Salient features of Indian Economy

 Mixed economy: The Indian economy is a mixed economy, meaning that it

has both public and private sector participation. The public sector plays a
significant role in key sectors such as infrastructure, energy, and defense,
while the private sector is the driving force behind economic growth.
 Developing economy: India is a developing economy, characterized by high
population growth, low per capita income, and a dualistic economy with both
traditional and modern sectors.
 Agro-based economy: Agriculture is the mainstay of the Indian economy,
employing over half of the workforce and contributing about 18% to GDP.
 Service-oriented economy: The services sector is the largest sector of the
Indian economy, accounting for over 60% of GDP. This sector includes a wide
range of activities such as IT, banking, insurance, and tourism.
 Rapid economic growth: India has experienced rapid economic growth in
recent decades, with average annual GDP growth of over 7%. This growth
has been driven by a number of factors, including demographics,
urbanization, and reforms.
 Rising middle class: India has a large and growing middle class, which is
boosting consumer demand and driving economic growth.
 Young population: India has a young population, with a median age of just
28.5 years. This young workforce is a major asset to the economy, and it is
poised to drive future growth.

Structural changes in the Indian economy

The Indian economy has undergone significant structural changes in recent

decades. These changes have been driven by a number of factors, including
economic growth, globalization, and technological advancements.

One of the most important structural changes has been the shift from agriculture to
industry and services. The share of agriculture in GDP has declined from over 50%
in the early 1950s to around 18% today. Meanwhile, the share of industry and
services has increased significantly.

Another important structural change has been the growth of the informal sector. The
informal sector now accounts for over 50% of India's GDP and employment. This
sector is characterized by low productivity and wages, and it lacks social security
benefits for workers.

The Indian economy is also becoming increasingly integrated with the global
economy. This is evident in the growing importance of trade and investment in the
Indian economy. India's exports and imports have grown rapidly in recent decades,
and foreign investment has played a significant role in financing India's economic
growth.

Technological advancements have also played a role in the structural transformation

of the Indian economy. The IT sector, in particular, has emerged as a major engine
of growth. The IT sector has created millions of jobs and has helped to boost India's
exports.

The structural changes in the Indian economy have had a number of positive and
negative implications. On the positive side, these changes have helped to boost
economic growth and create jobs. On the negative side, these changes have also
led to rising inequality and environmental challenges.

Challenges and opportunities for the Indian economy

The Indian economy faces a number of challenges in the coming years, including:

 High levels of poverty and inequality: India has a large and growing middle
class, but millions of people still live in poverty. The Gini coefficient, a
measure of income inequality, is relatively high in India.
 Unemployment: India's unemployment rate is relatively high, especially
among the youth.
 Poor infrastructure: India's infrastructure, such as roads, railways, and power,
is underdeveloped. This is a major obstacle to economic growth.
 Environmental challenges: India faces a number of environmental challenges,
such as air and water pollution and climate change.

Despite the challenges, the Indian economy also has a number of opportunities in
the coming years. These opportunities include:

 Young population: India has a young and growing population, which is a major
asset to the economy.
  Rising middle class: India's middle class is large and growing, which is
boosting consumer demand and driving economic growth.
 Integration with the global economy: India is becoming increasingly integrated
with the global economy, which is creating new opportunities for trade and
investment.
 Technological advancements: Technological advancements, such as artificial
intelligence and machine learning, are creating new opportunities for the
Indian economy.

