Size of the economy

The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy and largest South Asian economy with notable public sector in strategic sectors.^[11] It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). According to the International Monetary Fund (IMF), on a per capita income basis, India ranked 139th by GDP (nominal) and 127th by GDP (PPP).^[12] From independence in 1947 until 1991, successive governments followed Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, bureaucrat driven enterprises and economic regulation. This is characterised as dirigism, in the form of the Licence Raj.^[13][14] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning.^[15] Since the start of the 21st century, annual average GDP growth has been 6% to 7%.^[11] The economy of the Indian subcontinent was the largest in the world for most of recorded history up until the onset of colonialism in early 19th century.^[16][17][18] India accounts for 7.2% of the global economy in 2022 in PPP terms, and around 3.4% in nominal terms in 2022.^[19][20]

India still has informal domestic economies; COVID-19 reversed both economic growth and poverty reduction; credit access weaknesses contributed to lower private consumption and inflation; and new social and infrastructure equity efforts.^[21] Economic growth slowed down in 2017 due to the shocks of "demonetisation" in 2016 and the introduction of the Goods and Services Tax in 2017.^[22] Nearly 70% of India's GDP is driven by domestic consumption.^[23] The country remains the world's sixth-largest consumer market.^[24] Apart from private consumption, India's GDP is also fueled by government spending, investments, and exports.^[25] In 2022, India was the world's 6th-largest importer and the 9th-largest exporter.^[26] India has been a member of the World Trade Organization since 1 January 1995.^[27] It ranks 63rd on the Ease of doing business index and 40th on the Global Competitiveness Index.^[28] Due to extreme rupee/dollar rate fluctuations India's nominal GDP fluctuates significantly.^[29] With 476 million workers, the Indian labour force is the world's second-largest.^[30] India has one of the world's highest number of billionaires and extreme income inequality.^[31][32] Despite considerable efforts for widening the tax base, the number of taxpayers in the country remains low. However, the number of income tax returns filed have been increasing year on year reaching a record 6.77 crore Income Tax Returns (ITRs) filed till 31 July 2023 which was a 16.1% Year-on-Year increase.^[33] India is predicted to be the third largest economy by 2027.^[34]

Science and technology

India is prioritising the development of a well-trained workforce with advanced English language skills to fit into the emerging knowledge economy.^{[41][42][43][44]} An example of India's scientific endeavours is the ISRO, the third National Space Agency to be founded in the world, following those of the Soviet Union and the United States. It enabled India to become the third Asian nation to launch a satellite into orbit from an indigenously developed rocket after China and Japan, when the Rohini RS-1 lifted off in 1979.^[45][46] In January 2007, India became the fourth nation to complete atmospheric reentry^[47] In October 2008, India launched its first uncrewed lunar probe, Chandrayaan-1, which operated until August 2009.^[48][49][50] On 14 November 2008, the Moon Impact Probe separated from the Chandrayaan orbiter and was made to strike the Moon near its south pole, making India the fourth country to reach the Moon's surface. The probe discovered widespread water molecules in lunar soil. On 24 September 2014, India became the fourth nation to have a satellite orbiting Mars. India is the first Asian nation to achieve this and the first in the world to do so at the first attempt.^[51]

India and the United States have increased mutual co-operation in space-travel related technologies, such as increasing the interoperability between Indian and US systems, and prospects for a commercial space launch agreement with India that would allow US satellites to be launched on Indian vehicles.^[52] India is also trying to join international R&D projects – e.g. it has recently joined the European Galileo GPS Project^[53] and the ITER for fusion energy club.^[54] India also holds a world record for placing 104 satellites in orbit by single launch. Nearly 95% of the components used in the rockets, including those used in Chandrayaan 3 mission, were made in India and were a result of several years of development involving the Indian Space Research Organisation and Indian industries.^[55] India recently launched Chandrayaan-2 mission to moon which had included a lander and rover. Also, it has a planned space mission called Gaganyaan (Indian Human spaceflight) to send a human to space by 2024. Planned space missions include Chandrayaan-3, Mars Orbiter Mission 2, Shukrayaan-1 and space exploration satellites as well as the ISRO space station to enter service by 2030. India has several educational and research institutions of global repute, including the Indian Institute of Science, Indian Institute of Technology,^[56] National Institutes of Technology, Indian Institutes of Information Technology, IISER,^[57]BITS Pilani, Indian Institute of Management, Tata Institute of Fundamental Research, Tata Institute of Social Sciences and All India Institute of Medical Sciences.

