GDP is the total value of all goods and services produced within India’s borders in a year — factories, hospitals, schools, software, food — everything. It does not matter if the producer is Indian or foreign. If it happened on Indian soil, it counts. India’s GDP in 2021-22 stood at ₹147.36 lakh crore at constant 2011-12 prices — one of the fastest recoveries post-COVID among major economies.

PPP compares economies not by exchange rates but by what money can actually buy. A meal that costs $10 in the USA costs ₹80 in India — not ₹800 (the exchange rate equivalent). By this real-world buying power measure, India is the 3rd largest economy in the world — after USA and China (IMF WEO April 2022). This is why India’s economic strength is far greater than it looks on paper.

Per Capita Income = National Income ÷ Population. India’s PCI in 2019 was $1,891 — placing India in the World Bank’s Lower-Middle Income category (PCI between $996 and $3,895). The low PCI is not because India earns less — it is because 140 crore people share the same income. High population dilutes per capita figures significantly. This is a critical distinction examiners test.

Term coined by Prof. Raj Krishna in 1978 to describe India’s disappointingly low annual growth rate of around 3.5% from the 1950s through to the 1980s. Per capita income grew at only 1.3% during this period. The term was used to highlight that India was growing far too slowly to lift its massive poor population out of poverty. The 6th Five Year Plan (1980-85) finally broke this pattern with higher government spending and liberalised import policies.

The landmark 1991 economic reforms triggered by India’s balance of payments crisis. Liberalisation removed restrictions on businesses and industries. Privatisation allowed private companies to enter sectors previously reserved for the government. Globalisation opened India to foreign trade, investment and technology. Post-1991, India’s GDP grew at 6.7% (8th Plan), and reached 8.6% annually between 2002-2007 — making it the world’s 2nd fastest growing economy after China.

During direct British rule (1858-1947), Home Charges were official financial transfers from India to the United Kingdom. These included: East India Company shareholder dividends, interest on loans raised in England, expenses of British army stationed in India, pensions of retired British officers, guaranteed interest to railway companies, and the Secretary of State’s salary. By the 1930s, these charges were £40-50 million per year. Dadabhai Naoroji calculated India paid Britain £10 crore between 1829 and 1865 alone.