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India as an undeveloped economy

On seeing the above features, we find that Indian economy exhibits most of the above features of an undeveloped economy. It can be illustrated as below.
  • Predominance of agricultural sector: Agriculture being the main occupation of the people in India. At the time of independence, 72% of the population was dependent on agriculture. Currently about 53% of the population continued to be dependent on it
  • Poverty is wide spread. Every third poor person in the world is an Indian. According to planning commission, 29.8% of the population was below poverty line in 2009-10.
  • Population explosion is a prime feature of Indian economy. India experiences an average annual growth of 2% in its population. One hand, the death rate is falling but, the birth rate still remains to be high, resulting in population explosion.
  • The dependency rate (below 15 and above 65 years) in India is close to 40% as compared to developed countries which is about 33%.
  • India’s per capital income was $1,420 in 2011. Low per capita income has also led to a low the standard of living.
  • Gross domestic savings were below 20% of GDP (at current prices) between1950-1990 and thus, the gross domestic capital formation has also remained below 20%. However, post 1990, the percentage on both improved drastically
Gross domestic savings
Gross domestic capital formation
2008- 09
  • Techniques of production in agriculture continue to remain primitive and backward. This has led to low productivity in agriculture as well as in industrial sector when compared to that of advanced countries
  • Unemployment has increased. As per 66th Survey by National Sample Survey Organisation (NSSO), the unemployment rate of India is 6.6% of the labour force, which means out of 1000 persons in the labour force, as many as 66 are unemployed. India also has a high rate of disguised employment, which refers to an employment that leads to insignificant or negative contribution to output
  • Human Development Index (HDI) formulated by the United Nations Development Programme (UNDP) is used in India for measuring human well-being. The HDI is a composite of three basic indicators – longevity, educational attainment and standard of living. Longevity is measured in terms of life expectancy at birth, knowledge in terms of education and standard of living in terms of real GDP per capita. The HDI is a simple average of the three indices. According the UNDP report of 2013, India’s global ranking in this index is 136 among 187 countries and its HDI was 0.54.
  • There is unequal distribution of income and wealth in the nation. The Gini coefficient is used to measure the inequalities of income and wealth. It measures the deviation of the distribution of income or consumption of an individual or a household, from a perfectly equal distribution. According to the Human Development report-2010, the Gini index for India was 0.368 for the period of 2000- 2010. It was 0.33 in 1999-2000 and 0.297 in 1994. A Gini index of zero represents perfect equality while a Gini index of one represents perfect inequality

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