Problems of Indian Economy Click to edit Master subtitle style

BY Saurabh Ameer Suman

The Indian Economy

India has a very mixed economy, ranging very old-fashioned agricultural techniques to the state-of-the-art Information Technology Industry that has transformed Bangalore into the IT capital of Asia. Recently India has enjoyed massive economic growth, people are flocking to invest in India and our people are growing steadily richer. This huge accumulation of wealth has led to the widespread use of the popular slogan India is Shining! Congratulations should go to this man: Manmohan Singh who as Finance Minister and now as Prime Minister is orchestrating the massive liberalization that has led to Indias economic boom

Bet You Didnt Know

India is one of only three countries that makes supercomputers (the US and Japan are the other two). India is one of six countries that launches satellites. The Bombay stock exchange lists more than 6,000 companies. Only the NYSE has more. Eight Indian companies are listed on the NYSE; three on the NASDAQ. By volume of pills produced, the Indian pharmaceutical industry is the world's second largest after China. India has the second largest community of software developers, after the U.S. India has the second largest network of paved highways, after the U.S. India is the world's largest producer of milk, and among the top five producers of sugar, cotton, tea, coffee, spices, rubber, silk, and fish. 100 of the Fortune 500 companies have R&D facilities in India.

Two million people of Indian origin live in the U.S. Indian-born Americans are among the most affluent and best educated of the recent immigrant groups in the U.S. Thirty percent of the R&D researchers in American pharmaceutical companies are Indian Americans. Nearly 49% of the high-tech startups in silicon Valley and Washington, D.C. are owned by Indians or Indian-Americans. There are over 700 companies in Silicon Valley owned by IndianAmericans. India sends more students to U.S. colleges than any country in the world. In 2004-2005, over 80,000 Indian students entered the U.S. China sent only 65,000 students during the same time. In a case decided by the U.S. Supreme Court, an IndianAmerican woman scientist, Dr. Ananda Chakrabaty, won the argument that persons may be granted patents for useful manufacture of living organisms. She defeated the U.S. Patent Office, that argued that living things may not be patented, thus establishing the legal foundation for the biotech industry, (Diamond vs. Chakrabaty, 1980). Dr. Chakrabaty invented a microbe that eats oil spills.

Some Encouraging Statistics..

India is the second fastest growing major economy with a 9.2% increase in GDP per year India is already the third largest economy in the world at PPP India has seen a huge amount of foreign direct investment in the country, totaling 67.72 billion dollars and is said to be one of the preferred options for FDI Indias poverty level is decreasing by 10% annually Indian companies have gone on a buying rampage, with Tata Steel acquiring Corus, Mittal buying Arcelor . Tata bought Jaguar and Ford acquired Land Rover. Every year Indias middle class is increased by 40,000,000 new members which shows that the wealth is truly entering society The Bombay Stock Exchanges value has been consistently rising, currently worth 1.61 trillion dollars, the largest in South East Asia. Unemployment has dropped by 2% annually, and illiteracy and mortality rates have also been falling, indicating that India is not only growing but developing too.

Indias growth has been fuelled mostly by the Services Sector. India has comparatively little industry, the secondary sector employs only 12% of the workforce while services employ 28% and the primary sector 60%. Most agree that Indias growth has almost entirely been achieved by the private sector. This has been most noticeable in the IT industry, which has a value of 50 billion USD, and is growing at almost 30%. Many foreign firms conduct Business Process Outsourcing (BPO) which includes call centres and business solutions programs in India, largely thanks to Indias massive English-speaking workforce.

Some Corporate Achievements in India

The Tata Nano, the worlds cheapest production car The HCL laptop, the cheapest production laptop

The Infosys IT training campus the largest in the world Kingfisher Airways, voted the best airline of south-east Asia

Major Problems of Indian Economy

Problem of Poverty Problem of Population Problem of Unemployment Regional Imbalances Inequalities of Income and Wealth in India Inflation

Problem of Poverty

Fruits of the Indian Economy is enjoyed by 20%-30% of the population. 50% of the people are below the poverty line. During the recent recession India could withstand the pressure of the economy. Still Rich people are getting richer whereas poor people are getting poorer and poorer day by day.

Poverty and Inequality

345 Million Indians live under the poverty line. This means that one in three Indians live on less than twenty rupees per day. 7.2% of all Indians are unemployed India comes in at 94th in terms of employment. Using the GINI coefficient which is the only reliable method of calculating inequality India scores 0.368 were 0 is perfect equality and 1 is perfect inequality, putting India in the bottom 50 of all ranked nations in the world.

Problem of Population

Though economy is growing at a steady rate but because of the population explosion Indian economy is not able to cater to all the person, so the standard of living of the 20%-30% are very good.

Problem of Unemployment

India's educated youths are facing some serious issues like educated unemployment and underemployment. Bad education is hurting the economy. There is not much employment generation, about 1100 crore unemployed person are there in India.

Regional Imbalances

The difference in growth rate between the forward and backward states was 0.3%(5.2% & 4.9%) during 1980-1981 to 1990-91 respectively, but grown to 3.3%(6.3% & 3.0%) during 1990-91 to 1997 -98 respectively. Per capita income in India varies drastically. As 2010, New Delhi had a per capita income of $3,020 whereas Bihars per capita income was at $445.

Inflation

The inflation rate in India was last reported at 10.1 percent in September of 2011.

From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976.

Conclusion

Despite of the fact that Indian economy is not a developed economy rather it is developing to be globally accepted, it cannot be said that Indian economy has gone into severe problems. Various factors drives the economic growth of a country. India being a democratic country and culturally diversified, vested with several natural resources, the country is expected to grow in and every parameter which will lead