India as a developing economy
Nature
Of Indian
Economy Pearson
India has shown remarkable improvements in many areas over the decades and is now on the road to
development. The following facts highlight that India is, in fact, a developing economy
Rise in national income: India’s national income i.e., Net National Product (NNP) has increased by
over 17 times over a period of 60 years. It was around ₹ 2,55,000 crore in 195051,
which rose to
about ₹ 45,72,000 crore in 201112.
On an average, the NNP has increased at a rate of little less
than 5% p.a. Thus, we see that India is indeed growing, though not at a fast pace
Rise in per capita income: The per capita income which was ₹ 7,114 in 195051
increased to about
₹ 38,037 in 201112
(See chart 1). Thus, it has increased by more than 4 times in a span of about 60
years
Occupational distribution of population: Occupational structure refers to the distribution of work
force in different occupations of the country. Occupations are mainly classified into:
Primary sector: It includes agriculture and its allied activities such as animal husbandry, forestry,
poultry farming etc.
Secondary sector: It includes all types of manufacturing and construction activities
Tertiary sector: It includes services such as trade, transport, communication, banking, etc.
It has been found that there is a shift of labour force from the primary to the secondary and tertiary
sectors. This happens because of the following reasons:
As an economy grows, income increases, but demand for agricultural goods does not increase
proportionately and demand for goods and services provided by secondary and tertiary sectors
increases
Secondly, better techniques of production are available to the agricultural sector which results in the
replacement of man by machines
6/7/2016 Indiaas
a developing economy Nature
of Indian Economy Pearson
Occupational structure in India: During 1951, the number of people occupied in the primary,
secondary and tertiary sectors were 72%, 10.6% and 17.3% of the working population respectively.
According to the Economic Survey 200910,
around 53.2% of the population was engaged in primary
sector and 21.5% and 5.3% of the population is engaged in the secondary and tertiary sectors during
200910.
Thus, over a period of five and a half decades, there has been a shift in the work force from
the primary to the secondary and tertiary sectors showing significant development in the economy.
Changes in sectoral distribution of domestic product: The share of agriculture and allied
activities has fallen and shares of secondary and tertiary sectors have improved in the GDP. The
share of primary, secondary and tertiary sectors in the GDP during 20112012
are 14.1%, 30.2% and
55.7% respectively. The corresponding figures for 195051
had been 53.1%, 16.6% and 30.3% of the
GDP
Growing capital base of the economy: At the time of independence, we had very few basic and
capital goods industries. But after independence, priority was given to the establishment of basic
industries. Thus, a large number of industries such as iron and steel, heavy chemicals, heavy
engineering, capital equipment etc. have been established
Improvements in social overhead capital: Social overhead capital includes transport, irrigation
facilities, energy, education system, health and medical facilities. Since independence, these facilities
have undergone a sea change in the following manner.
Indian railways is Asia’s Largest and world’s 4 largest network under a single management
Diesel and electrical locomotives have replaced steam engines
Indian road network has become second largest networks in the world aggregating to 4.69 milion
kilometres
In 201112,
the installed electricity generating capacity was 2,36,000 MW against 2,300 MW in
195051.
While our industrial set up for basic and capital goods were highly primitive at the time of
independence, it has substantially improved since then
Irrigation facilities have increased, thus raising the land under irrigation from 22.6 million hectares
in 195051
to 88.4 million hectares in 200809
(See chart 2)
The number of higher secondary educational institutions has increased by 23 times. The literacy
rate has increased from 18.33% in 1951 to 74.4% in 201112
In the field of medicine and health, the number of doctors has increased from 61,800 in 1951 to
around 9.22 lakh in 2011. The bedpopulation
ratio is now 1.03 per 1,000 population as against
0.32 per 1,000 in 195051
Development of the banking and financial sector: RBI was nationalised in 1949 and later, in 1969
and 1980, many other banks were nationalised.
Thus, it can be inferred that India is marching strongly on its road to development and will be a strong
economic force in the near future. As a result of this, banks now cater to the requirements of people
from all corners of the country. Agricultural sector, small scale industries and other sectors enjoy the
facilities rendered by these banks which provide funds on a priority basis to them at concessional rates
of interest.