Iron and steel industry

India surpassed Japan as the second largest steel producer in January 2019.^[58] As per worldsteel, India's crude steel production in 2018 was at 106.5 tonnes (MT), 4.9% increase from 101.5 MT in 2017, which means that India overtook Japan as the world's second largest steel production country.

India plans to build 12 new steel plants with a capacity of 60 million tons per year. Indian Ministry of Steel instructed government owned steel plants to increase capacity by at least 80%, to 45 million tons per year by 2030. The current capacity is 25 million tons per year.^[59]

Rare Earth industry

Currently India can process about 10,000 MT of rare earth bearing mineral. As regards production, capacity and capabilities in terms of mining, processing, extraction, refining and production of high pure RE oxides is adequately available in India.^[60]

India has huge natural resources regarding rare earth which it could exploit to make the country leading in this field.^[61]

There are also multiple companies such as Indian Rare Earths, Gujarat Mineral Development Corporation, and Mishra Dhatu Nigam which have expertise in this area.

Energy

India joined China in acquiring stakes in oil fields in the Middle East and Russia.^[62][63][64]

India is well-placed to transition from fossil fuels to other energy generation technologies, in line with global trends away from finite resources and harmful emissions^[65][66][67] due to its high solar insolation^[68] and density of consumers.^[69][70][71] For example, considering the costs of energy consumed for temperature control (a major factor influencing a region's energy intensity) and the fact that – cooling load requirements, unlike heating, are roughly in phase with the sun's intensity, cooling from the excessive solar radiation could make great energetic (and hence economic) sense in the subcontinent, whenever the required technology becomes competitively cheaper.^[72][73][74]

India is constructing several power generation plants using nuclear power or hydroelectric-power. It has made civilian nuclear energy deals with the US^[75] and EU.^[76] As the site of 25% of the world's thorium reserves, India would be well-placed to use this alternative to uranium for nuclear power generation. ^{[citation needed]} India also has multiple world class companies working in nuclear technology such as BHEL, Larsen & Toubro, Walchandnagar Industries and Gammon India

Business-to-Business commerce

Business-to-Business (B2B) marketplaces are likely to hit gross merchandise value (GMV) of $125 billion in the next five years, growing at a compound annual growth rate (CAGR) of 45%, according to a report by Avendus Capital. ^[77]

India's B2B e-commerce startups sees 3-6x growth, India's B2B (business-to-business) market is twice the size of B2C (business-to-consumer) and contributes roughly two-thirds to India $3 trillion economy.India has seen the rise of several B2B unicorns too and, they are going after what's potentially a $2 trillion opportunity.These companies are fuelling the engines of Indian economy — the micro-, small- and medium-sized enterprises (MSMEs). The addressable market is big with over 65 million MSMEs all ready to go digital, but only about six to 10 million of them actively buy and sell online.^[78]

As per Airtel, 5G will make more B2B Revenues than B2C.^[79]

Government e Marketplace is an online platform for public procurement within Government departments/organizations in India under Government of India, The initiative was launched on 9 August 2016 by the Ministry of Commerce and Industry. GeM's B2B procurement crosses Rs 2 lakh-crore mark($30.76 Billion).The business through GeM has grown from around Rs 35,000 crore two years ago and tripled last year to Rs 1 lakh 6 thousand crores.^[80]

Railway Network

Indian Railways has 114,500 kilometers (71,147 mi) of total track over a route of 65,000 kilometers (40,389 mi) and 7,500 stations. It has the world's fourth largest railway network after those of the United States, Russia and China.

The railway sector in India aims to contribute about 1.5% to the country's GDP by building infrastructure to support 45% of the modal freight share of the economy. With a workforce of 13 lakh people, the IR is also one of the country's largest employers. the railways is a major contributor to jobs, GDP, and mobility.

