Unit- IIIrd Ch- Ist

The Nature and Ideological contours (outline) of Indian

Economy

Ideological Contours of Indian Economy

India is having a mixed economic structure. It is neither fully capitalistic nor fully socialistic. The
guiding principles are; equal opportunity to all; access to education to all; respecting the right to earn
a livelihood; freedom of speech and religion to all. It supports, helps, monitors, regulates, and initiates
and substantiates changes as and when required. The bureaucracy plays a very critical role and needs
to be educated and enlightened.

Although India has one of the largest economies in the world, the country is very poor. This
is mainly due to its exceptionally large population. According to the World Bank, more than
800 million people in India lived below the poverty level. Due to the high rates of poverty,
the government is continuously implementing new policies and strategies to combat this
issue.

Agriculture is an important part of the country's economy as more than 10 percent of its
exports consist of agricultural products. The mining industry also plays a major role in the
economy as India is the fourth largest producers of minerals in the world.

Corruption and poverty has been a problem of the country for a long time. However, through
excellent education and other means, the government is trying to increase economic growth
and decrease unemployment rates.

The Indian economy is presently an underdeveloped economy. Almost all-important

characteristic features of an underdeveloped economy were present in the Indian economy at
the time of independence and have not changed much since then.

India-an underdeveloped economy

What is Underdeveloped Economy?

 Underdeveloped economy means such an economy is neither developed nor undeveloped but on the
way of developed country’s economy.
 The Indian economy is presently an underdeveloped economy.

Reasons for underdeveloped economy of India

1) Inadequate distribution of income

The distribution of income and wealth in India is unequal. According to world development
report, in India the poorest 10% population gets only 3.5% of national income as against of
the richest 10% population enjoys 33.5% of national income.

2) Pressure of population:

Over the years population in India has been growing at a fast rate. The demographics of India
are inclusive of the second most populous country in the world, with over 1.21 billion people
(2011 census), more than a sixth of the world's population.

Because of high growth rate of population, problems like food shortage,unemployment

etc.raise their heads.This pressure of population is a great obstacle in the way of economic
development.

3) High incidence of poverty:

According to data from the United Nations Development Programme, an estimated 37.2% of
Indians live below the country's national poverty line.

Since 1970s there has been a decline in the incidence of poverty.Neverthless, the % of
population below the poverty line is still quite high.

4) Unemployment:

 India suffers from large scale unemployment.It is estimated that 15% labours are
unemployed in the country. On account of unemployment,there is wastage of labour
power,less production, low per capita income and low rate of investment.It is low rate of
investment that causes low out put and employment.
The nature of unemployment in India is different from that in developed countries.In
India,people in a large number, do not have adequate work throught the year.

5) Technological backwardness:

There still exists a wide gap between the sophisticated production techniques of the
developed countries and India’s technology.

While technological progress is at the heart of development,these are backward in India.

Everywhere,farmers are using old production techniques.

6) Lack of proper Banking facilities:

One of the causes of underdevelopment of India is that banking and credit facilities especially in rural
areas have not properly developed. Poor and small farmers do not get loans and credit facilities at
cheap rates of interest.

7) Less developments of means of transportation:

Present position of means of transportation in India like railways and roads, air and waterways is not
adequate in view of the vast geographical area of the country. In India there are 24 kms of railway
lines per one lakh population as against 1163 kms of railway lines per lakh population in Canada.

8) Outdated social institutions:

Main social institutions of India like caste system, joint family system, customs etc., are against to
economic development. Because of this, modern techniques are not adopted and the resources of the
country are wasted.

9). Lack of proper industrialisation:

Rate of industrial development has been very slow in India. Low rate of industrial growth results in
low productivity and low per capita income.