India’s Economic Challenges & Opportunities

With such a large population, the economic challenges in India are plenty. India has a mixed economy, where the primary source of income is agriculture. However, over the last few decades, there has been a significant shift in the market by the privatisation of state-owned enterprises opening doors to foreign direct investments. Still, there is a long way to go. 

Major Challenges to the Indian Economy

1. Since time immemorial, India’s high population has been a burden to the economy. This leads to food scarcity, less opportunity for education, and fewer employment opportunities. 
2. Depleting resources is also becoming a challenge to the Indian economy. Like most economies, India is dependent on natural resources like coal, iron, manganese, gold, etc., for industrial development and personal use. However, the rising population coupled with depleting resources has hampered the demand and supply curve to a great extent. 
3. The monetary and trade policies of other countries, like the U.S., China, and Russia, have also affected the Indian economy. For example, there was an observable fall in the Indian rupee value when the Federal Reserve began its quantitative easing program resulting in mild stagflation in 2013 in the US.
4. Climate conditions also hamper the growth of the country. Things like lack of rain leading to acute water shortage often slow down productivity in industries.
5. The changes in international relations between the countries globally also hamper the economy by forcing the investors to back off from the countries where there are chances of war. This often leads to considerable losses to the Indian economy.
6. Lesser advancements in technology also hamper the growth of the Indian economy. Additionally, new technology requires capital investment and a trained and skilled workforce, which are not readily available in quantities in India.
7. Inaccessible regions, primitive technologies, poorly skilled workers, and less availability of capital also lead to underutilisation of resources which could have helped solve the challenges of the Indian economy.
8. Lack of proper transportation, communication, banking, healthcare facilities, and electric supply also leads to the underutilisation of the country’s potential.
9. Unequal wealth distribution is also a significant challenge for the Indian economy. In India, about 1% of the population holds 58% of the country’s total wealth. Also, 57 billionaires make up the same wealth as 70% of the country.
10. The deficiency of capital and employment opportunities affects economic growth drastically. About half the labour force is engaged in agriculture, with the marginal product becoming negligible. The educated, unemployed workforce is also a significant challenge for the Indian economy. 

Economic growth opportunities available for India

1. The cost of living is low in India. This contributes to the availability of cheap labour for the industry as well as an opportunity to provide a better lifestyle to people with a significantly low investment.
2. The population of India is also a boon for the country. As the number of educated people increases with time in India, it provides a more skilled and specialised workforce pool.
3. The desire of living a better urban life by leaving rural areas and moving to cities is also helping in the growth of the Indian economy. As more and more educated youth are shifting toward cities, the trend of employment is also shifting from agriculture to the industrial.
4. Various industries like Bollywood, BPO, and LPO also assist the Indian economy by providing relatively cheaper services than rival foreign industries. For example, the Hindi film industry contributes about $4.5 billion to the Indian GDP, with a film cost of $1.5 million on an average compared to Hollywood, which has an average cost of $47.7 million per film.
5. India’s foreign relations, like trade relations with China and military partnerships with countries like the U.S., are also becoming an asset to the global recognition and faster growth of the Indian economy.
6. Shifting to renewable energy sources like solar and hydro can significantly support the Indian economy in times of depleting non-renewable resources.
7. The development in technology will help solve most of the significant challenges in the Indian economy.
8. The government’s efforts and investments in education and healthcare can be crucial in shifting the unskilled labour force to the skilled workforce in India. 

Conclusion

The Indian economy is a two-sided coin where a challenge in one sector is an opportunity for another. Solving a challenge will raise opportunities in a sector while giving challenges to another. For example, removing the infrastructural challenge will lead to employment generation whilst increasing the environmental challenge giving a chance to the green industry to grow. Additionally, turning the population burden into a population asset must be the target for the Indian economy. This can help the country grow significantly.