DEVELOPMENT OF INDIAN

ECONOMY
INTRO

I chose the topic: “Development of Indian economy” as it appealed to

me the most out of all other topics. My love for economics and my
curiosity to learn more made me choose this topic so that I can learn
more about the Indian economy beside whatever is men oned in my
textbooks. For me, it is always fun to learn the various components of
the economy and all the factors which a ect it. Therefore, my
eagerness to learn and inquisi ve nature made me inclined towards
selec ng this topic. All in all, I enjoyed making this project and could
acquire new ds-bits of informa on.

India has emerged as the fastest growing major economy in the world
and is expected to be one of the top three economic powers in the
world over the next 10-15 years, backed by its robust democracy and
strong partnerships.
The economic development in India followed socialist-inspired
poli cians for most of its independent history, including state-
ownership of many sectors; India's per capita income increased at
only around 1% annualized rate in the three decades a er its
independence. Since the mid-1980s, India has slowly opened up its
markets through economic liberaliza on. A er more fundamental
reforms since 1991 and their renewal in the 2000s, India has
progressed towards a free market economy. n the late 2000s, India's
growth reached 7.5%, which will double the average income in a
decade. IMF says that if India pushed more fundamental market
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 reforms, it could sustain the rate and even reach the government's
2011 target of 10%. States have large responsibili es over their
economies. The average annual growth rates for Gujarat (13.86%),
U arakhand (13.66%), Bihar (10.15%) or Jharkhand (9.85%) were
higher than for West Bengal (6.24%), Maharashtra (7.84%), Odisha
(7.05%), Punjab (11.78%) or Assam (5.88%). India is the Fi h largest
economy in the world by nominal basis and the third largest by
purchasing power parity adjusted exchange rates (PPP). On per capita
basis, it ranks 140th in the world or 129th by PPP.
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MEANING OF ECONOMIC DEVELOPMENT
economic and social development is the process by which the
economic well-being and quality of life of a nation, region, local
community, or an individual are improved according to targeted
goals and objectives
The term has been used frequently in the 20th and 21st centuries,
but the concept has existed in the West for far longer.
"Modernization", "Westernization", and especially "industrialization"
are other terms often used while discussing economic development.
Historically, economic development policies focused on
industrialization and infrastructure; since the 1960s, it has
increasingly focused on poverty reduction
whereas economic development is a policy intervention aiming to
improve the well-being of people
Economic development is a wider concept and has qualitative
dimensions. Economic development implies economic growth plus
progressive changes in certain important variables which determine
the well-being of the people, e.g: health, education
economic development is a "broadly based and sustainable
increase in the overall standard of living for individuals within a
community", and measures of growth such as per capita
income do not necessarily correlate with improvements in
quality of life.
It means increase in the ef ciency of the factors of production,
better techniques of production, positive changes in attitude
towards work and life increase in the importance of non-
agriculture sectors and so on
Economic development means economic growth along with the
desired changes in the distribution of national income an other
technical and institutional changes
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history
prior to India's Independence, from the period of 1900 to 1947, per capita
income in India had either declined or stagnated. Post-Independence,
Jawaharal Nehru demonstrated his willingness to compromise socialism
for the perceived benefit of the country to provide financial incentives for
the expansion of private enterprise. However, after the crisis of 1957,
India turned towards import substitution industrialization and introduced
foreign exchange. The Nehru-Mahalanobis approach, often referred to as
the Second Five Year Plan, emphasized the development of basic and
heavy industries as a means of accelerating economic growth. These
included steel, copper, petrochemicals, paper, coal, and oil. Mahalanobis
strived for India to reach autonomy, ridding any outstanding debts. Critics
disagreed with this approach, stating that World Bank's claim of Indian
export prospects being low were falsified and due to India's inward-
looking strategy, the growth opportunity of the world economy was
missed. Nonetheless, over 1950–1965, India's acceleration of per capita
income growth had increased an average of 1.7%, a value not exceeded
since.

