Characteristics of indian economy

The economy of India is the ninth largest in the world by nominal GDP and the fourth largest by Purchasing Power Parity(PPP) . The country’s PPP was $3408 in 2010,
making a lower middle income economy, was then characterized by extensive Indian economy was then characterized by extensive regulation protectionism, public ownership, public ownership, persuasive corruption and slow growth. Since 1991, following the economic reforms, the country’s economic growth progressed at a rapid pace with very high rates of growth and large increases in the incomes of the people. By 2008, India has established itself as the world’s second fastest growing major economy, India’s Gross Domestic Product (GDP) growth rate was recorded at 7.4% in 2009-10 and 8.6%-9% are projected for the financial year 2011-2012.

India’s large service industry accounts for 57.2% of the country’s GDP while the industrial and agricultural sectors contribute 28.6% and 14.6% respectively. Agriculture is the predominant occupation in rural india, accounting for about 52% of employment. The service sector makes up further 34% and industrial sector around 14%.

Major industries includes telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining , petroleum, machinery , software and pharmaceuticals. Major agricultural products includes rice, wheat oilseed, cotton, jute, tea, sugarcane, potatoes cattle, water buffalo, sheep, goats, poultry and fish, Previously a closed economy, India’s trade and business sector has grown fast. India’s currently accounts for 1.5% of world trade in 2009-10. India’s top five trading partiers are United Arab Emirates, China, United States, Saudi Arabia and Germany.

AGRARIAN ECONOMY ------ Even after 60 years of independence, it dominant the Indian economy. More than 60% of the population is engage in agriculture and allied activities. Based on this, it can be said that Indian economy is still primarily Agrarian Economy.

MIXED ECONOMY ---- After independence, India has opted for mixed economy. Indian Economy is a unique blend of public and private sector i.e. , missed economy.  It allows co-existence of public and private sector.

LOW PER CAPITA INCOME ------- Underdeveloped economy is characterized by low per capita income. Indian per capita income is very low as compared to the developed countries. According to World Development Report, 2010, India’s per capita income was $1070 in 2008, whereas, USA’s per capita income is $4780  and hence India’s per capita income is about one forty fifth of US level of per capita. This trend of difference of per capita income between underdeveloped and developed countries is gradually increasing in present times.

HEAVY POPULATION PRESSURE----- The Indian economy is facing the problem of population explosion. It is second highest populated country, China being the first. All the under developed countries are characterized by high birth rate which stimulates the growth of population. The fast rate of growth of population necessitates a higher rate of economic growth to maintain the same standard of living.

DISPARITIES IN INCOME DISTRIBUTION -------- Inequality of income and wealth is other feature of Indian Economy and the main resources are concentrated in the hands of the few people, 40% of the total assets in concentrated in the hands of top 20% people. According to data shown by NSSO, 39% of rural population possesses only 5% of all the rural areas while, on the other hand, 8% top household possess 46%of total rural assets. Income disparities are somewhat more intensive in urban areas as compared with those of rural areas.

PLANNING PROCESS------- It is also an important feature. As the government has adopted planned developmental economy. Five Year Plans are framed for economic development.

DOMINANCE OF AGRICULTURE AND HEAVY POPULATION PRESSURE ON AGRICULTURE ------  Agriculture and allied sector even today provides livelihood to about 65to70%of the total population but contributes only 15.7% of the GDP.

UNBALANCED ECONOMIC GROWTH India has not achieved the goal of balanced economic growth, According to World Development Report, 2010 about 64% of total labour force is dependent on agriculture and rest about 20% on trade, transport and other services.

LOW RATE OF CAPITAL FORMATION ------- In backward economies like India, the rate of capital formation is also low due to low national income and high consumption expenditure. Gross Domestic Saving in 2009-10 is 33.7% while in the same year, Gross Domestic Capital formation is 36.5%.

LACK OF INDUSTRIALISATION India lacks in large industrialization based on modern and advanced development in the economy. Average annual growth rate of industrial sector was 8.0%in 2009-10.

UNDERUTILIZATION OF RESOURCES India is a poor land so its people remain economically backwards for the lack of utilization of resources of the country.

MARKET IMPERFECTIONS Indian economy faces a number of market imperfections like lack of mobility among production factors from one place to the other and lack of specialisations these market imperfections and their results are important reasons for underdeveloped Indian economy.

UNEMPLOYMENT The larger unemployment and under employment is another feature of Indian economy.

BACKWARD INSTITUTIONS AND SOCIAL FRAMEWORK ----- The social and institutional framework in India is hopelessely backward, which is strong obstacle to any change in the forms of production.

PRICE UNSTABILITY----- In Indian economy, there is always continuous price instability. Shortage of essential commodities and gap between consumption and productions increases the price persistently. Rising trend of price creates a problem to maintain the standard of living of the common people.