Why is Indian economy regarded an underdeveloped economy? State its basic characteristics
The Indian economy is often regarded as an underdeveloped economy due to several factors:
Get the full solved assignment PDF of MCO-04 of 2024 session now.
- Low per capita income: India has a relatively low per capita income compared to developed economies. Despite its large GDP, this wealth is distributed among a vast population, resulting in lower income levels for many individuals.
- High poverty levels: A significant portion of India’s population lives below the poverty line, lacking access to basic necessities such as food, shelter, healthcare, and education.
- Infrastructure challenges: India faces infrastructure deficiencies in areas such as transportation, energy, sanitation, and telecommunications. Inadequate infrastructure hinders economic growth and development.
- Uneven regional development: There are significant disparities in development between different regions of India. While some urban areas experience rapid growth and industrialization, rural areas and certain states lag behind in development indicators.
- High unemployment and underemployment: India struggles with high levels of unemployment and underemployment, particularly in the informal sector. Many people are employed in low-paying jobs with limited job security and benefits.
- Poor health and education outcomes: Despite improvements in recent years, India still faces challenges in healthcare and education. Access to quality healthcare and education remains limited for a large portion of the population, impacting productivity and human capital development.
- Dependency on agriculture: A significant portion of India’s workforce is employed in agriculture, which contributes a relatively small share to the GDP. This dependency on agriculture indicates a lack of diversification in the economy.
Basic characteristics of the Indian economy as an underdeveloped economy include:
- Dual economy: India has a dual economy characterized by the coexistence of traditional agricultural practices alongside modern industrial and service sectors.
- High population density: India has one of the highest population densities globally, putting pressure on resources and infrastructure.
- Low industrialization: Despite recent growth in industrial sectors, India’s industrial base remains relatively underdeveloped compared to advanced economies.
- Income inequality: There are significant disparities in income distribution, with a small portion of the population holding a disproportionate share of wealth.
- High poverty rates: A large portion of the population lives below the poverty line, facing challenges related to income, health, education, and basic living standards.
- Limited technological advancement: While India has made strides in technology and innovation, there are still gaps in technological infrastructure and access, particularly in rural areas.
- Reliance on foreign aid and investment: India relies on foreign aid, investment, and trade to support its economic development efforts, indicating a level of dependence on external support.