Problems Faced By Indian Economy Decoration

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Following are issues which highlight the major problems of Indian economy.

1. Low level of National Income and per Capita Income -     

After 70 years after independence, India not only has a low per-capita income, but Indian economy also has great inequalities in the distribution of income and wealth. The logical corollary of this inequality is mass poverty.     

2. Macro economic stability -

The present Government has been putting efforts to maintain the fiscal moderation. India still runs a deficit of about 2% of GDP and successive governments have not done enough work to eliminate it. A top priority for credible macroeconomic performance will be to target a low current account deficit and a small but positive revenue surplus.    

3. Predominance of  Agriculture -

Less developed countries live mainly upon Agriculture, and extractive industries e.g. mining, fisheries, forests etc. Occupational structure give a view of pre-dominance of agricultural sector and backwardness of Industrial sector. 

4. Population pressure - 

India ranks second to China in this sector with higher rate of growth which effects the economic progress. While many of people making move to urban centers in search of jobs and better lives, millions end up living in slums, and conditions for the urban poor are going from bad to worse. Today, one in six urban citizens in India live below poverty line.     

5. Massive unemployment -

It is tragic to mention that despite huge investment made during the plan period, unemployment problem has assumed a great proportion amounting to great wastage of human capital. It has been strongly believed that injecting fresh capital investment will automatically lead to job creation. But it is increasingly clear, that correlation is questionable.  

6. Restrictions in business  - 

Due to maze of laws and regulations, it takes more for an entrepreneur to start a business in India than most of other places in the world, and even after he settles down in business, it takes even a greater effort to comply with sector, department, state and central laws.

7. Lack of technological input - 

Though modern industrial sectors employ advanced technology, village industries still employ old methods even in the age of modern science and globalized world. It is a reasonable conclusion that that low productivity of Indian labor is explained in terms of loe level of technology. 

8. Infrastructure -

The superstructure of an economy  largely depends upon the availability of infrastructural facilities. In India, such shortage of such facilities needs to properly addressed.

9. Stressed Banking sector-

The problem of managing NPAs and Scams put more pressure on the functioning of banks. Such issues create more restrictions on economy of the country to develop. 

10. Poor educational standards - 

High levels of illiteracy among the women and in rural areas are worse. Over 50% of women are lliterate which limits the economic development and skilled workforce.   

11. Balance of payment deterioration -  

Although India has built up large amounts of foreign currency reserves, the high rate of economic growth have been at the cost of persistent current account deficit. Indian economy has seen imports growth faster than exports. That means that India needs to attract capital flows to finance the deficit. While the deficit remains, there is always a fear of further devaluation in the Rupee. There is a need to balance the economy and improve the competitiveness of exports.        


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