Characteristics of Indian Economy
Characteristics of Indian Economy
Main characteristics and various aspects of Indian Economy are:
1. Agrarian Economy: Even after seven-decades of independence, agriculture plays a vital role in India’s economy. 54.6% of the population is engaged in agriculture and allied activities (Census 2011) and according to ‘INDIA 2021’ it contributes 17.8% to the country’s Gross Value Added for the year 2019-20, (at current prices).
2. Mixed Economy: Indian Economy is a unique blend of public and private sector, i.e. a mixed economy. After liberalisation, Indian Economy is going ahead as a capitalist economy or market economy.
3. Developing Economy: The following facts show that Indian Economy is a developing economy:
(a) National Income: According to the Press Note released on 31st August 2022 by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation the estimates of GDP for the April-June quarter (Q1) of 2022-23:
⇒ Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in Q1 2022-23 is estimated to attain a level of 36.85 lakh crore, as against 32.46 lakh crore ₹ in Q1 2021-22, showing a growth of 13.5 % as compared to 20.1 % in Q1 2021-22.
⇒ Nominal GDP or GDP at Current Prices in Q1 2022-23 is estimated at 64.95 lakh crore, as against 51.27 lakh crore in Q1 2021-22, showing a growth of 26.7 % as compared to 32.4 % in Q1 2021-22.
Poverty in India
⇒ Poverty estimates are derived from household consumption data. The World Data Lab monitors global poverty using advanced statistical models.
Measuring Poverty in India
In India, the first official rural and urban poverty lines at the national level were introduced in 1979 by Y.K. Alagh Commitee and official poverty counts began for the first time.
Later, in 1993, D.T. Lakdawala Committee extended these poverty lines to states and over time allowing official poverty counts over time and in the states.
In 2005, recognizing that the rural poverty line was too low, the government appointed the Tendulkar Committee to take a fresh look at the poverty lines. Reporting in 2009, the Tendulkar Committee revised upward the rural poverty line.
Continued media criticisms led the government to appoint the Rangarajan Committee in 2012. Reporting in June 2014, the committee recommended raising further both the rural and urban poverty lines. Decision is yet to be taken on the Rangarajan Committee recommendations.
Therefore, the Tendulkar poverty line remains the official poverty line and is the basis of the current official poverty estimates in 1993-94, 2004-05 and 2011-12. [Source: NITI Aayog]
Multidimensional Poverty
⇒ Using NFHS-4 (2015-16) report, in line with global Multidimensional Poverty Index (MPI), NITI Aayog prepared Multidimensional Poverty Index at the national, for all states and districts of India. It will at enable measuring deprivation across twelve indicators at national, states and districts level. In 2015-16, 25 % households were found to be multidimensional poor in India. Since the MPI index is based on NFHS-4 data of 2014-15, it may serve as the baseline for measuring deprivation in future studies. [Source: MOSPI]
BPL : According to the Rangarajan Committee, 30.95% people in rural areas and 26.4% in urban areas (as compared to 25.7% and 13.7% respectively as per the Tendulkar Methodology) were below the poverty line [Source: The IE, 4 July, 20 The IE, 4 July, 2015 and ES 2015-16] Around 22% Indians live below poverty line. Out of the total population living in the rural parts of the country, 25.7% of them is living below the poverty line, according to RBI. In the urban areas 13.7% of the population is living below poverty line. [Source: Financial Express (FE), 21st Sept, 2019]
(b) Level of unemployment is very high. Unemployment in India is mainly structural in nature because the productive capacity is inadequate to create sufficient number of jobs. There is an acute problem of disguised unemployment in the rural areas. Aperson is considered employed if he/she works for 273 days of a year for eight hours every day.
(c) Savings are low in India due to low national income and high consumption expenditure. The low savings results in shortage of capital formation. Capital is an important factor of production.
(d) India is the second most populated country of the world. During 2001-2011, population increased by 17.69%. With this high growth rate of population about 1.83 crore new persons are being added to Indian population every year. According to 2011 census, the total Indian population stands at a high level of 121.07 crore which is 17.5% of the world’s total population. To maintain 17.5% of world population India holds only 2.42% of total land area of the world.
(e) India lacks in large industrialisation based on modern and advanced technology, which fails to accelerate the pace of development in the economy.
Important facts relating to characteristics of Indian Economy
⇒ Primary sector of Indian Economy is agriculture and the related sectors.
⇒ Secondary sector of Indian Economy is related to industry, manufacturing, electricity etc.
⇒ Tertiary sector of Indian Economy is related to business, transport, communication and services.
⇒ The best indicator of economic development of any country is per capita income.
The following factors are important in Economic Development of a developing country: 1. Natural resources, 2. Capital gain, 3. Skilled labour force, 4. Surplus sale of agriculture, 5. Justified social organisation, 6. Political freedom, 7. Freedom from corruption, 8. Technological knowledge and general education.
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