The discourse on the efficacy of the Nehru-Mahalanobis Strategy is

commonly contested by economists. A criticism of the approach
emphasizes the lack of resource allocation in the agriculture sector. It is
argued that the misbalanced weightage towards the machine-making
sector contributed to the increase in food-grain prices and thus,
perpetuated poverty and malnutrition. Defenders of the strategy claim
that it sought to increase agricultural output by increasing the output-
capital ratio. This agreeably would have been accomplished through land-
reforms, something the strategy did not address, not indicating a problem
with the strategy itself.
Challenges of Indian economy
Poverty
It is a situation in which a person is unable to get minimum basic
necessities of life, ic. food, clothing and shelter for his or her living 22%
of the population lives below the poverty line. This means that a large
portion of the population is not able to participate in the economy and
this leads to a vicious cycle of poverty.Though this gure has decreased
in recent times but some major steps are needed to be taken to
eliminate poverty from India.Poverty is linked to unfavourable situations
such as inferior housing, homelessness, inadequate food and nutrition
insecurity, inadequate care for children, lack of access to health care,
hazardous neighbourhoods, and underfunded schools, all of which have
a detrimental in uence on our country's children.

Though this gure has decreased in recent times but some major steps
are needed to be taken to eliminate poverty from India.
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unemployment
A situation in which a section of people, who are able and willing to work but do not nd
gainful work
The increasing population is pressing hard on economic resources as well as job
opportunities hundreds thousands of people are unemployed. Besides, the problem of
unemployment in India is very serious due to the growing population and demand for jobs.
Unemployment in India was 6.1% in FY 2018 as mentioned in NSSO – National Sample
Survey Organization Report 2019.The number of job seekers in the register of
employment exchange is also increasing by leaps and bounds. There are three categories
of employment here. In villages, people who live in agriculture work for four to ve months
in a year, remaining idle. During that period, they remain practically unemployed. In towns
and cities, there is another class of unemployed, who do not nd employment due to the
installation of large machines in factories. Finally, there is a large number of educated
people who are unemployed. The masses, uneducated and illiterate also adopt some
means by which they can earn their livelihood. However, educated people cannot do this.

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POPLULATION explosion
THIS monster is eating up into the success of India. The population is
expected to exceed 1.5 billion by 2030, and 2 billion by 2050. This rapid
growth is putting immense pressure on India's resources, and is contributing
to environmental degradation, poverty, and social unrest. Due to a higher
population, we nd scarcity everywhere and due to scarcity, the prices are
heading towards an increase. The country has a scarcity of food-grains,
scarcity of employment, scarcity of essentials, scarcity of houses, scarcity of
oil, etc..The explosive increase in population in India has forced expenditure
of crores of rupees on population control under planned development. These
resources would otherwise have been used in the economic development of
the country and the standard of living would have improved.The rapid
increase in population increases the burden of the number of dependents.
According to the 1961 census, 47.3% of the population was dependent which
increased today to 71.1%.
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RURAL AND URBAN DIVIDE

In simple words, the glaring disparities in income distribution,

consumption and quality of life between
rural and urban India is known as rural-urban divide. There is a lack of
livelihood opportunities, modern amenities and services, necessary for
decent living in rural areas. There are huge di erences in the availability
of physical and social infrastructure in rural and urban areas which
divide them.India has more than 6 lakh villages while there are around
7,000 towns and urban centres. Out of a total population of 121 crores,
the rural population accounts for 69% and urban population 31%.There
is a very stark di erence in pace of rural and urban growth. Unless there
isn't a balanced development Indian economy cannot grow.n recent
times, the per capita income in rural area has been observed to only
40% of that in urban area for a majority of states. In India, we have
created an economy of rich metro cities which are surging and poor
villages which are decaying. Hence, there is an immediate need to
reduce the gap between these two area.
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 OVERCOME THE challenges
1.Orientation of public expenditure such as on health and education sectors.
2.Introduction of reforms in labor laws to generate more employment
opportunities.
3.Introduction of new technology.
4 Reducing agriculture's dependence on monsoon by developing means of
irrigation.
5 Introduction of nancial reforms including privatization of some public sector
banks

