ECONOMY OF INDIA

The Economy of India is the seventh-largest in the world by nominal GDP and the third-largest by purchasing
power parity (PPP).The country is classified as a newly industrialized country, one of the G-20 major
economies, a member of BRICS and a developing economy with an average growth rate of approximately 7%
over the last two decades. Maharashtra is the wealthiest Indian state and has an annual GDP of US$220 billion,
nearly equal to that of Pakistan or Portugal, and accounts for 12% of the Indian GDP followed by the states
of Tamil Nadu (US$140 billion) and Uttar Pradesh (US$130 billion). India's economy became the world's
fastest growing major economy from the last quarter of 2014, replacing the People's Republic of China.
The long-term growth prospective of the Indian economy is positive due to its young population, corresponding
low dependency ratio, healthy savings and investment rates, and increasing integration into the global
economy. The Indian economy has the potential to become the world's 3rd-largest economy by the next decade,
and one of the largest economies by mid-century. And the outlook for short-term growth is also good as
according to the IMF, the Indian economy is the "bright spot" in the global landscape. India also topped
the World Banks growth outlook for 2015-16 for the first time with the economy having grown 7.6% in 201516 and expected to grow 7.7-8.0% in 2016-17.
India has the one of fastest growing service sectors in the world with annual growth rate of above 9% since
2001, which contributed to 57% of GDP in 2012-13. India has capitalized its economy based on its large
educated English-speaking population to become a major exporter of IT services, BPO services,
and software services with $167.0 billion worth of service exports in 2013-14. It is also the fastest-growing part
of the economy. The IT industry continues to be the largest private sector employer in India. India is also the
fourth largest start-up hub in the world with over 3,100 technology start-ups in 2014-15. The agricultural sector
is the largest employer in India's economy but contributes to a declining share of its GDP (17% in 2013-14).
India ranks second worldwide in farm output. The Industry sector has held a constant share of its economic
contribution (26% of GDP in 2013-14). The Indian auto mobile industry is one of the largest in the world with
an annual production of 21.48 million vehicles (mostly two and three wheelers) in FY 2013-14.India has $600
billion worth of retail market in 2015 and one of world's fastest growing E-Commerce markets.

SECTORS
Historically, India has classified and tracked its economy and GDP as three sectors agriculture, industry and
services. Agriculture includes crops, horticulture, milk and animal husbandry, aquaculture, fishing, sericulture,
aviculture, forestry and related activities. Industry includes various manufacturing sub-sectors. India's definition
of services sector includes its construction, retail, software, IT, communications, hospitality, infrastructure
operations, education, health care, banking and insurance, and many other economic activities.

Agriculture

Rice fields near Puri, Odisha on East Coast

India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing
accounted for 17% of the GDP and employed 49% of the total workforce in 2014. As the Indian economy has
diversified and grown, agriculture's contribution to GDP has steadily declined from 1951 to 2011, yet it is still
the largest employment source and a significant piece of the overall socio-economic development of India. Crop
yield per unit area of all crops has grown since 1950, due to the special emphasis placed on agriculture in the
five-year plans and steady improvements in irrigation, technology, application of modern agricultural practices
and provision of agricultural credit and subsidies since the Green Revolution in India. However, international
comparisons reveal the average yield in India is generally 30% to 50% of the highest average yield in the
world. The states of Uttar Pradesh,Punjab, Haryana, Madhya Pradesh, Andhra Pradesh, Telangana , Bihar, West
Bengal ,Gujarat and Maharashtra are key contributors to Indian agriculture.
India receives an average annual rainfall of 1,208 millimetres (47.6 in) and a total annual precipitation of
4000 billion cubic metres, with the total utilisable water resources, including surface and groundwater,
amounting to 1123 billion cubic metres. 546,820 square kilometres (211,130 sq mi) of the land area, or about
39% of the total cultivated area, is irrigated. India's inland water resources including rivers, canals, ponds and
lakes and marine resources comprising the east and west coasts of the Indian ocean and other gulfs and bays
provide employment to nearly six million people in the fisheries sector. In 2010, India had the world's sixth
largest fishing industry.

Amul Dairy Plant at Anand was a highly successful co-operative started during the green revolution in the
1960s
India is the largest producer in the world of milk, jute and pulses, and also has the world's second largest cattle
population with 170 million animals in 2011. It is the second largest producer of rice, wheat, sugarcane, cotton
and groundnuts, as well as the second largest fruit and vegetable producer, accounting for 10.9% and 8.6% of
the world fruit and vegetable production respectively. India is also the second largest producer and the largest
consumer of silk in the world, producing 77,000 tons in 2005.
India exports several agriculture products, such as Basmati rice, wheat, cereals, spices, fresh fruits, dry fruits,
buffalo beef meat, cotton, tea, coffee and other cash crops particularly to the Middle East, Southeast and East
Asian countries. It earns about 10 percent of its export earnings from this trade.

