Essay on the Current Challenges of the Indian Economy

This essay sample was donated by a student to help the academic community. Papers provided by EduBirdie writers usually outdo students' samples.

Cite this essay cite-image

Table of contents

  1. Heavy Population Pressure
  2. Corruption
  3. Prevalence of Unemployment and Underemployment
  4. Low Per Capita Income
  5. Prevalence of Low Level of Technology
  6. Inequalities in Financial Gain and Wealth
  7. The Predominance of Agriculture
  8. Underdeveloped Infrastructure
  9. Low Rate of Capital Formation
  10. Poor Quality of Human Capital
  11. Conclusion

India is not simply emerging: India has already emerged. India has a tremendous growth story, and is truly one of the rising stars of the global economy. India is now in the phase of the fastest economic expansion in comparison to developing countries. But still, the Indian economy is known as ‘developing economy’. Which signifies that India is still underdeveloped and the process of development has been initiated in the country. Since development has been initiated, the Indian economy is progressing to become a developed economy. On the basis of their low per capita income, developing economies are differentiated from the developed economies. Though per capita income is not the only indicator, it is the most significant single measure of comparison for different economies. India is a low-income developing economy. Without any, controversy in saying that nearly one- fourth of its population lives in the condition of misery. Poverty is not only acute but is also a chronic ailment in India. Although unutilized natural resources still exist. There are several reasons for India still being a developing economy. The Indian economy is currently facing several challenges.

Heavy Population Pressure

The major problem amongst all is the high level of birth rates and the parallelly falling level of death rates. Also, India ranks second after China in the total population. The population of India is projected close to 1.37 billion or 1369 million in 2019, as compared to 1.354 billion in 2018. The population growth rate for 2019 is projected at 1.08%. The problem is not only the rising population but the other factors which get affected due to this. The fast rate of growth of the population necessitates a higher rate of economic growth in order to maintain the same standard of living of the population. To maintain this rapidly growing population food, clothes, shelter, medicines, schools, etc. All demands rise. Thus, the rise in population imposes a greater economic burden in response to this society has to take great effort to initiate these processes of growth. Moreover, a rising population leads to an increase in the labor force. The rapid growth of the labor force creates a higher supply of labor than its demand leading to unemployment. So, the rising population is a major challenge that the Indian economy is facing until now.


India has been ranked 78th most corrupt country in the world in 2018. The score of India out of 100 on the corruption index was 41. This ranking was given by the Corruption Perceptions Index (CPI), which ranked amongst 180 countries and terrorists by their perceived level of public sector corruption among experts and business people. The corruption level in India is increasing day by day, leading to scams and laundering of money. The continued failure to significantly control corruption is leading to a crisis in democracy around the world. The need to urgently curb this corruption is required. So that India can also compete with developed countries and can enhance its business with foreign counterparts.

Prevalence of Unemployment and Underemployment

The factor of being labor in an abundance, and consequently, it is very really hard to provide gainful employment to the whole working population. In developed countries, unemployment is of cyclical nature and occurs due to a lack of effective demand. The Indian economy does not find sufficient capital to expand its industries to such an extent that the entire labor force is absorbed. In the agricultural sector of the Indian economy, a much larger number of laborers are engaged in production than are really needed. Accordingly, the marginal product of labor in agriculture is often negligible; it may be zero or may even be negative. Thus, there exists ‘disguised’ unemployment in agriculture. Disguised unemployment in rural areas is the result of the heavy pressure of population on land and the absence of alternative employment opportunities in our villages. As the unemployment rate in India increased to 7.2% in February 2019 as per the latest data by the CMIE and so being one of the major crises in India unemployment should be solved.

Low Per Capita Income

Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) In a specified year which is calculated by dividing: area's total income by its total population. Developing economies are identified by the existence of low per capita income. Per capita income at official exchange rates exaggerated the disparities, while the purchasing power parity figures corrected the position. Though the per capita income differences got narrowed down, still the difference between the level of living of an average American and an Indian was quite large and significant. India's GDP per capita was 2,041.091 USD in Mar 2019, whereas it was 2,015.228 USD in Mar 2018. The growing per capita income is an indicator of the prosperity of a country. The gross national income at current prices is estimated at Rs. 188.17 lakh crore during April'18- March'19 as compared to Rs. 169.10 lakh crore during April'17- March'18, rising by 11.3 percent. Low per capita income is the major challenge that an Indian economy is constantly facing.

Prevalence of Low Level of Technology

In a developing economy like India, the foremost fashionable the technology exists facet by facet with the foremost primitive within the same business, however, there's no gainsaying the very fact that the bulk of the productive units and a serious a part of the output is made with the assistance of techniques which might be represented as inferior judged by fashionable scientific standards. The sharp variations in productivity between developed and underdeveloped nations will be copied to a substantial degree to the appliance of superior techniques by the previous. Since new techniques measure expensive and need a substantial degree of talent for his or her application in production, the dual necessities for the absorption of the latest technology measure the supply of capital associate degreed coaching of an adequate range of personnel. It's necessary to own a basic minimum level of education among the particular producers so that the economy will absorb new technology. Deficiency of capital hinders the method of scraping off the previous techniques and therefore the installation of the up to this point and fashionable techniques. Illiteracy and therefore the absence of a talented labor measure the opposite major hurdles within the unfold of technology within the economy. The Indian economy suffers from this basic weakness. The low productivity per area unit in Indian agriculture and therefore the low level of productivity per employee in agriculture and business measure mostly a consequence of technological stupidity. In India the overwhelming majority of farmers measure too poor to shop for even the essential inputs, like improved seeds fertilizers and pesticides, to not speak of affording the dearer producer’s product like harvesters, tractors, sowing machines, etc. In manufacture additionally, the overwhelming majority of the enterprises in India measure run either on a personal or on a partnership basis and it's on the far side the means that of little enterprises to use fashionable and additional productive techniques. However, with the alleviation of the economy, new technology is being adopted by an oversized range of enterprises for his or her survival. So, there's associate degree pressing ought to improve the technology.

