India's economy grows at a fast pace

11 july 2018

India is the largest stable democracy and the third largest economy in the world. It has a population of 1.32 billion people that is still growing fast. By 2022 India is expected to overtake China as the most populous country in the world, Analytical Center experts write in their new bulletin on the current trends in the global economy titled India: Characteristics of its Economic Growth and the Energy Sector.

According to the experts, India has been demonstrating stability and high growth rates. The reforms that India has been implementing since 1991 have created conditions for accelerated economic growth, making the economic environment in the country more liberal, transparent and favorable for both domestic and foreign investments. "In 2000-2017 the country's GDP expanded by a factor of 3.3. The average real GDP growth in India was 7.1% in 2000-2017. Despite the global financial crisis the country's economy continued to grow at a fast pace in 2008-2009, which only slowed down to 3.9% in 2008. In 2011 India's GDP growth slowed down primarily because of slowing growth in the industrial sector. This was mostly the result of reduced output of capital goods," the analysts write in their bulletin.

In 2014-2016 India's economy was growing faster than that of China, the experts note. Despite the country's economic growth slowing down somewhat in 2016-2017, India still remains the fastest growing economy in the world. Its contribution to the global GDP (in purchasing power parity) reached 7.4% in 2017, according to preliminary IMF estimates.

In the 21st century the socio-economic indicators characterizing the standard of living in India has also demonstrated sustained growth, the experts note. In 2016, 84.5% of the country's population had access to electricity, which is more than 25 percentage points more than in 2000. Internet penetration went up from 7.5% in 2010 to 29.5% in 2016. Especially important is the significant increase in life expectancy: from 62.6 years in 2000 to 68.6 years in 2016.

Even though a large share of the population lives in poverty, the level of inequality in India is less than in Africa or Latin America, the specialists believe. The richest 10% of the population (the first decile) earned 29.8% of the total household income while the poorest 10% earned 3.6% of the total household income in 2011. The rich/poor index in 2011 was 8.3, which is far lower than for the other BRICS countries (for South Africa it is 57). The Gini index was 0.351 in 2014.

For details see the bulletin India: Characteristics of its Economic Growth and the Energy Sector.

The other bulletins on current global economic trends can be found in Publications.