Nature of the Indian Economy Tnpsc – Its Salient Feature and Weakness

Indian Economy

Indian economy is the 7th largest economy in the world. India maintains, an average growth rate of approximately 7%.

India is a developing nation that has a mixed economy. It is characterised by low per capita income, overpopulation, poor infrastructure, maximum population under the poverty line, maximum population high depended on Agriculture directly or indirectly etc.

But there are signs of backwardness even though the rate of growth is sustainable and stable.

Feature and Nature of Indian Economy

India has a mixed economy

India is a good example of a mixed economy. This is because there exist public and private sectors, still function smoothly.

Still, the fundamental and heavy industrial units are operated by the government. And due to the liberalization of the economy, the private sector has gained importance.

This makes a good model for public-private partnerships.

Agriculture plays the key role

Agriculture plays the key role in the economy
Agriculture has an important role in Indian economy By Jayaseerlourdhuraj – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=17402575

Agriculture is the largest occupation in India and it plays a vital role in the economy. More than 60% of the population depends on agriculture.

And more than 17% of the countries GDP is provided by the agriculture sector. The agriculture of India was made self-sufficient due to the green revolution, evergreen revolution, and invention in biotechnology.

The export of agricultural products such as fruits, vegetables, spices, etc also adds to forex earning through international trading.

An emerging market

The Indian economy due to stable GDP growth has attracted a lot of investment through FDI and FII.

And also a lot of potential for prospective growth, which makes it an emerging market in the world.

Emerging Economy

Indian economy, emerging as a top economic giant among the world. Indian economy is 7th in terms of GDP and 3rd in terms of PPP(Purchasing Power Parity).

As a result, India is one of the G20 Countries.

Fast Growing Economy

India’s economy is known for its sustained high growth and it emerged as the fastest growing economy in the year 2016-2017 with a growth rate of 7.1% in GDP only next to China.

Fast growing Service Sector

The service sector provides the highest share of the GDP of India. There is also great growth in sectors like Information Technology, BPO, etc.

Large Domestic consumption

With economic growth, the standard of living is improved a lot. This in turn has resulted in rapid domestic consumption that led to greater production.

Rapid growth of Urban Areas

Urbanization is an important element of the growth of any economy. The cities in India have grown rapidly after independence.

This in turn improved the connectivity in transport, communication, education, and health.

Stable macro economy

As per the current economic survey, India’s economy is the “Heaven of macroeconomic stability, resilience, and optimism”.

According to the economic survey 2014-15, an 8% plus GDP growth rate is predicted, with actual growth turning out to be a little less (7.6%).

Thereby this shows that the Indian economy has stable macroeconomic growth.

Demographic dividend

India has the largest youth population in the world.

Also, the Indian population is skilled and trained for the countries growth. This invited foreign investments and outsourcing opportunities.

The Weakness of the Indian Economy

Large dependence on Agriculture

Nearly 60% of population depends on the agriculture. Due to poor marketing, storing and logistics problems the work done by large population in agriculture is just enough for their survival.

The farmers getting very less gain for their final product. As most of them are perishable goods, they are forced to sell the item below par value. This keeps the generation of farmer poor and still they have no options.

The case is still worse for landless farmers who work in other lands for just food and other, and they are not even paid for their hard job.

Large Population

India is second in the world in terms of the highest population in the world.

The population growth in India is high as 1.7 per 1000. The added population equals the total population of Australia every year.

Inequality and poverty

In the Indian economy there exist a big economic disparity. 10% of the population holds more wealth than the 90% percentage of the population.

This has made an increased poverty level and a large number of Indians living below the poverty line (BPL).

As a result, the rich become richer and the poor became poorer.

Increasing Prices of Essential Goods

There has the steady rise in prices that decreases the purchasing power of the people.

The increasing price of essential goods adversely affects the poor people, whose incomes are not protected.

Weak Infrastructure

Indian has improved a lot in Infrastructure but still, it is up to the level of developed nations. There is still a scarcity of basic infrastructure like power, transport, storage, etc.

Inadequate Employment generation

The increasing young population needs a lot of jobs.

In the Indian economy, the growth of the Indian economy does not reflect job creation. The Indian economy is often characterized as ‘jobless growth’.

Outdated technology

The technology in agriculture and small-scale industries is outdated.

Gdp of India

In 2019 Gdp of India is 2.87 lakh crores. India’s Gdp in the year 2021-2021, is seen contracting at 7.7%, the real GDP is around Rs 134.40 lakh crore at constant prices of 2011-2012.

India’s GDP growth rate in 2020 is contracting at a rate of 7.7%, which is negative.

Indian economy 2020

India’s economy in 2020, is very poor. It has a high public debt with 89% of its GDP. While India’s fiscal deficit stood at 9.5% of GDP.

India’s GDP rank is 6th in the world.

India’s PPP rank is 3rd in the world.

India GDP growth rate last 10 years

YearGDP
20115.24%
20125.46
20136.39
20147.41%
20158%
20168.26%
20177.04%
20186.12%
20194.18%
2020Expected to contract by 7.7%
2021Expected to contract by 7.7%
India GDP growth rate last 10 years
India GDP growth rate last 10 years

Conclusion

Indian is characterized as a middle-income developing market economy and sixth-largest economy by nominal GDP, third in Purchasing power parity (PPP). Also Indian economy is largely agro-based and there is a need to resolve regional disparities to become the greatest economy in the world.

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* * All the Notes in this blog, are referred from Tamil Nadu State Board Books and Samacheer Kalvi Books. Kindly check with the original Tamil Nadu state board books and Ncert Books.
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