementing India’s status as the world’s fastest-growing large economy. Rural households spent more as their incomes were boosted by recently strong harvests, and public spending picked up on a post-election splurge. Moreover, the contribution of net trade to GDP growth more than doubled thanks to strong orders for IT and financial services. That said, GDP growth remained below the 10-year pre-pandemic average of 6.9%, with domestic demand throttled by high interest rates. Turning to January–March, our Consensus is for GDP growth to pick up to a one-year high as recent tax cuts, lower inflation and income from recently strong harvests bolster private spending. That said, high interest rates will likely cap growth beneath trend.India Economic Forecasts
Projections out to 2034.49 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 44 expert analysts.
Want to get insight on the economic outlook for India in the coming years? FocusEconomics collects projections out to 2034 on 49 economic indicators for India from a panel of 44 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the India economy. To download a sample report on the India's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
India Economic Indicators
Frequently Asked Question about India's Economy
What is the economic outlook for India?
Is India doing well economically?
Where can I get Indian economic data?
Is India one of the world's largest economies?
India's economy should see strong growth ahead, supported by robust domestic demand. Despite global slowdown risks, high inflation and geopolitical tensions, India's solid fundamentals should more than offset these challenges.
India is performing well economically, with strong growth projections for the coming years. Key drivers include robust domestic demand, a growing middle class and a recovering services sector. India is also a major and growing exporter of goods and services and a major recipient of foreign direct investment.
FocusEconomics is a global leader in providing reliable macroeconomic intelligence and offers historical data and forecasts for a variety of key indicators of the Indian economy. Our forecasts from a panel of over 40 analysts from leading national, regional and global economic institutions. Get in touch to find out more, or download a free sample report today.
India is currently the fifth-largest economy in the world by nominal GDP and is expected to become the world's third-largest economy by 2027. With a GDP of over USD 3 trillion in 2022, India has experienced rapid economic growth in recent years, driven by strong domestic demand, a thriving services sector, and a growing middle class.