500+ Words Essay on Indian Economy
“There can be economy only where there is efficiency.” – Benjamin Disraeli
Indian economy is the fifth largest economy in the world currently. It is a developing market economy. The economic growth of India has even surpassed that of China in recent years. India has been able to successfully jump up ranks in various indexes, including the Ease of doing business index.
Agriculture still remains the largest employer in the country, with the construction and real estate sector right behind it. India is the world’s second-largest coal and cement producer. The government has had a major role in accelerating the economic growth of the country.
The way industries operate in our country has been enhanced by the Industrial Policy. Many industries have been freed from the system of licensing and have no restriction on importing new and latest technology from other countries.
The government has also taken up disinvestment in the industries where it is unprofitable. The focus on privatisation is being increased to intensify healthy competition. The government is also making efforts to revive and promote small scale industries and businesses.
The New Trade Policy has made it extremely easy for traders to carry out imports and exports. The trade of all items barring a restricted few has been allowed. Also, the tax on many items has been abolished, while for others, the amount has been visibly minimised. A lot of incentives are also being provided to exporters to encourage foreign trade and gain foreign currency.
History of the Indian Economy
For continuous 1700 years starting from the 1st century A.D., the Indian economy constituted about 35 to 40 percent of the world’s GDP and was the topmost flourishing economy. The Indus Valley civilisation proved to provide a form of permanent settlement to the people of the country alongside efficient water supply, urban planning and sanitation.
The silk route provides proof of early Indian trade. Under the Mughal empire, the Indian economy thrived and prospered. It was during this time that a focus on industrial production was also seen. Under the British rule, the Indian economy suffered some significant setbacks and was downtrodden. There were major changes seen in the agricultural sector.
The commercialisation of agriculture increased. Farmers were forced to grow cash crops that were used in trade, rather than producing food crops. This resulted in numerous famines. The once rich handicrafts and handloom sector also dipped and sunk during the British Raj.
However, the colonial rule is responsible for giving the country railways, a legal system and a single currency exchange rate. The British era in India was rather exploitative, but our economy has come a long way since then with the help of policies pertaining to privatisation, liberalisation and globalisation.
Sectors of the Indian Economy
As the Indian economy has vastly diversified and grown in the previous years, the GDP contributed by the agricultural sector has reduced. However, it still continues to employ more than 50 percent of the country’s population. India is the largest producer of milk, pulses and jute and is the second-largest producer of wheat, rice and cotton. The agricultural sector accounts for about 20% of India’s GDP.
The main industries included in the Indian industrial sector include textile, construction, power, food processing, etc. The industrial sector employs around 22 percent of the country’s workforce and accounts for 26 percent of India’s GDP. Foreign Direct Investment is one measure by the government, which has increased foreign investments in the country, leading to further growth in this sector.
The services sector contributes the maximum to the GDP of the country. It includes financial services, aviation, insurance, hospitality, entertainment, etc. This sector employs around 23 percent of the Indian population. The main reason why the service sector has been able to do exceedingly well is because of outsourcing. The working population here is skilled, highly educated and cheaper than the labour in other countries.
Problems facing the Indian Economy
Unemployment is a problematic issue for the working-age population of India. The rate of unemployment has increased, and so has the population between the age bracket of 15-59 years. This unemployment is prevalent in the rural as well as the urban areas and is more widespread among the unskilled workers.
A significant chunk, including women, especially those that live in rural areas are illiterate and have low educational standards. This leaves so much potential untapped and opportunities unexplored.
There is the existence of poor infrastructure in the economy. Millions of Indians do not have access to basic life amenities. They even lack clean drinking water. Around 40 percent of the fruit rots before being brought to the markets. These are just a few of the constraints.
The growth of the Indian economy has been unable to decrease the parity between the rich and the poor of the nation. Instead, it only seems to increase and favour those who are wealthy and hold power.