Overview of Economic Development in India

The economic development in India pursued socialist-inspired politicians for the majority of its independent history, comprising state-ownership of numerous sectors; India’s per capita income boosted at just around 1% annualized rate in the three decades following its independence. However, since the mid-1980s, India has gradually opened up its markets via economic liberalization. After more elementary reforms since 1991 and their restitution in the 2000s, India has developed towards a free market economy.

In the 2000s, India’s growth accomplished 7.5%, which will double the average income in a decade. IMF proclaims that if India pushed more elementary market reforms, it could prolong the rate and even accomplish the government’s 2011 target of 10%.

The economic expansion has been obliged by the growth of the services that have constantly been growing quicker than other sectors. It is disputed that the outline of Indian development has been an explicit one. The country might be able to hop the intermediate industrialization-led stage in the revolution of its economic arrangement. Serious apprehensions have been lifted about the jobless character of the economic growth.

Positive macroeconomic performance has been an essential but not adequate condition for the critical improvement in human development pointers. Though the poverty rate diminished after the economic reforms of 1991, the advance in human development has been below satisfactory. For example, child malnutrition has prolonged to endure (46% in 2005–6).

Agriculture

Agriculture is one of the leading and significant zones of the Indian economy. It is the supplier of foodstuff and raw materials in the nation. On the occasion of independence, over 70 per cent of India’s population relied on agriculture to earn a living. Therefore, the agriculture division in the national product/income was as high as about 56.6 per cent in 1950-51. Nevertheless, with the growth of industries and the service sector throughout the plan periods, the percentage of the population relying on agriculture as well as the division of agriculture in the national product has dropped.

India ranks second globally in farm output. Agriculture and associated sectors like forestry, logging, and fishing comprised 18.6% of the GDP in 2005, employed 60% of the entire workforce and regardless of a stable decline of its share in the GDP, is still the primary economic sector and plays a vital role in the entire socio-economic expansion of India. Yields per unit area of all crops have developed since 1950 because of the particular stress placed on agriculture in the five-year plans and stable improvements in irrigation, technology, application of contemporary agricultural practices, and stipulation of agricultural credit and subsidies since the green revolution.

Industrial output

Industry, or the secondary sector of the economy, is another vital area of economic development of Indian activity. Post-independence, the government of India accentuated the role of industrialization in the country’s economic growth in the long run. Consequently, the blueprint for industrial growth was made via the Industrial Policy Resolution (IPR) in 1956. The 1956 policy highlighted the institution of heavy industries, with the public sector taking prominence in this area. Implementation of heavy or basic industries strategy was acceptable because it will decrease the load on agriculture; facilitate growth in the production of consumer goods industries plus small industries that are supportive for employment generation and attaining self-reliance.

India ranks tenth in the world in factory production. The manufacturing sector, additionally to mining, quarrying, electricity, and gas jointly comprise 27.6% of the GDP and utilize 17% of the total workforce. Economic reforms commenced after 1991 brought foreign competition, resulting in the privatization of certain public sector industries, initiated sectors previously reserved for the public sector, and led to a development in the manufacturing of fast-moving consumer goods. In recent years, Indian cities have persisted in liberalizing, but extreme and heavy business regulations continue to be troublesome in some cities, like Kochi and Kolkata.

Services

India ranks fifteenth in services output. The service industry utilizes English-speaking Indian workers on the supply and demand sides, which has augmented demand from foreign consumers curious about India’s service exports or those looking to subcontract their operations. Regardless of contributing considerably to its balance of payments, India’s IT industry accounts for just about 1% of the real GDP or 1/50th of the complete services. 

Characteristics of the Indian Economy 

1. Low per capita income 
2. Serious population pressure 
3. Reliance of population on agriculture
4. Poverty and Inequality income allocation 
5. Higher level of capital formation, which is an optimistic feature 
6. Planned economy

Conclusion

The occurrence of COVID-19 has been an enormous distress to economic activity in India for at least 60 years. The present predicament will aggravate pre-existing vulnerabilities, comprising a lack of fiscal space and a significant level of non-performing loans, which could hinder the near-term revival’s tempo. Yet, India’s economic outlook persists to be sustained by a range of positive structural factors, comprising a growing working-age population and outlooks for unrelenting urbanization.