According to nominal GDP India is the world’s sixth-largest economy. In terms of PPP (purchasing power parity), it is the third-largest. The Indian economy shows the country’s economic development. India has a mixed economy, as the private sector coexists with the public sector. In 1994, India was in the fifth position on the world’s largest economy list and in 2020, the fourth.

Features of the Indian economy

• High population: The comparison of the Indian population and its available resources shows that India is an overpopulated country, which is a major cause for India lagging in economic development.
• Low per capita income – As per the measures of the World Bank the nations that have a per capita income GNI (Gross National Income) of less than $1,026.
• GDP:-  gross domestic product, in a country the value which was added to the goods and services is measured by the GDP.
• Mixed economy: India has a mixed economy, as the private sector coexists with the public sector.

• Mostly dependent on agriculture: The agriculture sector contributes less than one-fifth of national income to our country’s economy.

Demerits of Indian economy

• The economy should take steps to provide education, as education helps in productivity and also helps to maintain high economic growth. Education also provides an improvement in groundwork, on which most of the economy’s social well-being depends. Education also provides standards or classes to people and increases creativity levels. Education also boosts earnings, which helps our economy to become more stable.

• As the population increases day by day, unemployment rises as well. And due to population growth, there has been a huge increase in many products’ prices. And recently, the main problem faced by Indians is the price rise. When the price rises it is called inflation, which directly impacts the middle class or poor people when the products are necessary goods.
• When the production rate increases, then inflation occurs, or we can say it leads to price rise. The leading cause of price rise is a huge gap between demand and supply. When anything or any product is in demand, then its price rises immediately. To control the price rise market there are some factors such as maximum price legislation, price control-cum-rationing, or maintaining stability.

Top five challenges of the Indian economy

As the economy changes every year, many problems and challenges arise. When our country got independence, we faced poverty which directly affected our economy. As agricultural productivity became low, industries did not have the modern tools and technologies or investments that we have now. One of the top challenges of the Indian economy is to provide education. The Indian economy faced many problems, issues such as – massive unemployment, the predominance of agriculture, etc. The top five challenges of the Indian economy are:- 

Low level of national income and per capita income

National income and per capita income show the economic growth of a country. The economic growth rate is directly proportional to the level of national income, which means if there is an increase in the level of national income, then the economic growth rate also increases. If we compare the per capita income of India with other countries’ per capita income, the result will be that India is in a lower position in the world.

Vast inequalities in wealth and income

In  India, inequality increases with every passing year. And the main reason behind this inequality is mass poverty. From 1972- to 1973, 50% of the total population suffered from poverty, and after some time, when the economy progressed, this 50% reduced to 36% in 1993- 1994. But still, the Indian economy struggles in the violent cycle of poverty. 

The predominance of agriculture

The Indian economy is primarily dependent on agriculture, as India is a developed country. The predominance of agriculture shows how the Indian economy is dependent on agriculture. From 1950-to 1951, 55% of GDP was given by the agriculture sector. And in 2007- 2008 it dropped from 55% to 19.4%. The agriculture sector contributes less than one-fifth of national income to our country’s economy. That’s why agriculture has a predominant place in India.

Tremendous population pressure

 As we know, India is the second-most populous country after China. According to recent data, the population was 1110 million in 2011. Now the unemployment rate of India is high and as the population increases day by day the employment rate decreases.

Massive unemployment

As the population increases, employment decreases, from 1971-to 1999, the unemployment rate increased by 1.8%. Nowadays, people experienced only “jobless growth” in India. We can say that half of the total population was linked with agriculture and due to this many products were neglected by agricultural labourers. 

Conclusion

In the world’s largest economy list, India is in fourth place in terms of nominal GDP. And according to PPP (purchasing power parity), India is in third place. India has the fastest developing economy compared to other countries. India is a developing country that has a high GDP growth rate. The main two tasks included in a good economy are growth and development. Where growth stands for quantitative and development for qualitative. Both have a major role in the Indian economy, as development is used to upgrade the class of people’s lives. And growth is only used to expand income, which is important for the future. To reach that expected economic growth, India has to face many challenges and problems such as a low level of national income or per capita income, the predominance of agriculture, Massive unemployment, population pressure, inequality, etc.