According to the International Monetary Fund (IMF), the Indian economy in 2015 was nominally worth US$2.183 trillion; it is the 7th-largest economy by market exchange rates, and is, at US$8.027 trillion, the third-largest by purchasing power parity, or PPP. With its average annual GDP growth rate of 5.8% over the past two decades, and reaching 6.1% during 201112, India is one of the world's fastest-growing economies. However, the country ranks 140th in the world in nominal GDP per capita and 129th in GDP per capita at PPP. Until 1991, all Indian governments followed protectionist policies that were influenced by socialist economics. Widespread state intervention and regulation largely walled the economy off from the outside world. An acute balance of payments crisis in 1991 forced the nation to liberalise its economy; since then it has slowly moved towards a free-market system by emphasising both foreign trade and direct investment inflows. India's recent economic model is largely capitalist. India has been a member of WTO since 1 January 1995.

The 486.6-million worker Indian labour force is the world's second-largest, as of 2011. The service sector makes up 55.6% of GDP, the industrial sector 26.3% and the agricultural sector 18.1%. India's foreign exchange remittances were US$70 billion in year 2014, the largest in the world, contributed to its economy by 25 million Indians working in foreign countries. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, and potatoes. Major industries include textiles, telecommunications, chemicals, pharmaceuticals, biotechnology, food processing, steel, transport equipment, cement, mining, petroleum, machinery, and software. In 2006, the share of external trade in India's GDP stood at 24%, up from 6% in 1985. In 2008, India's share of world trade was 1.68%; In 2011, India was the world's tenth-largest importer and the nineteenth-largest exporter. Major exports include petroleum products, textile goods, jewellery, software, engineering goods, chemicals, and leather manufactures. Major imports include crude oil, machinery, gems, fertiliser, and chemicals. Between 2001 and 2011, the contribution of petrochemical and engineering goods to total exports grew from 14% to 42%. India was the second largest textile exporter after China in the world in calendar year 2013.

Averaging an economic growth rate of 7.5% for several years prior to 2007, India has more than doubled its hourly wage rates during the first decade of the 21st century. Some 431 million Indians have left poverty since 1985; India's middle classes are projected to number around 580 million by 2030. Though ranking 51st in global competitiveness, India ranks 17th in financial market sophistication, 24th in the banking sector, 44th in business sophistication, and 39th in innovation, ahead of several advanced economies, as of 2010. With 7 of the world's top 15 information technology outsourcing companies based in India, the country is viewed as the second-most favourable outsourcing destination after the United States, as of 2009. India's consumer market, the world's eleventh-largest, is expected to become fifth-largest by 2030.

Driven by growth, India's nominal GDP per capita has steadily increased from US$329 in 1991, when economic liberalisation began, to US$1,265 in 2010, and is estimated to increase to US$2,110 by 2016; however, it has remained lower than those of other Asian developing countries such as Indonesia, Malaysia, Philippines, Sri Lanka, and Thailand, and is expected to remain so in the near future. However, it is higher than Pakistan, Nepal, Afghanistan, Bangladesh and others.

According to a 2011 PricewaterhouseCoopers report, India's GDP at purchasing power parity could overtake that of the United States by 2045. During the next four decades, Indian GDP is expected to grow at an annualised average of 8%, making it potentially the world's fastest-growing major economy until 2050. The report highlights key growth factors: a young and rapidly growing working-age population; growth in the manufacturing sector because of rising education and engineering skill levels; and sustained growth of the consumer market driven by a rapidly growing middle class. The World Bank cautions that, for India to achieve its economic potential, it must continue to focus on public sector reform, transport infrastructure, agricultural and rural development, removal of labour regulations, education, energy security, and public health and nutrition.

In 2016, the Economist Intelligence Unit (EIU) released a list of the Top 10 cheapest cities in the world, based on the cost of 160 products and services, of which four were in India: Bangalore (2nd), Mumbai (3rd), Chennai (6th) and New Delhi (8th).

Sectors

India's telecommunication industry, the world's fastest-growing, added 227 million subscribers during the period 201011, and after the first quarter of 2013, India surpassed Japan to become the third largest smartphone market in the world after China and the US.

The Indian automotive industry, the world's second fastest growing, increased domestic sales by 26% during 200910, and exports by 36% during 200809. India's capacity to generate electrical power is 250 gigawatts, of which 8% is renewable. At the end of 2011, the Indian IT industry employed 2.8 million professionals, generated revenues close to US$100 billion equalling 7.5% of Indian GDP and contributed 26% of India's merchandise exports.

The pharmaceutical industry in India is among the significant emerging markets for global pharma industry. The Indian pharmaceutical market is expected to reach $48.5 billion by 2020. India's R & D spending constitutes 60% of the biopharmaceutical industry. India is among the top 12 biotech destinations of the world. The Indian biotech industry grew by 15.1% in 201213, increasing its revenues from 204.4 Billion INR (Indian Rupees) to 235.24 Billion INR (3.94 B US$ exchange rate June 2013: 1 US$ approx. 60 INR). However, hardly 2% of Indians pay income taxes.

Poverty

Despite impressive economic growth during recent decades, India continues to face socio-economic challenges. In 2006, India contained the largest number of people living below the World Bank's international poverty line of US$1.25 per day, the proportion having decreased from 60% in 1981 to 42% in 2005; under its later revised poverty line, it was 21% in 2011. 30.7% of India's children under the age of five are underweight. According to a Food and Agriculture Organization report in 2015, 15% of the population is undernourished. The Mid-Day Meal Scheme attempts to lower these rates. Since 1991, economic inequality between India's states has consistently grown: the per-capita net state domestic product of the richest states in 2007 was 3.2 times that of the poorest. Corruption in India is perceived to have increased significantly, with one report estimating the illegal capital flows since independence to be US$462 billion.

India has the highest number of people living in conditions of slavery, 18 million, most of whom are in bonded labour. India has the largest number of child labourers under the age of 14 in the world with an estimated 12.6 million children engaged in hazardous occupations.