Save your time!
We can take care of your essay
  • Proper editing and formatting
  • Free revision, title page, and bibliography
  • Flexible prices and money-back guarantee
Place Order

Inequalities in Financial Gain and Wealth

There has been an increase in inequalities of financial gain and wealth in Indians. Distribution of financial gain in favor of the less privileged categories has not taken place. On the opposite hand, the concentration of financial gain and wealth has magnified. In keeping with the various studies and surveys, there's a transparent indication that even the tiny gains of development over the years haven't been equitably distributed. There is no strange to such financial gain difference, however, in India, this gap is widening more. According to the latest survey, India's richest people own fifty-eight of India's total wealth, about five hundredths more than the world's total.

The Predominance of Agriculture

Generally, associate degree underdeveloped economies would principally rely on agriculture. Agriculture would be the most supply of employment. The economy is captivated by agricultural production. Agriculture would contribute a serious share to the value. The industries would even be agriculture-based.

India is preponderantly associate degree agricultural economy. As per March 2018 survey, agriculture utilized five-hundredths of the Indian hands and it additionally had contributed 17-18% to the country's value. Whereas, in 2016, agriculture and sectors like agriculture, biology, and fisheries overall accounted for fifteen.4% of the value (gross domestic product) with concerning thirty-first of the hands in 2014. The concentration of the population on agriculture is just too serious. Although agriculture occupies a predominant position in India, it's still backward.

Underdeveloped Infrastructure

Infrastructure refers to those basic economic and social establishments that measure inevitable for initiating the method of development. The Indian economy doesn't have a well-developed infrastructure. The social infrastructure that consists of education, training, research, health, housing, civic amenities, etc., on the market in India is quite backward. Similarly, economic infrastructure, that contains the network of transport and communication systems, irrigation, power, banking, and insurance establishments, etc. Is also not totally developed. Backward infrastructure hinders economic development. As so much as social and economic overheads measure involved, India is poor. It's so true that her railway and road networks measure love the developed nations. However, her demand for infrastructural facilities and services outmatches theirs provides. Compared to different countries, India is poor in info technology. Thus, India’s social infrastructural facilities don't seem to be solely inadequate compared to the wants, however additionally awfully low compared to totally different countries of the planet.

Low Rate of Capital Formation

Capital could be a crucial determinant of economic development. Underdeveloped countries have an awfully low rate of capital formation. Such countries got to rely on foreign countries for the influx of capital. If the capability to save lots of is low, this ends up in a low rate of capital formation. That's why development economists recommend that to interrupt the vicious circle of the economic condition it's necessary to push up the speed of investment. Since India could be a capital-poor country, capital per head is low. This insufficiency of capital causes the overall backwardness of the Indian economy. Capital formation can increase the pace of development by creating full exercise of resources on the market.

Poor Quality of Human Capital

An obtrusive feature of an underdeveloped economy is that the poor quality of human capital. Most of the underdeveloped countries suffer from mass acquirement. Illiteracy retards growth. A minimum level of education is critical to amass skills as additionally to understand social issues. Rural areas wherever illiteracy may be a rule, area unit the backwaters of civilization and therefore the centers of superstitious notion, social taboos, and conservativism. Determinism and acceptance of misery as a part of life and belief in a very predestine order are all among mass illiteracy. But if we have a tendency to enlarge the definition of capital formation to incorporate the employment of any resource that enhances the productive capacity, then besides physical capital the data and coaching of the population also will kind a vicinity of the capital. As a result, the expenditure on education, ability formation, analysis and enhancements in health area unit enclosed in human capital. The world organization Development Program (UNDP), ranks countries supported the Human Development Index (HDI). This can be supported by life, education, and per-capita financial gain. During this index, India hierarchic a hundred thirty out of 189 countries in 2019.


There are a unit plenty of issues that the Indian economy is facing, this can be the sole reason India still being within the developing nations. These problems got to be self-addressed before long to beat the issues the Indian economy is facing in progression.

Make sure you submit a unique essay

Our writers will provide you with an essay sample written from scratch: any topic, any deadline, any instructions.

Cite this paper

Essay on the Current Challenges of the Indian Economy. (2022, October 28). Edubirdie. Retrieved April 18, 2024, from
“Essay on the Current Challenges of the Indian Economy.” Edubirdie, 28 Oct. 2022,
Essay on the Current Challenges of the Indian Economy. [online]. Available at: <> [Accessed 18 Apr. 2024].
Essay on the Current Challenges of the Indian Economy [Internet]. Edubirdie. 2022 Oct 28 [cited 2024 Apr 18]. Available from:

Join our 150k of happy users

  • Get original paper written according to your instructions
  • Save time for what matters most
Place an order

Fair Use Policy

EduBirdie considers academic integrity to be the essential part of the learning process and does not support any violation of the academic standards. Should you have any questions regarding our Fair Use Policy or become aware of any violations, please do not hesitate to contact us via

Check it out!
search Stuck on your essay?

We are here 24/7 to write your paper in as fast as 3 hours.