The recent opening up of public-private partnership (PPP) opportunities by Indian Railways is a clear indicator that a reform-driven agenda is being implemented. It is a controlled foray into PPP, where market forces will help enhance the quality of services and in-transit experience, without the Government relinquishing control over public safety and security.^[81]

Roadways

Roads in India are an important mode of transport in India. India has a network of over 6,331,791 kilometres (3,934,393 mi) of roads (as of 31 December 2022^[update]). This is the second-largest road network in the world, after the United States.^[82] At (1.94 km, 1.21 mi) of roads per square kilometre of land, the quantitative density of India's road network is equal to that of Hong Kong, and substantially higher than the United States (0.71 km, 0.44 mi), China (0.54 km, 0.34 mi), Brazil (0.23 km, 0.14 mi) and Russia (0.09 km, 0.056 mi).^[83] Adjusted for its large population, India has approximately 5.13 kilometres (3.19 mi) of roads per 1,000 people, which is much lower than United States 20.5 kilometres (12.7 mi) but higher than that of China 3.6 kilometres (2.2 mi). India's road network carries over 71% of its freight and about 85% of passenger traffic.^[84] Expressways make up approximately 2,091 km (1,299 mi) of India's road network, as of 2020.^[85]

Mass transit system

India is developing modern mass rapid transit systems to meet present and future urban requirements. A modern metro rail system is already in place in the cities of Delhi, Mumbai, Bangalore, Kolkata, Hyderabad, Kochi, Gurgaon, Jaipur, Noida, Pune, Nagpur, Kanpur, Ahmedabad and Lucknow. Similar mass transit systems are intended for Agra, Bhopal, Bhubaneswar, Chandigarh, Indore, Patna, Ranchi and Navi Mumbai.

India is developing modern RRTS system to replace the old MRTS system which will provide connectivity in Delhi Metropolitan Area and Mumbai Metropolitan Region which will serve the suburbs of these big cities at 80-100 km of distance from city center.

Land prices in tier-II cities such as Lucknow, Patna, Jaipur, Ahmedabad, Pune, Kochi, and Coimbatore have gone up by almost 8–10 percent following the introduction of a metro corridor in these cities, an assessment by JLL has said.^[86]

Tourism

India continues to attract tourists with the attractions of its history, arts, music, culture and spiritual traditions.^[87] About 3.9 million tourists travelled to India in 2005, each spending an average of $1,470, higher than in France, the most visited tourist destination in the world.^[87] Foreign visitors contributed over US$15.4 billion to the Indian economy in 2005.^[88][89][90] Many travellers find the cultural diversity an enriching experience, despite hassles, inefficiency, pollution and overcrowding.^[91] Monuments like the Taj Mahal are among the many attractions of this land.^[92][93] As of 2006, Conde Nast Traveller ranked India the 4th most preferred travel destination.^[87] The Planning Commission expects 5.8 million tourists travelling to India by 2010. The World Travel and Tourism Council believes India's tourism industry will grow at 10% per annum in the next decade, making it lead the world in terms of growth.^[87] Tourism contributes 6% of India's GDP and employs 40 million people, making it an important factor in India's economic growth.^[87] More than 8 million foreign tourists arrived in the year 2015 against 7.68 million in 2014 recording a growth of 4.4 percent over 2014.^[94]

Medical tourism in India

In 2014 an estimated 150,000 foreigners visited India for medical procedures, with the number projected to increasing by about 22 percent per year.^[95]

Geographic location

India lies in the South Asian portion of the Indian Ocean and therefore is places advantageously for transoceanic commerce with and between continents.

In a speech in 1909, George Curzon, 1st Marquess Curzon of Kedleston (a former Viceroy of India) explained the importance of India to the British Empire:

The central position of India, its magnificent resources, its teeming multitude of men, its great trading harbours, its reserve of military strength, supplying an army always in a high state of efficiency and capable of being hurled at a moment's notice upon any point either of Asia or Africa—all these are assets of precious value. On the West, India must exercise a predominant influence over the destinies of Persia and Afghanistan; on the north, it can veto any rival in Tibet; on the north-east ... it can exert great pressure upon China, and it is one of the guardians of the autonomous existence of Siam.

— Lord Curzon, The Place of India in the Empire (1909)^[96][97]

Large population

India has the world's largest population^[98] and has a positive Population Growth Rate. About half of its population is under 25, which suggests that economic growth should not be constrained in the next decades by contraction of the active workforce though aging.^[99] Although its population was smaller than China's in the past,^[100] it surpassed China as the world's most populous country in 2023.^[101]

Young population

Due to its high birth rate, India has a young population compared to more developed nations. Approximately 65% of its population is below the age of 35. In addition, declining fertility is beginning to reduce the youth dependency rate which may produce a demographic dividend.^{[102][103][104]} In the coming decades, while some of the powerful nations will witness a decrease in workforce numbers, India is expected to have an increase. For example, while Europe is well past its demographic window, the United States entered its own in 1970 (lasting until 2015), China entered its own in 1990 (and will last until 2025), India entered its own in 2010 (and it will last until 2050).^[105] Regionally, South Asia is supposed to maintain the youngest demographic profile after Africa and the Middle East, with the window extending up to the 2070s.^[106]