Industry

Jamnagar Refinery in Gujarat. Although crude oil constitutes about a third of the country's total imports, India is
a net exporter of petroleum products.
Industry accounts for 26% of GDP and employs 22% of the total workforce. According to the World Bank,
India's industrial manufacturing GDP output in 2015 was 6th largest in the world on current US dollar basis
($559 billion),and 9th largest on inflation adjusted constant 2005 US dollar basis ($197.1 billion). The Indian
industrial sector underwent significant changes as a result of the economic liberalisation in India economic
reforms of 1991, which removed import restrictions, brought in foreign competition, led to the privatisation of
certain government owned public sector industries, liberalised the FDI regime, improved infrastructure and led
to an expansion in the production of fast moving consumer goods. Post-liberalisation, the Indian private sector
was faced with increasing domestic as well as foreign competition, including the threat of cheaper Chinese
imports. It has since handled the change by squeezing costs, revamping management, and relying on cheap
labour and new technology. However, this has also reduced employment generation even by smaller
manufacturers who earlier relied on relatively labour-intensive processes.

Petroleum products and chemicals

Petroleum products and chemicals are a major contributor to India's industrial GDP, and together they
contribute over 34% of its export earnings. India hosts many oil refinery and petrochemical operations,
including the world's largest refinery complex in Jamnagar that processes 1.24 million barrels of crude per day.
By volume, the Indian chemical industry was the third largest producer in Asia, and it alone contributed 5% of
its GDP. India is one of the top 5 world producers of agrochemicals, polymers and plastics, dyes and various

organic and inorganic chemicals. Despite being a large producer and exporter of chemicals, India is a net
importer of chemicals given its domestic demand for products.

Services

Bangalore, along with cities such as Pune, Hyderabad, Chennai and Gurgaon, is a major IT services center.
India's services sector has the largest share in the GDP, accounting for 57% in 2012, up from 15% in 1950.It is
the 7th largest in the world by nominal GDP, and third largest when purchasing power is taken into account. The
services sector provides employment to 27% of the work force. Information technology and business process
outsourcing are among the fastest-growing sectors, having a cumulative growth rate of revenue 33.6% between
1997 and 1998 and 200203 and contributing to 25% of the country's total exports in 200708.The growth in
the IT sector is attributed to increased specialisation, and an availability of a large pool of low cost, highly
skilled, educated and fluent English-speaking workers, on the supply side, matched on the demand side by
increased demand from foreign consumers interested in India's service exports, or those looking
to outsource their operations. The share of the Indian IT industry in the country's GDP increased from 4.8% in
200506 to 7% in 2008.In 2009, seven Indian firms were listed among the top 15 technology outsourcing
companies in the world.
Energy and Power

NTPC's Ramagudam Super Thermal Power Seation

The primary energy consumption in India is the fourth biggest after China, USA and Russia. Coal and crude oil
together account for 85% of the primary energy consumption of India. India's oil reserves meet 25% of the
country's domestic oil demand. As of April 2015, India's total proven crude oil reserves is 763.476 million
metric tons, while gas reserves stood at 1,490 billion cubic metres (53 trillion cubic feet). Oil and natural gas
fields are located offshore at Bombay High, Krishna Godavari Basin and the Cauvery Delta, and onshore
mainly in the states of Assam, Gujarat and Rajasthan. India is the fourth largest consumer of oil in the world

and net oil imports are nearly 820000 crore (US$120 billion) worth of oil in 2014-15, which had an adverse
effect on its current account deficit. The petroleum industry in India mostly consists of public sector companies
such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Limited (HPCL), Bharat
Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Limited (IOCL). There are some major
private Indian companies in the oil sector such as Reliance Industries Limited (RIL) which operates the world's
largest oil refining complex.
India became the world's third largest producer of electricity in the year 2013 with 4.8% global share in
electricity generation surpassing Japan and Russia. As of November 2015, India had an installed power
generation capacity of 281.423 GW, of which thermal power contributed 69.8%, hydroelectricity 15.2%, other
sources of renewable energy 13.0%, and nuclear power 2.1%. India meets most of its domestic electricity
demand through its 106 billion tonnes of coal reserves. India is also rich in certain alternative sources of
energy with significant future potential such as solar, wind and biofuels (jatropha sugarcane). India's dwindling
uranium reserves stagnated the growth of nuclear energy in the country for many years. Recent discoveries of
natural uranium in Tummalapalle belt, which promises to be one of the top 20 of the world's reserves, and an
estimated reserve of 846,477 metric tons (933,081 short tons) of thorium about 25% of world's reserves are
expected to fuel the country's ambitious nuclear energy program in the long-run. The Indo-US nuclear deal has
also paved the way for India to import uranium from other countries.

ISSUES AND CHALLENGES

As India prepares herself for becoming an economic superpower, it must expedite socio-economic reforms and
take steps for overcoming institutional and infrastructure bottlenecks inherent in the system. Availability of both
physical and social infrastructure is central to sustainable economic growth.
Since independence Indian economy has thrived hard for improving its pace of development. Notably in the
past few years the cities in India have undergone tremendous infrastructure up gradation but the situation in not
similar in most part of rural India.
Similarly, in the realm of health and education and other human development indicators Indias performance has
been far from satisfactory, showing a wide range of regional inequalities with urban areas getting most of the
benefits.
In order to attain the status that currently only a few countries in the world enjoy and provide a more egalitarian
society to its mounting population, appropriate measures need to be taken.
Currently Indian economy is facing these challenges:
i. Sustaining the growth momentum and achieving an annual average growth of 7-8% in the next five years.
ii. Simplifying procedures and relaxing entry barriers for business activities.

