C.P.T.

(Macro Economics)
Chapter-1 (NATURE OF INDIAN ECONOMY)
By: Manish Dua
INDIA AN UNDEVELOPED ECONOMY Features of an Undeveloped Economy Agriculture is the main occupation of the people. Nearly 60 to 80 per cent of the population is engaged in agriculture and its related activities. Poverty is wide-spread. Population grows at a high rate (about 2 per cent per annum). The standard of living of people is generally low productivity of labour is also considerably low. The production techniques are backward. Investment in research and development is quite low. The incidence of unemployment and underdevelopment is quite high. Income inequalities are widespread. Indias case Agriculture is the main occupation of the people in India. At the time of independence nearly 76 per cent of the population was dependent on agriculture. At present, nearly 54 percent population is dependent on agriculture. There has been an increase in the absolute number of people engage in agricultural activites in India. National Sample Survey Organization (NSSO) 2004 05) nearly 22 per cent of the population is below poverty was 36 per cent in 1993 94 and 26p per cent in 1999 2000 Population has grown at a fast rate of more than 2 per cent.The dependency rate i.e; percentageof people in non working age group is nearly 40 per cent in India as compared to developed countries where it is about 33 %. Indias per capital income was $720 in 2005. Tenth plan aimed to create approximately 50 mn employment opportunities during the plan period.The result of 61ST NSSO round show that about 47 million person were provided job during 2000-05.Thus we find that there are a large number of unemployed people in India. The level of human well-being is also quite low. Human Development Index (HDI) constructred by the United National Development Programme (UNDP) is used. The HDI is a composite of three basic indicators of human development longevity, knowledge standard of living. The HDI is a simple average of the above indices. The UNDP finds this index for all countries and ranks them. According to the latest UNDP report, 2006, Indias relative global ranking on this index has remained at a low of 126 among 177 countries up by one rank from the last three years in a row. Its HDI was .577 in 2004 which improved marginally to .611 in 2004.

In order to measure the inequality of income and wealth, generally Gini index is used. A Gini Index of zero represents perfect equality while an index of one represents perfect inequality. The Gini coefficient lies between 0 and 1. According to the World Development Report 2006, the Gini index for India in 1999 00 (survey year) as 0.33. The corresponding figure was 0.297 in 1994. Thus, over this period, the inequalities of income and wealth have increased. Low rate of saving 2004 05 30% of G.D.P 1. Rise in National Income: Average growth rate 5.5%
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Indias national income i.e. Net National Product (NNP) at factor cost was Rs. 1,32,367 crore in1950 51 which rose to Rs. 22,95,243 crore in 2005 06. Thus, over a period of five and half decades, the NNP has increased by 16 times. On an average, the NNP has increased at a rate of a little less than 5 percent per annum. During the last two and a half decades, NNP rose at a rate of more than 5.5. percent per annum as against 3.4 per cent per annum during the first three decades of planning. Thus, we see that India is growing although at not so high rate of growth Per capita income in India was Rs. 3,687 in 1950 51. It rose Rs. 20734 in 2005 06 increased by more than four and half times. On an average, the per capital income has increased at a rate of around 2 2 per cent per annum. Occupation structure is changing There is shift of labour force from primary sector to secondary and tertiary sector. Sector Primary Secondary 1950 51 72.1 10.6 2001 59.5 18.2 22.5

17.3 Tertiary It shows development Share in G.D.P Primary 18.5, Tertiary 55.1 Secondary 26.4 Other things Railway 2nd largest in world (10000 km) Roads one of the in world (3.34 mn km) Energy installed capacity increased 1950 51 2004 05 2300 mw 143000 mw Irrigation facility improved 1951 51 2004 05 22.6 mn Hect. 84.7 mn Hect. Medical and health, no. of doctor increased 1950 51 2004 05 61.18 thousand 656.1 thousand 9X Bed population 1950 51 3.2/10000

2003 04 9.5/10000

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