What are India’s key economic trends?

Edexcel B GCSE Geography > Development Dynamics > What are India’s key economic trends?

India has experienced significant economic transformation since 1990, marked by substantial growth in GDP and GNI per capita, shifts in economic sector contributions, and changes in trade and foreign direct investment (FDI) patterns.

Gross Domestic Product (GDP) and Gross National Income (GNI) Per Capita

India’s GDP has shown remarkable growth over the past few decades. In 1990, the GDP was approximately $320 billion. By 2023, it had risen to about $3.55 trillion, reflecting an upward trajectory.

This economic expansion has positively impacted GNI per capita. In 1990, India’s GNI per capita was around $380. By 2023, it had increased to approximately $2,540, indicating improved average income levels for Indian citizens.

Changing Importance of Economic Sectors

The structure of India’s economy has evolved significantly.

Agriculture: In 1990, agriculture contributed about 29.5% to GDP. By 2023, this had decreased to approximately 17.6%, reflecting a shift towards industrialisation and services.
Industry: The industrial sector’s contribution remained relatively stable, accounting for around 27.7% of GDP in 1990 and 27.62% in 2023.
Services: The services sector has grown substantially, rising from 42.8% of GDP in 1990 to approximately 54.72% in 2023, highlighting India’s transition towards a service-oriented economy.

Imports and Exports

India’s trade landscape has expanded and diversified:

Exports: Key exports include petroleum products, gems and jewellery, pharmaceutical products, and transport equipment. The total value of exports increased from $18 billion in 1990 to approximately $290 billion in 2020.
Imports: Major imports include crude oil, gold, electronic goods, and machinery. The total value of imports rose from $24 billion in 1990 to about $380 billion in 2020.

Asia remains the primary destination for India’s exports, with a significant portion directed to countries like China and the United Arab Emirates.

Foreign Direct Investment (FDI)

FDI has played a crucial role in India’s economic development:

Inward FDI: India has attracted substantial FDI, with inflows increasing from $0.2 billion in 1990 to approximately $28.07 billion in 2020. Key sectors receiving FDI include services, computer software and hardware, telecommunications, and trading.
Outward FDI: Indian companies have also expanded globally, with outward FDI rising from $0.6 billion in 1990 to about $13.88 billion in 2023, indicating growing international presence and investment by Indian firms.

India’s economic journey since 1990 reflects a dynamic shift towards a diversified and globally integrated economy, with significant advancements in income levels, sectoral contributions, trade, and investment.

Summary

GDP and GNI Growth
India’s GDP rose sharply from $320 billion in 1990 to $3.55 trillion by 2023, and GNI per capita increased from $380 to $2,540, reflecting improved income levels.
Shift in Economic Sectors
Agriculture’s contribution to GDP declined from 29.5% in 1990 to 17.6% in 2023, while services expanded from 42.8% to 54.72%, showcasing India’s shift toward a service-oriented economy.
Stable Industrial Contribution
Industry’s share of GDP has remained fairly steady, contributing around 27% both in 1990 and 2023, highlighting the sector’s ongoing importance.
Expanded Trade
India’s exports rose from $18 billion in 1990 to approximately $290 billion by 2020, while imports grew from $24 billion to $380 billion, with major trade partners in Asia.
Increased FDI Inflows
Foreign direct investment inflows surged from $0.2 billion in 1990 to $28.07 billion by 2020, especially in technology, telecommunications, and services sectors.
Outward FDI Growth
Indian companies have increased their global presence, with outward FDI growing from $0.6 billion in 1990 to $13.88 billion in 2023, showcasing India’s expanding role in international markets.