Introduction to Indian Economy – India has emerged as the fastest-growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF). The Government of India has forecasted that the Indian economy will grow by 7.1 percent in FY 2016-17. As per the Economic Survey 2016-17, the Indian economy should grow between 6.75 and 7.5 percent in FY 2017-18.
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An Introduction to Indian Economy
India’s gross domestic product (GDP) grew by 7 percent year-on-year in the October-December 2016 quarter, which is the strongest among G-20 countries, as per the Organisation for Economic Co-operation and Development (OECD) Economic Survey of India, 2017. According to IMF World Economic Outlook Update (January 2017), the Indian economy is expected to grow at 7.2 percent during FY 2016-17 and further accelerate to 7.7 percent during FY 2017-18. The main characteristics and various aspects of the Indian Economy are given below:
Even after 60 years of independence, 52.1% of the workforce of India is still agriculturist and its contribution to Gross Domestic Product is approximately 17%.
Indian Economy is a unique combination of the public and private sectors, i.e. a mixed economy. After liberalization, the Indian Economy is going ahead as a capitalist economy or market economy.
The following facts show that Indian Economy is a developing economy:
- The national income of India is very low by international standards and per capita income is much low in India as compared with other developed countries. India’s per capita income is approximately 1/75 of the U.S. level of per capita income. 26.1% population is still living Below Poverty Line.
- Level of unemployment is very high. Unemployment in India is mainly structural in nature because the productive capacity is inadequate to create the sufficient number of jobs. There is an acute problem of disguised unemployment in rural areas. A person is considered employed if he/she works for 273 days of a year for eight hours every day.
- 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. There is lack of capital and resources although during the recent years, the rate of domestic savings has remained at 26%.
- India is the second most populated country of the world. With the high growth rate of population about 1.7 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 1.21billion which is 16.7% of the world’s total population. To maintain 16.7% of world population India holds only 2.42% of total land area of the world.
- 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
- The contribution of agriculture sector in the national income is 17%.
- The contribution of public sector in the gross production is less than 20%.
- Primary sector of Indian Economy is agriculture and the related sectors.
- Secondary sector of Indian Economy is related to industry, manufacturing, electricity etc. Its contribution to GDP is approximately 28%.
- Tertiary sector of Indian Economy is related to business, transport, communication and services. Its contribution in GDP is highest (approximately 58%).
- The best indicator of economic development of any country is per capita income.
Factor for Economic Development of a Developing Country
The following factors are important in Economic Development of a developing country:
- Natural resources
- Capital gain
- Skilled labour force
- Surplus sale of agri-product
- Justified social organization
- Political freedom
- Freedom from corruption
- Technological knowledge and general education
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Important Questions on Introduction to Indian Economy
Who is called the father of Modern Economics? [MPPCS (Mains) 2010]
(A) Adam Smith
Paul Krugaman is a/an [MPPCS (Mains) 2009]
For the existence of a market which is indispensable? [MPPCS (Pre) 1997]
(B) Economic laws
(D) Trade unions
Indian Economy is characterised as [UPPCS (Pre) 1995]
(A) backward economy
(B) developed economy
(C) developing economy
(D) underdeveloped economy
The Gandhian economy is based on the principle of [UPPCS (Pre) 2013]
(C) State control
(D) None of the above
FAQs on Introduction to Indian Economy
Who propounded the concept of ‘Trusteeship’?
Mahatma Gandhi propounded the concept of ‘Trusteeship’.
What is the major feature of the Indian Economy?
The major feature of the Indian Economy is a mixed economy.
The Indian Economy is a ___
The Indian Economy is a Mixed economy.
Mixed economy in India means
Mixed economy in India means the Co-existence of the public and private sectors.
The credit of developing the concept of modern economic growth goes to ___
The credit of developing the concept of modern economic growth goes to Simon Kuznet.