The Indian economy consists of all the production units or institutions such as farms, factories, workshops, railways, hospitals, schools and banks.
The Indian economy can be broadly classified into three sectors:
Sectors in Indian Economy
Primary sector of the Indian Economy
This sector consists of agriculture and various allied activities such as dairy, poultry, fishing, forestry and cattle rearing or animal husbandry. Most of the goods are produced by using natural resources. The primary sector plays an important role in India, an overpopulated agro-based economy.
Secondary sector of the Indian Economy
This sector is also known as the industrial sector. It consists of manufacturing and construction activities in small-, large- and tiny-scale industries. The small- and tiny-scale industries include clothes, candles, poultry, matchbox, handloom and toys which provide huge employment. The large-scale industries include iron and steel, chemicals and fertilizers; their
contribution to the gross domestic product is significant.
Tertiary sector of the Indian Economy
This sector produces services such as transport, communication, banking, insurance, trade and commerce, including both national and international trade. Also, all services such as doctors, engineers, lawyers and teachers fall in this sector. It also includes the services provided by the government for the welfare of citizens.
Basic Characteristics of the Indian Economy
While reviewing the process of India’s economic growth during the planning periods, there are some dynamic characteristics of this growth process. The study of the basic characteristics of the Indian economy can be grouped under the following heads:
Underdeveloped Indian Economy
An underdeveloped economy is one with low levels of living, absolute poverty, low per capita income, low assumption levels, poor health services, high birth and low death rates and dependence on foreign economies.
Dualistic Indian Economy
The Indian economy is considered to have a dualistic feature because it comprises the features of both types of economies: underdeveloped and progressive. A very large portion of the economy consists of people who are underdeveloped and belong to the backward class. This includes people from the rural and agricultural sectors of the economy.
On the other hand, a very small portion of people in the economy is rich and developed. This includes people belonging to the urban industrial sector. The first mentioned category is known as regional dualism and the second mentioned category is known as technological dualism.
Mixed Indian Economy
It refers to a type of economy wherein some important part of production is undertaken by the government, while some are left to private owners. Thus, it is a blend of both capitalist and socialist economies. It means the co-existence of two sectors: private and public. This provision was included by the government of India in the industrial policies of 1948 and 1956.
India as a Developing Economy
The principal features of the Indian economy as a developing economy are
Increase in the national income: An increase in the national income leads to the development of an economy. It is the best indicator of the economic development of a country. During the independence period, the national income of our country was only about Rs 1.32 lakh crore. Currently, the national income increased to 236.65 lakh crore.
Increase in per capita income: Increase in per capita income is also considered one of the best indicators of the economic development of a country. Therefore, there is a need to express progress in economic growth in income per head.
Rise in capital formation: Rise in capital formation gives rise to primary, secondary, and tertiary sectors. The rate of capital formation depends on the rates of saving and investment.
Agricultural progress: New agricultural policies during the Green Revolution have improved the yield per hectare of land. This increase in production is seen in all major crops of the country. This is because Indian agriculture has become technology-oriented, making the country self-sufficient in food grains.
India as a Planned Economy
A planned economy is also known as a controlled economy. In this kind of economy, the government/state has full control over all the economic activities/matters of the country.
India as a Federal Economy
According to the Constitution of India, the Indian economy is a federal economy. It implies that the powers
of the government regarding the control and regulation of the economic life of the people will be undertaken at two levels: centre and state. The centre has the responsibility to guide and regulate the major economic activities of the country such as railways, post, and atomic power plants.
On the other hand, the state has several responsibilities which fall under its jurisdiction such as education, electricity, irrigation, and transport. At times, the centre has major controlling power such as in the construction of dams and river valley projects even after assigning these responsibilities to the state. Hence, the centre plays an important role in this economy.
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