India’s growth story from 1991-2019

There are nine sets of facts in which six about the economy and markets and three about the
media business.
 Population: The population of India has grown by about 50 per cent since 1991 - from
89 crore to 136 crores. At that time the typical Indian could expect to live to about 60
years. since then longevity has grown significantly and is close to 70 years. A big
change since those days is that fertility has fallen and in 13 states the birth rate
dropped so sharply that if it weren't for migration, the population would have begun
declining.
 Per capita income: In 1991, consumer markets for most product categories were
confined to big cities. Today, they have moved to smaller towns and in many
categories a large chunk of sales come from rural India. That's because the per capita
income at purchasing power parity (PPP) has grown six-fold, from $1,140 in 1991 to a
much more respectable $7,060 in 2019.
 India's GDP: Population has grown and so has per capita income and naturally then,
so too has the country's gross domestic product (GDP). The nominal GDP - that is, in
real dollars, not PPP - has galloped from merely $266 billion in 1991 to $2.6 trillion in
2019. It is up tenfold, making it one of the world's largest economies.
 Car market: The car market has been in the news for all the wrong reasons of late but
still, the explosion in sales since 1991 has been astounding. In 1991, Indians bought a
total of 2 lakh four-wheelers and the most luxurious car was the Maruti Esteem 1000!
Now, all the major car companies are in India and together they sold a total of 3.2
million cars last year - that is 16 times the number from 1991.
 Forex reserves: In 1991, the oil spike following the Gulf war had wrecked the country's
already fragile economy and India had just $500 million left in foreign exchange
reserves. Because it didn't have the dollars to even import oil, it pledged 47 tonnes to
the Banks of England and Japan to raise $400 million. This created a political uproar
but as the economy opened up, the country soon recovered and began to accumulate
more than enough in foreign exchange. Today, India's reserves are around $430 billion
- which means, 860 times what they were in 1991.
  TV households: India of 1991 was nearly media dark. Newspaper circulation was low
and TV and radio were controlled by the government via Doordarshan and All India
Radio. There were no FM radio stations or cinema multiplexes. Only 35 million
households had TV sets. Today the number is up by six-fold to 197 million homes.
 Largest media company: Within media, print was the only real business in a small,
closed economy. The biggest company at the time was Bennett Coleman, publisher of
The Times of India and other dailies. Its top line in 1991 was about Rs 150 crore. Today,
there are three media companies/groups whose turnover is over Rs 10,000 crore:
Bennett Coleman, Star India and Zee's media business. In other words, the largest
media company is 67X what it was in 1991.
 Satellite channels: CNN had entered India in 1991, via five-star hotels, riding on the
back of its coverage of the Gulf war. It was India's first taste of live television. Later
that year, a bouquet of four Star channels became available. In contrast, there are at
least 900 satellite channels in every conceivable language, catering to every possible
taste.

In conclusion, India has a long way to go on many parameters.

Top performing sectors in India from 1991:

The adoption of the New Economic Policy in 1991 saw a landmark shift in the Indian
economy, as it ended the mixed economy model and license raj system - and opened the
Indian economy to the world. An overview of the top performing sectors of the Indian
economy is given below –

Agricultural Sector:
One of the most important sectors of the Indian economy remains Agriculture. Its
share in the GDP of the country has declined and is currently at 14%. However, more than
50% of the total population of the country is still dependent on agriculture. Keeping this in
mind, the Union Budget 2017 - 18 gave high priority to the agricultural sector and aimed to
double farmers’ incomes by 2022.
• Government subsidies to agriculture are at an all - time high.
• Further, cropping patterns have shifted in favour of cash crops such as sugarcane and
rubber.
• Introduction of cooperative farming like – e - choupal etc.
• Rise of SHGs such as Lijjat Papad.
• Agricultural land is being brought under industrial and commercial use, thereby straining
the remaining agricultural land.
• Many export sectors have been opened for agricultural goods.
• Food processing is emerging as a ‘Sunrise Industry’

Industry Sector:
Another important part of the Indian economy is the Industry sector. Changes such
as the end of the ‘Permit Raj’ and opening up of the economy were welcomed in the
country with great enthusiasm and optimism. As a result of these changes, the industrial
potential of the economy has increased since 1991.
• Proliferation of industries, from traditional iron and steel to jute and automobiles.
• Autonomy in production, marketing and distribution.
• Reduced red - tapism.
• Encouragement to private investments, both domestic as well as FDI.
• Transfer of technology and benefits of research and development to the advantage of
the economy.
• Arrival of investment models such as joint ventures, public-private partnerships, MNCs.
• Private players got an opportunity to enter new sectors, which were earlier under
government monopoly.

