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The development of the Indian economy can be explained through the following characteristics which clearly highlight the same:
1. India's national income and per capita income are extremely low. According to the World Bank estimate, it was $720 in 2005. It is one of the lowest per capita income of the countries. In the same year, the per capita income of Switzerland was 76 times of India's. Even after making certain required adjustments the per capita income has narrow down, but still, the difference remains significant.
2. The economy is excessively dependent on agriculture. Out of the total working population, the vast majority of the proportion is engaged in agriculture and its allied activities. In 2005, 58% of the population was engaged in agriculture and contributed 21% to the total national income. It also faces certain other basic problems like low productivity, lack of modernization and diversification.
3. India faces the problem of a very high growth rate. This has resulted from the high birth rate and the low death rate in our country. So if any development occurs, it is not able to be in balance with the increase in population. The increased growth rate also requires a higher economic growth to maintain a standard of living. This means the need for food, clothing, housing, clean water, schools, etc has increased.
4. The problem of unemployment continues even after so many years of development. India faces the problem of chronic unemployment or disguised unemployment. A large amount of labor is engaged in the agriculture field which is more than the required digit. This means the marginal productivity of labor is either very low or zero. In urban areas, the problem of educated unemployment has also increased.
5. Capital deficiency is another problem of India's economy. The capital available per head and the rate of capital formation is very low.
6. The distribution of wealth has the inequality feature in it. On one hand, there is a high degree of concentration of assets in the hands of big industrialist and on the other hand there is a vast majority of people living below the poverty line.
7. The technology used in India is extremely low. The industries use obsolete means of Technology and the sophisticated means of technology is used only in certain sectors. The poor Technology along with the low level of skills means the productivity of different sectors is very low.
8. Although India is a very rich country in terms of natural resources like land, water, minerals, etc. the problem of underutilization and wastage of resources is a main matter of concern.
9. The infrastructure facilities such as transport, communication, banking. education, health etc are not developed to the proper extent. Due to the lack of proper infrastructural facilities in the country, certain crucial areas are not being able to develop.
10. The rural areas need a proper economic organization for mobilization of their Savings and for other financial needs. Most of the Financial Institutions are set up in urban areas. The small farmers do not have access to these. It is extremely important to give certain initiatives to the banks to establish their branches in the rural areas so that the farmers are able to have access to short term and long term credit
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