Features And New Trends Of Indian Economy

The gross national income of India as per capita in 2015 was 1600. Gross national income is the sum of value added by all resident producers plus any product taxes (fewer subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad. It is calculated as gross national income divided by midyear population. The data used is in current local currency.

Quality of life is a subjective and intangible concept. Universal Declaration of Human Rights of 1948 provided a list of factors that are considered while evaluating the quality of life. It includes GDP which is the total output of an economy, distribution of income in society, unemployment level, life expectancy, and literacy rate. It also includes certain other factors such as the housing, access to clean water, pollution level, the standard environment level of transport, climate changes, etc.

At the time of independence, a large proportion of human labour in India was employed in the field of agriculture. The share of agriculture in India's Gross Domestic Product was approximately 52 %. The share of employment in the agriculture sector as a share of the total workforce was 100 million out of 140 million working population.

The rate of population growth in India from 2001 to 2011 was 17.64 % IN 2011 as compared to 21.15% in 2001. This decadal growth rate was given by census. According to this report during this decade the book. It is also the first decade which had accounted for the least amount of people added to the population. The total population growth was : 18,14,55,986 (17.64 %). Among this, the population growth of male was 9,15,01,158 (17.19 %) and of female was 8,99,54,828 (18.12 %).

Human development report is prepared by the Human Development Report Office of the United Nations development programme. It is an international report which is prepared by a selected team of leading scholars, practitioners and the members of the human development report office.
The first report was published in 1990 and was called the "Concept and Measurement of Human Development."

The Economic reforms were introduced in India in 1991. This included a new industrial policy, a new trade policy, reforms in the monetary market, capital market and fiscal front, along with a change in the price and subsidy system.

Liberalization is the process by which a government removes all the restrictions on its economic sector in the private areas. It is usually connected with free trade and the free market. The main aim is the free flow of capital between nations, the efficient allocation of resources and competitive advantages. This is usually done by reducing taxes, tariffs and removing other trade barriers.

Privatization means the transfer of ownership, business from the government to the private sector. It helps to increase in efficiency as the private firms usually focus on the goal of profit maximization. The main form of inviting private companies was through disinvestment which implies the transfer of minority shareholding to the general public.

Globalization means the free movement of people, goods across the world. It is implemented in a unified and integrated manner. It bridges the gap between the local economy and the international market. India had adopted this in 1991 under the recommendation of Dr. Manmohan Singh. It helps to increase the employment, improvement in saving and better purchasing power.

Human capital is the stock of knowledge, habit, social attribute, and personality which are embodied in a person so that he has the ability to perform labour to produce a certain level of economic value. It is an asset which a human being hold which can be used by any organization to advance its goal. It affects economic growth and can help to develop an economy. For example investment in education is an investment in the human capital.

The Swadeshi Movement was a strategy to remove the British rule from the Indian territory. The first Swadeshi movement was developed by Dadabhai Naoroji, Gokhale, Ranade and a few others, The second Swadeshi movement started with the partition of Bengal by the Viceroy of India, Lord Curzon in 1905 and continued till 1911. This was a prominent focal point of Mahatma Gandhi who said the Swaraj is self-rule. It was launched as a protest movement which also gave way to the Boycott Movement. It was also called Vande Mataram Movement in Bengal.

India has greatly improved in terms of the quality of life. It has one of the largest economies that contributes to the Global system. The growth has been slow yet noticeable. The agriculture today accounts for 16% of the total value added as compared to 52% in 1951. According to the Global competitiveness report of 2015 - 16 India is at the 55th rank out of 140 economies. Despite this, a large section of the people is still unable to get out of poverty.
1. The educational system is lagging behind. The enrollment level is extremely low at all the levels. Only 1.4% Of secondary students are enrolled in technical and vocational programs. The average educational level is only 7.3 years. Most of the students are male who benefit by gaining 2 years more of education as compared to the girls. Out of all the 37th lower-middle-income countries, India is at 31 in terms of providing equal educational opportunities for men and women.
2. Another area where India lags behind is the transport infrastructure. The airline sector is a major weakness of India's transport system. Most of the cities do not have operational airports. They are situated in the outer areas where the roads are not proper. This accounts for a high number of accidents in the country. Among all of the transport systems available, railways perform the best; With 65000 km of rail, it is the fourth largest railway system in the world.
3. The health system also has limited coverage. Due to the increase in the expenses, most of the people are unable to gain access to the good health system.

