Indian Economy — Economics STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsIndian Economy5 Marks
Question
Explain the state of Indian economy after Independence.
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Answer
Indian economy after independence:
After the British rule, India was ruined economically. Post-independence there were several major economic challenges before India.
Today, India exhibits characteristics of a developing country with some areas having lesser development and some showing much development.
Overall, in current times, India can be termed as a mixture of less developed as well as a developing country.
India’s post-independence economy is discussed below:
$1.$ Per capita income:
According to Human Development Report, the per capita income of India in $2013$ at purchasing power parity was $ 5,150.$
This was not only lower than that of developed countries but also lower than many developing countries like China with per capita income of $11,477$ and Sri Lanka with per capita income of $9,250.$
$2.$ Agriculture:
India has always been an agrarian country. Although the share of agricultural sector in employment has gradually declined but still it is relatively higher.
India’s higher agriculture development and lesser development of industries and service sector have resulted in lower economic development.
Developed nations have lesser percentage employment in agriculture and higher in the industrial and service sectors.
As per Human Development Report, during independence about $72\%$ of the population was dependent on agriculture. This declined to $58\%$ in $2001-02$ and to $49\%$ in $2013-14.$
$3.$ Industries:
Post-independence India developed well in industrial sector. The contribution of industrial sector in employment and national income has increased over time.
Contribution in employment:
In $1950-51,$ the share of industries in employment was $10.6\%.$ This increased to $18.2\%$ in $2001$ and further to $24.3\%$ in $2011-12.$
Contribution in national income:
In $1950-51,$ the share of industries in national income was $16.6\%.$ This increased to $26\%$ in $2013-14$
(Source: $CSO$ i.e. Central Statistical Organization).
Today, $2/3rd$ of the export earnings are earned from the industrial sector.
Although the industrial sector is progressing, India cannot be called a completely industrialized nation.
$4.$ Service sector:
Contribution in employment:
In $1951,$ the share of service sector in employment was $17.3\%.$ This increased to $25.2\% $ in $2001$ and further to $27\%$ in $2011-12.$
Contribution in national income:
In $1951,$ the share of service sector in national income was $30.3\%.$ This increased “to $38\%$ in $1980-81, 50.4\%$ in $2000-‘01$ and further to $52.7\%$ in $2014-15.$
From such a rapid increasing share of service sector we can say that India is moving fast on the path of growth and development.
$5.$ Population growth:
The growth rate of population in India is one of the reasons for its lesser development.
After independence, population in India has grown annually by $1.5\%$ which means there is population explosion in India.
In $1901,$ the population of India was $23.84$ crores. It increased to $36.1$ crores in $1951, 102.7$ crores in 2001 and further to $121.02$ crores in $2011,$ Such high growth rate of population has always remained a matter of concern for Indian development.
$6.$ Poverty:
One of the main characteristics of Indian economy is a very high level of absolute poverty.
Though percentage of population living below poverty line has declined , over years it is still quite high.
In $1973-74,$ about $54.9\%$ of population lived below poverty line. It then declined to $45.3\%$ in $1993-94,$ to $37.2\%$ in $2004-05$ and further to $21.9\%$ in $2011-12.$
$7.$ Unemployment:
India has been a facing a severe problem of structural unemployment.
Structural unemployment refers to a form of unemployment caused by a mismatch between the skills that workers in the economy have, and the skills, demanded by employers.
In $1951, 33$ lakh people were unemployed.
In $1999-2000,$
$7.31\%$ of the total population was unemployed. This increased to $8.2\%$ in $2004-05$ (Source: NSSO-National Sample Survey Organization).
The good side is that the unemployment decreased to $6.6\%$ in $2009-10$ and further to $5.6$ in $2011-12.$
The proportion of disguised unemployment is higher in rural areas. Disguised unemployment cannot be exactly measured.
$8.$ Human development:
Average life expectancy, literacy, gender ratio, infant mortality rate, etc. are various indices that measure the human development. On studying these indices one can see that India- stands at lower rank in human development. ‘
One such index is the Human Development Index $(HDI)$. India’s $HDI$ in $2000$ was $0.463$, in $2010$ was $0.547$, in $2012$ was $0.554$ and in $2013$ was $0.586.$ These measures on the $HDI$ are very low.
In $2013$ India’s rank was the $136$ in a list of $187$ countries, which confirms that India’s $HDI$ is very low.
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