Services Sector:
The sector that benefited most from the New Economic Policy was the services
sector. Banking, Finance, Business Process Outsourcing - and most importantly Information
Technology services - have seen double - digit growth.
• Indian IT giants such as Infosys, WIPRO and TCS have made their mark on the global
platform.
• 60 percent of the GDP contribution comes from the services sector.
• India, with its huge demographic dividend potential, has emerged as the IT hub of the
world.
• New employment opportunities are being created in this sector.
• Opening of transportation, tourism and medical sectors have led to the growth of service
sector competencies.
• RBI has transitioned from being a regulator to a facilitator.
• Product diversity of financial investments.
• Wider penetration of services such as insurance, banking, stock market etc.
• Considerable improvement in forex reserves.

Food Processing:
Food processing has emerged as a high - growth, high - profit sector and is one of the
focus sectors of the ‘Make in India’ initiative. The vast availability of raw materials,
resources, favourable policy measures and numerous incentives have led India to be
considered as a key attractive market for the sector. With a population of 1.3 bn and an
average age of 29, as well as a rapidly growing middle - class population that spends a high
proportion of their disposable income on food, India boasts of a large consumer base. The
total consumption of the food and beverage segment in India is expected to increase from $
369 bn to $ 1.14 tn by 2025. The output of the food processing sector (at market prices) is
expected to increase to $ 958 bn during the same period. India is the second largest
producer of food grains in the world, second only to China. This sector has huge potential in
India due to increasing urbanization, income levels and a high preference for packaged and
processed food. Visit the sectors category to read more about the food processing industry.

Manufacturing Sector:
The manufacturing sector is the second largest contributor to India’s GDP after the
Services sector. Various government initiatives like Make in India, MUDRA, Sagarmala,
Startup India, Freight Corridors, along with a whole - hearted contribution from states, will
raise the share of the manufacturing sector in the foreseeable future.
However, if India aims to raise its share of manufacturing in GDP to around 25%, the
industry will have to significantly step up its research and development expenditure. The
quantum of value addition has to be increased at all levels and the government needs to
offer attractive remuneration to motivate people to join the manufacturing sector.

Recent Developments in the Economy of India

Besides these developments and reforms, it is imperative to bear in mind that in order
to tap the highest potential of the economy and ensure good governance, an optimal level of
synergy is required between the central and state government. This will not only add strength
to our cooperative federal structure but will also strengthen India’s economy.
Initiatives such as –
 Goods and Services Tax (GST)
 Insolvency and Bankruptcy Code (IBC)
 Startup India
 Digital India

These, among others, have helped the Indian economy jump 65 ranks (in the last four years)
in the World Bank’s Ease of Doing Business Report.
These measures cemented India’s reputation as one of the few bright spots in an otherwise
grim global economy. India is among the fastest growing major economies, underpinned by a
stable macro - economy with declining inflation and improving fiscal and external balances.
Not only that, it was also one of the few economies enacting major ‘structural reforms’, that
have positioned India as a competitive player in the international market.

Future of Indian Economy

To make India a $ 5 tn economy by 2030, and to achieve consistent 8% growth, NITI Aayog
has released a comprehensive document titled ‘Strategy for New India @75’. Its main
objectives are –
 Doubling farmers’ incomes.
 Creating an all India talent pool for the entre and States together - such as the All
India Services.
 Providing a major boost to the ‘Make in India’ campaign.
 Achieving 22% tax to GDP ratio by 2023 - up from the current 17%.
 Achieving 36% of investment rate by 2023 - up from the current 29%.
Guided by unwavering democratic credentials and strong government leadership, India is an
emerging superpower with a vibrant economic climate. Under Prime Minister Narendra Modi,
India’s growth rate in the last quarter has been pegged at 7.7%. And with an ever - expanding
middle - class base and youth demographic, the opportunity for business has never been
better.
To know more about foreign trade & FDI in India, visit our resources section.