Global diaspora

More than 32 million Indians live across the globe.^[107] Under fair opportunities, they have become socio-economically successful— especially in the US and the UK where they are the highest earning ethnic demographic.^[108]

In some countries, more than one-third of their populations are thought to have Indian heritage, particularly in the Arabian Peninsula (United Arab Emirates and Qatar) and the Caribbean (Guyana and Trinidad and Tobago), as well as the island nations of Mauritius in Africa and Fiji in Oceania. Despite these diaspora populations' historic origins in the Indian indenture system, these nations generally enjoy strong diplomatic and economic ties with India as a result of continued demographic ties.^{[109][110][111][112]}

Furthermore, since the 2010s, people of Indian descent have been elevated to positions of significant political power in Europe, including British Prime Minister Rishi Sunak, Portuguese Prime Minister António Costa, and Irish Taoiseach Leo Varadkar. In all three cases, their elections were associated with a more positive and cooperative view of India.^{[113][114][115]}

Foreign language skills

The global importance of the English language may be in transition^[116][117] but the large number of non-native English speakers means that it cannot be discounted as an enabler in global trade.^[118][119] India has the world's largest number of people able to understand and/or speak English.^[120] It claims one of the largest workforces of engineers, doctors and other key professionals that use English.^[121] It has the 2nd largest population of "fluent English" speakers, second only to the United States, with estimates ranging from 150 to 250 million speakers, and is expected to have the largest in the coming decades. Indians also learn other major world languages.^[122][123]

Democratic republicanism

India is the world's largest democratic republic by population, four times bigger than the next largest (the United States). It has so far been successful politically, especially considering its functionality despite its difficult ethnic composition.^[124] The fact that India is a democracy has improved its relations with other democratic nations and significantly improved its ties with the majority of the nations in the developed world.

Candidacy for Security Council

India has been pressing for permanent membership of the United Nations Security Council (as part of the G4 nations^[125]) but with a clause that it won't exercise its veto for the next 15 years.^[126] It has received backing from the United States,^[127][128] France,^[129] Russia,^[130] and the United Kingdom.^[131] However, China's stance on India's candidacy has been unclear.^[132][133]

Foreign relations

India has developed relationships with the world powers like the United Kingdom, the European Union,^[134] Japan, Russia, and the United States.^[135] It also developed relationships with the African Union (particularly South Africa), the Arab World, Southeast Asia, Israel and South American nations (particularly Brazil). It has significantly boosted its image among Western nations and signed a civilian nuclear deal with the United States in March 2006. India's core position in maintaining world peace and Indo-Pacific regional stability becomes increasingly important.^[136][137] To make the environment favourable for economic growth, India is investing on its relations with China.^[138] It is also working for stable relationships with Pakistan.^[139]

Role in international politics

Historically, India was one of the founding members of Non-Aligned Movement and had good relationships with Soviet Union and other parts of western world. It played regional roles in South Asian affairs, e.g. its use of the Indian Peace Keeping Force in the Bangladesh Liberation War and in Sri Lanka. It took a leading initiative to improve relations between African and Asian countries. India is an active member of the Commonwealth and the WTO. The evolving economic integration politics in the West and in Asia is influencing the Indian mood to slowly swing in favour of integration with the global economy.^[140] Currently, India's political moves are being influenced by economic imperatives. New Delhi is also being observed to slowly, cautiously, and often hesitantly, step into the uncharted role of becoming one of the two major seats of political power in Asia,^[141] the other being at Beijing. Some enlightened thinkers from the subcontinent have also envisioned, over the long run, a South Asian version of free trade zone and even a Union, where the South Asian nations relinquish all past animosities and move to make economic growth a pan subcontinental phenomenon.^[129][142]

Multipolarity

In the early 21st century, a new and highly controversial geopolitical strategy, being debated in the West, is whether India should be trusted/helped to become an economically strong democratic citizen of the world, and be used to balance the powerful but non-democratic forces, to insure a more stable world.^[143] Generally speaking, it is discussed in the context of adopting a policy of offshore balancing on the part of the United States.^[144] As the world pattern changes, U.S. Indo-Pacific Strategy supports India's continued rise and regional leadership.^[145]