The Indian government is taking a number of steps to address the challenges and
capitalize on the opportunities facing the economy. These steps include:

 Investing in infrastructure: The government is investing heavily in

infrastructure, such as roads, railways, and power.
 Promoting skill development: The government is promoting skill development
to improve the employability of the workforce.
 Attracting foreign investment: The government is taking steps to attract
foreign investment into the country.
 Promoting digital transformation: The government is promoting digital
transformation to improve the efficiency and productivity

Causes of Low Agricultural Productivity in India

There are a number of factors that contribute to low agricultural productivity in India,
including:

 Small landholdings: The average landholding size in India is very small, at just
over 1 hectare. This makes it difficult for farmers to invest in new technologies
and improve their productivity.
 Fragmentation of landholdings: Landholdings in India are often fragmented,
meaning that they are spread out over multiple plots. This makes it difficult for
farmers to cultivate their land efficiently.
 Poor irrigation facilities: Only about half of India's cultivated land is irrigated.
This makes farmers dependent on the monsoon rains, which can be erratic
and unreliable.
  Lack of access to credit: Many farmers in India do not have access to credit
from formal sources. This makes it difficult for them to invest in new inputs
and technologies.
 Traditional farming practices: Many farmers in India still use traditional farming
practices, which are less productive than modern methods.
 Lack of extension services: Farmers in India often lack access to extension
services, which can provide them with information and advice on new
technologies and practices.

Government Measures to Improve Agricultural Productivity

The Government of India has taken a number of measures to improve agricultural

productivity, including:

 Subsidies on inputs: The government provides subsidies on inputs such as

seeds, fertilizers, and pesticides. This helps to reduce the cost of farming for
farmers.
 Irrigation projects: The government is investing in irrigation projects to
increase the area under irrigation. This will make farmers less dependent on
the monsoon rains.
 Crop insurance: The government provides crop insurance to farmers to
protect them from losses due to crop failure. This helps to reduce the risk of
farming and encourages farmers to invest in new inputs and technologies.
 Agricultural credit: The government is providing agricultural credit to farmers
at subsidized interest rates. This helps farmers to invest in new inputs and
technologies.
 Promotion of modern farming practices: The government is promoting the use
of modern farming practices, such as high-yielding varieties of seeds,
precision agriculture, and drip irrigation. This helps to improve the productivity
of farmers.
 Extension services: The government is providing extension services to
farmers through a network of agricultural research and extension centers.
This helps farmers to access information and advice on new technologies and
practices.

In addition to the above measures, the government is also investing in research and
development to develop new agricultural technologies and improve the productivity
of existing crops. The government is also working to improve the infrastructure in
rural areas, such as roads, electricity, and storage facilities. This will help to reduce
the cost of marketing and distribution of agricultural produce.

The government's measures to improve agricultural productivity have had some

success. However, there is still a long way to go. The government needs to continue
to invest in agriculture and provide support to farmers in order to achieve the full
potential of the sector.

Poverty Line

The poverty line in India is defined as the minimum income required to meet the
basic needs of food, clothing, and shelter. The poverty line is calculated separately
for rural and urban areas, and it is updated every five years. As of 2021, the poverty
line in India is Rs. 375 per day in rural areas and Rs. 450 per day in urban areas.

Causes of Poverty in India

There are a number of factors that contribute to poverty in India, including:

 Large population: India has a population of over 1.3 billion people, which is
one of the largest in the world. This large population puts a strain on
resources and can make it difficult to create jobs for everyone.
 Uneven distribution of wealth: The distribution of wealth in India is very
uneven, with a small percentage of the population controlling a large share of
the wealth. This inequality can make it difficult for people to lift themselves out
of poverty.
 Lack of access to education and healthcare: Many people in India do not have
access to quality education and healthcare. This can make it difficult for them
to get good jobs and improve their living standards.
 Discrimination: Discrimination based on caste, gender, and religion can also
lead to poverty. People who are discriminated against may have fewer
opportunities to get ahead in life.
 Alleviation Strategies for Poverty in India

The Government of India has implemented a number of strategies to alleviate

poverty, including:

 Economic growth: Economic growth is one of the most important ways to

alleviate poverty. When the economy grows, more jobs are created and
incomes rise. The Government of India is working to boost economic growth
through a number of initiatives, such as Make in India and Skill India.
 Social welfare programs: The Government of India also implements a number
of social welfare programs to help the poor, such as the Mahatma Gandhi
National Rural Employment Guarantee Scheme (MGNREGS), the Public
Distribution System (PDS), and the National Social Assistance Programme
(NSAP). These programs provide financial assistance, food subsidies, and
other benefits to the poor.
 Empowerment programs: The Government of India also implements a number
of empowerment programs to help the poor improve their lives. These
programs include the Pradhan Mantri Jan Dhan Yojana (PMJDY), the
Pradhan Mantri Ujjwala Yojana (PMUY), and the Pradhan Mantri Saubhagya
Yojana (PMSY). These programs provide access to banking services, LPG
connections, and electricity to the poor.