Demographic features are the socio-economic characteristics of a population of an area which is expressed in a statistical manner such as sex, educational level, income level, life expectancy rate, religion, occupation, birth rate, and death rate.
1. The population of India is very large in size. It ranks second in the world in terms of the size of the population. Although India has only 2.4 percent of the total land of the world, it has 17% of the total world population.
2. The population was 102.86 crore as per the 2001 census. It is 121 crore as per the 2011 census.
3. Regarding the age composition, India has 50% of the population consisting of the youngest people. The age group of 0 to 14 years is 37.3%, that of 15 to 60 years is 55.4% and above 60 years is 7.3%.
4. Sex ratio refers to the number of females 1000 males. It reflects the relative chances of survival of women as well as indicates the social health of a society. It had fallen from 933 in 2001 to 940 in 2011.
5. The rural-urban composition of India's population is a mirror on the pattern of living of the countries population. The percentage of the total population in the year 2011 was 67.7% in rural areas and 31.1% in urban areas.
6. The density of population is the average number of people living per square kilometer. It is an important determinant of the magnitude of the burden that the land has to carry and for future potential growth. According to the 2011 Census, the average density per square is 382.

During Independence agriculture had very low productivity. However, this situation was completely changed with the introduction of economic planning in the year 1950 to 1951. There was an increase in the area under cultivation, an increase in the growth of food crops and an increase in the yield per hectare. Although the industrial sector is prominent in India, the contributions of agriculture cannot be ignored. This is mainly because of the following reasons:
1. Agriculture helps to increase the Gross Domestic Product. The latest census shows a 26% contribution to the national income
2. It helps to give employment opportunities to two third of the working population. This is because the other sectors have failed to create much employment opportunity.
3. Due to the increase in the population, there is also an increase in the demand for food. The income elasticity of demand for food is extremely high. So it is important that agriculture should continuously increase its surplus of food grains or else a crisis is likely to emerge.
4. The agricultural sector plays an extremely important role to increase the rate of capital formation. If it fails to do so, the whole economy will suffer a setback.
5. It helps to supply raw material to the agro-based industries like sugar, jute, cotton textiles, etc. It is also important to the food processing industries.
6. It is very important to increase the rural purchasing power for Industrial Development. This is because two third of the population lives in villages.

In the year 1950- 1951, the share of primary sector in GDP was 55.8% and the secondary sector was only 15.2 %. The share of the primary sector fell to 26% in the year 2001, and the secondary sector increased to 22% in the same year. The industrial sector however expanded and increased to 22% in the year 2001 and eventually to 52% in 2001. This was mainly due to the increase in sectors of transport communication, finance, trade, etc.
The changing structure of national income indicate industrialization at a slow pace within the industrial sector there also certain changes such as it treated in favour of capital goods industry.
Another aspect of India's national income trend is the contribution of the public sector. As per the latest trends primary sector contributes 2.7 percent, the secondary sector contributes 4.9 percent, and the tertiary sector contributes 5.8 percent.

The following points highlight the changes that have taken place in the nature and structure of the Indian economy.
1. Earlier India was a predominantly agriculture nation. Over the years the other two sectors - the secondary sector and the tertiary sector have seen considerable improvement.
2. India is a mixed economy. Both the private and public sector are responsible for providing employment and revenue to the economy.
3. The share of export and import has increased considerably to 2.5% and 1.7% as per the latest WTO estimate.
4. The growth rate of India was quite stagnant up till 1980. Later India's economy was inspired by Soviet Union post-independence practices. This lead to an increase in the growth rate of India.
5. In 1991 the Indian government realized that it is extremely important for the local economy to be a part of the Global market. It introduced the LPG scheme or the liberalization privatization globalization scheme.
6. Currently, India is on the path of becoming one of the most developing economies of the world because its share of agriculture in total GDP is decreasing along with an increase in the service sector.

In 1991 the Government of India introduced the LPG scheme or the liberalization globalization privatization scheme. Disinvestment is a part of privatization. It is the selling of an investment. It implies the selling of government equity shares of public sector units in the market. It was started in 1992. The term privatization and disinvestment are completely different. Privatisation is when the government sells more than 51% of its ownership to private units. Disinvestment is below 50% where the government continues to have a major share.
India was facing a bankrupt situation prior to 1991. There were 236 public sector undertaking under operation. Out of which only 123 were making any profit. The top 20 profit making PSU’s counted for 80 % of the profits. This means that less than 10 % of the PSU’s were responsible for 80% of profits. The return on public sector investment for the year 1990-91 was just over 2 percent. The reason for the poor performance of the private sector was:
1. Poor capacity utilization
2. Low contribution to national income
3. A low rate of return on investment
4. Overstaffing and excessive delay

