2.basic features of economy - copy - copy

8/11/2019 2.Basic Features of Economy - Copy - Copy

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Basic Features of

Indian Economy

By: Shikha Gupta


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Definition of UnderdevelopedcountriesAccording to *he +nited (ations

,An underdeveloped country is one "hich hasreal per capita income that is lo"er in relationto the real per capita income of the+-A$.anada$Australia and Western Europe

According to *odaro$ ,+nderdevelopedeconomy is that economy in "hich there are

lo" level of living

absolute poverty

lo" per capita income


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Basic Features OfUnderdeveloped Countries

/o" per capita income/o" level of living

igh )ne uality of )ncome

Widespread overty

opulation e3plosion

/o" level of productivity

/o" rate of capital formation

/ess development of uman .apital

rimitive *echni ues ofroduction *echnolo ical Back"ardness


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+ndeveloped countries%+D.5s'or lessdeveloped .ountries%/D.5-' are no" calledDeveloping Countries "hich is indicative

of the fact that these poor back"ardcountries are capable of developing and aremaking efforts to get rid of their poverty andstagnation

*hese developing countries are also kno"nby the name of the Third WorldCountries 6


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Indian Economy

The Indian economy can be analyzed from variousangles such as ;

The form of Economic Organization - Organizationalsetup of the Indian economy is a mixture of capitalism

and socialism ,commonly known as Mixed conomy Structure of the economy !"tructure wise ,Indiahas a dualistic character where the small ,butgrowing modern sector is coexisting with vast andsprawling traditional sector#

Stage of Growth and development- Indianconomy is a developing economy


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India :a developin economy

India ,which for long has been defined as anunderdeveloped country is now called adeveloping economy#

$ developing economy is characterized by amixture of features of an underdeveloped

stagnant economy and those of a steadily progressing economy#


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&er capita G'I at (arket &rices

)*+"", In US Dollars.ountries E3change Rate Basis urchasing o"er

arity Basis

-"it4erland 78$900 :2$:70

+-A 9!$820 9!$!20;AA( 99$


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3.High Inequality of Inco e! *he gap bet"een"ealth and poverty is e3ceedingly "ide in)ndia A handful of rich persons get a relatively

large share of the total income "hile the largemass of poor population gets a relatively smallportion of it

)ne ualities of income distribution are to be

observed both in the rural and urban sectorsof the economy

)ne ualities of income are to be seen in theform of une ual distribution of land in theagricultural sector and concentration of


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9 Widespread poverty >When internationalpoverty line "as calculated for ?2 per personper day $almost !0@ people in )ndia "ere living

belo" the poverty line in year 200:>08*he ne" )nternational poverty line is set at1 2: a day in 200: terms


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".High #ate of population $ro%th! )ndia hasthe second highest population and is in thestage of population e3plosion

)ndia5s opulation 1$2:! 9 million in 2012)ndia5s average annual gro"th%2001>11' 1 7percent

Density%people per s uare km'%200


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&.'o% 'evels of (roductivity! )n )ndia$productivity levels are very lo" mainly becauseof

/ess use of capital in the form of modernmachines and e uipments

/ess efficiency in the "ork force due to poorhealth and poverty

/o" Work culture due to lack of incentivesand discipline


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).'o% #ates of capital for ation >)n )ndia$rate of capital formation has not been steadyover the years it increased steadily during the

first fifteen years of planned development butlater it reduced due to

a' /o" rate of saving

b' -lo"er increase in private investment

c' )nade uate Ciscal measures

d' )neffective resource mobili4ation


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*. (oor +uality of Hu an Capital! )n )ndia$the seventh Cive year lan puts in print theimportance of human capital in economicgro"th ain problems of human .apitalformation in )ndia are

a' igh regional and gender ine uality

b' Brain drain or migration of highly skilledprofessionals

c' )nsufficient on>the ob training

d' igh poverty level


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,.Technological -ac %ardness!. *hetechni ues of production employed in most ofthe sectors of the underdeveloped economiesare obsolete or outdated

)n )ndia$ for e g agriculture is largely carriedon "ith the techni ues "hich are centuriesold oderni4ation in the industrial sector is

also very limited


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)ndia has lo" levels of living According tothe data sho"n by uman Development

Report 201#*otal population %2012' 1$2:! 9 million

*otal unemployment rate%both

&enders'2010 # 8 percentAdult literacy rate%ages 1: and older'%200:>2010' 82 !

/ife e3pectancy of birth %2012' 8: !year


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/0. (redo inance of 1griculture! )n )ndia$agriculture contributes 19 1 per cent to the&D %at constant 2009>0: prices' in 2011>12 )tprovides employment to around :! per cent ofthe total labour force %as per .ensus 2011'

)t means that :!@of labour forces that dependson agriculture is generating 19 1@ of &D

)n other "ords$ the remaining 92 percent oflabour force that is engaged in non>agriculturaloccupations is generating !: 8@of&D

)t sho"s )ndiaFs underdeveloped nature because


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Gro%th .Oriented features ofindian economy


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3.Increase in $ro%th rate! )ndia has achieveda significant increase in the gro"th rate of theeconomy since it began its development effortsin 1:1

11

12001 : @ and above

200! !@ to


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Structural Chan es

1 -ignificant changes in sectoral distribution ofdomestic product

2 )ncrease in social and economic overheads

# rogress in the banking and financial sector

9 &ro"th and diversification of )ndustry

: .hanges in employment structure

&. &ro"th and diversification of )ndustry

7 )ncrease in Agriculture roduction


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Increase in 1griculture (roduction 6 *heagricultural sector has sho"n a sufficientincrease in the gro"th of output over the yearsof economic planning

*he inde3 of agricultural production %"ith base1!2 100' "ent up from !: < in 171 to

18: 7 in 2000>01 thereafter$ it rose to 21: #in 2010>11


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$ro%th and diversification of Industry 6*he ma or achievement of planning has beendiversification and e3pansion of )ndia5sindustrial capacity

*he country is no" -elf Isufficient inconsumer goods and in basic industrial itemslike steel

)ndia can no" sustain gro"th of its industrieson the domestic production of capital goods


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*he End

2.basic features of economy - copy - copy

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