What are the basic characteristics of the Indian economy as developing country?

India is a developing country in the lower middle income group. The basic characteristics of the Indian economy as developing country are:

1. Low per capita income: The per capita income of an Indian in 2011 was $ 1410. Barring a few countries, the per capita income (PCI) of the Indian people is the lowest in the world.

2. Occupational pattern – primary producing: One of the basic characteristics of India being an underdeveloped country is that it is primary producing. A very high proportion of working population is engaged in agriculture, about 52 per cent and its contribution to national income was only 13.9 per cent in 2011-12. Since agricultural sector is a low income earning sector and also because the productivity per person engaged in it is very low.

3. Heavy Population pressure: One of the major problems in India is the high level of birth rates which is also an evil effect of illiteracy. A positive attributive is the average life of citizen has increased which adds further to the working population. The is further identified with a falling death rate.

4. Prevalence of chronic unemployment and under-employment: In India cheap labour force is available in abundance. It is very difficult to engage in gainful employment to the entire working population, which is the result of a deficiency of capital in the country.

5. Steady improvement rate of capital formation: In a country like India where the rate of population growth is 1.36 per cent (during 2011-12), about a high investment is needed to offset the additional burdens imposed by a rising population. Unless this balance is achieved, there is a danger that higher growth will only be obtained at the expense of unacceptable inflation.

6. Maldistribution of Wealth/Assets: Inequality in asset distribution is the principal cause of unequal distribution of income in the rural areas. It also signifies that the resource base of 50 per cent of the households is so weak that it can hardly provide them anything above the subsistence level of income.

7. Poor quality of human capital: Underdeveloped countries suffer from mass illiteracy. Illiteracy retards growth. A minimum level of education is necessary to acquire skills as also to comprehend social problems.

8. Prevalence of low level of technology: In India, the most modern technique exists side by side with the most primitive in the same industry, but the majority of the productive units is produced with the help of inferior techniques as judged by the modern scientific standards. The sharp differences in productivity between developed and underdeveloped nations can be traced to a considerable degree to the application of superior techniques by the former.

9. Low level of living of the average Indian: Failure to secure a balanced diet manifests in India in the low calorie intake and low level of consumption of protein. Another factor is that in India cereals predominate, but in contrast the diet in the advanced countries is rich in content because it includes fruits, fish, meat, butter and sugar. The protein intake is nearly less than half of the level prevalent in advanced countries. This results in developing less strength to fight diseases and is also partly responsible for the low level of efficiency of the Indian workers. The picture regarding housing is equally bleak.

10. Demographic characteristics of an underdeveloped country: Demographic characteristics associated with underdevelopment are high density of population. Besides this, the average expectation of life is low and infant mortality rates are high. The density of population in India in 2010 was 412 per sq. Km. as compared with that in USA, which is 34. Even in China density is 143 per sq. km. obviously, a higher density imposes greater burdens on land and other natural resources. The major problem for India is to harness the growing working age population in emerging areas of the economy, both in industry and services.

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