Indian Economy

India in the past six and half decades has undertaken planned
economic development. It has planned and implemented several
developmental programs to take a leap in the development. Therefore,
India today has emerged as one of the fastest growing developing
economy. However, there still exists both developed and under
developed characteristics in India. Let us observe those characteristics
one after the other.
India as Under Developed Economy
The important characteristics of India as under developed economy
are;
1) Low Percaptia Income:
India’s Percapita income is far less compared to developed countries
due to over population, very high poverty and unemployment. India’s
percapita income was Rs.230 in 1948. At present India’s percapita is
just 1/13 of America’s percapita income.
2) Inequality in Income and Wealth:
Inequality of income and wealth is high in India. As per World
Bank and Asian Development Bank report, at present inequality has
increased in India. Gini coefficient index is used to measure inequality.
If the Gini coefficient is zero, it means complete equality and if it is
100 means high inequality. In 1991, India’s Gini coefficient was 32.5,
which has increased to 37 in 2010. India’s 40% of rich possess 79.2
wealth, whereas the remaining 60% possess only 20.8 % of wealth
which is clear indication of inequality.
3) High incidence of Poverty
Wide income inequality naturally leads to increase in poverty.
Though the ratio of poor people in India has been reduced from 48.44%
in 1979-80 to 21.9% in 2011, but still more than 269.3 million people
are still living below poverty line. All these people are living without
basic facilities.

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4) Over Dependence on Agriculture
During 1950-51, the contribution of agriculture to India’s national
income was 55.3% which got reduced to 13.5% in 2013-14. But,
48.9% of population is still engaged in agriculture. Majority of India’s
agriculture is still dependent on monsoon, and those involved in
agriculture do not earn the whole year. This makes them live as under
employed or seasonal employed and earn less. Lack of superior skills,
reduction in agriculture productivity also makes them unable to do
other jobs.
5) Crippled Human Development
Human development Index is measured based on three aspects
namely long healthy life, knowledge and standard of living. But
unfortunately many in India are not getting good health care facilities,
quality education and reasonable income for better living. Hence,
India is not doing well in HDI. In UNDPs (United Nations Development
Programmes) HDI report India is ranked at 136 among 186 countries
in 2013.
India as Developing Economy
Indian economy though has some under developed characteristics;
it has many developing economy characteristics. The important
among them are;
1) Increase in National Income
India, by early 2015 has emerged as 2 trillion economy, India’s
national income in 2004-05 constant prices was 2,78,677 crore
during 1950-51, which increased to 56, 73,857 crore during 2013-
14, making it 4th largest economy of the world.
2) Higher Growth Rate
India’s economy on an average grew at a rate of 3.5% from 1950 to
1980. This growth rose to 5.5% during 1980-91, and to 8% in 2000-
2011. Though the growth has slowed down little after that, at present
Indian economy growth rate is 7% showing the healthy recovery and
taking leap towards higher growth rates. Today India is the 2nd fastest
growing economy of the world.

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3) Major Shift in Sectoral Distribution
In 1950-51, agriculture contributed 55.3% at 1999-2000 prices to
national income. This has reduced to 13.5 in 2013-14. But, during
the same period the contribution of industrial and service sector to
national income has increased remarkably. The change in contribution
to national income has not reflected in the share of employment as
majority still depend on agriculture for livelihood. Only 51.5 % of
people in India are now engaged in non agricultural activities for their
livelihood.
4) Service Sector led growth
Today after China, India has become 2nd fastest growing economy
of the world. The main reasons for this growth in service sector which
has grown at average rate of 8.5% from 2000-01 and 2013-14. The
share of service sector (including construction sector) is 64.85% in
2013-14.
5) Expansion in the infrastructure Facilities
Infrastructure assists in undertaking social and economic
activities easily. Expansion of social and economic infrastructure in
case of transportation, communication, fuel, energy, water resources,
education, and health systems are the main facilities for the economic
development. When these facilities are good, it intensifies the
economic development. Infrastructure facilities were scares in 1947
when India attained its independence. For instance, in 1948 India’s
electricity production capacity was 2100 mega watts. In 1951, the
literacy rate was 8.33% and irrigated land was 22.6 million hectare.
But, today India produces 97 billion units of electricity, has 48.65
lakh kilo meters of roads, 63.9 million hectares of irrigated land and
the literacy rate is 74.04%. India today also has better education and
health care facilities.
6) Growth in Banking and Financial Sector
India was having undeveloped banking sector in 1947. The
banking system was completely with private sector. The Reserve Bank

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of India, India’s central bank was also run by private shareholders,
which was nationalized in 1949. The State Bank of India became
nationalized in 1955 followed by 14 commercial banks in 1969 and 6
more commercial banks in 1980. This move helped India to expand
banking sector which helped in development of financial sectors. The
economic reforms in 1991 paved the way towards establishment of
private as well as foreign banks. Today India has 1, 11,723 bank
branches and out of them 37.9% function in rural areas.
Despite, Indian economy having a few under developed
characteristics, today it has all the characteristics of fastest growing
developing economy of the world. If population growth is further
reduced, quality education and better health facilities are provided
to all and if all the development schemes are implemented properly,
India will soon emerge as developed nation.

EXERCISE

I. Choose the correct answer from the Four options

given below.
1) Who said ‘a country is poor because it is poor’ ________________

a) Ragner Nurkse b) Adam Smith

c) Alfred Marshall d) J.M. Keynes

2) The nation having highest percapita income is __________________

a) India b) China

c) Egypt d) America

3) The share of service sector (including construction) in

2013-14 was_____________

a) 64.8% b) 54.8%

c) 60% d) 50%

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 4) According to Tendulkar Committee the consumption
expenditure of less than Rs_______ in rural areas and _______
in urban areas is regarded as poor.
a) Rs.26, Rs.32 b) Rs.32, Rs.26
c) Rs.52, Rs.64 d) Rs.64, Rs.56

5) The main characteristics of backward country is ___________

a) More urbanization b) More Malnutrition
c) More Literacy d) Higher Standard of living

II. Fill in the blanks.

1) In India 51.5% of people are dependent on _______ for their
livelihood.
2) The share of the service sector in national income during
2013-14 was_______.
3) In 2013, India is ranked______ in HDI.
4) The nations having less than $________ percapita income are
called as under developed nations.
5) Among the total bank branches _______ percentage of banks
are working in rural areas.

III. Answer the following questions in one sentence.

1) What is economic development?
2) Write the meaning of under developed economy.
3) What is the rank of India in Human Development Index in
2013?
4) What is percentage of people living below poverty line in India
in 2011?
5) Name any two developed countries.

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IV.Answer the following questions in two or three
sentences.
1) Name non economical characteristics of under developed
economy.
2) Mention important sectors of India’s economy.

3) When was commercial banks nationalized in India?

4) Name few under developed nations.

5) Explain how vicious circle of poverty hampers the nation’s

development?

V. Answer the following questions in about eight

sentences.
1) Explain main characteristics of under developed economy.

2) Differentiate between developed and under developed economy.

3) Discuss India as a developing economy.

4) Explain vicious circle of poverty in the context of demand and

supply side.

5) Discuss India as an under developed economy.

Project Work

1. List out the developed and under developed nations.

2. List the developed and under developed characteristics of the Place
(village/ Town/District) of your residence.

YY

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