Indian economics

B.com final year 

Subject: open elective

Asst. Prof. Priti Upadhyay 

In 2026, the Indian economy continues its trajectory as one of the world's fastest-growing major economies, characterized by its "mixed" nature—a blend of public and private sectors. However, it remains a "developing" economy due to several structural challenges.

 

Salient Features of the Indian Economy

• Mixed Economy Structure: India operates with both private enterprises and state-owned enterprises (PSUs).
• Dominance of the Services Sector: While agriculture employs the most people, the services sector (IT, finance, etc.) contributes over 50% of the GDP.
• Agricultural Base: Agriculture remains the "backbone," supporting nearly 50% of the workforce, even though its share of the total GDP has declined.
• Demographic Dividend: With over 65% of the population under 35, India has a massive potential workforce that can drive growth if properly skilled.
• Rising Capital Formation: Savings and investment rates have improved significantly, often exceeding 30% of GDP, which fuels infrastructure and industrial projects.
• Emerging Market Status: High GDP growth (typically 6–7%) and massive foreign direct investment (FDI) inflows mark its status as a key global emerging market. 

Major Economic Problems

• Poverty and Income Inequality: Despite growth, a significant portion of the population lives below the poverty line. Wealth is highly concentrated, with the top 10% holding more than half of the national income.
• Unemployment: Job creation often lags behind the growing labor force. Issues include "disguised unemployment" in agriculture (too many workers for the required task) and youth unemployment among graduates.
• Low Per Capita Income: India's average income per person remains much lower than that of developed nations like the US or Japan.
• Inflation and Price Volatility: Fluctuating food and fuel prices frequently impact the purchasing power of the common citizen.
• Infrastructure Deficit: While improving, bottlenecks in transportation, power, and urban planning continue to hinder industrial efficiency.
• Agricultural Low Productivity: Small land holdings, lack of modern technology, and dependence on monsoons result in low yields for many farmers.
• Parallel Economy: Unreported income and tax evasion (the "black economy") drain government resources needed for public services.
• Regional Imbalance: Significant economic disparities exist between developed urbanization states and underdeveloped rural regions.