Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

According to the IMF, the Indian economy grew by an estimated 6.8% in 2022, mainly driven by the pickup in economic activities in the travel industry, trade, construction, mining, electricity, and manufacturing. One of the fastest-growing economies in the world, India is expected to keep growing in the coming years, with global off-shoring, digitisation, and energy transition setting the scene for unprecedented economic growth in the country. According to the IMF, the economy is expected to register an estimated GDP growth of 6.1% in 2023 and 6.8% in 2024.

Thanks to global trends and key investments made in technology and energy, India is on track to becoming one of the world's top economies. In 2022, the country continued recovering from the impacts of the pandemic, with India’s broad range of fiscal stimuli and health responses proving their effectiveness. By the end of the year, the country’s general government deficit stood at an estimated 8.5%, a rate which should remain relatively stable in 2023 and 2024, at 8.3% and 8.4/%, respectively. According to the IMF, inflation increased to 6.9% in 2022, but it is expected to decrease to 5.1% in 2023 and 4.4% in 2024. The level of public debt remains high - it was estimated at 83.4% in 2022 - and it is expected to remain virtually unchanged in the next two years, at 83.8% in 2023 and 84.1% in 2024. The government is focused on reducing inequality, as it seeks to implement growth oriented reforms to get the economy back on track, such as MSME incentives, infrastructure sector boost, agriculture infrastructure, micro food enterprises, increased public employment outlay, and special liquidity window. According to the government, the MSME sector is crucial for the inclusive growth of the economy and, as such, it's become a major priority, with various programmes for the development and promotion of MSMEs being put in place across the country.

India is expected to overtake China as the world’s most populous country by 2024. It has the world’s largest youth population, nevertheless, according to the OECD, over 30% of India's youth are NEETs (not in employment, education or training). India continues to suffer from a low GDP per capita (USD 2,098), and almost 25% of the population still lives below the poverty line (about one-third of the world’s population living on under USD 1.90/day lives in India) and the country's inequalities are very strong: the richest 1% of the population own 53% of the country’s wealth. Additionally, the informal sector, where the vast majority of India’s labour force is employed, has been particularly affected by the COVID-19 pandemic, increasing their risk of slipping back into poverty. According to the CMIE, India's unemployment rate stood at 8.3% of total labour force in 2022, with rates being higher in urban areas (10%) than in the rural parts of the country (7.4%).

Foreign Trade

India used to be a protectionist state for a long time, but the country has become progressively more open to international trade. Currently, trade represents 45.3% of the country's GDP. The country mainly exports petroleum oils (13.7%), diamonds (6.3%), medicaments (4.3%), articles of jewellery (2.7%), and rice (2.4%), while it imports petroleum oils (18.7%), gold (9.8%), diamonds (4.6%), coal and similar solid fuels (4.5%), petroleum gas and other gaseous hydrocarbons (4.2%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services increased by 3.9% in 2022 and is expected to further increase in 2023, reaching at 4.9%, while the volume of imports of goods and services increased by 10.1% in 2022 and is expected to increase by 7.2% in 2023.

India's main partners are the United States, China, the United Arab Emirates, Switzerland, Saudi Arabia, Bangladesh, and Hong Kong. The country has recently signed free trade agreements with South Korea and ASEAN, and has entered into negotiations with several partners (EU, MERCOSUR, Australia, New Zealand and South Africa). In 2021, Brazil and India signaled their interest in expanding the FTA that India has with MERCOSUR, but the expansion is still under negotiation, pending approval from other members of the South American bloc. India is currently the world’s fastest-growing large economy, as well as the world's eighth largest exporter and tenth largest importer of commercial services. However, India’s trade regime and regulatory environment still remains relatively restrictive.

The country's trade balance is structurally negative, given that the country imports nearly 80% of its energy needs. However, as India benefits from the fluctuations in world hydrocarbon prices for its imports, the country's trade deficit has been oscillating for the past few years. In 2021, India exported USD 395 billion worth of goods, while imports accounted for USD 572 billion, resulting in a negative trade balance of USD 176 billion. According to the WTO, in the same year, exports of services amounted to USD 240 billion, whereas the imports of services stood at USD 195 billion, leading to a decrease of the overall trade deficit, which amounted to USD 74 billion.

COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in India, please consult the official data on the governmental platform #IndiaFightsCorona, which provides a breakdown by state at the section COVID19 Statewise Status.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in India and the current sanitary measures in vigour, please consult the dedicated pages on the official governmental portal mygov.in/covid-19, including the up-to-date information on the containment measures put in place and public health recommendations. Further details and updates can be found on the inter-ministerial website covid19.india.gov.in and on the website of the Ministry of Health and Family Welfare.

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Central Board of Indirect Taxes and Customs.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to India on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For information on the economic recovery scheme put in place by the Indian government to address the impact of the COVID-19 pandemic, refer to the official portal covid19.india.gov.in.
For a general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Indian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to India in the IMF’s Policy Tracker platform.

Support plan for businesses

For information on the local business support scheme established by the Indian government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the Invest India’s website Business Immunity Platform.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

For the up-to-date information on possible support plans for exporters in India, if applicable, please consult the website of the Ministry of Commerce and Industry. Furthermore, the Business Immunity Platform outlines programs that may help many export businesses.