Indian Economy

SM5156
 Introduction
Indian economy is a developing economy which is mainly depended on
Agriculture.
The Indian Economy is the seventh-largest economy in the world measured by
nominal GDP and the third-largest by purchasing power parity (PPP). (Based
on June, 2016)

The country is classified as a newly industrialised country, one of the G-20

major economies, a member of BRICS and a developing economy with an
average growth rate of approximately 7% over the last two decades.

Maharashtra is the wealthiest Indian state and has an annual GDP of US$220
billion, nearly equal to that of Portugal, and accounts for 12% of the Indian
GDP followed by the states of Tamil Nadu (US$140 billion) and Uttar
Pradesh(US$130 billion).

India's economy became the world's fastest growing major economy from the
last quarter of 2014, replacing the People's Republic of China
 Characteristics of Indian Economy
Excessive dependence of agriculture and primary producing.
Open Economy
Globalization, Capitalization and Privatization
Presence of FDI
High rate of population growth
Low per capita income
Existence of chronic unemployment and under-employment
Inequality in the distribution of wealth
Under-utilisation of natural resources
Low level of living
Poor quality of human capital
Demographic characteristics (Young Country)
 History of Indian Economy
The history of Indian economy can be broadly divided into three Phase

A-Pre-Colonial. B-Colonial C-Post Colonial

Pre- Colonial :- The economy history of India since INDUS VALLEY civilization to 1700 AD
can be categorised under this phase.
During this Phase Indian economy was very will developed. It has very good trade relation with
other parts of world.
Before the advent of the East India Company each village in India had sufficient entity and was
economically independent as all the economies needs were fulfilled with in the village.
Colonial:- The arrival of East India Company in India caused a huge strain to the Indian
economy and there was a two way depletion of resources. The British would buy raw materials
from India at cheaper rates and finished foods were sold higher than normal price in Indian
market.
Post Colonial Indian Economy:-
After India got independence from colonial rule in 1947, the process of rebuilding started
various policies and schemes were formulated. The first five years plan came in to
implementation in 1952. The 5th year plan was started by Indian government, focused on the
needs of the Indian economy.
 Sectors of the Indian Economy
Primary Sector:-The economic activity depends
mainly on exploitation of natural resources.
Agriculture and related activities, forestry and fishing,
mining, and extraction of oil and gas.
Secondary Sector:-
It involves manufacturing and the industrial
production of physical goods .
Tertiary Sector:- It involves providing intangible
goods like services.
Financial services, management consultancy,
telephony and IT are good examples of service sector.
Key Factors Effecting on Indian Economy

Human Resource
Natural Resources
Capital flows and Stock Exchange Market
Capital Formation:-
It involves land, building, machinery, power, transportation,
and medium of communication. Producing and acquiring
all these manmade products is termed as capital formation.
Technological Development
Social and Political Factors
Demographics and poverty rates
Global currency trends
 Economic Growth
In simplest terms, economic growth refers to an increase in aggregate

productivity.

It occurs when a society acquires new resources or when it learns to produce

more by using existing resources.

Economic growth is an increase in the capacity of an economy to produce

goods and services, compared from one period of time to another. It can be

measured in nominal or real terms, the latter of which is adjusted for inflation.

Traditionally, aggregate economic growth is measured in terms of gross national

product (GNP) or gross domestic product (GDP), although alternative metrics

are sometimes used.

 Economic Growth Rate
An economic growth rate is a measure of economic
growth from one period to another in percentage terms. This
measure does not adjust for inflation, it is expressed in nominal
terms. In practice, it is a measure of the rate of change that a
nation's gross domestic product (GDP) goes through from one
year to another, but gross national product (GNP) can also be
used if a nation's economy depends heavily on foreign earnings.

Economic Growth rate can be measured by:

 Problems faced in Indian Economy
Lower per capita income
Inflation
Poor educational standard
Poor Infrastructure.
Balance of payment deterioration
High level of debt
Large budget deficit
Rigid labour laws
Heavy Population Pressure
Pre-dominance of Agriculture
Poor Technology
Less Human Development Index (HDI)
Industries In India
 Industries In India-Continues..
I. On the Basis of Strength of Labour
Large Scale Industry (Cotton, jute textile industries)
Medium Scale Industries (Cycle industry, radio and television industries)
Small Scale Industries

II. On the Basis of Raw-Material and Finished Goods

Heavy Industries
Light Industries

III. On the basis of Ownership

Private Sector Industries (eg-Bajaj Auto or TISCO)
Public Sector Industries (eg-Bharat Heavy Electricals Ltd)
Joint Sector Industries (Oil India Ltd)
Co-operative Sector Industries
 Industries In India-Continues..
IV. On the Basis of Source of Raw Material
Agro Based Industries
Mineral Based Industries
Pastoral-Based Industries
Forest Based Industries

V. Miscellaneous Industries
Village Industries
Cottage Industries
Consumer Goods Industries

VI. Ancillary Industries

(Eg-trucks, buses, railway engines, tractors, etc. are called ancillary
industries)
End