We do not wonder as to how best we can describe our country. The task of describing Indian economy is not so easy. It is rich or is it poor ? Is there enough for all to live happily. Is our life as good as in many other countries ? Are the rural areas developing ? At present in India 72.2% people are living in villages. Most of them are farmers or landless laborer. A large number of people are migrating from villages to cities in search of better opportunities of life. Modern industries are on the rise and new technology is affecting us in all steps of life. The Indian economy we inherited then was a back-yard and stagnant economy. No doubt it required tremendous effort to uplift our economy to its present status.
Before 1757 our Indian economy was a self-sufficient economy. But, it was damaged to a great extent by the British rule. At the time of independence we got a semi feudal, backward, stagnant, dependant, depleted and a disintegrated economy. The British rule in India was responsible for the exploitation of the people of India of whom they enslaved by their policy of divide and rule.
But, it had been completed 58 years since independence that India was able to heal itself the scars of the British rule. To reach its present state the economy had to be guided by planning and it chose to adopt the Mixed Economic System. Indian economy is a mixed economy as both the private sector and public sector co-exist and work together. In the Industrial Policy Resolution of 1948 adopted the idea of Mixed Economy. At the time of independence the task of development of industries was entrusted to the public sector to set up and promote basic and capital goods industries and be a guide to the private sectors. India has ad opted mixed economy system for its economic development. Before 1991 public sector was given the utmost importance. But, economic crisis in 1991 led to economic reform in India. After 1991 private sector has been given more importance to increase the rate of economic growth and free and healthy environment for the private sector.
Indian economy is a developing economy. On one hand it has a large number of highly modernized industries while on the other hand, it has a low standard of living, predominance of agriculture, under-utilization of resources, unemployment and large population etc. In India the economic activities are regulated by a federal structure of the government. The centre and the state governments both can regulate the economic activity and life of its people.
Indian economy is an agrarian economy as there is predominance of agriculture. Agriculture continues to provide the maximum employment and source of livelihood to a large portion of population. A large part of the domestic product comes from agricultural activities. Agriculture provide a large consumer market. It meets the food requirements of large growing population.
In India there is low rate of capita formation. Since income is low, savings are low and so rate of capital formation is low in India. So the economy cannot develop at the fast rate desired. The productivity per worker is also low both in agriculture and in industry. This is due to lack of adequate capital and low level of literacy and ill health of the workers. India has a large growing population. The annual rate of growth of population is 1.9% per annum. The population is growing every year at a fast rate. This causes a low rate of growth of per capita income, and a large labour force which has to be given employment. A fast rising population needs more food, shelter, clothing, schooling etc.
India has a vast supply of natural resources of but it is unable to use them efficiently. This is because of low level of technology and lack of technology that can best use these resources. For economic development natural resources must be used efficiently. From the above mentioned character of Indian economy we can say that there is a large possibilities of fast economic growth in India. But there are some obstacles which we can remove. First of all we should control the birth rate so that we can control the growing population. Because most of our development will be to satisfy their immediate requirements and so less is left for further growth. Over the years India has been able to get a high savings rate and reasonable rate of capital formation but yet the rate is not enough to meet the growing needs of development. So, we should try to increase the rate of capital formation by increasing the rate of savings. This should be increased by generating opportunities of employment. More employment can increase the per capita income and savings. In agriculture and industry new technology should be used to increase the productivity. There should be more training and educational institutions for the people. So, that there will be more educated, trained and skilled labour in agriculture and industry. Thus there will be high productivity and the Indian economy will run on the path of development.