The Government of India's poverty alleviation strategies have had some success.
The poverty rate in India has declined significantly in recent decades. However,
there is still a long way to go. There are still millions of people living in poverty in
India, and the government needs to continue to invest in poverty alleviation
programs.

In addition to the government's efforts, the private sector and civil society
organizations also play a role in poverty alleviation. There are a number of NGOs
and other organizations working to help the poor improve their lives. These
organizations provide education, healthcare, and vocational training programs to the
poor. They also work to empower the poor and help them to advocate for their rights.

Poverty is a complex problem, and there is no single solution. However, by working

together, the government, the private sector, and civil society organizations can
make a significant difference in the lives of the poor.
 Population Size and Composition in India

India is the second most populous country in the world, with a total population of
1.425 billion people as of September 2023. The population is projected to surpass
China's by 2024.

Age Composition:

India has a relatively young population, with a median age of 28.4 years. This means
that half of the population is under the age of 28.4 years, and the other half is older.

Sex Composition:

India has a slightly skewed sex ratio, with 947 females per 1000 males. This is due
to a number of factors, including female feticide and infanticide.

Religion:

India is a religiously diverse country, with Hinduism being the majority religion
(79.8% of the population). Other major religions include Islam (14.23%), Christianity
(2.30%), Sikhism (1.72%), and Buddhism (0.70%).

Causes of High Population Growth in India

There are a number of factors that have contributed to India's high population growth
in the past. These include:

 High fertility rates: India's total fertility rate (TFR), which is the average
number of children a woman is expected to have in her lifetime, has declined
significantly in recent decades. However, it is still above replacement level
(2.1 children per woman).
 Early marriage: Many people in India marry at a young age, which can lead to
earlier and more frequent childbearing.
 Lack of access to contraception: Some people in India do not have access to
modern contraception methods, which can make it difficult for them to control
the size of their families.
 Demographic Dividend in India

India is currently experiencing a demographic dividend, which is a period of rapid

economic growth that can occur when there is a large proportion of the population in
the working age group (15-64 years old). This is because the working age population
is more productive than the dependent population (children and elderly people).

India's demographic dividend is expected to last until around 2050. During this time,
India has the potential to achieve significant economic growth.

Challenges of Managing India's Population

The Indian government is facing a number of challenges in managing the country's

population growth. These include:

 Providing education and healthcare: The government needs to invest in

education and healthcare for the growing population.
 Creating jobs: The government needs to create enough jobs to accommodate
the growing working age population.
 Managing urbanization: India is experiencing rapid urbanization, which can
put a strain on infrastructure and resources.

The Indian government is taking a number of steps to address these challenges.

These include investing in education and healthcare, promoting family planning, and
developing new cities and infrastructure.

NITI Aayog
NITI Aayog, or the National Institution for Transforming India, is a government think
tank in India that was established on January 1, 2015, to replace the Planning
Commission. It is the premier policy-making institution of the Government of India.

Structure of NITI Aayog

NITI Aayog is chaired by the Prime Minister of India. It has a Governing Council,
which includes the Chief Ministers of all states and union territories, and the
Lieutenant Governors of Puducherry and Delhi. The Governing Council is the apex
body of NITI Aayog and it provides strategic guidance and direction to the institution.

NITI Aayog also has a Vice Chairperson, who is appointed by the Prime Minister.
The Vice Chairperson is the full-time executive head of NITI Aayog and is
responsible for its day-to-day functioning.

