Problems faced by Indian Economy

Problem faced by Indian Economy:-

Being a poor country and one of the fastest growing economies in the world, there are some problems in Indian economy as explained below:-----

Low per capita income

Usually, developing economies have a low per-capita income. The per capita income in India in 2014 was $1,560. In the same year, the per-capita Gross National Income  of USA was 35 times that of India and that of China was 5 times higher than India. Apart from the low per-capita income, India also has a problem of unequal distribution of income. This makes the problem of poverty a critical one and a big obstacle in the economic progress of the country. Therefore, low per-capita income is one of the primary economic issues in India.

Dependence of population on agriculture

Another aspect that reflects the backwardness of the Indian economy is the distribution of occupations in the country. According to the World Bank, in 2014, nearly 47 percent of the working population in India was engaged in agriculture. Unfortunately, it contributed merely 17 percent to the national income implying a low productivity per person in the sector. The expansion of industries failed to attract enough manpower either.

Heavy population pressure

Another factor which contributes to the economic issues in India is population. Today, India is the second most-populated country in the world, the first being China. Hence, there is an increased economic burden on the country.

Unemployment and under-employment

The huge unemployed working population is another aspect which contributes to the economic issues in India. With nearly half of the working population engaged in agriculture, the marginal product of an agricultural laborer has become negligible. The problem of the increasing number of educated-unemployed has added to the woes of the country too.

Slow improvement in Rate of Capital Formation

India always had a deficiency of capital. However, in recent years. We experienced a population growth of 1.6 percent during 2000-05 and needed to invest around 6.4 percent to offset the additional burden due to the increased population.

Inequality in wealth distribution

In India, merely 1 percent of the population has 58 percent of the total Indian wealth. Also, 57 billionaires have the same amount of wealth as the bottom 70 percent of India. Unequal distribution of wealth is certainly one of the major economic issues in India.

Poor Quality of Human Capital

Therefore, the knowledge and training of the population is a form of capital. Hence, the expenditure on education, skill-training, research, and improvement in health are a part of human capital.

Low level of technology

New technologies are being developed every day. However, they are expensive and require people with a considerable amount of skill to apply them in production. Therefore, the deficiency of human capital and the absence of skilled labor are major hurdles in spreading technology in the economy.

Lack of access to basic amenities

In 2011, according to the Census of India, nearly 7 percent of India’s population lives in rural and slum areas. Also, only 46.6 percent of households in India have access to drinking water within their premises. Also, only 46.9 percent of households have toilet facilities within the household premises.

Under-utilization of natural resources

India is rich in natural resources like land, water, minerals, and power resources. However, due to problems like inaccessible regions, primitive technologies, and a shortage of capital, these resources are largely under-utilized.

Lack of infrastructure

The lack of infrastructural facilities is a serious problem affecting the Indian economy. These include transportation, communication, electricity generation, and distribution, banking and credit facilities, health and educational institutions, etc. Therefore, the potential of different regions of the country remains under-utilized.