India has slipped from 5th to 7th largest economy with GDP $2.972 trillion, and In FY19, India experienced its lowest growth rate of 6.8% in six years. It stills remains one of the fastest growing economies in the world, however, India continues to face numerous economic problems. The challenges that India faces are deep-rooted, inter-mingled and persistent. Here are five big economic challenges India is currently facing.
1. Low per capita income
Per capita income is one of the major indicators of an economy’s prosperity. In FY19, India’s per capita income is estimated to have risen by 10% to 10,534 a month from 9,580 in previous financial year; however the average income is still too low to sustain an adequate standard of living. The basic necessities remain beyond the means of the majority of the population. The regional disparity is high in terms of standard of living, and the situation is worse in rural areas. The reasons behind low per capita income are mainly tremendous population growth, inequality and corruption.2. Unemployment
Unemployment remains an issue in India despite rapid economic growth in the last decade. The Periodic Labour Force Survey (PLFS) of National Sample Survey Office (NSSO)’s report revealed that unemployment rate in FY18 was at 5.3% in rural India and 7.8% in urban India, resulting in overall unemployment rate of 6.1%. The World Bank estimated that India needs to create 8.1 million jobs a year in order to maintain its current employment rate and according to the prediction of the international Labour Organization, the country will have 18.9 million jobless people in 2019.3. Population pressure
The country homes world’s second largest population with nearly 1.35 billion people living in India and according to UN report on World Population prospects; India will surpass China in terms of population in 2027 and will become the most populous country in the world. The population is growing 20% per decade, resulting in problems such as unemployment, deficit of necessary resources and pollution. The main reasons behind over population in India are child marriage or marriage below 18 years, lack of education regarding birth control, and migration.4. Poor Infrastructure
Infrastructural facilities consist of transport and communications, health and education, energy, housing and insurance, science and technology, finance etc and in India, the growth of these infrastructural facilities are not keeping pace with population growth. India ranks 145th among 195 countries in terms of global health care access and quality index, and more than 70% of the population has limited or no access to health care services. In terms of educational infrastructure the story is more or less the same, and over 287 million adults are illiterate.5. Inefficient and Predominant Agricultural Sector
In India, agriculture sector is predominant, and it employs over 50% of country’s workforce, but produces only 15.87% of economic output as of 2019. Productivity of agricultural sector remains low due to fragmented land holdings, vagaries of monsoon, lack of modern technology and indebtedness of farmers. People involved in agriculture have meager income and have the least access to education and health-care necessities. It is the most inefficient sector of the economy and there have not been any major reforms to boost the agricultural sector since green revolution.The problems are big, and it will take some doing on the government’s part to address these issues properly. The new government needs to introduce well thought out policies and schemes in order to overcome these challenges.
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Hi! I am Sahana Chakraborty. I am pursuing M.Sc. in Economics from University of calcutta. I love to travel and experience new cultures. If I could do anything in the world, I would travel the world and write about it. My hobbies include reading, writing, cooking and talking to my cat.
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