Globalization is the process by which a business or any organization can develop International influence or can start operating on an international level. It has four dimensions.
1. Economic globalization: It is the expansion of the economic relations of a country with other countries of the world. It includes activities such as a new economic order, internationalization of trade and increasing the role of International Trade institutions.
2. Military globalization: It is the expanding of the military powers of the country across the globe.This involves nuclear military weapons, radiation weapons, etc. It can be both progressive or defensive.
3. Political globalization: It is the expansion of political relations across the world such as enhancing the role of global governance, developing a modern nation-state system and the direction of the Global political system.
4. Cultural group globalization: It is the expansion of cultural relations across the world. It is a very broad concept that includes many entities such as globalization of language, culture, etc.

Globalisation is the process by which a business or any organization can develop International influence or can start operating on an international level. It has many advantages such as the following:
1. It helps to increase the trade and services of a country with that of the world. Many investors can invest their money in both developed and developing countries. For example, Japanese and European companies such as Kawasaki and Siemens started their work in China.
2. Information can easily be transferred from one part of the world to other. Information can be shared between individuals and corporations at a very fast rate.
3. The consumer now has access to the best goods and services throughout the world. The companies produce a better quality of goods and services, and the consumers have the liberty of choosing whichever product he thinks is the best.
4. Due to the increased competition in the market, the producers must also keep their prices at a competitive level to survive in the market.
5. As products and information can easily move between countries, this has led to the reduction of barriers between cultures. This has also had to facilitate communication between different nations.
6. People now have access to the best educational facilities across the globe. People from underdeveloped and developing countries often move to developed countries for better education.
7. With the increase in the globalization more and more companies have set up business in different countries. This has helped the people to gain more employment opportunities.

Globalisation is an interaction between different cultures of the world. It has brought the world closer. However, it has both positive and negative effects. For example, globalization has many advantages such as it helps an individual to gain the best educational facilities from all over the world. This also helps him to get access to a vast majority of employment opportunities in different countries. But there is a downside to it. If an individual leaves his home country to gain an educational degree in a particular country, he might not come back. If he gets a good job opportunity in the same country, he will hesitate to move back to his own country. Since he lives in a new country now, there is a change in culture, values, and tradition. Most of the individual are unable to retain their original values and tend to forget their indigenous knowledge. The indigenous culture is also affected by the increased access to digital media, satellite communication and the interaction of different people belonging to different cultures.

Skill development means the addition of a set of skills to oneself which can benefit the organization as a whole as well as for personal career development. In India, there is a separate Ministry of skill development and Entrepreneurship which was developed on 9th November 2014 with the main aim to coordinates skill development efforts in the country. It focuses on the development of skill in the youth and to bridge the gap between demand and supply of skilled labor. In the same context, prime minister Narendra Modi introduced a campaign called skill India on 15 July 2015. Its aim was to train 40 crore people of India through different skills by 2022. It included four schemes:
1. The National Skill Development Corporation India (NSDC) to set up good quality vocational Institute.
2. "Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to encourage the youth to take up those skill training programs which are relevant to the current industry
3. National Policy on Skill Development and Entrepreneurship, is an umbrella framework for all the skill related activities being carried out in the country
4. Skill Loan Scheme for any Indian citizen who has admitted in a course run by ITI, Polytechnic, state skill mission, etc