iii. Checking the growth of population; India is the second highest populated country in the world after China.
However, in terms of density India exceeds China as Indias land area is almost half of Chinas total land. Due
to a high population growth, per capita remains very poor. It was only $ 2880 in 2003 (World Bank figures).
iv. Boosting agricultural growth through diversification and development of agro processing.
v. Expanding industry fast, by at least 10% per year to integrate not only the surplus labour in agriculture but
also the unprecedented number of women and teenagers joining the labour force every year.
vi. Developing world-class infrastructure for sustaining growth in all the sectors of the economy.
vii. Allowing foreign investment in more areas.
viii. Effecting fiscal consolidation and eliminating the revenue deficit through revenue enhancement and
expenditure management.
ix. Empowering the population through universal education and health care, India needs to improve its Human
Development Index (HDI) rank, as at 134 it is way below many other developing countries performance. The
Central government is committed to furthering economic reforms and developing basic infrastructure to
improve lives of the rural poor and boost economic performance. Government had reduced its controls on
foreign trade and investment in some areas and has indicated more liberalization in civil aviation, telecom and
insurance sector in the future.
Since 1991, the Indian economy has pursued free market liberalisation, greater openness in trade and increase
investment in infrastructure. This helped the Indian economy to achieve a rapid rate of economic growth and
economic development. However, the economy still faces various problems and challenges.
1. Inflation
Fuelled by rising wages, property prices and food prices inflation in India is an increasing problem. Inflation is
currently between 8-10%. This inflation has been a problem despite periods of economic slowdown. For
example in late 2013, Indian inflation reached 11%, despite growth falling to 4.8%. This suggests that inflation
is not just due to excess demand, but is also related to cost push inflationary factors. For example, supply
constraints in agriculture have caused rising food prices. This causes inflation and is also a major factor
reducing living standards of the poor who are sensitive to food prices. The Central Bank of India have made
reducing inflation a top priority and have been willing to raise interest rates, but cost push inflation is more
difficult to solve and it may cause a fall in growth as they try to reduce inflation.
2. Poor educational standards
Although India has benefited from a high % of English speakers. (important for call centre industry) there is
still high levels of illiteracy amongst the population. It is worse in rural areas and amongst women. Over 50% of
Indian women are illiterate. This limits economic development and a more skilled workforce.
3. Poor Infrastructure
Many Indians lack basic amenities lack access to running water. Indian public services are creaking under the
strain of bureaucracy and inefficiency. Over 40% of Indian fruit rots before it reaches the market; this is one
example of the supply constraints and inefficiencys facing the Indian economy.
4. Balance of Payments deterioration.

Although India has built up large amounts of foreign currency reserves the high rates of economic growth have
been at the cost of a persistent current account deficit. In late 2012, the current account reached a peak of 6% of
GDP. Since then there has been an improvement in the current account. But, the Indian economy has seen
imports growth faster than exports. This means India needs to attract capital flows to finance the deficit. Also,
the large deficit caused the depreciation in the Rupee between 2012 and 2014. Whilst the deficit remains, there
is always the fear of a further devaluation in the Rupee. There is a need to rebalance the economy and improve
competitiveness of exports.

5. High levels of private debt

Buoyed by a property boom the amount of lending in India has grown by 30% in the past year. However there
are concerns about the risk of such loans. If they are dependent on rising property prices it could be
problematic. Furthermore if inflation increases further it may force the RBI to increase interest rates. If interest
rates rise substantially it will leave those indebted facing rising interest payments and potentially reducing
consumer spending in the future
6. Inequality has risen rather than decreased.
It is hoped that economic growth would help drag the Indian poor above the poverty line. However so far
economic growth has been highly uneven benefiting the skilled and wealthy disproportionately. Many of Indias
rural poor are yet to receive any tangible benefit from the Indias economic growth. More than 78 million
homes do not have electricity. 33% (268million) of the population live on less than $1 per day. Furthermore
with the spread of television in Indian villages the poor are increasingly aware of the disparity between rich and
poor. (3)
7. Large Budget Deficit
India has one of the largest budget deficits in the developing world. Excluding subsidies it amounts to nearly
8% of GDP. Although it is fallen a little in the past year. It still allows little scope for increasing investment in
public services like health and education.
8. Rigid labour Laws
As an example Firms employing more than 100 people cannot fire workers without government permission.
The effect of this is to discourage firms from expanding to over 100 people. It also discourages foreign
investment. Trades Unions have an important political power base and governments often shy away from
tackling potentially politically sensitive labour laws.
9. Inefficient agriculture
Agriculture produces 17.4% of economic output but, over 51% of the work force are employed in agriculture.
This is the most inefficient sector of the economy and reform has proved slow.
10. Slowdown in growth
2013/14 has seen a slowdown in the rate of economic growth to 4-5%. Real GDP per capita growth is even
lower. This is a cause for concern as India needs a high growth rate to see rising living standards, lower

unemployment and encouraging investment. India has fallen behind China, which is a comparable developing
economy

