India, the world’s most populous country, with 1.46 billion people residing on this peninsula, was once primarily dependent on agriculture
India has a rich history of cultural prowess and is home to numerous ancient treasures that caught the attention of Western traders. Satish Chandra, in his book History of Medieval India, stated that India had long-standing trade and cultural relations with the regions around the Mediterranean Sea. However, the country’s richness led it into a dark age of colonisation. Since India’s independence in 1947, the nation has struggled with economic crises. Being a secular country, India is home to nearly 3,000+ castes, 25,000+ sub-castes, and multiple religions. For years, the rapidly growing population of this developing country has been a major source of concern.
India, the world’s most populous country, with 1.46 billion people residing on this peninsula, was once primarily dependent on agriculture. Data from Wikipedia suggest that India’s population below the poverty line (BPL) stood at 27.4% in 2012. However, this figure fell to 21.6% in 2014. According to the Rangarajan Report (2014), India’s BPL declined by approximately 1.26% annually — thanks to the implementation of strategic government policies aimed at narrowing the gap between the ‘haves’ and the ‘have-nots.’ The World Bank cited the significant improvement in poverty reduction within just two years as meeting international standards. An SBI research study in 2023-24 reveals that, with an estimated poverty rate of only 4-4.5%, India is close to eradicating extreme poverty. This major leap is largely attributed to its welfare programmes.
With a subsequent increase in population and a greater emphasis on education, India is ranked as the fastest-growing major economy in the world. India is now the third-largest economy globally by Purchasing Power Parity (PPP), with a GDP of over $13 trillion, surpassing Japan by $1 trillion.
A balance between imports and exports is essential for a stable economy. Looking back at history, India faced a major economic crisis in 1985 as imports surged, leading to a balance of payments deficit. Until 1991, India followed a Soviet-style model characterised by extensive state ownership of the means of production, collective farming, and industrial manufacturing. In 1991, India implemented economic liberalisation, privatisation, and globalisation (LPG) reforms — marking a shift from state control to a more market-oriented approach. Currently, India ranks 10th among the world’s largest exporters and 7th among the world’s largest importers. However, the country remains primarily a consumption-driven economy, with 70% of its GDP driven by domestic consumption.
India’s economic reforms and improving macroeconomic indicators have positioned it among the world’s leading economies. Under the Donald Trump administration, the United States levied a 26% reciprocal tariff on Indian goods in April 2025. In response to India’s retaliation, the USA imposed a 50% tariff in August 2025. As the United States’ tariff war with various countries intensified, India made significant bilateral progress with the European Union, culminating in the signing of what was described as the ‘mother of all trade deals.’ Under this agreement, India will scrap or reduce tariffs on 96.6% of EU exports by value, while the EU will lower tariffs on 99.5% of Indian products. Following the trade deal with the EU, the US President declared that reciprocal tariffs on India would be reduced to 18% in February 2026.
Recently, World of Statistics on X (formerly Twitter) shared the top 10 contributors to global real GDP growth (2026). According to the tally, China tops the list with 26.6% of global GDP growth, followed by India with 17.0%. Billionaire Elon Musk stated on his X handle, “The balance of power is changing,” as the United States falls to third place with 9.9% growth.
In the financial year 2023-24, India’s service sector alone contributed 54.7% of the GDP. From offering large-scale outsourcing services, India has advanced to delivering high-value software development, consultancy, engineering, and research-oriented solutions. However, the country needs to focus more on increasing its per capita income.
India’s economic journey may be gradual, but it is showing signs of steady progress. If the country maintains this momentum, it could significantly reshape global power dynamics. China, once the most populous country in the world, has set an example of how to leverage a vast workforce to boost economic growth. Collective efforts transformed China into one of the most powerful economies globally, with its GDP attracting worldwide attention. If China can, so can India.
