The Salient Features of Indian Economy
Indian economy is termed as the developing economy of the world. Some features like low per capita income, higher population below poverty line, poor infrastructure, agriculture based economy and lower rate of capital formation, tagged it as a developing economy in the world.
India, as a developing country, features a mixed economy in the world. The major characteristics of developing economy are low per capita income, overpopulation, maximum population below the poverty line, poor infrastructure, agro-based economy and a lower rate of capital formation.
Indian economy is termed as the developing economy of the world. Some features like low per capita income, higher population below poverty line, poor infrastructure, agriculture based economy and lower rate of capital formation, tagged it as a developing economy in the world.
(1) Mixed Economy
India is a mixed economy. In a mixed economy, public sector (government-owned) business enterprises exist alongside the private sector to achieve a welfare state with socialistic pattern of society. Ever since independence, India’s economic development has been guided by the twin objectives of developing:
(a) a rapidly and technologically progressive economy by democratic means; and
(b) a social order based on justice, offering equal opportunity to every citizen of the country.
(2) Low per Capita Income
According to IMF GDP per capital of India in 2014 at current prices is $1,627. India is the 9th largest economy of the world. But, due to its huge population of more than 1.26 billion, India is at 145th position in term of GDP Per capita. Per capita income of India is 6.69 times lower than world’s average around of $10,880. This figure is 68.66 times lower than richest country of world and 6.5 times greater than poorest country of the world. India is at 34 th position in the list of Asian countries. On the basis of PPP, GDP, per capita of India stands at 5,855 International Dollar in 2014. GDP (PPP) per capita of world is 15,189 Int. $.
(3) Dominance of Agriculture and Heavy Population Pressure on Agriculture
In India, almost 60-70% of the total population still resides in rural areas and hence they depend on agriculture for their livelihood.
(4) Over-Population
India is over populated. In every decade Indian population gets increased by about 20%. During 2001- 11, population increased by 17.6%. With this high growth rate of population about 1.7 crore new persons are added to Indian population every year. According to 2011 census, the total Indian population stands at a high level of 121.02 crore which is 17.5% of the world’s total population which is second largest population of the world. To maintain this 17.5% of world population India holds only 2.42% of total land area of the world.
(5) Unbalanced Economic Development
India has not yet achieved the goal of balanced economic development. According to latest data available about 64% of total labour force is dependent on agriculture, 16% on industries and the rest about 20% on trade, transport and other services.
(6) Low rate of capital formation
Another basic characteristic of the Indian economy is the existence of capital deficiency which is reflected in two ways – firstly, the amount of capital per head available is low; and secondly, the current rate of capital formation is also low. Gross Fixed Capital Formation in India increased to 4975.22 INR billion in the third quarter of 2014 from 4957.25 INR billion in the second quarter of 2014. Gross Fixed Capital Formation in India averaged 3595.81 INR billion from 2001 until 2014, reaching an all time high of 5356.22 INR billion in the first quarter of 2014 and a record low of 2021.90 INR billion in the first quarter of 2002.
(7) Lack of Infrastructure Facility
There is a lack of physical infrastructure (i.e. road,electricity, banking, transportation, insurance, energy) and social infrastructure(i.e. education, health, housing, drinking water, sanitation) that hinders the development process of a country.
(8) Poor Economic Organisation
Another important feature of the Indian economy is poor economic organisation. Certain institutions necessary for economic development are not adequately developed. For instance, to mobilise savings and more especially the savings of the rural sector, the creation and development of financial institutions is essential.
(9) Agriculture Based Economy: Agriculture and allied sectors provide around 14.2% of Indian GDP while 53% of total Indian population is based on the agriculture sector.
(10) Income Disparities: a report released by Credit Suisse revealed that the richest 1% Indians owned 53% of the country’s wealth, while the share of the top 10% was 76.30%. To put it differently, in a manner that conveys the political economy of this stunning statistic, 90% of India owns less than a quarter of the country’s wealth.
(11) Market Imperfections: Indian economy doesn’t have good mobility from one place to other which hinders the optimum utilization of resources. These market imperfections create the fluctuations in the price of commodities every year.
(12) Economy is Trapped in the Vicious Circle of Poverty: Prof. Ragner Nurkes says that ‘a country is poor because it is poor’. It means poor countries are trapped in the vicious circle of poverty.
(13) Use of Outdated Technology: It is very clear that Indian production technique is more labour oriented in nature. So it increases the cost of production of the products made in these countries.