Total strength

The Indian Armed Forces, India's main defence organisation, consists of two main branches: the core Military of India and the Indian Paramilitary Forces. The Military of India maintains the largest active duty force in the world as of 2020,^[146] while the Indian Paramilitary Forces, over a million strong, is the second largest paramilitary force in the world. Combined, the total armed forces of India are 2,414,700 strong, the world's third largest defence force.^[147]

Army

The Army of India, as the Indian army was called under British rule before 1947, played a crucial role in checking the advance of Imperial Japan into South Asia during World War II. It also played a leading role in the liberation of Bangladesh in 1971. Today, the Indian Army is the world's largest army in total numbers of armed personnel.^[148]

Air force

The Indian Air Force is the fourth largest air force in the world.^[149][150] India recently inducted its second indigenously manufactured combat aircraft. India is also developing the fifth generation stealth aircraft.

Navy

The Indian Navy is the world's fifth largest navy. It is considered to have blue-water capabilities with sophisticated missile-capable warships, aircraft carrier, advanced submarines and the latest aircraft in its inventory, along with a significant use of state of the art technology that is indigenously manufactured.^[151] It operates two aircraft carrier and also plans to induct the INS Vikrant by 2020 followed by a larger INS Vishal.

Integrated Guided Missile Development Program

India started the Integrated Guided Missile Development Program (IGMDP) to be a self-reliant nation in missile development. The IGMDP program includes five missiles like the Prithvi and Agni of ballistic missiles, surface to air missiles Trishul and Akash and also the anti tank Nag missile. Prithvi and Agni missiles are inducted into the armed forces and form the basis of Indian nuclear second strike capability. Trishul missile is declared a technology demonstrator. The Akash (Sky) is in service with the Indian Army and the Indian Air Force. While Nag and Helina missiles are undergoing user trials. Recently, a new weapons system, the beyond visual range air-to-air Astra missile was added to the project. Also India has fielded many modern missiles like the anti ballistic missiles like the AAD and PAD along with submarine launched ballistic missiles for its Arihant class of nuclear ballistic submarines. The expertise in developing these missiles has helped Indian scientists to contribute to joint weapon development programs like the Brahmos and Barak-II. India is also developing long range cruise missiles similar to the Tomahawk class of missiles called Nirbhay. There are reports of India developing an intercontinental ballistic missile beyond the range of ten thousand kilometres.^[152] India is self-reliant in missile technology.^[153]

Nuclear weapons

India has possessed nuclear weapons since 1974, when it did the Pokharan I nuclear tests, and the means to deliver them over long distances. However, India is not a signatory to the Nuclear Non-Proliferation Treaty (on grounds of security concerns and that India condemns the NPT as discriminatory).^[154][155]

Arms imports

As of 2024, India remains the world's top arms importer, accounting for 9.8% of global arms sales according to the Stockholm International Peace Research Institute (SIPRI). Russia continues to be India’s main weapons supplier, followed by France and the United States.

Current major roles

The Indian Armed Forces plays a crucial role in anti-terrorist activities and maintaining law and order in the disputed Kashmir region. India has also participated in several United Nations peace-keeping missions, currently being the largest contributor to UN peace keeping force and is the second-largest contributor to the United Nations Democracy Fund behind the USA.^[156]

Cinema

India's film industry produces more feature films than any other.^[157] In a year, it sold 3.6 billion tickets, more than any other film industry in the world (In comparison, Hollywood sold 2.6 billion tickets). The cinemas play a major role in spreading Indian culture worldwide. Indian cinema transcended its boundaries from the days of film Awara, a great hit in Russia. Bollywood films are seen in central and west Asia.^{[158][159][160][161]} Indian films have also found audience in eastern societies.^[162] India's film industry is now becoming increasingly popular in Western society, with Bollywood festivals occurring in numerous cities^[163] and Bollywood dance groups performing in New Year's Eve celebrations, treatment which other non-English film industries generally do not receive.^[164]

Cost of democratic republicanism

Democratic republicanism has its value, more so in a multi-ethnic country like India. However, the applicability of the "theoretical" virtues of republicanism on a country like India is sometimes questioned.^{[165][166][167]} Some thinkers consider India's diverse democracy to levy a huge tax on its economy.^[168] The Indian government has to consider many interest groups before decision making. However, India is relatively a much younger republic when compared to other major democracies. Moreover, it is predicted that in the long run, India being a democracy will provide it an edge over non-democratic^{[citation needed]} competitors like China.^[169][170]

