The chronic condition of Indian economy on the eve of independence compelled the policy-makers to adopt the mixed economy system for planned growth and development of the economy. India holds seventh position in the largest economies of world as per the nominal GDP and third as per purchasing power parity. The nominal GDP of our country is $ 2.72 trillion which makes it fastest growing economy of the world between 2014 – 2018 but after 2018, an unprecedented economic slowdown can be seen easily traced. Our economy is described as a developing economy belonging to lower middle- Income group but still reflects the sign of an underdeveloped nation. We have made growth in numbers seen in economic operations but there is no substantial rise in standard of living of the citizens. Rampant poverty, high unemployment rate, low credit creation, low investment, poor infrastructure, negligence in health-care and educational facilities hindered the development process of our nation and signals the slow paged economic growth.
India has ranked 103 among 119 countries in the Global Hunger Index; 140 among 156 countries in the World Happiness Index and the Human Development Index ranking of India is 130 among 189 countries with HDI Value of 0.64 in 2017 that put the country in middle human development Category. The performance of the country in all these social indicators ranking is even worse than it’s small neighbouring countries like Sri Lanka, Maldives, Bhutan, Myanmar. According to the IMF report in 2017, India’s per capital income was $1983 and Was ranked 140 among 188 countries. This indicate that the per capita income Of most of the countries of the world is far better than India.
The primary sector which is providing employment to 53% of the total population of India but contributes only 17% in GDP share (2018-19) while the secondary and tertiary sectors account for 29.6% and 54.3% of total GDP share respectively. The tertiary sector has significant contribution in GDP but it can not generate much employment which leads to increased dependency on agriculture and allied activities and availability of cheap labour force. It is evident from the current unemployment rate of 6.1% which is four decades high. High dependency on agriculture leads to low literacy rate, unskilled labour and high poverty rate of around 21.9% in 2011 which shows that 5.5% of total population lives under extreme poverty. This can never increase the living standards of the rural areas. India has 1.3 billion population, nearly 17.74% of world total population, resides merely in 2.4% of total world geographical area; thus, puts an immense pressure on available economic resources. In spite of huge population especially young population we are lagging behind in human capital formation due to lack of skilled labour force. Even in 2017, the population growth rate is 1.13% while growth in gross capital formation was 1.7304% (World Bank).
According to 2018-19 data of CIA world fact book, the export of the country is $330 billion while the imports are $514 billion which resulted in unfavourable BOP and put an additional pressure of gross external debt amounted $1543 billion. Not only this, the economy also have heavy burden of public debt around $2.1 trillion which is almost 69.037% of total GDP (2019). Moreover, the credit rating of India is also declining.
It can be concluded that most of the vital sectors of the economy are not performing well and there is an urgent need for a comprehensive-corrective policy to boost the dipping growth and development process in the economy. The policies should not be result of hasty decisions and before initiating any structural reform the facts and figures should be considered twice and also their implications on socio-economic health of nation. If the necessary precautions aren’t taken well, it may collapse the critically positioned Indian economy.
(Writer is a student of FoC, BHU and Member of Finance and Economics Think Council)