SESSION-2Anatomy of the Indian Economy A. An overview of the Indian economy. B. Analysis of the sectors of the Indian economy. C. SWOT Analysis of the Indian economy.
Anatomy, literally means• the act of dividing into parts for the purpose of analyzing / examining the parts to reveal the structure of the parts.Anatomy of the Indian economy means• analysing/ studying/ examining the nature/ characteristics of the Indian economy, by dividing the economy into parts/ sectors.
A. AN OVERVIEW OF THE INDIAN ECONOMY a) Characteristics of the Indian economy (during the pre independence period)The economy was• a ‘stagnant economy’ with extremely low growth rate of per capita income &• a ‘backward economy’ with characteristics likei. Predominance of agriculture (An agrarian economy)ii. High birth rate & high death rateiii. Low per capita incomeiv. Mass povertyv. Mass illiteracy
b) Characteristics of the Indian economy (during the post independence & pre-liberalization period)• Predominance of agriculture• High population growth rate• Low per capita income• Balance of payments crisis• Low foreign exchange reserves• Extensive regulation of the private sector• Protectionism policy with strong emphasis on import substitution• High fiscal deficit in the government budget
c) Characteristics of the Indian economy(in the post liberalization period, under the LPG Policy)• Increase in the rate of economic growth• Increase in foreign direct investment• Increased investment in the private sector• Increased foreign currency reserves• Upgradation of technology• Control of inflation• Surplus in the balance of payments• Increased competition from MNCs• Unequal & unfair competition with foreign goods
Current Indian economy at a glance• By 2008 India had establised itself as the 2nd fastest growing economy of the world (GDP growth rate close to 9%. However, in 2009 India recorded a GDP growth rate of 6.8%(under the impact of global recession), which was expected to be 7.7% in 2011-12 but ended up with 6.5% only)• As per World Bank Periodic Reports, Indian economy was the 4th largest economy in the world in terms of nominal GDP ($1.631 trillion, in 2008-09), but has slipped to become 11th largest economy in the world in terms of nominal GDP ($1.85 trillion, 2011)• India is the 2nd most populous country with a large population of 1.21 billion, with a growth rate of 1.31% per annum (Census 2011),• Per capita income of India crossed Rs. 50,000 mark in 2010-11. It grew by 15.6% to Rs.53,331 per annum in 2010-11. However, this figure at constant prices was Rs. 35,993 per annum, with a growth rate of 6.4% per annum. (As per ‘Central Statistical Organisation’ estimates of GOI)
B. ANALYSIS OF THE SECTORS OF THE INDIAN ECONOMYIndian economy has been classified into different sectors on the following basis:-1. Sectors on the basis of economic activities-• Primary sector (Agricultural sector)• Secondary sector (Industrial sector)• Tertiary sector (Service sector)2. Sectors on the basis of ownership of means of production-• Private sector• Public sector• Joint sector
A comparative study of the 3 sectors (clearly reveals ‘structural change’ in the Indian economy)• Contribution of different sectors to GDP SECTOR 1950-51 1990-91 2010-11 (%) (%) (%) Primary sector 59 29 18 Secondary sector 25 29 22 Tertiary sector 16 42 60• Occupational distribution of labour force SECTOR 1950-51 1990-91 2010-11 (%) (%) (%) Primary sector 72 66 52 Secondary sector 11 14 14 Tertiary sector 17 20 34
C.SWOT ANALYSIS OF THE INDIAN ECONOMY STRENGTHS WEAKNESSES• Huge pool of labour force • Very high percentage of• High percentage of cultivable land workforce engaged in agriculture• Huge English speaking population • Around 1/4th of the population(availability of skilled manpower) living below poverty line• Extensive higher education system • Scarcity of resources due large population size( 3rd largest reservoir of engineers)• High growth rate of the economy • Inequality in the distribution of income• Rapid growth of IT & BPO sector • Low productivitybringing valuable foreign exchange • Poor infrastructural facilities ( IT & software superpower)• Abundance of natural resources • Corruption, malpractices & bureaucratic control.• Stable economy
SWOT Analysis contd. OPPORTUNITIES• Scope for entry of new firms in • Global economic recessionvarious sectors of business (LPG) • High fiscal deficit ( 4.7% of GDP)• Inflow of foreign capital is likely to • Growing import billincrease in different sectors. (LPG) • High of crude oil prices• Huge foreign exchange earning • High growth rate of populationprospects in IT & ITES sector • Lack of irrigation facility,• Investment in R & D agriculture still dependent on• Huge scope in the area of monsoon in many areasbiotechnology • Governmental intervention