INFRASTRUCTURE GROWTH
ACCELERATING THE COUNTRY`S INFRASTRUCTURE GROWTH IS ONE OF THE MAIN
PRIORITIES BEFORE THE GOVERNMENT. LACK OF ADEQUATE INFRASTRUCTURE GROWTH IN
THE COUNTRY IS CURRENTLY ONE OF THE MAJOR HURDLES THAT THE COUNTRY IS FACING.
MAJOR CHALLENGES IN THE WAY OF INFRA GROWTH ARECOMPLEXITIES AT POLICY
MAKING LEVEL, PROBLEMS IN LAND ACQUISITION, ABSENCE OF SINGLE WINDOW
CLEARANCE OF PROJECTS AND INADEQUATE FUNDING. GOVT MUST ENCOURAGE PPP MODEL
TO BOOST INFRA GROWTH AND MAKE PROVISION FOR ADEQUATE FUNDING OF PROJECTS.
INFRA GROWTH WILL NOT ONLY GENERATE EMPLOYMENT BUT ALSO GARNER MORE
FOREIGN INVESTMENT, THEREBY CONTRIBUTING TO THE OVERALL GROWTH OF THE
ECONOMY.
HOWEVER, DOUBLING THE AMOUNT ENVISAGED IN THE PREVIOUS PLAN PERIOD, INDIA HAS,
FOR THE 12TH FIVE-YEAR PLAN (2012-17), SET A TARGET OF USD 1 TRILLION INVESTMENTS
(NEARLY 10 PERCENT OF GDP), WELL ABOVE 5 PERCENT OF GDP IN A DECADE FOR THE
INFRASTRUCTURE SECTOR.

TAX REFORMS
INTRODUCTION OF GOODS AND SERVICES TAX (GST) AND DIRECT TAXES CODE (DTC) WILL
HELP REVIVE THE SAGGING ECONOMIC GROWTH.
THE IMPLEMENTATION OF DTC WOULD ENHANCE ECONOMIC EFFICIENCY OF THE TAX
SYSTEM BY ELIMINATING DISTORTIONS AND INCREASE TAX-GDP RATIO.
GOVERNMENT MUST SOON PUT INTO EFFECT DTC, WHICH SEEKS TO OVERHAUL THE OVER 50YEAR-OLD INCOME TAX LAW.
IT MUST ALSO PAVE THE WAY FOR GST BILL THAT SEEKS TO BRING IN A COMMON TAX REGIME
FOR GOODS AND SERVICES.

LOWERING TRADE DEFICIT

FOR A COUNTRY`S SOUND FISCAL HEALTH, THE BALANCE OF TRADE SHOULD BE IN SURPLUS
RATHER THAN IN DEFICIT. UNFORTUNATELY, INDIA HAS TRADE DEFICIT WITH AS MANY AS 80
COUNTRIES, INCLUDING CHINA, AND IS CONTINUING TO GROW AT AN EVEN PACE.
THE FOREMOST REASON BEHIND THE RISE IN TRADE DEFICIT IS DUE TO INCREASE IN
IMPORTS BILL OF PETROLEUM PRODUCTS AND GOLD.
ALTHOUGH THE GOVERNMENT HAS ANNOUNCED MANY MEASURES TO IMPROVE THE
COUNTRY`S EXPORTS, IT HAS FAILED TO EXPLORE NEWER AVENUES TO CURB THE WIDENING
DEFICIT.
INDIAS EXPORTS FELL CLOSE TO 2 PERCENT IN 2012-13 TO USD 300 BILLION AND TRADE
DEFICIT WIDENED NEARLY USD 191 BILLION AS DEMAND FOR GOODS SLOWED IN WESTERN
ECONOMIES.

FDI INFLOWS
TO REVIVE INDIA`S GROWTH STORY AND BRING IT BACK ON TRACK THE GOVERNMENT MUST
FOCUS ON LURING FOREIGN INVESTORS. THOUGH IT HAS TAKEN SEVERAL POLICY DECISIONS
IN THE PAST FEW MONTHS, THESE STEPS HAVE FAILED TO ATTRACT SIGNIFICANT FDI
INFLOWS.
ACCORDING TO DATA FROM THE WORLD INVESTMENT REPORT OF UNCTAD, INDIA`S FDI
INFLOW WAS JUST 4.3 PERCENT OF ITS GROSS FIXED CAPITAL FORMATION AS COMPARED TO
THE GLOBAL AVERAGE OF 8.3 PERCENT. ALSO, FDI STOCKS AS A PERCENTAGE OF GDP STAND
AT 12.2 PERCENT IN CONTRAST TO THE RATIO FOR DEVELOPING ECONOMIES AT 30.4 PERCENT.
THE COUNTRY REGISTERED 38 PERCENT DECLINE IN ITS FOREIGN DIRECT INVESTMENT TO
USD 022.42 BILLION IN 2012-13, COMPARED TO PREVIOUS YEAR.
GOVERNMENT MUST DO ITS BEST TO PROMOTE INDIA AS AN INVESTMENT-FRIENDLY
DESTINATION. INDIA WOULD REQUIRE AROUND USD 1 TRILLION IN THE NEXT FIVE YEARS TO
OVERHAUL ITS INFRASTRUCTURE SECTOR, SUCH AS PORTS, AIRPORTS AND HIGHWAYS TO
BOOST GROWTH.

