India: Basic Information

Overview Basic Information Trade Policy Issues and Analysis Recommended Readings Recommended Data Recent Research Developments Related Links

Agricultural Sector
Macroeconomy and Reforms
Key Statistics
More Information

National and State Maps

With a population of more than 1.1 billion, India is the world's largest democracy and its second most populous nation, after China. Real Gross Domestic Product (GDP) grew 5.7 percent annually during the 1990s and accelerated to 6.4 percent annually during 2000-08, making India the second fastest growing major economy in the world during each period (after China). India's economy, as measured by GDP, is Asia's third largest, after Japan and China. Although economic growth has led to a significant reduction in poverty—with the share of the population in poverty estimated to have fallen from 26.1 percent in fiscal year 1999/2000 (April-March) to 21.8 percent in 2004/05, per capita gross national income of about $730 continues to rank India among the world's low-income countries.

India's annual population growth rate declined from 2.2 percent in the 1980s to 1.7 percent during 1990-2005, and is projected at 1.3 percent during 2005-15. Despite the decline, India is expected to overtake China as the world's most populous country in the coming decades. Although about 71 percent of India's population remains rural and about 58 percent of the population relies primarily on agriculture for income and employment, the urban population is growing at about 2.5 percent annually. Middle-class households, accounting for about 200 million consumers, are the fastest growing segment of the population and are having an increasing impact on the growth and diversification of food demand. With about 55 percent of household expenditures, on average, devoted to food, consumer demand is highly responsive to both rising incomes and changing relative prices.

Top of page

Agricultural Sector

India has a large and diverse agricultural sector, accounting for about 21 percent of GDP and 10 percent of export earnings. Its arable land area of 159.7 million hectares (394.6 million acres) is the second largest in the world (after the United States), and its gross irrigated crop area of 82.6 million hectares (204.1 million acres) is the largest in the world. India is among the top three global producers of a broad range of crops, including wheat, rice, pulses (chickpeas, pigeon peas, lentils, dry peas, etc.), cotton, peanuts, fruits, and vegetables. Worldwide, India has the largest herds of buffalo and cattle, is the largest producer of milk, and has one of the largest and fastest growing poultry industries.

India: Area, yield, and production of major crops
(2004/05-2006/07 average)

India achieved strong growth in food grain production during the 1970s and 1980s because of its extensive agricultural resource base, the introduction of high-yielding grain varieties, and supportive government policies. This enabled India to achieve its key policy goal of self-reliance in cereals during the 1990s and 2000s. However, gains in farm output slowed beginning in the early 1990s, even as growth in the rest of the economy strengthened. Yields of most major crops in India remain low by world standards, as the development and use of high-yielding varieties, irrigation, and modern inputs has been slow to spread beyond wheat and rice production.

Despite gains in irrigated area, Indian agriculture continues to be constrained by its dependence on variable monsoon rainfall for a large share of cropland. Also, major farm policies—including price supports, input subsidies, and public sector research—that traditionally focused on the wheat and rice sectors have been slow to adjust to meet the needs of India's increasingly diverse domestic market or of competing in global markets. Alongside the robust gains in output and investment that have occurred in the overall economy since the early 1990s, public and private investment in agriculture has shown comparatively little growth.

The combination of stronger growth in incomes and food demand, sluggish agricultural production and investment, and more liberal import policies is leading to stronger growth in India's agricultural imports. While cereal imports have declined, India is now among the world's leading importers of edible oils and pulses and is a rapidly expanding market for an array fruit, vegetable, and processed food products. Despite rising imports, India remains a substantial net agricultural exporter. About half of its agricultural exports consist of traditional items—including tea, coffee, spices, fruits and nuts, and tobacco—but nontraditional items—including rice, meat, and soybean meal—now account for a growing share of farm exports. See the Trade chapter of this briefing room for more information on India's agricultural imports and exports.

Top of page

Macroeconomy and Reforms

From independence in 1947 until the late 1980s, Indian economic policy was characterized by extensive central planning and regulation of economic activity, including quantitative controls on imports and exports that made India one of the most closed economies in the world. Under this system, the economy registered relatively slow 3-percent annual growth, accumulated large fiscal deficits, and operated with a chronically weak balance of payments stemming from uncompetitive domestic industries. In 1991-93, India introduced major reforms to industrial, trade, and exchange-rate policy that led to India's emergence as one of the fastest growing economies.

Since 1990, the performance of India's overall economy has been consistent with two key policy goals—employment generation and price stability—with annual GDP growth averaging 6.4 percent and annual consumer price inflation averaging about 7 percent. Economic growth and price stability improved further during 2003-07, although they have been affected by global price volatility and the weakening global economy during 2008-09.

In contrast to the pattern for the overall economy, farm sector growth has remained sluggish since 1990, with growth actually slowing compared with the 1970s and 1980s. Annual farm sector growth has averaged 2.9 percent since 2000, and agriculture's share of GDP has fallen from 29 percent in 1990 to 22 percent in 2000 and 16 percent in 2008.

India's balance of payments—the balance of trade and capital flows with the rest of the world—were previously a chronic weakness of the Indian economy, but have become more robust following economic reforms. Domestic regulatory reforms have helped make Indian industries more competitive and trade liberalization measures, including removal of most quantitative trade restrictions and tariff reductions, have made the economy significantly more open to trade. The depreciation of the Indian rupee after it was made fully convertible on the current (or trade) account in 1991 also boosted the competitiveness of Indian exports.

With less restricted trade, less domestic regulation, and rupee depreciation, Indian goods and services industries have become increasingly competitive in global markets. Two-way trade has expanded nearly sevenfold, rising from just $46 billion in 1990/01 to about $320 billion in 2006/07. India's foreign exchange reserves have shown even more growth, climbing from $5.8 billion in 1990/91 to more than $270 billion in 2006/07 and affording policymakers with substantial flexibility in macroeconomic and trade policy management.

Reflecting more market-oriented domestic and trade policies, the inflow of foreign direct investment to India has also increased. Inflows from international investors, including nonresident Indians, climbed from negligible levels in the early 1990s to $4.0 billion in 2000/01 and $22.1 billion in 2006/07.

Top of page

Key Statistics

• Government of India, Union Budget and Economic Survey. Latest economic data, including statistics on agriculture.

• Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation, Agricultural Statistics at a Glance. Current statistics on various aspects of agricultural supply, demand, trade, and policies.

• USDA, Foreign Agricultural Service (FAS), Production, Supply, and Distribution Online database. Official USDA data on production, supply, and distribution of field crop (grains, oilseeds) and livestock products produced in India.

• United Nations, Food and Agriculture Organization, FAOSTAT. Agricultural production and trade statistics and food balances

More Information

Additional information on Indian economy and agricultural sector is available from a number of sources:

• Government of India's Ministry of Agriculture, Department of Agriculture and Cooperation. Information on agricultural programs and policies.

• USDA, FAS, Agricultural Attaché Reports. Current and historical reports on India's markets for major agricultural commodities.

• Central Intelligence Agency, World Factbook. Data on population, income, income distribution, structure of the economy, and the role of agricultural in the economy.