Why is Indian economy regarded an underdeveloped economy? State its basic characteristics.

 The Indian economy has historically been considered an underdeveloped economy due to its low per capita income, poor infrastructure, widespread poverty, and limited access to education and healthcare. Despite being one of the fastest-growing economies in the world over the past few decades, India still faces numerous challenges in terms of economic development. In this essay, we will explore the reasons why the Indian economy is regarded as underdeveloped and its basic characteristics.

Reasons for Underdevelopment

1. Historical Factors: India's history of colonial rule and exploitation has left a lasting impact on the country's economic development. British colonial policies prioritized the export of raw materials and the import of manufactured goods, which left the Indian economy reliant on agriculture and handicrafts. After independence, India faced numerous challenges in developing its manufacturing sector, which remained largely underdeveloped for several decades.

2. Population: India has the second-largest population in the world, which puts pressure on the country's resources and infrastructure. The population growth rate has been slowing down in recent years, but the sheer size of the population remains a challenge for the Indian economy.

3. Infrastructure: India's infrastructure has long been a barrier to economic development. The country has poor road and rail networks, limited access to electricity, and a shortage of water resources. These infrastructure challenges have hindered the growth of industries, particularly in rural areas.

4. Poverty and Inequality: India has one of the highest rates of poverty in the world, with more than 20% of the population living below the poverty line. There is also significant inequality in the distribution of wealth and income, which has limited the ability of the poor to access education and healthcare.

5. Political Instability: Political instability has been a recurring issue in India, with frequent changes in government and corruption being major challenges. This has led to a lack of long-term policy planning and investment in infrastructure and social welfare.

Characteristics of Underdeveloped Economy

1. Low Per Capita Income: The per capita income in India is relatively low compared to developed economies. As of 2021, India's per capita income was around $1,947, which is well below the global average.

2. Dependence on Agriculture: Agriculture remains the backbone of the Indian economy, employing around 50% of the workforce. However, the sector is plagued by low productivity, inadequate infrastructure, and limited access to credit, which has limited its potential for growth.

3. Limited Industrialization: India's industrial sector remains underdeveloped, with manufacturing accounting for only around 18% of the country's GDP. The sector faces numerous challenges, including limited access to credit, inadequate infrastructure, and bureaucratic hurdles.

4. Informal Sector Dominance: The informal sector, which includes small-scale enterprises and self-employment, is a significant contributor to the Indian economy, accounting for around 45% of GDP. However, these enterprises often operate in a non-regulated environment and lack access to credit and other resources.

5. Poor Infrastructure: As mentioned earlier, India's infrastructure remains inadequate, with limited access to electricity, poor road and rail networks, and a shortage of water resources. This has hindered the growth of industries and limited access to basic services for many people.

6. Widespread Poverty: India has one of the highest rates of poverty in the world, with more than 20% of the population living below the poverty line. Poverty is particularly prevalent in rural areas, where access to basic services and education is limited.

7. Limited Access to Education and Healthcare: Access to education and healthcare remains limited in India, particularly in rural areas. This has limited the ability of many people to access opportunities for economic and social mobility.

In conclusion, the Indian economy is regarded as underdeveloped due to historical factors, population growth, infrastructure challenges, poverty and inequality, and political instability. These challenges have limited India's ability to develop its economy and improve the standard of living for its citizens. The basic characteristics of an underdeveloped economy, such as low per capita income, dependence on agriculture, limited industrialization, dominance of the informal sector, poor infrastructure, widespread poverty, and limited access to education and healthcare, are prevalent in India.

However, it is important to note that India has made significant progress in recent years in terms of economic development. The country has become one of the fastest-growing economies in the world, with GDP growth rates averaging around 7% in the past decade. The government has implemented numerous policies aimed at promoting economic growth and development, such as the Make in India campaign, which seeks to promote manufacturing and increase foreign investment. The government has also implemented policies aimed at reducing poverty and inequality, such as the Pradhan Mantri Jan-Dhan Yojana, which aims to provide banking services to the unbanked population, and the Ayushman Bharat program, which aims to provide health insurance to low-income families.

Furthermore, India has a young and growing population, which presents opportunities for economic growth and development. The country has a large pool of skilled labor, which can be harnessed to develop its manufacturing and services sectors. The government has also made efforts to improve infrastructure, such as the development of the Dedicated Freight Corridor, which aims to improve rail connectivity for freight transportation.

In conclusion, while the Indian economy is still regarded as underdeveloped due to its historical challenges and current limitations, the country has made significant progress in recent years in terms of economic growth and development. The government's policies and initiatives aimed at promoting economic growth and reducing poverty and inequality have been positive steps in the right direction. However, there is still a long way to go in terms of developing infrastructure, promoting industrialization, and improving access to education and healthcare for all.

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