UNEMPLOYMENT
EVEN AFTER 66 YEARS OF INDEPENDENCE, UNEMPLOYMENT REMAINS A CHALLENGE FOR
POLICY MAKERS. FOR THE ERADICATION OF UNEMPLOYMENT IN THE COUNTRY, THE
GOVERNMENT`S APPROACH SHOULD BE INCLUSIVE.
HOWEVER, THE GOVERNMENT HAS TRIED BEST TO ADDRESS THE ISSUE BUT HAS NOT MET
WITH MUCH SUCCESS.
AROUND SEVEN CRORE PEOPLE IN THE COUNTRY ARE STILL EITHER UNEMPLOYED OR
UNDER-EMPLOYED, THE NATIONAL SAMPLE SURVEY OFFICE (NSSO) REPORT HAD SAID LAST

YEAR.
AS PER RESULTS OF THE SURVEY CONDUCTED BY NSSO DURING 2009-10, THE NUMBER OF
UNEMPLOYED OR UNDER-EMPLOYED PERSONS ON USUAL STATUS BASIS IN THE COUNTRY
WAS 95 LAKHS AND ABOUT SIX CRORE RESPECTIVELY.

POVERTY
ERADICATION OF POVERTY REMAINS THE PRIME CHALLENGE BEFORE THE INDIAN
GOVERNMENT. HOWEVER, PLANNING COMMISSION IN ITS RECENT REPORT HAS SHOWED A
SUBSTANTIAL DECREASE IN THE NUMBER OF PEOPLE LIVING BELOW THE POVERTY LINE IN
2011-12.
THE FIGURES PRESENTED BY THE PLANNING COMMISSION HAVE BEEN WIDELY DEBATED. IF
ONE ACCEPTS THE DATA AS IT IS, INDIA STILL HAS A LONG WAY TO GO BEFORE IT GETS RID OF
POVERTY ON ALL LEVELS.
ACCORDING TO PRESENT FIGURES IT HAS BEEN ESTIMATED THAT POVERTY IS AT 25.7
PERCENT IN RURAL AREAS, 13.7 PERCENT IN URBAN AREAS AND 21.9 PERCENT FOR THE
COUNTRY AS A WHOLE. POVERTY RATIO IN INDIA HAS DECLINED TO 21.9 PERCENT IN 2011-12
FROM 37.2 PERCENT IN 2004-05 ON ACCOUNT OF INCREASE IN PER CAPITA CONSUMPTION, AS
STATED IN THE PLANNING COMMISSION DATA.

TOP 10 ECONOMIC AND DEVELOPMENT CHALLENGES FOR INDIA IN 2015

1.Sustainable growth and development: India requires growth rates of at least 7% to cater to the needs of its
large, young and aspiring population. The countrys growth rate is projected to6.4% for 2015. Stronger
economic reforms and greater investments and better resource management in multiple sectors and across the
country are necessary to invigorate growth to required levels. The falling oil prices provide an opportunity to
decrease energy subsidies and utilise the savings in targeted investments and improve growth prospects.
Inclusion of all people from all economic and social backgrounds to attain their full potential is crucial for
Indias sustainable development. Indias growth path should align with the Sustainable Development
Goals (SDGs) for ending poverty and reducing inequality; ensuring food and water security; improving health,
nutrition and sanitation; providing quality education; enabling gender equality and safety; making cities clean
and green; addressing climate change; and promoting peaceful societies.

2. Green growth: Green growth optimises the potential of sustainable economic growth that is efficient, clean
and resilient. It thereby enables reduction in pollution, greenhouse gas emissions and environmental
degradation. Green growth enables energy security through efficient use of natural resources and reduces
dependence on imported fossil fuels. It enhances climate resilience through considered environmental
management , maintaining biodiversity, improving health prospects, minimising waste and reduction in climate
vulnerability to extreme weather hazards.
Furthermore, it has the potential to offer India tremendous opportunity for sustainable development.
Improvements could be made to energy efficiency in industry, transportation, infrastructure and assets. India has
already been undertaking significant initiatives to limit expected increase in emissions and greater investment is
essential to mitigate risks due to climate change and safeguard her people.
There will be challenges. However, sustainable green growth is certainly achievable with existing and on-going
developments in clean technologies and renewable energies but requires strong commitment by central and state
governments, corporates, households and individuals.
3. Human development: The working age population is estimated to become over 64% in 2021 with the
average age expected to be 29 years. Indias middle class is expected to be 200 million by 2020. These
demographic factors provide opportunities as well as challenges. Higher investment is crucial to educate, skill
and provide employment and entrepreneurial opportunities to keep pace and stay ahead of the growing demands
and attain the potential of her people wealth.
Improving the quality of education is essential. Major gaps exist in quality and availability of teachers,
particularly in rural government schools. Encouraging internship opportunities for qualified young people to
volunteer in village schools can benefit interns and children. Greater efforts for counselling students and
teachers, involving parent teacher associations and NGOs are essential to enhance the performance of Right to
Education across public and private schools across the country.
Enhancing employability and employment through enabling opportunities in multiple sectors (including Indias
expanding space programme) is essential to fulfil the aspirations of the countrys youth. Technical and
vocational training programmes; creating jobs; innovation and entrepreneurship opportunities have to be
expanded for working age population.
Reducing gender gaps in human development is required to ensure inclusion and equality; improve health of
children and family; enable greater participation in labour force participation. Women and girls can be
empowered only when they are safe and free to be able to participate equally in all activities in urban and rural
areas. Large scale (through media, involvement of ambassadors, etc.) and community-based programmes to
educate men, women and households are essential to improve awareness and change attitudes and behaviours.
4. Social protection: In the keeping of his subjects lies the kings happiness; in their welfare, his welfare;
whatever pleases himself he shall not consider as good, but whatever pleases his subjects he shall consider as
good, wrote Kautilya in his Arthashastra. The culture of ensuring provision for the vulnerable has to be
enhanced and sustained. Awareness and inclusion of disabled in education and jobs has been improving but
requires greater commitment and resources to empower and involve them according to their capabilities.
Some improvements are being made by states in the implementation of public distribution systems using
technology and better monitoring to enable all those eligible to access government benefits and prevent access