In addition to the Prime Minister, the Vice Chairperson, and the Chief Ministers, NITI
Aayog also has a number of full-time and part-time members. The full-time members
are experts in various fields, such as economics, science and technology, and social
development. The part-time members are representatives of various ministries and
departments of the Government of India.

Functions of NITI Aayog

NITI Aayog has a wide range of functions, including:

 To provide strategic direction and guidance to the Government of India on

development policies and programs.

 To assist the Governing Council in discharging its functions.

 To provide inputs and technical support to the Governing Council and the Vice
Chairperson.

 To represent the Government of India in various international and regional

forums.

 To provide specialized advice and inputs to the Governing Council and the
Vice Chairperson.

NITI Aayog also plays an important role in promoting cooperative federalism. It

provides a platform for the central government and the state governments to work
together to develop and implement development policies and programs.

NITI Aayog has been successful in a number of areas, such as developing the
Sustainable Development Goals (SDGs) for India, launching the Atal Innovation
Mission, and designing the Aspirational Districts Program. However, it has also been
criticized for its lack of transparency and accountability.
Overall, NITI Aayog is an important institution that plays a vital role in India's
development process. It has the potential to make a significant contribution to India's
transformation into a developed country.

Food security
Food security is defined as the state of having reliable access to a sufficient quantity
of affordable, nutritious food. India has made significant progress in improving food
security in recent decades. However, there are still challenges that need to be
addressed.

Recent trends in food security in India

 Overall food production has increased: India's total food grain production
increased from 212 million tonnes in 2011-12 to 317 million tonnes in 2021-
22. This has helped to improve the availability of food.
 Poverty has declined: The poverty rate in India has declined from 21.9% in
2011-12 to 10.7% in 2020-21. This has led to an increase in the purchasing
power of households, which has improved their ability to access food.
 Child malnutrition has decreased: The prevalence of stunting among children
under the age of five has declined from 48.4% in 2005-06 to 30.9% in 2019-
21. This is a positive sign that children are getting better nutrition.

Challenges to food security in India

 Uneven distribution of food: Despite the increase in food production, there is
still uneven distribution of food in India. Some states and regions have a
surplus of food, while others have a deficit. This can lead to food insecurity in
some areas.
 Food price inflation: Food prices in India have been rising in recent years.
This can make it difficult for low-income households to afford food.
 Climate change: Climate change is a major threat to food security in India.
Extreme weather events such as floods, droughts, and heatwaves can
damage crops and livestock. This can lead to food shortages and higher food
prices.
Government initiatives to improve food security

The Indian government is implementing a number of initiatives to improve food

security. These include:

 The National Food Security Act (NFSA): The NFSA provides subsidized food
grains to over 800 million people. This has helped to improve access to food
for the poor and vulnerable.
 The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY): The PMGKAY is
a special scheme that was launched during the COVID-19 pandemic to
provide free food grains to the poor and vulnerable. This scheme has been
extended until December 2023.
 The Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA): The
PM-AASHA is a scheme that aims to ensure that farmers get a fair price for
their produce. This scheme is expected to help improve the incomes of
farmers and boost agricultural production.
Conclusion

India has made significant progress in improving food security in recent decades.
However, there are still challenges that need to be addressed, such as uneven
distribution of food, food price inflation, and climate change. The Indian government
is implementing a number of initiatives to improve food security, but more needs to
be done to ensure that all Indians have access to a safe and nutritious diet.

The New Industrial Policy, 1991

The New Industrial Policy, 1991 (NIP 1991) was a major economic reform initiative
launched by the Government of India in July 1991. The policy was aimed at
liberalizing the Indian economy and making it more competitive. It was introduced in
the backdrop of a severe economic crisis that India was facing at the time.

The NIP 1991 had the following key features:

 Deregulation: The policy abolished industrial licensing for most industries,

except for a few strategic sectors. This removed a major barrier to entry for
new businesses and allowed existing businesses to expand more freely.
  Privatization: The policy opened up the public sector to private investment and
competition. This led to the privatization of many public sector enterprises
(PSUs).
 Foreign direct investment (FDI): The policy liberalized FDI norms and made it
easier for foreign companies to invest in India. This led to a significant
increase in FDI inflows.
 Trade liberalization: The policy reduced tariffs and other trade barriers. This
made it easier for Indian companies to export their products and for foreign
companies to import their products into India.

