India is one of the fastest growing developing economies in the world. It has an annual average growth rate of 7% in recent decades. The economy is diverse and has strong state participation in strategic sectors.
As the country expands its economic scope, it is diversifying from an agrarian to an industrialized economy. Major industries include petroleum, telecommunications, and steel. However, agriculture still accounts for the largest part of India’s GDP.
In 2000, India’s services sector accounted for about one-third of its total output. This sector had a growth rate of 7.5%.
Over the past decade, the public sector has moved toward more of a mixed economy. State governments have a greater say in implementing structural reforms than the central government.
The Indian economy is a mix of a socialist command economy and a capitalist market economy. It has experienced a number of phases of privatization and nationalisation.
The Indian economy owes much to its colonial history. During the British Raj, India was a major market for quality European goods. But the rule of the British East India Company imposed mass impoverishment on the people. Eventually, this led to famines.
India’s economic policy has also included import substitution, protectionism, intervention in financial markets, and the formation of a large public sector. Among the most important reforms of the recent past are the removal of price controls, the Licence Raj, and the automatic approval of foreign direct investment in certain sectors.