agriculture
Two thirds of India 's population lives in rural
areas. Agriculture and related activities are the main source of livelihood for them.
" Helping the country achieve a surplus in the food grains production.
With liberalization of trade in agricultural commodities, India enjoys a competitive
advantage in a number of agricultural and processed food products exports
ndia ranks second worldwide in farm output. Agriculture and allied sectors
like forestry, logging and shing accounted for 18.6% of the GDP in 2005, employed
60% of the total workforce and despite a steady decline of its share in the GDP, is
still the largest economic sector and plays a signi cant role in the overall socio-
economic development of India. yields unit area of all crops have grown since
1950, due to the special emphasis placed on agriculture in the ve-year plans and
steady improvements in irrigation, technology, application of modern agricultural
practices and provision of agricultural credit and subsidies since the green
revolution .
.
.
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 manufacturing
manufacturing sector contributes around one fourth of total GDP.
Companies in the manufacturing sector have consolidated around their area
of core competence by tying up with foreign companies to acquire new
technologies, management expertise and access to foreign markets India
is tenth in the world in factory output. Manufacturing sector in addition to
mining, quarrying, electricity and gas together account for 27.6% of the GDP
and employ 17% of the total workforce. Economic reforms introduced after
1991 brought foreign competition, led to privatisation of certain public sector
industries, opened up sectors hitherto reserved for the public sector and led
to an expansion in the production of fast-moving consumer goods. In recent
years, Indian cities have continued to liberalise, but excessive and
burdensome business regulations remain a problem in some cities, like Kochi
and Kolkata.
the Indian private sector, which was usually run by oligopolies of old family rms and
required poli cal connec ons to prosper was faced with foreign compe on,
including the threat of cheaper Chinese imports. It has since handled the change by
squeezing costs, revamping management, focusing on designing new products and
relying on low labour costs and technology. Under the Modi Government, various
ini a ves are taking place like Make In India campaign, to boost the Indian
industries.

SERVICES
India is eenth in services output. Service industry employ English-speaking Indian
workers on the supply side and on the demand side, has increased demand from
foreign consumers interested in India's service exports or those looking to outsource
their opera ons. India's IT industry, despite contribu ng signi cantly to its balance
of payments, accounts for only about 1% of the total GDP or 1/50th of the total
services.
During the Internet bubble that led up to 2000, heavy investments in undersea bre-
op c cables linked Asia with the rest of the world. The fall that followed the
economic boom resulted in the auc on of cheap ber op c cables at one-tenth of
their original price. This development resulted in widely available low-cost
communica ons infrastructure. All of these investments and events, not to men on
a swell of available talent, resulted in India becoming almost overnight the centre for
outsourcing of Business process
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infrastructure
The infrastructure sector in India, traditionally reserved for the government, is
progressively being opened up for private sector participation.
It constitutes factors like:
Ports
Roads
Airports
PoweR
For India to maintain the growth momentum, it is essential to strengthen infrastructure
facilities such as transportation, energy, communication, and so on. As well as being in
short supply, India's infrastructure in most cases is also of poor quality by world standards.
In fact, India's high rate of economic growth will be dif cult to sustain if infrastructure
development does not increase and keep pace with demand. Therefore, a number of
measures are needed to address the various infrastructure constraints that the country
faces and improve the productivity of infrastructure sector.
India is doing well in terms of road density by population (road-km/1,000 people). For the
year 2010, road density for India was 3.3, which compares well with 3.0 for China and 2.8
for East Asia. However, India lags behind other BRICS countries, which were around 6.6
and way behind the developed countries which were at 12.1 in the year 2010. Given its
relatively high population density and low forest cover, India also fares better in term of
road density by land area (road-km per 1,000 sq km of land area) and stands at a better
position compared to China, BRCS and East Asian countries, though behind the
developed countries.
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 RECENT DEVELOPMENTS

India is primarily a domestic demand-driven economy, with consumption

and investments contributing to 70% of the economic activity. With an
improvement in the economic scenario and the Indian economy
recovering from the Covid-19 pandemic shock, several investments and
developments have been made across various sectors of the economy.
According to World Bank, India must continue to prioritise lowering
inequality while also putting growth-oriented policies into place to boost
the economy. In view of this, there have been some developments that
have taken place in the recent past. Some of them are mentioned below.
• As of September 21, 2022, India’s foreign exchange reserves stood at
US$ 524,520 million.

• The private equity-venture capital (PE-VC) sector investments stood at

US$ 2 billion in September 2022.

• Merchandise exports in September 2022 stood at US$ 32.62 billion.

• PMI Services remained comfortably in the expansionary zone at 56.7

during April-September 2022

• In September 2022, the gross Goods and Services Tax (GST) revenue
collection stood at Rs. 147,686 crore (US$ 17.92 billion).

• Between April 2000-June 2022, cumulative FDI equity in ows to India

stood at US$ 604,996 million.

