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Characteristics of Indian Economy

Salient Features of Indian Economy

Indian Economy Features or Characteristics List
» The economy of India is the seventh-largest 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, and one of the G-20 major economies, with an average growth rate of approximately 7% over the last two decades.
» Indian State Maharashtra is the wealthiest Indian state with an annual nominal GDP of US$330 billion, roughly equivalent to those of Venezuela and the United Arab Emirates, and accounts for 13.4% of Indias GDP followed by the states of Tamil Nadu (US$170 billion) and Uttar Pradesh (US$150 billion).
» India's economy became the world's fastest growing major economy in the last quarter of 2014, surpassing the People's Republic of China.
» Indian economy is an under developed economy in which Agriculture is the back bone of Indian economic. 60% of India’s population are on the below poverty line. Mineral resources are not fully utilized.
» Indian economy is an underdeveloped economy because almost all important features of an underdeveloped economy arc still present in Indian economy.
» Generally an economy is said to be underdeveloped, if it has the following characteristics:
·  Agriculture is the main occupation of the people. Nearly 60 to 80 per cent of the population is engaged in agriculture and its related activities.
·  Poverty is wide-spread. The ability to save of people is very low. Due to the low rate of saving, the rate of capital formation/investment is very low.
·  Population grows at a high rate (about 2 per cent per annum) and the burden of dependent population is also high.
·  The standard of living of people is generally low and the productivity of labour is also considerably low.
·  The production techniques are backward. Investment in research and development is quite low.
·  The incidence of unemployment and underemployment is quite high.
·  The level of human well-being measured in terms of real income, health and education is generally low.
·  Income inequalities are widespread.
»   Indian economy had the following features:


Basic characteristics of Indian Economy

1.       Mixed Economy
2.      Pre-dominance of Agriculture.
3.      High population.
4.      Underutilized Natural resources.
5.      Low Human development index.
6.      Lack of infrastructure facility.
7.      Capital deficiency.
8.     Unemployment.
9.      Technological backwardness.
10.  Poor economic organizations.
11.   Low per capita income.
12.  Economic backwardness.
13.  Poverty.

Basic/ Important Features of Indian Economy

Mixed Economy

· An economic system in which both the private enterprise and a degree of state monopoly (usually in public services, defense, infrastructure, and basic industries) coexist.
· All modern economies are mixed where the means of production are shared between the private and public sectors.
· Also called dual economy.
· Indian Economy is a unique blend of public and private sector which is a main feature of mixed economy.

Pre-dominance of Agriculture.

· Agriculture and allied sectors provide around 14.2% of Indian GDP while 53% of total Indian population is based on the agriculture sector.
· In most of the countries of Asia, Middle East and Africa, from two-thirds to four- fifths of their total population are solely dependent on agriculture.
· In most of the developed countries like U.K., U.S.A. and Japan, the percentage of active population engaged in agriculture ranges between 1 to 5 per cent.

High population.

· High population growth rate is also an indicator of underdevelopment.
· India’s population growth rate was 1.93% per annum and 21.34 % per decade during 1991-2001, which is still very high as compared to developed economies.
· Over population creates complex economic problems. India is the second largest populated country in the world having population of 238 million in 2001 and 1138 million in 2011.

Underutilized Natural resources.

· It has been stated that India is a rich country inhabited by poor people.
· Various types of natural resources, viz., land, water, minerals, forest and power resources are available in sufficient quantity in the various parts of the country.
· But due to its various inherent problems like inaccessible region, primitive techniques, shortage of capital and small extent of the market such huge resources remained largely under-utilised. A huge quantity of mineral and forest resources of India still remains largely unexplored.

Low Human Development Index.

· India continued to rank low in the Human Development Index (HDI), but climbed five notches to the 130th rank in the latest UNDP report on account of rise in life expectancy and per capita income.
· India's 2014 HDI of 0.609 is below the average of 0.630 for countries in the medium human development group.

Lack of infrastructure facility.

· Lack of infrastructural facilities is one of the serious problems from which the Indian economy has been suffering till today.
· These infrastructural facilities include transportation and communication facilities, electricity generation and distribution, banking and credit facilities, economic organisation, health and educational institutes etc.

Capital deficiency.

· Capital deficiency affects economy as well as social factors, India suffers from deep rooted shortage of capital.
· The level of savings is very low and capital formation rate is also low. Capital deficiency is very low because the population rate rises at a rapid rate

Unemployment.

· Unemployment is a phenomenon that occurs when a person who is actively searching for employment is unable to find work.
· Unemployment is often used as a measure of the health of the economy.
· Unemployment in India is a serious social issue.
· Unemployment records in India are kept by the Ministry of Labour and Employment of India.
· The most frequently measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labor force.

Poor economic organizations.

· Economic organization is an important and pushing factor for economic institutions have been working in India, however it is not developed enough.
· Banking systems are not developed well in rural areas, in recent years capital and money markets are not much developed in India.
· Industrial banks, financial institutions are not very common in India. In this point of view India has lack of structural economic organization set up.

Low per capita income.

· In India, the national income and per capita income is very low and it is considered as one of the basic features of underdevelopment.
· India per capital income is very low as compared to the advanced countries.
· For example the capital income of India was 460 dollar, in 2000. Where as their capita income of U.S.A in 2000 was 83 times than India.
· This trend of difference of per capita income between under developed and advanced countries is gradually increasing in present times.

Economic backwardness.

· India is developing country and has been facing the problem of unemployment, poverty, low per capita income, lack of technology, high growth rate of population, low labor efficiency, economic ignorance, social and religious problems factors, immobility, limited developed occupation and trade, caste system, corruption at every stage.
· Thus reflecting India as economically back ward country.

Poverty

· Poverty is an important issue in India, despite having one of the fastest growing economies in the world, clocked at a growth rate of 7.6% in 2015, and a sizable consumer economy
· Deutsche Bank Research estimated that there are nearly 300 million people who are middle class. If current trends continue, India's share of world GDP will significantly increase from 7.3% in 2016 to 8.5% by 2020. In 2015, around 170 million people, or 12.4%, lived in poverty (defined as $1.90 (Rs 123.5)), a reduction from 29.8% in 2009.

 Summary (Features of Indian Economy)
» Generally an economy is considered backward if agriculture is the main occupation of people, population is growing at high rate, techniques of production are backward, incidence of unemployment and high rate of poverty.
» Primary sector of Indian Economy is agriculture and related sectors.
» Secodary section of Indian Econoomy is related to industry, manufacturing,electricity etc.
» If we observe Indian economy, we may conclude that Indian economy is under developed. But, if we observe the growth in national income, per-capita income, occupational structure, capital base, etc. we may say that India is a developing economy. 
» The best indicaot if economics development of any country is per capita income.
» India follows mixed economy, where in the means of production are jointly owned by Private and Public sector simultaneously.

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