Infographics Introduction to Economics and Indian Economy - Indian Economy for UPSC

 Page 1


Introduction to Economics & Indian Economy
Economics examines the production, allocation, and consumption of goods and services. 
Due to perpetual scarcity of resources, economist Lionel Robbins characterized the field in 
1935 as the study of managing limited resources. Despite being called the "dismal science," 
economics plays a crucial role in improving the world and understanding economic theory is 
essential for applying concepts in everyday life.
Microeconomics
Focuses on specifics like 
individual consumer 
choices, income, and 
price determination. 
Analyses the economy 
from the bottom-up 
approach.
Macroeconomics
Deals with the bigger 
picture examining 
inflation, growth 
dynamics, and 
employment. Founded by 
John Maynard Keynes in 
1936, taking a top-down 
approach.
Econometrics
Applies statistical and 
mathematical methods to 
economic analysis, 
facilitating sophisticated 
analyses in both micro 
and macroeconomics.
Economic Systems Evolution
1
Market Economy (1776)
Adam Smith's invisible hand concept 
emphasized self-interest, division of 
labour, and laissez-faire policies driving 
capitalism and free markets.
2
Non-Market Economy (1917-1949)
Karl Marx's socialist and communist 
models where the state controlled 
resources, labour, and production 
decisions without private property rights.
3
Mixed Economy (1944-Present)
Combination of market and state 
systems, with both private and public 
sectors playing economic roles, offering 
flexibility and continuous adaptation.
Sectors of Indian Economy
National Income Accounting
Key Concepts
01
GDP - Gross Domestic Product
Total value of final goods and services 
produced within India's boundaries from 
April 1 to March 31 annually.
02
NDP - Net Domestic Product
GDP minus depreciation, accounting for wear 
and tear of assets during production.
03
GNP - Gross National Product
GDP plus income from abroad including 
remittances, external loans interest, and 
grants.
04
NNP - Net National Product
GNP minus depreciation, representing the 
purest form of national income used to 
calculate per capita income.
GVA vs GDP
Supply Side (GVA): Calculates value added by agriculture, industry, and services sectors, 
capturing income generated across the economy.
Demand Side (GDP): Sum of all expenditures including private consumption, government 
spending, business investments, and net exports.
GDP = GVA + Net Taxes (Taxes - Subsidies)
Economic Policy Frameworks
Washington Consensus
10 reform policies by IMF, 
World Bank, and US 
Treasury emphasizing 
fiscal discipline, 
privatization, trade 
liberalization, and 
deregulation. Associated 
with neoliberalism and 
globalization since the 
1980s.
Beijing Consensus
Chinese model 
introduced by Deng 
Xiaoping featuring 
constant 
experimentation, 
peaceful distributive 
growth with gradual 
reforms, and self-
determination with 
selective foreign ideas.
Santiago Consensus
World Bank's alternative 
emphasizing inclusive 
socio-economic 
development with local 
characteristics, utilizing 
financial resources, 
technology, and global 
partnerships for shared 
prosperity.
India's Economic Performance FY 2024-25
6 .4%
Real GDP Growth
Estimated growth 
rate for FY25, 
projected to reach 
$4.2 trillion economy 
by FY26
¹17 8 .2L
Real GDP (Crore)
Total GDP at 
constant prices, 
showing robust 
economic expansion
¹325L
Nominal GDP (Crore)
Approximately $3.9 
trillion at current 
prices
6 . 6%
GVA Growth
Gross Value Added 
at basic prices 
growth rate
Recent Developments & Way Forward
Digital Economy
UPI handled 120 billion 
transactions in 2024, 
accounting for 50% of global 
digital payment volume. IT-
BPM sector projected to 
contribute 10% to GDP by 
2025.
Climate & Sustainability
Renewable energy capacity 
reached 200 GW by 2025, 
with 40% energy from non-
fossil sources. Budget 
allocates ¹3 lakh crore for 
green energy initiatives.
Atmanirbhar Bharat
PLI schemes and self-
reliance policies promote 
domestic manufacturing in 
semiconductors, EVs, and 
strategic sectors, targeting 
$1 trillion exports by 2030.
3 . 3 4 %
Retail Inflation (March 
2025)
CPI eased from 4.85% in 
March 2024, aligning with 
RBI's 4% ±2% target range
5 5 . 3 %
Services Contribution to 
GVA
Services sector remains the 
largest contributor driven by 
digital services and skill 
development in FY25
4 1%
Job Market Growth
YoY increase in February 
2025, driven by graduate 
hiring and expanding 
employment opportunities
"India's economy demonstrates remarkable resilience through agile policies, capital 
expenditure, strategic reforms, and focus on digital infrastructure, green energy, and 
inclusive growth while navigating global challenges including geopolitical tensions and 
inflation pressures."
Key Takeaways
Understand the distinction between GDP, NDP, GNP, and NNP for comprehensive 
national income analysis
Master the evolution from market to mixed economy systems and their implications
Analyse India's sectoral transformation from agrarian to service-dominated economy
Study policy frameworks: Washington, Beijing, and Santiago Consensus for comparative 
perspectives
Focus on recent developments including digital economy, sustainability initiatives, and 
Atmanirbhar Bharat
Integrate economic theory with current affairs and government schemes for holistic 
understanding
Primary Sector
Natural resource exploitation 
including agriculture, mining, and oil 
exploration. Still employs about 50% 
of India's population despite 
declining GDP share.
Secondary Sector
Processing raw materials from 
primary sector. India's industrial 
sector estimated to grow by 6.2% in 
FY25, driven by construction and 
utilities.
Tertiary Sector
Service production including 
education, healthcare, banking. 
India's services sector grew 
7.2% in FY24, the largest 
contributor to GDP.
Quaternary Sector
Knowledge sector encompassing 
education, research, and 
development, crucial for determining 
quality of human resources.
Quinary Sector
Highest-level decision-makers in 
government and corporate sectors, 
regarded as the "brains" behind 
socio-economic performance.