Characteristics and Nature of Indian Economy

Introductions: The economy of India is 10th largest in World by nominal GDP and 3rd largest by Purchasing Power Parity (PPP). The Indian Economy is 2nd and 3rd largest in Asia on the basis of PPP and Nominal GDP respectively. Apart from this it is the largest Economy of South Asia. It is the 2nd fastest growing Economy in the world after China. It has average growth rate of 7.7% over the past 10 years.

Nature of Indian Economy

Indian Economy is the best Examples of Mixed Economy. Here we discuss all the basic types of Economy. In general their are 3 forms i.e.Mixed Economy, Agrarian Economy, Developing Economy. We can also broadly classifiy the Economy as Primary, Secondary and Tertiary. Here we will discuss all types as shown in the given tabular forms.

Mixed Economy	Agrarian Economy	Developing Economy
In exists in both public and private sectors.	51% of work force of India is agriculturist.	Low per capita income and low rate of economic growth.
In the entire plan period, the Government has invested 45% capital in public sector.	Its contribution of GDP is 17.4% in 2011-2012.	High proportion of people is BPL (Below the Poverty Line)

Primary Sector	Secondary Sector	Tertiary Sector (Service Sector)
It is based on agriculture, forestry and fishing.	It is based on manufacturing, mining, electricity, gas and water supply, construction.	It is based on telecommunication, business transport, real estate, banking insurance, community and personnel services.

Planning in India (Role of Planning Commission) – Planning Commission is set up in March, 1950. There are some aims of planning. It must raise the standard of living of the people. It must reduce economic and social inequalities. It provides a balanced regional development.

National Development Council (NDC) – It is the highest decision making body in respect of planning. It helps in the execution of common policies in various important spheres of economy of country and thus ensures balanced economic development of the country.

Some Historical Milestones -

Planned Economy for India (1934) – M. Visvesvaraya
National Planning Committee (1938) – Jawaharlal Nehru
Gandhian Plan (1944) – S. N Agarawal
People’s Plan (1945) – M. N Roy
Sarvodaya Plan (1950) – J. P Narayan

NITI Aayog – NITI Aayog stands for National Institution for Transforming Indian Aayog. It was established on 1st January, 2015. It is the policy making think-tank of Government that replaces the planning commission and aims to involve states in economic policy making. The Prime Minister is the Chairman of the NITI Aayog. Dr. Rajiv Kumar is the Present Vice-Chairman of NITI Aayog of India.

FIVE YEAR PLAN - IMPORTANT HIGHLIGHTS

Plans	Targeted Growth	Achieved Growth	Priority Given	Features and Mottos
1^st Five Year Plan (1951-56)	2.1%	3.6%	Agriculture, power, transport, price stability, irrigation and electricity	It is based on the Harrod-Domar Model. Community Development program was launched in 1952.
2^nd Five Year Plan (1956-1961)	4.5%	4.2%	Heavy Industries	It is also known as P.C.Mahalanbis Plan after its architect. Its main objective was rapid industrialization.
3^rd Five Year Plan (1961-1966)	5.6%	2.8%	Food grains, Heavy Industries	Its aim was to make India “Self Reliant” and “Self-Generating”. It was a complete failure due some misfortunes like Chinese Aggression, Indo-Pak war, severe drought.
Plan Holiday (1966-1969)				An agricultural strategy was taken involving distribution of high-yielding seeds, use of fertilizers, exploitation of irrigation potential, soil conservation etc.
4^th Five Year Plan (1969-1974)	5.7%	3.2%	Agriculture	Did well in first two years, later failed due to poor monsoon. Had to tackle Bangladesh Refugees after Indo-Pak war.
5^th Five Year Plan (1974- 1978)	4.4%	5.0%	Removal of Poverty, “attainment of self-reliance”	It was proposed by D D Dhar. Distribution of income, significant growth in domestic rate of savings.
Rolling Plans				It was made by Janata Dal (then Ruling Party) for two years.
6^th Five Year Plan (1980-1985)	5.2%	5.5%	Agriculture Industries	Major aims were –increase in National Income, advancement of technology, decrease of poverty and unemployment, population control.
7^th Five Year Plan (1985-1990	5.0%	6.0%	Energy and Food grains	It increases employment opportunities and productivity.
Annual Plans
8^th Five Year Plan (1992-1997)	5.6%	6.6%	Human Resource Education	Rapid economic growth, high growth of agriculture and allied sectors, manufacturing sectors, better import and export, improvement in trade and current account deficits.
9^th Five Year Plan (1997-2002)	6.5%	5.4%	Social Justice	It has four important dimensions. i.e. quality of life, generation of productive employment, regional balance and self reliance.
10^th Five Year Plan (2002-2007)	8.1%	7.6%	Income and Energy	Increased literacy rate, universal access to primary education.
11^th Five Year Plan (2007-2012)	8.0%	7.9%	Inclusive Growth	Increased GDP, increased literacy rate, reduced infant mortality rate, increased sex ratio.
12^th Five Year Plan (2012-2017)	8%	---	Faster, sustainable and Inclusive Growth	Reduce poverty, growth in agriculture and manufacturing industry, reduced infant mortality rate and increase job opportunities.

National Income of India – It is an instrument to measures the net value of respective goods and services produced in a nation during a financial year. And it also include net earned foreign income.

Related to Domestic Product –

Gross Domestic Product at Market Price = Market Value of final output of goods and services produced within the domestic economy of a country in one year.
It also includes the net earned foreign income.
The total National income measures the flow of goods and services in the economy.
Net Domestic Product at Market Price = GDP – Depreciation.
Net Domestic Product at Factor Cost = NDP (MP) – Indirect Taxes + Subsidies

Related to National Product –

Gross National Product at Market Price = GDP (MP) + Net Factor Income from Abroad
Net National Product at Market Price = GNP (MP) – Depreciation
Net National Product at Factor Cost or National Income = National Product (MP) – Indirect Taxes + Subsidies
Per Capita Product / Income = National Income / Population = Net National Product at Factor Cost / Population

Important Note Down Points

The 1st estimate of National Income – Dadabhai Naoroji (1867-68)
First Scientific Estimate – Prof. V K R V Rao (1931-32)
National Income Committee (1949) – P. C Mahalanobis (Chairman)
The task of National Income was entrusted to the CSO (Central Statistical Organization)
The Indian Economy is divided into 9 sectors at present and the base year is 2011-2012 (2015 onwards).

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Characteristics and Nature of Indian Economy