Economic Profile

India has transformed in the past fifteen years from a closed market to a liberal market-driven economy, with a large involvement of the private sector, including foreign enterprise. The economy is broad-based, with well-developed agriculture, industrial and service sectors, including high technology and knowledge-based sectors. With a Gross Domestic Product (GDP) growth exceeding 8% annually for three years continuously, India is the world’s fastest-growing free market economy, as fondly referred to at the World Economic Summit at Davos.

India’s economy is characterised by:

A GDP on nominal basis of Euro 718 billion (12th position in the world) as compared to Euro 537 billion of Netherlands (16th position in the world) in 2006. Also on purchasing power parity basis a GDP of Euro 3,020 billion (4th position in the world) as compared to Euro 438 billion of Netherlands (23rd position in the world) in 2006.

A GDP of Rs 32 trillion (Euro 557 billion) in 2005-06 on nominal basis, and Rs 82 trillion (Euro 2.86 trillion) on the basis of Purchasing Power Parity (PPP); in 2005, the Netherlands’ GDP output was 0.9 trillion euro

A per capita GDP of Euro 557 on nominal basis (Euro 2,860 on PPP basis), in 2005-06

GDP growth of 8.4% in 2005-06.

	A robust services sector accounting for 55.1% of GDP, driven by a large pool of technical manpower and competitive labour costs
	A diverse industrial base, accounting for 26.4% of GDP, with self reliance in all core industries and a wide range of engineering products
	A strong agriculture sector, accounting for more than 18.5% of national output, with self sufficiency in all important crops

A large, growing consumer class estimated at 300 million people.

A stable current account deficit trend of less than 1.5% (surplus in 2005-06), and adequate foreign currency reserves to meet external payment obligations

A policy environment with periodic liberalization of investment and trade regulations

A western model of legal and accounting system

Inflation remained in the range of 3-5% during the financial year, and was 4% in February 2006. Fuel, power and lubricant prices accounted for the main part of price rises during the year.

Principal Economic Sectors » Government Performance » External Sector

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