The NIP 1991 had a significant impact on the Indian economy. It led to a rapid
increase in economic growth, industrialization, and exports. The policy also helped to
create jobs and reduce poverty.

Here are some of the key positive impacts of the NIP 1991:

 Economic growth: The average economic growth rate of India accelerated

from 5.6% in the 1980s to 6.8% in the 1990s.
 Industrialization: The share of industry in GDP increased from 24.6% in 1990-
91 to 26.2% in 2000-01.
 Exports: India's exports increased from $18.3 billion in 1990-91 to $33.6 billion
in 2000-01.
 Job creation: The NIP 1991 led to the creation of millions of new jobs in the
private sector.
 Poverty reduction: The poverty rate in India declined from 37.3% in 1990-91
to 26.1% in 2000-01.

However, the NIP 1991 also had some negative impacts, such as:

 Increased inequality: The gap between the rich and the poor widened after the
reforms were implemented.
 Deindustrialization of some sectors: The opening up of the economy to foreign
competition led to the deindustrialization of some sectors, such as textiles and
consumer electronics.
 Environmental degradation: The rapid industrialization and urbanization that
followed the reforms led to environmental degradation.
Overall, the NIP 1991 was a landmark policy that had a significant impact on the
Indian economy. It is credited with transforming India from a closed and centrally
planned economy to a more open and market-oriented economy.

Problems of Micro, Small and Medium Enterprises

(MSMEs)

Micro, Small and Medium Enterprises (MSMEs) are the backbone of the Indian
economy. They account for over 90% of all businesses in India and employ over 120
million people. However, MSMEs face a number of challenges, including:

 Lack of access to finance: MSMEs often find it difficult to access finance from
formal sources, such as banks. This is because they may lack collateral or
have a poor credit history.
 Regulatory burden: MSMEs are subject to a complex and cumbersome
regulatory environment. This can make it difficult for them to start and operate
their businesses.
 Competition from large businesses: MSMEs face stiff competition from large
businesses, which have more resources and economies of scale.
 Lack of skilled workforce: MSMEs often find it difficult to find skilled workers.
This is because many young people are migrating to cities in search of better
job opportunities.
 Poor infrastructure: MSMEs often have to operate in areas with poor
infrastructure, such as roads, electricity, and water supply. This can make it
difficult for them to transport their goods and services and to operate
efficiently.

Policies of the Government of India to Support MSMEs

The Government of India has implemented a number of policies to support MSMEs,

including:

 Providing access to finance: The government has launched a number of

schemes to provide MSMEs with access to finance at affordable interest
rates. These schemes include the Pradhan Mantri Mudra Yojana (PMMY) and
 the Credit Guarantee Fund Scheme for Micro and Small Enterprises
(CGTMSE).
 Reducing the regulatory burden: The government has taken steps to reduce
the regulatory burden on MSMEs. For example, it has introduced a single-
window clearance system for obtaining various licenses and permits.
 Promoting exports: The government is promoting exports from MSMEs by
providing various incentives, such as duty drawbacks and export subsidies.
 Upskilling the workforce: The government is launching various skill
development programs to train and upskill the workforce.
 Improving infrastructure: The government is investing in infrastructure
development, such as roads, electricity, and water supply, in rural areas. This
will benefit MSMEs in rural areas.

The Government of India's policies have helped to support MSMEs and to boost their
growth. However, more needs to be done to address the challenges faced by
MSMEs. The government needs to continue to invest in MSMEs and to provide them
with the necessary support so that they can reach their full potential.

In addition to the government's policies, there are a number of other things that can
be done to support MSMEs. For example, large businesses can source their inputs
from MSMEs and provide them with mentorship and guidance. Civil society
organizations can also play a role by providing training and support to MSMEs.