Indian Economy And Its Basic Features Economics Essay
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The economy of India is the eleventh largest economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP). In the 1990s, following economic reform from the socialist-inspired economy of post-independence India, the country began to experience rapid economic growth, as markets opened for international competition and investment. In the 21st century, India is an emerging economic power with vast human and natural resources, and a huge knowledge base. Economists predict that by 2020, India will be among the leading economies of the world.
Since 1991, continuing economic liberalization has moved the economy towards a market-based system. A revival of economic reforms and better economic policy in 2000s accelerated India's economic growth rate. By 2008, India had established itself as the world's second-fastest growing major economy. However, the year 2009 saw a significant slowdown in India's official GDP growth rate to 6.1%as well as the return of a large projected fiscal deficit of 6.8% of GDP which would be among the highest in the world.
India's large service industry accounts for 62.6% of the country's GDP while the industrial and agricultural sector contribute 20% and 17.5% respectively. Agriculture is the predominant occupation in India, accounting for about 52% of employment.
After having been an aid recipient, India has now joined the aid givers club. India has become a net creditor to IMF, since July 2003.
Although India was late and slow in modernization of industry in general in the past, it is now a front-runner in the emerging Knowledge based New Economy.
The Government is pursuing reforms and liberalization not out of compulsion but out of conviction and consensus.
Indian companies are no longer afraid of Multinational Companies. They are becoming competitive and some of them are going global.
Fatalism and contentment of the Indian mindset have given way to optimism and ambition. Introspective and defensive approach has been replaced by outward-looking and confident attitude.
The Indian culture, which looked down upon wealth as a sin and believed in simple living and high thinking, has started recognizing prosperity and success as acceptable and necessary goals.
Graduates no longer queue up for safe government jobs. They prefer and enjoy the challenges and risks of becoming entrepreneurs and global players.
Stable democracy and institutions.
Largest democracy with stable, mature, vibrant and exemplary democratic governance and institutions.
Strong and transparent legal and accounting system.
Primacy of rule of law and independent judiciary.
Numerous watchful and proactive NGOs.
Free, vocal, alert and quality media.
IN INFRASTRUCTURAL DEVELOPMENTâ€¦.
India has re-emerged as one of the fastest growing economies in the world. According to many commentators, India could unleash its full potentials, provided it improves the infrastructure facilities, which are at present not sufficient to meet the growing demand of the economy. Failing to improve the country's infrastructure will slow down India's growth process. Therefore, Indian government's first priority is rising to the challenge of maintaining and managing high growth through investment in infrastructure sector, among others.
India, while stepping up public investment in infrastructural, has been actively engaged in involving private sector to meet the growing demand.
The demand for infrastructure investment during the 11th Five Year Plan (2007-2011) has been estimated to be US$ 492.5 billion (Planning Commission, 2007). To meet this growing demand, Government of India has planned to raise the investment in infrastructure from the present 4.7 percent of GDP to around 7.5 to 8 percent of GDP in the 11th Five Year Plan.
Software part of India's physical infrastructure performed well, thus not only helped the country to maintain a faster growth but also integrated the economy with the world market at a faster pace.
The hardware component of the country's physical infrastructure comparatively grew slowly, thus negated the country's development process.
The most distinct part of India's physical infrastructure development in recent years is the development of road network across the country; per sq. km. of surface area in India is now endowed with one km of roadways. India has one of the largest road networks in the world, aggregating to 3.34 million km
A major fleet acquisition is underway by the national carriers, namely Indian Airlines,
Air India and Air India Charters' Limited. The project of Indian Airlines for acquisition
of 43 Airbus aircraft has been approved by the Government.
HUMAN AND NATURAL RESOURCESâ€¦..
Resources in India refer to the untamed natural essence of the environment. Resources in India can be categorized into renewable, flow and non-renewable sources. While renewable resources in India primarily involve living sources such as forests, fish, etc, and non-living sources like water and soil. The basic characteristic of renewable resources is that they are sustainable if used with sense and discretion.
Wind Power in India has made a significant role in the domain of energy resources. India now ranks as a "wind superpower" with an installed wind power capacity of almost 1167 MW and about 5 billion units of electricity have been supplied to the national grid till date.
Hydropower is another form of renewable resources of energy in India obtained from the movement of water in rivers and oceans. Water can likewise be used to generate electricity using turbines, or can be used mechanically to do useful work.
Geothermal power directly exploits the natural flow of heat from the ground. The available energy from natural decay of radioactive elements in the earths, crust, and mantle is roughly equal to that of incoming solar energy.
Tidal energy is another unlimited and inexhaustible sixth source of energy. The Gulfs of Kutch and Cambay are ideally suited to develop electricity from the energy produced by high tides entering into narrow creeks.
IN INDUSTRIAL SECTORSâ€¦â€¦
The India Industry Sector and agricultural sector now comprises of more than half of India's GDP which amounted to 51.16 per cent in 1998-99. The number of Industries in India has multiplied by a large amount in the last few years.
The Indian economy had grown by 5.4 per cent in 2001-02, which included a growth rate of 3.3 percent in the India Industry Sector.
There was a marked improvement in the growth rates of manufacturing (from 4.2 per cent in 1999-2000 to 6.7 per cent in 2000-01) and mining and quarrying (from 2 per cent to 3.3 per cent during the same period).
In the India Industry Sector the most striking force has been the IT Industry sector. The Indian software industry has grown at a massive rate from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 in 1999-2000.
CURRENT STATUS OF INDIA IN THE ERA OF GLOBALIZATION
Globalization is a term that includes a wide range of social and economic variations. It can encompass topics like the cultural changes, economics, finance trends, and global market expansion.
Due to globalization, there has been significant flow of inward foreign direct investment. MNCs are getting a chance to explore various different markets across economies and explore the untapped potential.
More and more medical innovations are coming in which are improving the health situation in India. The infant mortality rate and the malnutrition rate have significantly come down since the last decade.
Financial - emergence of worldwide financial markets and better access to external financing for corporate, national and sub national borrowers.
Economic - realization of a global common market, based on the freedom of exchange of goods and capital.
Social - the achievement of free circulation by people of all nations
With the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs.
Rise in demand for labor and the rise in wage rates leading to some increase in costs.
Weakening power of the trade unions over labor in emerging industries and growth
sectors like IT, entertainment, internet and mobile services
Instability in profits due to too much choice among customers.
Problems of dealing with uncertainty in the international market in terms of demand supply and prices.
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