by those who are ineligible. Further improvements are required through regular monitoring and evaluation,
creating awareness, empowerment and involvement of local communities and leadership.
Schemes introduced under the new government have great potential, as long as they are implemented
efficiently. For example, the Jan Dhan Yojanan could enhance financial inclusion and improve the distribution
of government subsidies, scholarships, pensions, etc.
5. Urbanisation: About 32% of the countrys population currently lives in urban areas. It is estimated that
urban population will contribute over 75% of GDP in the next 15 years. Economic Corridors and Smart
Cities need to encourage transparency, planned efficiently; and developed with stronger co-ordination between
public and private, as well as national and international collaborations to be drivers of growth and inclusion that
is sustainable and enhances quality of life.
The golden quadrangle helped to fast track urbanisation of second tier cities and enabled better connectivity
with rural areas. People from rural areas are now commuting for jobs and schools in nearby towns. Rural to
urban migration within and between states continues to grow. Public and private sector investments in
development of infrastructure and industry Special Economic Zones, roads and other constructions have been
providing alternative non-farm occupations and additional sources of income. About 61% of the rural
population (500 million) belong to the working age group of 15 59 years (Census 2011). This population will
increasingly access services and facilities in urban and peri-urban areas through migration or daily commuting
for work, business or education. Public and private services and Infrastructure requirements should be
projected, planned and developed in a responsible and transparent manner to be inclusive and meet the growing
demands to benefit rural and urban populations.
6. Land reforms: Developing transparent land reforms for Centre and States are crucial for sustainable growth
and development. The ordinance passed on 29th December to amend the Land Acquisition Act is a step forward
and should reform and promptly secure approval from Parliament. The government should seek to develop
feasible reforms that are fair and provide justice and equity to urban and rural landowners, together with
meeting development objectives.
7. Strengthening public sector institutions: Significant human, infrastructure and capital resources already
existing in several public sector institutions are accessible to the larger population. It would be resource efficient
to scale up existing resources by improving their performance and enhance their potential through regular
training, monitoring, evaluation and investment. Salaries for employees in public sector should be
commensurate with their work and responsibilities and should provide incentives for good performance and
achievements. Greater awareness programmes and disincentives for unethical practises have to be strictly
implemented.
8. Centre-State co-operation: The Centre-State and State-State understanding and co-operation have gained
significance in recent years. The difference in leadership, governance and cultures between the 29 states
contributes richly to Indias democracy. Article 263 in the Constitution should be optimised to promote cooperative federalism. With an efficient co-operative federalism, the achievements in economic growth,
governance and social inclusion of any state can easily be replicated in other states to enable equitable growth.

9. Federal Republic of India: A beauty of the federation of India is the unity in the vast diversity of its people
and places from Kashmir to Andaman Islands and Arunachal Pradesh to Gujarat. Her people comprise of the

second largest Muslim population in a country and Christian population higher than the entire population of
some countries (e.g. Sri Lanka). India is and will remain uniquely sovereign, socialist, secular, democratic
republic, like no other country in the world.
India can become a world leader. What she requires are large-scale reforms for sustainable and inclusive
development aligning with technology and developments existing in the 21st century and to become a
responsible and transparent democracy.
10. Regional co-operation: The population of Asia (includes central Asia) is 4.3 billion (61% of world
population in 2013). Strong co-operation between countries in the region are essential for economic growth and
development. There is a growing awareness of this and occasional surmises regarding the possibility of an
Asian Union to improve standards and economic integration across the region. Greater commitment,
communication and co-ordination are crucial to improve equitable multi-and-bilateral trade, security relations
and sharing of resources such as water.

