The Economy of India is the Eleventh Largest Economy in the World by Nominal GDP

8/8/2019 The Economy of India is the Eleventh Largest Economy in the World by Nominal GDP

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The economy of India is the eleventh largest economy in the world by nominal GDP[2] and the fourth

largest by purchasing power parity (PPP).[10] Following strong economic reforms from the socialist

inspired economy of a post-independence Indian nation, the country began to develop a fast-paced

economic growth, as free market principles were initiated in 1990 for international competition and

foreign investment. India is an emerging economic power with a very large pool of human and natural

resources, and a growing large pool of skilled professionals. Economists predict that by 2020,[11] India

will be among the leading economies of the world.

History

India's economic history can be broadly divided into three eras, beginning with the pre-colonial period lasting up to the 18th century. The advent of British colonisation started the colonial period in the early 19th century, which ended with independence in 1947. The third periodstretches from independence in 1947 until now.

Independence to 1991

nIndia between 1947 andCompareIndia (orange) with South Korea (yellow). Both started from

about the same income level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as a percent of the American GDP per capita.

Income and consumption Main article: Income in India



Percentage of population living under the poverty line of $1 (PPP) a day, currently 356.35 rupeesa month in rural areas (around $7.4 a month).

Issues

[ edit ]Agriculture

Agriculture in India

Slow agricultural growth is a concern for policymakers as some two-thirds of India¶s peopledepend on rural employment for a living. Current agricultural practices are neither economicallynor environmentally sustainable and India's yields for many agricultural commodities are low.Poorly maintained irrigation systems and almost universal lack of good extension services are

among the factors responsible. Farmers' access to markets is hampered by poor roads,rudimentary market infrastructure, and excessive regulation.

± World Bank: "India Country Overview 2008"[150]

The low productivity in India is a result of the following factors:

y According to "India: Priorities for Agriculture and Rural Development" by World Bank, India's

large agricultural subsidies are hampering productivity-enhancing investment. Overregulation of

agriculture has increased costs, price risks and uncertainty. Government interventions in labor,

land, and credit markets are hurting the market. Infrastructure and services are inadequate.[151]

y Illiteracy, slow progress in implementing land reforms and inadequate or inefficient finance and

marketing services for farm produce.

y The average size of land holdings is very small (less than 20,000 m²) and is subject to

fragmentation, due to land ceiling acts and in some cases, family disputes. Such small holdings

are often over-manned, resulting in disguised unemployment and low productivity of labour.

y Adoption of modern agricultural practices and use of technology is inadequate, hampered by

ignorance of such practices, high costs and



Economic disparities

Slums next to high-rise commercial buildings in Kaloor, Kochi. Hundreds of people, mostlycomprising migrant labourers who come to the city seeking job prospects, reside in such shabbyareas.[183]

One of the critical problems facing India's economy is the sharp and growing regional variationsamong India's different states and territories in terms of per capita income, poverty, availabilityof infrastructure and socio-economic development.[184] Six low-income states - Bihar ,Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa and Uttar Pradesh - are home to more than onethird of India's population.[185]

Between 1999 and 2008, the annualized growth rates for Maharashtra (9%),[186]

Gujarat (8.8%),Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%),or Madhya Pradesh (3.5%).[187] However, In 2009-10, Bihar witnessed a growth of about 12.6%,and ended up becoming the 'fastest growing state' , followed by Gujarat with a growth of 11.3%.

Poverty rates in rural Orissa (43%) and rural Bihar (40%) are some of the worst in the world.

[180]

Challenges before Indian economy:

y Population explosion: This monster is eating up into the success of India. According to 2001 census of

India, population of India in 2001 was 1,028,610,328, growing at a rate of 2.11% approx. Such a vast

population puts lots of stress on economic infrastructure of the nation. Thus India has to control its

burgeoning population.

y Poverty: As per records of National Planning Commission, 36% of the Indian population was living Below

Poverty Line in 1993-94. Though this figure has decreased in recent times but some major steps are

needed to be taken to eliminate poverty from India.

y Unemployment: The increasing population is pressing hard on economic resources as well as job

opportunities. Indian government has started various schemes such as JawaharRozgarYojna, and Self

Employment Scheme for Educated Unemployed Youth (SEEUY). But these are proving to be a drop in an

ocean.

y Rural urban divide: It is said that India lies in villages, even today when there is lots of talk going about

migration to cities, 70% of the Indian population still lives in villages. There is a very stark difference in

pace of rural and urban growth. Unless there isn't a balanced development Indian economy cannot grow.



These challenges can be overcome by the sustained and planned economic reforms.

These include:

y Maintaining fiscal discipline

y

Orientation of public expenditure towards sectors in which India is faring badly such as health andeducation.

y Introduction of reforms in labour laws to generate more employment opportunities for the growing population

of India.

y Reorganization of agricultural sector, introduction of new technology, reducing agriculture's dependence on

monsoon by developing means of irrigation.

y Introduction of financial reforms including privatization of some public sector banks.

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The Economy of India is the Eleventh Largest Economy in the World by Nominal GDP