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India- as a developing economy

India has shown remarkable improvements in many areas over the decades and is now on the road to development. The following facts highlight that India is, in fact, a developing economy
  • Rise in national income: India’s national income i.e., Net National Product (NNP) has increased by over 17 times over a period of 60 years. It was around 2,55,000 crore in 1950-51, which rose to about 45,72,000 crore in 2011-12. On an average, the NNP has increased at a rate of little less than 5% p.a. Thus, we see that India is indeed growing, though not at a fast pace
  • Rise in per capita income: The per capita income which was 7,114 in 1950-51 increased to about 38,037 in 2011-12 (See chart 1). Thus, it has increased by more than 4 times in a span of about 60 years
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  • Occupational distribution of population: Occupational structure refers to the distribution of work force in different occupations of the country. Occupations are mainly classified into:
    • Primary sector: It includes agriculture and its allied activities such as animal husbandry, forestry, poultry farming etc.
    • Secondary sector: It includes all types of manufacturing and construction activities
    • Tertiary sector: It includes services such as trade, transport, communication, banking, etc.
It has been found that there is a shift of labour force from the primary to the secondary and tertiary sectors. This happens because of the following reasons:
  • As an economy grows, income increases, but demand for agricultural goods does not increase proportionately and demand for goods and services provided by secondary and tertiary sectors increases
  • Secondly, better techniques of production are available to the agricultural sector which results in the replacement of man by machines
Occupational structure in India: During 1951, the number of people occupied in the primary, secondary and tertiary sectors were 72%, 10.6% and 17.3% of the working population respectively. According to the Economic Survey 2009-10, around 53.2% of the population was engaged in primary sector and 21.5% and 5.3% of the population is engaged in the secondary and tertiary sectors during 2009-10. Thus, over a period of five and a half decades, there has been a shift in the work force from the primary to the secondary and tertiary sectors showing significant development in the economy.
  • Changes in sectoral distribution of domestic product: The share of agriculture and allied activities has fallen and shares of secondary and tertiary sectors have improved in the GDP. The share of primary, secondary and tertiary sectors in the GDP during 2011-2012 are 14.1%, 30.2% and 55.7% respectively. The corresponding figures for 1950-51 had been 53.1%, 16.6% and 30.3% of the GDP
  • Growing capital base of the economy: At the time of independence, we had very few basic and capital goods industries. But after independence, priority was given to the establishment of basic industries. Thus, a large number of industries such as iron and steel, heavy chemicals, heavy engineering, capital equipment etc. have been established
  • Improvements in social overhead capital: Social overhead capital includes transport, irrigation facilities, energy, education system, health and medical facilities. Since independence, these facilities have undergone a sea change in the following manner.
    • Indian railways is Asia’s Largest and world’s 4th largest network under a single management
    • Diesel and electrical locomotives have replaced steam engines
    • Indian road network has become second largest networks in the world aggregating to 4.69 milion kilometres
    • In 2011-12, the installed electricity generating capacity was 2,36,000 MW against 2,300 MW in 1950-51. While our industrial set up for basic and capital goods were highly primitive at the time of independence, it has substantially improved since then
    • Irrigation facilities have increased, thus raising the land under irrigation from 22.6 million hectares in 1950-51 to 88.4 million hectares in 2008-09 (See chart 2)
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    • The number of higher secondary educational institutions has increased by 23 times. The literacy rate has increased from 18.33% in 1951 to 74.4% in 2011-12
    • In the field of medicine and health, the number of doctors has increased from 61,800 in 1951 to around 9.22 lakh in 2011. The bed-population ratio is now 1.03 per 1,000 population as against 0.32 per 1,000 in 1950-51
  • Development of the banking and financial sector: RBI was nationalised in 1949 and later, in 1969 and 1980, many other banks were nationalised.
Thus, it can be inferred that India is marching strongly on its road to development and will be a strong economic force in the near future. As a result of this, banks now cater to the requirements of people from all corners of the country. Agricultural sector, small scale industries and other sectors enjoy the facilities rendered by these banks which provide funds on a priority basis to them at concessional rates of interest.

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