1 7.0 Objectives
17.2 Features of the Indian Economy
17.3 Growth and Development
1 7.4 Mixed Economy
1 7.5 Demographic Transition
1 7.6 Sectoral Composition of GDP
1 7.7 Employment Structure
1 7.8 Inter-Governmental Fiscal Relations
17.9 Let Us Sum Up
17.10 Key Words
1 7.1 1 Answers to Check Your Progress Exercises
After going through this unit, you will be able to:
identify the important features of the Indian economy;
distinguish between economic growth and economic development; explain the pattern of demographic transition in India;
explain the sectoral composition of the Indian economy; and
explain the pattern of employment in India.
Let us begin with the word 'economy'. It denotes the operations and management of the economic system - the activities related to production of goads and services, consumption, investment, exchange of g d and services within the geogmphical territory, and exports and imports with rest of the world. You may have observed that production of goods and services requires inputs such as labour, capital (machineries, buildings, etc.) and raw materials. The inputs are available in limited quantity, i.e., there is a shortage of inputs. When these inputs are used in the production process, they need to be paid some reward. For example, if you want to employ a unit of labour you have to pay some wage to himher. Similarly, building can be hired by paying some rent or money can be borrowed by paying some interest. Ultimately utilization of inputs involves some costs. Thus the objective before the economy is to utilize the scarce resources efficiently so that production of goods and services is maximized and cost is minimized.
Economic Development Now let us try to explain the structure of the Indian economy. The word structure, as you know, implies the way in which something is organised or put together. Thus we should look into the way the Indian economy is organised. AmrdinglyY we will find out the major segments or sectors of the Indian economy and the manner in which'these sectors interact with one another. In order to keep our discussion brief we will focus on the developments in the Indian economy dukg the post-independence period, particularly the period since five-year plans started in India. To begin with, we find out the important features of the Indian economy. 17.2 FEATURES OF THE INDLAN ECONOMY
At the time of Independence the Indian economy was stagnant and highly underdeveloped. Agriculture was the backbone of the economy but agricultural activities were undertaken through obsolete technology. Industrial sector c o n t r i i very little to gross domestic product (GDP). In order to give a direction to the economy the government initiated economic panning in the form of Five Year Plans in. 195 1. Over the years the economy has witnessed increase in GDP, the composition qf GDP has changed, standard of living of people has improved, and there has been ypgradation in level of technology. The important features of the Indian economy are as follows :
1) The Indian economy is a developing economy. It has not yet reached the level of economic development seen in America and Europe. -
2) The 1ndid economy is a mixed economy in the sense that both private sector and public sector coexist and participate in the production process. 3) It is c-zed by high population density and population growth. 4) About one-third of the population live below poverty line. 'Vicious cycle of poverty' operates in many sectors of the economy.
5) There is high level of unemployment and underanployment In addition, there is 'disguised unemployment' in the agricultural sector.
6) The level of technology used in production process is low in many sectors. Modern technology has not been adopted in all sectors ofthe economy. 7) ~ h aise a shortage ofphysical and economic inhstmcture....