Insurgency

India has had significant successes with quelling many insurgencies, most prominently the Punjab insurgency (Khalistan) and the surrender of large sections of insurgent outfits like the United Liberation Front of Asom in 1992 and National Liberation Front of Tripura in 2000–2001. However, the Indian government has acknowledged that there has been a dramatic increase in support for the Maoists (Naxalite) insurgency in the last decade.^[171] Maoist rebels have increased their influence over the last 10 years, especially in regions near Nepal, particularly by targeting and gaining support from poor villages in India. The boom in support appears to have been also boosted by the successes of the nearly 10-year-old Maoist rebellion in Nepal. India's government has recently taken a new stance on the Maoist insurgency, pulling the affected states together to co-ordinate their response. It says it will combine improved policing with socio-economic measures to defuse grievances that fuel the Maoist cause.

Disputes

India's growth is impeded by disputes with its neighbouring China and Pakistan (over historical border and ideological issues) and disputes with Bangladesh (over water availability) and hence, India's neighbours such as China and Pakistan remain distrustful towards India. It is also occasionally burdened with instability issues within some localised-regions of the subcontinent. In an effort to reduce political tension and increase economic co-operation, in recent years, India has improved its relations with its neighbours.^[172]

Lack of international representation

India is not a permanent member of the UNSC, although currently, it is one of the four-nations group actively seeking a permanent seat in the council. Thus India lacks the ability to extend its influence or ideas on international events in the way superpowers do.^[173]

Subsistence Farming

As of 2020, according to the World Bank, approximately 41.49% of India's total workforce are employed in the agricultural sector. In comparison, this figure in most developed economies such as the United States, United Kingdom and Germany is around 1%.^[174]Despite the decline of the agricultural sector in India in favour of the industrial and service sector, it will still require decades until the structure of India's economy becomes similar to other leading economies. According to the National Institute of Open Schooling, a majority of farmers in India practice subsistence farming, meaning they farm for own consumption instead of for financial gain. In this type of farming, landholdings are small and fragmented and cultivation techniques are primitive and simple. In other words, there is a total absence of modern equipments like tractors and farm inputs like chemical fertilizers, insecticides and pesticides. The most commonly farmed subsistence crops in India are cereals along with oil seeds, pulses, vegetables and sugarcane.^[175]

Poverty

As of 2011, approximately 21.9% of India's population lived below poverty line.^[176][177] Poverty also begets child labour.^[178] Various reforms, including mass employment schemes have been undertaken by the government to tackle this problem,^[179] and India has been quite successful in reducing its share of poverty. The number of people living on $1 a day is expected to fall in South Asia from 41.5 per cent in 1990 to 16.4 per cent until 2015.^{[needs update][180]} In 2022, India has almost eradicated extreme poverty.^[181] However, the issue of poverty in India is far from resolved. There is consensus among economists that overall poverty in India has declined, the extent of poverty reduction is often debated.^[182] The economic reforms of the early 1990s were followed by rates of high economic growth. Its effect on poverty remain controversial, and the official numbers published by the Government of India, showing a reduction of poverty from 36% (1993–94) to 26% (1999–00), to 22% (2004–05), have been challenged both for allegedly showing too little and too much poverty reduction.^[183] As of 2011, 86.8% of Indians live on less than $5.50 a day by purchasing power parity.^[184] While there is a consensus on the fact that liberalisation has led to a reduction of income poverty, the picture is not so clear if one considers other non-pecuniary dimensions (such as health, education, crime and access to infrastructure). With the rapid economic growth that India is experiencing, it is likely that a significant fraction of the rural population will continue to migrate toward cities, making the issue of urban poverty more significant in the long run.^[185] Economist Pravin Visaria has defended the validity of many of the statistics that demonstrated the reduction in overall poverty in India. He insisted that the 1999–2000 survey was well designed and supervised, and he further defended that just because the numbers did not appear to fit preconceived notions about poverty in India, they should not be dismissed outright.^[186] Nicholas Stern, vice-president of the World Bank, has published defences of the poverty reduction statistics. He argues that increasing globalisation and investment opportunities have contributed significantly to the reduction of poverty in the country. India, has shown one of the clearest co-relation trends of globalisation with the accelerated rise in per-capita income.^[187][188]

