CHARACTERISTICS OF INDIAN ECONOMY

CHARACTERISTICS OF INDIAN ECONOMY
CHARACTERISTICS OF INDIAN ECONOMY

CHARACTERISTICS OF INDIAN ECONOMY

The economy of india Is the ninth largest in the world by nominal GDP and the fourth by purchasing power parity (PPP).The country’s PPP was $ 3408 in 2010,making it a lower middle income economy was then characterized by extensive regulation, protectionism,public ownership ,pervasive corruption and slow growtIh 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 include telecommunication

Textiles,chemicals,food processing,steel,transportation equipment pharmaceuticals.Major agriculture products includes rice,wheat,oil seed,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 par-triers 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., mixed economy.It allows co-existence of public and private sector.

Low Per Capita Income 

Underdeveloped economy is characterized by low 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 1/45 of US level of per capita. This trend of difference of per capita income between underdeveloped and developed countries is gradually increasing in present time.

Heavy Population Pressure 

The Indian economy is facing the problem of population explosion.It is second highest populated county. 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 is 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 ate some what 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 plan 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 65 to 70% of the total population but contributes only 15.7% of the GDP.

Unbalanced Economy Growth

India has not achieved the goal of balanced economic growth.According to world development report,2010 about 64% of total labout force is dependent on agriculture and rest about 20% on trade,transport and other services.

Low Rate of Capital Formation

In backward economics 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% while in the same year,Gross Domestic Capital formation is 36.5%.

Lack of Industrialization

India lacks in large industrialization based on modern and advanced technology,which fails to accelerate the pace of development in the economy.Average annual growth rate of industrial sector was 8.0% in 2009-10.

Under Utilization of Resources

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

Market Imperfection

Indian economy faces a number of market imperfections like lack of mobility among production factor from one place to the other and lack of specializations which hinder the optimum utilization of available resources.All 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 hopelessly backward,which is strong obstacle to any change in the forms of production.

Price Unsuitability

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.

CHARACTERISTICS OF INDIAN ECONOMY

RANK
9TH (NOMINAL) 4TH  (PPP)
GDP
$ 1.632 TRILLION (NOMINAL)
$ 4.057 TRILLION (PPP)
GDP GROWTH
8.5% (2010-11)
GDP PER CAPITA
$1371(NOMINAL),(138TH ,2010)
$ 3408(PPP) (129TH ,2010)
GDP BY SECTOR
SERVICES 55.2%
INDUSTRIES 26.3%
AGRICULTURE 18.5%
POVERTY
37%(2010)
UNEMPLOYMENT
9.4%(2009-10)
INFLATION
9.39% (NOVEMBER 2011)
AVERAGE GROSS SALARY
$ 1371 YEARLY (2010)
EXPORTS
$ 225.6 BILLION (2010)
IMPORTS
$ 357.7 BILLION (2010)
FDI STOCK
$ 35.6 BILLION (2009-10)
FOREIGN RESERVES
$ 319 BILLION (2011)
GROWTH RATES
SERVICES 9.6%
INDUSTRIES 8.7%
AGRICULTURE 5.4%

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