WAYS TO COUNTER ISSUES AND CHALLENGES

In order to tackle these serious problems the Indian government has been making policies and spending a lot of
money since the time of independence.That is why population below poverty line has been reducing over time.
Though slowly. Similarly unemployment rate has not been allowed to rise beyond control.These were possible
due to the following programmes implemented by the government.
1. The Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGS)
MGNREGS aims at providing at lest one hundred days of guaranteed wage employment in a year to rural
population. The nature of work is unskilled manual work. The scheme was launched in 2006 in 200 districts of
India. Then it was notified for the entire country in 2008. Any adult member of a family living in rural area can

do manual labour on daily wage basis for 100 days in a year. In 2010, upto the month of December about 4.1
crores households were benefited under this scheme. In 2010-11 the government had allocated Rs. 40,100
crores to run this scheme.
2. Swarnjayanti Gram Swarozgar Yojana (SGSY)
SGSY was launched in April 1999. The aim of this programme is to help the rural poor to increase their income
generating capacity through self employment. The primary focus of this scheme is the SC and ST population, as
well as women. But others can also get benefit. Under this scheme poor people are given training, bank loans
and other facilities so that they can build up their capabilities to overcome poverty. People who work on their
own are called self employed or Swarozgaris. This scheme is specially meant for these swarozgaris. In order to
give training to people belonging to poor households government has set up rural self employment training
institute (RSETI) in each district under this scheme. About 77000 rural youths have got training from RSETI by
December 2010.
3. Swarna Jayanti Sahari Rozgar Yojna (SJSRY)
SJSRY is meant for providing employment to poor families living in urban areas ofthe country. It was first
launched in 1997. Then many new initiatives were introduced in 2009 which include the following :
(i) Programmes to generate self employment
(ii) Programmes for urban women
(iii) Training for urban poor
(iv) Community development programme
(v) Wage employment programme
The government has allocated about Rs.590 crores for SJSRY for the year 2010-11. A total of more than 6 lac
50 thousand families in urban areas have been benefited under this scheme by December 2010.

Another challenge before our nation is to educate all the citizens. According to census 2011, the literacy rates of
India were 82.14 per cent for males, 65.46 percent for females and 74.04 percent for all adults.
The government of India has taken following measures to provide education to all.
1. Right of children to free and compulsory education Act 2009.
The government of India has made free education for all children between 6 to 14 years of age a fundamental
right in 2009. This law has been made effective from April 2010. Now children between age group of 6-14
years can have claim to free education and the government is duty bound to provide so. Accordingly the
government will open more and more primary and upper primary schools and appoint teachers to teach.
2. Schemes for elementary and secondary education
Some of the important schemes to develop elementary and secondary education are given below
(i) Sarva Siksha Abhiyan (SSA)

SSA has been implemented by the central government in partnership with state governments to give education
to children in the age group 6-14 years. Keeping in view the right to education act which came latter, SSA
scheme has been accordingly modified. The goals of this scheme are
(a) enrolment of all children in school
(b) Retention of children in the school up to upper primary level
(c) Hosting back to school camps
(d) Building education guarantee centers
(e) Closing the gap arising due to caste, gender etc. in giving education
By September 2010 there were 309, 727 new schools with more than 11 lac teachers being appointed. Nearly 9
crore children were provided text books.

To provide education to girl child SSA has an important component called national programme for education for
girls at elementary level (NPEGEL). Under this programme model schools are being set up in every cluster to
impart education to girls. Uniforms and study materials etc. are provided freely to girls. Teachers get special
training to teach girl students under this programme.
There are also residential schools for girls called Kasturba Gandhi Balika Vidyalayas (KGBVs) under SSA. 75
percent of total girls students admitted in KGBVs belong to SC, ST, OBC and minority communities.
Remaining 25 percent belong to families who are below poverty line. More then 2 lac girls are enrolled in
KGBVs by March 2010.
(ii) National programme of Mid-day meals in Schools
In order to attract children into schools and retain them, the government has started mid day meals programme.
The idea is to provide healthy diet to children by providing good food. Mid day meals also bring children from
different sections of the society together and develop sense of belongingness towards each other. More than 14
crore children were benefited in 2009-10.
(iii) Rashtriya Madhyamik Shiksha Abhiyan (RMSA)

RMSA was launched in 2009 to increase the enrolment ratio in the secondary stage. 75 percent of the total
expenditure on this programme comes from central government while state government provide 25 percent. For
the north east region this ratio is 90 : 10.
(iv) Inclusive education for the disabled at secondary stage (IEDSS) To help the children with special needs,
the government has launched IEDSS programme with effect from 2009-10. Its aim is to provide 100percent
central assistance for education of disabled children studying classIX-XII stage.
(v) Saakshar Bharat
To promote education and literacy among the adults above 15 years of age, the government has recast its
national literacy mission as Saakshar Bharat. The special focus of this program will be women.
(3) Programme for Higher and Technical Education
Higher education starts with college education after passing out from schools. Higher and technical education
includes graduation in arts, social science, science, engineering, medicine, information technologies etc. A
country must improve the level of its higher & technical education if it wants to establish knowledge society
and compete with other countries at international level. The government of India has taken several steps to
develop higher and technical education as given below.
1. In the eleventh plan period the central government has aimed at establishing 8 new universities, 10 new
engineering colleges with cooperation from state governments.
2. New model colleges will be set up at educationally backwards districts of the country.
3. To promote IT education 20 more Indian institutes of information technology (IIT) will be set up.
4. More engineering colleges in the form of national institutes of technologies (NITs), and Indian Institutes of
Technology (IITS), will be built and become operational in 2011-12 in different parts of India.
5. To promote research in science the government has set up five Indian Institutes of Science Education and
Research (IISER) in various parts of the country.
6. Finally five new Indian Institute of Management (IIMS) have become operational in the Eleventh and two
more will become operational in 2011-12.

