India as a country has many economic challenges. After getting independence from colonial rule, India started its journey as a very poor nation. However, in the later part of the 20th century, it started getting enough progress in the economy due to the liberalization of the economy.
India is the fastest growing economy in the world now and some of its products, such as medicine and milk products are getting widespread acceptance in the world. India has distributed Coronavirus vaccines to a lot of countries during the need and it has earned enough reputation among the nations.
India is the fastest-growing economy in the world. However, its current economic challenges are worth noticing. Some of the current economic issues in India are -
According to the Centre for Monitoring Indian Economy (CMIE), about five million or 50 lakh salaried jobs were lost in the month of July, 2020 with total layoffs in the formal sector to over 1.8 crores.
This shows the enormousness of the problem of unemployment in India. Unemployment has both direct and indirect impacts on the economy. While it leads to a worse lifestyle, unemployment means less purchasing power too which is not suitable for an economy.
A stagnant economy is the most significant problem the Indian economy has ever faced till now. In India, demand for imported goods and commodities like food, fuel, consumer goods, and power has come down over the last few months.
India’s demand woes began in 2019, but the coronavirus outbreak worsened the overall scenario. Consumer demand in India was declining due to the low household incomes which were caused by major job losses in the wake of this raging pandemic which has forced the closures of factories and businesses. India is still trying to get out of the problem in 2022.
The coronavirus pandemic is one of the major roadblocks for every nation in its path to growth and prosperity. India is no different. It has faced the problem more due to its huge population and high density of population in cities as well as towns and villages. India has crossed the 200 crore vaccination as a landmark achievement in August 2022 but it still has to do more to get completely rid of the problem.
India is the second most populous country after china and its birth rate is noticeably high. Moreover, as the infant mortality rate is getting reduced, India is facing the heat of population like a double-edged sword. As there is less participation of private players in taking care of the needs of the population, the government has to take care of the basic requirements of food, medicine, clothing, shelter, schooling, etc. These situations are a burden multiplier for the nation.
India always had a scarcity of capital because it has a huge population. In recent years, there has been a moderate but constant development in capital formation. But, the country is way behind its aim and needs to do a lot to achieve the landmark.
There is a vast disparity between the rich and the poor, one of India's major economic issues. The disparity is growing every day despite many steps taken by the government and it is a bad sign for the economy. The disparity in wealth distribution often leads to social unrest and hence it must be tackled by the government.
India has many economic challenges as it is marking its position at a global level. However, the country is progressing at a good pace for the last three decades since liberalization in 1991. As Indian products and commodities are getting appreciated worldwide, its net exports are increasing gradually. The country should however keep the track of progress intact to become a world power.
Following are some of the historical economic challenges from the time of independence −
An increasing proportion of the Indian population is dependent on agriculture as their occupation. However, the profitability and productivity of the agricultural sector are not promising enough. The use of traditional methods of cultivation instead of modem ones results in low productivity and stagnation in the agricultural sector leading to less property for the farmers. This is a big issue since the independence of India.
Another noticeable issue in the agricultural sector is that a majority of farmers have less amount of land under their ownership and many rural individuals work as part-time laborers in large agricultural firms. This increases the burden of poverty and unemployment in rural sectors of India.
During British rule, no attention was paid to the enhancement of the world-famous Indian handicrafts sector which brought it on the verge of extinction. Now, the government is trying to bring it back on the path of prosperity. But it is easier said than done because a lot of effort must be paid to create a market and ensure proper support to the entire handicrafts sector.
Up to the dates of liberalization, the level of growth of the industrial sector in India was very low. This, accompanied by restrictions put by the government kept the Indian economy at the threshold level instead of offering large opportunities for India’s participation in the global market.
India had one of the worst medical facilities, especially in the rural areas which led to a low life expectancy, high infant mortality rate, and low literacy rate. These destroyed the growth of the nation because the government needed to pay a huge part of its budget in managing these issues.
The widespread poverty at a massive level due to natural calamities (famines, epidemics, etc.) and other socio-economic factors made India take loans from the world bank and other authorities. Most of the government's expenses occurred in paying these loans.
So, the government had only marginal amounts to look after the economy. This made the government weaker and fragile. It took more than five decades for India to come out of the debt trap and the country is now flourishing slowly but gradually.
India should take economic challenges as opportunities and develop itself into a major world economy. The path to attaining such success is tough but with a cumulative and united effort, India can succeed to become a major world power. India’s foreign trade and international political relations with most countries are good enough can help it become a major economy within the foreseeable future.
India’s service sector is very strong too. While the world is looking to get into the service industry to stay successful, it is working as a new dawn for India. The day is not far when India will overcome all economic challenges and become a prosperous nation.
Q1. Give four examples of India’s current economic problems.
Ans. India’s current economic challenges include -
Weak demand,
A slow rate of capital formation
Growth of population
Pandemics, such as Coronavirus pandemic
Q2. Give examples of some historical economic challenges of India.
Ans. Some historical economic challenges of India are -
Widespread poverty
Inequality of wealth distribution
Lack of medical services, and
Overdependence on the agricultural sector
Q3. Which two countries are the fastest growing in the world as of 2021-2022?
Ans. As of 2021-22, India and then China are the fastest growing economies in the world.
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