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Economic Growth and Challenge: India

The changing size and structure of India's economy

  • 3 things to know
  • Component 3 Section B

Overview

Sector shares of India's economy, india's leading export sectors and role of foreign direct investment in India.

What you need to know

Answer each one before you reveal it.

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Numbers

How large is India's economy?

Numbers

How fast has India's economy grown since liberalisation?

Numbers

Why is India's rank so different measured by GDP per capita?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    How large is India's economy?

    Model answer

    India became the fifth largest economy in the world by nominal GDP in 2022, passing the United Kingdom, and the fourth largest in 2025, passing Japan. Output stood at around 4.2 trillion United States dollars.

  2. 2

    How fast has India's economy grown since liberalisation?

    Model answer

    Growth averaged around 6% to 7% a year from 1991 to the early 2020s. The economy roughly doubles in size every eleven years at such a pace.

  3. 3

    Why is India's rank so different measured by GDP per capita?

    Model answer

    A population above 1.4 billion divides India's output very thinly. GDP per head was around 2,400 United States dollars in 2022, well below the world average.

  4. 4

    Describe the sector shares of India's economy.

    Model answer

    Services generated over half of gross value added by the early 2020s. Industry contributed around a quarter and agriculture under a fifth.

  5. 5

    Why is India's structural change unusual?

    Model answer

    India moved from agriculture to services without a large manufacturing phase. Countries that industrialised earlier absorbed farm labour into factories first.

  6. 6

    What problem does jobless growth create in India?

    Model answer

    Output has grown much faster than formal employment since the 2000s. Roughly a million young people enter the labour market every month.

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