Another major challenge before the country is to provide better health care facilities to its people. Due to lack of
proper health care 254 females out of every 100,000 die while giving birth. This is called maternal mortality
rate (MMR). 50 out of 1000 children die at the time of birth which is called infant mortality rate (IMR). 15
children out of 1000 die before completing 4 years of age which is known as child mortality rate (CMR).
Certainly these news are not encouraging. There are so many villages and remote areas in the country. But
unlike cities and towns, these areas do not have adequate health centers or hospitals and doctors to attend to the
problems of people there.. In 2010-11, the government spent only about 5 percent of total expenditure on health
care which is only 1.27 percent of our national income. Even our neighbor Sri Lanka spends more than India on
health services per head.
(i) National Rural Health Mission (NRHM)

NRHM was launched in 2005 to provide affordable and qualitative health service to rural population. It aims at
strengthening health and family welfare programmes, removing diseases such as malaria, kala azar, blindness,
iodine deficiency, T.B. filaria, leprosy etc. by improving public health delivery system. NHRM has started
revitalizing the existing primary and community health centres. By September 2010 around 8 lac health workers
have been given training on health care and more than9 thousand doctors and 26 thousand nurses have been
appointed on contract basis to give health services to rural population. NRHM is also running many mobile
medical units (MMUs) which run from one place to another to provide health care at door step.
(ii) Janani Suraksha Yojana (JSY)
In order to save the life of the mother at the time of the delivery the government has started the Janani Suraksha
Yojana.
(iii) Pradhan Mantri Swasthya Suraksha Yojana (PMSSY)
Health care facilities are not uniformly available in India. Some states have very good health infrastructure in
the form of medical institutes / colleges and hospitals while others do not have these facilities. This has created
regional imbalances in provision of health care service and over crowding of certain places where these
facilities are available. For example the All India Institute of Medical Sciences (AIIMS) is situated in Delhi and
is a world class medical institute cum hospital. Since other states do not have such a facility, people from
different states come to Delhi to get treatment in AIIMS. As a result AIIMS has become over crowded with a
long waiting period for treatment. To remove these problems the government of India has launched PMSSY.
Under this scheme six new AIIMS like institutions will be constructed in different parts of the country. It also
aims at upgrading 12 existing government medical colleges in different states.
(iv) National AIDS Control
AIDS (Acquired Immune Deficiency Syndrome) is a dangerous health disorder which affects people infected
with HIV. About 24 lakh people in India were affected by HIV in 2009, which is one of the highest in the world.
Once the virus called HIV attacks the human body, the person loses strength to fight diseases and his/her
immune system become weak over time. Under such a circumstance the person cannot recover if he/she suffers
from any disease. AIDs has endangered population all over the world. The government of India has created
centers to generate awareness to prevent AIDS as well as treat people affected by the virus.
People pay prices to buy different commodities in the market. If prices increase then it
becomes difficult to buy the same amount of the good and service. As a result, the level
of satisfaction of the individual falls. When you pay more prices, your existing income
looks less than before since you have to now pay more money to buy less
amount of the commodity. This hits the buyer badly.Why do prices rise? The most
common reason is that if the amount of a good people wants to buy in the market is
more than its actual availability then this will create a situation of shortage of the
particular good. As a result the price of the good will rise. Shortage may occur if
production of the good has not been adequate. For example, food grain production falls if
a draught situation happens. Another reason of shortage could be wastage of the good
due to lack of proper storage facility. Finally, shortage will occur if the sellers hoard the
good without selling it so that a man- made shortage takes place.

Sellers do it deliberately to charge more prices for the good. Hoarding often takes place
in case of essential commodities such as onion, rice, medicines etc.
The government plays a major role in controlling prices in the following ways
(i) By helping farmers in several ways so that food grain output does not suffer.
One example is that the government allows the farmers to buy seeds, fertilizer
etc. at lower price.
(ii) By building store houses and cold storages to keep food grains and vegetables
properly so that there will be no problem of availability of such goods.
(iii) By keeping a strict vigil on hoarding of essential commodities and punishing the
guilty since hoarding is a crime.

ACHIEVING HIGHER ECONOMIC GROWTH

In a simpler manner we can define economic growth as increase in our Countrys total
income and per capita income. This is possible when Indias agricultural and industrial
production increase as well as Service sector expands in the desired manner.
Some of the steps taken by the government in this direction are as follows.
1. India has been encouraging establishment of small scale, large scale and heavy
industries since the second plan onwards i.e from 1956.These industries produce goods
for the use of people, machines and equipments needed to build infrastructure and help
service sector to expand. Industries provide lots of jobsand higher wages.
2. The government has been encouraging the use of better inputs in the form of better
seeds, fertilizers etc. to improve food grain production.
3. Because of better infrastructure in the form of roads, railway lines, Airports,
communication towers, power etc. Indias service sector is growing fast. In order to
maintain the momentum of economic growth the government has modified rules and
regulations so that people can easily participate in the process of
development. These steps are known as economic reforms.