The document provides information on the Indian economy and different economic systems. It states that the Indian economy is the 6th largest in the world by GDP and has grown at about 7% annually for the past two decades. Several key aspects of the Indian economy are highlighted such as its large service and IT sectors. The document also outlines three main economic systems - capitalism, socialism, and communism - and provides brief definitions and characteristics of each.

1. Business Environment (CBA21) UNIT-4
Prepared by Dr.T.S.Kumar/AP/BBA Jawahar Science College, Block14,Neyveli. Page 1 of 2
BUSINESS ENVIRONMENT – ECONOMIC ENVIRONMENT – UNIT IV
INDIAN ECONOMY
Indian Economy: The economy of India is the sixth-largest economy in the world measured
by nominal GDP and the third-largest by purchasing power parity (PPP). The country is
classified as a newly industrialised country, one of the G-20 major economies, a member of
BRICS and a developing economy with an average growth rate of approximately 7% over the
last two decades. India's economy became the world's fastest growing major economy in the
last quarter of 2014, replacing the People's Republic of China. The Indian economy has the
potential to become the world's 3rd-largest economy by the next decade, and one of the two
largest economies by mid-century. According to the IMF the outlook for short-term growth is
also good. India also topped the World Bank's growth outlook for 2015-16 for the first time
with the economy having grown 7.6% in 2015-16 and expected to grow 8.0%+ in 2016-17.
Maharashtra is the wealthiest Indian state and has an annual nominal GDP of US$330 billion,
nearly equal to that of Portugal and Pakistan and accounts for 12% of the Indian GDP followed
by the states of Tamil Nadu (US$150 billion) and Uttar Pradesh (US$130 billion). The long-
term growth prospective of the Indian economy is positive due to its young population,
corresponding low dependency ratio, healthy savings and investment rates, and increasing
integration into the global economy.
Key Highlights of Indian Economy
1. India has one of the fastest growing service sectors in the world.
2. India has become a major exporter of IT services, BPO services, and software services.
The IT industry continues to be the largest private sector employer in India.
3. India is also the third largest start-up hub in the world.
4. The agricultural sector is the largest employer in India's economy. India ranks second
worldwide in farm output.
5. The Industry sector has held a constant share of 26% of GDP.
6. The Indian auto mobile industry is one of the largest in the world.
7. India has $600 billion worth of retail market in 2015 and one of world's fastest growing
E-Commerce markets.

2. Business Environment (CBA21) UNIT-4
Prepared by Dr.T.S.Kumar/AP/BBA Jawahar Science College, Block14,Neyveli. Page 2 of 2
ECONOMIC SYSTEM
Economic system: An economic system is the system of production, distribution and
consumption of goods and services of an economy. Alternatively, it is the set of principles and
techniques by which problems of economics are addressed, such as the economic problem of
scarcity through allocation of finite productive resources. The economic system is composed
of people and institutions, including their relationships to productive resources, such as through
the convention of property.
Types of Economic System
a. Capitalism
b. Socialism
c. Communism
a. Capitalist economic system: Capitalist economic system is a system in which individuals
own all resources, both human and non-human. Governments intervene only minimally in the
operation of markets, primarily to protect the private-property rights of individuals. Free
markets in which suppliers and demanders can enter and exit the market at their own discretion
are fundamental to the capitalist economic system.
b. Socialism: Socialist economic system is the one in which individuals own their own human
capital and the government owns most other, non-human resources that is, most of the major
factors of production are owned by the state. Land, factories, and major machinery are publicly
owned. A socialist system is a form of command economy in which prices and production are
set by the state. Movement of resources, including the movement of labor, is strictly controlled.
Resources can only move at the direction of the centralized planning authority. Economic
decisions about what and how much, how, and for whom are all made by the state through its
central planning agencies.
c. Communism: Communist economic system is the one in which, all resources, both human
and non-human, are owned by the state. The government takes on a central planning role
directing both production and consumption in a socially desirable manner. Central planners
forecast a socially beneficial future and determine the production needed to obtain that outcome.
The central planners make all decisions, guided by what they believe to be good for the country.
The central planners also allocate the production to consumers based on their assessment of the
individual's need.