Nature
Of Indian
Economy Pearson
India has shown remarkable improvements in many areas over the decades and is now on the road to
development. The following facts highlight that India is, in fact, a developing economy
Rise in national income: India’s national income i.e., Net National Product (NNP) has increased by
over 17 times over a period of 60 years. It was around ₹ 2,55,000 crore in 195051,
which rose to
about ₹ 45,72,000 crore in 201112.
On an average, the NNP has increased at a rate of little less
than 5% p.a. Thus, we see that India is indeed growing, though not at a fast pace
Rise in per capita income: The per capita income which was ₹ 7,114 in 195051
increased to about
₹ 38,037 in 201112
(See chart 1). Thus, it has increased by more than 4 times in a span of about 60
years
Occupational distribution of population: Occupational structure refers to the distribution of work
force in different occupations of the country. Occupations are mainly classified into:
Primary sector: It includes agriculture and its allied activities such as animal husbandry, forestry,
poultry farming etc.
Secondary sector: It includes all types of manufacturing and construction activities
Tertiary sector: It includes services such as trade, transport, communication, banking, etc.
It has been found that there is a shift of labour force from the primary to the secondary and tertiary
sectors. This happens because of the following reasons:
As an economy grows, income increases, but demand for agricultural goods does not increase
proportionately and demand for goods and services provided by secondary and tertiary sectors
increases
Secondly, better techniques of production are available to the agricultural sector which results in the
replacement of man by machines
6/7/2016 Indiaas
a developing economy Nature
of Indian Economy Pearson
Occupational structure in India: During 1951, the number of people occupied in the primary,
secondary and tertiary sectors were 72%, 10.6% and 17.3% of the working population respectively.
According to the Economic Survey 200910,
around 53.2% of the population was engaged in primary
sector and 21.5% and 5.3% of the population is engaged in the secondary and tertiary sectors during
200910.
Thus, over a period of five and a half decades, there has been a shift in the work force from
the primary to the secondary and tertiary sectors showing significant development in the economy.
Changes in sectoral distribution of domestic product: The share of agriculture and allied
activities has fallen and shares of secondary and tertiary sectors have improved in the GDP. The
share of primary, secondary and tertiary sectors in the GDP during 20112012
are 14.1%, 30.2% and
55.7% respectively. The corresponding figures for 195051
had been 53.1%, 16.6% and 30.3% of the
GDP
Growing capital base of the economy: At the time of independence, we had very few basic and
capital goods industries. But after independence, priority was given to the establishment of basic
industries. Thus, a large number of industries such as iron and steel, heavy chemicals, heavy
engineering, capital equipment etc. have been established
Improvements in social overhead capital: Social overhead capital includes transport, irrigation
facilities, energy, education system, health and medical facilities. Since independence, these facilities
have undergone a sea change in the following manner.
Indian railways is Asia’s Largest and world’s 4 largest network under a single management
Diesel and electrical locomotives have replaced steam engines
Indian road network has become second largest networks in the world aggregating to 4.69 milion
kilometres
In 201112,
the installed electricity generating capacity was 2,36,000 MW against 2,300 MW in
195051.
While our industrial set up for basic and capital goods were highly primitive at the time of
independence, it has substantially improved since then
Irrigation facilities have increased, thus raising the land under irrigation from 22.6 million hectares
in 195051
to 88.4 million hectares in 200809
(See chart 2)
The number of higher secondary educational institutions has increased by 23 times. The literacy
rate has increased from 18.33% in 1951 to 74.4% in 201112
In the field of medicine and health, the number of doctors has increased from 61,800 in 1951 to
around 9.22 lakh in 2011. The bedpopulation
ratio is now 1.03 per 1,000 population as against
0.32 per 1,000 in 195051
Development of the banking and financial sector: RBI was nationalised in 1949 and later, in 1969
and 1980, many other banks were nationalised.
Thus, it can be inferred that India is marching strongly on its road to development and will be a strong
economic force in the near future. As a result of this, banks now cater to the requirements of people
from all corners of the country. Agricultural sector, small scale industries and other sectors enjoy the
facilities rendered by these banks which provide funds on a priority basis to them at concessional rates
of interest.
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