Basic Features of Indian Economy

1. Basic Features of Indian
Economy
By: Dr. Mehak Gulati

2. ➢ Low National Income:
The gross national income of India was Rs.10,360 crores
in 1950-1951 which has been increased to Rs. 77,02,308
crores in 2010-2011 (the base year was 2004-2005).
➢ Low Per Capita Income:
The per capita gross national income of India was $5,150
and at the same time was $63,909 in USA. On the basis
of constant prices (2010-2011) the per capita income of
an Indian was Rs64,316 in 2011-12 which was increased
to Rs 74,193 was 2014-2015.
➢ Predominance of Agriculture:
About 18% of the GDP is obtained from agriculture and
allied sector. In India about 48.9% of the total labour
force is engaged in agriculture sector.

3. ➢ Population Explosion:
India stands second in the list as per population of the
world and China stands first. The main problem of the
population is the high birth rate and falling death rate.
The annual compound growth rate was 1.76% in 2001-
2011.
➢ Lack of Capital and Low Rate of
Capital Formation:
In 1990-91 the gross domestic rate of capital fomation was 26%
of GDP and was increased to 36.5% in 2010-11 and in 2018 it
was recorded as 31%.
➢ Low Standard of Living:
the average consumption of calories is 2000 as compared to
3000 calories in developed countries. The consumption of
clothes, sugar, edible oil , tea is also low as compared to other
countries. Most people also lack good housing and health
facilities.

4. ➢ Unbalanced Industrial Growth:
In India the consumer based industries have grown much faster as
compared to the capital based industries. States like Maharashtra,
Gujarat, West Bengal, Tamil Nadu, Bihar have many industrial units
as compared to the other states like Jammu & Kashmir, Orrisa,
Assam, etc.
➢ Deficit Financing:
India has been utilising deficit financing for collecting finance for the
economic development. In each plan and budget the deficit is
increasing due to insufficient recovery of public revenue, corruption
and government’s non productive expenditure.
➢ Dependence on Monsoon:
Our economy is dependent on agriculture and agriculture is depended
on monsoon. Insufficiency of monsoon, late monsoon or high rainfall
adversely affects agriculture, industries & trade.

5. ➢ Dependence on Foreign Assistance:
Development of any economy around the world is baseless
without foreign assistance. There is need of import of
modernised scientific techniques, large machines, etc. India
mainly take loans from International Finance Institutions,
World Bank & IMF.
➢ Traditional Technology:
Indian economy is still based on traditional technologies, both
agriculture and manufacturing units are using the same. Due to
limited mechanisation, more capital, time and labour is
required in production process and cost of production also rises.
➢ Imbalanced Foreign Trade:
India’s unfavourable trade which was by Rs 5,46,503 crores in
2010-11 was increased to level of Rs 10,34,844 in 2012-13 and
was decreased to Rs 8,10,423 crore in 2013-14.

6. ➢ Poverty In Plenty:
About ¼ th of the total population is below poverty line and
have low standard of living. Due to slow growth in national
income and rapid growth in population the per capita income
of Indian Economy is very low.
➢ Imperfection of Market:
Due to imperfection of markets and underdevelopment of
markets the investment in the economy is not motivated.
Hence there is always imbalance between demand and supply
in the economy.