ndian Economy – Detailed Notes
1. Definition
The Indian economy refers to the economic structure and activities of India, including
production, distribution, and consumption of goods and services by individuals, businesses,
and the government.
2. Types of Economy
1. Traditional Economy – Relies on agriculture, bartering, and customs.
2. Command Economy – Government controls production and allocation (e.g.
socialism).
3. Market Economy – Free interaction of demand and supply determines production.
4. Mixed Economy – India follows this model, combining private enterprise with state
intervention.
3. Key Sectors of the Indian Economy
1. Primary Sector
o Agriculture, forestry, fishing, mining.
o Employs more than 40% of the population.
o Major crops: rice, wheat, sugarcane, cotton.
2. Secondary Sector
o Industry and manufacturing.
o Includes steel, chemicals, textiles, automobiles.
3. Tertiary Sector
o Services like banking, insurance, education, IT, transport.
o Fastest-growing sector in India.
4. Features of Indian Economy
Mixed economy.
Agriculture-dependent but declining contribution to GDP.
Rapid growth in services sector.
Large informal sector.
High population but large labor force.
Challenges like poverty, unemployment, inflation.
Liberalization, Privatization, and Globalization (LPG reforms).
5. Major Economic Indicators
1. GDP (Gross Domestic Product) – Total value of goods and services produced.
2. GNP (Gross National Product) – GDP + net income from abroad.
3. Per Capita Income – GDP divided by population.
4. Inflation Rate – Increase in price levels over time.
5. Fiscal Deficit – Excess of government expenditure over revenue.
6. Five-Year Plans (Historical Context)
Started in 1951, aiming at planned development.
Focus on agriculture, industry, infrastructure, and human development.
Shifted towards liberalization in the 1990s.
7. Major Economic Reforms
1991 New Economic Policy – Industrial deregulation, foreign investment, reduction
in import duties.
GST (Goods and Services Tax) – Uniform tax structure across states.
Make in India – Boost domestic manufacturing.
Digital India – Technology-driven economy.
8. Challenges
Poverty and inequality.
Unemployment, especially among youth.
Agricultural distress.
Inflation and price rise.
Infrastructure gaps.
Environmental issues and climate change.
9. Recent Trends (2023-2025)
Growth in services and IT exports.
Increased focus on renewable energy.
Development of infrastructure corridors.
Rise of startups and digital payment systems.
Government schemes like PM-Kisan, Ayushman Bharat, and Startup India.
10. Important Government Programs
MGNREGA – Employment for rural areas.
PM-Kisan – Direct income support to farmers.
Skill India – Workforce training and employment generation.
Atmanirbhar Bharat – Self-reliant economy strategy.