• In August 2022, the overall IIP (Index of Industrial Production) stood at

131.3. The Indices of Industrial Production for the mining,
manufacturing and electricity sectors stood at 99.6, 131.0 and 191.3,
respectively, in August 2022.

• According to data released by the Ministry of Statistics & Programme

Implementation (MoSPI), India’s Consumer Price Index (CPI) based
retail in ation reached 7.41% in September 2022.

• In FY 2022-23, (until October 28, 2022), Foreign Portfolio Investment

(FPI) out ows stood at Rs. 58,762 crore (US$ 7.13 billion)
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• The wheat procurement in Rabi 2021-22 and the anticipated paddy
purchase in Kharif 2021-22 would include 1208 lakh (120.8 million)
metric tonnes of wheat and paddy from 163 lakh (16.7 million) farmers,
as well as a direct payment of MSP value of Rs. 2.37 lakh crore (US$
31.74 billion) to their accounts.\
government initiatives
• The Union Budget of 2022-23 was presented on February 1, 2022, by
the Minister for Finance & Corporate Affairs, Ms. Nirmala Sitharaman.
The budget had four priorities PM GatiShakti, Inclusive Development,
Productivity Enhancement and Investment, and Financing of
Investments. In the Union Budget 2022-23, effective capital expenditure
is expected to increase by 27% at Rs. 10.68 lakh crore (US$ 142.93
billion) to boost the economy. This will be 4.1% of the total Gross
Domestic Production (GDP).

National Bank for Financing Infrastructure and Development (NaBFID) is a

bank that will provide non-recourse infrastructure nancing and is expected to
support projects from the rst quarter of FY2022-23; it is expected to raise
Rs. 4 lakh crore (US$ 53.58 billion) in the next three years.

In June 2022:

• Prime Minister Mr. Narendra Modi, laid the foundation stone of 1,406
projects worth more than Rs. 80,000 crore (US$ 10.01 billion) at the
groundbreaking ceremony of the UP Investors Summit in Lucknow.

• The Projects encompass diverse sectors like Agriculture and Allied

industries, IT and Electronics, MSME, Manufacturing, Renewable
Energy, Pharma, Tourism, Defence & Aerospace, Handloom & Textiles.

• n August 2022, a Special Food Processing Fund of Rs. 2,000 crore

(US$ 242.72 million) was set up with National Bank for Agriculture and
Rural Development (NABARD) to provide affordable credit for
investments in setting up Mega Food Parks (MFP) as well as
processing units in the MFPs.

• In July 2022, Deendayal Port Authority (DPA) announced plans to

develop two Mega Cargo Handling Terminals on a Build-Operate-
Transfer (BOT) basis under Public-Private Partnership (PPP) Mode at
an estimated cost of Rs. 5,963 crore (US$ 747.CONCLUSION
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 CONCLUSION
ROAD Ahead
India recorded the real GDP (gross domes c product) growth of 0.4% in the third
quarter of FY21, as per the NSO's (Na onal Sta s cal O ce) second advance
es mates. This rise indicates V-shaped recovery progression that started in the
second quarter of FY21.
As per Economic Survey 2020-21, India's real GDP growth for FY22 is projected at
11%. The January 2021 WEO update forecast a 11.5% increase in FY22 and a 6.8%
rise in FY23. According to the IMF, in the next two years, India is also expected to
emerge as the fastest-growing economy.
India is focusing on renewable sources to generate energy. It is planning to achieve
40% of its energy from non-fossil sources by 2030, which is currently 30% and have
plans to increase its renewable energy capacity from to 175 gigawa (GW) by 2022.
India is expected to be the third largest consumer economy as its consump on may
triple to US$ 4 trillion by 2025, owing to shi in consumer behaviour and
expenditure pa ern, according to a Boston Consul ng Group (BCG) report. It is
es mated to surpass USA to become the second largest economy in terms of
purchasing power parity (PPP) by 2040 as per a report by Price water house Coopers.
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 Bibliography
h ps://www.ibef.org/economy/indian-economy-overview
h ps://en.wikipedia.org/wiki/Economic_development_in_India
h ps://www.senat.fr/interna onal/anglais/interven on_singh_anglais.pdf
h ps://www.tandfonline.com/doi/pdf/10.1080/14736480802665238
h ps://www.asianstudies.org/publica ons/eaa/archives/the-history-of-economic-development-in-india-
since-independence/
h ps://en.wikipedia.org/wiki/Economy_of_India
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