The development of the Indian economy can be explained through the following characteristics which clearly highlight the same:
1. India's national income and per capita income are extremely low. According to the World Bank estimate, it was $720 in 2005. It is one of the lowest per capita income of the countries. In the same year, the per capita income of Switzerland was 76 times of India's. Even after making certain required adjustments the per capita income has narrow down, but still, the difference remains significant.
2. The economy is excessively dependent on agriculture. Out of the total working population, the vast majority of the proportion is engaged in agriculture and its allied activities. In 2005, 58% of the population was engaged in agriculture and contributed 21% to the total national income. It also faces certain other basic problems like low productivity, lack of modernization and diversification.
3. India faces the problem of a very high growth rate. This has resulted from the high birth rate and the low death rate in our country. So if any development occurs, it is not able to be in balance with the increase in population. The increased growth rate also requires a higher economic growth to maintain a standard of living. This means the need for food, clothing, housing, clean water, schools, etc has increased.
4. The problem of unemployment continues even after so many years of development. India faces the problem of chronic unemployment or disguised unemployment. A large amount of labor is engaged in the agriculture field which is more than the required digit. This means the marginal productivity of labor is either very low or zero. In urban areas, the problem of educated unemployment has also increased.
5. Capital deficiency is another problem of India's economy. The capital available per head and the rate of capital formation is very low.
6. The distribution of wealth has the inequality feature in it. On one hand, there is a high degree of concentration of assets in the hands of big industrialist and on the other hand there is a vast majority of people living below the poverty line.
7. The technology used in India is extremely low. The industries use obsolete means of Technology and the sophisticated means of technology is used only in certain sectors. The poor Technology along with the low level of skills means the productivity of different sectors is very low.
8. Although India is a very rich country in terms of natural resources like land, water, minerals, etc. the problem of underutilization and wastage of resources is a main matter of concern.
9. The infrastructure facilities such as transport, communication, banking. education, health etc are not developed to the proper extent. Due to the lack of proper infrastructural facilities in the country, certain crucial areas are not being able to develop.
10. The rural areas need a proper economic organization for mobilization of their Savings and for other financial needs. Most of the Financial Institutions are set up in urban areas. The small farmers do not have access to these. It is extremely important to give certain initiatives to the banks to establish their branches in the rural areas so that the farmers are able to have access to short term and long term credit

The need for such as new economic policy is mentioned below:
1. The fiscal deficit of the government was increasing due to the increase in nondevelopment expenditure. The fiscal deficit is the difference between total expenditure and total receipt minus receipt. To cover the fiscal deficit the government had to increase the loans. This also implied an increase in public debt and interest payment liability.
2. When the receipt of foreign exchange Falls short of their payment, the problem of negative balance of payment arises. Although the government had adopted a restrictive policy in terms of imports and exports, the expected result was not seen. India's export could not compete with the quality of goods in the market. To cover this deficit, a large amount of foreign loans had to be obtained.

3. In 1990-91, the Iraq war broke which lead to an increase in the price of petrol. The foreign flow from Gulf countries stopped which further increased the problem.
4. The public sector undertakings performed poorly most of these wave in curing loss with an unsatisfactory performance they were not performing well due to the political interference and became a liability for the government.
5. The inflation period increased food grains prices. This deepened the economic crisis.
6. In 1990-1991, the foreign exchange reserve file to a very low level that it became insufficient to pay the import bill for 2 weeks.

Thus, the government decided to introduce the policy of LPG- Liberalisation, privatisation, and globalization.

The new economic policy was introduced in 1991 to solve the economic crisis and to increase the rate of economic growth in India. There were two types of reforms introduced under the new economic policy. Stabilization measures and structural reforms. Stabilization measures are short-term measures to correct the balance of payment situation and to bring inflation under control. Structural reforms are long-term measures to increase the efficiency of the economy. It was also called the LPG policy- liberalization, privatization and globalization.

LIBERALIZATION: It means removing all the unnecessary control and restriction like license, quota. This allowed the private sector companies to operate with fewer restrictions. The main objectives of liberalization:
1. To increase foreign capital formation
2. To increase competition in the international market
3. To decrease the debt burden of the country
4. To increase export and import of goods and services
5. To expand the market size
The Economic reforms under liberalization included:
1. INDUSTRIAL SECTOR REFORMS:
A) Abolition of industrial licensing government except for Liquor, Cigarettes,• Defence equipment, Industrial explosives, Dangerous chemicals, and pharmaceuticals.
B). Contraction of the public sector from 17 to 8. Reservation of railway, defense, and atomic energy sector.
C). De-reservation of production areas, Expansion of production capacity, Freedom to import capital goods
2. Financial sector reforms including a reduction in SLR from 38.5 % to 25% and CRR from 15.5% to 4.1%, change in the role of RBI from the regulator to facilitator and deregulation of interest rate.
3. Fiscal Reform or tax reform including simplification of the tax structure and lowering the rate of taxation.
4. Foreign exchange Reform or external Reform including devaluation of rupee abolishing of import quota, reduction in import duty, complete withdrawal of export duty and policy of import licensing.
PRIVATISATION : It is the process of involving the private sector in the ownership or operation of a state-owned Enterprise. The main objective of privatization are:
1, Raising funds from Disinvestment
2. Improving the financial condition of the govt.
3. Bringing healthy competition within an economy
4. Making Way for Foreign Direct Investment
Government company is converted into a private company either through disinvestment or by the withdrawal of the government from ownership and management of the public sector companies.

