Q. 85.0( 6 Votes )
Explain the features of the Indian economy.
Indian economy is one of the fastest growing economies in the world. There are many features that are inherent to the economy. The combination of all the features enables development economists to classify Indian economy as a developing one. Some salient features of the Indian economy are:
• Agrarian economy: Indian economy is an agriculturally pre-dominant economy. Nearly 50% of the population still depend on agriculture as their major source of living. But the contribution of the primary sector towards GDP is only a negligible 13%. Thus even though a large proportion of people depend on agriculture for their living, its sectorial contribution towards GDP is very less.
• Population: India is the world's second most populous country in the world. In the world, every seventh person is an Indian. The population of India is greater than the combined population of many countries in the world. Even though the growing population enlarges the human resource base, the problems in resource allocation are also increasing.
• Low capital formation: The rate of capital formation is very less in the country. It is decreasing with every passing year. The rate of savings and investment is also less. This contributes to the lower rate of economic development in the country.
• Infrastructural and technological backwardness: The technology and infrastructure in the country are highly out-dated. The economy concentrates more on labour intensive methods for production in all the sectors. The supporting infrastructure is also backward. Because of the low quality of education and training, the quality of human capital is also poor.
• A vicious circle of poverty: The economy is trapped in the vicious circle of poverty. The people are trapped in the vicious circle of poverty. A person who is born poor will die poor and will transfer the burden of poverty to the next generation. The unequal distribution of income and wealth has also contributed to rising poverty.
• Unemployment and underemployment: The economy is characterised by the existence of both unemployment and underemployment. It is very difficult for the increasing population to find themselves productive employment opportunities according to their capabilities. The problem of underemployment is also prevalent. This occurs especially in the agricultural sector.
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