Characteristics of the Indian Economy

India is the country with the second-largest population on the earth, with about 1.4 billion residents. Progress-wise, India is a developing country. The economic development of India corresponds to that of the developing nations. Most of the Indian economy depends on agriculture and agriculture-related activities.

The Indian economy is characterised by slow development, lower income per capita, and a diminishing GDP. The impact of covid 19 on the Indian economy led to further degradation of the GDP. Let’s study the characteristics of the Indian economy along with various sectors and the impact of Covid 19 on the Economy.

The Indian Economy

Since it achieved independence in 1947, India has been emerging as a developing country. Due to its large population, which is the second-largest in the world, the development rate has been slow. The population keeps increasing exponentially. However, employment opportunities are not emerging at the same pace. Hence, even though many human resources are available for work, due to no employment opportunities, most of the population of India stays below the poverty line. With the persistent war-like situations with its neighbouring country Pakistan, India has to pour a considerable amount of its budget into defence.

The back-to-back waves of the covid 19 pandemic have impacted the economy inversely. A lot of money had to be put into a free vaccination campaign, and due to lockdown, the generation of new income had been quite difficult. All of this is reflected in the various sectors of the Indian economy.

Let us take a look at the various characteristics of the Indian economy.

Characteristics of the Indian Economy 

• Low per Capita real income: 

The real income or revenue of any country means the purchasing power or the buying force of the entire country as one unit in a given fiscal year. And the per capita real income is the purchasing power of any individual in the country on average for the given country in the given fiscal year. The nations which are developing tend to have lower per capita real income than the developed nations. The Indian economy is also characterised by low per capita real income.

• Higher population growth rate:

The population of India is currently second highest in the whole world after China. India’s population is around 1.3 billion. The large population means the available resources would have to be shared among a large number of people, and hence each person will have fewer resources.

The growth rate of the population is ever increasing. Hence, the available employment opportunities are not enough for the entire population. This means a great portion of the population is left unemployed, and that’s why a lot of the Indian population is below the poverty line.

This also results in low per capita income. Hence, the increasing growth rate of the population has an adverse effect on the Indian population. 

• Dependency on the primary sector

When new job opportunities are not available to the people in developing countries like India, people have to turn to primary sectors for income. These sectors include the occupations that people have been doing for centuries like agriculture, cattle breeding, etc. 

These sectors do not earn them as much money as other sectors in developed countries. Hence, the Indian economy is weakened due to its dependency on the primary sectors.

Impact of Covid 19 on the Indian economy

Along with the loss of life that the covid pandemic has caused all over the world, because of the covid-19 economy of various nations has also taken a great hit. Almost all sectors of the Indian economy have experienced the adverse impact of covid -19. According to the ministry of Statics in India, in the fiscal year 2020, the GDP or the Gross Domestic Product of India went down to 3.1 %.

In the fiscal year of 2021, during the second quarter, the largest GDP contraction of about 24% shook the Indian economy. Major Indian industries like the Ultratech cement, Tata motors, Aditya Birla group either significantly reduced their operations or shut down temporarily.

A lot of small scale industries too had to be shut down because of the nationwide lockdown and curfew. This impacted the various sectors of the Indian economy greatly.

Along with all this, the government had to supply free vaccinations to everyone in the country in two rounds. All this money came from the government’s budget. So, the income of the government had significantly lowered, but the government had to take on such excess expenditures.

The entertainment industries like the movie theatre, tourism, etc., had to be completely shut down, and no revenue was generated from them—all this the Indian economy to a great extent.

Such are the characteristics of the Indian economy and the impact of covid 19 upon it.

Conclusion

India is among the developing countries. The economy of developing countries mostly depends on primary sectors, which are composed of activities like agriculture, cattle breeding, fishing, etc. The characteristics of the Indian economy include low per capita real income rate, higher rate of population growth, and dependency on the primary sector.

The covid 19 had impacted the Indian economy adversely. The covid pandemic led to the shutting down of industries and subsequent unemployment. Due to this, the Indian economy faces the greatest GDP contraction of about -24% during the fiscal year of 2021 during the second quarter.