Globalization is the process by which a business or any organization can develop International influence or can start operating on an international level. It has many advantages such as the following:
1. It helps to increase the trade and services of a country with that of the world. Many investors can invest their money in both developed and developing countries. For example, Japanese and European companies such as Kawasaki and Siemens started their work in China.
2. Information can easily be transferred from one part of the world to other. Information can be shared between individuals and corporations at a very fast rate.
3. The consumer now has access to the best goods and services throughout the world. The companies produce a better quality of goods and services, and the consumers have the liberty of choosing whichever product he thinks is the best.
4. Due to the increased competition in the market, the producers must also keep their prices at a competitive level to survive in the market.
5. As products and information can easily move between countries, this has led to the reduction of barriers between cultures. This has also had to facilitate communication between different nations.
6. People now have access to the best educational facilities across the globe. People from underdeveloped and developing countries often move to developed countries for better education.
7. With the increase in the globalization more and more companies have set up business in different countries. This has helped the people to gain more employment opportunities.

Globalization means the interaction of the domestic economy with the large global market. Indigenous products are products that are originated or developed by the people in a particular country, region or environment. The indigenous market in a globalized economy has both negative and positive effects.

It has become a necessity to participate in the global market as all the countries do not have access to all the resources or the best technology. The labor may not be adequately skilled, and the cost of production may differ. So, the country can rely on each other for the best resources, technology, skilled labor and an effective cost of production. So, if we wish to use only indigenous products, there is a high chance of producing substandard goods at a high price with an unstable form of technology. With the lack of inputs, exports may also be curtailed. A series of unfavorable effects will be continued. So, to develop the indigenous market on a sound basis show, the following steps can be undertaken :

1. A good workforce

2. Innovative and risk-taking investors

3. A suitable market where this industry can grow.

Apart from this, we can make the indigenous market develop by making it modern, skilled and capable of competing in the world market. This would help to create more job opportunities and reducing poverty. The technology of the country would improve, which in turn would help the economy as a whole.

Skill development means the addition of a set of skills to oneself which can benefit the organization as a whole as well as for personal career development. The main role of skill development is highlighted below:

1. Create a set of skills which provide a lifelong opportunity for development. It involves the incorporation of skill during the early stages of schooling as well as good quality short term and long term training skills.
2. Establish a skill training setup that is acceptable both nationally and internationally and by creating a good quality skill framework that is applicable to all the states and training provider.
3. Improve the skills of certain sectors such as the construction workers. This would also help them to transit into a formal sector of employment.
4. Development of a skilled teacher training institution so that they are able to impart a good set of skills to the students.
5. Support the weaker and disadvantaged sections of the society through targeted skill development activities.

In India, there is a separate Ministry of skill development and Entrepreneurship which was developed on 9th November 2014 with the main aim to coordinates skill development efforts in the country. It focuses on the development of skill in the youth and to bridge the gap between demand and supply of skilled labor. With an annual budget of 3400 crore rupees, it is run by Dharmendra Pradhan as the Minister.

In the same context, prime minister Narendra Modi introduced a campaign called skill India on 15 July 2015. Its aim was to train 40 crore people of India through different skills by 2022. It included four schemes:
1. The National Skill Development Corporation India (NSDC) to set up good quality vocational Institute.
2. "Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to encourage the youth to take up those skill training programs which are relevant to the current industry
3. National Policy on Skill Development and Entrepreneurship, is an umbrella framework for all the skill related activities being carried out in the country
4. Skill Loan Scheme for any Indian citizen who has admitted in a course run by ITI, Polytechnic, state skill mission, etc

The development of the country in this sector is highlighted below:
1. On 12 February 2016 Oracle has announced to build a campus in Bangalore. This would help approximately 50 lakh students to develop computer science skills.
2. The UK has set up a partnership with India under the same program. This is a virtual partnership under which students at the school level will be able to experience the education system of the schools in the UK.
3. Japan's private sector has decided to set up 6 Institute to train the Indians in the Japanese style of manufacturing skills and practices. Three of them have already been set up in Gujarat, Karnataka, and Rajasthan.
4. The Government of India has decided to allocate Rs 17000 crore ocean in the sector.
5. The government has invested Rs. 4000 crore in the launch of SANKALP (Skill Acquisition and Knowledge Awareness for Livelihood Promotion Programme)
6. The government would set up a hundred International skill centers that would conduct courses in a foreign language that can help the youth of the country to prepare for a job overseas.