Infrastructure

Basic infrastructure in India such as roads, power grid, water, communications infrastructure, and housing are often below standards, and not catching up with the tune of its economic progress.^[189] Continued poor infrastructure might serve as a bottleneck to further economic development. The 2012 India blackouts, which affected millions, was a result of such problems. The government is, however, improving the infrastructure, such as expanding the expressways, freeway and highway system, state highways and bringing it up to global standards. As of 2005, India only had 8,811.5 km of expressways,^[190] while China have 149,600 km of expressways, respectively. Even so, India has more than 151,000 km of National Highways and the world's second largest road network, plus another 186,528 kilometres (115,903 mi) of state highways.^[191]

Inflation and overheating

According to a 2006's report, despite India's growth spurt of 8% p.a. in recent years, its sustainable pace is still much lower than China's, which puts its economy more at risk of overheating and rising inflation.^[192] The Reserve Bank of India (RBI) has acknowledged the risk of overheating and has been tightening monetary policy steadily. It is debatable whether this alone will be sufficient to ease inflationary pressures. The economy is running near or above capacity, and the RBI has noted that production must rise at a pace sufficient to match overall GDP growth if further inflationary pressures are to be avoided. The Indian government has said that much of the rise in inflation recently can be attributed to short-term supply constraints, such as a shortage of key foodstuffs thanks to an erratic summer monsoon.^[193]

Energy dependence and costs

India heavily depends on foreign oil – a phenomenon likely to continue until non-fossil/renewable energy technology becomes economically viable in the country.^[194] To avert an energy crisis, India is desperately seeking alternate means of energy. India can sustain its growth to higher trajectories only by the co-operation of other countries. As for now, India is energetically expensive since India has to import over 70% of its energy,^[195] thus making costs of comforts – like personal car or even air conditioning – extremely high. It is however, steadily combating its energy issues.

Health

India's health scenario is dismal with diseases and malnutrition constantly affecting the poorest quarter of the populace.^[196][197] Mortality is still relatively high and the bane of AIDS is spreading quickly.^[198] According to a report of United Nations Development Programme, India has the 3rd highest population living with AIDS/HIV and its economy might suffer a setback if it does not check the problem of the virus' spread. It is estimated that India's economic growth will decline by 0.86 percentage annually if the AIDS problem is not properly dealt with. To improve the situation, a number of projects such as the building of hospital chains (like the Apollo Hospitals, amongst others) has laid the foundation for a health system that matches global standards. However, these hospitals are sometimes used by foreigners as a cheap yet effective source of health services and much remains to be done for India's very poor.

Literacy

As per the 2011 India census, India's national literacy is only 74.04% (2011).^[199][200] Literacy drive is spreading slowly to other states.^[201] India's youth (age 15 to 24) literacy rate was 76.4% between 2000 and 2004.^[202] At current rates India will take no less than 20 years for a literacy of 95%.^[203] Literacy in India is not homogeneous, some states in India have higher literacy rates than others. Kerala, a south-Indian state widely recognised as the most well-educated state in India, recorded a literacy rate of 93.9% in 2011. On the other hand, the north-Indian state of Bihar lags behind with 63.8%. India's adult literacy rates (61.3% in 2002), is just a little better compared to other nations in South Asia except Sri Lanka's 91.7%,^[204] with Nepal next at 44%, Pakistan at 41.5% and Bangladesh the lowest at 41.1%.

Climate and environmental problems

The majority of India lies in the tropical climate zone, which may have a negative impact on its agricultural and overall economic development. The climate thesis of economic development was first argued by Adam Smith and recently by David Landes in his The Wealth and Poverty of Nations. Tropical areas generally average enough rainfall, but the timing is often irregular and unpredictable. The rain drops are large and the rate of fall often torrential. One answer to irregular moisture is storage and irrigation, but this is countered in these regions by incredibly high rates of evaporation. In the Agra region of India, for example, rainfall exceeds the needs of local agriculture for only two months in the year, and the excess held in the soil in those wet months dries up in only three weeks.^[205] Tropical zones are also more prone to endemic water-borne and parasitic diseases such as cholera and malaria.^[206] As a result of climate change, the Gangotri Glacier, among others, is receding.^[207][208] Also, of the 3 million premature deaths in the world that occur each year due to outdoor and indoor air pollution, the highest number are assessed to occur in India.^[209]