Salient Features of Indian Economy
» 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.
» 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.
