Characteristics of Indian Economy

• Mixed Economy: India has both public and private sectors functioning together.
• Federal Structure: Economic decisions are made at both central and state government levels.
• Developing Economy: India is a developing nation with a rapidly growing GDP but still faces challenges like poverty and unemployment.
• Agricultural Dominance: A large part of the workforce depends on agriculture for livelihood.
• Service Sector Growth: The service sector contributes the highest share to GDP, including IT, finance, and telecommunications.
• Population Pressure: High population poses challenges as well as opportunities for economic growth.
• Capital Formation: Increasing investment in infrastructure and industries.
• Low Per Capita Income: Despite growth, per capita income remains low compared to developed countries.
• Economic Planning: India follows a planned economy approach through Five Year Plans and policy frameworks.
• Labor Intensive: Majority of the workforce is engaged in labor-intensive activities.
• Large Informal Sector: A significant part of economic activity is informal or unorganized.
• Diverse Economy: Economy comprises agriculture, manufacturing, and services sectors with regional diversity.
• Infrastructure Challenges: Issues remain in transport, energy, and urban facilities.
• Increasing Foreign Investment: India attracts FDI to boost growth.
• Technological Advancement: Growing use of technology in agriculture, industry, and services.
• Persistent Poverty: Despite growth, poverty reduction remains a key goal.
• Inflation Management: Managing inflation is a continuous economic challenge.
• Monetary and Fiscal Policies: Used by the government and RBI to regulate the economy.
• Globalization Impact: Integration with the global economy influences trade and industry.
• Environmental Concerns: Balancing growth with sustainability is critical.

Previous Year Questions

• SSC CGL 2019: What is meant by a mixed economy?
• Economy where both public and private sectors coexist.
• HSSC 2020: Name two key characteristics of the Indian economy.
• Mixed economy, Agricultural dominance.
• RRB JE 2018: Which sector contributes the most to India’s GDP?
• Service sector.
• SSC CHSL 2021: What does ‘Federal structure’ in Indian economy mean?
• Economic policies are framed at both central and state levels.
• HSSC 2019: Why is India called a developing economy?
• Because of its growing GDP but challenges like poverty and unemployment.
• SSC MTS 2020: What is the major occupation of Indian workforce?
• Agriculture.
• HSSC 2021: What is capital formation?
• Investment in infrastructure and industries to increase productive capacity.
• SSC GD 2021: What role does the service sector play in the Indian economy?
• It contributes the highest share to India’s GDP.
• RRB NTPC 2020: Define ‘informal sector’ in Indian economy.
• Economic activities not regulated by the government, often small scale and unorganized.
• SSC CGL 2021: What is the impact of population pressure on Indian economy?
• It creates challenges like unemployment but also provides a large labor force.
• HSSC 2020: What are the main challenges faced by Indian infrastructure?
• Transport, energy shortages, and urban facility deficits.
• SSC MTS 2019: What does ‘economic planning’ refer to?
• Formulating and implementing policies through Five Year Plans and schemes.
• RRB JE 2021: Why is poverty reduction important for India?
• To improve living standards and ensure inclusive growth.
• SSC CGL 2020: What is the role of foreign direct investment (FDI)?
• To bring capital, technology, and employment for economic growth.
• HSSC 2019: How does globalization affect the Indian economy?
• It increases trade, competition, and access to global markets.
• SSC CHSL 2020: What is ‘monetary policy’?
• RBI’s control over money supply and interest rates to stabilize the economy.
• RRB NTPC 2019: Why is managing inflation important?
• To maintain price stability and protect consumers’ purchasing power.
• SSC GD 2020: What environmental concerns does India face with economic growth?
• Pollution, deforestation, and sustainable resource management challenges.