(14) Traditional Set Up of Society: Indian societies are trapped in the menace like casteism, communalist, male dominated society, superstitions, lack of entrepreneurship, and ‘chalta hai attitude’ of the peoples. These all factors hindered the growth of the country as a whole.
(1) Mixed Economy
India is a mixed economy. In a mixed economy, public sector (government-owned) business enterprises exist alongside the private sector to achieve a welfare state with socialistic pattern of society. Ever since independence, India’s economic development has been guided by the twin objectives of developing:
(a) a rapidly and technologically progressive economy by democratic means; and
(b) a social order based on justice, offering equal opportunity to every citizen of the country.
(2) Low per Capita Income
According to IMF GDP per capital of India in 2014 at current prices is $1,627. India is the 9th largest economy of the world. But, due to its huge population of more than 1.26 billion, India is at 145th position in term of GDP Per capita. Per capita income of India is 6.69 times lower than world’s average around of $10,880. This figure is 68.66 times lower than richest country of world and 6.5 times greater than poorest country of the world. India is at 34 th position in the list of Asian countries. On the basis of PPP, GDP, per capita of India stands at 5,855 International Dollar in 2014. GDP (PPP) per capita of world is 15,189 Int. $.
(3) Dominance of Agriculture and Heavy Population Pressure on Agriculture
In India, almost 60-70% of the total population still resides in rural areas and hence they depend on agriculture for their livelihood.
(4) Over-Population
India is over populated. In every decade Indian population gets increased by about 20%. During 2001- 11, population increased by 17.6%. With this high growth rate of population about 1.7 crore new persons are added to Indian population every year. According to 2011 census, the total Indian population stands at a high level of 121.02 crore which is 17.5% of the world’s total population which is second largest population of the world. To maintain this 17.5% of world population India holds only 2.42% of total land area of the world.
(5) Unbalanced Economic Development
India has not yet achieved the goal of balanced economic development. According to latest data available about 64% of total labour force is dependent on agriculture, 16% on industries and the rest about 20% on trade, transport and other services.
(6) Low rate of capital formation
Another basic characteristic of the Indian economy is the existence of capital deficiency which is reflected in two ways – firstly, the amount of capital per head available is low; and secondly, the current rate of capital formation is also low. Gross Fixed Capital Formation in India increased to 4975.22 INR billion in the third quarter of 2014 from 4957.25 INR billion in the second quarter of 2014. Gross Fixed Capital Formation in India averaged 3595.81 INR billion from 2001 until 2014, reaching an all time high of 5356.22 INR billion in the first quarter of 2014 and a record low of 2021.90 INR billion in the first quarter of 2002.
(7) Lack of Infrastructure Facility
There is a lack of physical infrastructure (i.e. road,electricity, banking, transportation, insurance, energy) and social infrastructure(i.e. education, health, housing, drinking water, sanitation) that hinders the development process of a country.
(8) Poor Economic Organisation
Another important feature of the Indian economy is poor economic organisation. Certain institutions necessary for economic development are not adequately developed. For instance, to mobilise savings and more especially the savings of the rural sector, the creation and development of financial institutions is essential.
(9) Agriculture Based Economy: Agriculture and allied sectors provide around 14.2% of Indian GDP while 53% of total Indian population is based on the agriculture sector.
(10) Income Disparities: a report released by Credit Suisse revealed that the richest 1% Indians owned 53% of the country’s wealth, while the share of the top 10% was 76.30%. To put it differently, in a manner that conveys the political economy of this stunning statistic, 90% of India owns less than a quarter of the country’s wealth.
(11) Market Imperfections: Indian economy doesn’t have good mobility from one place to other which hinders the optimum utilization of resources. These market imperfections create the fluctuations in the price of commodities every year.
(12) Economy is Trapped in the Vicious Circle of Poverty: Prof. Ragner Nurkes says that ‘a country is poor because it is poor’. It means poor countries are trapped in the vicious circle of poverty.
(13) Use of Outdated Technology: It is very clear that Indian production technique is more labour oriented in nature. So it increases the cost of production of the products made in these countries.
(14) Traditional Set Up of Society: Indian societies are trapped in the menace like casteism, communalist, male dominated society, superstitions, lack of entrepreneurship, and ‘chalta hai attitude’ of the peoples. These all factors hindered the growth of the country as a whole.
No comments:
Post a Comment
Please give your valuable Feedback.