Indian Economy

Every country possesses natural and human resources in varying proportions. Economic development refers to the methods of utilising these resources for achieving higher standards of living for people of the country.

Characteristics of Indian Economy

1. Under-developed Economy

It is characterised by

  • High population growth rates
  • Abundant but unutilised natural resources
  • Low rate of capital formation
  • Low standard of living characterised by continuous and sustained efforts to raise it through a proper utilisation of available natural, man power,  ï¬nancial and entrepreneurial resources.

2. Mixed Economy

India has a mixed economy because of

  • existence of private and public sector industries makes our economy mixed.
  • market trends determine production, investment and business dealings in the private sector. But marketing mechanism is not completely free from the State control.
  • existence of the public sector along with free enterprise.
  • economic planning since Independence gave it the character of a socialistic economy.

 3. Federal Economy

As India has a federal form of government, its financial system is federal.

  • India has a strong Centre from the point of view of finances.
  • Use of powers of concurrent taxation is avoided.
  • Sources of revenue allotted to Centre are high-yielding and elastic.
  • Money, banking and currency are with the Centre.
  • Some exclusive sources of revenue are given to the Centre.
  • Financial powers are divided between Centre and the States efficiently.
  • Three means are used for resource transfer. There is flexibility in resource transfer.

Economic planning in India includes, planning commission and National development council.

Planning Commission

The Planning Commission was set-up on Mar 15, 1950 under the chairmanship of JL Nehru, by a resolution of Union Cabinet. It is an extra-constitutional, non-statutory body which consists of Prime Minister as the ex-officio Chairman, one Deputy-Chairman appointed by the PM and some full time members. The tenure of its members and deputy chairman is not fixed. There is no definite definition of its members also. They are appointed by the government on its own discretion. The number of members can also change according to the wishes of the Government.

Below are the Main Functions of Planning commission:

  • Assessment of material, capital and human resources of the country.
  • Formulation of plans for the most effective and balanced utilisation of the country’s resources.
  • Definition of stages in which the plan should be carried out.
  • It will act as advisory body to the union government
  • Determination of the nature of the machinery necessary for the implementation of the plan in all its aspects.
  • Appraisal from time to time of the progress achieved in the execution of each stage of the plan.
  • Public co-operation in national development.

National Development Council

All the plans made by the planning commission should be approved by National Development Council first. It was constituted to build co-operation between the States and the planning Commission for economic planning. It comprises Chief Minister of all the states and is headed by the Prime Minister.

Main functions

  • To prescribe guidelines for the formulation of National Plan, including assessment of resources for the plan.
  • To consider National Plan as formulated by the Planning Commission.
  • To consider important questions of social and economic policy affecting national developments.
  • To review working of the plan from time to time.
  • To recommend such measures as are necessary for achieving aims and targets set out in the National Plan.

It includes measures to

1.    secure active participation and co-operation of the people

2.    improve efficiency of the administrative services

3.   ensure fullest development of the less advanced regions and sections of the community through sacrifices borne equally by all the citizens to build up resources for national development.

Related Questions

1. Dadabhai Naoroji theorised on the drain of wealth from India in his book : -- View Answer

2. Which of the following may be termed long-term objectives of Indian planning?
1. Self-Reliance
2. Productive employment generation
3. Growth of 7 per cent per annum
4. Growth in infrastructure -- View Answer

3. Which of the following are not correct assessments of the decades of India's Five-Year Plans?
1. There has been vey low capital formation
2. Growth has favoured the better off
3. Production has increased substantially through often falling short of targets
4. The public sector has contributed nothing to economic growth -- View Answer

4. Who is the Deputy Chairman of Planning Commission? -- View Answer

5. The Deputy Chairman of the Planning Commission : -- View Answer

6. Who was the first Deputy Chairman of Planning Commission of India? -- View Answer

7. Persons below the poverty line in India are classified as such based on whether : -- View Answer

8. Which Committee's recommendations are being followed for estimating Poverty Line in India? -- View Answer

9. Consider the following statements :
Regional disparities in India are high and have been rising in recent years
because :
1. There is persistent investment over time only in Select locales
2. Some areas agro climatically less conducive to development
3. Some areas continue to face little or no agrarian transformation and the
consequent lack of social and economic opportunities
4. Some areas have faced continuous political instability -- View Answer

10. Absolute Poverty means : -- View Answer

More Questions and Answers

1. Economy
2. Nature of Indian Economy
3. Poverty and Unemployment
4. Currency Inflation
5. Banking System
6. Fiscal System
7. Industries and Infrastructure
8. International Organisations

Related Articles

1. Banking in India
2. Banking Terms
3. Inflation and Deflation
4. National income
5. Stock exchange
6. Unemployment