PROBLEM FACED BY INDIAN

ECONOMY
AND
STRENTH OF INDIAN ECONOMY
PROBLEM FACED BY INDIAN
ECONOMY
 Since 1991 The Indian Economy Has pursued Free
Market LIBERALISATION Greater openness in trade
And Increase Investment In infrastructure This helped
The Indian Economy To Achieve a Rapid Rate Of
Economic Growth And Economic Development
However The Economic still face various Problem And
Challenges
GDP PER CAPITA (1990 GEARY –KHAMIS DOLLER)
DATA RANGE 1950-2003
Following problem faced by
INDIAN ECONOMY
 Inflation :-fuelled by rising wages property price
inflation in INDIA is an increasing problem inflation
is currently between 8-10% this inflation has been a
problem despite periods of economic slowdown
 Poor educational standards :-In INDIA There is still
high level of illiteracy amongst the population it is
worse in rural areas and amongst women over 50% of
INDIAN women are illiterate
 Large budget deficit :-INDIA has one of the largest
budget deficit in the developing world excluding
subsidies its amount to nearly 8% of GDP it still allows
little scope for increasing investment in public services
 Right labor laws:-as an example firms employing more
than 100 people cannot fire worker without
government permission the effect of this is discourage
firms from expanding to over 100 people it also
discourages foreign investment
 Inefficient agriculture :- agriculture produce 17.4% of
economic output but over 51% of the work force are
employed in are employed in agriculture this is the
most inefficient sector of the economy and reform has
proved slow
 Slowdown in growth :-2013/14 has been slowdown in
the rate of economic growth to 4 to 5% real GDP per
capita growth is even lower this is cause for concern as
INDIA need a high growth rate to see rising living
standards lower unemployment and encouraging
investment
Strengths of INDIAN Economy
 After several decades of sluggish growth the Indian
economy is now amongst the faster growing economy
in the world economic growth is currently 8-9%
second only to china
Despite several
problems facing
INDIAN
economy many
economist point
to
Following strengths of INDIAN
ECONOMY
 Demographics of INDIA are FAVOURABLE :-INDIA
still has a positive birth rate meaning that the size of
the workforce will continue to grow for the foreseeable
future
 There is much scope for increase in efficiency:-The
infrastructure of INDIA is so bad in places that even
moderate improvement could lead to significant
improvement in the productive capacity of economy
 Positive growth forecasts :-a recent study from
Goldman Sachs FORCAST that INDIA Could growth
at a sustainable rate of 8%growth untill2020
 Comparative advantage in labor intensive industries :-
INDIA will also benefit from the LIBERALISATION of
free trade in recent year
 Diversification of INDIAN economy :-less dependent
on agriculture service sector offers chance for higher
economic growth