The economy of India is a developing mixed economy with a notable public sector in
strategic sectors.[52] It is the world's fourth-largest economy by nominal GDP and the
third-largest by purchasing power parity (PPP); on a per capita
income basis, India ranked 136th by GDP (nominal) and 119th by GDP
(PPP).[53] From independence in 1947 until 1991, successive governments followed
the Soviet model and promoted protectionist economic policies, with
extensive Sovietization, state intervention, demand-side economics, natural resources,
bureaucrat-driven enterprises and economic regulation. This is characterised
as dirigism, in the form of the Licence Raj.[54][55] The end of the Cold War and an
acute balance of payments crisis in 1991 led to the adoption of a broad economic
liberalisation in India and indicative planning.[56][57] India has about 1,900 public sector
companies,[58] with the Indian state having complete control and ownership of railways
and highways. The Indian government has major control over
banking,[59] insurance,[60] farming,[61] fertilizers and chemicals,[62] airports,[63] essential
utilities.[64] The state also exerts substantial control over digitalization,
telecommunication, supercomputing, space, port and shipping industries,[65] which were
effectively nationalised in the mid-1950s but has seen the emergence of key corporate
players.[54][55][66]
Nearly 70% of India's GDP is driven by domestic consumption;[67] the country remains
the world's fourth-largest consumer market.[68] Aside private consumption, India's GDP is
also fueled by government spending, investments, and exports.[69] In 2022, India was the
world's 10th-largest importer and the 8th-largest exporter.[70] India has been a member of
the World Trade Organization since 1 January 1995.[71] It ranks 63rd on the ease of
doing business index and 40th on the Global Competitiveness Index.[72][73] India has one
of the world's highest number of billionaires along with extreme income
inequality.[74][75] Economists and social scientists often consider India a welfare
state.[76][77][78][79] India's overall social welfare spending stood at 8.6% of GDP in 2021-22,
which is much lower than the average for OECD nations.[80][81] With 586 million workers,
the Indian labour force is the world's second-largest.[82] Despite having some of the
longest working hours, India has one of the lowest workforce productivity levels in the
world.[83][84][85][86][87] Economists say that due to structural economic problems, India is
experiencing jobless economic growth.[88]
During the Great Recession, the economy faced a mild slowdown. India
endorsed Keynesian policy and initiated stimulus measures (both fiscal and monetary)
to boost growth and generate demand. In subsequent years, economic growth
revived.[89]
In 2021–22, the foreign direct investment (FDI) in India was $82 billion. The leading
sectors for FDI inflows were the Finance, Banking, Insurance and R&D.[90] India has free
trade agreements with several nations and blocs, including ASEAN, SAFTA, Mercosur,
South Korea, Japan, Aus
