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Characteristics of Indian Economy

Indian economy is a developing economy in which Agriculture is the back bone of Indian
economic. 60% of Indias population are on the below poverty line. Mineral resources are not
fully utilized. We are selling iron ore by trucks and getting blades by packets. Majority of the
people of India are leading a poverty line. Indian economic is affected by it. Countries which are
on the part of progress and which have their potential for development are called developing
economic. So India is termed as developing economic by modern views.
The important features of Indian economic:
1. Low per capita income:
Developing economy is characterized by low per capital income. India per capital income is very
low as compared to the advanced countries. This trend of difference of per capita income
between developing and advanced countries is gradually increasing in present times. India not
only the per capita income is low but also the income is unequally distributed. This maldistribution of income and wealth makes the problem of poverty in ore critical and acute and
stands an obstacle in the process of economic progress.
Statistics
The per capita net national income (NNI) of India at current prices during 2014-15 is estimated
at 87,748 Indian rupees as compared to 80,388 INR for the year 2013-14.
According to International Monetary Fund World Economic Outlook (April-2015), India is at
145th position in term of GDP (nominal) per capita. Per capita income of India is 6.69 times
lower than world's average around of $10,880. The Gross Domestic Product per capita in the
United States was last recorded at 46405.26 US dollars in 2014. The GDP per Capita in the
United States is equivalent to 367 percent of the world's average.
2. Heavy Population Pressure:
The Indian economy is facing the problem population explosion. It is the second highest
populated country China being the first.. All the developing 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.
Statistics
#

Country

2015
Population

2050
Expected Pop.

1 China

1,361,512,535

1,303,723,332

2 India

1,251,695,584

1,656,553,632

321,362,789

439,010,253

3 United States

4 Indonesia

255,993,674

313,020,847

5 Brazil

204,259,812

260,692,493

6 Pakistan

199,085,847

276,428,758

7 Nigeria

181,562,056

264,262,405

8 Bangladesh

168,957,745

233,587,279

9 Russia

142,423,773

109,187,353

10 Japan

126,919,659

93,673,826

TOP TEN Countries

4,213,773,474

4,950,140,178

Rest of the World

3,050,850,319

4,306,202,522

TOTAL World
Population

7,264,623,793

9,256,342,700

3. Pre-dominance of Agriculture:
Occupational distribution of population in India clearly reflects the backwardness of the
economy. One of the basis characteristics of an developing economy is that agriculture
contributes a very large portion in the national income and a very high proportion of working
population is engaged in agriculture.
Statistics
GDP of agriculture and allied sectors in India was recorded at US$ 156.1 billion in FY14
According to the advanced estimates of Central Statistical Organisation, agriculture and allied
sector recorded a growth of 3.6 per cent in FY14
From FY07 14, agriculture and its allied services grew at a CAGR of 2.8 per cent
Agriculture is the primary source of livelihood for about 58 per cent of India's population
4. Unemployment:
There is larger unemployed and under employment is another important feature of Indian
economy. In developing countries labor is an abundant factor. It is not possible to provide gainful
employment the entire population. Lack of job opportunities and disguised unemployed is
created in the agriculture fields. There deficiency of capital formation.
Statistics

Unemployment Rate in India decreased to 4.90 percent in 2013 from 5.20 percent in 2012.
Unemployment Rate in India averaged 7.32 percent from 1983 until 2013, reaching an alltime high of 9.40 percent in 2009 and a record low of 4.90 percent in 2013. Unemployment
Rate in India is reported by the Ministry of Labor and Employment, India.

5. Low Rate of Capital Formation:


In backward economics like India, the rate of capital formation is also low. capital formation
mainly depends on the ability and willingness of the people save since the per capita income is
low and there is mal-distribution of income and wealth the ability of the people to save is very
low in developing countries for which capital formation is very low .
6. Poor Technology:
The lever of technology is a common factor in developing economy. India economy also suffers
from this typical feature of technological backwardness. The techniques applied in agriculture
industries milling and other economic fields are primitive in nature.
7. Backward Institutional and social framework:
The social and institutional frame work in developing countries like India is hopelessly
backward, which is a strong obstacle to any change in the form of production. Moreover
religious institutions such as caste system, joint family universal marriage affects the economic
life of the people.
8. Under utilization of Resources:
India is a poor land. So our people remain economically backwards for the lack of utilization of
resources of the country.
9. Price instability:
Price instability is also a basis feature of Indian economy. In almost all the developing countries
like India there is continuous price instability. Shortage of essential commodities and gap
between consumption aid productions increase the price persistently. Rising trend of price
creates a problem to maintain standard of living of the common people.
10. Poor Infrastructure:
On the eve of independence infrastructural development which comprised of communication and
transport and electricity etc. was very poor. In 1948, power generation capacity was nearly 2100
MW;length of railway lines was 53,596 Kms.
11. Illiteracy:

Illiteracy was both cause and effect of poverty. Due to illiteracy, people were unable to use new
techniques in agriculture and industry. They were unable to organize trade and commerce on
modern lines. In 1948, rate of illiteracy was 18%. Thus 82% of the population was illiterate.
12. Industrial Backwardness:
On the eve of independence Indian economy was backward from industrial point of view there
was deficiency of basic and heavy industries. Among heavy industries, there was Tata Iron and
Steel industry.
The production of machines in the country was negligible. Statistics reveal that in 1947 total
production of iron & steel was 9 lakh tonnes.
13. Low Levels of Living:
India has been, and even today is one among the poorest countries of the world. Barma few rich,
the common masses forced to lead a miserable life. Almost half of country's population is below
the poverty line.
Quantity of goods available per head of population is meager and the quality is invariably
indifferent. Nutritional content of consumption is grossly inadequate and hunger, starvation and
disease are fairly widespread.
14. Income Disparities:
The gap between wealth and poverty is exceedingly wide in India. A handful of rich persons get
a relatively large share of the total income while the large mass of poor population gets a
relatively small portion of it.
Inequalities of income distribution are to be observed both in the rural and urban sectors of the
economy. Inequalities of income are to be seen in the form of unequal distribution of land in the
agricultural sector and concentration of economic power in non-agricultural sector.
15. Dependence on Imports:
The country had to heavily depend on imports. Armed forces of the country also depended
on foreign imports. Moreover, several consumer goods like sewing machines, medicines, oil,
bicycles etc. were imported from abroad.