03-07-2013, 04:43 PM
INDIAN ECONOMY: FEATURES AND DEVELOPMENTS
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INTRODUCTION
The Economy Of India is the ninth largest in the world by nominal GDP and the fourth largest by Purchasing Power Parity. The independence-era, Indian economy was inspired by the economy of Soviet Union with socialist practices, large public sectors, high import duties and lesser private participation characterizing it, leading to massive inefficiencies and widespread corruption. However, in 1991, India adopted free market principles and liberalized its economy to international trade. Following these strong 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 people.
Beneficial Effects of the Reform Process
Fourth Largest Growing Economy in terms of PPP with a GDP of US $3.36 trillion
In Exchange terms , Tenth Largest in the world with a GDP of US$ 691.87 billion (2004)
Second Fastest Growing Major Economy of the World with a growth rate of 8.1% for the 1stQ of 2005-06
Features
The Indian economy is a developing economy. It’s a mixed economy in the sense that both private sector and public sector coexist and participate in the production process.
It is characterized by high population density and population growth.
About one-third of the population live below poverty line. 'Vicious cycle of poverty' operates in many sectors of the economy.
There is high level of unemployment and underemployment In addition, there is 'disguised unemployment' in the agricultural sector.
The level of technology used in production process is low in many sectors. Modern technology has not been adopted in all sectors of the economy.
There is a shortage of physical and economic infrastructure.
Reason for the highest growth rates in the mid-2000s
The growth was led primarily due to a :
huge increase in the size of the middle class consumer population(AVERAGE working age being 25)
a large workforce comprising skilled and non-skilled workers(NAREGA scheme)
improvement in education standards(mid-day meal for rural) and considerable foreign investments(FDIs and FIIs).
Major issues of Development
Low per-capita income
Income inequalities
High incidence if poverty
Predominance of agriculture and instability of output
Rapid population growth
High dependency ratio
Low level of human development
Unemployment
Imbalance between population size, resources and capital
Inadequacy of entrepreneurs