Hi everyone. We all know that Indian Economy is an important part of different Govt examinations such as UPSC, RBI etc. In this post, I am going to discuss some salient features of the Indian Economy.
The features of the Indian economy are :
- Planned economy
- Dependence of population on agriculture
- Low per capita income
- Heavy population pressure
- Poverty and Inequality in income distribution
- A higher level of capital formation
India is a planned economy. Through planning the country sets its priorities first and
provides the financial estimates to achieve the same. Accordingly, efforts are made
to mobilise resources from various sources at the least cost. Several five-year plans have been formulated by the Planning Commission of India since 1951. On 15th August 2014, Hon'ble Prime Minister Mr Narendra Modi announced the dissolution of the Planning Commission, leading to another organization called the Niti Aayog.
Majority of India's working population depend on agricultural activities to pursue
their livelihood. In 2011 about 58 per cent of India's working population was engaged in agriculture. In spite of this, the contribution of agriculture to India’s gross domestic product is a little over 17 per cent. A major concern of agriculture in India is that productivity in this sector is very less.
Per capita income is defined as the ratio of national income over the population. It gives the idea about the average earnings of an Indian citizen in a year, even though this may not reflect the actual earning of each individual. India is characterized as a country with low per capita income.
India is the world's second largest populated country after China. Currently, the Indian population stands at approximately 135 crores. The reason behind the steep rise in population is a sharp decline in the death rate. At the same time, the birth rate has not decreased so fast. This leads to a huge population.
In India, the Niti Aayog task force executes the task of estimation and elimination of poverty. It was constituted in March 2015 under
the Chairmanship of Vice Chairman, NITI Aayog. The poverty line estimation is based on the consumption expenditure. Poverty goes with inequality in income and wealth distribution. Very few in India posses materials and wealth while the majority have control over no or very little wealth in terms of landholding, house, fixed deposits, shares of companies, savings etc. Although India observed a remarkable reduction in poverty between 2005-06 and 2015-16, Niti Aayog's SDG Index 2019, released on December 27, 2019, says that more Indians have fallen into poverty, hunger and income inequality in the past two years.
After independence, one of the most important problems of the Indian economy was the lack of capital in the form of land, savings, machinery etc. In order to continue the cycle of economic activities such as production and consumption, a certain ratio of production must go towards saving and investment.
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